Vision Financial

Minimise Your Business Tax

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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!

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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.]

 

    Tax Planning Starts Now

    There are 5 key things all business owners must consider right now. Some of them are brilliant wealth creation ideas. Please read on…

    30 June will be here before we know it. Let us help you get the most out of the upcoming months.

    Too often, we end up suffering because we have procrastinated and not made a positive decision to do something. If we all leave your tax planning until the end of May and early June, quite frankly there may not be enough time to do anything significant to legally reduce your tax.

    So, for 2017, our invitation to you is to start now with your tax planning.

    5 Key Tax Planning Strategies

    Over the next five weeks, we will send you one email per week covering one of our five key tax planning strategies. These are:

    1. The Secrets to Tax Planning

    2. Last Chance for big super contributions

    3. Why use a “bucket” company?

    4. Why use a SMSF?

    5. Trust Distribution Resolutions before 30 June

    So, keep an eye out for our emails over the next 5 weeks, and we’ll outline in detail for you how to save $ and at the same time grow your family’s wealth in a low-risk manner.

    How our tax planning service works

    1     First, we request from you details of your expected income and business profits for the 2017 tax year (1 July 2016 to 30 June 2017). This includes all:

    •  wages / employment income
    • interest, dividends and rental income received

    • business profits / losses; and

    • any capital gains / losses you expect to make.

    Based on this information, we estimate your taxable income and your tax payable before any tax planning strategies. For example, we may calculate (based on your information) that you have a taxable income of $100,000 for 2017. This would result in $26,832 tax and Medicare levy payable.

    2     Secondly, we discuss all your tax planning options. Some of these may be things to do in your business, and some of these may be investment / wealth creation options.

     

    3     Third, we provide you with a report that explains in plain English the tax planning strategies we recommend and exactly how much tax you will save.

     

    4     And finally, we provide you with an easy-to-follow action plan to ensure that both you and we can do everything that needs to be actioned before 30 June.

    Contact us today to get started!

    Don’t wait until June, now is the time to have a chat to us.  

    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.]

    Merry Christmas from the team at Vision Financial Group

    Merry Christmas

    From the team at Vision Financial Group, we wish all of our clients and business associates a very Merry Christmas.  We thank you for the support throughout 2016 and look forward to working with you all again in the future!

    We would like to remind everyone that our office will be closed from close of trade Wednesday 21st December and we will re-open Monday 9th January.

    Don't leave your tax planning to the last minute

    The biggest changes to super in a decade – how to capitalise now!

    Major changes to tax and superannuation have just been approved by the Government in early December 2016.

    These are the biggest changes in the last 10 years. They are significant. 

    Most of these changes will take place on 1 July 2017.

    That’s why we need to start planning ASAP with you.

    The expert Vision Financial Team have spent the past 3 months creating a number of cutting edge and brilliant strategies to help you.

    Maximise Super Contributions – Large amounts now for possibly the last time

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

    The following changes occur from 1 July 2017:

    The tax deductible super contribution cap decreases to $25,000 per year from $30,000 per year for up to age 49 or $35,000 per year for age 50 to age 75, after passing a work test if over 65.  

    The non-tax deductible super contribution cap decreases to $100,000 per year (provided your super balance is less than $1.6 million) from $180,000 per year.

    You may have a once-off opportunity to make a non-tax deductible contribution of $540,000 before 30 June 2017 into super, depending on prior year contributions if any. 

    We need to meet and consider your overall personal and family circumstances, and then we can design for you the most tax effective super contributions you can make prior to 30 June 2017.

    Other General Tax Planning Strategies

    Of course, we’ll consider all the usual 2017 General Tax Planning options for you at the same time.  There are many strategies to consider!

    Action Plan

    Contact Vision Financial Group TODAY to book in your initial 2017 Tax Planning Meeting with us.  Phone 07 4951 7900 or Email enquires@visionfg.com.au.

    Imagine what you could do with your tax saved!

     

    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.]

     

    Advantages and Disadvantages of Buying a Business

    Advantages

     Buying an existing business offers a sense of security because you have a good idea of what you’re getting for your money. 

    Existing customers and goodwill

    An established business will generally come with existing customers, clients, suppliers and staff.  This eliminates much of the effort and expense needed to generate goodwill, branding, advertising and hiring staff. 

    Expenses and finance

    The business is already operational and stock is already on hand, so your initial expenses would be minimal and you can quickly generate a cashflow.  If you need to obtain finance, it may be easier because the business has a proven track record. 

    Training and assistance

    First-hand experience is valuable and the previous owner and employees remaining with the business are best placed to give you the training and assistance you need. 

    Disadvantages

    An existing business does not come with a guarantee of future success!

    Goodwill may not last

    There’s a risk that customers and clients may leave when the business changes hands.  Staff may wish to leave too and you may have to pay their entitlements, such as long service leave.  The departure of the owner may have a negative effect on the business, so you can’t necessarily guarantee the profits.

    Reputation

    The business may have a bad reputation or have made a poor impression in the past – this might prove difficult for you to turn around.

    Premises and equipment

    The premises may be inadequate and the equipment or stock may be out dated or in need of replacing or repair.

    Action Plan

    Thoroughly research the business!

    For expert advice on buying a business, make an appointment to talk with your accountant, solicitor or business adviser.

    Contact Vision Financial 07 4951 7900 or email enquires@visionfg.com.au to make an appointment