Tax Time Taking care of business
The Australian Taxation Office (ATO) is encouraging small businesses to get organised at the beginning of the new financial year by taking care of business now. Assistant Commissioner Deborah Jenkins says that thousands of small businesses register every month, which means there are a lot of new business owners about to have their first tax time experience. “We understand that around 50% of small businesses come under financial pressure within the first year, and one of the biggest issues is cash flow,” she said. With this in mind, Ms Jenkins has five tips for small businesses to help them get a head start on the new year. 1. Stay informed There are a number of new measures that small businesses might be able to take advantage of this year. For example, the turnover threshold for a wide range of concessions has changed and there’s a lower company tax rate for small business. It is a good idea to work out if your circumstances have changed and see whether you can benefit from the measures before you get into tax time. The best way to keep up with what’s new for small business is to follow the Small Business Newsroom at ato.gov.au/sbnews. 2. Get on top of your records Good record keeping is essential for anyone in business because it makes it easier to manage your cash flow, meet your tax obligations and
understand how your business is doing. If you get your records together now, when it’s time to do your tax you’ll have all the information at hand and won’t need to go rummaging through a shoe box of paper receipts. You can use your records to compare yourself against the ATO’s small business benchmarks and check how your business is performing against similar businesses in the same industry. For more information and advice on good record keeping practice, visit ato.gov.au/ electronicrecordkeeping and to find out how competitive your business is, use the small business benchmarks, visit ato.gov.au/ businessbenchmarks. 3. Find ways to make it easier The ATO has a range of products and tools to make it easier for small businesses to stay on top of their tax and super obligations. For example, you can do most of your business reporting and transactions with the ATO online, so it’s a good idea to familiarise yourself with the ATO website to see where you can save yourself time. If you are sole trader, you can lodge your returns using a registered tax agent or myTax. For the first time this year, sole traders can also use the myDeductions tool in the ATO app to keep track of your business expenses. From 1 July 2017, goods and services tax (GST) reporting on the business activity statement (BAS) will be easier with Simpler BAS. Small businesses will be required to report less GST information, which will reduce the complexity of bookkeeping
and reporting, saving you time and money. To find out more, visit ato.gov.au/simplerbas. 4. Look after your employees If you have staff, it’s important that you do the right thing by them by making sure you meet your deadlines for your employer obligations, including their payment summaries and superannuation guarantee payments. You need to issue payment summaries to employees by July 14 and you need to lodge your PAYG withholding payment summary annual report to the ATO by August 14. You should also make sure you know if your workers are employees or contractors because this can affect your obligations. There is a decision tool available online to help you get it right at ato.gov.au/ecinfo. 5. Know where to get help Around 95% of small businesses use a registered tax professional to lodge their returns, so it’s likely that your agent will be your first point of call. You can also call the ATO and speak with someone over the phone because we’re here to help. We’ve trained more than 4,000 staff to be able to assist small business owners who are dealing with difficult circumstances, including those who are managing mental health issues. If you have a debt that you can’t pay on time, you might even be able to organise a payment plan online. For more information, visit ato.gov. au/debt or to find out about how the ATO can help, visit ato.gov.au/sbsupport.
TALKING TAX How do I lodge my tax return? Most taxpayers go to an accountant to ensure the return is prepared correctly and that the maximum is claimed to ensure that the best possible tax refund is issued from the ATO. The ATO is checking more information than ever before, please make sure all receipts/invoices are kept and all log books completed accurately. When is my tax return due for lodgement? - If you visited a registered tax agent last year you will be on their ATO lodgement list. In most cases you will have an extension period to lodge your 2016/17 tax return. Lodgement should be by March 18, 2018. - If this is the first time using an agent, please visit us by the 31st October to ensure you can be added to our ATO lodgement list to receive the additional time to lodge. - If you lodge your own return, the ATO must receive the return by the 31st October. What should I bring to my appointment? • You should bring your Payment Summaries; • The amount of Interest earned from banks on any savings during the year; • Dividend Statements, buy/sell details of shares or land and buildings; • Any receipts/invoices for work related expenses. • Fees for the Preparation of last years’ return; • Rental Property Income & Expenses incurred during the year;
• Donations made to charities (this does not include ticket purchases) or school building funds; • Income Protection Insurance amounts paid during the year. • Please bring in phone bills, electricity accounts, etc to appointments. Remember it is better to have more information than not and we can go through this to ensure correct claims will be made. Motor Vehicle Claim – Bulky Work Tools Can only be claimed where ALL of the following conditions are satisfied: - The equipment is required for the employee to carry our their duties on that day - It must be essential to transport the equipment to and from work (not just personal choice or convenience) - The equipment is sufficiently bulky and/or heavy making it impractical to transport other than by own vehicle - There is no reasonably secure storage area provided by the employer. The ATO are phoning employers and checking this. Self Education Costs Expenses will not be deductible if the course is designed to enable you to obtain new employment or start up a new income-earning activity. Superannuation Employer Super Contributions are 9.5% for the 2018 financial year.
The concessional contributions cap is $25,000 for all age groups for 2017/18. (This includes the 9.5%SG, salary sacrifice amounts, member contributions). I employ staff what should I do at the end of June? - Ensure you provide your employees with their Payment Summary. You have until the 14th August to provide the ATO with the Annual PAYG Payment Summary Statement. - Check your classification with Workcover Qld to ensure that the staff wages are allocated correctly. - Minimum Wages increase from the pay period that starts on the 1st July. You need to check your employee’s minimum entitlements to make sure you’re meeting your obligations – even if you’re covered by an agreement or pay above the award wages. You can check with fairwork.gov.au to check the A-Z Modern Awards to ensure you are meeting your obligations. At the Fairwork website you can also check on Minimum working conditions, Apprentices & Trainees, Notice Periods, Holiday & Leave calculation. - Make sure your software is up to date with the latest tax tables. Building & Construction Industry The “Taxable Payments Annual Report” is due at the ATO by the 28th August if you lodge your BAS on a quarterly basis.
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Tax Time Taking time to get your tax right Tax time is once again upon us and the Australian Taxation Office (ATO) is reminding taxpayers to take their time to get it right. Assistant Commissioner Kath Anderson said 2.8 million people lodged their tax return in July last year, which is 22% of all tax returns lodged for 2015-16. “We know that some taxpayers like to get in early and lodge in the first month of tax time, but our analysis shows that if you lodge in July, you’re far more likely to make a mistake by leaving out some of your income,” Ms Anderson said. “By mid-August we have pre-filled most of the data
from employers, banks, government agencies and other third parties. Waiting until this information is available will help you avoid mistakes. Ms Anderson said taxpayers don’t need to get into a rush to lodge their tax returns early. “It’s great to see taxpayers eager to finalise their returns, but it’s your responsibility to make sure you declare all your income. This includes income from any cash jobs, the sharing economy, your second job, foreign sources, employee share schemes and capital gains from the disposal of shares and property.” “Our systems are great at finding errors in tax
returns, and if we have to investigate something further in your tax return.” Ms Anderson said people can choose to lodge using the ATO’s online lodgment tool, myTax, which is fast, easy and secure, or they can lodge with a registered tax agent. If you have been using the myDeductions tool, which is available in the ATO app, to save and store your deductions, you can upload that data as well without the need for physical receipts. For more information on how to lodge, visit ato.gov. au/lodgeonline and to find out about myDeductions, visit ato.gov.au/mydeductions.
Get ready for the new financial year Whether you work for an employer or yourself, 30 June is a great time to review your budget and ensure you’re financially fit for the new financial year.
Tips for salaried staff
Now’s the time to start making sure your tax records are in order. You won’t receive your group certificate until after the end of the financial year, but check you have receipts for all allowable tax deductions. That way, you can ensure you are claiming all eligible work-related expenses. If you own an investment property it’s likely that you will be able to claim interest payable on the mortgage, as well as depreciation and other expenses. The
end of the tax year is the time to ensure your records of these costs are accurate. If you have other borrowings, review your debts and consolidate them if appropriate. Ensure you can still meet the repayments. It might also be an opportunity to review whether you have the capacity to make additional voluntary contributions to your super fund to help reduce your taxable income and bump up your retirement savings. The concessional superannuation cap will drop to $25,000 per year for everyone from 1 July. At the moment, it’s $30,000 for people younger than 50, and $35,000 for people older than 50. So if your circumstances allow, it might be an
idea to contribute up to your limit to take advantage of the more favourable rules now in place. It can be an idea to talk to an accountant or financial adviser about making extra contributions to your super fund.
Working for yourself
Like employed people, this includes ensuring you have kept accurate records of your income and expenses, and identified your allowable tax deductions. There are a number of government incentives available for small businesses at the moment, including the $20,000 instant asset write-off program. If you are planning on investing in assets like technology, office fixtures or
anything else you need to run a thriving business, it may be an idea to bring the expense into the current financial year to generate a tax write-off. Talk to your accountant about taking advantage of this and other government incentives available for people who work for themselves.
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One of the key decisions you’ll make when commencing a business is what business structure you will use. Your choice of structure will depend on the size and type of business, your personal circumstances and the expected growth in your business. It is possible to re-structure as your business grows or your circumstances change, however there could be stamp duty or CGT to consider depending on your intent. TIP: We highly recommend that you discuss any proposed structure with your accountant. At Range Accounting in Landsborough we will discuss matters in simple terms and help you determine the following: • tax liabilities • responsibilities as a business owner • potential personal liability • ongoing costs and the volume of required paperwork and • asset protection (by referral to a legal representative) Some concessions for Small Businesses (turnover under $10m) include: • Simpler BAS - From July 1, 2017 you’ll only need to report: o Total sales o GST on sales o GST on purchases • Immediate write-off for assets purchased under $20,000 • Write-off General Pool balances under $20,000 • Company tax rate 27.5% • Increased small business income tax offset • There are also a number of CGT Concessions available Please give the friendly team at Range Accounting a call today to arrange an appointment. Business Feature
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Grow your retirement income Ask any retiree what they fear the most and chances are most will say “running out of money”. But there are ways to stretch your retirement income and things you can do to make your money last as long as possible. The earlier you start preparing for retirement, the more options you will have to set a course that suits you. Managing your finances can be hard work even if you have some financial knowledge. You will need financial advice with investment strategies and expert help to navigate our complex tax and superannuation system. With many retirees living up to 90 and beyond, you will need to invest at least some of your money in assets that will grow over time, like shares and property. This will help ensure your capital will grow in value to keep pace with inflation. But, as you know, shares and property also have risks, so diversification is the key. Spreading your investments will help avoid financial heartache in the future. Why us? – How we can help For nearly 20 years Darren Eising has specialised in helping clients retire free from financial worries. He is a Certified Financial Planner and an accredited SMSF Specialist Adviser with experience in managing investment portfolios and complex financial planning arrangements. Darren co-owned a large stockbroking and financial planning business in Central Queensland, selling his interest in the business at the end of 2013 before establishing Elemental Wealth Management in Beerwah. Darren specialises in tailoring investment portfolios to suit retirees, aiming to reduce risk and ensure you can continue your lifestyle into retirement. Elemental Wealth Management is an independent ‘Fee for Service’ business, ensuring an ethical and transparent service. To find out more about how Elemental Wealth Management can help secure your future, contact them on 5494 0650, or read more at www.elementalwealthmanagement.com.au. Business Feature
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