EOFY checklist for SMEs: The overlooked tax deductions you need to know

With so much going on at tax time, it’s easy to make mistakes that can cost a pretty penny. This easy checklist for business leaders has you covered. From commonly overlooked deductions to unchecked tax liabilities, end-of-financial-year (EOFY) can come with a nasty financial sting for many businesses and their time-poor leaders.

But it need not be that way. 

Using this tax-time checklist, take a proactive approach now before the financial year ticks over anew and you’ll likely find your pocket brimming with extra dollars – what’s not to love about that?

Plan ahead

Tax time isn’t just about looking back at the previous year – it’s a time to be forward-looking too.

The new tax year may be much tougher than the current one as the economy slows and interest rates rise, making planning even more important for yourself and your business to weather the storm.

Pre-plan your tax position and implement appropriate structures. Consider tax-effective ways to reward and retain staff. 

It could be worth visiting your accountant and financial advisor before June 30 to see how best to manage the EOFY divide – you may be better off bringing some spending or income forward, or pushing them back, so they fall within the most favourable financial year for your situation and relevant tax policies.

Get others to act

In business, your numbers are dependent on other people. Be proactive in chasing them for what you need so you can lodge your taxes earlier and bank any refunds sooner.

For instance, encourage payments from clients with outstanding invoices and prompt employees to lodge their expenses before the new tax year.

Think business AND personal

Don’t sacrifice your personal financial wellbeing by focusing solely on the business. The worst case scenario could see you disqualified as a director by becoming personally bankrupt.

Ensure your financial affairs are managed independently of the business, which includes:

• Getting separate tailored advice for yourself and your business.
• Separating personal and business deductions.
• Lodging your personal returns promptly. 

FBT

Fringe Benefits Tax (FBT) may be more prominent than in previous years because:

• employers are increasingly seeking non-monetary ways to incentivise employees.
• employers are using perks to entice workers back to the office post-pandemic.
• fewer workers are using public transport, suggesting more are driving – potentially with parking or a company vehicle supplied.

Keep vigilance over your liabilities and plan accordingly to avoid unpleasant surprises.

Don’t overlook deductions

Underclaiming deductions = overpaying tax. Why pay more than you have to? 

Commonly overlooked deductions include:

• depreciation – this becomes simpler if you claim the full deduction through the instant asset write-off at the point of purchase. Or you may be eligible for simplified depreciation rules for small businesses.
• mileage (and tolls) – often the result of poor recordkeeping.
• occupation and industry-specific deductions – many people are unaware of these.
• self-education expenses – a bonus is that the $250 non-declarable threshold has been removed.
• ongoing financial advice expenses – many people don’t realise these are deductible.
• charitable donations – from you or the business.

Plus, remember to claim personal deductions for those long hours spent working from home on the business – accounting, invoicing, marketing, BAS, payroll, etc. done on late nights and weekends.

Consider relevant grants

It may be worth investigating what new grants open from 1 July and, more urgently, which ones have applications that close by 30 June, since some could operate by the financial year.

If you’ve already received grant funding, double-check its expiry date – you may be required to use the funds within the current tax year or risk losing the benefit.

Caution on EOFY sales

Tax-time sales only save money if you were planning to purchase those goods anyway. 

Otherwise, the deduction you’ve banked pales against the cost of unused goods, the hit to your cash flow, and potentially extra costs should you need to store them.

So, avoid unnecessary splurges on EOFY sales.

Supercharge your super

Additional superannuation contributions can boost your retirement nest egg while simultaneously qualifying for a tax deduction or being salary-sacrificed. 

The carry-forward rule also allows you to take advantage of unused contribution caps from previous years.

And, for those who prioritise building up the business over taking a large salary, you may be eligible for additional co-contributions too. Why not have the government pay you for a change!

Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women.