Posts Categorized: Tax

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.

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.

Don’t jump too early?

So we have a Budget being delivered (one month early) tomorrow night. And we have a Federal Election due next month.

It seems as though we will have a change of government. One would therefore tend to pay more attention to Labour’s announcements than those from the Coalition.  It also could be that Labour have a majority in both houses or at least a favourable Senate.

But don’t jump too early.

I have lost count of the number of times bills put forward by both parties have never been passed or are greatly watered down from the original announcement. And many times I have seen people incur transaction costs or trigger tax liabilities in anticipation of something that never saw the light of day.

Please return to this web page to view Tips and Traps on changes as they become concrete.

LRBA’s to go?

LRBA’s to go?

Labour says so according to the Shadow Treasurer Chris Bowen.

Missing from the statement is how this and all the other proposed changes  to super are going to further limit one’s ability to provide for one’s own retirement.

It flies in the face off all initiatives made between 1983 and 2006 – by Labour and the Coalition alike.


Loans by companies – welcome relief in sight


Accountants call loans by companies to the shareholders and trusts as Division 7A loans. It requires corrective action to avoid being penalised.

It’s an area of tax law that clients just don’t understand. It is so incomprehensible that some four years ago the Board Of Taxation recommended a simplification of the rules.  This welcome idea was backed up and supported by a statement within the 2016 Federal Budget.

Only trouble was that Treasury released a position paper in October 2018 that is a complete 180 in the other direction with:-

  • Suddenly retrospectively penalising positions that were previously OK.
  • Greater penalties.
  • More complex rules.

And it’s all supposed to start from July 1 2019!

I have read this morning that the assistant Treasurer has stated that he and the ATO (of all people) are in line. He also said that he and Treasury are not in line with each other.

Thankfully sanity has returned. Pity though that it has taken over four months as Treasury has created great concern and panic.  Hopefully they will now go back and do what they were asked to do and formulate a simplified set of rules.

What is left to explain is how it ever came to be that Treasury took off hard 180 degrees in the opposite direction….

And why the picture of the owl?  Well they are supposed to be quite intelligent and able to turn their head back to normal after turning it 180.  Over to you Treasury…

Instant asset write-off gets even better!


Small businesses receive a number of valuable tax concessions. And now the instant asset write-off gets even better!

It has been announced that the $20,000 limit will increase to $25,000. But please note that this is not yet law.

And there is more good news!

This concession which was due to expire at the end of June will be extended to 30th June 2020.

What you need to do about the instant asset write-off:-

  • If your intended purchase costs more than $20,000 (excluding GST) then wait until the new limit has become law – so come back to our web page.
  • That said, don’t leave it to the last day of June. Often the discounting on common items is reduced the closer one gets to the end of June.
  • Refer to our other blogs which set out some of the tips and traps to be mindful of. Type asset into the search bar to find past blogs.  Or better yet, ask us.