Breeze through end of year


After a busy sowing season for many, tax time is now upon us and it’s out of the paddock and into the office.

It seems like there are even more tax related sales pushes this year than ever before.

Tax time adds make it sound like tax deduction are a 100% cash rebate that disappears forever on the 30th of June.

Nothing could be further from the truth, the extra cash you eventually have in your bank following a tax deduction is based, of course, on the marginal rate of tax you pay and tax deductions are available 365 days of the year.

Timing of the benefit is related to when your tax is submitted and payable.

My tax advice is always to concentrate on making a profit and running your business the best you can. When it comes to running your farm business, you are the expert. When it comes to tax, well to put it in Harry Potter terms, you are a muggle (non magical).

I have pulled together some tips for getting the right information together for your accountant to work their magic in their area of expertise.

  1. Start with a tidy office – Don’t get bogged down with a deep clean, but your work area needs to be inviting and productive. Just a quick removal of shed stuff, dirty cups and toys really helps. If you are feeling energetic clean computer screens, wipe down benches and perhaps clean the window. Find our tips on a quick office clean out here.
  2. Get your account reconciliations up to date – I am just going to assume that you are possibly only one BAS behind. Go through it month by month, account by account and then prepare the most recent BAS and submit it. If you are further behind than that, don’t stress, adopt the same process. Month by month, account by account.Write a list and tick them off as you go.
  3. Collect your Livestock Numbers – Accurate livestock numbers are needed to calculate livestock on hand and your livestock trading profit. You will need numbers on deaths, rations if you kill your own to eat, stock sold and stock on farm. Remember for those of you in NSW, LLS Annual Stock and Land requirements are only just around the corner, so make a note of where the mobs so the information is on hand to fulfill that requirement. Be realistic, simplistic and consistent in your stock take methodology. For example, if you wean in late May, or shear in mid July, consistently using stock numbers collected at this time will be good enough. Don’t try to count or estimate unmarked lambs or calves. It just over complicates the process. This template can be used to help document your numbers. Use one sheet for every stock type you have. 
  4. Undertake end of year tasks in your payroll system – Most online or software based payroll systems will have an automated EOFY process. You might not remember from last year exactly what has to be done, and it may well have changed. Make sure you read through the online instructions for this process to make sure you don’t miss anything.
  5. Ask your accountant for their checklist – Most accountants will provide you with a customised checklist related to your previous returns. For example, outlining if you have to provide information on things like off farm investments, personal payments into super, share statements and rental property details. If they have not sent through a list yet, ask them to do it.
  6. Collect info on equipment brought and sold – If you have purchased equipment or made infrastructure improvements this year (like sheds, silos or yards) your accountant will want to include them in your depreciation schedule, even if they will be instantly written off due to current taxation legislation. They will require copies of invoices and any loan related documents if applicable. If you are using a paper system, a plastic file with a zip keeps everything in one place, using different colours for different businesses or document types can also help.
  7. Update your budget – Changes in livestock numbers, prices, input costs and variations in cropping areas means that the coming financial year cannot be estimated by looking at the previous financial year. In some businesses, accountants would be able to estimate sales and expenses easily, this would not be the case in your business over the last few years. In a mixed farming operation, the main budget areas to concentrate on will be livestock income, cropping income and cropping expenses. Much of the other information will be reasonably consistent, unless there have been major changes in your business.
  8. Set up one or two process improvements to make the job easier for next year – Whilst you are in the middle of the business of tax time record keeping you often identify pain points in your existing processes.  Now is not the right time to give yourself extra work changing systems or researching new technology. Note down what you would like to improve within your farm office and stick it up on the wall. When things are not so busy, work through the list and set a few priorities for improvements that will make the job easier next year.We have a Trello board to help you keep track of your end of year and farm admin duties. Trello is a great piece of free software you can use to organise tasks. You can find the link here and a video on how to use it here.     
    Happy New Year!

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