The end of financial year is fast approaching! Have you started planning yet?
It is important to book in for a review prior to the end of financial year to take advantage of planning opportunities and ensure you are in the best position you can be. We can you look at strategies, take stock and look at where you are tax-wise for the year to avoid any nasty surprises come tax time.
Not sure if tax planning will benefit you? It can provide big benefits if you:
- are unsure of how to read your business financials and dont know if you have tax payable for the year
- have significant changes to you business profitability
- have sold any substantial assets like an investment property, business or shares
- have a Discretionary Trust and must document a Trustee Resolution before 30 June to avoid paying 47% tax
- are reaching retirement and are unsure of how to take advantage of superannuation strategies
- have had a change in your personal circumstances and you are unsure of how this might affect your tax
Now is also a great time to ensure you wrap up any loose ends. It is really important that any unpaid employee super or late super payments are dealt with immediately.
If you would like further advice or would like a tax planning assessment, please contact us.
February fuel tax credit rates change
Fuel tax credit rates change regularly. They also vary depending on when you acquire the fuel, what fuel you use and the activity you use it for.
Fuel tax credit rates are indexed twice a year, in February and August, in line with the consumer price index (CPI). The CPI is released towards the end of January and July, five days before the rates are changed. Fuel tax credit rates will be updated as soon as they become available.
Rates may also change for fuel used in a heavy vehicle for travelling on public roads. This is due to changes to the road user charge which is reviewed annually.
As of Monday 1 February 2016 fuel tax credit rates change due to indexation.
Fuel tax credit rates are indexed in August and February in line with the consumer price index.
You may need to use more than one rate in a BAS period.
Use the Fuel tax credit calculator to help you get your claim right.
For details of the fuel tax credit changes go to ato.gov.au/fueltaxcreditrates
We’re now one month into the new year, how are things going so far? Have you got all your plans in place? If not, we can help with budgeting, cashflow forecasting and general advice to help you ensure you reach your goals this year. Come in and see us or we can come to you.
This month in Sciacca’s News we’re bringing you:
- 5 things you need to do to ensure your business is compliant
- Top Marketing Tips for 2016
- Reviewing your salary packaging arrangements
If you have any queries at all, please get in touch.
CASE STUDY: Good news story
A couple recently retired and their previous accountant told them they did not have to pay capital gains tax on the sale of their rental property.
He was wrong.
The clients got hit with interest of $5,900. They are on the age pension and John was able to get the interest written off.
Here’s what they had to say:
On behalf of my wife and myself I wish to pass on to you and your staff our late but very sincere thanks to all of you regarding our problem with the ATO over our failure to pay capital gains tax. If it was not for your company’s expertise and experience in this matter, the end result for us would have been horrendous. The added bonus of the ATO refund following the appeal process by your company was really appreciated. Once again, thank you to yourself and your staff.
As we rapidly approach the end of the financial year, NOW is the time to focus on the best strategies to reduce your tax where possible, to streamline your accounting and bookkeeping procedures, and to forward plan for the new financial year.
Of course the best way to do this is to come in and have a chat with us, so we can discuss your situation and give you personalised advice.
However, to get you thinking, we’ve put together a few tips:
Tax planning strategies
- Top up your super contributions
- Delay invoicing or receipting your income until 1 July
- Realise capital losses to offset against capital gains made during the year
- Small businesses with a turnover under $2 million can claim an immediate deduction for the cost of depreciable assets costing less than $1,000 and certain prepayments (e.g. lease and rent expenses)
- Get rid of slow-moving stock and write-off obsolete stock before 30 June
- Write off bad debts and claim back the GST credits where the debt has been outstanding for more than 12 months
- Review PAYG instalment obligations and consider varying the instalment for the June quarter where the estimate of business income tax payable for the year is less than the instalments raised by the ATO
Accounting & bookkeeping
- Ensure that BAS lodgements and super guarantee contributions are up-to-date
- Behind on tax and BAS payments? Ensure that payment arrangements have been entered into with the ATO and are complied with
- Report salary sacrifice contributions and certain fringe benefits on employee’s PAYG Payment Summaries
- Back up the data file prior to rollover and ensure your records are in good shape
- Review GST codes for profit & loss and balance sheet accounts for correctness
- Have cut-off procedures to ensure matching of income and expenses. For example, ensure suppliers provide the relevant invoices for all purchases and expenses for the period up to the end of June. Also identify work in progress or sales not yet invoiced and raise the relevant invoices for the period up to 30 June.
- Complete stocktakes of inventory. Any unders/overs of stock quantities and spoilage identified from the stocktake process should then be adjusted in the stock module by 30 June and thereby reflected in the financial statements.
- Complete stocktakes of fixed assets. Any adjustments required to the assets register identified in the assets stock take for issues including description, location, quantity and damage/obsolescence needs to be made in the assets module by 30 June and thereby reflected in the financial statements.
- Review the balance sheet and profit & loss statement to confirm:
- Bank accounts and loans are reconciled.
- Receivables and Payables subsidiary ledgers are reconciled to the general ledger.
- GST accounts and PAYG withholding are reconciled to the business activity statements.
- Wages in the profit & loss is reconciled to the PAYG Payment Summaries.
- Capital items such as plant & equipment purchases have not been expensed as repairs.
- Amounts in suspense have been allocated to the appropriate account.
- Fringe benefits tax has been paid on deductions claimed for employees private expenses.
- Material differences to the prior year can be explained.
Planning for the new financial year
There are a few things you can do to improve on the performance of your business this year:
- Prepare/update your business plan to provide solid focus and direction
- Update the budgets for the next 12 months and compare actual to budget.
- Review your current accounting software and upgrade to the latest version to take advantage of new features, or talk to us about other options
- Review credit terms with suppliers and customers and make changes if required
- Review insurances to ensure adequate level of coverage
- Reduce costs in areas identified as excessive in the current year
- Implement new internal control systems to address weaknesses identified
If you need any help at all with your planning, please get in touch. We are here to support you and give you the right advice, whatever stage you’re at.