The most popular end of financial year questions, and answers

Taxes might be one of the only two guarantees in life However, it doesn’t mean that there is any guarantee that they will be paid.

The imminent close of the financial year (EOFY) will mean that the majority of small-business owners will seek the assistance of a professional accountant to ensure their affairs are in good working order. To help you make the most of the time you spend with them, we’ve talked to two leading small business accountants who have provided their most frequently asked queries regarding EOFY with their clients and give you a head-start.

Q. How do I claim my car?

There’s more than one method. One option is to claim it as an allowance for kilometres – which is a reimbursement to your business and is not a tax deductible benefit for your personal income.

There are requirements for the keeping of a logbook. But, if you’ve got an inventory of your events and movements through your email, that could suffice to prove your claim.

Q. I’ve been earning a fair amount of money. Would it be worth purchasing a vehicle at the end of the year to reduce tax?

When you buy a vehicle, the decision should be about cash flow, not tax. You won’t gain a significant advantage by purchasing a vehicle towards the close of the trading year. You’re better off assessing your cash flow at the start of each year in order to maximize the amount of depreciation allowance and any interest.

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

You’re going to have to enter into some kind of payment agreement. There are a few options to accomplish this. You can contact the tax department to set up a payment plan but the interest is charged and there are penalties if you miss your payment.

You can approach companies that offer tax pooling. They can fund tax obligations via a pooling agreement and the interest rate is usually much lower than the tax department. Additionally, it’s more flexible.

A small business loan is a beneficial alternative.

Q. What tax do I have to pay?

There isn’t a quick, universal solution to this because it is wildly different in relation to the business structure you have and the tax rates you’re legally obligated to pay, and the type of business that you are in.

We usually recommend that our clients save roughly 20-25% of their revenue to cover tax on income and GST, Accident Compensation Corporation (ACC) taxes and any other little surprises throughout the year.

Q. Should I be GST registered for the next financial year?

The answer is different for each business owner , based on industry, target market and turnover.

It is possible to register for GST on your own when you’re likely to exceed the threshold or are engaged in any activity where GST will be contained in the industry prices as a rule.

Q. Do I need to do a stocktake?

The short answer is yes. There is an exemption which allows people with low value of stock to just guess the quantity they have available. However, if you’re operating a business that sells products, it is important to know precisely how many items you have in your inventory to sell.

The process also flags SLOBS (slow-moving and obsolete stocks) and allows you to get rid of it , and never purchase it in the future, thereby improving your cash flow.

Q. Can I do my EOFY taxes myself?

You can certainly do it, but will you do it right? Today’s software can make it simple to track an income and loss and file a return with IRS. However, it does not tell you what you may and aren’t claiming, and does not review of your financial position.

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