With the 2020-21 end of the financial year (EOFY) fast approaching, there are many things that you as a business owner, company director or trustee have to consider. It’s vital to be aware of these EOFY business action points and get them in order before 30 June, 2021, as the new financial year often brings change and new obligations. Let’s discuss some crucial EOFY business action points to address before 30 June 2021.
EOFY Actionable Points to Consider for your Business
1.Record hours worked from home during COVID-19 (if applicable)
Our first EOFY business action point to consider relates to the COVID-19 pandemic. If you worked from home during the major COVID period, you should write down and record these hours (if applicable), so you can claim the special COVID home office calculation rate of 80 cents per hour.
2. Complete a stocktake
A stocktake allows your business to assess and record the amount of stock held. This is especially vital near the end of financial year. It is a requirement of all businesses to account for the value of their trading stock at the end of each income year (closing stock) and at the start of the next income year (opening stock).
3. Be aware of Superannuation changes and obligations
As discussed in our recent article, the Superannuation Guarantee (SG) will increase from 9.5% to 10% from 1 July 2021. This is very important to note so that you are in line with your super obligations to employees.
Also, note that while the June 2021 quarter superannuation guarantee contribution is not technically due until 28 July, you may want to look into paying your June quarter superannuation contributions to your employees before 30 June 2021, in order to secure a tax deduction this year. We suggest doing this by 23 June 2021 to ensure you don’t miss out on the deduction.
4. Ensure all relevant motor vehicles have log books if using the logbook operating method
If you have a motor vehicle that you use for work, or if you use your motor vehicle for travel to clients or customers, you may be able to claim a tax deduction on your income tax return. If you’d like to use the logbook operating method, ensure all your relevant motor vehicles have log books that are kept and written in accordance with the ATO’s guidelines.
5. Check whether your business has a payroll tax liability.
Your business is generally liable for payroll tax if the sum of your wages, super and certain contractor and other wage related payments exceeds the threshold for your state. In NSW the threshold is $1.2 million.
6. Temporary Full Expensing or Instant Asset Write off
Be sure to make early purchase of assets costing up to $150,000 to qualify for temporary full expensing or instant asset write off.
7. Trust Depreciation Schedules
Review the company’s or the trust’s depreciation schedule and write off all eligible assets.
8. Director’s Fees
Ensure Directors Fees declared last year are paid and declare Directors fees and employee bonuses before the end of June. Even if not paid, PAYGW must be deducted.
Check your list of debtors and write-off any that will not be collected.
10. Deferring Sales
Defer selling an investment, remember it’s the date of the contract, not the date of settlement that determines in what year it is taxable.
11. Superannuation – Personal Contributions
If you are an individual who makes personal super contributions, notify your superfund trustee of an intention to claim a deduction of your super contributions. Make sure your super concessional contributions do not exceed $25,000.
12. Trust Income Distribution
Trust Income distribution resolutions for the income year to be made, and committed in writing, on or before 30 June. Remember, if you have made a family trust election for your trust, be conscious of the distributions you make for a year; any distribution outside of that family group will be subject to the penal family trust distribution tax.
13. Prepayment of Expenses
Prepay any tax-deductible expenses before 30 June to obtain a tax deduction e.g. paying 12 months’ car lease repayments.
Other EOFY Business Action Points to Consider
There are some other important EOFY business action points you will also need to consider.
- Reconcile wages paid and superannuation contributions
- STP finalisation declaration is due by 14 July 2021
- Finalise June quarter BAS
- Prepare an annual reconciliation of GST to balance for the full year
- Do an annual payroll tax reconciliation and pay by 28 July 2021.
Remember that the above EOFY business action points act only as a guide of things to address prior to 30 June; there may be more dependant upon your circumstances. To fully address your specific needs, contact The Quinn Group for tailored advice.
Need Help? Would you like a Tax Planning Meeting?
If you would like help or tailored advice with respect to the above EOFY business action points, please contact one of our experienced tax accountants by submitting an online enquiry form, calling us on 1300 QUINNS or alternatively, +61 2 9223 9166 to arrange a teleconference or appointment.