6. Consider the income you receive ahead of time
Holloway says some businesses, such as dance studios or travel agents, will record income ahead of an actual payment and it’s important at tax time that these businesses don’t assume that income has actually been received.
In many cases, the consumer will have a right to a return if they cancel their bookings and so this should change the way the income is recorded and assessed, says Holloway. In the case of a dance studio, it might make more sense to record the income as the individual classes take place, as opposed to an annual subscription payment.
7. Self-education expenses
While last week’s tips also included recommendations for business owners to claim all the deductions available, many business owners may not realise that this also includes money they spend on self-education.
Paul Drum, head of policy at CPA Australia, says self-education expenses can be claimed if the study is “directly related to either maintaining or improving your current occupational skills or it is likely to increase your income from your current employment”.
Business owners and operators should think about claiming course fees, textbooks, stationery, student union fees and the depreciation of other study-related items such as computers and printers.
8. Director penalties
Company directors should be aware of the potential penalties of unpaid or undeclared Pay-As-You-Go withholding and superannuation obligations, says Braine.
The director penalty regime applies to unpaid or undeclared payments which have been outstanding for more than three months, says Braine.
“Keep up to date with your PAYG withholding and superannuation obligations to make sure that you aren’t personally liable,” Braine recommends. “However, if you are going to be late lodging your forms, entering into a payment arrangement should provide a better outcome for a director than not lodging the forms at all.”
9. Take note of the ATO’s hit list
Each year, the ATO publishes a list of the areas it will be paying special attention to at tax time.
This year, the ATO has said it will be cracking down on work-related expenses claims. Of particular interest will be claims relating to overnight travel, transporting bulky tools and equipment, and the work-related use of computers, phones and other devices.
Of course the ATO will also be watching out for incorrect or excessive claims for all work-related expenses. To be safe, the ATO says to claim deductions for work-related expenses, taxpayers must have actually spent the money; the expense must be related to the job; and the taxpayer must be able to prove it.
ATO deputy commissioner Steve Vesperman recently said the ATO will also be focusing on payments to contractors in the building and construction industry as part of its compliance program. For this reason, the ATO will be taking a close look at employer’s ‘Taxable payments annual report’, due by July 21.
“As well as their name and address, you need to report each contractor’s ABN, gross amount paid for the financial year and the total GST,” said Vesperman.
10. Keep those New Year promises
The end of any year brings with it the opportunity to start afresh and keep those New Year resolutions, says Field. So why not use the end of this financial year to upgrade to more user-friendly accounting software or financing deal from the bank?
“The ‘cloud’ is the new way of doing things and has provided many of our clients with a solution for greater assistance, more relevant data and time to focus on more important aspects of their business like making profit and growth opportunities,” says Field.
“It’s also a good time to look at your bank financing,” he says. “Shop around for the best rates and consider fixing the interest on all or part of your facilities. Rates are currently at record lows, but won’t be forever. Review your financial statements and see if your trust or company owes you money from prior trust distributions. There may be an opportunity to legitimately refinance this amount into deductible debt and reduce the balance of your (non-deductible) home loan.”
Editor
Eloise is an experienced business journalist and editor, who has held senior editorial roles at SmartCompany since 2014. Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on LinkedIn, and Twitter at @ellykeating.
