EOFY Compliance. Are you ready?
With the countdown to the end of Financial Year officially on (just 52 sleeps to go!), it’s time for business owners around the nation to ensure all their books and accounts are in order so they start off FY2012-13 in tip top shape. It’s also time for many to get prepared for the year ahead, and that includes preparing for several changes to tax compliance.
So are we ready?
It appears not. During our recent business owner and management insights panel, we found that Australian business owners have significant knowledge ‘black spots’ about the many compliance updates being introduced in the new financial year (that’s right, the one that kicks off in under two months!), putting relationships with their employees and the ATO at risk.
Despite 69% of our panel participants describing themselves as confident that their business would be compliant with the 2012-13 compliance changes, further questioning revealed that we’re not as prepared as we think. The study revealed that 45% of Australian SMEs were unaware of the removal of the flood levy, 18% weren’t aware that there were changes to the tax free threshold, 62% were in the dark about changes to the reporting of building and construction contractor payments and 13% didn’t know that the carbon tax was being introduced. (If any of the above is a shock to you, it’s time to consult your accountant or financial advisor!)
So what does this mean for the engine room of our local economy? “Business operators who don’t gain an understanding of their knowledge deficits are at risk of paying too much tax or deducting too much tax from their employees’ pay packets in the new financial year. This could cause further time, money and paperwork burdens if these grey areas are not quickly attended to,” says our CEO, Tim Reed. He believes that SMEs need easily digestible, easily accessible information about what’s changing, which is why we’re launching a range of online resources that will help navigate key EOFY compliance changes. They’ll be available on our website later this month – so watch this space!
For now, here are key changes that should be on your radar.
- The flood levy is to be removed for individuals who were impacted during the last financial year.
- The carbon tax compensation measures for consumers will mean a payroll change for every employee to take into account the new tax thresholds.
- The tax-free threshold for individuals will increase significantly to $18,200 per year and will mean a payroll change for every employee.
- The low income tax offset will be reduced from $1,500 to $445 in 2012-13 (and to $300 in 2015-16).
- The superannuation changes passed as part of the Minerals Resources Rent Tax legislation could apply to some businesses’ staff. This legislation was passed in March but further detail is not yet available.
- The annual reporting of contractor payments to the ATO is due for the first time on 21 July 2013, for payments made in the 2012-13 financial year. Business owners in building and construction will need to ensure their systems are prepared to begin capturing this information from 1 July 2012.
- Pending legislation – The tax loss carry back scheme enables companies to carry back up to $1 million worth of losses to get a refund of tax paid in the previous year. From 1 July 2013, companies will be able to carry back up to $1 million worth of losses against tax paid up to two years earlier.
Are you confident that your business is ready for 2012-13 compliance changes?