As the financial year comes to a close, it’s crucial for businesses to prioritise certain tasks and considerations to ensure a smooth transition into the next fiscal period. In this blog post, we will provide you with some valuable insights and tips to help you wrap up the financial year effectively and set yourself up for success.
One important aspect to consider is taking advantage of the temporary full expensing scheme, which allows businesses to claim deductions for assets up to $150,000. It’s essential to remember that the asset must be installed and ready to use by the end of the financial year, irrespective of whether it’s new or second-hand and purchased locally or internationally.
Reviewing business debtors is a key step in assessing the financial health of your company. Consider writing off any trade debtors that are deemed unrecoverable. Additionally, think about prepaying expenses that would typically be paid in the next financial year, as small businesses can claim these expenses in the current financial year. Ensure that your cash flow can support delaying invoicing to 1 July, if necessary.
To optimise your inventory, it’s crucial to evaluate the value of your stock. Write off any damaged or obsolete items, and if the market price is lower than the cost of the stock, you can value it at the lower value. It’s also important to assess the value of plant and equipment assets that are no longer in use and consider writing down their worth.
Carefully review income received close to the end of the financial year. If payment has been received in advance of services or work being provided, it may be assessable in the year the services are delivered or the work is completed. Furthermore, stock up on general business items such as office supplies and computer consumables before the financial year ends, as you can claim these expenses in the current year even if they will be used in the following year.
To ensure compliance and employee satisfaction, pay all employee superannuation for the June 2023 quarter before the end of the financial year. Be aware that some super funds and clearing houses may have earlier cut-off dates for processing payments. Additionally, consider paying out staff bonuses before the end of the financial year. Provide employees with the option to receive their bonuses as additional super contributions, but keep in mind the concessional contribution cap for the year.
Starting from 1 July 2023, the superannuation guarantee rate will increase from 10.5% to 11%. Employers should review employment contracts to ensure compliance with the superannuation guarantee. Additionally, ensure you comply with PAYG reporting and withholding obligations to claim tax deductions for payments made to workers. Finalise Single Touch Payroll for all employees with the ATO, ideally after processing the final pays for the 2023 financial year.
It’s also crucial to address compliance-related matters before the financial year concludes. Review any loans to and from companies and trusts to ensure they comply with the current Division 7A provisions. Additionally, record any dividends paid to shareholders in your accounting systems and meet your documentation/notification requirements. For discretionary trusts, make sure to resolve how to distribute income in writing before 30 June 2023, according to the terms of the Trust Deed.
As the financial year comes to an end, following these tips and reminders will help ensure a successful transition into the next fiscal period.
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