Whether you’re just starting out in business, or you’ve been your own boss for years, the end of the financial year (EOFY) can be a busy time.
To help you organise your financial records and find the paperwork you’ll need to pass onto your accountant, we’ve put together a handy EOFY checklist to help you.
Reporting COVID-19 stimulus payments
Some COVID-19 related business grants or support payments you have received need to be included in your tax return.
For sole traders, include this as business income in your individual tax return.
For partnerships, trusts and companies, report this as business income in your partnership or trust tax return, or income in your company tax return.
Visit the Australian Taxation Office (ATO) website for more information.
Temporary full expensing and loss carry back
You may be eligible to claim temporary full expensing or loss carry back in your 2022-23 tax return.
Temporary full expensing allows eligible businesses to deduct the business portion of the cost of eligible depreciating assets that are first purchased or installed for use from 7:30pm (AEDT) on 6 October 2020. Temporary full expensing is available until 30 June 2023.
Under loss carry back, eligible corporate entities can receive a refundable tax offset if they choose to carry back tax losses made in the 2019-20, 2020-21, 2021-22 and 2022-23 income years against tax they paid from the 2018-19 to 2021-22 income years in which there was an income tax liability.
Other government payments
Visit the ATO website for a high-level summary of government payments and whether they should be included in your tax return. You can also have a look at government grants and payments during COVID-19.
Tip: If you had to pause or close your business, visit the ATO website for guidance on how to manage your tax obligations.
Ask staff to wait for information to be pre-filled before lodging
If you employ staff, the ATO recommends completing your end-of-financial-year Single Touch Payroll (STP) finalisations as soon as possible so information on their income statement can be pre-filled before they lodge their tax return.
Income statements marked ‘tax ready’ with pre-filled information generally won’t have their return held up in the system and/or need to amend their return when the information arrives, so encourage your staff to wait for their income statement to be marked ‘tax ready’.
Visit the ATO website to find out more.
2022-23 Federal budget tax-related measures
Two new bonus deductions will be available for eligible small businesses.
The Small Business Technology Investment Boost will allow small businesses to claim an additional 20 per cent tax deduction to support the uptake of digital technology, helping them grow by investing in their digital operations.
The second boost, the Small Business Skills and Training Boost, will allow eligible small businesses an additional 20 per cent tax deduction to train new and existing employees. More information on how to claim the small business boosts is available on the ATO website.
Please note: these initiatives were announced as part of the 2022-23 Federal budget but are not yet law. If you are planning to claim for one or both of the boost programs, you can delay lodging your tax return until the law is enacted. Alternatively, you can lodge your return and claim a deduction under existing tax law for the technology investment or the skills and training expenditure. When the law is enacted, you can amend your return to claim the 20 per cent bonus deduction.
Tax record keeping requirements
As a business owner, you need to keep records of all of your financial transactions under Australian tax law. This includes documentation explaining how your income and expenses were calculated, as well as documents supporting these calculations and any other elections or choices you have made within your tax return/s.
For example, if you use your home internet for business purposes and plan to claim a portion of the cost on your tax return, you’ll need to have supporting documentation (such as a usage log and tax invoice) to support the percentage of the cost you are claiming through tax
It pays to be organised
While it can be tempting to put off completing your tax return, the sooner you know what your tax liability is, the better you can manage your cash flow. Check with your accountant for the tax due dates that apply to you.
Expand your tax knowledge
The more you learn about how tax impacts your business, and how to plan for it, the more you can make informed decisions throughout the year and at tax-time. If you’d like to learn more about managing your finances, register for one of our upcoming workshops.
Read the tax time toolkit on the ATO website for more information on tax time essentials, including a range of fact sheets on claiming expenses for home-based businesses, motor vehicles and travel.
For more information on your business and tax obligations, read our finance information and our tax time tips, including:
- expert tax tips
- tax planning tips for a bumper year ahead
- how to prepare for a downturn in your income.
- quick guide to tax deductions