An accountant at Trekk Advisory talks to a client who plans for EOFY on the phone.
June 28, 2019 By Gavin Weller

To plan for EOFY, or not to plan for EOFY?

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As an accountant, it is not uncommon to be contacted by friends and family members outside of business hours with burning tax questions. Yesterday afternoon, a friend and small business owner rang to ask whether it was possible to know her tax liability before 30 June or prior to lodging her tax return. My answer was of course – YES!

Tax planning has been around for a while, but it certainly has not diminished in terms of its benefits for the business community and individuals with numerous investments. 

So what is it and why is it so important?

Tax planning allows your accountant to conduct a review of the current financial position of your business or personal circumstances to determine your likely tax position by the end of the financial year. This is normally conducted between April and June each year, as the more financial information we have, the better our assumptions are, and the more accurately we can plan for your tax position.

You might be asking yourself – how will this benefit me? Why do I want to know how much tax I’m going to pay? The three main reasons we feel this process is of value to our clients are:

It helps with cash flow planning

Taking up tax planning lets you know your estimated tax liability almost 12 months before it’s due. For example, by completing your tax planning in May 2022 for the 2021/22 financial year, any tax liability determined wouldn’t be due until the 15th May 2023 (if you lodge your tax return with an accountant). That gives you 12 months to plan and save. This is particularly important if your business is doing very well and your tax liability is high.

You've got to time it right

It gives you time to implement tax-saving strategies before the end of the financial year. For example, after reviewing your financial position your accountant may suggest making additional superannuation contributions or accessing small business tax concessions relevant for your business prior to 30 June. The timing of implementing these strategies is very important to achieve maximum benefit and your accountant may suggest tax savings you hadn’t thought of.

Talking to an expert can make all the difference

It allows for a conversation with your accountant throughout the year about how your business is tracking and what you need from them. Do you know what your turnover is? Is your gross profit or net profit on target and meeting or exceeding expectations? How has COVID-19 really impacted the numbers? Do you have enough staff to meet increased trade needs? Are you happy with your current accounting software? Do you need new equipment/finance? Do you want to buy/sell a business? Now is the time to talk about changes you can implement to finish off this financial year with a bang, and start 20212/23 afresh.

So what are you waiting for? Let's start the conversation

Article Modified 24/04/2022

 

About Author

Gavin Weller

Gav is a Director of Trekk and operates from our Brisbane office - helping his client's in the advisory space in planning, strategy, structure, and taxation. He loves being able to work closely with both his clients and his team to help them achieve their goals. The best part of his job is that each new day is interesting, challenging and rewarding because of the great people he gets to work with. He is a massive fan of all sports and no doubt wishes he could have been a sports star or commentator. Unfortunately for him, he’s not good enough or impartial enough for either but he very much enjoys continuing to play soccer and tennis in the meantime. There's more to him than sports though... He loves music and going to gigs and theatre with his wife. Gav goes by the saying "Life is short – enjoy and appreciate this moment" and "Back yourself – some days you kick and some days you get kicked – that’s rugby". This metaphor for strength and resilience helps him get the best out of each day.

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