The most frequent EOFY questions, and answers

Taxes might be one of the two most important things in the world however that doesn’t mean there is always certainty around them.

The nearing closing of the financial year (EOFY) implies that the majority of small-business owners will be seeking the assistance of a professional accountant to make sure all their financial affairs are in good order. To help you make most of the time you spend together, we’ve talked to two leading small business accountants, who have provided their most frequently asked EOFY questions from clients to give you an idea of what to expect.

Q. What can I do to claim my vehicle?

There’s more than one way. One method is to claim it as the kilometre allowance, which is a reimbursement to your company and does not have income ramifications for individuals.

There are rules for keeping the logbook. However, if there is an inventory of your events as well as your movements via email, that may be sufficient to justify your claim.

Q. I’ve made a fair amount of money. Is it worth buying a vehicle at the end of the year to reduce tax?

If you decide to purchase a car your decision should be about cash flow and not about tax. You don’t get a real advantage by purchasing a vehicle near the end of the trading year. You’re better off considering your cash flow prior to the start of each year in order to increase the depreciation allowance and interest.

Q. I’ve got no cash. What can I do to be able to pay for my tax bills?

It is necessary to agree to some type of payment arrangement. There are a few options to accomplish this. You can call the tax department to create a payment plan however, interest will be charged and you will be penalized when you don’t make your payment.

There is another option: you might approach businesses offering tax pooling. They can fund tax obligations through a pooling arrangement , and the interest rate can be significantly lower than those offered by the tax office. Additionally, it’s more flexible.

A small business loan is another effective alternative.

Q. What amount of tax will I have to pay?

There is no simple, universal solution to this since it differs widely in relation to the business structure you have, the taxes you are paying and the sector you operate in.

We typically recommend that clients save around 20-25% of their turnover to help with taxation as well as GST, Accident Compensation Corporation (ACC) levies and any little surprises during the year.

Q. Do I have to be GST-registered in the following financial year?

The answer is different for every business owner based on the type of business, the target market and turnover.

You can voluntarily register for GST if you’re anticipating to reach the threshold or are engaged in an activity that requires GST is included in your industry prices in the normal course.

Q. Do I require an inventory?

The short conclusion is that yes. There is an exemption which allows those with low values of stock to simply make an estimate of the inventory they hold. But if you’re in the business of selling products, it is important to know precisely how many items are available to sell.

The process also flags SLOBS (slow-moving and out-of-date stock) and allows you to get rid of the item and not purchase it once more, which will improve the flow of cash.

Q. Can I do my EOFY taxes myself?

Yes, you can however, how do you go about doing it right? Software available today can make it simple to track an income and loss and submit a tax return to Tax Department. However, it doesn’t tell you what you are allowed and can’t claim, and it doesn’t take a closer review of your financial situation.

Want to get it right this tax time? Talk to your accountant about making sure you’ve checked all the right boxes.