Over the past couple of months PrincipleFocus has completed tax planning for many of our clients – a process of determining an approximate net income position and then helping our clients with strategies to optimise their tax position and develop a plan to achieve this outcome. This can include a mixture of utilising the Primary Production tax provisions (including FMD’s, deferral of profit from forced sales, PP Averaging), considering timing of income and expenditure, superannuation contributions and structuring with different entities and family members.
Your 2021 EOFY Reminders & Action Items
Reportable Fringe Benefits
Where you have provided fringe benefits to your employees in excess of $2,000, you need to report the FBT grossed-up amount. This is referred to as a `Reportable Fringe Benefit Amount’ (RFBA) amount it needs to be updated for each employee as part of your Single Touch Payroll finalisation procedure for 2021. Please call should you have any queries regarding fringe benefits you may have paid to your employees.
Businesses that buy and sell stock generally need to do a stocktake at the end of each financial year as the increase or decrease in the value of stock is included when calculating the taxable income of your business. If your business has an aggregated turnover below $10 million, you can use the simplified trading stock rules. Under these rules, you can choose not to conduct a stocktake for tax purposes if the difference in value between the opening value of your trading stock and a reasonable estimate of the closing value of trading stock at the end of the income year is less than $5,000. You will need to record how you determined the value of trading stock on hand.
A simple list of stock categories or lines as well as number on hand and the value of the stock should be recorded at 30 June 2021 for your financial and taxation records.
Livestock on hand – Numbers of all categories of livestock on hand as at 30 June 2021 will be needed to prepare year end livestock accounts. Ensure that you note down numbers of head for reconciliation / completion of your livestock trading accounts for the 2021 financial year – it’s often harder to get this information right as you get further away from 30 June and the numbers change.
Grain on hand – The value of grain on hand at the end of the financial year should be recorded for your business. A simple listing of the tonnages on hand this week will make this process easier than having to work back or estimate at a later date.
Here’s a few other reminders about ways to reduce your tax for 2021
• Write-off bad debts in your computer system before 30 June 2021
• Write-off any trading stock that is damaged or obsolete
• Review your Asset Register and scrap any obsolete plant and equipment
EOFY is also a good time to consider whether or not there are strategic opportunities for your business and to set some goals for the future. This could include some of the big picture items such as succession and estate planning, purchase of another property, evaluating your mix of enterprises or considering property improvements.