End of Financial Year Savings for the Hospo Industry

It’s that time of year again, as the end of the financial year is fast approaching, we wanted to remind you to take the time to ensure you are claiming the maximum tax deductions and ensure your books are up to date. Most notably is the Government has extended the Temporary Full Expensing of Depreciable Assets (TFEDA) stimulus measure, which many tourism and hospitality businesses will be able to utilise if they find they have cash available to them at the end of the financial year.

From 6 October 2020 to 30 June 2023 businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of eligible new depreciating assets. For businesses with an aggregated turnover of less than $50 million, TFEDA also applies to the business portion of eligible second-hand depreciating assets.

Perhaps there is an item of equipment that you are wanting to purchase, and you need to manage your taxable income. If the asset is installed and ready for use by 30 June 2023 you may be eligible for an immediate tax deduction for the full cost of the asset.

Here, we list out ways to maximise your tax write-offs for 2023 to help shore up your bottom line. Luckily, a number of business expenses in the hospitality industry are deductible which is why we have outlined a few available tax deductions for venue owners.

Superannuation

To ensure that you can claim a tax deduction for the superannuation you have paid during the year, you need to pay your super for the June quarter by 28th July, and check that all the super for the 3 previous quarters has been paid. If you are late paying any super, it won’t be tax deductible and missed payments may attract the super guarantee charge which is also non-deductible.

Super is only considered ‘paid’ when it is received by the fund which can take a few days, so avoid leaving it until the last minute. Superannuation is only tax deductible when actually paid. Bring forward the June quarter tax deduction by paying all employee superannuation prior to 30 June. It has to be paid by 28 July 2023 anyway, but you will get your tax deduction 12 months earlier by paying prior to 30 June 2023.

Reward Your Staff

Staff retention still remains as one of the industry’s biggest pain points, so reward them! If you decide to pay your employees or directors a bonus at end of financial year, make sure that you have this in place prior to 30 June to ensure that it can be claimed as a tax deduction. Be wary of the type of bonus that you are paying, the rate you need to withhold tax at, and whether it attracts compulsory superannuation.

Asset purchases and improvements

Asset purchases of many types can be deducted. This can include a point of sale (POS) system, dishwashers, ovens, tables and chairs, kitchen equipment, and all the bits and bobs restaurants need like plates and cups and napkins.

Whether opening up a new venue, or perhaps you have been putting off making the switch to a new point of sale (POS) system due to cost, now is the time to make it happen. There are huge savings to be made this time of year, including Impos’ Free 2023 EOFY Bundle Sale with free software, EFTPOS fees, installation and local Customer Support with the opportunity to streamline operations with their POS and payments solution.

End of Year Payroll

All businesses should now be registered for Single Touch Payroll, which greatly streamlines the end of year payroll procedure. If you’re using an accounting program like Xero this further simplifies the process. Many tourism and hospitality businesses have a large pool of staff, and this can be a great time to confirm with your employees any change of personal information and ensure that the details you have on file are correct. Remember to file your pay runs for the year, reconcile your payroll reports, and complete your STP finalisation declaration. Advise your employees that they won’t be receiving a paper group certificate and can instead access their income statement through their MyGov account.

Stocktake

Tourism and hospitality businesses that buy and sell stock must ensure that they complete a stocktake at the end of the income year. There is an exception for small businesses if you estimate the value of your stock to have changed by no more than $5,000 in the year. Carrying out a stocktake will help you gain a better understanding of your stock levels by identifying slow moving or obsolete items and assist in ensuring that you have the right levels of inventory on hand. Excessive stock levels tie up cash which can be used by your business elsewhere.

Employee meals

Employee meals are another hospo tax deduction. They’re also not taxable for employees, either. So, if you’re providing employee meals on the business premises, be sure to keep track of meal expenses rather than just slinging food without keeping records. The money spent on employee meals can really add up over time, and if it’s something you’re already doing, you may as well go another step and save some money. Note that, for things to be totally above board and 100% deductible, employee meals need to be provided on premises.

Repairs and maintenance

Repairs on equipment, your establishment, and maintenance expenses like cleaning or machine servicing are all tax deductible. If you hire service providers like cleaners, for example, be sure to keep written receipts or invoices for all services performed, since you’ll need that come tax time.

Insurance and professional fees

Insurance premiums for the various types of insurance restaurants are required to have are fortunately tax deductible. Professional fees are as well, including fees to lawyers, accountants and the like. That’s quite good news, because non-negotiable items like insurance can be quite costly. The fact that they’re tax deductible keeps them from being a double whammy.