June 30 is among the most important dates in the Australian calendar, and not everyone looks forward to it. That's because it's "tax time", and whether you're a business or individual working for yourself, you need to have your accounts in order and lodge them on time so you're not hit with penalties.
Also known as EOFY, for End of Financial Year, lots of Aussies also eagerly await the run-up to this period, because of the many sales and bargains you can get. Retailers all over the country start offering big discounts at the beginning of June and some even run their promotions until the end of July, meaning there's ample time to get items at great prices.
So while there's work for Australians to do as EOFY approaches, to get their tax affairs in order, there are lots of bargain-hunting opportunities for others. Let's take a look at EOFY in detail -- including the question on many Aussies' minds: when do EOFY sales start officially -- so you're in compliance and also save money.
What Is the Financial Year?
Often just referred to as FY, the financial year is a period of 12 months that in Australia runs from July 1 to June 30 the following year. It's used for lodging tax returns, financial management and also for budgeting in this timeframe.
The financial year applies to:
- Businesses: Every company must prepare their financial statements, including Business Activity Statements, or BAS, as well as superannuation contributions and payroll.
- Individuals: People including employees and sole traders have to calculate their tax returns and eligibility for any offsets or deductions.
- Government departments: They use tax returns to create budgets for the year ahead and allocate funding in the same period.
Why Not the Calendar Year?
It might seem logical to have the financial year align with the calendar year, but that's not how it works in Australia. So while lots of countries' financial years run from January 1 to December 31, including places like China, France and Germany, in Australia, it's loosely based on colonial links to the United Kingdom, where the fiscal year is from April 6 to April 5 the following year.
The Australian tax year is often seen as more practical, as lodging is done at a quieter time, not at the end of the Christmas and New Year period. It offers more time for companies, people and government offices to complete their paperwork and draw up budgets.
Quick Reference
Australian Financial Year: July 1 – June 30
This is the period and deadline in Australia for assessing income, finalising accounts, renewing investments and claiming any tax deductions.
Why the End of Financial Year (EOFY) Matters
Financial wellbeing is just as important as the physical and mental kind. Making sure your finances are in good shape not only gives you peace of mind but also means you avoid penalties like fines and having a lodging history that's less than ideal.
For Individuals
As the end of June approaches, it's time to make sure your financial house is in order.
- Tax returns. The Australian Taxation Office (ATO) closes its books for the year on June 30, and you'll need to report earnings from work, any investment income and deductions you might be eligible for before then.
- Claiming deductions. You can claim deductions to your taxable earnings and income from purchases related to your work, expenses for home offices, donations to charity and travel costs if they meet ATO criteria.
- Superannuation top-ups. If you make any voluntary super contributions before June 30, they may be tax-deductible up to the concessional cap.
- Investment decisions. Many Australians like to review their investment portfolios around EOFY time, looking at income, any debt and adjusting strategies as needed so they meet their goals.
For Businesses
EOFT is an important time for any business and of whatever size, from big corporations right down to the smallest of sole traders.
- BAS and GST reporting. Companies have to ensure they submit accurate Business Activity Statements as well as Goods and Services Tax (GST), a 10% levy on most products and services in Australia.
- Payroll finalisation. Firms' accounting departments will also have to have income statements via Single Touch Payroll (STP) ready so staff can lodge their own returns -- but companies have an extra two weeks beyond the EOFY deadline, until July 14, to do it.
- Inventory and stocktake. Companies operating in the retail sector, including wholesalers, have to conduct a thorough inventory and make sure the stock is correctly valued while at the same time writing off items that may be out of date.
- Financial performance reviews. EOFY is also a time to review cash flow, assess profits and losses and also to prepare accounts and projections for boards.
- Capital purchases. Companies often decide at EOFY whether they need to make any investments, such as in technology, equipment or vehicles, and also if existing assets need to be written off for tax or if they're eligible for depreciation.
For Shoppers
EOFY is a major shopping event in Australia, comparable to the steep discounts offered on Boxing Day.
- Prices are typically slashed on an array of items, including electronics, white goods, furniture, vehicles and more.
- Expect the EOFY sales period to begin in mid-June, although in some parts of Australia it can start even sooner, around the beginning of the month. So if you're asking yourself, "When do EOFY sales start?, now you know.
- Savvy Australians know that if they buy items around EOFY sales time, they can not only save money but potentially benefit from tax deductions too -- like buying computers for work, for example.
For Investors
Every year at EOFY, investors like to take stock of where they’re at and what, if anything, they need to do.
- Capital gains/loss planning: Investors' tax burden can be reduced if they sell at specific times (before or after the June 30 deadline), and when reporting losses or capital gains.
- Dividend and distribution assessments: Returns need to report income from shares and any managed funds, which usually means you need to fill out additional paperwork.
- Portfolio review: It's a good time to review how your investment portfolio is performing, if you need to reduce any risks and also plan for the year ahead.
What Happens at EOFY?
The end of the financial year in Australia is not just a date but a deadline that comes with a number of obligations and things you need to do so you don't fall foul of the law. It's the same whether you're running a business or managing your finances.
Key Dates
- June 30: Officially the last day of the financial year in Australia, and all deductible expenses, super contributions and relevant purchases have to be processed by this date.
- July 1: The start of the new financial year in Australia. It's important to be aware of any new tax changes that come into effect on this date.
Common EOFY Activities
For Individuals:
People should be going through their receipts and invoices for the past year, especially those that are related to work and tax-deductible purchases. Income statements should be checked and be "tax ready" in myGov.
For Businesses:
Accounts and bookkeeping need to be finalised and completed, ensuring that bank statements are reconciled and resolving any errors. For retailers, stocktaking is required, especially if planning to write off old inventory. BAS, GST and PAYG all need to be up to date. Businesses also need to check their tax tables are current and back up their data. They also have to prepare reports for ATO compliance, including summaries of income and expenditure, assets and statements.
Important EOFY Deadlines in Australia
To stay compliant and steer clear of any penalties, you need to keep your eye on the EOFY deadlines.
June 30
This date is your last chance to make tax-deductible purchases, such as those related to your work. Also to make voluntary superannuation contributions, if you're planning to claim them in your tax return. And for any last-minute business spending that you're going to include in the year's accounts.
July 14
Businesses have to complete staff income statements, which is done via the ATO’s Single Touch Payroll system. Employees will then be able to see that their income statements are "tax ready" in myGov and they can lodge their tax returns.
October 31
This is the deadline for individuals to lodge their tax returns, unless they're using a registered tax agent.
May 15 (the following year)
People who have a registered tax agent are able to extend their lodging deadline to this date, as long as they're on their books by October 31.
EOFY Sales – Should You Buy Now?
For many Australians, the end of the financial year is less about tax returns and more about great shopping. It's a time of year when you can get your hands on big-ticket items at extremely low prices, as retailers clear their stock inventory for the year ahead. It's such a major retail event in Australia that it's not uncommon to start seeing EOFY sales promotions in May, and popular products sell out fast.
What Are People Buying? Items that people buy during the EOFY sales period typically include:
- Laptops and other tech gear, which may be claimed as tax deductions for work
- Office furniture, especially for small business and people working from home
- Cars and utes, which again may be claimed a work-related expense
- Tools and equipment
- Home appliances and energy solutions
Need vs. Tax Benefit
If you're planning to buy something expensive during an EOFY sale, bear in mind that just because it might be tax-deductible, that doesn't mean it's free. Just because there are many attractive offers doesn’t necessarily mean you have to buy something. So before splashing out on a high-cost product ahead of tax reporting time, ask yourself if you really need the item or are just buying it so you might get a deduction in your tax.
Also consider if the purchase will be an actual benefit to you. Will it, for instance, help you to work better -- to be more productive -- when working remotely?
And weigh up if you can afford to pay for the item in full, and if so, if it's going to be an issue for your cash flow. So if it’s not entirely necessary for your home setup or office, it may be best to leave the purchase to another time.
Tip: With many Australians looking for a backup power solution for their homes and businesses due to the frequency of severe weather incidents that can take down the grid, EOFY sales are the prime time to get a portable power station. Products like BLUETTI's range of power backups, which use solar power to store energy for when you need it, often have EOFY sales that let you get a power station before the June 30 deadline and at steep discounts
Whatever you're buying at EOFY sales time, make sure to ask for a tax invoice so you can use it when you lodge your tax return.
Frequently Asked Questions About EOFY
Is EOFY the same for all Australians?
Yes, unless you have a special financial reporting arrangement that's approved by the ATO.
Can I still lodge tax after October?
Yes, but you may incur penalties. If you don't have a registered tax agent handling your affairs or a valid reason for the delay, you may have to pay a fine.
What happens if I miss a super contribution?
If the contribution is not received by the deadline, June 30, it won't be deductible for the current tax year. You might make the payment before the deadline but it might not be received in time.
