The most popular EOFY questions, and answers

Taxes may be one of only two certainties in life However, this doesn’t mean there’s always certainty around them.

The nearing closing of the financial year (EOFY) is a time when most small-scale business owners will be seeking the assistance of a professional accountant to ensure that your affairs are in the right place. In order to help you make the most of your time with them, we’ve spoken to two leading small business accountants, who have provided their most frequently asked questions about EOFY from their clients, so you can get an advantage.

Q. How do I claim my vehicle?

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 is not a tax deductible benefit for your personal income.

There are certain requirements for the logbook. But, if you’ve got an account of your appointments and actions via your email, that can be sufficient to justify your claim.

Q. I’ve been earning quite a bit of money. Should I consider buying a vehicle at the end of the year to save tax?

When you are buying a car, the decision should be about cash flow and not tax. You don’t get a real benefit from buying a car towards the close of the trading year. You’re better off considering your cash flow at time of year’s beginning in order to increase the depreciation allowance as well as any interest.

Q. I’ve got no cash. How can I be able to pay for my tax bills?

You’ll need to sign some sort of payment arrangement. There are a few options to accomplish this. Contact the tax department and establish a payment schedule but you will be charged interest and penalties are imposed when you don’t make your payment.

There is another option: you can approach companies that offer tax pooling. They can fund your tax payment through a pooling arrangement , and the interest rate is 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 be required to pay?

There is no easy solution that is universally applicable since it differs widely according to your business structure, the taxes you are required to pay and the field that you are in.

We generally recommend that clients save around 20-25% of their turnover to help with taxation as well as GST, Accident Compensation Corporation (ACC) levies , and any small surprise throughout the year.

Q. Do I have to be GST-registered in the next financial year?

Again, the answer varies for each business owner , based on their industry, the market they want to target and turnover.

You can voluntarily register when you’re likely to exceed the threshold or are engaged in any activity where GST includes in industry prices as a rule.

Q. Do I have to conduct an inventory?

The short solution is yes. There is an exemption which allows those with low values of inventory to guess the quantity they have on hand. However, if you’re in the business of selling items, it’s smart to know exactly how many things you have to sell.

The process also flags SLOBS (slow-moving and obsolete inventory) and allows you to get rid of it and not order it once more, which will improve your cash flow.

Q. Can I do my EOFY taxes myself?

Of course you can, but will you do it right? Today’s software makes it easy to run a profit and loss, and file a return with the tax department. But it doesn’t tell you what you are allowed and can’t claim, and it isn’t able to take a review of your financial situation.

Are you looking to make sure that everything is in order this tax season? Talk to your accountant about ticking all the right boxes.