By All Accounts

Are you ready for the tax man?

Happy new fi nancial year!

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 aff air but for most trading within the accommodation industry it can be more complicated. More oft en than not an entity tax return i.e., trust, company or partnership must 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 mid-May the following year. For most businesses lodging with an accountant their due date will be mid-May.

Step 2: Obtain a checklist or information request

Contact your accountant for this. This may be a standard checklist, or a more

Jonathan Hanaghan,

Director, Jonathan Grant Accountants

customised and detailed list of the information required.

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 confi rm that your work will be completed in your accountant’s offi ce and not via an off shore processing offi ce.

There is a growing industry trend for Australian accounting fi rms to outsource accounting and tax work to cheaper overseas countries.

This is fi ne as long as 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 confi dential fi nancial data being transmitt ed back and forth overseas.

Agreeing on the time frame for completion is even more important if you require your tax returns for a fi nance application, an annual bank review or are part of a corporate agent partnership.

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Step 4: Ensure your bookkeeping soft ware 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 fi nancial year. 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 gett ing copies of bank and loan statements, purchase and sale contracts for assets bought and sold (including property, shares, motor vehicles and so on). 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.

Step 7: Forward all information to your accountant

This involves sending all requested information to your accountant together with any other writt en 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 lett er or similar document outlining both party’s roles and responsibilities. If you are unsure on any matt er, contact your accountant before sending. It is bett er 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 clarifi cation. 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 fi nancial 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 soft ware 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 bett er outcome for client and accountant.