Managing your business cash flow over the holiday period

Xmas Finance.jpg

Managing your business cash flow over the holiday period

December is usually the busiest time of the year for retail and hospitality businesses. But businesses in other sectors often find that their sales slowdown and their customers stop paying them for a few months. So cash flow dries up.

Whether your business is large or small, well-established or in start-up mode, you need to take a planned approach to managing cash flow during the holiday season. Here are few tips for keeping on top of cash flow management during the Christmas/New Year holiday period.

1. KEEP INVOICING IN THE LEAD UP TO CHRISTMAS

Don’t let your business admin slip in the rushed lead-up to Christmas. This is the most important time of the year to stay on top of your invoicing. You may find that many customers will be slow to pay because their businesses are closed over the Christmas period.

2. SET CLEAR EXPECTATIONS WITH YOUR CUSTOMERS

Be clear with your customers that you expect them to pay within the pre-arranged credit terms over the Christmas period. Phone regular slow payers a few days before payment is due to confirm that they’ll be paying on time. The phone is always a more effective method than email. If you’re not comfortable having this conversation with your customers, your accountant or bookkeeper may be able to assist.

3. SERVICE BUSINESS – OFFER A DISCOUNT FOR THE “QUIET TIME”

If your business is usually quiet in January, why not offer your clients a 10% discount if they book you in for January? Why not offer them a 15% discount if they also refer a neighbour or a friend? Set whatever discount amounts work for you. This is the thing: A strategy like this will keep your business busy and some cash coming through during the usually quiet period.

4. USE THE QUIET TIME TO WORK ON YOUR BUSINESS

If sales are a little slow in the lead-up to Christmas, use the time wisely to hit the ground running in the new year.

The pre-Christmas slowdown is a great time to work through the to-do list you’ve been compiling all year. This might include taking a thorough inventory, searching for more suitable lending alternatives, completing a comprehensive competitor analysis or researching the market for new products and suppliers.

WANT TO TALK?

Feel free to contact our office anytime by phone 0749 517900 or email admin@visionfg.com.au – We can’t wait to provide you with better advice now for a beautiful future!

Minimise Your Personal

Minimise Personal Tax.jpg

MINIMISE YOUR PERSONAL TAX

TAX PLANNING GUIDE

Now's the time to review what strategies you can use to minimise your tax before 30 June 2018.

Imagine what you could do with tax saved?

  • Reduce your home loan
  • Top up your super
  • Have a holiday
  • Deposit for an Investment Property
  • Upgrade your Car

KEY SUPERANNUATION CHANGES

While you might not be flush with cash now and able to put large amounts into superannuation, it’s important that you are aware of what is possible to maximise your super balance and possibly reduce your tax at the same time.

NEW CONCESSIONAL CONTRIBUTION CAP (CC) OF $25,000 FOR EVERYONE

The tax deductible super contribution limit (or “cap”) is $25,000 for all individuals under age 75. Individuals need to pass a work test if over age 65.

Consider making the maximum tax deductible super contribution this year before 30 June 2018.

The advantage of this strategy is that superannuation contributions are taxed at between 15% to 30% compared to typical personal income tax rates of between 34.5% and 47%.

Ordinarily, self-employed individuals and those who earn their income primarily from passive sources make super contributions close to the end of the financial year and claim a tax deduction. However, this is the first financial year that individuals who are employees may also use this strategy.

Individuals who may want to take advantage of this opportunity include those who:

  • work for an employer who doesn’t permit salary sacrifice
  • work for an employer who allows salary sacrifice, but it’s disadvantageous due to a reduction in entitlements, and
  • are salary sacrificing but want to make a top-up contribution to utilise their full CC cap.

SPOUSE SUPER CONTRIBUTIONS

From 1 July 2017, higher income thresholds apply when determining eligibility for the spouse contributions tax offset.

From this date, you may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a. or less (previously $10,800 p.a.).

The offset gradually reduces for income above $37,000 p.a. and completely phases out at $40,000 p.a. and above (previously $13,800 p.a.).

ADDITIONAL TAX ON SUPER CONTRIBUTIONS BY HIGH INCOME EARNERS

The income threshold at which the additional 15% (‘Division 293’) tax is payable on super contributions has reduced from $300,000 to $250,000 p.a., effective 1 July 2017. Where you are required to pay this additional tax, making super contributions within the cap is still a tax effective strategy.

With super contributions taxed at a maximum of 30% and investment earnings in super taxed at a maximum of 15%, both these tax points are more favourable when compared to the highest marginal tax rate of 47% (including the Medicare levy).

GOVERNMENT CO-CONTRIBUTION TO YOUR SUPER

If you are on a lower income and earn at least 10% of your income from employment or carrying on a business and make a “non-concessional contribution” to super, you may be eligible for a Government co-contribution of up to $500.

In 2017/18, the maximum co-contribution is available if you contribute $1,000 and earn $36,813 or less. A lower amount may be received if you contribute less than $1,000 and/or earn between $36,814 and $51,812.

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS

The concessional superannuation cap for 2018 is $25,000 for all individuals. Do not go over this limit or you will pay more tax!

Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge.

OWNERSHIP OF INVESTMENTS

A longer-term tax planning strategy can be reviewing the ownership of your investments. Any change of ownership needs to be carefully planned due to capital gains tax and stamp duty implications. Please seek advice from your Accountant prior to making any changes.

Investments may be owned by a Family Trust, which has the key advantage of providing flexibility in distributing income on an annual basis and an ability for up to $416 per year to be distributed to children or grandchildren tax-free.

PROPERTY DEPRECIATION REPORT

If you have an investment property, a Property Depreciation Report (prepared by a Quantity Surveyor) will allow you to claim depreciation and capital works deductions on capital items within the property and on the property itself.

The cost of this report is generally recouped several times over by the tax savings in the first year of property ownership.

MOTOR VEHICLE LOG BOOK

Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2018. You should make a record of your odometer reading as at 30 June 2018 and keep all receipts/invoices for your motor vehicle expenses. Once prepared, a log book can generally be used for a 5-year period.

An alternative (with no log book needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method.

SACRIFICE YOUR SALARY TO SUPER

If your marginal tax rate is 19% or more, salary sacrifice can be a great way to boost your superannuation and pay less tax. By putting pre-tax salary into super rather than having it taxed as normal income at your marginal rate you may save tax. This can be especially beneficial for employees nearing their retirement age.

PREPAY EXPENSES AND INTEREST

Expenses relating to investment activities can be prepaid before 30 June 2018. You can prepay up to 12 months of interest before 30 June on a loan for a property or share investment and claim a tax deduction this financial year. Also, other expenses in relation to your investments can be prepaid before 30 June, including rental property repairs, memberships, subscriptions, and journals.

INSURANCE PREMIUMS

Possibly your greatest financial asset is your ability to earn an income. Income Protection Insurance generally replaces up to 75% of your salary if you are unable to work due to sickness or an accident. The insurance premium is normally tax deductible, plus you get the benefit of protecting your family’s lifestyle if you cannot work due to sickness or an accident. It’s a small price to pay for peace of mind. Like rental property interest, income protection premiums can also be pre-paid for 12 months to increase your deductions.

WORK RELATED EXPENSES

Don’t forget to keep any receipts for work-related expenses such as uniforms, training courses and learning materials, as these may be tax-deductible.

REALISE CAPITAL LOSSES

Tax is normally payable on any capital gains. You should consider selling any non-performing investments you hold before 30 June to crystallise a capital loss and reduce or even eliminate any potential capital gains tax liability. Unused capital losses can be carried forward to offset future capital gains.

DEFER INVESTMENT INCOME & CAPITAL GAINS

If practical, arrange for the receipt of Investment Income (e.g. interest on term deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2018.

The Contract Date (not the Settlement Date) is generally the key date for working out when a sale or purchase occurred.

IS AN SMSF SUITABLE FOR YOU?

Now is a good time to seek specific advice in relation to this question, as it may be appropriate to establish an SMSF in conjunction with other tax planning opportunities, to maximise the benefit of the SMSF in your circumstances.

Talk to us TODAY before the 30 June 2018 deadline for assistance to reduce your tax!

Vision Financial Group

a Shop 10, North Point Retail Mackay

p 07 4951 7900 e  admin@visionfg.com.au

This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.

Minimise Your Business Tax

Tax Plan Minimise your Tax.jpg

MINIMISE YOUR BUSINESS TAX

TAX PLANNING GUIDE

Imagine what you could do with tax saved?

  • Reduce your home loan
  • Top up your super
  • Have a holiday
  • Deposit for an Investment Property
  • Upgrade your Car

Here’s a guide to the strategies you can use to minimise your business tax.

IS YOUR BUSINESS A“SMALL BUSINESS” ENTITY?

Small businesses can access a range of tax concessions from the ATO. To qualify as a “Small Business Entity”, the business must have an aggregated turnover (your annual turnover plus the annual turnover of any business connected / affiliated with you) of less than $10 million and be operating a business for all or part of the 2018 year.

REDUCTION IN COMPANY TAX RATES FOR SMALL BUSINESSES

The company tax rate for businesses with less than $10 million turnover is 27.5%.

If you use a Trust structure, one strategy is to allocate profits to a “Bucket Company” and cap your tax at 27.5% for the 2018 year. Note that this company must have business operations to qualify for the reduced company tax rate.

INSTANT DEDUCTION FOR ASSETS LESS THAN $20,000

If your business is a Small Business Entity, the following tax concessions apply:

  • Depreciating assets valued at less than $20,000 will be immediately deductible
  • Depreciating assets valued at more than $20,000 will be depreciated in one pool at a rate of 15% in the first year and 30% in future years
  • If your pool balance at the end of the year is less than $20,000 before applying any other depreciation deduction, the entire pool balance can be written off.

You should buy these assets before 30 June 2018.

If your business is not a Small Business Entity, you will need to depreciate all assets purchased over $300. Any assets purchased for $300 or under can be immediately deducted.

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS

The concessional superannuation cap for 2018 is $25,000 for all individuals. Do not go over this limit or you will pay more tax!

Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge.

For the contribution to be counted towards the employee’s 2018 contribution cap, it must be received by the fund by 30 June 2018.

TOOLS OF TRADE / FBT EXEMPT ITEMS

The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a tax benefit.

Items that can be packaged include handheld/portable tools of trade, computer software, notebook computers, personal electronic organisers, digital cameras, briefcases, protective clothing, and mobile phones.

If structured correctly, the employer will be entitled to a tax deduction for the reimbursement payment to the employee (for the equipment cost), claim any GST input credit, and the employee’s salary package will only be reduced by the GST-exclusive cost of the items purchased.

You should buy these items before 30 June 2018.

PAY EMPLOYEE SUPERANNUATION NOW

To claim a tax deduction in the 2018 financial year, you need to ensure that your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) by 30 June 2018.

You should avoid making last minute superannuation payments as processing delays may cause them to be received after year-end. If for any reasons you end up having to make last minute payments and you would like to claim them as deductions for the current year, contact us immediately and before you make any payments for possible resolutions.

DEFER INCOME

If possible, defer issuing further invoices and receiving cash/debtor payments until after 30 June 2018.  This strategy pushes tax payable to future years.

BRING FORWARD EXPENSES

Purchase consumable items BEFORE 30 June 2018. These include marketing materials, consumables, stationery, printing, office and computer supplies. Spend the money now and get the deduction this year.

REPAIRS & MAINTENANCE

Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2018.

DEFER INVESTMENT INCOME & CAPITAL GAINS

If possible, arrange for the receipt of Investment Income (e.g. interest on Term Deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2018.

The Contract Date is generally the key date for working out when a sale occurred, not the Settlement Date!

MOTOR VEHICLE LOG BOOK

Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2018. You should make a record of your odometer reading as at 30 June 2018 and keep all receipts/invoices for motor vehicle expenses.

An alternative (with no log book needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method.

INVESTMENT PROPERTY DEPRECIATION

If you own a rental property and haven’t already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.

PRIVATE COMPANY

(“DIV 7A”) LOANS

Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2018. Current year loans must be either paid back in full or have a loan agreement entered in before the due date of lodgement for the company return, or risk having it counted as an unfranked dividend in the return of the individual.

YEAR-END STOCKTAKE / WORK IN PROGRESS

If applicable, you need to prepare a detailed Stock Take and/or Work in Progress listing as at 30 June 2018. Review your listing and write-off any obsolete or worthless stock items.

Talk to us about your different options for valuing Stock, and how they affect your tax payable.

WRITE-OFF BAD DEBTS

Review your Trade Debtors listing and write-off all bad debts BEFORE 30 June 2018. Prepare a management meeting document listing each bad debt, as evidence that these amounts were written off prior to year-end and enter these into your accounting system before 30 June 2018.

SMALL BUSINESS CONCESSIONS - PREPAYMENTS

“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) BEFORE 30 June 2018 and obtain a full tax deduction in the 2018 financial year.

TRUSTEE RESOLUTIONS

Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2018 for all Discretionary (“Family”) Trusts. Please see us for more information about these resolutions.

Talk to us TODAY before the 30 June 2018 deadline for assistance to reduce your tax!

 

VFG-extra-1.jpg

Vision Financial Group

a Shop 10, North Point Retail Mackay

p 07 4951 7900 e dgarnham@visionfg.com.au

 

This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.

Vision Financial Group has moved!

Office Picture.jpg

Vision Financial Group is delighted to announce that we have relocated to new business premises (with on site and street parking available).

We are now at Shop 10, Northpoint Retail in the Harvey Norman complex Mackay.

Please note our office number is still 0749 517900 following the move to our new premises, and all other contact details including e-mail, postal address and mobile number will remain the same.  Thank you for your continued support and the opportunity to be of ongoing service to you and look forward to meeting you at our new premises in the near future.

What can I claim against my tax?

It’s tax time again. What can you claim to reduce your tax?

Please take just 2 minutes to read this blog article. We’ll explain:

  • Deductions you can claim
  • The importance of a fantastic tax accountant
  • The “tax trap” you need to avoid
  • Links to more information about specific deductions

Deductions you can claim

According to the Australian Taxation Office (ATO) website, there are 3 things you need to claim a work-related deduction:

1.     You must have spent the money yourself and weren’t reimbursed;

2.     It must be directly related to earning your income; and

3.     You must have a record to prove it.

The ATO allows you to claim up to $300 for work related expenses without having kept any receipts – but you must have spent the money and it must be related to your employment.

If the expense was for both work and private purposes, you can only claim a deduction for the work-related portion.

If the cost of any item is over $300, it will have to be depreciated (a portion of the cost claimed each year over its effective life).

The importance of a fantastic tax accountant

Many accountants seem to be working for the ATO. Instead of trying to maximise what you claim, they’re often too scared of upsetting the ATO rather than fighting to get you the largest legal tax deductions.

Rather than using an accountant who “works for the ATO” – use an accountant who works in your best interest.

At Vision Financial Group we’ll help you to claim every last dollar you can, and make sure you stay out of jail by not claiming anything you shouldn’t. Our team are aware of everything you can and can’t claim and what you should do this year to give you a bigger tax refund next year.

Our extraordinary accountants are all highly trained specialists at legally reducing your tax – so talk with us today!

The “tax trap” you need to avoid

Everyone wants to increase their tax refund (or reduce their tax payable). We’re here to help you to do this!

Tax saving strategies generally involve you spending money on “something” which creates for you a tax deduction. The “something” you spend your money on could be an expense, an asset, or an investment related payment (like superannuation or prepaid interest on an investment loan).

However – please don’t fall into a common trap of spending money just to get a tax deduction. You only save tax based on the marginal tax rate proportion on the amount you spend, NOT the full amount you spend.

For example, if you earn say $85,000 a year, your marginal tax rate (including Medicare levy) is 34.5%. This means any extra dollar you earn will be taxed at 34.5%, and any extra dollar you claim as a deduction will save you 34.5%.

So, if you spend $100 on something that you can claim a deduction for, you will get back $34.50 from the ATO. But it will still cost you $65.50. So only spend money on what you NEED, not just to create extra tax deductions for yourself.

Links to more information about specific deductions

It’s our job as your accountants to make the lodgement of your Tax Returns as easy and simple as possible.

We do this every day, so we know all the ins and outs of what to claim to make it easy for you.

If you want to have a look at some of the specific deductions you can claim, here are links to the ATO website (it’s actually pretty good for the ATO):

We’re here to help you!

To make an appointment with us to discuss and prepare your 2017 Tax Return call             0749 517900 or email enquiries@visionfg.com.au.

 

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.]

 

    Your 2017 EOFY Tax Minimisation Tips

    Your 2017 EOFY Tax Minimisation Tips

     

    Another financial year is about to finish! As a business owner, there are many obligations that you need to consider and action just before and after 30     June. Some of these will help to minimise your tax. We have outlined these action points below to assist you.

     

    Date

    Action Required

    BEFORE
    30 June 2017

    ·    Ensure your employee superannuation payments are received and allocated by your employees’ super      fund prior to 30 June 2017 to ensure a tax deduction for this year. Any payments made between 1 July 2017 and 28 July 2017 will count towards your Superannuation Guarantee requirement but will not be tax    deductible until the 2018 financial year.

    ·    If you operate through a trading company, review shareholder loan accounts and make minimum loan      repayments (may need to declare dividends).

    ·    If you operate through a discretionary family trust, ensure that a Trust Distribution Resolution for each       Trust is signed by 30 June 2017.

    ·    Review 2017 LAST MINUTE strategies below to reduce your tax prior to 30 June 2017.

    ·    Carry out a stocktake by 30 June 2017 (companies with turnover over $10 million)

    1 July 2017

    ·    Superannuation guarantee rate is still 9.5%

    ·    2% Temporary Budget Repair Levy ceases.

    14 July 2017 or before

    ·    Provide 2017 PAYG Payment Summaries to all employees

    28 July 2017

    ·    Quarterly Superannuation contributions due for employees (for the period 1 April 2017 to 30 June 2017).  THIS IS A KEY DEADLINE!

    (Note: If you fail to meet your requirements by 28 July 2017, you must complete a Superannuation               Guarantee Charge Statement and forward it to the ATO together with underpaid superannuation plus           administration  fees and interest by 14 August 2017. Superannuation Guarantee Charge payments are NOT  tax deductible.)

    14 August 2017 or before

    ·    Lodge your 2017 Annual PAYG Payment Summary Statement (for employees) with the ATO. Penalties apply for late lodgement.

    28 August 2017

    ·    Taxable Payments Annual Report due for lodgement with the ATO (building and construction industry)

     

    Key changes from 1 July 2017

    ·      The temporary budget repair levy for high income earners is abolished. This reduces the highest marginal tax rate from 49% to 47%.

    ·      The maximum concessional contribution has been reduced to $25,000, independent of your age at the start of the financial year.

    ·      The maximum non-concessional contribution has been reduced to $100,000.

    ·      The maximum amount of non-concessional contributions allowed under the bring forward provisions has reduced to         $300,000.

     

    Confirmation of changes from 1 July 2016

    The following were expected to be implemented from 1 July 2016, and we can confirm that the following measures have passed parliament and are now law:

     SBE Company Tax Rate reduced to 27.5%

    Effective 1 July 2016, the company tax rate for SBE (Small Business Entities) reduces by 1% from 28.5% to 27.5%.  To be considered an SBE, your group aggregated turnover must be less than $10 million.  This key concession for 2017 applies again in 2018.

     $20,000 Immediate Deduction for SBE’s

    Business groups with aggregated turnover of less than $10 million are now eligible to claim an immediate deduction for depreciating assets costing less than $20,000.

    Similarly, depreciating assets costing $20,000 or more will be allocated to the SBE’s general small business pool and will              depreciate at a rate of 15% in the income year in which the assets are first used or installed ready for use. The assets will then be depreciated as part of that pool at 30% in subsequent income years.

     If the balance of the general small business pool is less than $20,000 at the end of the income year, this balance is also written   off.

    Your 2017 EOFY Reminders & Action Items

    Trust Distributions - Timing of Resolutions

    Trustees (or directors of a trustee company) need to consider and decide on the distributions they plan to make by 30 June 2017 at the latest (the trust deed may actually require this to be done earlier).  Decisions made by the trustees should be documented in writing by 30 June 2017.

    If valid resolutions are not in place by 30 June 2017, the risk is that the taxable income of the trust will be assessed in the hands  of a default beneficiary (if the trust deed provides for this) or the trustee (in which case the highest marginal rate of tax would    normally apply).

      Action Required Please contact our office before 30 June 2017 so that we can properly prepare this document for you to sign.

     You might not need to do a Stocktake

    Small Business Entities (operational businesses with an aggregated turnover below $10 million) have access to a range of tax       concessions.  One of these concessions is the simplified trading stock rules.  Under these rules, you can choose not to conduct a stocktake for tax purposes if there is a difference of less than $5,000 between the opening value of your trading stock and a         reasonable estimate of the closing value of trading stock at the end of the income year.  You will need to record how you            determined the value of trading stock on hand.

    If you would like to take advantage of the simplified trading stock rules, call us today to make sure you are eligible to use the      simplified rules and to discuss how to use them properly.

     Deadline for 2017 PAYG Payment Summaries

    You need to provide 2017 PAYG Payment Summaries to your employees and other workers by 14 July 2017.  These must then be submitted to the ATO by 14 August 2017 or penalties will apply.

     

     Action Required If you have any doubt about how to correctly complete your 2017 PAYG Payment Summaries, please contact   us for assistance BEFORE you prepare them.

     

    Building and Construction Industry Reporting

    From 1 July 2012, new tax reporting rules apply for businesses in the building and construction industry. Businesses will have to   lodge an annual report with the ATO setting out details of payments made to contractors. This will assist the ATO to reduce the  “cash economy” by ensuring tax is paid on all income including “cash” payments.

     You will need to record the following details of all payments made to contractors for building and construction services:

    ·         The ABN of the contractor

    ·         The name and address of the contractor

    ·         The gross amount paid for the financial year, including GST

    ·         The total GST included in the gross amount paid

     If you use computerised accounting software, your system should be able to track this information for you and prepare the         required Taxable Payments Annual Report.

     

    Action Required Ensure that you lodge your Taxable Payments Annual Report with the ATO no later than 28 August 2017.

    Payroll Tax

    Payroll tax applies to all entities that have an Australian payroll that exceeds state-based limits.

    You should note that in addition to normal salaries and wages, the following items are generally also included in payroll expenses if payroll tax applies:

     

    ·         fringe benefits based on the grossed-up taxable value of fringe benefits;

    ·         all employer contributions to superannuation on behalf of employees; and

    ·         some contractor or sub-contractor fees.

    For more detailed information about whether payroll tax applies to your business, please contact our office.

     

    Action Required The Annual Return/Reconciliation for payroll tax must be lodged by 21 July 2017 with your State Revenue        Office.

    WorkCover/WorkSafe

    Your WorkCover/WorkSafe insurer sends an annual reconciliation to all registered employers at the end of the financial year.

     In completing your annual reconciliation, you will need to include the following items in addition to normal salaries and wages:

    ·         fringe benefits based on the taxable value of fringe benefits (do not gross-up);

    ·         all employer contributions to superannuation on behalf of employees; and

    ·         some contractor or sub-contractor fees.

     For more detailed information about what items to include in the reconciliation statement, please contact our office.

    Once the reconciliation is received and processed by your WorkCover/WorkSafe insurer, you will be issued with a final                 assessment or a refund depending on the instalments you have paid during the year.

     

    Action Required Complete and lodge the Annual Reconciliation with your WorkCover/WorkSafe insurer by the due date.

    Goods and Services Tax (GST)

    A reconciliation of GST should be performed as at 30 June 2017 to determine if there has been an under or over-payment of GST in the 2017 tax year. If a discrepancy has arisen, then it is possible to adjust a subsequent Business Activity Statement (BAS) to     rectify the error, however there are limits imposed on adjustments that can be made in this way.

    Income declared on your BAS should be reconciled to income declared on your income tax returns.

    Also, please note that you are required by law to substantiate all Input Tax Credit claims with a complying Tax Invoice, and you    need to retain these documents for a minimum of 5 years.

     

    Action Required Complete the annual GST reconciliations, and check that you have all required tax invoices and other                supporting documents.

    ATO Audit Activity

    Please note that the ATO and State Revenue Office are constantly increasing their audit activities. There has been an increase in   audit activity for PAYG Withholding, Payroll Tax, WorkCover, GST, Division 7A loan accounts from companies, and Trust                 distributions from Discretionary Trusts.

    We can offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit.

     

    Action Required Please contact our office if you would like to request this service.

    Last Minute Tax Minimisation Tips

    Here’s a few final reminders about ways to reduce your tax for 2017:

     

    1.     Write-off Bad Debts

    2.     Write-off any trading stock that is damaged or obsolete

    3.     Review your Asset Register and scrap any obsolete plant and equipment

    4.     Pay for marketing materials, repairs, consumables, office stationery, and donations before 30 June 2017

    5.     Ensure employee superannuation contributions are made (and received by your employees’ superannuation fund/s) by  30 June 2017 to allow a tax deduction this financial year

    6.     Realise any capital losses you have before 30 June 2017 to offset against any capital gains you may have made

    7.     Review the guidance provided in TR97/7 to confirm if you are eligible to claim deductions for your creditors as at 30 June 2017

     Want to talk?

    Feel free to call our office any time on 49 517900 or email us at enquiries@visionfg.com.au – We can’t wait to provide you with better advice now for a beautiful future.

     

    General advice disclaimer

    General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.]

    What every employer needs to know about fringe benefits

    On 31 March 2017, the Fringe Benefits Tax (FBT) year ends. The ATO will be reviewing whether all employers who should be paying FBT are, and that they are paying the right amount.

    To help you meet your fringe benefits obligations, we’ve put together a list of essentials every employer needs to know about FBT and review every year, such as:

    • Should I be registered for FBT?
    • What information do I need to give my accountant?
    • Are there any changes to the FBT rates come 1 April 2017?
    • What is exempt from FBT?
    • How can I reduce my FBT liability?
    • Do I need to review our salary sacrifice agreements?

    These questions are all answered for you below, as well as some log book management tips and new rules that have been introduced to salary sacrificed meal entertainment benefits.

     

    FBT Rate changes

    On 1 April 2017, the FBT rates will decrease to:

    FBT Rate                                    47%

    Type 1 Gross Up Rate           2.0802

    Type 2 Gross Up Rate           1.8868

     

    Should you be registered for FBT?

    Generally, if you have employees, including directors and you provide them with cars, car parking, entertainment (food and drink), employee discounts, reimburse private expenses etc, then you are likely to be providing a fringe benefit and we will need to register your business for FBT.

    It’s important you start gathering all of the details of these provided benefits as soon as possible using our annual FBT Questionnaire so we can calculate any potential FBT liability and lodge your FBT return on time – due 25 June 2017 with payment to be made by 28 May 2017.

     

    What items are exempt from FBT?

    If you’re providing items like mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc., or minor and infrequent benefits that are less than $300 in value, you are unlikely to have to worry about FBT.

    You can fill out our short FBT Questionnaire to 100% sure.

     

    An easier way to manage your vehicle log books  

    For employers with 20 or more ‘tools of trade’ cars – a car required for the job, like for a sales rep travelling extensively for the business – the ATO has a new process for validating the business use percentage of the car.

    It’s called the ‘simplified method’, and if you meet the access conditions, you can apply an average business use percentage to all ‘tools of trade’ cars in your fleet for first log book year and the next 4 years. Conditions to be met are:

    ·     valid log books kept for at least 75% of the cars in the log book year;

    ·     the employer chose the make and model of the car, not the employee;

    ·     each fleet car has less value than the ‘luxury car’ limit when purchased, generally $64,132 in 2016/2017;

    ·     the cars aren’t provided under a salary packaging arrangement / employee remuneration package; and

    ·     your employees can’t choose to receive additional remuneration in lieu of using the cars.

    Is it time to review your salary packages?

    With the FBT rate changing again on 1 April 2017, it’s a good time to review all existing agreements so that you and your employee know what the package will look like once the rate drops to 47%.

    The lower rate will, in general, make salary packaging less expensive to provide and an opportunity to look for potential savings. For example, for employees earning above $180,000 there is a one-off opportunity between 1 April 2017 and 30 June 2017 to reduce their taxable income with the FBT rate drop covering the 2% Debt levy imposed.

    Be careful though not to drop the individual’s income below the Debt levy threshold, and make sure the benefits provided under the salary sacrifice agreement replace amounts that would have been payable as salary, the employee agrees in writing to forego income before it is earned in return for benefits of a similar value, and the sacrificed amount comes out of the employee’s wages and not reimbursed into their bank account.

     

    New rules for meal entertainment benefits that are salary sacrificed

    Where an employee agrees to receive meal entertainment benefits instead of future salary, i.e. as part of a salary sacrifice arrangement, concessions have been removed as of the 2017 FBT year. There are 3 key changes to note:

    ·     these benefits are to be included in the employee’s individual fringe benefits amount being reported on the payment summary when it exceeds the $2,000 reporting exclusion threshold;

    ·     you can no longer use the 50-50 split or 12-week register methods to value these benefits; and

    ·     a new separate $5,000 cap for ‘salary sacrificed’ meal entertainment benefit now exists for employees of charities and not-for-profits. If these benefits exceed the cap the excess will be counted toward their current $31,177 exemption or $17,667 rebate cap.

     

    Ways you can reduce your FBT liability

    Here are some ways in which you can reduce your FBT liability:

    ·     replace your fringe benefits with cash salary;

    ·     provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves;

    ·     look at providing benefits that are exempt from FBT; and

    ·     use employee contributions, for example, an employee paying for some of the operating costs of car fringe benefit such as fuel that you don't reimburse them for. Though you should note that employee contributions may be deemed assessable income to you and subject to GST.

     

    How we can help you!

    The FBT year ends on 31 March 2017, so be sure to complete and return the FBT Questionnaire as soon as possible so you don’t miss the lodgment date of 25 June 2017, and meet the payment due date of 28 May 2017.

    We look forward to helping you meet your FBT obligations and are available anytime to answer any questions you have around reducing your FBT liability or creating effective salary sacrifice arrangements.