ATO expenses crackdown puts key SME items on notice
A leading public accountant has noted two important compliance items easily overlooked by small businesses ahead of tax time amid the ATO’s crackdown on business expenses.
According to Change Accountants & Advisors chief executive, Timothy Munro, said that, amid the discussion around deferring the issuing of invoices and reclaiming small business expenses, accountants should be checking that clients are on track with their Division 7A loans, and that repayments are being cleared out before 30 June.
“If a client takes money from a company, has that loan been documented? Are there any repayments that need to be made from last year's loan? That needs to be documented before 30 June,” Mr Munro told Public Accountant.
The other item on the agenda of the Institute of Public Accountants 2016 member of the year was ensuring that trust distribution resolutions have been signed from the trust.
“If one of your clients has a trust in their business, you also need to make certain that they've got their trust distribution resolution completed and signed before 30 June,” Mr Munro said.
As for other tax planning items, Mr Munro said that while many businesses know to clear super contributions to employees before 30 June, too many leave it too close to the date meaning it doesn’t land in their bank account in time.
“We’re saying, ‘Look, you have to get that contribution payment by no later than, say, the 22 June, so at least it clears the bank account.’ That's a key one,” he said.
On the SMSF front, Mr Munro highlighted personal tax deductions for super contributions as an item high on his firm’s agenda since it will be the first tax time since the changes were put in place, reminding clients of their need to lodge a notice of intent to claim a tax deduction from their fund.
“We recommend doing that before 30 June this year because if they don’t do it and they roll out of the fund to do something, then they can end up being disqualified from claiming that as a tax deduction. That’s something not a lot of people are aware of,” Mr Munro said.
“Generally, you’ve got until the time of lodgement, but we recommend that you actually lodge a notice of intent before 30 June.”