The end of the financial year is fast approaching and there are a range of taxation issues that businesses have to consider. It is important that you are aware of these issues and get everything in order before 30 June 2013.
Address any ATO tax debt you may have as soon as possible. The ATO is getting tougher with their debt policies and are reducing tolerance for those who fail to meet their tax obligations. Businesses commonly accrue a tax debt by failing to pay their business activity statements (BAS) on time, or through mismanagement of financial obligations such as PAYG withholding and superannuation contributions.
For most states, it is compulsory to complete and lodge a payroll tax reconciliation at the end of the financial year. The annual threshold for NSW payroll tax for the period 1 July 2012 to 30 June 2013 is $689,000 so if your total taxable wages (including any wages, remuneration, salary, commissions, bonuses, allowances paid or payable, superannuation and certain contractor payments) exceeds this, you are liable for payroll tax on the amount by which it is exceeded.
Ensure that you have the correct coverage for your employees. All NSW employers must have a workers compensation policy if they pay more than $7500 in wages per year, employ an apprentice or trainee, or are part of a group for insurance premium purposes. The premiums paid are tax deductible, so ensure you are maximising your deductibles. Premiums are calculated on the basis of gross wages, salary, commissions, bonuses, superannuation and certain contractor payments.
Your superannuation contributions must be paid before 30 June in order to be claimed as a deduction in the current tax year. A reminder that as of July 1 2013, new superannuation obligations will have come into effect and businesses are required to comply with the new rules. The super compulsory guarantee for employees will increase to 9.25% from 9 percent to help Australian workers save for retirement. A full summary of the super changes is available here.
Shareholder loans accounts
Shareholder/director company loans should be kept in credit rather than in debit, otherwise Division 7A tax applies. Therefore it is imperative to repay all shareholder loans before June 30 in order to avoid this.
If a shareholder/director loan is repaid by the earlier of the due date for lodgment, or date of lodgment of the trust’s tax return for the income year in which the loan is made, the loan will not be treated as a dividend.
For the purposes of Division 7A, ‘loan’ has an extended meaning and includes:
• an advance of money
• a provision of credit or any other form of financial accommodation
• a payment for you, on your account, on your behalf, or at your request if you have an obligation to repay the amount
• a transaction (whatever its terms or form) that is the same as a loan of money.
All trustees who make beneficiaries entitled to trust income by way of a resolution must do so by the end of an income year (30 June). This resolution will determine who is to be assessed on the trust’s taxable income.
Businesses are required to update their payroll and accounting systems to apply the appropriate increase to the super guarantee rate. As a business owner you have many things to organise before 30 June 2013. It is important that you have addressed each of these issues before that time, in order to minimise your stress and chances of making mistakes and having problems with the ATO. With all taxation matters it is imperative that you seek professional advice. Here at The Quinn Group our experienced team of accountants and tax agents can assist you with all of your taxation needs and advise you on what you need to do before the end of financial year. For more information submit an online enquiry or call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.