Five things businesses need to do before the end of the financial year
11 June 2020
Is it just us, or does it seem like time has really sped up lately? Keeping things positive during the challenges we have faced together over the past few months has made it seem like the weeks just evaporated in front of our eyes.
Before you know it, the end of the 2019/20 financial year (EOFY) will be upon us. On 30 June, we close this chapter, and a new year dawns on 1 July.
The end of the financial year is just around the corner, so it’s time to get your finances in order.
That means we’re headed into a very busy time for business leaders across Australia as they work to close their books on the past 12 months.
We’ve identified five essential steps to take before the 30 June deadline while keeping in mind that some things are a little bit different this year.
1. Lodge your monthly or quarterly business activity statement (BAS)
Monthly BAS deadlines are still set for 21 May and 21 June. If you lodge quarterly, you won’t need to concern yourself with these, but your fourth-quarter BAS will be due by 28 July.
Keep in mind that, this year, coronavirus relief efforts are available to provide cashflow assistance for employers. To distribute this aid as quickly as possible, the Government has requested that businesses lodge their statements electronically.
If you need help setting up electronic BAS lodgements, please visit the Australian Taxation Office (ATO) website.
2. Lodge your fringe benefits tax (FBT) return, ideally electronically
FBT refers to taxes paid by employers on benefits granted to employees. The FBT year is measured separately from the financial year. Since the FBT year ends on the last day of March, returns are usually due in May. This year, the deadline has been extended due to COVID-19, and electronic FBT returns are due by 25 June. It’s good to keep this in mind.
Keep a close eye on the dates as we approach the end of the financial year.
3. Keep looking for updates
Stay tuned to the ATO small business newsroom for potential policy updates that could impact your tax liability or shift the lodging deadlines between now and EOFY. You also might want to consider consulting the ATO’s webinar, which is focussed entirely on tax support for small businesses.
4. Gather your records and compile your financial documentation
One of the most important things you can do to prepare for EOFY is to tidy up your books for the whole financial year. Your accountant will certainly thank you for taking the initiative. Conduct a stocktake, and reconcile any discrepancies in your accounts. Thoroughly review your taxable assets and locate opportunities for deductions.
Work with your tax agent to find out what exactly they’ll need from you. Some particularly important documents include:
- Balances for bank accounts and outstanding loans
- Lists of debtors and creditors
- Records of purchases and assets
- Documentation for public grants and payments
- Paperwork for business vehicles
- Wage sheets and payment records for employees
- Superannuation logs.
Make sure your financial records are stored securely, too.
5. Pay your remaining super contributions, and think carefully about when you pay them
Officially, businesses have until 28 July to complete all necessary super contributions for their employees. Meeting that deadline is very important, as failure to do so will result in the employer having to lodge a superannuation guarantee charge (SGC) statement with the ATO and pay a penalty.
However, paying early might be beneficial for tax purposes. If your employees receive the full amount of their super guarantee for the year by EOFY - again, that’s 30 June - your tax burden could be lower.
So, why not pay ahead? Your employees will appreciate the early boost towards building up some slow and steady wins.
The weeks leading up to EOFY can be stressful - and this year, they’re probably going to be even more challenging than usual - but with the right mindset and a little bit of planning, you’ll be ready to turn the page on this year. Like you, we’re looking forward to the 2021-2022 financial year with hope. Remember to work closely with a trusted tax professional to prepare for EOFY, and be on the lookout for updates from the Government about any changes related to the COVID-19 pandemic.
While you’re going over your books, you may find yourself wondering whether it makes sense to become an LGS employer. Contact us to find out more about our fund and if it suits your needs and those of your employees.
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