EOFY Tax Return Checklist For Australian Tradies

Make sure you're hitting all your key dates this End of Financial Year. Get the latest on tax benefits and entitlements you may be eligible for and other important tips for lodging your 2020/2021 tax return.

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Here goes another End of Financial Year

It’s time to get your ducks in a row for your 2020/2021 annual tax return. Tradies always have a mountain of expenses to claim but this year, thanks in large part to COVID-19, there are a few extras to be aware of including stimulus and support measures that you may be able to take advantage of to ease your tax bill. Don’t worry - with our checklist tax time will be as easy and stress-free as possible.

01
Key dates to be aware of
01

Key dates to be aware of

30 June. Last day of the 2020/ 2021 Financial Year.

1 July. Start of the 2021/ 2022 Financial Year.

14 July. Single Touch Payroll finalisation declaration is due.

21 July. Lodge and pay your June 2021 Business Activity Statement (BAS) if you pay monthly.

28 July. Lodge and pay Q4 (April-June) Business Activity Statement (BAS) if you pay quarterly.

28 July. Make sure all Q4 superannuation guarantee contributions are received by employees’ funds to avoid extra charges.

28 August. Lodge Taxable Payments Report if you’re in the building and construction industry.

21 October. Deadline to lodge your tax returns if you’re doing it through an agent.

31 October. Deadline to lodge your individual/sole trader/partnership tax return, payment reports, and Annual Investment Income report.

28 February. Deadline to lodge your company tax return. These dates vary, so check the ATO website before getting started.

Before you get started...

Talk to your accountant. They’ll help you with specific advice, and ensure you’re taking advantage of any relief packages or deduction strategies that may cut down your tax bill. They’ll also help you avoid common tax mistakes.

02

Round up any outstanding invoices

Got clients who haven’t paid yet? Now’s the time to chase them up. Send out reminders for any outstanding invoices, double-check you’ve charged all your clients correctly, and try to chase up any unpaid invoices that may have slipped through the cracks.

Tip

Declare your bad debts: If you’ve tried everything in your power to get a client to settle up with no results, it might be time to make a decision on whether to write them off as bad debt. Writing them off may mean you’re in for a tax deduction, which can be handy to help recoup some of the losses from the client. Prepare as much evidence as you can that your client didn’t pay. Think email correspondence, legal documentation, and more.

03

Compile your expenses

As a tradie, you rack up a ton of business expenses — and now it’s time to round them all up.

Gather up your bank statements and vehicle logs, and start searching for any rogue receipts or additional expenses you can claim. Look in your emails for receipts from purchases you’ve made for your business (like tools or materials), request any missing invoices from contractors, and dig out those petrol receipts from the glove box. All of these little costs add up.

What can I claim?

  • Vehicles and associated running expenses
  • Travel
  • Uniform (including occupation-specific or protective clothing, laundry and dry cleaning)
  • Self-education courses or training
  • Work-related items like your phone or laptop
  • Tools, equipment and supplies related to your job
  • Meals when working overtime
  • Union or association fees

Conditions exist for most claim categories, for example if you use your tools for personal use as well as for work then you can only claim the work portion for tax purposes. Check out the ATO’s advice here.

Tip

If your receipts are in a shambles, look at downloading an app that lets you snap and save them while on the go, like Hubdoc by Xero or Dext.

04

Conduct a stocktake and make any final purchases

This means counting your stock on hand to make sure everything is in its place and where possible, that no tools or materials are unaccounted for from the past year. Once you’ve done this, it’s time to figure out what stock is still usable, and which stock you’d like to write-off or write-down.

Ideally, try to do this as soon as possible and purchase replacements (and any other last-minute purchases) before 30 June. This way, you can include them as an expense in the 2020/ 2021 financial year.

05

Gather and organise your financial records

The main reports you’ll need to generate at EOFY are a profit & loss statement (P&L) and a balance sheet. Your P&L shows your total income and expenses for the year, which helps to determine how much income tax you need to pay. Meanwhile, your balance sheet should include your assets and liabilities, which are used to calculate your net assets.

If you’re using Fergus, you can access these through your Business Activity report.

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06

Check your eligibility for stimulus/support measures

Over the past year, the Government has brought measures to help people who are doing it tough during COVID-19. A lot of these measures benefit tradies, so it’s worth taking a bit of time to do your homework on these.

JobKeeper and JobMaker

JobKeeper was introduced as a means to keeping more Australians in their jobs during the coronavirus crisis. It is a taxable expense that you can add to your P&L. You may also be able to claim the JobMaker hiring credit if you’ve taken on an additional employee under 35 between 7 October 2020 and 6 October 2021.

Small business income tax offset

Designed to lower the tax bill of small businesses, the small business income tax offset has increased from 8% to 13% for 2020/ 2021. The amount that can be offset for eligible businesses is calculated using your total net small business income and your taxable income for the income year and can reduce your tax obligations by up to $1,000.

Temporary loss carry-back scheme

Designed to provide temporary cashflow support to businesses that went from being in a tax paying position to a tax loss position. The temporary loss carry-back scheme allows small businesses that have made taxable losses to claim a refundable tax offset. Speak to your accountant to learn more.

07

Buy and write-off depreciating assets

Did you know?

Most of your assets like computers or tools will wear and tear over time. Depreciation is a way of calculating the loss in value of your assets over time, which can be claimed as a tax deduction. It’s similar to claiming expenses for assets you buy, except you only claim the amount that it depreciates each year.

Asset write-offs have changed this financial year, so it’s important to be across these when claiming your expenses. If you’re an eligible business, you can choose from one of the three options below when dealing with depreciating assets, such as computers, electronic tools, furniture or vehicles.

01

Temporary full expensing: You can instantly deduct the business portion of the cost of depreciating assets for this financial year.

02

Accelerated depreciation of eligible assets: You may be able to claim an accelerated deduction for depreciating assets, as long as you first used it or installed it in the 2020/ 2021 income tax year.

03

Instant asset write-offs for tradies: The instant asset write-off threshold has been increased from $30,000 to $150,000. Just make sure you use your asset at least once before 30 June 2021, or have it installed and ready for use by this date (provided you purchased it before 31 December 2020).

08

Finalise your payroll

Make sure all your employees or apprentices are being paid in line with minimum terms and conditions of employment for their occupation/industry (if you’re unsure, check out the Fairwork Ombudsman website here), and that you’ve made all of your superannuation contributions. Don’t forget to provide each employee (including apprentices) with a payment summary for the 2020/ 2021 Financial Year.

Tip

Superannuation for your staff (or yourself) is only tax deductible if you pay it on time.

09

Other tips to reduce your tax bill

01

Put time aside at the end of June to pay all your last-minute bills. You can also pre-pay as many bills for the next 12 months as possible before 30 June, as prepayments are tax-deductible in the year you paid for them.

02

Double and triple-check that your figures are up to scratch. The ATO has already warned that there will be an increased number of tax audits and reviews on JobKeeper, superannuation audits, and work from home expenses.

03

Get organised and stick to the ATO’s deadlines. You’ll incur penalty fees for missing deadlines, which can quickly add up.

04

Claim tools as an asset rather than an expense. This allows you to benefit from the write-offs for depreciating assets, and also helps if you’re planning to apply for financing in the future.

It’s now time to lodge your taxes

Individual, sole trader or partnership tax returns are due on 31 October 2020, while company tax returns will most likely be due on 28 February 2022.

Remember to declare how much GST you have paid throughout the year as well. If you’ve been paying it quarterly, you’ll need to submit an annual report. If you haven’t paid your GST, you can do this in one annual return.

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