With the new financial year less than two weeks away, now is the time to get your business accounts in order. Below is a checklist of things you will need to organise before 30 June 2012.
Pay all of your superannuation contributions now
Generally all super contributions are tax deductible; however you will only be able to receive deductions for them in the financial year you paid them. Deductions are available, not only for contributions to complying super funds or retirement savings for employees, but also for the contributions you make for yourself, if you are self-employed (subject to certain rules).
Ensure all of your relevant motor vehicles have up-to-date log books
Businesses that operate as a company or trust are able to claim a deduction for the expenses they incurred while running a motor vehicle. You can only claim a deduction if you have a written log book/diary of these expenses related to the motor vehicle. In this, you must record:
• the nature of the expense,
• the day and approximate time,
• the time period,
• the name of the place where you engaged the expense.
It is important to note that if you, or your employees/associates, use the vehicle for private purposes, you may have to pay fringe benefits tax (FBT). Fortunately however, the cost of FBT is also a deduction.
If you operate your business as a sole trader or a partnership that includes at least one individual, you can claim a full deduction for a business-purpose vehicle, or a vehicle expense deduction for a vehicle you own, lease or hire under a hire purchase agreement. However, you will need to keep a record of all the expenses related to that motor vehicle in a log book (the same as above).
Repay all Shareholder/Director loans now
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.
Check to see if you are liable for payroll tax
An individual employer or a group of employers may be liable for payroll tax if their total taxable wages throughout Australia, including NSW, exceeds that payroll tax threshold of $678,000 for the 2011–12 financial year. If the total of their taxable wages is lower than this threshold, they do not have to pay the tax.
As soon as a business’s total wages exceed the threshold, the full tax is applicable on the amount that exceeds the threshold. The current rate of payroll tax is 5.45%.
For payroll tax purposes, the term ‘wages’ means any wages, remuneration, salary, commissions, bonuses, or allowances paid or payable (whether at piece work rates or otherwise and whether paid or payable in cash or in kind) to an employee. Wages, remuneration and salary include any ordinary earnings, penalty rates, overtime and leave payments in relation to the provision of services to an employer. The term wages also includes:
• payments for labour under certain contracts (i.e. some contractor payments)
• apprentice and trainee wages
• directors’ fees
• payments under an employment agency contract to a service provider
• grants of shares or options
• fringe benefits
• termination payments
• superannuation benefits.
The world of tax can be extremely complex, and if obligations are not adhered to, it can often become quite stressful. The experienced team of Accountants, Lawyers and Tax agents at The Quinn Group are able to assist your business with all of its tax related matters. For more information contact us now by submitting an online enquiry or call 1300 QUINNS (784 667) or +61 2 9223 9166 to book an appointment.