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End of Financial Year Tax Tips For Individuals 2019-2020

The following tax planning measures should be considered in respect to your own individual circumstances. For specific guidance please refer to the ATO website or consult your Tailored Accounts accountants.

End-Of-Financial-Year Tax preparation often seems a bit daunting for many people. The COVID-19 outbreak this year has generated a range of impacts on the community and individual well-being. Tailored Accounts will help you overcome the burden of individual tax return complexities. The following tips provide a comprehensive list of important items for your coming tax return.

  • Salary Sacrifice Arrangements

If employed, you may wish to review your remuneration arrangements with your employer and forego future gross salary in return for receiving exempt or concessionally taxed fringe benefits and/or making additional superannuation contributions under a valid salary sacrifice arrangement.

Please review your contributions including Superannuation Guarantee (SG) and Salary Sacrifice to assess whether you have over/under contributed. It is now a good time to adjust your contributions.

  • Additional Superannuation Contributions

Voluntary superannuation contributions would help grow your super balance quicker and reduce your personal tax liabilities.

  • Work-Related Deductions

For employees who are working from home during the period 1 March to 30 June 2020, the ATO is allowing a temporary simplified method of calculating deductions for additional running expenses. There are 3 alternatives including:

  1. 80 cents per hour for all additional running expenses incurred after 1 March 2020 until 30 June 2020; or
  2. 52 cents per work hour for heating, cooling, lighting, cleaning and the decline in value of office furniture, plus the work-related portion of phone and internet expenses, computer consumables, stationery and the decline in value of a computer, laptop or similar device; or
  3. The actual work-related portion of all running expenses, which will need to be calculated on a reasonable basis.
  • First Home Super Saver (FHSS) Scheme

The FHSS scheme essentially allows an individual to make additional voluntary salary sacrificed superannuation contributions or after-tax contributions to a complying superannuation fund from 1 July 2017 up to a maximum amount of up to $15,000 per year (and $30,000 in total) which can be withdrawn to help finance a first home deposit from 1 July 2018. In addition, where the buyer’s partner also has never owned real property, the couple can effectively withdraw an amount of up to $60,000 to jointly fund a home deposit.

  • Early Access To Your Superannuation

You may be able to withdraw up to $10,000 from your superannuation balance in Financial Year 2019/20 and a further $10,000 in 2020/21. You do not need to declare those amounts in your tax return, in other words, they are tax-free. In order to be eligible, you must pass one of the following tests:

  1. You are unemployed; or
  2. You are eligible to receive a JobSeeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
  3. On or after 1 January 2020:
  • You were made redundant; or
  • Your working hours were reduced by 20 per cent or more; or
  • If you are a sole trader and your business you suspended or there was a reduction in your turnover of 20 per cent or more. 

If you are unsure of your current tax status or need assistance and advice for your EOFY preparation, please contact Tailored Accounts for a 20-minute of free consultation. Alternatively, you can access the Tailored Accounts - Sharing Is Caring Page for a free download of an individual cashflow assessment plan. 

Tailored Accounts - Sharing Is Caring Page

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End of Financial Year Tax Tips For Business Owners 2019-2020

This information is intended as general guidance only.  For specific guidance please refer to the ATO website or consult your Tailored Accounts accountants.

Uncertainty about the continuing spread of the noble coronavirus makes people fear for their health and their lives. If you are doing business in one of the industries, which are most susceptible to health and economic problems, such as tourism, food services, retail, or healthcare, the pandemic has struck your disproportionately hard. Under high uncertainty, funding and immediate government grants have been made available for eligible businesses to navigate the road to recovery. This End-Of-Financial Year Tax Tips will help you reach out and effectively leverage a range of existing support measures for business survival and growth.

Covid-19 Stimulus Measures

The government released a number of economic measures in response to COVID-19. Some of them may impact your FY 2020 tax return. 

  • Enhancing the instant asset write-off

The cost threshold for which entities can access an immediate deduction for depreciating assets and certain related expenditure has been increased from $30,000 to $150,000 for the period 12 March 2020 to 31 December 2020. The turnover threshold of businesses eligible for the instant asset write-off during this period has also been increased to include businesses with an annual turnover of less than $500 million (up from the existing cap of $50 million).

  • Backing business investment

Entities with an aggregated turnover of less than $500 million in an income year who do not use the simplified depreciation rules for small business may be eligible for accelerated depreciation if the entity starts to hold the asset and the asset was first used or installed ready for use for taxable purposes between 12 March 2020 and 30 June 2021.

The tax implication on received stimulus payments:

  • The Cashflow boost you have received will be treated as non-assessable, non-exempt income and is therefore not taxable to the entity. However, JobKeeper payments received are assessable income of the entity. Deductions for payments to employees are available provided the general requirements for deductibility are satisfied.

Other tax-saving tips

  • Super Contribution

All contributions which are required to be received by the superfunds by 30 June 2020 need to be scheduled for payment within ClickSuper by 4 PM AEST on Monday, 24 June 2020.  Superannuation contributions paid after this date may or may not be received by the superannuation fund by 30 June 2020. 

  • Review your Debtors

Review your aged receivables and write off any recoverable debts before 30 June 2020. The bad debt written off can be claimed as a tax deduction for the 2020 financial year. 

  • Pre-pay your expenses

Small business entities may be able to prepay expenses and claim an immediate deduction in the financial year in which they are paid. 

  • Trust resolution

Document and sign the trust distribution resolutions before 30 June 2020.

JobKeeper tips

If your business was not eligible for the JobKeeper grant during the March-May period, it is recommended to re-assess your JobKeeper eligibility for the period of June-August. 

Tailored Accounts is committed to supporting businesses during this critical time. Please contact us for JobKeeper, EOFY, Tax and Advice supports. Our expertise and experience will put your business in the best possible position for sustainable success. 

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End of Financial Year Preparation: Magical touch on your books!

With end of financial year (EOFY) fast approaching, the Tailored Accounts team is counting down to the last day of the financial year! Offices of accountants and bookkeepers will be filled with the hustle and bustle of time-critical challenges. You may wonder why EOFY often becomes such a hectic time for us. I hope this article can shed light on the inner processes of EOFY preparation.

Having worked in the accounting industry for more than a decade, I consider EOFY preparation as a chance to place extra effort to ensure accurate, up-to-date numbers as well as presentable reporting. These outputs are the results of, what I call, a magical touch on your books.

The following list articulates the main examples of magical touches that we exert to ensure your books are in the best order:

1.      The year-end payroll

During the financial year, we process 12 – 52 payrolls for our clients subject to their pay cycles. At the end of each month or quarter, our team reported the payroll information to Australian Taxation Office (ATO), including Gross Wage and Tax details. In addition to the accurate reports regularly lodged to the ATO, payroll reconciliations at year-end takes care and attention to ensure all requirements are met. Here are the core tasks that our team has been undertaking in the process of EOFY preparation:

  • Final super payment runs must be done before 25th June each year to ensure the last super payment is eligible for a tax deduction in the current financial year. Final salary sacrifice payment runs must happen on or before the same date to ensure all salary sacrifice arrangements are captured in the current year’s payment summary for employees. These particular tasks will require a few extra hours of work during the EOFY period.
  • Payment summaries are to be communicated to employees via email/post before 14th July. We ought to undertake a full year payroll reconciliation to ensure the accuracy of the information in payslips, Business Activity Statements (BAS), and payment summaries. This significant task requires half a day at a minimum, depending on the number of employees and complexity of the payroll structure.
  • Payment summary reports must be submitted to the ATO before 14th August in the following year. The task usually takes an hour to complete. To illustrate, 300 clients at Tailored Accounts are interpreted into a budget of minimum 300 hours for all payment summaries with no mistakes allowed.

2.      The last GST & BAS of the financial year

As you may be aware, April-June BAS is not due until 28th July in the next year. Regardless of the due date of BAS, our team finalises the last quarterly BAS before 14th July to reconcile balances between payslips and BAS. To prepare the end of the year BAS, the assignments below must be carefully completed:

  • Our team undertakes all reconciliation processes for the last quarter BAS as usual, requiring half a day.
  • We review all quarterly sets of BAS submitted during the financial year to reassure the integrity of your financial data since all adjustments need to be made in the final BAS. This task usually takes half a day.

3.      The final review of all other accounts

After the big year-end reconciliation processes of Payroll and BAS, our team also reviews every single account in your Trial Balance prior to closing your books. If your business has 50 accounts codes, for instance, we will need to thoroughly go through all 50 of the accounts. To deal with the sheer volume, the Tailored Accounts team implemented the effective way to review the accounts as follows:

  • We reconcile final bank account, credit card, petty cash & term deposit first. These reconciliations are usually completed by 30th June; however, a good summary of the whole year bank reconciliation will be prepared separately to support your tax agent in finalising their files. This task takes up to two hours.
  • We undertake stock-taking and complete the asset register. If on-site, physical stock-taking is required, it will take from three hours to a day for completion. Based on the volume of stocks and assets, our team may require another half a day for their reconciliation and adjustment.
  • We reconcile debtors’ information, normally taking half a day. This task includes a follow-up with debtors to identify doubtful debts and subsequent end of year adjustments.
  • Our team reconciles creditors’ information, which usually takes less time since most businesses pay their creditors regularly.
  • We reconcile loan accounts where businesses have internal loan transactions with directors. Preparing interest schedules and calculating a final balance should be completed before 30th June, which will then be rigorously reviewed for another two hours.
  • Our team prepares consolidation of all accounts after the reconciliation of Payroll and BAS, taking an hour to methodically consolidate them. The items include Salary & Wages, PAYG withholding, Super payable, Super expenses, Leave entitlement, GST, Sales, Capital purchases, Non-capital purchases, and PAYG tax installments.
  • We finally analyse other accounts from the Statement of Profit and Loss, including a Budget versus Actual comparison and discrepancy identification. This task will require up to four hours as Tailored Accounts places its accuracy as a top priority.

Total hours of required effort tend to rely on a number of factors, such as the size of your books, your accounting software, and the maintenance status of your accounts.

For instance, a small business, with up to five employees and having less than $500,000turnover,would need three hours for the year-end payroll processes, three hours of finalising all sets of BAS, and another six hours for other EOFY tasks. An additional provision of three hours is required for assisting your tax agent or auditor.

Accordingly, one-hundred small business clients can be translated into a budget for 1,500 hours (equivalent to 6.5 full-time staff) at a minimum for six weeks prior to EOFY. This response, hence, addresses the original question, "Why are accountants and bookkeepers busy during the EOFY period?"

At Tailored Accounts, we adopt the latest technology to minimise manual reconciliations. The purpose of implementing the most recent systems and processes is to save time and cost during EOFY period, consequently providing you with optimal savings. With strong attention to details, the Tailored Accounts team and I have always delivered neat, error-free and presentable reports to more than five-hundred clients since 2008. As the EOFY period is now approaching, this is an opportunity to set your financial reporting right by contacting Tailored Accounts today!

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Protect your company from cyber scams

Have you heard about the latest, devastating email scam befalling Sage and Clare Homewares Business?

You may be at risk of similar scams.  You are especially vulnerable this time of the year, when you are offered tax refunds and are subsequently asked to provide your credit card details and passwords. We wanted to share this important update with you so you can inform your team as soon as possible.

What do cyber scams look like?

  • You will generally receive an email with a subject line similar to “Important notice” along with a familiar looking logo. Often it will be identical to the logo of a supplier or client you know well. This could trick you into believing the email you received is authentic.
  • Scam emails often ask you to update bank account or credit card details of your clients or suppliers. To some, this might seem sufficiently suspicious but many of us are still taken in by the fake request.
  • By this time, the scammers have already successfully established a channel to steal money from your clients. When you realise what has occurred, it is often too late to recover from the consequences of money lost and your damaged relationship with clients.

What you should do in such situation?

  • If you have us as a bookkeeper, you will have nothing to worry about. We are constantly in contact with your clients and suppliers, and we go through extensive banking detail checks to ensure all correspondence is legitimate. We recommend joining with a secure agency such as ourselves to protect your business.
  • For the time being, inform your team of this new scam, and remind them to immediately report any suspicious emails or calls.
  • Implement latest anti-spam security software to detect suspicious content and senders.
  • Consider implementing regular e-mail system security audits, and upgrade your email system if necessary.
  • Talk to us anytime you are doubtful of any transaction or request. We are capable of engaging with cyber security professionals to help you resolve any potential problems.

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End Of Financial Year 2018: Get ahead of the game with Tailored Accounts

It's nearing end of financial year 2018. And because it’s super busy, Tailored Accounts would like to save your time by sharing some important dates in preparation for FY 17-18.

Super contributions

To be eligible for tax deduction in the current Financial year, your final superannuation guarantee payment for FY 17-18 should be made 7-10 days before 30 June 2018 (allow for delays) to ensure that super funds receive the contributions by 30 June 2018.

Salary Sacrifice Super payment will happen on the same date to ensure that the salary sacrifice super contribution appears in this financial year’s payment summary.

If your Super is being managed by Tailored Accounts, all the deadlines will be met so there won’t be any hassles! Super reports and reminders will be sent out well in advance so that you will have sufficient time to review and make super payments before the deadline.

Make sure you are aware of the following rules:

  • The concessional contribution cap is $25,000 for all the individuals regardless of age for this income year 2017-18.
  • Concessional contributions include employer contributions (including contributions made under a salary sacrifice arrangement) and employee personal contributions claimed as a tax deduction

Payment Summaries

Tailored Accounts will be preparing Payment Summaries on behalf of our clients and submit them to the ATO. By 14 July 2018, your employees should receive their payments summaries from our team. We will send payment summary annual report to the ATO by 14 August 2018.

If you are managing your own payroll, you will also need to have Payment Summaries ready for employees by 14 July 2018 and the ATO by 14 August 2018.

Final Business Activity Statements for FY 17 - 18

April – June 2018 BAS is not due until the 28 July 2018. Tailored Accounts will be asking our clients to send us the quarterly paperwork few days after 1 July 2018. This will help us with End of Year reconciliation and ensure that your BASs are complete before the due date.

Thank you for entrusting Tailored Accounts for your EOFY services – We guarantee 100 percent of your payment summaries are completed before the due date 14 July!

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Reconciliation of Your Payment Summaries

The six important steps of payment summary reconciliation that employers often overlook. 

Payment summaries generation is a simple task, however the back end reconciliation does take half to a day of work. Here are list of 6 STEPS that our staff have to go through to ensure that your payment summaries are faultless!

1. Reconcile all staff payslips in the past 12 months with BASs submitted to ATO during the year. Incorrect payment summaries is the biggest trigger to an ATO tax audit...we understand how important it is to ensure our data is perfectly matched with ATO data;

2. Reconcile all staff payslips information: Gross Salary, PAYG withholding, FBT, Super payable, Salary sacrifice, Termination pays. A full reconciliation between payroll report vs General Ledgers are conducted for the full year to ensure your staff pays are agree with what coded into your accounting software for the last 12 months; 

3. Once ATO = Pay summaries = General Ledger (debit/credit), our staff will print payment summaries and re-check them with employee payroll setup to ensure their pays are in line with their contract/award;


4. Payment summaries to be email to business owner/HR manager/CEO to check before we email to your staff;

5. Payment summaries to be emailed to staff before 14th July;

6. After 1 week from sending staff payment summaries, if we don't need to do any amendment, we will send Annual Payment Summaries to ATO before the DUE DATE 14th August.

 

 

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5 end of financial year tips for small businesses

If you are a small business, it is highly likely that you need to do everything to manage your business, from administration, marketing to bookkeeping. It is running well and you believe you are able to manage it until the end of financial year approaches. One client shared with us that EOFY used to be her nightmare and she was always lost with massive paperwork. 

End of financial year bookkeeping tips 

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How to Get the Biggest Tax Deductions from Charitable Donations

By Ken Berry

Reprinted from CPA Practice Advisor

At the end of the year, socially-conscious clients can boost their deductions, and thereby lower their tax bills, by giving a little extra to the charities of their choice. That’s still a sensible tax strategy as 2014 draws to a close. But a recent tax law change may give some upper-income individuals a moment’s pause before they reach into their pockets.

Tax deduction tips for business

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Personal Tax Rates

The Budget confirmed that from 1 July 2015 the tax free threshold increase has been deferred. The increase in the tax free threshold has been linked to the carbon price achieving $25.40 per tonne. This is projected to occur in the 2018-19 year.

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