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BY ALL ACCOUNTS
Are you ready for the Tax Man? Every year from July 1, all Australian resident taxpayers need to provide the deputy commissioner of taxation with a compliant tax return declaring all amounts of assessable income and the associated expenses they have incurred in earning this income. For some, this is quite a simple affair but for most trading within the accommodation industry, it can be more complicated. More often than not, an entity tax return i.e. trust, company, or partnership must to be completed as well as at least one individual tax return. I will now go through a stepped approach that should be useful in collating the required information and ensuring you meet your taxation reporting obligations.
Step 1: Due date for lodgment Find out from your accountant or tax agent what your due date for lodgment is. This due date will range from October 31 to May 15 the following year. For most businesses lodging with an accountant their due date will be May 15.
Step 2: Obtain a checklist or information request Contact your accountant for this. This may be a standard checklist or a more customised and detailed list of the information required. ResortNews | September 2020
Step 4: Ensure your bookkeeping software program is accurately reconciled to June 30 Whether you use MYOB, QuickBooks, Xero or another program you need to ensure that your data is accurately reconciled to June 30 of the relevant financial year. Jonathan Hanaghan, JonathanGrant Accountants
Step 3: Agree on timing and logistics Discuss how, when and where your work will be processed. Your accountant should have a standard processing timeframe. You may also want to confirm that your work will be completed in your accountant’s office and not via an offshore processing office. There is a growing industry trend for Australian accounting firms to outsource accounting and tax work to cheaper overseas countries. This is fine if you (the client) are aware that your accountant is doing this and are comfortable with it. I personally do not agree with this new trend as I believe in protecting and creating local jobs for Australian accountants and I have grave concerns regarding the security of taxpayer’s highly confidential financial data being transmitted back and forth overseas. Agreeing on the time frame for completion is even more important if you require your tax returns for a finance application, an annual bank review or are part of a corporate agent partnership.
This is important as it provides the starting point for your accountant to begin processing your work. Those that have their books kept internally by their accountant’s in-house bookkeeping services don’t need to worry about this step.
Step 5: Collate supporting information as per your checklist or information request This may require getting copies of bank and loan statements, purchase and sale contracts for assets bought and sold (including property, shares, motor vehicles etc.). You may need to contact your bank, solicitor, stockbroker, or real estate agent. This can take time, so it is best to get onto this as soon as possible.
Step 6: Make sure all ATO payments have been made and are up to date Ensure that any outstanding amounts of income tax, GST or PAYG have been paid. If this is not the case, you will need to advise your accountant.
MANAGEMENT
Step 7: Forward all information to your accountant This involves sending all requested information to your accountant together with any other written instructions including details to who is best to deal with any queries that may arise. At this point you may also be required to sign an engagement letter or similar document outlining both party’s roles and responsibilities. If you are unsure on any matter contact your accountant before sending. It is better to not start an engagement until all relevant information is with your accountant.
Step 8: Dealing with queries Make yourself available via phone or email to deal with any queries from your accountant. Most taxation compliance jobs have transactions that require clarification. It is best to deal with them as quickly as possible.
Step 9: Debrief This can involve a meeting or a phone call to discuss the resultant financial statements and tax returns. It is important that each client understands the contents of the tax returns as each taxpayer is ultimately responsible for the contents of their own tax return. This is also a good opportunity to discuss any other issues or questions you may have i.e. changing software programs or even selling the business. In summary, the taxation system in Australia is based on selfassessment so each taxpayer needs to take care when preparing their tax returns. This all starts with the quality of the information supplied to your accountant and the planning that goes into the process. A smooth engagement with minimal or no queries will always result in a much better outcome for client and accountant.
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