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Have you actually thought about how much it costs you to be unhealthy? This infographic by Medifast can give you some idea as to the cost of being unhealthy.

So what are some of the financial costs of being unhealthy?

- Lower productivity and energy levels affecting your performance at work or in your business.
- Medical Costs later in life or even earlier in life (as I learned)
- Insurance premiums are higher.
- All that potential unpaid leave and/or missed opportunities
- A shorter lifespan and early mortality (reducing how much you can earn in your life)

All of this is easy to say but how easy is it to implement and start becoming healthy. Like getting to financial freedom, it can be hard to know where to start; that is where having a coach to guide you and get you started to becoming and being healthy can be one of the best financial decisions you will ever make. A coach will give you the steps and knowledge to achieve your health goals and change your life for the better.

Brad Cunningham of The Fit Shop says that:

“You need to begin looking at your health like a bank account.

We all understand that if you take too many withdrawals from your account you’re going to go into the red.

So you need to continually make deposits. Same with your health, overtime you choose a poor food option, drink alcohol, skip exercise you make withdrawals.

And soon enough you will hit the ‘red’ and in this case red meaning: sickness, illness, injury or other health concerns,

So moving forward focus on making more deposits daily for your health.”

Whilst it may take some time and patience to get to the level that you ideally want, it is worth it. You will feel better, you will look better and most importantly you will have the energy to LIVE LIFE!!

As a business owner, there are many obligations that you need to consider and action over the next few weeks. Some of these will help to minimise your tax. We have outlined these action points below to assist you.

Key Changes from 1 July 2016

Please urgently check these key things:

1. Has your payroll software automatically updated for these changes? Or do you need to load these changes into your payroll software? (Xero does this automatically.)
2. Check your first pay run from 1 July 2016 to ensure the changes are correct.
3. Review any salary packaging and calculations and make any adjustments to employee FBT contributions or other items where needed.

Accelerated Depreciation

All small businesses with an aggregated annual turnover of less than $2 million will get an immediate tax deduction for any individual assets costing less than $20,000. This $20,000 limit applies to each individual item. Small businesses can apply this $20,000 rule to as many individual items as they wish. These arrangements will continue until the end of June 2017.

Company Tax Cut

To help all Australian small businesses grow, the Government is proposing to reduce the income tax rate to 27.5% for small business companies with annual turnover less than $10 million, starting 1 July 2016. This is only proposed at the moment; Labour does not support the turnover threshold increase (wants to keep it at $2million) but does support the cut. Keep tuned for updates in this space.

2% Debt Tax for High Income Earners

From 1 July 2014 until 30 June 2017, a 2% Temporary Budget Repair Levy, or debt tax, will apply to individuals on their taxable income in excess of $180,000 per annum. This means that the tax rate will increase by 2% for every dollar of taxable income you earn above $180,000 in a financial year.

Continue to be aware that if you have a one-off spike in income until June 2017, for example from the proceeds of a sale of business or a capital gain from the sale of an investment property, the debt tax is likely to impact on this increase in personal income.

If you have employees or directors affected by the debt tax, talk to us about strategies to lessen the impact.

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 2016 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 2016.

If valid resolutions are not in place by 30 June 2016, 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).

You might not need to do a Stocktake

Small Business Entities (operational businesses with an aggregated turnover below $2 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 2016 PAYG Payment Summaries
You need to provide your 2016 PAYG Payment Summaries to your employees and other workers by 14 July 2016.

Action Step: If you have any doubt about how to correctly complete your 2016 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.

From 1 July 2012, you will need to record the following details of all payments made to contractors from 1 July 2012 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 Step: Ensure that you lodge your Taxable Payments Annual Report with the ATO no later than 21 July 2016.

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 Step: The Annual Return/Reconciliation for payroll tax must be lodged by 21 July 2016 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 Step: 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 2016 to determine if there has been an under or over-payment of GST in the 2016 tax year. If a discrepancy has arisen, then it is possible to amend 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 Step: 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. In particular, 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 are able to offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit.

Action Step: 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 2016

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 repairs, consumables, office stationery, and donations before 30 June 2016
5. Realise any capital losses you have before 30 June 2016 to offset against any capital gains you may have made

Feel free to call our office any time on 03 5134 1778 or email us at admin@prestoncoering.com.au. We can't wait to provide you with better advice now for a beautiful future.

You can reduce your tax by $100’s if not thousands with some of these strategies.

Here's how to do it:

The Strategy behind Tax Planning

The tax you pay depends on your taxable income, and the tax rates that apply to that income.

Therefore, your tax is reduced if you:

1. Reduce your income, or

2. Increase your tax deductions.

Seeing we all want to earn more, reducing your income isn't an option! But increasing your tax deductions definitely is. We have shared below links to 2 Tax Planning Flyers which both list a number of items that could be claimed as tax deductions. You can use them as a guide but you should Contact Us if you aren’t sure of anything.

To illustrate: If you need something in July that is classified as a tax deduction, it makes sense to bring this purchase forward and buy it in June. You then get the tax deduction this year, and not next year.

Warning: Don't fall into the trap of buying something simply to get the tax deduction for it. If your tax rate (including Medicare Levy) is for example 34.5%, you would only get 34.5% of the purchase price back as a tax refund (or reduced tax payable) from a tax deductible item. You DON'T get 100% of the amount that you spend back as a tax refund (or reduced tax payable).

But if you do need an item for your business or your work and it is tax deductible, we recommend buying it BEFORE 30 June so that you get the tax deduction this year.

Your Tax Planning Strategy Checklists

Business Owners: Click Here for our Tax Planning Flyer for Business Owners.

Individuals: Click Here for our Tax Planning Flyer for Individuals.

If you are a business owner, we will look at both for you.

If you want to minimise your tax burden, then you need to help us help you and get in contact with us today!

By spending a little bit of time with us reviewing your situation, we might be able to help you save thousands!!

Now's the time to do it - please contact our office TODAY to get started.

In the last couple of days, we have heard of two people receiving a phone call from someone pretending to be calling from the ATO and claiming to be part of the fraud & tax evasion division.

One of the people that received the phone call was none other than Tash from our office.

Here is an audio recording of the phone message they have left: Click here to listen.

Please be aware that you may receive a phone call from these scammers, and if you are ever unsure, please contact us before doing anything!!

- The PCR Team

This is one of my personal favourites. Debt optimisation (sometimes referred to as "Debt Recycling") is a financial strategy which creates wealth over time and improves an individual's debt structure. Achieved in the majority of cases by:

- Using all surplus income to reduce the home loan (non-tax deductible "bad debt");

- Creating or increasing investment debt (tax deductible "good debt"), by drawing against equity in the home; and

- Using this borrowed money to build an investment portfolio.

It is a great strategy that can be adapted to suit your goals and time horizons; though it is important to note that borrowing money to invest and budgeting are key components.

Here is an example of how the assets and cash flow involved in a debt optimisation strategy using a "split loan":

Where suitable, it is possible to extend on the strategy above by using the newly created investments as security for a margin loan, with the proceeds used to further invest. In this type of strategy, the interest costs are still generally met from the home loan, with investment income also used to reduce the home loan balance.

Using a strategy like this allows you to decrease your bad debt over time and replace with debt that can be used tax effectively whilst building an investment portfolio that can be used to help fund your goals.

Everyone is talking about SMSF's these days. Even with the changes proposed by the government (such as the $1.6M cap) SMSF can be the way to go.

Very simply, SMSF is a super fund that you fully control. You make all the investment choices - including shares, managed funds, property, and cash. SMSF's can borrow from a bank to purchase investments, but this opportunity might be limited.

Strategy

Choosing the right STRATEGY for your SMSF is the key.
One great strategy can be to purchase your business premises in your SMSF or purchasing an existing commercial property you own with your SMSF. Either strategy means that you can get your super money working for you now and save significant dollars.

If you already own a commercial property outside of super it can be worthwhile looking at transferring that property to your superannuation fund also. It may help you free up cash and possibly even reduce your personal non tax deductible debt on your mortgage.

We had one client that we did this for. They owned a commercial property outside of their superannuation fund. The property was worth $275,000. They had a small loan left on the premise of $50,000 approx. They netted after Capital Gains $205,000 that left them with only $50,000 left on their personal mortgage. A great outcome for the client.

Furthermore they have net tax savings of $2,175 every year now because the income from the property is taxed at 15% not 34.5% & 39%.

Estate Planning

Another key reason for using a SMSF is that it gives you exact estate planning options. For example, you can nominate a specific dependent (spouse or child under 18) to receive your super benefit if you die. Unlike a Will, this cannot be contested.

Would you like NO TAX on your Investments?

Once you turn age 60, you can start to pay yourself a pension from your SMSF, and there is NO tax on income of the SMSF and NO tax on any capital gains.

This means you can gradually sell down assets (including property), held in your SMSF and pay NO TAX regardless of any capital gain you make.

This is an absolutely fantastic outcome - and it's possibly far better than owning an investment property in your individual name or in a Family Trust.

If you are a small business who uses a Trust, there are a number of people that you can distribute to with a discretionary trust.

These include:

- Children
- Parents
- Parents-in-law
- Brother & Sisters
- Grandparents
- Grandchildren

Children & Grandchildren

You can distribute to children who are minors only $416. That might not seem like a lot but if you have 3 children and you are in the 49% tax rate that works to being $611.52 in tax savings.

If you children are over 18 and studying at uni or are not really earning an income you can distribute up $20,542 and they will pay no tax. At the 49% tax rate that is $10,066 in tax savings. If we increase that to $37,000 they will have $3,456 in tax to pay and your net tax savings will be $14,674.

Brothers & Sisters

If you have brothers and sisters that are studying at uni or are not really earning income you can also distribute to them in a similar fashion as above. Just make sure no one else is doing the same thing!!

Parents, Parents-in-law & Grandparents

If you have parents, parents-in-law and/or grandparents that are self-funded you might be able to distribute to them in a tax effective manner.

How do you take advantage of this?

You need to have a Discretionary Trust, with income and you need to be a small business.

FAQ’s

Do I need to pay the distribution?

Yes you will need to pay the distribution.

What if they receive Centrelink?

If who you are looking to distribute to receives Centrelink then this strategy is unlikely to work for you.

You can get a double tax deduction when you pay for life insurance through superannuation.

How does it work?

Your business contributes your premiums to your super fund and the business gets the tax deduction. On top of that the super fund gets the tax deductions for the life insurance premiums it pays.

Option 1 – Pay $5,000 premium outside of super.

No tax deduction.

Option 2 – Pay $5,000 Life Insurance premium inside super.

Business pays the super fund as a contribution. Tax deduction. At 49% tax rate that is a $2,450 tax saving.

Contribution is income in the fund @ 15% = $750 tax payable

Life Insurance premium is deduction in the fund @15% = $750 tax refund.

NET TAX SAVINGS $2,450

What do you need to make sure you can get this tax deduction:

- A business or an employer that allows you to salary sacrifice to super.
- Super
- A chat with one of our team.
- To take action before 30th June.

FAQ’s

Why are life insurance premiums not tax deductible outside of super?

You are not allowed to claim the premiums outside of super because you don’t pay tax on the money that you receive.

How much would I have to earn pre-tax outside of super for that premium?

If you are on the highest marginal tax rate of 49% you would have to earn $9,803. But even if you are on the 34.5% tax bracket you would have to earn $7,633.

Does this strategy apply to other insurances?

This strategy can apply to TPD (Any Occupation) and Income Protection Insurance as well. Income Protection insurance is tax deductible outside of superannuation also.

Other insurances such as Home, Car & Pet insurances are not able to be paid through superannuation.

Don’t pay unnecessary tax this year! Plan ahead and Save

30th June isn’t far away!!
Too often, we end up suffering because we have procrastinated and not made a positive decision to do something. Last Year we were able to help our clients save over $800,000 in tax. We want you to join them and help us get to $1 million. So, over the coming weeks, we will be listing a number of strategies to help you reduce your tax legally.

Why?
If you leave your tax planning until the end of June, quite frankly there may not be enough time to do anything significant to legally reduce your tax.
So for 2016, start planning to save tax.

So over the next few weeks keep an eye out for our tax planning strategies that can help you save big and save more for your families wealth creation.

How our Tax Planning Process works

First of all, we request from you details of your expected income and business profits for the 2016 tax year (1 July 2015 to 30 June 2016). This includes all wages / employment income, interest and 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 may have a taxable income of $100,000 for 2016.

Secondly, we discuss all of 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.

Thirdly, 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.

Finally, we provide you with an easy-to-follow Action Plan to ensure that both you and us can do everything that needs to be actioned before 30th June.

This is just a quick rundown of the budget and the things most likely to impact our clients. It isn’t a fully comprehensive review of everything in the budget. Something to remember is that none of the budget is law and now that Labour has given its response, it looks like they won’t be supporting all of the reforms that are set out the budget, especially the retrospective super reforms and generous increase to turnover size for classification of small business.

We will be having a federal election soon, in which the full senate will be elected. This could see a substantial shift in the senate and the ability of the government to pass any legislation.

Superannuation

Effective Immediately

Lifetime cap for non-concessional (after-tax) contributions.

A lifetime cap has been set at $500,000 taking into account all after-tax contributions from 1 July 2007.

Yes, that means in order to make sure you don’t breach the cap, you will have to go back almost 10 years and work out exactly what has been contributed since then. I am sure that everyone is looking forward to that.

How has it changed?

Previously, this limit was $180,000 per year and individuals under 65 could bring forward 2 years to make it $540,000 over 3 years. This is a massive shift that is designed to stop people being able to make large contributions to their fund.

Super changes effective 1 July 2017

Allow catch-up concessional super contributions

Balances less than $500,000 will be allowed to make additional concessional (pre-tax) contributions based on unused cap amount in previous years. The unused amounts start accruing from 1 July 2017 and can only be carried forward on rolling basis for a period of five years.

I think this change is welcome and fantastic for people with lower balances and really help people get the funds that they need into super in their later years.

Transition to Retirement Income Stream (TRIS) – Taxing earnings

Previously, all income streams (pension) assets in a super fund were exempt from the 15% earnings tax. This will no longer be the case, with the income earned from assets supporting a TRIS to be taxed at the 15%.

The TRIS scheme was supposed to be there to help people supplement their incomes, should they decide to start working part time before retirement. Due to its nature though, it was a great way to save tax and put those extra funds into Super to boost savings. If this stays, these strategies will need to be reviewed.

Reducing Concessional Contributions Cap

Pre-tax contributions and employer contributions cap will be reduced to $25,000 from $35,000 for those aged over 50 and $30,000 for everyone else.

Changes to contribution rules for those aged 65 to 74

This is the removal of the work test, meaning that those in that age will be able to make contributions to their Super again, regardless of whether they are working or not.

Tax deductions for personal super contributions

This allows people to make contributions personally to Super and claim a deduction. Previously there was a 10% test in which only substantially self-employed individuals were able to claim this deduction.

Change to the double contribution tax rule for high income earners

As from 1 July 2017, the threshold will be reduced from $300,000 to $250,000 where high income earners have to pay an extra 15% on Super Contributions Tax.

Improve Superannuation balances of low income spouses

Low Income Super Tax Offset is available where spouse now earns up to $37,000 (up from $10,800). The offset is gradually reduced up until an income of $40,000. $540 tax offset is available for the contributing spouse.

Low Income Super Tax Offset

The point of this offset is so that people on lower incomes don’t pay more tax on their super contributions then they do outside of super. This will apply to people who have an adjusted taxable income of up to $37,000 and is up to $500.

This replaces Labour’s Low Income Superannuation Contribution (which is almost identical).

Business & Tax cuts

Personal Income Tax Cuts

The 32.5% personal income tax threshold will increase from $80,000 to $87,000.

Increasing Small Business Income Tax Offset

Increase in the current offset from 5% available to non-incorporated business to 8% but no increase the cap amount of a $1,000.

Reduction in Company Tax Rate

Reduction in Company Tax Rate effective 1 July 2016 for small business to 27.5%. The plan is to reduce it to 25% over the next 10 years.

Increase in small business entity turnover threshold

Starting 1 July 2016, the turnover threshold is to go from $2M to $10M. Labour have said they oppose this. We will have to wait and see it if makes it.

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Blog

Why Staying Healthy and Keeping Fit is a Financially Smart Decision!!

Another financial year is about to finish

Some Key Items that mean $ in your pocket

SPECIAL RELEASE – WATCH OUT FOR PHONE SCAMMERS

Pay off your home loan sooner and maximise your tax deductions

SMSF – Get your wealth working for you!

Trust Distributions – Who can you distribute to?

DOUBLE TAX DEDUCTION for Life Insurance

Help us save over a $1M in tax for Small Business!

Federal Budget 2016 – Making Super difficult & giving to business