The most common EOFY questions, answered

Taxes may be one of only two certainties in life but this doesn’t mean there’s never a certainty about them.

The looming approach of the close of the financial year (EOFY) means many small business owners will be seeking the help of a professional accountant to make sure their affairs are in good order. To make the most of the time you spend with them, we’ve talked to two renowned small business accountants who’ve shared their most common questions about EOFY from their clients to give you an early start.

Q. How can I claim for my car?

There’s more than one method. One way would be to claim it on an allowance for kilometres – which covers the expense to your business and does not have income ramifications for you as an individual.

There are certain requirements for the keeping of a logbook. However, if you have an inventory of your events and movements through your email, it could be sufficient to justify your claim.

Q. I’ve made quite a bit of money. Would it be worth purchasing a vehicle at the end of the year in order to avoid tax?

When you are buying a car it should be about cash flow and not about tax. You won’t gain a significant advantage from purchasing a vehicle near the end of the trading year. It is better to consider your cash flow prior to the starting of your year to maximize the amount of depreciation allowance and interest.

Q. I’ve got no cash. How do I make my payment for tax?

You’re going to have to sign a type of payment arrangement. There are several options to accomplish this. Contact the tax department and set up a payment plan but you will be charged interest and penalties are imposed when you don’t make your payment.

Another option is that you could approach businesses that provide tax pooling. They’re able fund your tax payments by pooling them and the interest rates are usually a lot less than that of the department responsible for tax. They are also much more flexible.

A small business loan is a helpful option.

Q. What tax do I have to pay?

There isn’t a quick answer that can be standardized because it differs greatly in relation to the business structure you have and the tax you are paying and the sector you work in.

We generally recommend that clients set aside between 20 and 25 percent of their turnover to help cover tax on income, GST, Accident Compensation Corporation (ACC) levies , and any small surprise throughout the year.

Q. Do I need to be GST registered for the next financial year?

The answer is different for each business owner depending on the industry, market and turnover.

You are free to sign up if you’re expecting to cross the threshold or are engaged in any activity where GST can be included into industry prices as a norm.

Q. Do I have to conduct a stocktake?

The simple conclusion is that yes. There is an exemption which allows those with low values of inventory to guess the quantity they have on hand. If you’re operating a business that sells items, it’s smart to know exactly how many items are available to sell.

This method also detects SLOBS (slow-moving and obsolete inventory) which allows you to dispose of it and not order it again, improving your cash flow.

Q. Can I do my EOFY taxes myself?

Yes, you can however, can you do it right? Today’s software allows you to easily run the numbers of a profit and loss and to file a tax return with Tax Department. However, it does not tell you what you are allowed and aren’t claiming, and does not take a deeper look at your overall financial situation.

Do you want to be sure you are doing it right this tax time? Talk to your accountant about ticking all the right boxes.