Category Archives: Tax

New ‘Better Targeted Super Concessions’ policy announced

Treasurer Jim Chalmers has announced some changes to the proposed contentious Div. 296 tax.

While it is important to note these changes have only just been announced and we are still waiting on draft legislation, they appear to address many of the widely held concerns raised with the originally proposed legislation.

The key revisions to the government’s proposed ‘Better Targeted Super Concessions’ policy announced include:

1. A Second Threshold Introduced

The first threshold remains as was originally proposed at $3 million. Members with more than $3 million in super would be taxed an additional 15% on the proportion of earnings over $3 million but under $10 million. Taxed at effectively 30% on earnings above this threshold.

The second threshold, introduced today is at $10 million. Members with more than $10 million in super would be taxed an additional 25% on the proportion of earnings over $10 million. Taxed at effectively 40% on earning above this threshold.

2. Only Realised earnings To Be Taxed

Addressing a key concern raised, unrealised gains earned during a financial year will no longer be considered earnings and will be exempt from the earnings calculation for this new tax. Only realised gains will be recognised as earnings.

3. Indexation Will Apply

Indexation will now apply to both the $3 million threshold and the $10 million threshold in line with the Transfer Balance Cap to reflect inflation.

4. Delayed Implementation Date

The proposed changes are now announced to come into effect from 1 July 2026, as opposed to 1 July 2025 that has previously been proposed. A one-year reprieve allowing time for consultation and the legislative process.

Overall, these changes are very welcome over the original proposed Div. 296 tax and reflect many of the concerns raised by industry professionals and the general public at large.

Once draft legislation has been submitted, we will have more details about how these proposed changes will work in practice and will inform all clients.

The Honeymoon’s Over: ATO Says No to GIC Remission

What has changed?
From 1 July 2025, the ATO has introduced key changes to General Interest Charges (GIC) and Shortfall Interest Charges (SIC). These changes impact both the ability to deduct interest and the process for seeking remission.

Remission of GIC/SIC
Remission is still possible, but the ATO has tightened its criteria. Requests must be formally submitted with strong supporting documentation.

The ATO will assess:-

  • Whether the delay was outside the taxpayer’s control
  • Steps taken to mitigate the delay
  • History of compliance

Note: Remission decisions are not subject to objection rights but may be reviewed under the Administrative Decisions (Judicial Review) Act 1977.

Deductibility Changes

  • Under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025:
    GIC/SIC incurred on or after 1 July 2025 are no longer deductible
  • Remitted interest will not be included in assessable income
  • For prior income years, GIC/SIC remains deductible and remissions are assessable

Financial Impact
With GIC currently at 11.17%, compounding daily, the cost of carrying tax debt is significant. Example: A $100,000 overdue tax debt could incur over $11,000 in annual interest- none of which is deductible after 1 July 2025.

Practical Advice for Businesses and Taxpayers

  • Regularly review tax debt positions and pay early to avoid interest charges.
  • Document any cases of financial hardship thoroughly to support remission requests if needed.
  • Plan cash flow proactively to ensure tax obligations are met on time.

At Economos, we recommend taking a proactive stance on tax debts to help minimise costly interest charges and navigate the new remission process effectively. Feel free to get in touch with one of our tax agents today if you’re concerned about any of these changes and how they may impact you.

Understanding CGT Event D1

Did you know?
Your home can be taxable even if you don’t rent it out! Even if you bought your home Pre Capital-Gains Tax [CGT] (1985)!

Understanding CGT Event D1

When it comes to capital gains tax (CGT), there are various events that can trigger a tax liability. One such event is CGT event D1, which occurs when a taxpayer grants an easement, profit à prendre, or license over an asset.

But what exactly does this mean for you?

What is CGT Event D1?

CGT event D1 happens when you create a contractual right or other legal or equitable right in another entity. This event is distinct from CGT event A1, which deals with the disposal of an asset.

When CGT event D1 occurs, the cost base of the asset cannot be considered in calculating any capital gain or loss.

Additionally, any capital gain from the grant is not a discount capital gain and cannot be disregarded even if the asset was acquired before 20 September 1985 or if it relates to a main residence

Example: Granting an Easement

Let’s look at an example to understand this better:

Lisa bought a property on 1 January 1985. On 1 December 2017, she granted an easement over the property to her neighbour for a storm water pipe and received $40,000 for doing so. Lisa incurred $1,000 in legal expenses related to the grant of the easement.

As a result, Lisa will make a capital gain of $39,000 (capital proceeds of $40,000 less incidental costs of $1,000).

This capital gain is not a discount capital gain and cannot be disregarded, even though the property was acquired before 20 September 1985 or if it was her main residence

Why is This Important?

Understanding CGT event D1 is crucial for taxpayers who might be involved in granting rights over their assets. It ensures that you are aware of the tax implications and can plan accordingly. Whether it’s an easement, profit à prendre, or license, knowing how these grants are treated for CGT purposes can help you make informed financial decisions.

Source: ATO TD2018/15 : Income tax:  capital gains:  does CGT event D1 happen if a taxpayer grants an easement, profit à prendre or license over an asset?

Choosing the right business structure part 4- Company

When setting up a business, it’s important to consider the structure of the business right from the start, as it will have ownership, tax and legal obligations. Your chosen structure must also be able to support your long-term business goals.

There are 4 common business structures in Australia, which include:

  • Sole Trader
  • Partnership
  • Trust
  • Company

This article will cover off the company structure, as well as the main benefits, disadvantages and tax implications. If you’re wondering which is the right structure for your particular circumstances, talk to one of our registered tax agents. Also remember to check out the other articles in this series! 

What is a Company?

A company is a separate legal entity with its own tax and superannuation obligations. It is run by the company directors and owned by its shareholders.

The assets, liabilities, income and expenses incurred by of the company are accrued to the company, not an individual. There may be tax consequences if you are using your company’s money and assets for private purposes. The business is also regulated by the Corporations Act and must abide by all the standards the act stipulates. A company can be operated either privately or publicly.

Companies fall into the following categories:

  • Companies limited by shared – This type of structure limits the liability of shareholders to the value of their shares. This form of company can either be public or private
  • Companies limited by guarantee – The liability of members is limited to the amounts the members contribute to the company if the company wounds up. This form is often used by non-trading or non-profit organisations like areligious organisation, charity or sporting club

ASIC regulates and governs all companies in Australia, using the Corporations Act 2001. ASIC also maintains a database of all companies in Australia.

Advantages of a Company

  • Shareholders generally only lose the value of their shares, and aren’t liable for the company’s debts
  • A company can trade anywhere in Australia
  • A company is a much better structure if you anticipate high growth for your business
  • All legal arrangements are made in the company’s name, not an individual director in the business
  • Most flexible form of structure in relation to continuity of trade in the event of illness, disability or death of key owners
  • Company shares may be transferred
  • Company tax rates are more favourable than the highest marginal tax rate for individuals

Disadvantages of a Company

  • This is the most regulated of all the business structures, so there is significant cost, administration and expertise required to set one up, and run it
  • Companies must comply with all legislation as outlined in the Corporations Act 2001 and regulated by ASIC. This adds complexity and additional costs
  • Under the Act, directors have a set of duties, which if breached, can mean they are personally liable for the company debt. Duties include acting in good faith, not trade while insolvent
  • Supplier or lenders are often reluctant to lend money or enter contracts with proprietary limited companies unless personal guarantees are offered
  • There are tax disadvantages to this company structure. Corporation tax rates will apply and personal tax-free thresholds are not available. No CGT small business concession or 50% CGT discount for sale of assets held by a company is available to this business structure. Shareholders pay tax on their dividends at their marginal rate and there’s not much scope for tax planning
  • Any income derived by a company where it’s rental income, capital growth or interest is taxable, which is different to how a trust is structured
  • There are greater and more complex tax reporting requirements than sole traders and partnerships
  • There is a lack of confidentiality as a company’s financial affairs are public
  • If a company holds all the business’ assets and IP, they are at risk if someone sues the company. There are ways to mitigate this risk, including the use of a holding company or an operating company.

Key Tax Obligations

  • A company is responsible for its own tax and superannuation obligations
  • Must have its own TFN
  • Is entitled to an ABN if registered under the Corporations Act 2001
  • A company must register for GST if it turnover more than $75,000 annually, provides taxi, limousine or ride-sourcing services or wants to claim fuel tax credits.
  • Might be required to lodge BAS statements
  • Must lodge an annual company tax return
  • Tax is usually paid via instalments via PAYG system
  • Tax is paid at the applicable company tax rate
  • Must issue distribution statements to any shareholders it pays
  • Must pay superannuation guarantee for any staff

There are many reasons why a company may be the right structure for your business, and we’ve covered off the main points here. Don’t forget to check out parts 1-3 of this series, where we cover off structuring as a Sole Trader, Partnership or Trust. Don’t hesitate to get in touch if you need specialised advice for your situation.

Choosing the right business structure part 3 – Trusts

Business Structures: Part 3- Trusts

When setting up a business, it’s important to consider the structure of the business right from the start, as it will have ownership, tax and legal obligations. Your chosen structure must also be able to support your long-term business goals.

There are 4 common business structures in Australia, which include:

  • Sole Trader
  • Partnership
  • Trust
  • Company

In this series of articles, we have already covered off the Sole Trader and Partnership structures.  This article will cover the structure of Trusts, as well as the main benefits, disadvantages and tax implications. If you’re wondering which is the right structure for your particular circumstances, talk to one of our registered tax agents.

What is a Trust?

A trust is one of the more complex business structures that provides more flexibility than those we have already covered off to date. In a trust, an individual or company holds trust assets either in their own name, or in its own name to benefit a group of beneficiaries. Beneficiaries can either be a group of people, or entities.

Trusts are usually created for tax planning, estate planning or asset protection. The flexibility to distribute income and assets, and the income tax savings make this an attractive business structure.

For a trust to be established, the following criteria must be fulfilled.

  • The Trustee- the titleholder who is obligated to deal with the property on behalf of the beneficiary or object of the trust
  • Trust property – which must be identifiable and capable of being held on trust

If a trust is set up to run a business, it will normally have a trust deed that sets out the powers of the trustees and interests of the beneficiaries in the trust.

Types of trusts

There are many types of trusts outlined below. The most popular one being discretionary and unit trusts.

  • Discretionary trust -The trustee can use their discretion to distribute the net income amongst beneficiaries. Good to use when the taxpayer wants flexibility in distributing income and capital to different beneficiaries to lower the overall tax rate. A popular option for small family trusts.
  • Unit trust – This is a fixed trust, with all beneficiaries holding units in the trust. The income generated is distributed among beneficiaries in proportion to the number of units held. Different classes of units may have different rights or entitlements, such as voting rights, share of income or preferential rights to interests or income. A popular option amongst public offer managed funds
  • Fixed trust – the beneficiary’s share in the trust estate is fixed by the trust deed
  • Bare Trust – A basic form of trust fund with no trust deed in place. The trustee holds the trust property with no discretionary powers. A common example is a parent holding a bank account for a minor
  • Superannuation funds- These all operate under a trust structure

The trust is managed by the trustee who is bound by equitable fiduciary duties, by the provisions of the trust deed and the Trustee Act of each state and territory.

A trust does not pay income tax on profits, provided the profits have been distributed fully to the beneficiaries in that financial year.

Advantages of trusts

  • A discretionary trust provides protection of assets and limits all liabilities of a business
  • The control of an asset is separated from the owner of the asset, so can be useful in protecting the income or assets of a minor or family unit.
  • Beneficiaries are generally not liable for trust debts unlike the other 2 structures of sole trader and partnerships
  • Discretionary trusts provide flexibility in the distribution of income and capital gains amongst its beneficiaries
  • Tax is paid by beneficiaries at their own marginal tax rates
  • The CGT small business concession and 50% CGT discount for sale of assets held by trust is available

Disadvantages of trusts

  • A trust is significantly more expensive to establish when compared to a sole trader or partnership structure
  • A complex legal structure that must be set up by a legal or accounting professional
  • Strict obligations are in place for the trustee to hold and manage property for the benefit of beneficiaries
  • The trust deed limits the operation of the business
  • Losses are not distributable and can’t be offset by beneficiaries against other income they have
  • The trust must comply with extensive regulations
  • A trust cannot retain profits for expansion without penalty rates of tax

Key tax obligations of a trust

  • A trust must have its own TFN
  • A trust must lodge an annual trust tax return, which will include a statement on how income was distributed
  • A trust must apply for an ABN
  • A trust must register for GST if it has an annual GST turnover of $75,000, provides taxi, limousine or ride sourcing services or want to claim fuel tax credits.
  • May be required to lodge BAS
  • Must pay super for eligible employees

Trusts are complex to set up and administer when compared to sole traders and partnership structures, however they afford more flexibility and control over the simpler business structures. It’s important to have a trust set up correctly, so if this is something you are interested in, please get in touch. Check back in next week to see the advantages and disadvantages of a company.

Check out part 1, sole trader and part 2, partnerships of this series if you haven’t already.

Choosing the right business structure part 2- Partnership

In this series of articles, we are covering off the different types of business structures. In Part 1, we learnt about Sole Traders, uncovering the advantages and disadvantages of this business structure, as well as the tax implications.

In this article, we will cover off partnerships.

What is a partnership?

A partnership involves 2 or more partners that jointly own the business’s assets and liabilities, and make decisions relating to how the business is run. From a legal perspective, all the partners are treated equally.

A written partnership agreement is not required but can help prevent misunderstandings and disputes about what each partner brings to the partnership, sets out how income and losses are to be shared and set out how the business should be managed.

If there isn’t a written agreement, all partners will equally share in profits and are equally liable for any losses.

A partnership has no separate existence from the partners who make up the partnership.

Advantages of a Partnership

  • This business stricture is easier and less expensive to set up over a company
  • Partners can carry out business under a trading name
  • Partners can tap into the resources and expertise of several people
  • Partnerships are quite simple to administer
  • Partnerships allow greater flexibility with holiday and sick leave when compared to sole traders
  • It’s relatively simple to change a partnership to a company later stage
  • CGT small business concession and 50% CGT discount for sale of assets held by a partnership are available.

Disadvantages of a Partnership

  • Each partner is liable for debts incurred by other partners. This is referred to as ‘jointly and severally’ liable, or ‘unlimited liability’. Each partner can be sued and be required to pay the full amount of any debts of the partnership. If one or more partners is unable to pay, the other partners are required to pay the debt
  • All partners have a say in the management of the business, which may be a disadvantage if agreement can’t be reached. Personal differences may complicate partnerships
  • Partners cannot transfer their ownership to someone else, unless all partners agree
  • Partnerships can be challenging to dissolve and leave on good terms

Key tax obligations

  • A partnership has its own TFN
  • It must lodge an annual partnership return showing income and all deductions, and how these are distributed to the partners
  • Must apply for an ABN
  • Must register for GST if the annual turnover is over $75,000, provides taxi, limousine or ride sourcing services regardless of turnover or wants to claim fuel credits
  • The partnership doesn’t pay tax, instead each partner reports their share of income or loss in their own tax return

Check back soon for Part 3 of this series, where we cover off Trusts.

Choosing the right business structure Part 1- Sole Trader

When setting up a business, it’s important to consider the structure of the business right from the start, as it will allow you to manage your personal risk, protect your assets, limit your liability, give you a platform for future growth, and manage your tax obligations.

There are 4 common business structures in Australia, which include:

  • Sole Trader
  • Partnership
  • Trust
  • Company

This article will delve into the structure of sole trader, lifting the lid on the main benefits, disadvantages and tax implications of this popular model. If you’re wondering which is the right structure for your particular circumstances, talk to one of our registered tax agents.  

Sole Trader

A sole trader or ‘sole proprietor’ is the easiest and cheapest of all the business structures to set up. As a sole trader, there is no legal separation between the individual and the business. The individual is responsible for all debts incurred in the business, and all income is treated as personal income.

The sole trader may choose to set up business in their own name, or a business name. They must apply for an Australian business number (ABN) and use it in all business dealings.

If a creditor, supplier, bank or customer makes a claim against the business, and the business is not able to pay all these claims, they may choose to take legal action and recover the claims not just from the business assets, but also the personal assets of the sole trader.

Sole Trader Pros

  • Easy to set up and maintain
  • The sole trader has complete ownership, control and management over the direction of the business
  • The trader owns all business profits and assets
  • Less paperwork and minimal reporting and legal requirements governing how the business operates
  • Greater privacy due to not having to disclose profits to the public
  • Easy to wind up
  • The trader owns all profits and assets
  • Start-up costs to this type of business are usually quite low
  • This business structure is relatively easy to change as your business grows or changes down the track

Sole Trader Cons

  • This business structure means the owner has a personal liability for any debts incurred, and if business debts can’t be paid, they risk losing personal assets such as a vehicle or home.
  • Sole traders pay tax on profits at their individual tax rate, which may be higher than the company rate
  • Sole traders may have limited options when it comes to holidays, sick days or if they are unable to run the business due to illness or disability. If they can’t work, the business may stop operating
  • There is limited capacity for growth as a sole trader. Sole traders can’t take on business partners or co-founders, and capital growth is limited as investors or shareholders can’t be brought on
  • Sole traders bear the full brunt of all costs to the business, including to expand the business, so are usually slower to grow
  • Sole traders can’t minimise tax by income splitting or streaming with family members

Key tax implications

  • Sole traders use their individual tax file numbers (TFN) when lodging tax returns
  • All income is reported in their individual tax returns using the ‘business’ section to show income and expenses.
  • A sole trader must register for goods and services tax (GST) if their annual GST turnover is $75,000 or more, they provide taxi, limousine or ride-sourcing services regardless of turnover or they want to claim tax fuel credits
  • A sole trader may voluntarily use, or be required to make PAYG instalments to prepay their tax
  • Sole traders can claim a deduction for personal super contributions
  • Sole traders can hire workers, but they must meet all employer and super obligations for them

The sole trader business structure is popular, but as we’ve outlined above, has its limitations. Tune in next time where we’ll explore another popular business structure in Australia, the partnership.

Top Exit Strategies for SMEs

Running a small to medium-sized enterprise (SME) can be a rewarding venture.  A well-planned exit strategy can ensure a seamless transition when you decide to pass on ownership to someone else. However, when it’s time to move on to new opportunities, many owners find that their business is one of their least liquid assets. Even the most experienced entrepreneurs often struggle to understand the exit strategies available and which one best fits their unique situation

This article will delve into the advantages and disadvantages of various business exit strategies and the appropriate times to implement them.

What is an exit strategy and why is it important?

An exit strategy is a plan devised by a business owner, founder, investor, or venture capitalist for leaving their business. This could involve selling their share or the entire company for a financial gain or transferring it to a selected successor.

Some owners establish an exit strategy as a goal right from the outset. For instance, they might aim to sell their business in 5 years to a competitor, targeting 20% profit.

When might an exit strategy be useful?

An exit strategy can be used to:

  • Sell the entire company
  • Sell a portion of shares in the company
  • Relinquish control or reduce ownership in the business
  • Take your company public by listing it on the stock market
  • Close a business that is no longer profitable
  • Cash out an investment after achieving profit goals
  • Wind down operations if market conditions shift dramatically
  • Prepare for retirement

Types of exit strategies

Family Succession
An appealing option for those who have a suitable member of their family that the business can be passed down to.

Pros

  • Succession planning often happens over many years, meaning the family member has been transitioning to a leadership position, shadowing the current owner, and likely to possess intimate knowledge of the business.
  • Original owners can choose to retain close connection to the business, staying on in an advisory or consulting capacity. This means knowledge stays within the business.
  • Often a quicker and less expensive transition

Cons:

  • Often, the full value of the business may not be realised.
  • Sometimes, there may not be anyone in the family who is capable of taking on the role.
  • Blurring professional and family lines can add emotional or financial stress to a family. Perceived unequal involvement or perceived favouritism can lead to costly and lengthy disputes.

M&A
Mergers and acquisitions include selling your business to another business, who may be looking to increase their product and service offering, eliminate competition in market, increase their geographical footprint or acquire your infrastructure, people or IP. This type of exit strategy is particularly enticing to start ups and entrepreneurs.

Pros:

  • Business owners can maintain control over price negotiations and set their own terms.
  • If there’s a competitive advantage to be gained by the buyer, or multiple bids are submitted, price can be driven up even further.

Cons:

  • This form of exit strategy is often time-consuming, costly, and regularly fails.
  • Acquisition can lead to loss of brand identity within the larger acquiring business, and swift restructuring impacting staff and morale.
  • This form of exit comes with a myriad of legal, tax and commercial considerations that are complex for acquirers to navigate without professional help.

 Selling your stake to a partner or investor
Venture capitalists are always looking to add profitable businesses to their portfolios. Similarly, if you are not the sole owner of a business, you may choose to sell your stake to your partner.

Pros:

  • Minimal disruption to the business and revenue.
  • ​When selling to an investor, the process can be quite quick as they are usually well versed in a buyout.

Cons:

  • Finding a buyer or investor can be difficult or time consuming.
  • The sale may be less objective and therefore not as lucrative in terms of the offer.

IPO
An initial public offering (IPO) exit strategy entails selling shares of stock to the public, thereby transitioning the company from private to public ownership. This approach is ideal for companies that are well-established and capable of handling their responsibilities to shareholders.

Pros:

  • An IPO is one of the most lucrative business exit strategies in terms of valuation and sale price.
  • It can boost publicity, enhance reputation, and increase brand awareness.
  • It can also quickly fund a business experiencing rapid growth.

Cons:

  • An IPO is one of the most complex and costly exit strategies. It can take several months, if not years to complete.
  • It requires extensive initial and ongoing documentation and reporting.
  • Shareholders gain substantial influence over the company’s operations.

Liquidation
A common exit strategy for a failing business. The business is closed down and assets are sold off. Any cash earned is usually used to pay off debts or shareholders.

Pros:

  • This exit strategy can be simpler and faster to execute than other methods, such as acquisition.

Cons:

  • This form of exist is likely not a high-value exit.
  • You may burn bridges between you and your staff, partners and customers.

Any exit strategy is going to need an expert business partner to guide you through the process. Seeking guidance from an expert with help ensure a smooth process, from helping select the right exit strategy, reviewing historical financials, ensuring the accuracy of projected forecasts and helping with lodging any documents and closing on an offer. Hiring the right business advisor early on in the process can significantly impact on the outcome of the sale.  Get in touch with us if we can help you through this process.

Superannuation: What to know before June 2024

There are several big changes to the superannuation rules coming up from the 1st of July 2024 that employers will need to be familiar with, including the superannuation guarantee rate, changes to contribution caps and updates to carry forward and bring forward rules. This article outlines these changes and aims to make them clearer for employers.

Superannuation guarantee contributions
From June 30, there will be an increase to the employer superannuation guarantee rate, which will impact employee take home pay. In accordance with mandatory employer contributions to employee superannuation, the contribution rate will be rising to 11.5%, and is legislated to rise again to 12% on 1 July 2025.

Contribution cap changes
Along with employer contribution to employee superannuation, employees can grow their own super with their own contributions. The government sets limits on how much employees can contribute without tax implications. The changes include:

  • The before-tax contribution cap in 2024-25 is $30,000, which is up from $27,500 in 2023-24.
  • The after-tax contribution cap in 2024-25 is $120,000, which is up from $110,000 in 2023-24.

Bring forward rule changes
Any unused carry-forward contribution amounts will drop off, because cap amounts can only be carried forward for 5 years. As an example, any unused portion of the concessional contribution cap from the 2018/19 financial year will no longer be available as of 1 July 2024. However, the bring-forward arrangements will allow you to contribute up to $360,000 over a three-financial year period with no regard to the annual cap, provided the bring-forward rule is triggered after 1 July 2024.

Get in touch with us if you need some more information around superannuation and growing your wealth.

7 tips to help get your business in shape for EOFY

June 30 always seems like such a long way away, until it’s not! With EOFY fast approaching, we’ve put together a quick checklist to get you thinking about the key milestones to meet, and some ideas to incorporate into the 2024 financial year.

1. Get your house in order

Make sure all your financial records are up to date and accurately recorded in line with what the ATO needs. Records include things like income and expenses, invoices, receipts and bank statements. You may need to generate a profit and loss statement, record any assets purchased or expenditures you’ve made to improve your business.

This is a great opportunity to have your accountant review any automatic bank rules you’ve set up, and the GST codes assigned to ensure you are lodging accurate Business Activity Statements (BAS).

2. Check your Business Activity Statements

Make sure your BAS lodgements are accurate and up to date. If they’re not, speak to one of our accountants, or get in touch with the ATO to work out a payment plan to ensure you’re  quick to get back on track.

3. Finalise payroll and superannuation obligations

When reporting payroll, tax and superannuation, employers must use Single Touch Payroll (STP) to deliver relevant information to the ATO.

If you report payroll through STP, you need to make a finalisation declaration by the 14th of July 2024 to ensure your employees can access their finalised information to complete their tax return.

Check whether your super guarantee (SG) contributions are up to date, and if not, contact your accountant as soon as possible.

4. Take stock of inventory, assets and liabilities.

If your business has stock, you should complete your stocktake of inventory by 30 June. If your business has plant and equipment on hand that you maintain in an asset register, ensure you also review and make any adjustments by this date.

5. Work out your deductions

Speak to your accountant or head to the ATO website to see what deductions you can claim.. You might be able to claim deductions if your business has a website, has travel expenses, motor vehicle expenses, operates at home or uses computers, machinery or tools.

6. Reconciliation

Ensure you have everything ready for reconciliation. Reconciliation is a process where a business owner or accountant compares all the actual transactions of this business against supporting documentation to identify any discrepancies or errors. This forms an important step for EOFY preparations, as it allows the business to identify and rectify any potential problems before reporting to the ATO.

Things to account for on the Balance Sheet and Profit and Loss Statement include:

  • Ensure petty cash, bank accounts, credit cards, loans and repayments to fleet vehicles are reconciled.
  • Ensure GST and PAYG are reconciled in the June BAS
  • Ensure wages and super in the Profit and Loss report are reconciled to the PAYG Payment Summaries.
  • Ensure personal expenses have not been claimed as business expenses
  • Ensure any material differences to the previous year can be explained

7. Look ahead to next financial year

Now is the time to think about and make decisions regarding the new financial year, and where you want your business to go. Sit down with your accountant and assess whether you met your financial goals, and set some new goals for the year.

Business and tax planning is important in the ever-changing tax landscape. July 1 is a popular date for new regulatory changes to take effect, so it’s important you are prepared.  Things to think about include:

  • Keep an ear out for any updates to national wage increases or super contributions in the coming year
  • Update your budgets and reports for the year taking into account any increases coming down the pipeline, and any discrepancies between budgeted and actual spends in the current year
  • Based on this planning, see whether you need to adjust your pricing for the coming year to remain profitable
  • Speak to your accountant about tax planning early on in the new financial year, to make sure you’re in a good position come this time next year

Tax time can be a stressful period for some businesses, however with good planning and diligent processes, along with the help of a registered and qualified tax agent, it doesn’t need to be. If we can help make this process smoother for you, please get in touch.