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Money Matters

Time is running out.

If you want to take a few simple preventative measures to minimise or defer how much tax you will pay for this Financial Year, you need to do two things:

          1. Read the following 9 point checklist,

              then

          2. Call or email us as soon as possible so we can make a time to sit do with you to assess which of these preventative measures can be done for you in your circumstances.

Depending on your situation, this tax planning process could save you many thousands of dollars. That's cash in your bank account, rather than the Tax Office's.

After all, why pay one more dollar in tax than you have to?

I'm sure you have better uses for your money, such as investing in your future or just investing in the here and now and rewarding yourself with a little 'lifestyle indulgence'.

Now ... to the checklist. Tick each item you think is relevant to you: 

  • Review your stock levels. The value of your closing stock directly affects your business profit, the higher your stock value the higher your profit and tax. Review and identify any obsolete or old stock and scrap it or re-value it to its correct value. Individual items of stock can be valued at cost, market value, or replacement value.
  • Review your business assets. Write off any obsolete asset and claim its remaining book value now. There are also new ways assets can be depreciated, called pooling, that will increase the depreciation expense. This isn't suitable for all business, but it is worthwhile reviewing.
  • Defer income. A simple tip that can defer a lot of tax for you. If your cashflow allows, you may consider deferring some of your invoices until July. If the income was not invoiced this financial year, it can't be taxed this financial year. Before taking this option we recommend having a budget to manage these months income and expenses. We can help you with that.
  • Review your invoices issued. If you have invoiced someone in advance for services you will provide in the next financial year, then you may not have earned that income in this tax year. That income may belong in the year you provide the service. Again, this is something we can work out with you when we meet for tax planning.
  • Pay the June quarter superannuation. Superannuation if paid on time is deductible when paid. Since you have to pay the 9.5% superannuation by 28 July, bring it forward a month and pay it now and claim the deduction now. Why wait a whole year to reduce your tax?
  • Using all of your superannuation cap. If maximising your superannuation is part of your retirement plan, then don't forget to contribute as much as you can into your super fund. We can guide you as to how much you can contribute. It's a missed opportunity not to do this each year.
  • Employee bonuses. Bonuses to employees are deductible when the business has committed to paying them and it is not subject to any discretion. So finalise and sign off on the bonuses to be paid and reduce this year's tax.
  • Capital Gains Tax (CGT). Minimising your capital gains tax is often about timing. Ensure the asset has been owned for at least 12 months. If you already have a capital gain, are there any investments making a loss you can sell? Do you qualify for any capital gain rollover relief concessions? (Again, we can guide you here.) CGT is a whole topic on its own, and the potential savings are so great, it is definitely an area in which you should seek our guidance.
  • Review debtors. Your income tax is payable on any invoices you've issued, even if you haven't been paid. Don't pay tax on any invoice you know won't ever get paid. Review the list of those who owe you money and write off those 'bad debts' now.

If you ticked any of the above items, then we need to talk. And soon.

Get in touch to make a time to meet and discuss your tax planning options.

Have you heard of the "SMSF Retirement Home Strategy"? 

Well an investor finds a property they'd like to live in during their retirement. They use money in their SMSF as a deposit and borrow into a special super fund borrowing arrangement with the bank to complete the transaction.

Warning: A member (or a relative of a member) of a SMSF by law cannot live in a property owned by a SMSF (and it can't buy a residential property from a member or related person/entity).

However, while the property is owned by the SMSF it's rented to UNRELATED INDIVIDUALS for a market-based rent.

Upon retirement the SMSF members start a pension and sell their current family home. They then use the proceeds from the sale of their home to buy the property from their SMSF at market rates.

The sale of the SMSF-held property is capital gains tax free because the SMSF is in pension phase. When the transaction is complete the super fund has liquid assets to pay their retirement income.

Estate Planning

Another key reason for using a SMSF is that it gives you very 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.

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

Don't forget to email me at m.moschetti@hendrie.com.au if you'd like a copy of my "6 Reasons a SMSF is a great tool to unlocking your financial freedom.".

 

From the 2011/12 financial year, Trustees who distribute the income of a Trust through a resolution to beneficiaries must do so BEFORE the end of the financial year (June 30).

If a Trustee fails to make a resolution to appoint the income of the Trust before the end of the financial year, the Trustee may be assessed by the ATO on the Trust income at the highest marginal tax rate of 49% rather than the intended beneficiary(s).

I think you'd agree that this is fairly HEFTY!!

What You Need to Do ABSOLUTELY, POSITIVELY NO LATER THAN MONDAY 1 JUNE:

1.       You need to provide us with a Profit & Loss Statement for each Family
           Trust that you have for the period 1 July 2014 to 31 March 2015.

2.       You also need to send us details of all income earned by all family
          members during the period 1 July 2014 to 31 March 2015.

3.       And we need your estimated income for the period 1 April 2015 to 30 June 2015, including any capital gains.

We'll then review all options for you, and recommend the most tax effective manner to distribute your Family Trust profits. And of course we'll prepare the appropriate Trust Distribution Resolution for you to sign before 30 June 2015.

 

Contact us TODAY to get started!

We don't want you ever paying more tax than you have to – because that would be a waste!

So please get your information to us no later than Thursday 14 May to make sure there's time to make the best decisions for you!!

 



15 ways to save tax before EOFY

The end of the 2014/15 financial year is almost here, so now's the time to review what strategies you can use to minimise your tax. 

 

#1 | Concessional Superannuation Cap

The concessional superannuation cap for 2015 is $30,000 per year for persons under 50 as at 30/6/15, and $35,000 for persons age 50 to 75. Do not go over this limit or you will pay more tax!

Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess contribution charge.

In order to claim a tax deduction in the 2015 financial year, the super fund must receive the contribution by 30 June 2015.

 

#2 | Asset Depreciation

If your business is a Small Business Entity (turnover less than $2 million), the following tax concessions apply:

·         Depreciating assets valued at less than $1,000 will be immediately deductible

·         Depreciating assets valued at more than $1,000 will be depreciated in one pool at a rate of 15% in the first year and 30% in future years

 

#3 | Tools of Trade / FBT Exempt Items

The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a tax benefit. Items that can be packaged include Handheld/Portable Tools of Trade, Computer Software, Notebook Computers, Personal Electronic Organisers, Digital Cameras, Briefcases, Protective Clothing, and Mobile Phones.

If structured correctly, the Employer will be entitled to a tax deduction for the reimbursement payment to the employee (for the equipment cost), claim any GST input credit, and the employee's salary package will only be reduced by the GST-exclusive cost of the items purchased.

You should buy these items before 30 June 2015.

 

#4 | Employee Superannuation Payments

To claim a tax deduction in the 2015 financial year, you need to ensure that your employee superannuation payments have CLEARED your business bank account by 30 June 2015.

For any last minute superannuation payments, we recommend that you arrange for a BANK CHEQUE made payable to your employee super fund prior to 30 June 2015.

Also, check that your payroll system is paying the required 9.5% rate from 1 July 2014.

 

#5 | Defer Income

Where practical, defer issuing further invoices and/or receiving cash/debtor payments until after 30 June 2015.

 

#6 | Bring Forward Expenses

Purchase consumable items BEFORE 30 June 2015. These include stationery, printing, office and computer supplies.

 

#7 | Repairs & Maintenance

Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2015.

 

#8 | Defer Investment Income & Capital Gains

If practical, arrange for the receipt of Investment Income (e.g. interest on Term Deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2015.

The Contract Date is generally the key date for working out when a sale occurred, not the Settlement Date!

 

#9 | Motor Vehicle Log Book

Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2015. You should make a record of your odometer reading as at 30 June 2015, and keep all receipts/invoices for motor vehicle expenses. Should the nature of the travel, vehicle or business use % have not changed you can use the log book for a 5 year period.

 

#10 | Investment Property Depreciation

If you own a rental property and haven't already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.

 

#11 | Private Company ("Division 7A") Loans

Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2015. Current year loans must be either paid back in full or have a loan agreement entered into before the due date of lodgement for the company return or risk having it counted as an unfranked dividend in the return of the individual.

 

#12 | Year End Stock Take / Work in Progress

If applicable, you need to prepare a detailed Stock Take and/or Work in Progress listing as at 30 June 2015. Review your listing and write-off any obsolete or worthless stock items.


#13 | Write-off Bad Debts

Review your Trade Debtors listing and write off all Bad Debts BEFORE 30 June 2015. Prepare a minute of a Directors' meeting, listing each Bad Debt, as evidence that these amounts were actually written off prior to year-end.

 

#14 | Small Business Concessions - Prepayments

"Small Business Entity" taxpayers can make prepayments (up to 12 months) on expenses (e.g. Loan Interest, Rent, subscriptions) BEFORE 30 June 2015 and obtain a full tax deduction in the 2015 financial year.

 

#15 | Trustee Resolutions

Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2015 for all Discretionary ("Family") Trusts. Like previous years, we will be preparing these and they will be sent to you.

Contact us TODAY to get started!

Don't wait until June. Contact our office TODAY to start your tax planning for 2015.

And look out for our special emails where we'll explain in detail how you can benefit from tax planning strategies!

 


Short window to save tax

Don't pay more tax than you have to!

There's five key things that all business owners MUST consider RIGHT NOW. Please read on! 

30 June is only 13 weeks after the beginning of April. It's not a long time at all. This year let's try and use all of them.

Too often, we end up suffering because we have procrastinated and not made a positive decision to do something. If we all leave your tax planning until the end of May and early June, quite frankly there may not be enough time to do anything significant to legally reduce your tax.

So for 2015, our invitation to you is to START NOW with your tax planning.

Key Tax Planning Strategies

Over the next few weeks, we'll send you emails covering three of our key tax planning strategies. These are:

1.         General tax planning strategies - Key items that mean $ in your pocket.

2.         Trust Distribution Resolutions needed BEFORE 30 June 2015 - or pay up to 49% tax on trust profits.

3.         Establish a Self Managed Super Fund (SMSF) - How to make it your family's wealth VAULT and legally pay NIL tax at retirement.

So keep an eye out for our emails, and we'll outline in detail for you how to save $ and at the same time grow your family's wealth.

How our Tax Planning Process works

First of all, you need to post, email or drop in the following information for the current financial year ABSOLUTELY, POSITIVELY NO LATER THAN MONDAY 25 MAY:

  • estimate of business profits (computer record keeping file);
  • personal income;
  • salary and wage income;
  • interest;
  • dividends;
  • capital gains;
  • rental income.

Based on this information, we estimate your taxable income and your tax payable BEFORE any tax planning strategies.

We'll then have a preliminary review of your position and identify any potential tax planning opportunities.

If tax planning is appropriate for you, we'd like to meet with you as soon as possible to allow enough time to implement any tax planning strategies we jointly decide upon. 

Please note that there's no charge for the meeting, and we won't even call you in for a meeting unless we can guarantee that your tax savings will be more than our fee for implementing your tax planning strategy.

We'll provide you with a report that explains in plain English the tax planning strategies we recommend and exactly how much tax you will save.

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

Contact us TODAY to get started!

Don't wait until June. Contact our office TODAY to start your tax planning for 2015.

And look out for our special emails where we'll explain in detail how you can benefit from tax planning strategies!



The Hendrie Group

23 Lacey Street Croydon (Po Box 489) | P: 03 97252533

Email: support@hendrie.com.au


 

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