Financial year-end in Australia: Everything you need to know

The financial year-end (end of financial year or EOFY) marks the conclusion of a company’s accounting period, where all financial records are closed off for reporting and tax purposes. For some, the financial year coincides with the fiscal year. For others, there are two ‘year-ends’ to deal with if the accounting year-end is at another point such as the end of the calendar year. 

Either way, closing off the year from a taxation and accounting basis (or both) requires plenty of effort.

The importance of financial year-end lies in ensuring accurate financial reporting, preparing for audits, and meeting legal obligations, such as tax filings. Efficient preparation can streamline closing accounts, improve budgeting, and set the stage for strategic business planning in the new year.

It’s always good to get new ideas on how best to approach important tasks such as closing accounts.

In Australia, the financial year runs from 1st July to 30th June of the following year. Important key dates include:​

• 1st July: Start of the new financial year​
• 31st October: Tax return deadline for individuals (or 15th May if using a tax agent)​
• 28th February: Payment deadline for companies if lodging by 31st October​
• 30th June: End of the financial year​
• 14th July: Single Touch Payroll (STP) finalisation deadline for employers​

Why does the Australian financial year start in July?​

Australia's financial year starts in July for practical reasons rather than historical ones. When the Commonwealth of Australia was established in 1901, the government chose a July-June cycle to avoid the busy
Christmas and New Year period when many businesses close down.​

This timing allows businesses to complete their year-end processes during the winter months when commercial activity typically slows down. It also aligns well with the federal budget process, giving the
government time to giving the government time to assess the previous year's performance​ before presenting the new budget in May.​

How do companies choose their financial year-end?​

Australian companies choose their financial year-end based on several key factors, including:​

• Standard practice: Most align with the standard 30th June year-end for simplicity.​
• Industry cycles: Matching year-end to quieter periods in their specific sector.​
• Seasonal patterns: Agricultural businesses might choose different dates to match harvest cycles.​
• International operations: Aligning with parent companies or major markets overseas.​
• Tax planning: Optimising the timing of income and deductions.​
• Reporting requirements: Meeting ASX or other regulatory deadlines.

Changing your financial year – Can you move it?​

Yes, you can change your financial year-end in Australia. This can be a strategic move to better align with your business operations, industry standards, or international reporting requirements.​

However, it requires careful planning and compliance with regulations. Australian companies must apply to the Australian Securities and Investments Commission (ASIC) for approval to change their financial year. The Australian​

Taxation Office (ATO) will also need to be notified of the change.​

For detailed guidance, you can refer to the official Australian Securities & Investments Commissions (ASIC).​

Navigating the financial year-end presents a range of challenges for businesses demanding careful attention and strategic planning. Here are some common challenges businesses we’ve worked with face. By addressing these challenges proactively, companies can navigate the financial year-end with greater ease.​

Time Challenges

The financial year-end can be an incredibly busy period for companies, often leading to tight
deadlines and increased workloads for finance teams. This rush can result in stress and
oversight, complicating the closing process.​

Data Accuracy

Ensuring data accuracy is crucial for producing reliable financial statements. Errors in data entry can have significant repercussions, potentially impacting decision-making and compliance.​

Human Error

Human mistakes can occur in any part of the financial reporting process, from data entry to interpretation of financial information. These errors may lead to compliance issues and inaccurate reporting.​

Tax Compliance

Managing tax obligations can be daunting during year-end. Companies must stay updated on changing regulations to ensure they meet their tax responsibilities, avoiding penalties and fines.​

Regulatory Changes

Keeping up with regulatory changes can be challenging, requiring businesses to adapt their processes swiftly. This often involves additional training and adjustments to financial systems.

Managing Expenses

Accurate expense tracking is vital for financial clarity, yet it can be overlooked amid the hustle of year-end preparations. Implementing effective tracking methods can help maintain a clear view of​ financial health.​

To ensure a smooth year-end process, follow these steps:

1. Set a Close Schedule: Create a timetable tailored to your business model. Allocate tasks to team​ members and finalise key figures like stock balances.​​
2. Gather Documentation: Compile essential documents such as income statements, cash flow​ statements, and balance sheets, which will form the basis for your assessment and HMRC submissions.​​
3. Forensic Check of Accounts: Review accounts payable and receivable for errors, missing invoices, and unpaid amounts. Ensure all outstanding payments are made.​​
4. Summarise Cash Flow: Record cash inflows and outflows from financial, operating, and investing activities to assess the net change in cash flow over the year.​​
5. Complete a Stock Take: If applicable, accurately record inventory to reflect in your profit and loss statement, accounting for unsold or damaged stock.​​
6. Analyse Financial Performance: Review profit margins, ratios, and cash flow forecasts. Use year-end data to​ monitor peaks, troughs, and upcoming expenses.​

Year-end review and forward planning​

1. Review Pricing Strategies: Year-end is a good time to evaluate pricing against competitors and adjust where necessary.
2. Assess Performance: Examine financial statements, team output, and customer feedback to evaluate how well the company has performed.
3. Re-examine Tax Strategies: Consider improving your tax systems, including digitisation, to increase efficiency and prepare for any upcoming regulatory changes.
4. Plan for the Next Financial Year: While finalising last year’s accounts, support other business functions with budgets, forecasts, and growth strategies. Assess factors like new hires, infrastructure investments, and the scalability of support systems.

Reviewing and closing the financial period at month-end provides you with the opportunity to assess business progress and keep track of profitability, cash flow, and performance.​

It’s also good to think creatively about what could make month-end easier. For example, introducing cut-off dates for invoices or expenses makes it clear to the whole business what their responsibilities are and how they can help.​ ​

A consistent approach also makes it easier when staff leave and new people start as the expectations are clear.​ ​

Think about how accounting software might help too. Producing reports, analysing data, and even populating documents with finance information can all be done much more easily. Ultimately, with the right tools and processes in place, your month-end close can be smooth and stress-free.​ 

Solving your financial year-end challenges with Access​

Navigating financial year-end challenges can be daunting, but with Access Group's finance management software, you can streamline the process and enhance accuracy.​

Our solutions are designed to integrate seamlessly into your operations, helping you manage data effectively and comply with regulatory requirements.​

By automating time-consuming tasks, you can focus on strategic decision-making and improving your overall financial performance.​