The end of the current Financial Year is an important time of celebration, extra administration and preparation for taxes. There’s a lot to do.  

• End of Financial Year reporting 

• End of Month Reporting 

• Last Minute Panic Purchases 

• Avoid the Increased End of Financial Year Tax Avoidance Scams 

Wait, hold up. Last minute panic purchases in a business? End of Year tax avoidance scams?  

Panic Buying Leads to Trouble  

This time of year we’ll see all sorts of advertising targeting last-minute purchases. At Northwest Accountancy we like our clients’ plans to be secure and organised before outlaying hard earned cash on “stuff.” Just because it looks like a great deal, it doesn’t mean it might be a great deal for you!  

Buying goods to save tax is not a strong strategy. An impulse buy on a new laptop for tax deduction still means you had to spend the cash to get it. If you think you’ll get the money back quickly because it’s so close to the end of the financial year, there’s factor you may have forgotten. It might not be 100% deductible. The ATO might take it’s time in processing your return. You may not have the rest of your documents organised in time for your accountant to finish it quickly. You may also have a sudden shortfall of a considerable sum of money!  

New assets should be a careful and considered purchase to ensure you get the maximum benefit from the old assets as well as from the new asset.  

Strategic spending is always the better idea. An impulse $5,000 spend can have flow on effects to your cashflow for months or the whole year. Emotional spending in business without planning can lead to disaster! Not to mention it costs $5,000 to save $1,250 in tax – there’s no dollar for dollar swap. 

Every year, the same EOFY sales occur. Good business sense means preparing to spend at the right time and at the right price. Then you can see if you actually saved money or just bought something because you wanted it.  

Planning in advance means you get to take advantage of these sorts of sales, not be taken advantage of.  

“Tax Avoidance Scams” Increase in June and July 

Scams are also prevalent at the end of the financial year, as scammers try to take advantage of the panic buying rush. If you are careless, you can easily give away passwords and login information, or lose a lot of money and have nothing to show for it. You worked hard for that money, and it’s important to take care of it responsibly.  

The ATO also sees an increase in scams pretending to be the Australian Tax Office during July, and has a page dedicated to help you figure out if an email, call or letter is from them or not.  

Scam alerts | Australian Taxation Office 

One of the other scams the Tax Office is aware of is investment or superannuation schemes that are sold to reduce your tax overheads when this is fraudulent. Your accountant will be on top of these schemes, and know how to spot them, however most people who get caught in them are trusting, hurried, and desperate, buyers. If we take the time to properly investigate the opportunities before us, we can greatly reduce the chances of being cheated of our hard-earned cash.  

These sorts of scams are designed for big money, hundreds of thousands of dollars or more. You may be invited to a seminar or an event of some kind, and have glossy brochures. Scams happen in the real world as well as the digital world, so it pays to have a great accountant on your side to help cut through the marketing and see what’s really going on underneath.  

Tax avoidance schemes to watch out for | Australian Taxation Office 

What Next?  

I’m sure you’ve heard this before – talk to an expert!  

The Australian Tax Office has a few suggestions about scams. How to verify, report, and spot a tax scam, and then if you do fall victim, what to do about it.  

Verify or report a scam | Australian Taxation Office 

However if you are looking to genuinely take advantage of the EOFY sales, don’t stress! They'll be there again in another twelve months- (or back in November for Black Friday sales, or pre and post Christmas....), which will give you time to plan, build the funds, and get your accountant happy! Time also helps you to see the difference between desire and need; and responsibility is a key them in business success. Knowing when you can afford the top of the range laptop versus when you just need something to run your admin software is a stepping stone to wealth.