What You Need to Know for a Streamlined Tax Process

With the end of the financial year just around the corner, now is the time to get your tax ducks in a row. Equipped with a strong understanding of your business finances, you can head into tax time with confidence that you are maximising the support available to you.

It’s been another challenging year with more COVID-19 lockdowns and ongoing supply chain disruptions. But with lockdowns seemingly behind us and some normalcy returning, there is a sense of optimism about the future.

Below you’ll find our tips about things to consider for EOFY 2022 to give you that same optimism about tax time and starting 2022/23 on the right foot. 

Plan for digital investment

The Federal Government announced a ‘Technology Investment Boost’ in their 2022 budget. For businesses with an annual turnover of less than $50 million, you may be able to claim a deduction of 120% for investments in digital skills and equipment.

The expenditure you can deduct is capped at $100,000 and may cover things like a new website or digital skills training for your employees. The plan covers expenses incurred from 7:30pm on 29 March, 2022. The program is due to end on 30 June, 2023, so if you don’t have any relevant deductions in this financial year, you may be able to include it in your plan for next year.

The instant asset write-off was also extended to cover this financial year and FY 22/23. Businesses with an aggregated turnover of less than $500 million can deduct assets valued up to $150K. For businesses with a turnover of less than $50 million, these assets can also be second-hand. 

Working from home deductions

Throughout the pandemic, working from home has been the norm. And it looks like hybrid work models are here to stay.

If you are among the large number of people who now work from home some or all of the time, there may be deductions that you can claim. You’ll find a full list of these on the ATO website. This may include:

  • Equipment that you’ve purchased for your home office, such as computers, printers, furniture or telephones.
  • Expenses such as electricity (for heating, cooling and lighting) as well as phone and internet.
  • Other running expenses required for your work such as stationery, printer paper or ink.

For items valued up to $300, you can claim the full cost. For items over $300 you can claim the decline in value. 

There are different methods you can use to calculate your working from home expenses claim, including a shortcut method that applies for FY 21/22. 

Wages and superannuation

Now is the time to make sure that your concessional superannuation contributions are up to date and paid before 30 June. If you make the payments after the end of the financial year, they won’t be deductible.

For your own superannuation, you may also want to think about making additional contributions up to the $27,500 cap. Your accountant can advise you on the benefits of doing this for your individual circumstances. 

It’s also a good time to consider bonus payments for your employees. This can serve the purpose of motivating your employees and rewarding them for their effort. Bonuses made before 30 June can also be claimed as tax deductions. 

Plan early

Being organised can make for a much more streamlined EOFY process. But it’s not just about ensuring a less stressful experience. Having the full picture of your business finances can ensure you make the most of any support or deductions available to you.

Start now by preparing your profit and loss statements, records of all purchases, completing a stocktake and digitising your paper records. 

If you have outstanding unpaid invoices, check if they meet the ATO’s deductibility requirements as ‘bad debts’. 

Don’t go it alone

No matter how prepared you are, tax time can be challenging for any business owner. Take the hassle out of the process by engaging the experts.

At Vital Addition, our accountants and SME experts can take your tax off your plate. That way, you can get back to business knowing that your finances are in the best of hands.

Get in touch  to arrange a complimentary strategy call. We’ll take the time to understand your business needs so we can support you where you need it the most.