How Can I Reduce My Tax?

The tongue in cheek answer – Earn less money.

If you want to reduce your tax burden, the easiest way to do this is by claiming deductions.

To find out what you can claim as a tax deduction talk with us – if the tax law allows it, we’ll make sure you get the tax deduction for it.

How Can I Increase My Business Profit?

Increase revenues and decrease costs, easier said than done, right?

A comprehensive understanding of what makes up your gross profit can greatly assist in identifying low margin or loss-making products/services that you provide to customers. Modern accounting and ERP systems provide advanced profitability analytics that can greatly assist your control over business profits. Advivo are specialists in providing you the tools you need to maximise return on your investment.

What Is My Business Worth?

Business value is determined by the price people are willing to buy and sell at. The best way to find the value of your business is through a valuation. A quality valuation report will identify a business’s tangible and intangible assets and put owner’s in a better justifiable position to negotiate the sale price.

To maximise the value of a business requires more than just “tinkering” the figures when you go to sell – it is a much longer process. If you want to maximise your sale price (and who wouldn’t?) you should engage with us well before selling so we can ensure your business is in the best possible shape to give you the most value when you exit.

What Structure Should I Use To Operate My Business?

There are different structures a business can operate in such as Sole Trader, Partnership, Trust, Company etc.

Factors such as asset protection, ability to raise capital, ability to distribute profit, personal liability, tax advantages and compliance costs will determine what structure to use – there is no one optimal structure. It is vital that you understand the legal environment applied to each structure before making any decision so please talk with us before proceeding.

Do I Have Enough Money To Retire?

It depends on a variety of factors including your current age, the age you are planning on retiring and what level of lifestyle you are planning to have during retirement. Your risk profile also assists to determine if you have enough money to retire.

To find out further information please contact our office and we will be able to put you in touch with a registered AFSL representative, as to answer this question fully, you require specialised financial advice.

How Does Negative Gearing Of A Rental Property Or Shares Work?

The ATO allows taxpayers a deduction for costs associated with holding an investment (shares/property etc). Negative gearing is essentially when these cost deductions are greater than the taxable income received from the investment. This can significantly decrease your tax bill. Contact Advivo to ensure that you are claiming all of what you are entitled to claim.

How Can I Build And Protect My Wealth?

There are three parts to this.
1) Creating wealth.
2) Ensuring that you lose as little of that wealth as is possible to the tax man.
3) Protecting your wealth from those who seek to take your hard earned cash for themselves.

Depending upon what industry you are in and the risks your wealth generation strategy entails will determine the right structure for you to protect what assets you generate along the way. Your longer term strategies (and exit) will be critical for this as well. We can help you with whatever stage of the journey you are at.

How Do I Sell My Business To Retire?

To ensure your business is ready for sale an owner must develop an overall strategy. At Advivo we have the resources to assist you in maximising the value of your business to potential buyers. From valuing your business, negotiating with potential buyers, to transitioning yourself out of the business and into a comfortable retirement, we at Advivo can provide practical advice and options to allow you to achieve your goals in retirement.

How Can I Make A Profit But Still Have No Cash In The Bank?

Making a profit does not necessarily mean that there is cash in the bank. If you’ve ever been told by your accountant you made a profit for the year, but don’t feel like you did, you wouldn’t be alone. There are many reasons why this can happen.

1) The Profit & Loss Statement is based on accrual accounting, meaning your customers might have been invoiced but still haven’t paid you yet.

2) The Profit & Loss Statement only incorporates particular things you spend money on. Items such as loan repayments are recorded on the Balance Sheet according to Accounting Standards. This means you have spent the money, but it doesn’t reduce your profit.

3) You have purchased stock but it’s sitting in the warehouse and hasn’t been sold yet. This “Stock on hand” at the end of the year reduces your expenses (including the expense of the money you actually paid for the stock). A stocktake at end of year is often a good idea to see if there is obsolete stock that can be written off to reduce your profit.

Should I Vary My PAYG Income Tax Instalments?

PAYG Tax Instalments is tax you pay in advance for the current financial year and is based on your historic income. This means that the Instalments can often be too high or too low. If your situation has not changed, the instalments issued by the ATO are normally a good estimate of your likely tax bill. If not, then you should contact us to see if you should vary them to be closer to what your eventual tax bill will be.

Should I Buy A Motor Vehicle Before 30th June?

If your business is classed as a ‘Small Business Entity’ (a business with less than $2m of aggregate turnover) you will be able to claim the total cost of your vehicle if the cost of the vehicle (excluding GST) is less than $20,000. You may also be able to take advantage of discounts offered by car dealers towards the end of the financial year. It is our advice that you talk to your Accountant before you make any decision. We always advise clients to bear in mind that spending money on depreciable assets (such as cars) should only be done if you do actually need the item. This is because the tax you save will only ever be a percentage of what you have to spend. This means the balance is going to money you spend so you want to be getting a good benefit from this.

What Is The Best Way To Finance A Motor Vehicle, Buy Or Lease?

There are pro’s and con’s using any of the various methods. The main methods are:

1) Outright purchase (if you have the funds available and don’t have another use for them). The advantage of this is there is no further cost of the vehicle other than running costs. The disadvantage is you have spent your money and don’t get a deduction for interest or finance costs.

2) Chattel Mortgage. This involves purchasing the vehicle and a lender funding the purchase and taking security over the vehicle. You are locked into regular repayments and will pay interest and finance costs (which are tax deductible over the term of the finance) but don’t need to find the funds to buy the vehicle at the start. If you are financing your purchase this method works best for claiming GST upfront where you are registered for GST on a CASH basis.

3) Hire Purchase. Similar to the Chattel mortgage but with a distinction when it comes to GST. Instead of being able to claim the GST for the purchase at the start, you have to claim it over the term of the finance if you are registered for GST on a CASH basis.

4) Operating Lease. Under this arrangement, you also make regular monthly repayments however the structure is different. You don’t own the car, the finance company does (and always will unless you choose to purchase it when you reach the balloon). Because of this, the payments you make are treated similarly to rent payments as an outright deduction and you claim GST on each payment. There is no deduction for depreciation for the vehicle under operating leases. Another name for an operating lease is “off balance sheet finance”.

When Is My BAS Due?

Standard due dates for quarterly BAS returns are 28th of April, July, October and February. If you lodge via BAS agents, you can get 4 weeks extension except for the December quarter. You are also eligible for an extension if lodging by your Business Portal, contact us for more information.

When Is MY Tax Return Due?

Your Tax Return due date depends on your circumstances, the type of entity and prior lodgement obligations being met. Please contact us to check the due date of your Return/s

Can You Loan Your Super Fund The Money To Buy A Property?

Yes, under a Limited Recourse Borrowing Arrangement (LRBA). However, it must be established as an arms length loan arrangement as per the ATO’s strict guidelines. Don’t try and do this yourself – the repercussions of getting it wrong are too severe. Seek our expert assistance.

How Long Will My Income Tax Refund Take To Issue?

The ATO generally takes 10-14 days to process your tax return. However, it could take longer due to individual’s circumstances.

When Is My Income Tax Amount Payable Due?

It is the date on your notice of assessment issued by the ATO after lodgement of your tax return.

Can I Pay My Tax Bill In Instalments?

Yes, you can discuss with the ATO to make a payment arrangement. Be aware that the ATO does charge interest on overdue amounts, even when you have implemented a payment arrangement.

Is There A Limit On Tax Deduction I Can Claim For The Year?

No, there is no limit on the amount of deductions you can claim in your tax return. However, the expenses must be work related and incurred in earning your income. You may need receipts to substantiate the expenses.

My Employer Paid Me A Travel Allowance. Can I Claim A Deduction For That On My Tax Return?

Yes, you can claim a deduction for the actual expenses incurred, less any private component.

How Long Do I Need To Keep My Tax Records?

Generally, you need to keep records for five years from the date of issue of your assessment notice for that year. Documents can be kept in written or electronic form. However, there are different dates for other types of documents including:
– documents to do with SMSF (often 10 years or longer), and
– records showing what you paid or acquired shares, properties and other investments for (keep until you’ve sold the item and then for 5 years after the tax return for that year).

If unsure, keep the records. If you don’t have the records and the ATO question something to do with your return, it can be impossible to prove your position in a dispute with the ATO. Unfortunately, in disputes with the ATO, the burden of proof is on the taxpayer to prove they are innocent – the opposite to a criminal court.

I Had To Pay A Child Care During The Year. Is This Claimable?

No. Child care expenses are considered as private expenses even if you need to pay for child care to go to work.

I Had An Overseas Holiday While I Was Attending A Seminar That Was Relevant To My Job. Can I Claim The Cost Of The Trip On My Tax Return?

If the trip was both for income-earning purposes and for private purposes, you can only claim the portion of work-related purposes.

Does the Single Touch Payroll changes affect me as an employer?

The short answer is, yes. The longer answer is yes for different size employers, here is a very quick summary for you:

  • Employers with 20 or more employees – STP started from 1 July 2018 for employers with 20 or more employees, you should already be reporting through Single Touch Payroll. If you’re not sure if STP applied to you during the 2018–19 financial year, you can do a headcount (not a full-time equivalent) to check if you had 20 or more employees at 1 April 2018.
  • Employers with 5-19 employees – It is now mandatory for all employers in Australia to adopt a compliant payroll solution from 1 July 2019. You can start filing Single Touch Payroll before 1 July and STP is available on all Xero subscription plans.
  • Employers with 1-4 employees – If you have four or fewer employees and don’t currently use payroll software you can now start reporting Single Touch Payroll through a low-cost solution starting from $7.50 per month.

Why is a Shareholder’s Agreement Important?

First and foremost, a shareholder’s agreement is created to protect all parties involved. When situations or disputes arise, it is very easy to refer to the agreement to settle disagreements. The agreement should have specific instructions to resolve disputes and make it clear how decisions are to be made. Additionally, all shareholders are protected in the agreement, no matter the number of shares they hold. The terms they set should protect those shares as well as their position on the board. It also prevents situations where circumstances for one shareholder can affect other shareholders or the company.

What is Financial Modelling?

Financial modelling is more than just number crunching, it is an abstract numerical scenario of a real-world financial situation, a numerical representation of some or all aspects of a company’s operations.  It combines accounting, finance, and business metrics to create a conceptual representation of a company, forecast into the future.

A financial model is a tool to forecast a business’ financial performance into the future.  The forecast is typically based on the company’s historical performance, assumptions about the future, and requires preparing an income statement, balance sheet, cash flow statement and supporting schedules.

When do employers need to pay the Superannuation Guarantee?

Employers have until 28 days after the end of each quarter to make the superannuation guarantee payment for their employees. If the payment is not made by the due date or not paid into the employee’s nominated superannuation fund, then employers must pay the SGC to the ATO.

Superannuation Periods and Due Dates
QuarterPeriodPayment Due Date
11 July – 30 September28 October
21 October – 31 December29 January
31 January – 31 March28 April
41 April – 30 June28 July

When a due date falls on a weekend or public holiday, the payment can be made on the next working day.

Payments can also be made more regularly than quarterly. For example, fortnightly or monthly, so long as the total Superannuation Guarantee obligation for the quarter is paid by the due date.

What happens if I miss a Super Guarantee payment?

If you haven’t paid the minimum Superannuation Guarantee amount on time and to the correct fund, you may have to lodge a SGC statement and pay the Superannuation Guarantee Charge (SGC).

If you pay late, you may be able to use the late payment either to offset the SGC or to carry forward as pre-payment of a future contribution for the same employee. You must still lodge an SGC statement and pay the balance of the SGC to the ATO.

What happens if an employer does not pay the Superannuation Guarantee Charge?

The ATO maintains that if an employer doesn’t work with them to pay SGC debts, it may take actions that can include:

  • Conducting an SGC audit to determine the employer’s unpaid super debt
  • Issuing a ‘director penalty notice’ which makes the director of a company personally liable for the unpaid super amount
  • Sending a garnishee notice to a person who owes the employer money and requiring them to pay any funds owed to the employer, or a portion of them, to the ATO instead.

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