As a business owner in Australia, it’s important that you prepare in advance for the June deadline to close out the end of the financial year.
Commonly referred to as EOFY, the end of the financial year is can be a stressful time, if you don’t take the time to prepare in advance.
Generating reports, reconciling your business accounts and filing your taxes with the Australian Taxation Office (ATO) are just some of the things that you need to do at the end of the financial year. Knowing what is required is the first step in ensuring that your business is EOFY ready.
Business taxes must be filed by June 30, and for many businesses in 2019, the end of financial year will also mean becoming single touch payroll (STP) compliant.
Other tasks that must be completed include conducting a stock take, completing and lodging income tax returns and lodging the required yearly financial reports. While there are a lot of tasks that need to be completed, at the end of the financial year, understanding your obligations and preparing in advance will ensure you complete everything that is required of you.
Continue reading to learn what you need to declare at the end of the financial year.
5 Things Must Be Declared At The End of the Financial Year
1# Single Touch Payroll
Single touch payroll (STP) has made it easier for the government to receive financial information from businesses operating in Australia.
STP has simplified the process for businesses to submit their employee payroll reports. In fact, with the right accounting software in place, companies can essentially automate this process.
Through the STP system, businesses must report wages, salary, and superannuation information to the ATO. You must also report PAYG summaries before July 14th to avoid incurring penalties.
2# Payroll Tax
All businesses with a payroll that exceeds the taxable wage threshold in their state or territory have an obligation to pay payroll tax.
Each state and territory has a different tax threshold and it’s important to know that this limit is in your region to ensure that you are registered for payroll tax in advance.
Wages that are subject to payroll tax include fringe benefits, employee wages, superannuation, director’s remuneration, allowances, bonuses, commission, termination payments and contractor fees. Your annual statement must be lodged by July 21st with your State Revenue Office.
3# Goods And Services Tax (GST)
GST is a 10% tax applied to most goods and services and other things that are consumed or sold in Australia. All of these transactions have to be declared. GST taxes also have to be declared on low-value imported goods as of July 2018.
Imported goods that are valued at less than $1,000 must also be declared to the ATO. If your business has a turnover that exceeds your state or territory threshold, or you think that this is likely to happen, then you are obligated to register for GST.
4# Payments To Contractors
Businesses who have hired security providers and investigation services, road freight transport providers and computer system design contractors will need to lodge additional reports to the ATO in regards to any payments made to these contractors.
While these reports will not actually be required until after July 1st 2019, if you feel that this change will affect your business, you should start putting processes in place now to gather the information you will need going forward.
Businesses who trade stocks have to do a stocktake before the EOFY to report the value of the stock that year. This is compulsory for businesses who have earned $10 million or more in the past year.
For businesses that have earned less than $10 million and the difference between the stock level at the start and the end of the year is more than $5,000, you will also be required to do carry out a stocktake.
If you have to do a stocktake, it is best to do so as close to the end of the financial; year as possible. With regards to what records you should keep, you will be obligated to provide a list describing each article of stock and the associated value.
You must also keep a record of who completed the stock, how it was carried out when it was completed and also who valued the stock and how the value of the stock was determined.
Be Prepared For The End Of The Financial Year
To ensure that you are ready when the end of the financial year rolls around, it’s advisable to start collecting the data you need in the fourth quarter of the business year.
To make the process as smooth as possible, be sure to keep your records organised. When the time comes to submit the required information to the ATO, you won’t need to scramble to get everything ready.
With an early start, you can ensure that you have everything you need for your EOFY reports and avoid a potential mess at the end of the financial year.
Author: Suzanne Elly