2023 End Of Financial Year Tax Tips
Here we are at the end of another busy financial year and it is time to start getting everything in order for the 2023 End Of Financial Year.
These are some considerations that you can do over the coming weeks to finish up last year and prepare for the year ahead.
Reconciling your bank accounts
The bank accounts, credit cards and loan accounts that you use within your business are all really important as the main source of all your business transactions. During the year reconciling each of these and keeping them up to date is an important process but the most important date of the financial year is 30 June. It is our recommendation that no matter what day or date you would normally reconcile the business’s various business accounts, that you specifically reconcile to the date of 30 June. In regards to credit cards, you can still reconcile from your internet banking records but also wait until you have your pdf copy of your next credit card statement and perform your credit card reconciliation to the pdf copy statement balance. That will make sure that no internet banking glitches creep in to the year end balances. Please provide a pdf copy of your 30 June bank accounts, credit cards and loan accounts to MKG Partners so that we can make sure the balances of these accounts are all correct at year end.
Record keeping and filing systems – Xero and Hubdoc
The ATO request that all small businesses keep records for 5 years (in most cases). If you are a Xero user then you should be using Hubdoc. It is easy, take your photo and don’t keep the paper copy. Hubdoc is free with your Xero subscription and makes your accountants life so much easier when we are working on your business records during the year and at year end. Please remember that photo technology is only as good as the photos you take so please make sure the photo is good or use the retake option until you get it right. Blurry photos and other photos of half a receipt or only one page etc. usually mean that we do not see all the transaction and we will waste time trying to work out what is correct. Use the technology at hand and everyone saves time.
Write Off Bad Debts
Businesses can save tax by claiming a tax deduction for income that it will never collect. At 30 June you should review your accounts receivable list and make decisions about whether you are going to get paid or not. This is never easy but if the reality is that you are never going to get paid then record your decision in writing and make your bad debt entries as at 30 June.
$20,000 Plant & Equipment claims from 1 July 2023
The unlimited claims for spending money on plant & equipment has ended as at 30 June 2023. From 1 July the maximum claim you can make when you buy plant & equipment in your small business is up to $20,000 excluding GST. While this will certainly limit the number of cars being purchased and claimed in small business there are still plenty of other items of equipment that your business can purchase and claim in full for the year ahead. This includes both new and second hand items that are purchased and remember to obtain a tax invoice or a receipt as proof of your purchase.
20% Extra Tax Savings Boost in Small Business Tax Returns
The ATO are allowing small business to claim an additional 20% in their 2023 tax returns for any costs incurred in training and technology. There are a lot of rules about how the 20% boosts apply but in simple terms if your small business has incurred costs since 29 March 2022 on Skills & Training and/or Technology Investment then an extra 20% tax saving is coming your way this year. Approved training courses, books, reference materials, training equipment, related meals & accommodation, travel and stationery may all be included in the Skills & Training boost. While included in the Technology Boost may be computers, laptops, computer equipment, phones, digital watches, software upfront or ongoing subscriptions, digital media & marketing, E-commerce and even cyber security. There are plenty of rules around what can be included so remember to ask your MKG Partners accountants about these and how you can obtain the 20% boost in your 2023 tax return.
Whether it be writing off bad debts or working through the new skills training and technology boost rules the topics and information above are important but can be confusing and complex. The team at MKG Partners can work through these with you to ensure that the correct claims and the maximum tax savings are made. Contact the MKG team and we will help you claim what you are entitled to.