EOFY planning is crucial for businesses and individuals seeking to minimise tax, enhance retirement savings, and fulfil compliance requirements before 30 June. This June 2022 update explores essential end-of-year (EOFY) planning strategies, covering tax tips, super contributions, trust resolutions, and record-keeping essentials.

Why Is End Of Year Planning So Important?

EOFY planning drives performance. Businesses with structured plans consistently outperform those that don’t. Setting targets, aligning your team, and reviewing financials help you move from reactive to proactive.

Use the EOFY period to bring your team together and brainstorm revenue and growth strategies. Remember the simple formula: Revenue = Customers × Transactions × Average Sale Value. Even a 10% improvement across each factor can generate over 30% total growth.

FBT For Your Business

The end of the 2021/22 fringe benefits tax financial year has come, and it is now time for us to do our part for your returns. However, there are some items that we might need your help with, particularly if you haven’t been forthcoming with information.

COVID-19 & FBT

Due to the impacts of COVID-19 over the last financial year, your FBT return may look a little different this year. Here are some of the areas that you might need to consider:

• Working From Home
• Cars
• Car Parking
• Entertainment

You may need to start a conversation with your accountant if you have been providing your employees and their associates with non-cash benefits and private expenses you have paid on their behalf. This information is necessary to help prepare your tax return.

Remember, if you are reaching out to us for assistance with your FBT tax return, the lodgement date will be 25 June 2022, otherwise it will be 21 May 2022 if you lodge it yourself.

Last Chance To Apply As COVID-19 Tax Deduction Deadlines Approach

Tax deductions introduced by the Australian Taxation Office to lessen the impact of COVID-19 are approaching the end of their eligible timeframe.

Loss-Carry Back Rules
Eligible businesses with an aggregated turnover of less than $5 billion or corporate tax entities that meet an alternative $5 billion total income test can use the temporary full-expensing measure again this year.

Shortcut Method
If you have had to work from home over the last year, from 1 July 2021 to 30 June 2022, you can claim a deduction for working from home.
You can claim $0.80 for every hour that you worked from home, but you are not able to claim for anything else if you use this method.

To claim this, you need to:

• Keep a record of how many hours you worked from home
• work out your deduction amount
• Write the deduction amount in your tax return in the ‘Other work-related expenses’ section
• Write ‘COVID-19 hourly tax rate’ in your tax return.

If you are consulting with a registered tax agent for your return, they may recommend this as your best course of action.

Essential Record-Keeping At Year-End For Your Business

Good record-keeping makes it easier to meet your tax obligations, manage your cash flow and make sound business decisions going forward. Essential business records that must be kept include:

• Expense Or Purchase Records. You must keep records of all business expenses, such as receipts, tax invoices, cheque book receipts, credit card vouchers and diaries to record small cash expenses.
• Year-end Records. These records include lists of creditors and debtors, as well as worksheets to calculate depreciating assets, stocktake sheets, and capital gains tax records.
• Income & Sales Records. You must keep records of all income and sales transactions, including tax invoices, receipt books, cash register tapes, and records of cash sales.
• Bank Records. Documents such as bank statements, loan documents, and bank deposit books should be kept in preparation for your tax return.
• Fuel Tax Credits. To claim fuel tax credits for your business, records must show that you acquired the fuel, used it in your business, and applied the correct rate when calculating how much you are eligible to claim.
• Payments To Employees & Contractors. Records of your workers must be kept, including their tax file numbers, withholding declaration forms, contributions to their superannuation, wages, and any other payments made to them.

By maintaining consistent records throughout the year of your major and minor expenses, you will be in a better position to face the end of the financial year.

Superannuation Strategies To Employ Before The EOFY

With superannuation being the key to a comfortable retirement, here are some strategies to consider that can help streamline your finances, while also taking into account some significant tax breaks.

Concessional Contributions
Also known as the before-tax contributions, these are the funds that go into your super account from your income before tax. The concessional contributions cap is $27,500 for all ages for the 2021-22 financial year. Your cap may be higher if you did not use the full amount of your cap in previous years. This is called the carry-forward of unused concessional contributions.

If your combined income and concessional contributions are more than $250,000 in total, you may have to pay extra tax. This is something to consider if you are looking to make personal contributions for the sake of the tax deduction.

Non-Concessional Contributions
Before-tax contributions are not the only way to top up your super account. Non-concessional contributions are made into your super fund from after-tax income. For the 2021-22 financial year, the non-concessional contributions cap is being increased to $110,000. If you contribute more than this, you may have to pay extra tax on this.

Preparing For Your Rental Property’s Tax Deductions

If you are a landlord, you may be looking for ways to reduce your tax liability this year. This may assist you in turning your property’s cash flow from negative to positive. Here is a list of the main tax deductions that landlords should bear in mind when tackling their income tax returns:

Maintenance & Repairs
Repairs can be claimed as an immediate deduction if they relate directly to wear and tear (e.g replacing broken tiles after a storm with professional help). You will also need to understand the difference between renovations and repairs. This is because there are different tax treatments to renovations and repairs, and getting the two confused can be costly.

Rental Advertising Costs
It’s a common saying: you have to spend money to make money. So if you have spent money on marketing your property using online or print media, brochures and signs, you can claim these advertising expenses against your income in the same year that you paid for them.

Loan Interest
You can claim the interest charged on a loan for an investment property, as well as any bank fees for servicing the loan. You cannot, however, claim your repayments on the principal sum of the loan, nor claim interest on the entire size of the loan if you refinanced a portion of the loan for private purposes (regardless of whether equity in an investment property was used as security in that loan.

Council Rates & Strata Fees
Council rates can be deducted in the year they are paid, but can only be claimed for the periods during which the house was rented out.

Building Depreciation
Depending on when your investment property was built, you may be able to claim a deduction on the depreciation of the building’s structure and any renovations you make to the property.

Pest Control
Either the landlord or the tenant can claim an immediate deduction for the hire of a pest control professional.

Insurance
You can claim the cost of insuring a rental property. This may be especially important to note for those who have flood-affected properties, or whose insurance in the area where their property is has increased in cost as a result.

Trust Planning This Year Needs To Be Done Carefully

EOFY planning for trusts is crucial for ensuring compliance and maximising tax efficiency. Trustees must thoroughly prepare for EOFY. Trusts are a valuable structure for asset protection, tax planning, and estate management; however, they come with strict responsibilities, especially given the increasing scrutiny from the Australian Taxation Office (ATO).

Trust Deed

Ensure your original trust deed, along with any amendments or variations, is readily available and accurately reflects the current operation of the trust. All trustee decisions, including income and capital distributions, must be consistent with the terms outlined in the deed. If the deed is missing or outdated, it can compromise the trust’s legal standing and be extremely costly to rectify.

Trust Distributions

Discretionary and some fixed trusts must prepare and sign distribution resolutions before 30 June each year. These resolutions determine who will receive income from the trust and how much. A properly executed distribution minute is essential to avoid having trust income taxed at the top marginal rate.

Consider the tax profile of each beneficiary—distributing income to low-income earners, adult children, or related entities (such as bucket companies) can help minimise overall tax. Also consider reserving a small nominal amount of income in the trust to trigger a notice of assessment, which limits the ATO’s amendment period to 2–4 years.

Compliance Risks

The ATO has flagged trust distributions as a compliance priority. Recent rulings, such as those impacting Section 100A of the ITAA, scrutinise arrangements where income is allocated to one beneficiary but effectively used by another. These arrangements, sometimes called “reimbursement agreements,” may now result in denied deductions or penalty assessments.

Make sure your arrangements:

• Clearly identify beneficiaries receiving trust income
• Reflect actual entitlement and access to income
• Are supported by proper documentation and trustee resolutions

Trustees should review their distribution strategies in consultation with their adviser to ensure compliance with current interpretations and rulings. If your trust structure involves complex beneficiary arrangements or profit-shifting mechanisms, now is the time to have them assessed.