Blog

May 23

Tax Deadlines

Posted by David Jepsen at Tuesday, May 23, 2017

Tax Deadlines and Penalties – 2016 Return Lodgement

We have been busy, like most accountants this time of year.

It is May 2017 and many businesses, trusts and individuals have not or only just lodged their tax returns for the year ended 30 June 2016, via a tax agent.

You get nearly 11 months to get your tax return in via an agent, which should be plenty of time you would think… 

The good news is that this is legal and that the deadline was 15 May 2017 for SME individuals, partnerships and trusts if they are on a registered tax agent lodgement program with the tax office.

Provide your information early

Fortunately or unfortunately accounting firms get inundated with work at this time of year as many clients leave their tax return obligations till the last minute and there is urgency to lodge, the work builds up and the accountant cannot turn the returns around quick enough to meet the deadline!

Missing the deadline means the ATO can impose administration and interest penalties on you the taxpayer.

Get your information in well by the start of March to lodge comfortably by mid May. Please. 

TAX DEADLINES ARE BORING, FINES ARE PAINFUL

May 17

One off opportunity for high income earners

Posted by David Jepsen at Wednesday, May 17, 2017

The 2% ‘debt tax’ is ending on 30 June 2017!

Basically you are better off earning more taxable income over the $180,000 level next year.

All things equal:

Tax on $350,000 of taxable income for the year ending 30 June 2017 is $3,400 more than 30 June 2018; $6,939 in income is needed to pay that $3,400 extra tax. 

Taxpayers with assessable income above $180,000 face an additional 2% tax on every dollar above this level till 30 June 2017 as the debt or Budget Repair levy on income over $180,000 is removed at 30 June 2017.

Therefore reducing your taxable income through salary packaging and other planning initiatives is worth considering this year especially.

If you are likely to have a one off spike in income, for example from the sale of a business or other significant assets, it’s worth seeing if you can delay the sale until 1 July 2017 to avoid paying an additional 2% tax.  Just be aware of how the arrangement is structured. In many cases the sale is treated as having taken place for tax purposes when the parties enter into the contract, even if settlement occurs at a later point in time.

If you are an investor consider prepaying 12 months of investment interest or paying for education courses prior to June 30. Managing this situation may be easier than you think and with some careful planning save you money.

 

May 10

Small Business Asset Write Off

Posted by David Jepsen at Wednesday, May 10, 2017

Is this your last chance to take advantage of the $20,000 Small Business Asset Write Off?

A couple of years ago the Government introduced this incentive to encourage small business to invest in assets and stimulate the economy; this tax break was finishing 30 June 2017… it has now been extended to 30 June 2018 in the May 2017 budget.

After 30 June 2018 you can ONLY write off an asset costing up to $1,100, not $22,000 ($20,000 + $2,000 GST).

How does it work?

Basically if your business (ABN holder) buys an asset (financed or purchased outright) up to $22,000 including GST by 30 June 2018 that purchase can be 100% claimed as a tax deduction in this year. Usually the tax deductions for assets are claimed over its life, which for a motor vehicle may be over 7 years or for a computer 4 years.

You don’t get $20,000 back on tax as a refund


The instant asset write off is a tax deduction that reduces the amount of tax your business has to pay. It enables your business to claim a deduction for depreciating assets in the year the asset was purchased and used (or installed ready to use). For example, if your business is in a company structure the most you will ‘get back’ is 27.5% (in 2016-17). If your business is likely to make a tax loss for the year then the bigger deduction might not provide any short-term benefit to you.


Q & A


Q:        Can I purchase for future use?

A:        No, the asset must be purchase and installed ready for use by 30/06/18

Q:        Do all business get this?

A:        No, small business with a revenue of less than $10m get it

Q:        Do second hand good qualify?

A:        Yes

May 09

Are you getting the right advice?

Posted by David Jepsen at Tuesday, May 09, 2017

Running a business is much easier when you have good relationships with staff, customers and suppliers.  In fact many would say business success is about the trust and level of service that comes with great relationships.    

Relationships with external advisors such as lawyers, business coaches, designers, marketeers, mentors and accountants are very important to the running of any business. How would you rate the relationship that you have with your external advisors? Are they proactive in helping you to achieve your financial goals, or do they just sit back and wait for your queries?       

As a business owner, you can try and do everything yourself. However, this can be exhausting! It also takes time away from running your business, which is what you are good at after all.   

Successful entrepreneurs and business owners are  more likely to turn to their trusted advisors for advice on what they need to do to improve growth, profit and cashflow. And the services of a proactive accountant are at the core of this trusted advice.         

You should use trusted advisors to really create value in your business. Ask questions to make sure you are getting what you expect. Ask them early and again later if you need to be sure. Do your due diligence before engaging your advisors and keep the dialogue going as you and your advisor develop the business relationship.      

You need to get on with running your business. Get experienced help and advice for the rest. The outcome should be a better business and better life for you as you will not have the stress of trying to do and know everything about running a business.       

At Jack Lawrence Accountants., we’ll provide you with advice on business structuring, tax planning, cashflow and strategies for growth and profit. If we can’t answer your question directly, we’ll recommend our trusted external professional partners for further advice.

CLICK TO FIND OUT MORE


Apr 18

Is it easy to run a charity?

Posted by David Jepsen at Tuesday, April 18, 2017

On the 1st of April I raced in and was the race director for the 2017 Tingira Cup a paddling event managed by Shark Island Paddlers.

Paddling craft includes surf skis, ocean skis, outriggers and SUP; this year the long course was 18km, shorter course was 10km and the new beginners course was 5km. We got a beautiful day and a great turn out of 150 paddlers. It was a great success and made the gruelling 18km worthwhile; I spent my pennies going out too hard, too early in the race and any style and grace I had left me…

To qualify for various financial and other concessions from the council we are required to donate to a charity.  Shark Island Paddlers itself could qualify as a charity as it has the sole purpose to promote and provide paddling and is a not for profit entity. Many sporting clubs; both large (Penrith Panthers for example) and small are registered charities and they qualify as they provide a community service and are not for profit.

As a charity we would be regulated by the Australian Charities and Not for Profit Commission (ACNC) and be required to prepare and provide audited accounts for the ACNC. To become a charity takes some time and $$ and to remain a compliant charity requires $$ and time. 

The not for profit sector in Australia is booming as organisations and individuals see the potential for operating out of this structure that receive significant tax and other concessions.

If you are interested in running a charity, we can advise and provide services. 

Thank you to the sponsors of the race!

We’d like to thank East Sydney Doctors, Rushcutters Bay Paddle Sports, Woolahra Sailing Club, Sugar and Spoon, Sydney SeaPlanes Slindir, OzPaddle and all the lovely volunteers.

Apr 12

Are You Positive About Cash Flow?

Posted by David Jepsen at Wednesday, April 12, 2017

No doubt you have heard the statistics about the risk of starting a business and how many end up in tears.

Yes, that’s right. 60% of businesses fail within three years of opening the doors. Most do not even know they are failing as they fail to look at the numbers on a consistent basis. Their accountant doesn’t give them the advice that they really need to take control of the financials for future success.

If you’re like many business owners, you’re too busy to look at the accounts on a regular basis. Perhaps you get that sick feeling in the stomach when you start to think about the numbers. You’d prefer to stay busy, working in the business – responding to emails and phone calls, making client visits, dealing with staffing issues and writing tenders and proposals - rather than making time to work on the business – critically reviewing what’s working and what needs to change to improve cashflow and profit.

For many businesses, positive cashflow is all about having enough cash to pay the bills on a day to day basis. However, there’s a lot more to managing cashflow than paying the bills. Forward planning can help to you anticipate future cashflow challenges and then take steps to address those challenges in a proactive way.

If your cashflow problems are keeping you awake at night, then you need to take control of your business. You need to really understand your numbers to know if you are winning or losing in business. Your investment in an accountant who can help you to understand the key financial drivers of business performance is an investment in your future and your peace of mind. 

Have a quick look at the infographic below to see if your business is ticking the boxes which are critical to success; working with the right systems and software, collecting your debts on time, being cash flow positive and, most importantly, having the right staff and external advisors. 

You don’t have to become an accountant to have a real understanding of the numbers. Instead, ask for help from Jack Lawrence Accountants. We’ll show you how you can use technology to get access to the numbers that are important for you in real time.

If you want to have a chat about your business financial challenges and needs, just get in contact with me for a complimentary, no obligation meeting and more. At Jack Lawrence Accountants, we’ll make your business life easier.  

Mar 28

EOFY Tax Time Tips - Income Protection

Posted by David Jepsen at Tuesday, March 28, 2017

You might not know, but the end of financial year is a great time to take out insurance. Particularly if you want to ensure you can still receive an income if you’re injured or fall ill. You see, Income Protection premiums are tax deductible.

What is Income Protection?

It is a type of cover that replaces up to 75% of your salary if you are off-work due to sickness or injury. It’s particularly important for the self-employed or small business owners, because their businesses rely heavily on the ability of one person to work.

Imagine something as simple as falling over and breaking an arm occurs. You may not be able to do your regular job, let alone day to day activities. If you have Income Protection, you can make a claim and use the benefits to keep on top of everyday expenses (food, mortgage repayments, bills, etc) and to pay for extra help while you recover.

Isn’t that what workers’ compensation is for?

Workers’ compensation only covers you for accidents at work. But you are actually three times more likely to be injured outside work. Like, playing touch footy on the weekend, or on a skiing holiday in New Zealand. Income Protection covers you 24/7 worldwide. And unlike workers’ compensation, you’re also covered for illness.

What’s so great about Income Protection?

Income Protection is different from Trauma cover or Total and Permanent Disability (TPD) cover, in that your claim payments are made in instalments, not a lump sum. It’s just like getting a regular salary. And, you can customise your policy to suit your individual needs by changing things like the waiting period and the length of time you want your payments to continue. This makes Income Protection one of the most flexible and affordable insurances going around.

And, unlike Trauma or TPD, Income Protection premiums are tax deductible. So, if you take out cover before June 30, any premiums you pay in that time can be claimed back in your tax return for the 2016-17 financial year. Which means if you decide to pay annually, you can claim the full amount paid and rest easy with a full year’s cover.

But what if I already have Income Protection?

You’ve probably heard the hype about health insurance premiums going up and seen all those ads recommending you review your cover to see if you’re paying too much. Well, the same goes for your Income Protection.

As your circumstances change, so do your insurance needs. Got a new job? Then it might be time to increase your cover to make sure it reflects your new salary. Maybe your health has improved and you are eligible for cheaper premiums. Or how about getting more bang for your buck by taking advantage of some exciting new product innovations? And you might be able to do this without going through the underwriting process again. The only way to know for sure is to have an expert take a look at your current policy.

Best of all, if you review and update your cover before June 30, you may be able to claim your new premium as a tax deduction.

So get yourself end-of-financial-year-ready and book an appointment with our insurance partners Monarch Advisory Group today or have a chat to me about this.


Tatiana Coulter – Director

http://www.monarchadvisorygroup.com.au

Mar 23

Do you really know your numbers?

Posted by David Jepsen at Thursday, March 23, 2017

How was business last month, do you know? 

Perhaps you respond:  ‘I was busy and there is money in the bank.’ Being busy does not mean PROFIT, positive CASH FLOW or progress. 

Business owners need to earn a living at the very least. However, if you are not reviewing the numbers and receiving regular financial reports, knowing how you are really progressing can be difficult.

THE NUMBERS DO NOT LIE. Your perception of business performance based on your knowledge and experience is useful, but doesn’t always paint the full picture. It’s easy to make the wrong decisions about the future if you don’t make the time to review and understand your numbers.

At the very least, you need to understand terms like gross profit, net profit, operating cash flow, liquidity, debtors and of course sales. And of course there is most likely a host of other numbers than can give you a real insight into how your business is performing on a day to day basis. Do you look at these numbers regularly?

Understanding your business ‘key performance indicaotrs’ can help you to  understand if you are under charging customers, paying to much for supplies, not collecting your sales quickly enough and much more. It will most likely lead to changes that will give you a more profitable business and a more enjoyable life.

Have a quick look at the infographic below to see if your business is ticking the boxes which are critical to success; working with the right systems and software, collecting your debts on time, being cash flow positive and, most importantly, having the right staff and external advisors.

You don’t have to become an accountant to have a real understanding of the numbers. Instead, ask for help from Jack Lawrence Accountants. We’ll show you how you can use technology to get access to the numbers that are important for you in real time.

If you want to have a chat about your business financial challenges and needs, just get in contact with me for a complimentary, no obligation meeting and more. At Jack Lawrence Accountants, we’ll make your business life easier.  

CLICK TO FIND OUT MORE



Mar 15

Dutch Disease

Posted by David Jepsen at Wednesday, March 15, 2017

Dutch Disease is the classic economic model describing two sectors of the economy; one booming (often resources) and the other lagging (not booming) and the effects on the economy:

  1. The resource boom increases demand for labour and takes labour and other resources from the lagging sector.
  2. The Spending effect related to the extra revenue brought into the nation, increase $$ in residents pockets who spend it in the non tradeable services sector, which increases the cost of services

Australia’s economic history includes examples such as the 2000’s boom and the Cairns Gold Rush of the late 19th century. Another example is The North Sea oil in the 1970’s for the UK and Norway to the detriment of the manufacturing sector.

Dutch Disease can cause many economic issues in an economy. Natural resources are finite and become depleted and resource demand is cyclical creating volatility in the price and the human and capital resources required. Lagging industries may be dismantled to some extent when they become uncompetitive during a boom and cannot be easily reinstated.

The effects can be minimised by investing and education in the lagging sectors, reducing the revenues flowing into the country from the boom or slowing the boom. Minimisation can be achieved by taxing the booming industry on their use of these resources; the tax increase the price and slows demand and the tax revenue can be used to assist lagging industries and/or put into a sovereign fund for the benefit of current and future generations.

Final Thoughts…

As Australians energy prices soar partly due to supply issues it was recently reported that the Japanese Government collected more tax revenue from their import of Australia’s LNG than our Government did on its export; this is crazy! 

This may appear removed from small and medium enterprise (SME) and their owners… Though the less the tax collected from Chevron, BHP and other multinationals the more TAX they will collect from SME and associated individuals.