30 June and Tax Time Tips
These are all general tips for you to think about – some specifically relate to your potential tax outcome and others are business operational matters that could be worth considering.
Is it claimable and do I have the records?
Good record keeping and having clear conversations with your Accountant can help in this area. Take the time to organise your paperwork, make sure you have all receipts and can account for each expense and all lines of revenue. If you really want to make a difference for yourself next year, take the time to set up a process that allows you to manage your paperwork on auto-pilot. New digital system record-keeping options that could save you from all those loose pieces of paper floating around in your car or the home office.
Also, be sure to separate your personal and business expenses to make tax time a quick, easy and painless process for both you and your Accountant.
Be strategic with CGT
Timing a sale for the best CGT outcome can take planning. There also are rules you need to be aware of in this area, so professional advice can be important.
Budget for expenses and consider pre-payments.
Making certain types of pre-payments can reduce your tax bill. To make decisions, you need to know what bills have you got upcoming? What were you able to defer during lockdown? Does this still need to be paid? Do you have an arrangement with your service providers that you are paying off over a few months? You may be able to take advantage of an early payment discount as well as claiming an immediate deduction.
Perhaps it could give you some leverage to obtain sharper pricing.
Conduct a Stocktake
This is an important annual ritual – particularly for retail businesses. It provides an important cross-check against your accounting inventory figures and will identify any obsolete items that could be scrapped and immediately written off.
Consider stock and/or capital purchases
Speak with your accountant about when to make significant purchases. Is June or July going to work better for your overall position? Can you work with your supplier to make a purchase at a time that is mutually agreeable for both of you from a tax perspective? Perhaps a discount could be negotiated?
Check your final pay run date
Does your EOFY pay run fall on this side of the financial year or next? A slight change in timing could be to your benefit. Check with your advisers to see what might be possible. And don’t forget, payment summaries are due by 14thJuly 2020.
Make a payment to your superannuation or pay down debt.
If you have excess capital, put it to work. Paying down debt or boosting your super are two things to consider at tax time.
Business Operational Issues
Budgets and cashflow
You have to revisit your budget every year – and then track your performance against it. You need to be realistic – particularly given the very unknown state of business conditions over the next 12-24 months. Work out what you need, add a buffer. Adequate cashflow will assist you in working through any COVID-19 related trading slumps as well as taking advantage of any EOFY opportunities that might pop up. If you need a boost to your cash-flow, let us know, we are here to help.
Think about what it’s costing you not to take out a short-term loan.
Review your invoicing and terms of sale
Business conditions are always changing – which means it might be time to review and update your terms and conditions of sale. It might now take longer to receive your stock from international and local suppliers. Maybe you were able to find a quality local manufacturer who is able to make your product using locally sourced materials.
Maybe your pricing could do with a little refresh, or your terms amended to provide a stronger cash flow cycle for your business. Now’s the time.
Review debt rates and credit terms
Are you getting the best deal on your debt? The bank will not contact you and offer a better deal unless you are pro-active. These reviews can often be complex and long-winded, so sometimes it is worth engaging a finance expert to help.
Review systems and processes
What is working and what is NOT working within your business? This type of planning usually involves challenging old habits, preferences and prejudices. Just because we’ve always done it this way – is it still the BEST way to do it? For example, do you need to pay rent on a massive office when Covid-19 has proved that three-quarters of your team can, and want to, work from home? Perhaps it’s time to consider going paperless – doing away with the need for printers and boxes of paper.
Boost your reserves
In business, you can make as many tax losses as you like – but you can only run out of money once. Always look at your cash reserves and how you could potentially build them. Having cash reserves provides security in economically challenging times, but the freedom to take advantage of immediate opportunities.
Know the rules, then make them work for you
A great example of this is the Governments Instant Asset Write-off. The Governments Backing Business Incentive has a series of initiatives that have been made available to eligible businesses. Take some time to review these and ensure you are getting all the bang for your buck you possibly can. Your Accountant can assist you in navigating this minefield.
Reach out and ask for help
Identify what you need to review, but don’t try to be the expert in all areas. Use specialised professionals who can efficiently and effectively answer questions and provide guidance. Establishing a network of business associates and professional advisers. What can you learn from others who are leaders in their fields? Do you have any insights you can share with them? Asking for help only puts you and your business in a stronger position.
Virtual Visits Will Be The Norm During Tax Time 2020
Covid-19 is about to change the way many people deal with their annual tax returns.
Online tax preparation is nothing new – but tax season 2020 is going to put more emphasis on professional accountants to offer flexible and virtual alternatives to face-to-face appointments.
Many taxpayers traditionally visit their accountant for an annual chat, and we look forward to this face-to-face connection at our Aspley office.
But this year, visiting your tax accountants office is a risk that should be avoided by all tax professionals and their clients.
Covid-19 may be contained – but it has not been cured, nor has a vaccine been developed. We don’t want to put our clients or our team at risk, if that risk can be easily avoided.
The Affinitas team will be engaging with clients via email, phone, Zoom or any other form of interaction that does not involve face-to-face meetings.
Affinitas already has spent many years in this online world and have prepared thousands of returns via post and/or email. This will make the transition easy for those new to such a system.
Via the tax agents portal, we already have access to much of your current and historical tax information. Plus you don’t have to leave work early, battle the traffic and find a park.
We have learnt how to use technology to its best advantage – including sharing our screens with clients to better explain various issues. And we are working on introducing paperless processes to allow clients to check and sign their returns – then ultimately receive their notices of assessment.
Even if you have multiple years to lodge, or a business or investment property tax return – these can be done via a virtual initial appointment and online process.
We believe many people are going to discover just how easy and convenient it is to virtually visit their accountants in 2020 – and will probably make it an annual event.
Tax Time Appointment Options
Our team is available are all year round from, Monday to Friday, 9am to 5pm. During tax season, from July to October, will have extended hours available for virtual appointments. These will be 8am – 5pm on Monday, Thursday and Friday; 8am – 8pm on Tuesday and Wednesday; and 8am – 1pm on Saturdays.
Meanwhile, click on the following link for handy hints to help you prepare for Tax Time 2020.
Handy Hints for Tax Time Preparation
- If you have worked from home due to Covid-19, then the government has announced that it will let taxpayers claim 80c per hour to cover costs of home office expenses, based on documented records of the hours you worked from home. However, if you do not think that this will adequately compensate for what it has actually cost you to work from home, you can choose to assess via a one-month diary establishing your percentage of expenses – mobile phone, home computers, printers, internet and any other costs related to working from home.
- Account for all your sources of income during the year, particularly if your have had several jobs or received Centrelink benefits for part of the year.
- Make sure you have receipts for all your work related deductions. Some expenses like union fees can be taken straight from your annual PAYG Summary, but most require their own receipt.
- If you have made tax deductible donations during the year, you will need receipts for these.
- If you use your car for work make sure you have a calculation of how many km you have travelled and if you require a log book make sure it is up to date.
- Any other work related travel expenses will require diarised notes of where and when you travelled, the purpose of the travel and receipts for fares, accommodation and any other expenses.
- Did you purchase any uniform or protective clothing for work purposes?
- Did you undertake any study that was directly related to your work activities?
- If you studied or worked from home, how many hours per week?
- If you were required to use your personal internet or mobile phone, have you made an effort to establish the percentage usage for work?
- You will need details of any earnings from bank interest, share dividends and managed funds.
- If you sold any investments you will need both purchase and sales details if there is a capital gains calculation to be completed.
- Have you checked your insurances to see if they include tax deductible income protection premiums?
Small Business Owners
- Many of the hints for individuals are transferrable to small business owners. However, there are some specific reminders that may apply to business owners.
- Have you reviewed your debtors to see if there are any bad debts to be written off?
Give Yourself a Break
FYI 2020 (and probably 2021) will be remembered as one of the most extraordinary times in history. It will be the subject of PhD theses and University courses in the future – just like our major wars, the 1930s Stock market crash, the September 9-11 terrorism attacks and other major global disasters. It is understandable if you feel tired and a bit stressed. Take some time to rest, recharge and give yourself some downtime – and if you think things are getting serious, reach out for medical and professional help. Your GP is a good place to start – as are great organisations like Beyond Blue, Headspace, Lifeline.