Tax
June 16, 2022

End of Financial Year 2022 — A guide for small businesses

by 
The Team

End of financial year is a big time for many businesses (us especially!) so it pays to be organised and have a clear idea of what needs to be done so you can close your books for the year without the stress.

The official date of the End of Financial Year is the 30th of June 2022. From midnight on the 30th of June your business books are closed off and all transactions after that date will find their way into the 2023 financial year.

This blog is a guiding light and prompt to tick off your list of to-do’s so you can finish the financial year strong and ready to go for next year!

Payroll

End-of-Year Finalisation Declaration — Due 14 July 2022

Payroll needs to be reconciled by the 14th of July. Then you can submit your EOFY finalisation declaration via Single Touch Payroll (STP) which allows your employees to complete their income tax returns.  

To finalise your end of year payroll, here are some steps to consider:

1. Review

Make sure all the details are correct including your organisation details and employee details. Things like ABN, legal trading name and postal address for the business, along with your employees personal details such as birth date and postcode are really important to have correct in order to avoid filing errors when sent through to the ATO.

2. Reconcile

Reconcile your payroll transactions. In this step, if you are using accounting software such as Xero, you can run the Payment Activity Summary and General Ledger Reports which helps you review the pay item totals and check super and wages have all been paid correctly.

3. Finalise & Process

Single Touch Payroll

Businesses filing pay runs with Single Touch Payroll will need employee wages, PAYG and superannuation to be finalised. This can also be done in software such as Xero. If you’re unsure about this, we recommend contacting us or your tax agent.

Payment Summaries

For those businesses not filing pay runs with STP, you’ll need to supply payment summaries to your employees and submit a Payment Summary Annual Report (PSAR) to the ATO.

4. Superannuation

For super to be claimed in the current financial year, it needs to be paid and cleared by the 30th of June. It is important to make sure all employees Super Fund’s are active and that you pay their contributions as early as possible to ensure they hit their super accounts in time.

ATO Checklist

There’s a few things that the ATO requires for EOFY that will ensure you are meeting compliance.

1. Business or Company Tax Return

Businesses need to lodge a tax return at the EOFY. For Sole Traders and Partnerships, tax returns are due between 1st July — 31st October 2022. For Companies and Trusts, the majority are due by the 28th February 2023, however this date does vary so we recommend checking the ATO website to confirm your date.

Sole Traders

An individual tax return is to be lodged and your business income and expenses go into the tax return. These can be submitted through myTAX (accessed through myGov) or through a registered tax agent (we’re here to help).

Companies and Trusts

Companies and Trusts need to lodge a tax return each year, aside from your individual tax return as a business owner. These tax returns can be lodged using accounting software that has built in Standard Business Reporting (eg. Xero) or through your accountant. The company or trust tax return includes all your company or trust income and expenses etc., and your individual tax return includes the income you earn from wages, shares and dividends from the company.

2. Record keeping

Making sure you have records of all expenses to allow you to claim deductions and accurately record income is really important. These can be kept digitally or as paper records and need to be supplied to your accountant. Examples of records you need to keep include:

  • Receipts or invoices for equipment or asset purchases and sales
  • Receipts for expense claims and repairs
  • Dividend Statements

3. Reports

Reports that need to be lodged and/or supplied to the ATO or your tax agent include:

  • A Profit and Loss statement to summarise your income and expenses.
  • Conduct a stocktake for those businesses with excess stock
  • Lodge yearly reports for Pay as you go (PAYG) withholding
  • Lodge yearly reports for Fringe Benefits Tax (FBT)
  • Lodge yearly reports for Goods and services tax (GST)

4. Claiming Deductions

When it comes to claims, the ATO has 3 golden rules:
One: You must have spent the money yourself and weren’t reimbursed.
Two: If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income.
Three: You must have a record to prove it.

Tax Planning

Tax planning is a smart move for all businesses to consider before EOFY, and while heading into the next EOFY. For most businesses and individuals income tax is one of the largest expenses, so it requires careful planning and budgeting. With a good tax plan, and an accountant on your side, working smarter with your tax strategies can save you some cash.

One thing to ensure you steer well clear of, is non-compliance tactics such as tax avoidance schemes. The ATO has a set of rules to play by, so working outside legitimate practices will lead to penalties, often involving the need to pay back tax with interest and additional fines.

Our blog 6 Tax Planning Strategies to help minimise your tax helps navigate these strategies so you can set up for success within your business. Using some of our suggested strategies or having a tax planning meeting with your accountant can really make a difference when it comes to saving money at tax time.

Starting off the New Financial Year — What’s Next?

With July marking the start of the new financial year, here’s what’s coming up next in terms of important dates and milestones.

Changes to Superannuation 2022 — 1st of July

1. Super rate Increase

From July 1, the Super Guarantee (SG) rate will change from 10% to 10.5%. From the 1st of July all contributions made on behalf of employees need to be paid at the new rate, even if it was for work completed before this date.

2. Super on the first dollar

The ATO has removed the minimum $450 earnings per calendar month eligibility threshold for all super contributions. From July 1, you’ll be required to pay super on the first dollar earn’t by an employee aged 18 and over.

3. Under 18 Employees

Regardless of how much they earn, super contributions must be paid to employees under 18 if they work over 30 hours per week.

You can be fined for not paying correct Super contributions, so it is important to be organised and check you are paying the correct amounts.

Single Touch Payroll (STP) Finalisation — 14 July

As mentioned above in the payroll section of this blog, STP needs to be finalised and processed by the 14th of July. If you’re paying yourself or a business partner, you may be eligible for an extension until the 30th of September. Instead of PAYG Payment Summaries which used to be handed out to your employees, STP allows employees to access their summaries through MyGov. If you’re unsure how to do this, or not set up yet please reach out. If you use Xero and are not yet set up with STP, check out our blog Single Touch Payroll in Xero.

Q4 BAS Lodgement — 28th of July

Quarterly BAS lodgements are due on the 28th of July

Q4 Superannuation & PAYG — 28th of July

Quarterly Super Contributions and PAYG are due on the 28th of July

PAYG Annual Summary Report — 14 August

PAYG Withholding annual summary reports are due on the 14th of August for the 21-22 financial year.

We hope this helps you get over the finish line for the 21-22 financial year! It’s been a big year with the effects COVID-19 and the many changes to business and everyday life. If you are looking for an accountant to help you meet all you taxation compliance needs this tax time, or you are looking for some business advice to help you with your tax plans, please get in touch.

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End of Financial Year 2022 — A guide for small businesses

This blog is a guiding light and prompt to tick off your list of to-do’s so you can finish the financial year strong and ready to go for next year!

June 16, 2022

Tax

End of Financial Year 2022 — A guide for small businesses

The Team

End of financial year is a big time for many businesses (us especially!) so it pays to be organised and have a clear idea of what needs to be done so you can close your books for the year without the stress.

The official date of the End of Financial Year is the 30th of June 2022. From midnight on the 30th of June your business books are closed off and all transactions after that date will find their way into the 2023 financial year.

This blog is a guiding light and prompt to tick off your list of to-do’s so you can finish the financial year strong and ready to go for next year!

Payroll

End-of-Year Finalisation Declaration — Due 14 July 2022

Payroll needs to be reconciled by the 14th of July. Then you can submit your EOFY finalisation declaration via Single Touch Payroll (STP) which allows your employees to complete their income tax returns.  

To finalise your end of year payroll, here are some steps to consider:

1. Review

Make sure all the details are correct including your organisation details and employee details. Things like ABN, legal trading name and postal address for the business, along with your employees personal details such as birth date and postcode are really important to have correct in order to avoid filing errors when sent through to the ATO.

2. Reconcile

Reconcile your payroll transactions. In this step, if you are using accounting software such as Xero, you can run the Payment Activity Summary and General Ledger Reports which helps you review the pay item totals and check super and wages have all been paid correctly.

3. Finalise & Process

Single Touch Payroll

Businesses filing pay runs with Single Touch Payroll will need employee wages, PAYG and superannuation to be finalised. This can also be done in software such as Xero. If you’re unsure about this, we recommend contacting us or your tax agent.

Payment Summaries

For those businesses not filing pay runs with STP, you’ll need to supply payment summaries to your employees and submit a Payment Summary Annual Report (PSAR) to the ATO.

4. Superannuation

For super to be claimed in the current financial year, it needs to be paid and cleared by the 30th of June. It is important to make sure all employees Super Fund’s are active and that you pay their contributions as early as possible to ensure they hit their super accounts in time.

ATO Checklist

There’s a few things that the ATO requires for EOFY that will ensure you are meeting compliance.

1. Business or Company Tax Return

Businesses need to lodge a tax return at the EOFY. For Sole Traders and Partnerships, tax returns are due between 1st July — 31st October 2022. For Companies and Trusts, the majority are due by the 28th February 2023, however this date does vary so we recommend checking the ATO website to confirm your date.

Sole Traders

An individual tax return is to be lodged and your business income and expenses go into the tax return. These can be submitted through myTAX (accessed through myGov) or through a registered tax agent (we’re here to help).

Companies and Trusts

Companies and Trusts need to lodge a tax return each year, aside from your individual tax return as a business owner. These tax returns can be lodged using accounting software that has built in Standard Business Reporting (eg. Xero) or through your accountant. The company or trust tax return includes all your company or trust income and expenses etc., and your individual tax return includes the income you earn from wages, shares and dividends from the company.

2. Record keeping

Making sure you have records of all expenses to allow you to claim deductions and accurately record income is really important. These can be kept digitally or as paper records and need to be supplied to your accountant. Examples of records you need to keep include:

  • Receipts or invoices for equipment or asset purchases and sales
  • Receipts for expense claims and repairs
  • Dividend Statements

3. Reports

Reports that need to be lodged and/or supplied to the ATO or your tax agent include:

  • A Profit and Loss statement to summarise your income and expenses.
  • Conduct a stocktake for those businesses with excess stock
  • Lodge yearly reports for Pay as you go (PAYG) withholding
  • Lodge yearly reports for Fringe Benefits Tax (FBT)
  • Lodge yearly reports for Goods and services tax (GST)

4. Claiming Deductions

When it comes to claims, the ATO has 3 golden rules:
One: You must have spent the money yourself and weren’t reimbursed.
Two: If the expense is for a mix of income producing and private use, you can only claim the portion that relates to producing income.
Three: You must have a record to prove it.

Tax Planning

Tax planning is a smart move for all businesses to consider before EOFY, and while heading into the next EOFY. For most businesses and individuals income tax is one of the largest expenses, so it requires careful planning and budgeting. With a good tax plan, and an accountant on your side, working smarter with your tax strategies can save you some cash.

One thing to ensure you steer well clear of, is non-compliance tactics such as tax avoidance schemes. The ATO has a set of rules to play by, so working outside legitimate practices will lead to penalties, often involving the need to pay back tax with interest and additional fines.

Our blog 6 Tax Planning Strategies to help minimise your tax helps navigate these strategies so you can set up for success within your business. Using some of our suggested strategies or having a tax planning meeting with your accountant can really make a difference when it comes to saving money at tax time.

Starting off the New Financial Year — What’s Next?

With July marking the start of the new financial year, here’s what’s coming up next in terms of important dates and milestones.

Changes to Superannuation 2022 — 1st of July

1. Super rate Increase

From July 1, the Super Guarantee (SG) rate will change from 10% to 10.5%. From the 1st of July all contributions made on behalf of employees need to be paid at the new rate, even if it was for work completed before this date.

2. Super on the first dollar

The ATO has removed the minimum $450 earnings per calendar month eligibility threshold for all super contributions. From July 1, you’ll be required to pay super on the first dollar earn’t by an employee aged 18 and over.

3. Under 18 Employees

Regardless of how much they earn, super contributions must be paid to employees under 18 if they work over 30 hours per week.

You can be fined for not paying correct Super contributions, so it is important to be organised and check you are paying the correct amounts.

Single Touch Payroll (STP) Finalisation — 14 July

As mentioned above in the payroll section of this blog, STP needs to be finalised and processed by the 14th of July. If you’re paying yourself or a business partner, you may be eligible for an extension until the 30th of September. Instead of PAYG Payment Summaries which used to be handed out to your employees, STP allows employees to access their summaries through MyGov. If you’re unsure how to do this, or not set up yet please reach out. If you use Xero and are not yet set up with STP, check out our blog Single Touch Payroll in Xero.

Q4 BAS Lodgement — 28th of July

Quarterly BAS lodgements are due on the 28th of July

Q4 Superannuation & PAYG — 28th of July

Quarterly Super Contributions and PAYG are due on the 28th of July

PAYG Annual Summary Report — 14 August

PAYG Withholding annual summary reports are due on the 14th of August for the 21-22 financial year.

We hope this helps you get over the finish line for the 21-22 financial year! It’s been a big year with the effects COVID-19 and the many changes to business and everyday life. If you are looking for an accountant to help you meet all you taxation compliance needs this tax time, or you are looking for some business advice to help you with your tax plans, please get in touch.

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