The beginning of a new financial year is an excellent time to make some “New Financial Year Resolutions”. Take the opportunity to review your financial position and seek improvements.

BETTER RECORD KEEPING

It is important to collect and organise your tax documents throughout the year to ensure that deductions are maximised and correctly claimed.

There are several apps that can make this process easier.

These apps enable you to take photos of tax receipts, recording potential tax deductible expenses on your phone at any time. This information can be forwarded to your accountant at year end for review and allowable deductions claimed in your income tax return.

MOTOR VEHICLE LOG BOOK

Keeping a logbook ensures appropriate records of the business use of motor vehicles are kept. A new logbook may be required if your business usage has changed significantly or logbook is out of date. Each logbook is valid for a period of 5 years. You do not need a new logbook for a new car, provided you use the vehicle in the same manner as the log book vehicle.

A logbook must be kept for a continuous period of 12 weeks and representative of the travel throughout the year. Your logbook must contain:

  • when the logbook period begins and ends
  • the car’s odometer readings at the start and end of the logbook period
  • the total number of kilometres the car travelled during the logbook period
  • the number of kilometres travelled for each journey. If you make two or more journeys in a row on the same day, you can record them as a single journey
  • the odometer readings at the start and end of each subsequent income year your logbook is valid for
  • the business-use percentage for the logbook period
  • the make, model, engine capacity and registration number of the car.

 

For each journey, record the:

  • reason for the journey (such as a description of the business reason or whether it was for private use)
  • start and end date of the journey
  • odometer readings at the start and end of the journey
  • kilometres travelled.

 

The use of an app may make the task of recording your logbook less onerous.

SINGLE TOUCH PAYROLL (STP)

Single Touch Payroll (STP) requires employers to report employee’s payroll information each time your pay them through STP enabled software. The payroll information includes salary and wages, pay as you go (PAYG) withholding and superannuation.

The ATO has provided concessions which will end on 1 July 2021, from this date you will need to report each pay through STP, otherwise, penalties may apply.

Up to date bookkeeping software will ensure that you meet your STP obligations.

CHANGES TO SUPERANNUATION FROM 1 JULY 2021

From 1 July 2021, the superannuation guarantee percentage increases from 9.5% to 10%.

USING APPROPRIATE BOOKEEPING SOFTWARE

Your financial position is difficult to assess if your information is not up to date. A move to cloud-based bookkeeping software such as Xero or other online bookkeeping products will make this easier for you and your business, by automating many of the manual recording and collating processes.

In conjunction with using a cloud based bookkeeping system, you could consider moving from a paper-based filing system to electronic information storage. You can upload documents to your bookkeeping software so information can be recorded more accurately and consistently.

Your accountant and bookkeeper can access your software to ensure processes are efficient and meaningful. This will assist you to make informed decisions regarding your financial affairs.

USE OF APPS AND SOFTWARE

There are several apps that can make substantiation of your expenses less onerous.

Be mindful of your requirements when choosing an app and remember to back up your data regularly to ensure no data is lost.

When upgrading your accounting software it is advisable to talk to your accountant to determine your needs and level of software required.

TALK TO YOUR ACCOUNTANT

In our experience, no one is excited by the prospect of a surprise tax bill. To avoid this, it is important that you arrange a tax planning meeting with your accountant on the completion in April or May each year, or when you are considering a significant transaction.

During this meeting, your accountant should discuss your financial position, planning for the rest of the financial year and identify any tax planning strategies that you can use to your advantage. Further knowing your tax liability and planning for it means you can better manage your cash flow.

The above commentary is general in nature and does not consider personal circumstances. Please contact us should you wish to discuss matters raised above and their application to you. This firm accepts no responsibility or any form of liability from reliance upon or use of its contents without further consultation with us.