The most common question accountants get asked is “what can I claim as a tax deduction?” and one of the most common things people ask us to do is to “just claim the standard deduction.” In this blog post we are going to take a deep dive into when you can claim for travel expenses and how to make sure you are making a valid claim.

It has been a common practice of business owners, operating through companies, to transfer surplus cash into personal mortgage offset accounts. Then at the end of a financial year transferring the cash back into the business to avoid the consequences of Division 7A (i.e. the funds being treated as an unfranked dividend in the hands of the recipient), before transferring it all back to the offset account in July.

I was recently asked to speak at a mortgage brokers conference about the top 5 trends that accountants are seeing in the property market.

Financial literacy should be taught as part of growing up, as much as learning to drive a car is. It’s the knowledge that ensures a family is thriving within its financial means, or that keeps an individual financially savvy and secure. When it comes to managing a business, especially a micro-business, financial literacy is as essential as the product/service knowledge within your area of expertise.

It's Sunday afternoon when I write this and the guidelines have just been released for the Covid-19 Business Grant, for which applications open tomorrow. I am feeling like next week is going to be a big week. To help as many businesses as possible, as quick as possible and as cost effectively as possible I have put together this guide for you to gain an understanding.

With a few minor exceptions, budget 2021/2022 was pretty much a matter of extending programs that were already in place to stimulate the economy in the wake of the Covid-19 pandemic. At the time of writing this the legislation enacting the budget proposals had not been passed by Parliament. Most of what was announced is not set to start until 1 July 2022. We will provide further updates and reminders once the legislation has been passed.

Starting a business? Many people slip from being employed into being an independent contractor, keeping it unofficial until the concept gains traction and there’s scope for a legitimate business to take shape. At this point, you can start looking at the direction you’d like to take. Would you like to see your one-man band become a team of capable professionals? Are you keen to share the risks and responsibilities with another trusted ally? Or do you want to be an independent professional? Here is a summary of the common business structures and how they can work for your business goals.

"I love paying tax" said no one, EVER! With the end of the 2021 financial year less than two months away, here are nine things every business owner needs to look at before the new year begins:

Owning a company comes with its own set of rules to get money out, once it starts making a profit. It is essential to have a plan on how to pay yourself to avoid the Problem with leaving profits in your company. Not having a plan can also lead to surprise tax bills (and not in a good way). Here are five ways to pay yourself from your company.

I have lost count of the times someone has set themselves up with a company or trust, as a contractor or as an individual, only to be bitterly disappointed when I tell them that all of the benefits of having a company or trust don’t apply to them. The tax act is full of exceptions and conditions, and the rules around personal services income and personal services businesses are just two of them.

One of the really attractive things about companies is that profits are taxed at 26% if they meet certain conditions (if the company is trading and aggregated earnings are less than $50m per year they will qualify). It gets better still on 1 July 2021 where the rate drops to 25%. That’s a massive 22% saving in tax (and Medicare Levy) if you are in the highest marginal tax bracket. Once you earn more than $45,000 a year, where the marginal tax rate changes to 32.5%, there’s a real incentive to keep your money tucked up in your company so you don’t lose a big chunk to the taxman.

There is a degree of flexibility around how payments out of a company are made when you are the one responsible for making the decisions (ie the director). Three common forms of payments from a company are dividends, bonuses and directors’ fees. But first, what's the difference between them?

Both companies and trusts have attractive features when it comes to asset protection, wealth creation and managing taxes. Which type of entity you choose to trade your business through will depend on your vision for your business, your appetite for risk and your long term wealth creation goals. For some people a simple company or discretionary trust will suffice, however where your business plans and wealth creation plans are more ambitious it would be great to be able to combine the benefits of both companies and trust. I am going to use Liam and Adele as a case study to demonstrate how we helped a client achieve just this. But first, let’s revisit what makes companies and trusts individually so appealing.

I’m not usually a fan of making loans from companies. The most frequent use of them is purely reactionary, to delay paying tax. These loans often arise when a shareholder or one of their associates pays for personal expenses or simply withdraws cash from the company bank account without processing these transactions through payroll (and therefore paying PAYG withholding and super). If left unchecked, what usually results is a large sum of money being owed to the company at the end of the financial year. The ATO requires the loan to be repaid in full at the time the company’s tax return is lodged or a complying loan agreement is put in place otherwise they will deem an unfranked dividend. The unfranked dividend most often results in the shareholder (or associate) with a large and unexpected tax bill.

As part of the Government’s Covid-19 economy stimulus package, the Government increased the instant asset write-off thresholds for depreciating assets to $150,000 for some businesses, and from 6 October 2020 until 30 June 2022, certain businesses are also entitled to the temporary full expensing of depreciating assets. This has encouraged more businesses to make an investment in cars and other motor vehicles.

I don’t think I have ever met anyone who loves getting things ready for tax time. Even I don’t like getting my own things in order! I find getting a system in place and staying organised is the best way to tackle tax time. It also has the added bonus of being able to use the data you have to gather for tax to more effectively make decisions in your business, so it is a win win. Here are my tips for getting up to date and staying up to date:

Our case study about how Adrienne used the principles of Mike Michalowicz’s book, Profit First, really showed how cashflow is king. By following the recommendations of the book, Adrienne transformed her cashflow and made it through COVID. If you are wondering how to improve yours and not quite sure you have the time to read the book, here is my review of Profit First. The essence of the book comes down to 4 profit-management principles…

The budget delivered by Prime Minister, Scott Morrison, last Tuesday night was all about getting the economy moving after the shut-down caused by Covid-19. The theme of the budget was getting people back into work and tax cuts. So, what does this mean for small business?

You know the saying prior planning prevents poor performance? This applies to getting ready for tax time…and there is no time like the present. While we are in the thick of the tax season, you have a little breathing room to get organised and prepared for when your trusty accountant prepares your business or personal income tax returns. Here are five things you can do to make it easier for yourself and for your accountant:

I am yet to meet anyone, other than an accountant, who gets excited about tax time. With a fear of a tax bill, a loathing of paperwork and complex web of tax law to navigate it is no wonder most people find it a bit overwhelming, but with our savvy tips tax time will be a breeze!