RSM Australia: End of Year Tax Tips for Tourism & Hospitality Businesses

With the end of the financial year fast approaching, it’s often confusing for business owners to know what exactly they need to do in the lead up to 30 June. That’s why we’ve compiled a list of tax tips to ensure your tourism and hospitality business makes a smooth transition from one year to the next.

  1. Make use of the extended Temporary Full Expensing of Eligible Depreciating Assets stimulus

The Government has extended the Temporary Full Expensing of Depreciable Assets (TFEDA) stimulus measure, which many tourism and hospitality businesses will be able to utilise if they find they have cash available to them at the end of the financial year.

From 7:30pm AEDT 6 October 2020 to 30 June 2023, businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets. For businesses with an aggregated turnover of less than $50 million, TFEDA also applies to the business portion of eligible second-hand depreciating assets.

What does this mean for tourism and hospitality businesses? Perhaps there is an item of plant and equipment that you want to purchase, and you need to manage your taxable income. If the asset is installed and ready for use by 30 June 2021 you may be eligible for an immediate tax deduction for the full cost of the asset.

A word of caution…

A tax deduction is most useful when it can reduce your business’ taxable income. With the effects of COVID-19 hitting the tourism and hospitality sector hard, many businesses may find themselves making a loss or a greatly reduced profit. It would appear unwise to go and invest large amounts of money to purchase assets for the sake of accessing the full expensing measures if your business is already in a loss or reduced profit position, especially when that money may be better utilised elsewhere in the business. It’s important not to get caught up in the headlines, and really consider whether it’s a worthwhile investment for your business.

  1. Remember to pay your bonuses

If you want to pay your employees or directors a bonus at the end of the financial year to reward their hard work, make sure that you have this in place prior to 30 June to ensure it can be claimed as a tax deduction. Be wary of the type of bonus that you are paying, the rate you need to withhold tax at, and whether it attracts compulsory superannuation.

  1. Check your Superannuation has been paid on time

To ensure that you can claim a tax deduction for the superannuation you have paid during the year, you need to pay your super for the June quarter by 28 July and check that all the super for the three previous quarters has been paid. If you are late paying any super, it won’t be tax-deductible and missed payments may attract the Super Guarantee Charge (SCG) which is also non-deductible. Superannuation is only considered ‘paid’ when it is received by the fund which can take a few days, so avoid leaving it until the last day of June.

Superannuation is also only tax-deductible when actually paid. Bring forward the June quarter tax deduction by paying all employee superannuation prior to 30 June. It has to be paid by 28 July 2021 anyway, but you will get your tax deduction 12 months earlier by paying prior to 30 June 2021.

  1. End of year payroll processing – File, reconcile, and complete your STP declaration

All businesses should now be registered for Single Touch Payroll, which greatly streamlines the end of year payroll procedure. If you’re using an accounting program like Xero, this should further simplify the process for you. Many tourism and hospitality businesses have a large pool of staff, and this can be a great time to confirm with your employees any change of personal information to ensure that the details you have on file are correct. Remember to file your pay runs for the year, reconcile your payroll reports, and complete your STP finalisation declaration. Advise your employees that they won’t be receiving a paper group certificate and can instead access their income statement through their MyGov account.

  1. Remember to carry out a final stocktake

Tourism and hospitality businesses that buy and sell stock must ensure that they complete a stocktake at the end of the income year. There is an exception for small businesses if you estimate the value of your stock to have changed by no more than $5,000 in the year. Carrying out a stocktake will help you gain a better understanding of your stock levels by identifying slow-moving or obsolete items and can often assist in ensuring that you have the right levels of inventory on hand. Excessive stock levels tie up cash which can be used by your business elsewhere.

  1. Review your Trade Debtors listing for bad debts

Trade Debtors identified as unrecoverable should be written off as bad debts prior to 30 June, to ensure that you can claim a tax deduction for them.

How can RSM help your tourism and hospitality business?

RSM Australia’s extensive regional office network means you can count on easily accessible, face-to-face accounting and business advice from local people that truly understand the Australian tourism and hospitality industry.

The most important element in your business is you. Let us take care of the numbers, so you can stay focused on what you do best and make the most of new opportunities. Get in touch with your local RSM office today.

 

Author: Steff Wallner, Accountant, RSM Australia

 

Steff Wallner

Accountant

RSM Australia

Unit 2/2 Fairbairn Road, Busselton WA 6280

DL: +61 (08) 9752 1406

E: steffie.wallner@rsm.com.au | W: www.rsm.com.au