If you had to guess when the end of the financial year (EOFY) was, and you didn’t already know, you’d probably guess wrong.
Intuitively, you may expect it to line up with the calendar year, finishing on the 31st of December. Instead, it’s smack-bang in the middle of the year: June 30th, with the new financial year (NFY) starting on July 1st.
Also, the financial year isn’t a game of two halves like the calendar year (does anyone else restart new year’s resolutions six months in? No? Just us?). Instead, the financial year is broken up into four quarters, each consisting of three months:
- Q1 – July, August, September
- Q2 – October, November, December
- Q3 – January, February, March
- Q4 – April, May, June
This is basically so companies and government departments who analyse data (like the ATO) can pick up on any business and economic patterns — good or bad — early on. It also means information can be organised more efficiently.
Why is the financial year in the middle of the year?
A truly great question. This takes us all the way back to 1901 (yep, we’re going on a brief tour through history) when it was first established by law as a way to simplify tax, budgeting, and financial reporting.
It was decided that the fiscal year would operate between July 1st and June 30th purely for convenience’s sake – like many of us, Australian Parliament struggled to arrange fiscal meetings around Christmas, New Year, and the rest of the summer holidays. They also historically sat in May and June, so it just made sense to end the financial year during this time.
Nowadays, the federal budget is delivered in May, meaning any financial changes can be considered and put in place by the beginning of the financial year. It’s a system that works well, and parliamentarians can also hit the beach in the hot months with the rest of us. Easy!
What you need to know for the EOFY
As the end of the financial year looms, there are a few things you need to begin preparing:
1. Your annual tax return
Basically, you need to ensure that all your income, deductions, health insurance details etc are in order. Only then can you lodge your tax return with the ATO (something you must do – it’s not optional). Your tax return will calculate the amount of income tax, medicare levy, HECS/HELP debt etc that needs to be paid.
Once you’ve lodged, the ATO will notify you of the outcome of your tax return. If you haven’t prepaid taxes via PAYG instalments, or through your friendly tax friend Hnry, you may have over or underpaid your taxes. If you’ve overpaid, you may receive a refund. If you’ve underpaid, sorry, but you’ll get a tax bill. Ouch!
2. Expense claims
This is where you can claim the cost of eligible business expenses you purchased throughout the financial year as tax deductions (woohoo). These are things like cost of goods sold, materials, equipment, professional fees and subscriptions and any other work related expenses from the past financial year.
Make sure you have those receipts stored in a handy place – the ATO requires you to hang on to them for the next five years!
💡 Need a step-by-step guide to preparing your tax return? We’ve got you covered.
Alternatively, use Hnry
If all of this sounds both a little too hard and a wee bit complicated, that’s okay. We (Hnry) can do it all for you.
That’s right, we’ll prepare all the bits and bobs to lodge your tax return, including managing your expense claims. We’ll even store all those necessary receipts in a digital tin box so they’re safe and sound. You can go right ahead and throw them away.
What won’t we do? Shampoo your dog. Unfortunately that’s not part of our repertoire.
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