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Monthly Archives: May 2019

Another financial year is about to finish

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 2019 Please urgently check these key things: 1. Has your payroll software automatically updated for these changes? Or do you need to load these changesinto your payroll software? (Xero does this automatically.)2. Check your first pay run from 1 July 2019 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.4. Single Touch Payroll becomes compulsory for all businesses employing people. You will have to ensure you have payroll software that is STP enabled before the 30th September.
Accelerated Depreciation All businesses with an aggregated annual turnover of less than $10 million will get an immediate tax deduction for any individual assets costing less than $30,000. This $30,000 limit applies to each individual item. Businesses can apply this $30,000 rule to as many individual items as they wish. These arrangements have been extended until the end of June 2020. 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 2019 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 2019. If valid resolutions are not in place by 30 June 2019, 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 2019 PAYG Payment Summaries
You need to provide your 2019 PAYG Payment Summaries to your employees and other workers by 14 July 2019. Action Step: If you have any doubt about how to correctly complete your 2019 PAYG Payment Summaries, please contact us for assistance BEFORE you prepare them. Taxable Payments Annual Reports – Building and Construction, Cleaning and Courier Since the 1 July 2012, tax reporting rules apply for businesses in the building and construction industry. This financial year they have been expanded to the cleaning services and courier services business. Businesses 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 Step: Ensure that you lodge your Taxable Payments Annual Report with the ATO no later than 21 July 2019. Cleaning and Courier Services have until the 28th August 2019 to lodge their Report. 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 2019 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 2019 to determine if there has been an under or over-payment of GST in the 2019 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 are a few final reminders about ways to reduce your tax for 2019: 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 2019.5. Realise any capital losses you have before 30 June 2019 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

Some Key Items that mean $ in your pocket

You can reduce your tax by hundreds of dollars (if not thousands), with some of the following 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 two Tax Planning Flyers, which both list a number of items that can be claimed as tax deductions. You can use them as a guide, but you should contact us if you are not 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 from 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 the tax deductible item. You DON’T get 100% of the amount that you spend back as a tax refund (or reduced tax payable). If you do need an item for your business or 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 help us to help you, and get in contact with us today! By spending a little bit of time with us reviewing your situation, we may be able to help you save thousands!! Now is the time to do it – please contact our office TODAY to get started.

Pay Super for Employees Earlier

To claim a tax deduction for Super, it needs to be physically paid. By paying your June quarter, or month’s Super before the end of the financial year 30th June, you will get a tax deduction for the year. Paying your employees’ Super a month earlier than you need to, can create a significant one-off tax benefit. If you have $20,000 to pay in Super for your employees prior to the 30th June, this can result in a tax saving of up to $9,400. If this is something that you want to do, you will need to ensure that the payment you are making is processed before the 30th June. To ensure this is done in time, it is best to process the payment a week before the end of financial year. Something to note is that, this creates a one-off tax benefit, as you are paying Super that you would usually pay in July earlier, to get the tax deduction.

Pay off your home loan sooner and maximise your tax deductions

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. This is 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 the 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 on the borrowed money, are key components. Following is an example of how the assets and cash flow involved in a debt optimisation strategy can be used in 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 it with debt that can be used tax effectively, whilst building an investment portfolio that can be used to help fund your goals.