It feels like I only just finished writing this article for last year, and somehow we are here again, at the start of a brand new financial year.
Many will be happy for a chance to hit reset and start afresh – it certainly hasn’t been an easy year, with many challenges being faced by all. We hope that there were also glimpses of joy and optimism that have kept you going. With FY23 starting, it’s a good time to reflect on the year that’s been and look forward to new opportunities and a clean slate ahead.
We have put together a checklist of items to complete and tax planning opportunities to consider as the 2023 financial year begins:
Review outstanding debts and identify any debts that are not likely to be recovered. On the basis that you have done everything practically possible to recover the outstanding debt, consider writing off the outstanding amount as a bad debt and recover the relevant GST in your next BAS.
Ensure that you have reviewed your fixed asset register and written off any depreciable assets identified which are no longer being used. Additionally, as part of the Federal Government budget announced in May 2022, the temporary full expensing measures have been extended to 30 June 2023. For entities who are not subject to the small business depreciation rules and have an aggregated turnover not exceeding $5 billion, assets can be immediately written off.
Employee bonuses are an area where changes to internal processes can change your tax position. By aligning your employee contracts, timing of personnel reviews and communication of results, accrued employee bonuses that would otherwise not be deductible until the following year can be claimed as a deduction in the current year.
Key due dates are as follows:
|Staff Superannuation – 10% Gross Wages||30 June 2022*|
|Finalisation Declaration for STP Reporting||14 July 2022|
|June Quarter Business Activity Statement||28 July 2022|
|Payroll Tax 2021 Annual Reconciliation lodgement||30 October 2022|
*Note that superannuation contributions for employees needed to be received by the respective superannuation funds prior to 30 June 2022 in order to obtain a tax deduction in the year ended 30 June 2022. The latest due date for superannuation guarantee contributions for the quarter ended 30 June 2022 will be 28 July 2022, to avoid potential penalties and additional tax consequences.
From 1 July 2022, the Superannuation Guarantee rate will increase to 10.5%. Be sure that all employee payroll details are updated for the new rate, and pay rates updated if required. Additionally, it is noted that the $450 per month threshold for superannuation guarantee payments has been removed from 1 July 2022.
From 30 June 2022, AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities will require entities to prepare General Purpose Financial Statements if they satisfy the following:
Required by legislation to prepare financial statements that comply with Australian Accounting Standards or Accounting Standards; OR
Required only by their constituting or another document to prepare financial statements that comply with Australian Accounting Standards if that document was created or amended after 1 July 2021.
If you have a company or trust that currently prepares Special Purpose Financial Statements, we recommend that you review your constitution, trust deed, shareholder agreements, unitholder agreements, bank covenants, or other binding agreements to confirm that if they require the preparation of financial statements in accordance with Australian Accounting Standards, you are aware and prepared that General Purpose financials may be required.
For individuals / trusts
Motor vehicle logbooks are only valid for 5 years. If your logbook is 5 years old, or the business usage of your vehicle has changed significantly, please complete a new logbook for a continuous, representative 12-week period.
If you have a trust, to comply with relevant trust legislation, distribution minutes must be completed before the end of the financial year. This will ensure that the income of the trust for the year is distributed in accordance with the trust deed.
This year will also need to consider the implications of the updated ATO views regarding 100A, which may impact on historical distribution patterns within family groups.
Working from home:
With many people currently working from home, it would be expected there to be a rise in deductible expenditure relating to these changed working circumstances.
Examples of expenditure which may be deductible relating to working from home include:
- Electricity related to heating, cooling and lighting the area you use to work;
- Cleaning costs for a dedicated work area;
- Phone, internet and data expenses;
- Printer paper, ink and other stationery; and
- Home office equipment.
To claim a deduction for these working from home expenses, all the following must be satisfied:
- You must have spent the money;
- The expense must be directly related to earning your income; and
- You must have a record to substantiate these expenses.
The ATO has provided a simplified method (i.e. short cut method) of calculating additional running expenses until 30 June 2022. As such, there are now three ways to calculate these working from home expenses:
- Shortcut method – 80c per hour worked from home (not just checking emails) and have incurred additional costs;
- Fixed rate method – comprising of:
- 52c per hour for electricity, cleaning and depreciation of office furniture;
- Work-related components of your phone, internet, data, stationery and computer expenses; and
- Work-related component of the depreciation of computer hardware.
- Actual cost method – claiming the work-related portion on all actual expenditure incurred whilst working from home.
Records must be kept for all working from home deduction claims, noting that the shortcut method requires only a record of hours worked at home. The other two methods require both a record of hours, along with records of expenditure incurred.
Noting that the ATO are paying close attention to individual deductions claimed this year, and how they correlate. For example, if you have increased working from home deductions, they are expecting to see a decrease in work related travel expenses, or car deductions.
ESV’s advisors work from a solid understanding of EOFY protocol; if you are in need of a personalised assistance plan, please don’t hesitate to get in touch with us on (02) 9283 1666.