The most common end of financial year questions, answered

Taxes are perhaps one of the only two guarantees in life, but this doesn’t mean that there’s never a certainty about them.

The looming approach of the final year of financial reporting (EOFY) implies that numerous small business owners will be seeking the aid of an experienced accountant to ensure all their financial affairs are in good working order. To help you make the most of the time you spend working with them, we’ve spoken to two top small-business accountants who have discussed their most frequent questions about EOFY from their clients and give you an early start.

Q. How do I claim my car?

There’s many ways to. One option 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 some requirements for a logbook. If you do have the log of your meetings and activities through your email, that can be sufficient to support your claim.

Q. I’ve been making an amount of money. Should I consider buying an automobile at the close of the year to save tax?

When you purchase a vehicle it should be about cash flow and not tax. There isn’t any real advantage from purchasing a vehicle just at the end of your trading year. You should consider your cash flow at the start of each year to increase the depreciation allowance and any interest.

Q. I’ve got no cash. How am I going to make my payment for tax?

You’ll need to sign some sort of payment agreement. There are many ways to do that. You can reach out to the tax department to establish a payment schedule however, interest will be charged and you will be penalized when you don’t make your payment.

There is another option: you may approach companies offering tax pooling. They’re able fund your tax payments via a pooling agreement and the interest rates are usually significantly lower than those offered by the tax office. It’s also more flexible.

A small business loan can be a beneficial alternative.

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

There is no easy, universal solution to this since it differs widely based on your business structure, the taxes you are legally obligated to pay, and the type of business you work in.

We generally suggest that clients save between 20 and 25% of their turnover to help cover tax on income and GST, Accident Compensation Corporation (ACC) taxes and any other little surprises all through the year.

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

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

It is possible to register for GST on your own when you’re likely to exceed the threshold or are undertaking an activity in which GST is included in your industry prices as a rule.

Q. Do I need to do a stocktake?

The short solution is yes. There is an exemption which permits those with lower values of inventory to guess the quantity they hold. But if you’re in the business of selling things, it’s important to be aware of the number of items you have on hand to sell.

This process also identifies SLOBS (slow-moving and out-of-date stocks) which allows you to dispose of it without having to purchase it again, thus improving your cash flow.

Q. Can I do my EOFY taxes myself?

Of course you can however, can you do it right? Software available today makes it easy to run an income and loss and submit a tax return to your tax authorities. However, it does not tell the tax benefits you 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.