Year End and Tax Return Process

A financial year has two steps, and they run in this order. This page is the route through them, for you and for any assistant working through the Beeswax connector.

Step 1: review the books

The year-end review (Reports → Tax Returns, Step 1) checks the year's books before any tax figure is relied on. Work through it from the top, because later checks depend on earlier ones: a balance sheet can't be trusted until the bank agrees.

1. Set-up: business details, last year's return, and last year's closing balances.
2. Bank: every account agrees to its statement at year end, and every bank line is allocated.
3. GST: every Business Activity Statement is lodged and locked.
4. Payroll, debtors and creditors, assets.
5. Loans and equity, including Division 7A for a company.
6. The profit and loss and the balance sheet.
7. Year-end adjustments: prepayments, accruals, depreciation and income tax.

Red checks stop the return being finalised until they're fixed, or a reviewer signs them off as they stand with a note. Amber checks are worth a look and don't block anything.

Step 2: the tax return

Create the return once every Business Activity Statement for the year is locked. It takes its figures from the ledger, so fix a wrong figure in the ledger and repopulate the return, rather than typing over it. See Tax Returns.

Who does what

Some steps are always a person's, on the web. No token or assistant can do them:

• signing off a review check, and recording a decision on one
• locking a Business Activity Statement or the year
• confirming a section of the return, finalising it, or unlocking it

Lodging happens outside Beeswax.

Working through the connector

1. Call get_tax_workflow_status for the year. Its next_actions list says what to do next, in order, and whether each step is for the connector, for a person on the web, or outside Beeswax.
2. Call get_year_end_review, then get_year_end_review_check for each check you work on. It lists the items behind the figure.
3. Use trial_balance, profit_and_loss and balance_sheet for totals by account. Use list_account_transactions with summary: true for one account's totals, and without it only when you need the lines.
4. Propose fixes to the owner. When a year-end entry needs an account that doesn't exist, add it with create_transaction_account, with a tax return label if it's an expense or income account.
5. Stage journals with create_manual_journal and status: "draft". Delete a stray draft with delete_manual_journal. A finalised journal can't be deleted through the connector: post a reversing journal instead.
6. Record what you found with add_year_end_review_note, then tell the owner which steps above are theirs.

Only count entries where posted is true.

Director loans

For a company, the review's Division 7A check shows each loan's movement for the year: opening balance, drawings, interest charged and repayments. Interest is recognised when a journal debits the loan and credits an income account with interest in its name.

Once a written agreement is recorded on the check, enter the year the loan was made and its term. The check then shows the minimum repayment, worked out with the ATO's benchmark rate, and turns red if the year's repayments fall short. In the year the loan is made, it shows next year's minimum.

Known limitations

• trial_balance runs from the start of the financial year holding the date, as the web report does when given a single date. Beeswax posts no year-end close, so the debit and credit totals differ by earlier years' profit. That isn't an error: balance_sheet shows it as retained earnings, and its discrepancy says whether the ledger balances.
• balance_sheet leaves out inactive accounts, as the web report does, so an inactive account with a balance shows as a discrepancy.
• profit_and_loss on the cash basis works through every payment in the period, so a long period on a busy account can time out. Use shorter periods if it does.
• Foreign-currency invoices and expenses aren't checked for balance when they're finalised.
• The connector can't change an account's type, set up a bank account or set an opening balance. Those stay on the Chart of Accounts page.
• The Division 7A minimum assumes one agreement per loan account, a 30 June year end and no extra amounts added to the balance. It's a guide: check it with the ATO's Division 7A calculator before relying on it.