Keeping out of the tax spotlight

The end of the financial year has come and gone but that doesn’t mean you can become complacent about the role of tax in your business.

The danger is that the pressure of business and the opportunities you are chasing cause you to overlook some of the basics.

It is too easy to say, “I’ll fix that up later.” And it’s also dangerous.

The easiest way to be caught out by the ATO is not to be able to produce source information if they ask for it.

Here is a quick list to make sure you have everything in place:

1. If you carry trading stock then you should have your June 30 stocktake completed. This should include the stock count, the unit prices for each stock item, the valuation method you have used and the calculation of total value. Where you have used a valuation method other than cost price you should have a basis for how you have calculated the market or realisable value.
2. If you wrote off any bad debts before June 30, make sure the debtors are written off in your debtors’ ledger and if you need a resolution to support the write-off it should be signed off.
3. If you operate through a trading trust, your resolution for the appointment of trust income should now be completed and signed off.
4. Where any bonuses or directors’ fees were declared pre-June 30 the action to approve these charges should be minuted and signed off.
5. Where you declared any dividends pre-June 30, the resolution for these dividends should be signed off.

If the Tax Office comes looking, these are basic source documents they will expect to see: Don’t have them and you are at risk.