Top 10 tax time tips
04 Jul 2022
After a busy sowing season for many, tax time is now upon us. It’s out of the paddock and into the office. Carmen Quade from AgriFocused has pulled together some tips for getting the right information together for your accountant to work their magic.
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 the clean the window. Find our tips on a quick office clean out.
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.
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 Local Land Services Annual Land and Stock Returns are due, 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 overcomplicates 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.
7. Set up a place to store documents you accountant will need
Your accountant will need copies lots of documents. Some which you have on hand now and some like bank and super statements which will come in progressively over the next few months. It is good to have one place to keep them together. If you have an electronic system, setting up a shared drive can be a really easy way to send documents to your accountant and keep track of what you have already collected. It saves a lot of back and forth emails. Programs like Dropbox, One Drive and Google Drive all work well, and the documents are kept securely on the cloud. Your accountant may already have a system like this in place with other clients, so ask what they find works best for them.
8. Paper systems
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.
9. 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.
10. 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.
Sign up for Farm Office Plus course
For those of you looking to make improvements in your farm office management, Central West Local Land Services is running a three part course over August and September. Farm Office Plus participants will work on developing systems that work for their own farming businesses and learn about technology, tips and tricks to make things streamlined and more efficient.