Many of Australia’s small businesses might be missing out on potentially valuable tax deductions by not consulting with a financial expert, according to research highlighted by finance and tax software developer Intuit.
Conducted with Galaxy Research, the study involved a survey of 400 small business owners in May, this year. The researchers found that, as the countdown to EOFY is on, almost three-quarters of SMBs who manage their own tax still aren’t aware of the deductions available to them. Almost a quarter of SMBs (23%) surveyed chose to do their own tax return.
Brad Paterson, Vice President & Managing Director, Asia-Pacific at Intuit said the research highlighted the value accountants bring at EOFY and the benefits of a small business partnering with an expert.
“Accountants and bookkeepers are the unsung heroes at tax time which can make or break a small business. Our research shows too many small business owners are missing a trick by completing their own return without knowing about all potential deductions and compliance requirements.
“Working with an accountant or bookkeeper and leveraging tools like cloud accounting software that streamline end of financial year is a no brainer to save significant time, maximize your return and set your business up for success in FY17.”
Compliance is key
Of concern, the research also found less than half of SMBs have an understanding of the SuperStream requirements, despite the initiative coming into effect this week.
SuperStream requirements come into effect for small employers (19 employees or less) on 1 July 2016. Despite this fast approaching deadline, the research uncovered only four in ten (42%) SMBs have an understanding of the new standard for superannuation data and payments; with only one third of these (14%) saying they fully understand the SuperStream requirements.
Given this, it is no wonder almost half (43%) of SMBs who use an accountant or bookkeeper at EOFY say the value this offers is in ensuring their business is compliant with ATO payroll initiatives like SuperStream.
For a SuperStream employer checklist, visit the ATO website.
SMBs missing out on potential deductions
Far too many (73%) SMBs managing their own tax at EOFY are naive to the deductions available to them. This indicates Aussie SMBs are missing out when it comes to tax-time, by not taking advantage of the deductions and tax-cuts available to help them thrive.
Proving to be the tech-native generation, Gen X business owners are more likely to tackle their own tax at EOFY compared to Baby Boomer business owners (31% vs 17%). However, the younger generation’s eagerness to be a jack-of-all-trades could be costing them – with almost 60% of SMBs using an accountant or bookkeeper at EOFY stating they see the value in getting a better tax return.
Key findings from the research:
- More than three quarters of SMBs (77%) employ an accountant or bookkeeper to help them with their tax return and other end of financial year reporting. Just one in four (23%) choose to do their tax return themselves
- As many as 73% of SMBs who are completing their own tax return admit to not being aware of all of the available tax deductions and compliance requirements that apply to their business
- Just four in ten SMBs (42%) have any understanding of the requirements of SuperStream with only one third of these (14%) saying they fully understand the requirements
- SMBs who are using an accountant or bookkeeper at the end of the financial year say they see the most value from getting a better tax return (59%) and from ensuring their business is compliant with ATO payroll initiatives like SuperStream (43%)
- Gen X SMB owners (31%) are more likely than Baby Boomers (17%) to do their tax return themselves
Intuit has produced some last minute tips for EOFY.