EOFY Tax Tips For Retailers

The end of the fiscal year (EOFY) is drawing near, which indicates that it is time to start giving some thought to how you will handle your taxes when the time comes. When it comes time to fill out your tax return, there are a few very specific things you need to keep in mind if you own a retail business.

Because the end of the fiscal year is drawing near, now is a good time to start giving some thought to how you will handle your taxes when the time comes. If you are in the retail business, there are a few steps you can take to optimise the amount of money you receive from your tax return. This blog post will go through some of the most important recommendations for retailers, with the goal of lowering their taxable revenue and lowering their overall tax burden.

As the end of the fiscal year draws closer, you may be a merchant who is curious about what tax advice you can put into practise to reduce the amount of tax liabilities you will have to pay. This article will provide you with some crucial pointers to assist you keep organised and limit the amount of revenue that is subject to taxation. Continue reading this article if you want to find out how to get the most out of your end-of-the-year bonus!

If you're in the retail business and looking to make the end of the fiscal year a bit less stressful, here are a few tax strategies that you may use. Remember that the advice presented here is of a general nature; therefore, if you need special guidance pertaining to your company, you should speak with an accountant.

First things first: make sure you account for all of the costs that are associated with generating income, including advertising, depreciation, and inventory costs. Additionally, make sure to claim any appropriate income deductions, such as those for your rent, salary, and office supplies. And last but not least, don't overlook the GST! Ensure that you have registered for it, and remember to factor it in when calculating your sales.

Financial Year End Tax Tips and Guidance for Retailers

According to the director of tax communications at H&R Block, Mark Chapman, the end of the tax year is quickly coming, and now is the time to take action to minimise the tax burden that your firm will owe.

The first of his top recommendations for end-of-year tax planning that he shares with Appliance Retailer is to take advantage of temporary full expensing.

This indicates that you are eligible for an immediate tax deduction for the costs of capital assets. Since many companies are currently running promotions to celebrate the end of their fiscal years, now is the perfect time for your business to take advantage of these deals by purchasing some much-needed assets to build your company while simultaneously reducing the amount of taxable profits you report.

The tax cut is effective because it allows an instant deduction to be used against annual profits for any and all capital assets. There is no upper limit on the amount of money that can be spent on acquiring assets. Businesses are eligible to participate as long as their annual revenue is less than $5 billion.

Purchases made just before the end of the fiscal year always make the greatest sense from a tax planning viewpoint, so now is the time to take the plunge before the temporary full expensing provision expires on June 30, 2022. This provision is in effect until that date.

If your company needs to invest in new capital equipment and has the cash flow or borrowing capacity to finance it, now is the time to do it because generous tax breaks like these will probably never come around again. While now may not be the ideal time to make large capital purchases for many retailers, now is the time to do it if your company needs to invest in new capital equipment.

The following are examples of things that may be eligible for reimbursement: cash registers and other point-of-sale equipment, delivery vehicles, store fittings and fixtures, computers, laptops, tablets, in-store security systems, and accounting software.

Because the end of the tax year is drawing near, now is the time to take steps to reduce the amount of tax liabilities that your retail firm will have to pay. The following is a list of the most important advice for end-of-year tax planning:

Profit From Temporary Full Expensing

Due to the fact that many companies are currently running End of Financial Year promotions, this is the perfect time of year for your company to take advantage of the Temporary Full Expensing tax break by purchasing some much-needed assets to build your business and, at the same time, reduce your taxable profits. Since this tax break allows you to receive an immediate tax deduction for the costs of capital assets, it is one of the best tax breaks for businesses.

This tax break allows you to deduct immediately from your annual profits the amount that any and all capital assets contribute to the business. There is no limit to the amount of money that can be spent on acquiring assets, and as long as the annual revenue of your company is less than $5 billion, you are eligible to participate.

Purchases made just before the end of the fiscal year always make the greatest sense from a tax planning perspective, so now is the time to take the plunge before temporary full expensing expires on June 30, 2023. This provision will remain in effect until that date.

If your company needs to invest in new capital equipment and has the cash flow (or the borrowing capacity) to finance it, now is certainly the time to do so because generous tax breaks like these will most likely never be offered again. This is the case despite the fact that many retailers are finding that the current period is not the ideal time to make large capital purchases. Therefore, some of the things you would want to consider asserting are the following:

• Registers and other point-of-sale (POS) devices
• Delivery trucks
• Fixtures and fittings for stores
• Desktops, portables, and tablet devices
• Security measures installed within the shop
• Accounting software

Prepay expenses

You may be eligible for an instant tax deduction for some company expenses that you have already paid for. The general guideline that dictates when a deduction can be claimed for a cost is that it must span a period of no more than one year. This pays for expenses such as insurance premiums, telephone and internet services, subscriptions to trade or professional bodies, rent or leasing rates on your retail premises, and bookings for business seminars, conferences, or business excursions.

When a business has certain business expenses pre-paid, the company is eligible for an immediate tax reduction.

A deduction can be claimed for expenses that cover a period of no more than one year, such as insurance premiums, telephone and internet services, subscriptions to trade or professional bodies, rent or leasing charges, and bookings for seminars, conferences, or business trips. This is the basic rule that governs the deduction process.

Pay Superannuation

Within the first 28 days after the end of each quarter, employers are required to make payments to employees' superannuation accounts. Make sure that all of your superannuation contributions for the June quarter are paid by the 30th of June so that you can get your tax deduction sooner. It is important to keep in mind that in order for a tax deduction to be claimed, the contributions must first have been made, cleared in the business bank account, and then sent to the employee's super fund by the 30th of June. Before the end of the year, you need to make sure that any other delinquent sums are paid in full.

The Golden Rule: Always Maintain Your Files

Maintaining accurate records is your best ally for running an effective business, and it will also make your life easier in the event that the ATO has questions for you. In addition, it is vital to keep documents to justify what is included in your tax return; any deductions that are not substantiated, for example, are generally not acceptable.

The law stipulates that records must be preserved for a period of five years and must contain the following information:

• sales invoices
• expenditure reports
• receipts from the use of credit cards
• banking records
• a record of employees (wages, super, tax declarations, contracts)
• records of vehicles
• a list of both the creditors and the debtors
• purchases of various assets

It is OK to keep records on paper or electronically, but they should be accessible when needed. Unfortunately, in our experience, businesses frequently trip up when asked by the ATO to verify transactions by providing supporting records. As a result of this, even "innocent" businesses can find themselves being penalised by the tax man in situations in which they are unable to provide the requested evidence.

Don't rely on pre-filled information being accurate

Pre-filling, in which the Australian Taxation Office (ATO) receives data from a third party and puts it directly into the taxpayer's tax return, can be beneficial for both the taxpayer and the ATO. However, you should not presume that the information that has been pre-filled is either accurate or full. You are the one who is responsible for submitting an accurate tax return, and because it is your responsibility to do so, the ATO is not liable in any way if any of the data is submitted incorrectly or not at all. Make sure that you compare the data that has been pre-filled with your own original source papers.

Eliminate bad debts

No one who owns a company ever wants to be in a position where they can't collect on their existing obligations, but we have to be honest with ourselves and admit that this does, in fact, sometimes occur. The good news is that if your company is forced to write off a debt, your company will be eligible for a tax benefit equal to the amount of the debt that was written off.

It is possible to take a tax deduction for an unpaid obligation that has been determined to be a bad debt, provided that the debt was included as assessable income in either the current or the preceding income year.

It is important to look through your list of debtors at this time of year since it makes good sense. If you have any debtors that you believe cannot or will not pay, you should cancel those obligations before the 30th of June in order to claim the deduction for this year. The company is required to maintain a written record in order to provide evidence that the debt has been wiped off.

Even though it is a situation that no company likes to find themselves in, particularly when the economy is in a slump, businesses can occasionally find themselves unable to collect on outstanding obligations.

The good news is that if your company is forced to write off a debt, your company will be eligible for a tax benefit equal to the amount of the debt that was written off. It is possible to take a tax deduction for an unpaid obligation that has been determined to be a bad debt, provided that the debt was included as assessable income in either the current or the preceding income year.

It makes sense to go through your list of debtors at this time of the year, and if there are any debtors on that list who you believe can't or won't pay, it makes sense to write off those debts before the 30th of June so that you may claim the deduction for this year. It goes without saying that the company must maintain written records in order to provide evidence that the debt has been forgiven.

Obtain the appropriate trading stock valuation

For the purposes of taxation, the value of trading stock can be determined using a variety of approaches, including the cost, the market value, or the replacement value. The only criteria that must be met in order to change methods is that the value of the stock at the conclusion of one tax year must be the same as the value of the stock at the beginning of trading the following year. The provisions make it possible to make a selection with regard to each particular item of trading stock.

Changing the valuation technique used for tax reasons at the end of the year might either bring forwards or delay an amount of taxable income; therefore, it is important to examine the method that is being used in great detail.

If the value of a company's trading stock has not changed by more than $5,000 in either direction over the course of the previous year, the company does not need to do a stock-take even if it has a total annual turnover of less than $10 million. Include the same stock value at the end of the year as you did at the beginning of the year, that is, as if nothing had changed throughout the course of the year.

It is possible to take a tax deduction and "write down" or "write off" completely damaged or obsolete stock.

Bonuses should be paid to workers

If your company intends to pay bonuses, you must have a fully completed bonus plan in place by the 30th of June in order to be eligible for a tax deduction for this year. In most cases, a deduction for employee bonuses is allowed if the expense was incurred before the end of the year. This means that the company must have definitively committed itself to the payment (for instance, by passing a resolution) or has incurred a quantifiable legal liability to pay the bonus in order to be eligible for the deduction. On the other hand, there is no possibility of claiming a deduction for any bonuses if their totals are not computed and approved until after the fiscal year has come to a close.

Defer income

If you are planning on sending out invoices right up until the end of the year, it is in your best interest to hold off on sending those bills out until the beginning of the new tax year. Although the tax rate for the following year will be the same as it is for this year, your income tax liability will be postponed by one year.

Tax Advice for Stores

It is difficult enough to run a company without having to worry about being caught up in the complexities of the tax system. As a result, in order to make things more understandable for our readers, we compiled an introduction to the tax deductions that ought to be pursued by any and all retail firms.

Acquisitions Of Stock

Everything that you buy with the intention of reselling in your shop qualifies as a deductible business expense for tax purposes. You can also make a claim for the expenses associated with getting stock supplied from suppliers, in addition to other costs of sale such as delivery charges to customers (if you pay these rather than the customer), packing, and so on. If you go to trade shows to check out new products, you can also deduct the expense of attending those events from your taxes.

Before the end of the year, you should "write off" any stock that has been lost, destroyed, or become obsolete in order to qualify for a tax benefit.

Direct Deduction For Capital Purchases

Rather than spreading the expense of a capital purchase out over a number of years, your company can, up to the 30th of June 2018, claim an instant tax credit for any and all capital acquisitions that cost less than $20,000. That might be a good method to produce some additional income flow in addition to giving your store a facelift. In order for your company to be eligible, it must be considered a small business, which is defined as having an annual revenue of less than $10 million. Some of the goods that you may be able to claim include the following:

• Registers and other point-of-sale (POS) devices
• Delivery trucks
• Merchandise fits and installations in stores
• Desktops, portables, and tablet devices
• Security measures installed within the shop
• Accounting software

The Fees Associated With Advertising And Marketing

Tax deductions can be taken for money spent on advertising and marketing efforts that are directed towards selling shares, gaining publicity, or hiring workers. Unfortunately, business expenses incurred by entertaining customers and vendors are not tax deductible.

Your tax deductions for your business premises can include things like the rent, mortgage interest, rates, and land tax.

Payroll And Superannuation Costs

You are required to make salaries payments to employees, in addition to making contributions to mandatory superannuation funds for each and every employee on your payroll. All of those expenses are deductible on your taxes. If you are able to make your quarterly super contribution for June before the 30th of June, you will have a better chance of being able to bring that deduction forwards into the current tax year (the actual deadline is in July, after the next tax year has started).

Tax Expenses

All costs linked with taxes and accounting, such as engaging a book-keeper to create your company's financial records, having tax returns or BAS prepared, attending an ATO audit, or contesting an inaccurate tax assessment, should be tax deductible.

Fringe Benefits

The cost of providing fringe benefits to employees, as well as the Fringe Benefits Tax (FBT) that employers must pay on those benefits, can typically be deducted from an employer's federal income tax liability. An employee (or their associate) may receive a benefit known as a fringe benefit if the individual receiving the benefit is an employee (or a past or prospective employee). Examples of fringe benefits include automobiles and parking spots for those automobiles.

Commercial Insurance

If the premiums you pay for business insurance are tied to your company's ability to produce an income or safeguard its assets, then they are eligible to be deducted from your taxable income.

This indicates that the premiums paid for insurance policies covering workers' compensation, professional indemnity, fire damage, theft cover, public liability, loss of profits, and commercial motor vehicle insurance are all eligible for tax deductions.

The premiums paid for key person insurance, also known as key man insurance, are a type of policy that provides a benefit payment in the event that an important company employee becomes incapacitated and is no longer able to work. In most cases, the premiums paid for key person insurance can be deducted from your taxable income as long as the key person cover was purchased to protect your company's revenue.

Changing Your Business Structure Tax-Free

The government has recently introduced new measures that permit businesses to reorganise themselves without experiencing unexpected income tax consequences, such as capital gains on asset transfers. These measures are not tax deductions per se, but rather a tax relief that applies to small businesses. This is especially helpful for young and growing firms that want to switch to a different legal structure to give the owners better asset protection or more opportunity to expand, like switching from a sole proprietorship to a trust or company.