Avoiding Common Tax Mistakes This EOFY

As business owners, very few of us enjoy filling out our tax returns. It is typically a time of stress and frustration as you need to work through lots of processes you are unfamiliar with.

Making tax mistakes in your business can be costly, with you missing out on potential deductions, time wasted as you try and correct your mistakes, and as a worst-case scenario, penalties from the ATO for misleading them.

However, it is during the entire year that we set the tone for what we will end up ‘dealing with’ at tax time, which can lead you towards mistakes. Don’t leave these things until the last minute!

These potential mistakes include:

  • Paying wages and invoices from cash registers.
  • Not updating cash receipt books.
  • Failing to conduct daily sales reconciliations.
  • Not keeping adequate stock management (inventory) ledgers.
  • Misclassifying product sales as being GST free when they are not.
  • Forgotten to record all forms of income across the business.
  • Deductions and offsets are forgotten. Of course, you would expect that we wouldn’t want to forget them, but sometimes there are things that we don’t realise that are deductions out there. You may be very surprised what you may quality for.
  • Losing and\or misplacing proof of purchase.
  • Estimating figures instead of them being actual numbers. The ATO is becoming increasingly dynamic in identifying inconsistencies and abnormalities in business tax returns, compared days of the past.
  • Not declaring capital gains.

Having a process in place to manage your finances and tax obligations is a wise way to ensure that you don’t succumb to any of these tax mistakes when filing your return this year. We advise that you consult with specialists in taxation to ensure that you are fulfilling all of your obligations as you should be, and not leaving opportunities on the table.

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