Posts Categorized: General

Improving cash flow

Want to improve your cash flow?

Not much of a question really – of course you do.

For some it is easy as making it easier for your customers.  For those providing a good or a service, it can be as easy as taking payment upon or before delivery.  And for some this can be as easy as using Square, Pay-pal and other such options.

You are asking for payment at the time – and isn’t easier to ask to be paid at the time of the exchange?  You are also making it easier for your customer / patient to pay you.

Want other cash flow tips?  We have hundreds obtained from our experience of working with a wide range of clients form different industries.  Call us.

A lesson in tax planning

The 2019 Federal Election certainly proved to be a surprise.

It seems the Coalition is headed for a majority in the House of Representatives. The Senate, whilst heading towards again being hung, may have enough independents to vote with the Coalition on most legislation.  So Labor’s tax policies as presented for the 2019 Federal Election will never see the light of day.

This all proved to be a classic lesson in tax planning.

In my mind, there are three golden rules of tax planning:-

  1. Never assume legislation will be passed,
  2. Never assume legislated passed matches wat was proposed in the first place, and
  3. If you decide to go down a particular path, make sure the payoff is relatively quick.

I spoke with one fund manager late last week who noted that they were having incredibly high inflows into portfolios low on or without franking credits. I wonder how quickly those same investors may now pull out.  Bu extension, I also wonder how cashed up the fund may stay to accommodate what could be an equally high level of withdrawals.

Family Tax Benefit Part A

Those with family incomes under $53,728 receive the full amount of Family Tax Benefit Part A – that’s $4,753.84 for a child under 13, $6,184 for a child aged 13 to 15 as well as for those children aged 16 to 19 who met study requirements.

That’s a lot of money.  In fact for a family with 12 and 14 year old children, the benefit is more than the tax to be deducted from a salary of $53,728.

The entitlement is reduced by 20% for every dollar of income in excess of $53,728.

One still receives a base rate of the Family Tax Benefit Part A of $1,525.16 for each child up until an income of $94,316. Thereafter, your entitlement reduces by 20% for every extra dollar of family income.

Income is defined as adjusted taxable income which includes reportable fringe benefits and reportable employer super contributions.

To receive this entitlement, you MUST lodge your Tax Return for the previous year by 30th June.  So if you haven’t lodged your 2018 Tax Return you better get cracking!

Single Touch Payroll

Single Touch Payroll will apply to all employers from 1st July 2019.  Whilst extensions have been offered we recommend not relying on them in the majority of cases as it will create more work later.

There are a number of things to do and matters that as an employer you need to have in order before July.  Keep an eye out for notification of our upcoming webinar.

In that webinar we will set out the when, what, why and how of Single Touch Payroll.

We look forward to seeing you then.

Contractor or employee?

Contractor or employee? You better get it right as the implications for doing so can be financial crippling.  And then there is the time and mental frustration of dealing with such disputes.

The critical thing is to get the classification right.

You then have to get the right documentation in place.

  • If they are an employee then you need to do a few things including determine the right award, give them a letter of offer and issue the National 10 Employment Standards.
  • All too many business owners fail to document a contractor relationship. Agreements are looked through by investigators to avoid shams and find the true relationship. Sadly though, some business owners lose the fight as they have don’t have a contractor’s agreement to prove their position – leaving the investigators to pretty much accept whatever the payee claims.

Does it cost to establish a contractor’s agreement? Yes (but it’s insignificant considering what it can save you)

Should you get one off the web? No (how many times do do it yourself lawyers use say a USA agreement or be clueless about the differing considerations used by the ATO, State Revenue Office and WorkCover).

Will the process reduce the possibility of any claim as both parties are fully aware of the relationship? Absolutely.

We would welcome the opportunity to discuss your situation.

Upcoming March quarter deadlines

For those of you who are employers, Friday 26th April is the end date for satisfying your SG super obligation for the March quarter.  Late payments will attract interest and penalties.  As such, this obligation is an employer’s most important commitment so best not to leave it until the last minute; particularly as payments through some super clearing houses take 5 days or more to clear.

For those who lodge a paper (non-electronic) quarterly BAS or IAS, your March quarter activity statement is due to be lodged by Monday 29th April.

Personal services entities

If you have a personal services entity (you will know if this relates to you as we will have discussed this with you many times over the years), your entity will be required to pay at least 80% of its income to you as salary/wage and remit the tax thereon within this BAS.

Lodgement tip

Please note that lodgement of an activity statement (even if it is nil statement) and payment are two separate requirements. Late lodgement attracts a minimum non-deductible fine of $210 for every 28 days that a form is lodged late whereas as late payment results in an interest levy. More importantly, BAS’s and SG super which is not reported and remains unpaid after 3 months becomes a personal debt of directors (please refer to the September 2012 edition of Tips and Traps for further details on the Directors Penalty Notices system) – and the ATO are actively issuing DPN notices.  That said, the ATO are agreeable to entering into payment arrangements.

STP reminder

And a quick reminder about Single Touch Payroll (STP). STP will be mandatory for all employers from July 2019.  You will shortly receive an introductory letter which will be followed by a series or reminders and steps to be implemented before 30th June.

 

$30000 instant asset write off trap

There are a few traps with the $30000 instant asset write off trap to be wary of.

To qualify you need not only to buy the asset but have it installed ready for use before 1st July 2019.

And please note that this increased threshold only applies to asset acquired after Budget night (2nd April).

$30000 asset limit

The Senate has already passed the bill that allows a small business to fully deduct assets costing less than $30,000 (excluding GST).

However it only applies to assets bought after Budget night (2nd April).

From 1st July 2018, the ex GST limit was $20,000.  In case you missed it, the limit was increased to $25,000 for any assets bought on or after 29th January 2019 (and which applies to assets bought before 2nd April 2019.

The $30,000 is generous. It brings a number of quality new cars and second hand cars into the fold.

And even though the expenditure will match the cash flow, please understand that the tax saved is only a percentage of the outgoing cash.

Want to know how your cash flow will be impacted?  Ask us.  We can show our or cloud accounting clients what the real impact will be on their cash flow.

A Budget warning

A Budget warning!  A Federal Budget is only a series of announcements. No announcement has effect until it is legislated.  For that to happen, a bill must be passed by The House of Representatives before being passed by the Senate.  From there it is effectively a formality for abill to receive Royal Assent.

That all said, the increased instant asset write-off of $30,000 has passed the Senate.

With an election pending, other announcements may never see the light of the day.  Many announcements morph into quite different legislation.

Keep an eye on our posts to find out what is eventually becomes law and how you will benefit or be affected.

$30,000 instant asset write-off

It was announced in the Federal Budget on Tuesday night that the instant asset write-off threshold would be increased to $30,000.

Well the $30,000 instant asset write-off has already passed both houses of Parliament.  It now just awaits royal asset (which is a formality).

Please note that this limit only applies to assets bought AFTER 2nd April 2019.

Keep you eye out for more upcoming tips and traps about this valuable tax saving concession.