2021 EOFY Checklist for Business
With the end of the 2021 financial year fast approaching, our annual tax planning strategies are provided for your consideration.
As a business owner, you need to consider some of your obligations pre and post 30 June and assess the relevant strategies when it comes to tax minimisation for the short and long term.
Please contact us at info@alkfinancialgroup.com.au or on 03 9808 7377 to find out which tax-effective strategies will be most appropriate to you and your business and to ensure that you have met all your necessary obligations.
BEFORE 30 JUNE ACTIVITIES AND ACTIONS
- Superannuation Contributions – Ensure that all payments are made on time and that the nominated Superannuation Fund receives the relevant funds prior to 30 June to claim a tax deduction.
- Prepayment of Expenses – Ensure all prepayments for businesses with <$50m turnover are made prior to year end to claim a tax deduction i.e., interest on loans, insurance premiums etc.
- Repairs & Maintenance – Consider bringing these forward.
- Other Incidental Expenses – Ensure all incidental expenses i.e., stationery, subscriptions, training courses/seminars, marketing material etc are purchased prior to 30 June 2021 to claim a tax deduction.
- Director’s Fees & Staff Bonuses – Ensure these are either paid or unconditionally approved prior to 30 June.
- Depreciation – Review your depreciation schedule and make a note of any obsolete equipment.
Allocate assets to the low value pool and self-assess the effective life of asset(s).
- Instant Asset Write off – For assets first used or installed ready for use between 12 March 2020 until 30 June 2021, and purchased by 31 December 2020, the instant asset write-off threshold amount for each asset is $150,000 (up from $30,000).
Temporary Full Expensing Method
The Instant Asset Write-Off also known as the ‘Temporary Full Expensing Method’ has been extended to cover the period from 7.30pm AEDT on 6 October 2020 until 30 June 2023 (including the extension announced in the FY21/22 Federal Budget).
Temporary Full Expensing now allows an immediate deduction for purchases of new eligible depreciating assets (for businesses with an aggregated turnover under $5 billion), eligible second-hand assets (for businesses with aggregated turnover under $50 million), and the balance of a small business pool at the end of each income year in the period (for businesses with an aggregated turnover under $10 million).
- Capital Gains Tax – Consider deferring Capital Gains (where possible) to the next financial year. Where you have incurred a Net Capital Gain for assets realised, consider realising a capital loss to offset against the capital gain in the current financial year.
- Work Related Devices (laptops / tablets / navigations / mobile phones etc) provided to employees are exempt from FBT.
- Trust Distributions and Company Dividends – Ensure that a trustee resolution has been completed by 30 June regarding distribution of income; Ensure that dividend payments are tax effective given COVID-19.
- Division 7A – Determine whether any payments, loans or debt forgiveness made by a private company to a shareholder (or an associate of a shareholder) have been made during the year ended 30 June 2021. If so, ensure that there are strategies in place to ensure that a deemed dividend does not arise.
- Single Touch Payroll (STP) – Closely-held entities will need to adopt STP from 1 July 2021 – if not already.
ON 30 JUNE ACTIVITIES AND ACTIONS
- Complete a Physical Stocktake & Work In Progress (Retailers, Wholesalers and Manufacturers) – Perform a physical stocktake of all stock held for re-sale at 30 June.
- Manufacturers and Professional Service Providers – Account for any Work in Progress (WIP) and incomplete manufactured goods.
- Trade Debtors – Review trade debtors to ensure they are recoverable at 30 June and bad debts are written off.
- Trade Creditors – Review trade creditors to ensure they are reconciled and due and payable at 30 June.
AFTER 30 JUNE ACTIVITIES AND ACTIONS
Employee related matters
- Reconcile Wages & Salaries (Payroll) – Ensure that all wages / salaries are reconciled and PAYG Payment Summaries are issued to your employees by 14 July 2021 if you are not already on Single Touch Payroll.
- Ensure that the Finalisation Declarations for STP are lodged by 14 July 2021
- Annual PAYG Payment Summary Statement – Ensure this is completed and lodged with the ATO by 14 August 2021.
- Superannuation Contributions – Ensure you have notified your employees of their superannuation contributions paid.
- Ensure you have paid all superannuation contributions for the June Quarter by 28 July 2021 (if not paid by 30 June 2021).
- WorkCover – Complete the WorkCover Rateable Remuneration Certificate
- By 23 October 2021 if your rateable remuneration was more than $200,00
- By 26 March 2022 if your rateable remuneration was less than $200,000
Contractor matters
- Taxable Payments Annual Report – Ensure these are completed and lodged with the ATO by 28 August 2021 (relates to businesses in the building and construction industry).
Bookkeeping and reconciliations
- Attend to all year-end processing and reconciliations to ensure that your financial records are correctly recorded.
This will enable you to assess your business performance and position for the year end and allow you to set new goals and objectives for the New Year.
Furthermore, accurate records will assist in producing financial reports and tax returns efficiently and accurately.
Computer systems and IT
- Review your computer systems and ensure that both your hardware properly functions and your software is updated with the latest version.
- Run exception reports to ensure the integrity of the data is always maintained.
Disclaimer
This information is provided by Arthur Kyriacou & Co. for educational purposes. It does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. In deciding whether to acquire or continue to hold an investment, you should consider the relevant product guide or product disclosure statement.
We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
Arthur Kyriacou & Co. will not be liable for any losses arising from reliance on this information.