The most popular EOFY questions, answered

Taxes might be one of only two certainties in this world However, it doesn’t mean that there is always certainty around them.

The nearing closing of the financial year (EOFY) is a time when most small-scale business owners will need the assistance of a professional accountant to make sure all their financial affairs are in the right place. To help you make most of your time working with them, we’ve spoken to two renowned small business accountants who given their top questions about EOFY from their clients to give you a head-start.

Q. How can I claim my vehicle?

There’s many ways to. One option is to claim it on an allowance for kilometres – which will reimburse the cost to your business and does not impact your income for you as an individual.

There are rules for keeping the logbook. However, if there is the log of your meetings and activities through your email, that can be sufficient to justify your claim.

Q. I’ve made an amount of money. Would it be worth purchasing an automobile at the end of the year to save tax?

When you purchase a vehicle your decision should be about cash flow and not about tax. You’ll not gain any advantage by purchasing a vehicle near the end of the trading year. You’re better off assessing your cash flow prior to the start of each year to maximize your allowance for depreciation and any interest.

Q. I’ve got no cash. How can I cover my taxes?

It is necessary to sign some sort of payment arrangement. There are several ways to go about it. You can contact the tax department to create a payment plan however, interest will be charged and penalties are imposed when you don’t make your payment.

There is another option: you may approach companies offering tax pooling. They can fund your tax payments by pooling them and the interest rate is often lower than that of those offered by the tax office. It’s also a lot more flexible.

A small business loan is another helpful option.

Q. How much tax will I be required to pay?

There isn’t a quick solution that is universally applicable as it varies wildly according to your business structure, the taxes you are registered for and the industry you work in.

We typically recommend that clients save around 20-25% of their turnover to help cover income tax, GST, Accident Compensation Corporation (ACC) levies and any little surprises during the year.

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

It is true that the answer varies for each business owner depending on the industry, market and turnover.

You are able to register on your own in the event that you’re planning to cross the threshold or are undertaking an activity in which GST can be included into the industry prices as a norm.

Q. Do I have to conduct a stocktake?

The short answer is yes. There is an exemption which permits those with lower values of stock to simply guess the quantity they have in their inventory. If you’re involved in selling products, it is important to be aware of the number of things you have to sell.

This process also identifies SLOBS (slow-moving and out-of-date stocks) so you can clear the item and not purchase it once more, which will improve your cash flow.

Q. Can I do my EOFY taxes myself?

Sure, you can however, can you do it correctly? Software available today makes it easy to run the numbers of a profit and loss and then file a tax return with the tax department. But it doesn’t tell you what you can and can’t claim, and it doesn’t take a closer examine your overall financial situation.

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