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10 steps towards a smooth EOFY Posted on May 14, 2022
With the Australian Tax Office (ATO) back in full collection mode after some leniency during the COVID peak, it is essential that businesses and individuals not only do due diligence this EOFY, but protect against an audit as well. Here’s a step-by-step guide…
1. Schedule time with your accountant
A simple first step that enables you to work backwards to get organised.
Individuals and businesses go to step 2.
2. Research what you can claim
Many people believe they know exactly what they can claim in their industry, but it does change and it pays to check, especially in relation to COVID protection gear. https://www.ato.gov.au/Individuals/Income-and-deductions/Deductions-you-can-claim/
Individuals and businesses go to step 3.
3. Gather your evidence
Businesses should receipt every expense in their accounting software, such as XERO or MYOB. Individuals should gather a hardcopy or e-receipt of expenses and log it in a spreadsheet or app, such as the ATO mobile app. Also gather a detailed summary of your income streams, including any side hustles and investments.
Individuals and businesses go to step 4.
4. Understand salary sacrificing
There is income tax benefit to sacrificing a portion of your salary into your superannuation fund. Concessional contributions (before tax) are capped at $27,500 per year. Understand what you think you can afford and how to set this up for maximum tax benefits. Talk to your super provider and your employer to understand the process, then take your questions to your accountant.
Individuals go to step 10, businesses go to step 5.
5. Reconcile your accounts
This one applies to businesses. Use your accounting software reconciliation application to check that bank accounts, credit card accounts, loan accounts, inter-company loan accounts, superannuation payable accounts, PAYG Withholding can be reconciled so that there are no differences between the balance in the software and the actual balance. If anything can’t be reconciled needs to be justified.
Businesses go to step 6.
6. Review accounts receivable and accounts payable
This too applies to business. Use your accounting software to run your accounts receivable and payable reports so that you can identify any unpaid invoices and/or bills. This will flag any bad debts you want to review with your accountant.
Businesses go to step 7.
7. Check your P&L
Check that all the figures make sense. If you are running a decent profit, consider which expenses you may be able to pre-pay before 30 June for the year ahead that you can discuss with your accountant.
Businesses go to step 8.
8. Do a stock take
Line up all your resources to do a thorough stock take by 30 June and get an indication of what you may have to write-off. This is an important discussion point with your accountant.
Businesses go to step 9.
9. Check your wages and super guarantee
Check that your accounting software figures align with your STP figures. Any discrepancy will need to be explained.
Businesses go to step 10.
10. Meet with your accountant
Meet with your accountant armed with a top-level explanation of your income for the year and your perspective on your tax obligations, plus paperwork, electronic log-ins and any questions you would like clarification on. This will save you money as it will save your accountant time in figuring out exactly how to drill down and suggest efficiencies, as well as report on your behalf. Our accounting team loves nothing more that to help clients to be better off. To make an EOFY appointment with the experienced team at Adviceco. please contact [email protected]
As a final note, the ATO is ramping up it’s audit activity. An audit can incur significant professional fees from both lawyers and accountants to gather evidence to prove your compliance. To avoid these professional fees, audit insurance is recommended. For a small fee, you can insure against the shock of an audit. Contact us to enquire.