Your checklist for end of financial year (EOFY): tax, super, business
June 17, 2021
Whether you’re a business owner, PAYE employee, or contractor, getting ready for the end of the financial year (EOFY) can be a busy time.
Preparing for EOFY is the perfect opportunity to take stock of your financial position and plan for the future.
To help you get ready for tax time, we’ve put together a checklist that will see you through EOFY and into the year ahead.
Personal tax and investments
- Work-related expenses: Compile all your work-related expenses, including work from home hours, self-education and professional development expenses, and work-related subscriptions and memberships.
- Motor vehicle deductions: Ensure your logbook is up to date and valid. If you are claiming a motor vehicle for work-related purposes, make sure you understand your entitlement to use the logbook or cents-per-kilometre methods.
- Pre-pay interest: Paying loan interest in advance on margin loans and geared investments can be a smart tax strategy. As margin loans are used to invest in shares, the loan interest can normally be claimed on tax.
- Pre-pay deductible expenses: Certain expenses such as annual income protection premiums, insurance, rebates, and licenses can also be prepaid, allowing a tax deduction for the current tax year.
- Share portfolio: Do you have any shares that can be sold at a loss to offset any capital gains you’ve realised this year? Tax-loss selling may be a useful strategy to help minimise your tax bill.
- EOFY statements for investments: Be aware that many of your EOFY statements will not arrive until after July 1. Once in hand, they provide an ideal opportunity to review your overall financial situation.
- Summary of income and expenses: Prepare your profit and loss statement, remembering to fill in actual or estimated figures against each item, state whether your figures are GST inclusive or exclusive, and calculate the gross profit, total expenses, and net profit.
- Personal super contributions: You may be eligible to claim a tax deduction for personal contributions up to the concessional contributions cap of $25,000, which includes all employer contributions. You may also be eligible to make additional personal contributions from your after-tax salary up to the non-concessional contribution cap of $100,000.
- Super co-contributions: Low to middle-income earners who make personal (after-tax) super contributions may be eligible to receive a government co-contribution of up to $500. The amount you receive depends on income and how much you contribute and will be automatically calculated and paid by the government.
- Employer salary sacrifice: Putting some of your pre-tax income into superannuation can have significant tax benefits. Your super fund will tax these contributions at 15 per cent, which may be lower than your marginal tax rate. The end of financial year is a good time to review your salary sacrifice arrangements for the new financial year to ensure you don’t exceed the reduced concessional cap of $25,000.
- Spouse contributions: If you make contributions to your spouse’s super fund you may be able to claim an 18 per cent tax offset through your tax return. The maximum tax offset is $540. To be eligible, you must contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less.
- Supplier invoices: Ensure all suppliers have invoiced you by June 30. Corporate entities are entitled to a deduction where the goods and services have been supplied during the financial year, even if the invoice has not yet been paid.
- Depreciation: Examine your depreciation schedule and see if any assets require writing off. Assess the effective life of assets (how long they can be used to produce income) to determine if they should be reallocated to a low-value assets pool to be depreciated for the life of its value.
- Staff bonuses: Bonuses determined and approved before the end of the financial year as unconditional and payable can be deducted in the current financial year.
- Government-related payments: You must report all government-related payments, including grants, JobKeeper, and COVID-19 payments in your tax return. For sole traders, this is to be included as a business income in your individual tax return. Partnerships, trusts, and companies should report these payments in the partnership, trust, or company tax return.
- Single Touch Payroll (STP): Before you finalise the declaration in STP-enabled software, clean up any anomalies and ensure all information is correct. You should check that employee information is accurate and that you are addressing overpayments, calculating super, and paying employees correctly.
- Temporary full expensing and loss carry back: Temporary full expensing allows eligible businesses to deduct the business portion of the cost of eligible depreciating assets bought after October 6, 2020. Under loss carry back, eligible corporate entities can receive a refundable tax offset if they choose to carry back tax losses made in the 2019-20 or 2020-21 financial years against tax paid for the 2018-19 or 2019-20 financial years.
Talk to the tax experts
With expertise across all aspects of financial management, including tax, superannuation, and other investments, LDB can help individuals and businesses make the most of tax-time opportunities.
To find out more, contact LDB by phoning (03) 9875 2900 or sending us details via the contact form below.