Bardi Management Group Pty Limited Suite 5, 57 Bells Line of Road (Cnr Grose Vale Road) North Richmond, NSW 2754 PO Box 129 North Richmond, NSW 2754 Telephone (02) 4571 3599 Fax (02) 4571 2548 Index The 2010/2011 Tax Year The 30th June What deductions to look for Individual Tax Checklists Business Tax Checklists Factoring or invoice Financing It is amazing that we are almost ready for the Pre June 30 rush to plan for tax and with the 30th June on the door step please find our latest newsletter that has a number of Pre and post June 30 information, all aimed at making our services more effective for you. Income protection insurance Income protection insurance is an essential part of any financial plan, designed to secure your family s lifestyle in the event of illness or injury. Income protection insurance premiums are generally tax deductible, so if you purchase income protection insurance and pay your annual premium before 30 June 2011, you will be able to include the deduction in this year s tax return. Business owners may also be able to claim deductions on their business insurance premiums. Private health insurance If you earn more than $77,000 as a single person or $154,000 as a couple you can end up paying a minimum of $770 in extra tax if you don t have private health insurance cover. You may want to consider taking out an appropriate level of private patient hospital cover for the whole of the next financial year if you want to avoid paying the penalty in the future. Keep your receipts The most common reason why people don t take advantage of tax deductions is simply because they don t keep receipts. While keeping receipts for big ticket items is necessary, you don t always need a receipt for the smaller items such as stationery and books. You do not need receipts if your work-related expenses are $300 or less, but you must be able to show how Not everybody keeps good records! the deduction relates to your income and how you calculated the amount you claimed.
What deductions to look for? Work Uniforms Stay in it for the long haul Government co contributions Delay any income Capital loss to offset tax Work uniforms If you wear a uniform to work, you can claim the cost, providing it follows the ATO guidelines. The uniform must be distinctive, such as one that has your employer s logo permanently attached to it. It must either be a non-compulsory uniform that your employer has registered with AusIndustry or a compulsory uniform that can be a set of clothing or a single item that identifies you as an employee of an organisation. You can also claim the cost of: occupation-specific clothing which allows people to easily recognise your occupation, such as the checked pants a chef wears when working, and which are not for everyday use; protective clothing and footwear to protect you from the risk of illness or injury, or to prevent damage to your ordinary clothes, caused by your work or work environment. You can claim the cost of renting, repairing and cleaning any of the above work-related clothing. The more you earn, the less you keep, And now I lay me down to sleep. I pray the Lord my soul to take, If the tax-man hasn't got it before I wake. ~Ogden Nash Stay in it for the long-haul If you have purchased assets (such as shares or managed funds) during the market downturn and they have risen in value, you might rethink selling them. Otherwise, you may have to pay a lot of CGT. A way to trim CGT is to hold on to the investment for more than 12 months. Since 21 September 1999, individual investors have been entitled to claim a 50 percent discount on capital gains that they make on assets held for longer than a year. Government co-contributions If you are an Australian resident and earn below $61,920 a year, you may be eligible for the Government Co-contribution to super. To claim your Co-contribution you will need to make a personal, after-tax contribution to your super before 30 June 2011, and the government will kick in some extra cash towards your retirement. This may be up to $1,000 in a financial year. Why does a slight tax increase cost you two hundred dollars and a substantial tax cut save you thirty cents? ~Peg Delay any income Thinking of selling off a profitable asset, such as shares or property? It may be worth deferring this sale until after 30 June 2011. In doing so, you will delay incurring CGT for another financial year. So while you will still need to pay the CGT eventually, freeing up short-term cash flow may be beneficial depending on your circumstances. Capital loss to offset tax Selling poor performing assets that no longer suit your circumstances before 30 June 2011 is another option. By selling a poor performing asset (i.e., an asset where the value has decreased) and thus incurring a capital loss, you may be able to offset a realised capital gain from another asset in the same financial year, allowing you to manage your Capital Gains Tax liability. If you don t have a capital gain to offset you can carry forward your loss into future financial years. It may also free up money for more suitable investment opportunities.
Individual Checklists statement shows you how much you have paid for medical expenses and how much you have claimed back from Medicare. 2010/2011 Individual Tax Return Checklist How much can I save? Personal deductible contributions People may find themselves in a situation where they can significantly boost their retirement savings, as well as reducing their taxable income. The simplification of and changes to deductible personal contribution limits is one such opportunity. The new caps allow deductible contributions of $25,000 per year for under 50s, and until 30 June 2012 up to $50,000 per year for those aged 50-plus. Split super with your spouse If your spouse is on a low income, you could receive a tax offset for making a contribution to your spouse s super fund as long as their assessable income (including reportable fringe benefits) is less than $13,800. However, to claim the maximum offset of $540, your spouse must earn $10,800 or less and you need to contribute $3,000 to their super in the same financial year. Because it s a tax offset, you ll make a direct saving against your income tax liability. Employer superannuation contributions If you have employees and make super contributions on their behalf, make sure you have deposited these prior to 30 June. This will ensure you can claim the tax deduction your business is allowed. If payments are made post 30 June you won t be able to claim the tax deduction in the current financial year. Medical expenses Taxpayers whose net medical expenses exceed the current threshold of $2,000 for the year may be able to claim medical expenses. The offset is calculated as 20 percent of the excess of net medical expenses over the threshold. Your Medicare financial tax statement will help you claim the offset in your tax return. The A good strategy to reduce tax payable is normally to accelerate any income tax deductions into the current income year. However clients should remember that tax rates are effectively increasing for the next income year due to the imposition of the flood levy on individuals earning more than $50,000 Taxable Income Tax on this Income $1 $6,000 NIL $6,001 $37,000 15c for each $1 over $6,000 $37,001 $80,000 $4,650 plus 30c for each $1 over $37,001 $80,001 $180,000 $17,550 plus 37c for each $1 over $80,001 $180,001 and over $54,550 plus 45c for each $1 over $180,000 Common work related claims made by individuals Depreciable plant, etc. costing $300 or less salary wage earners and rental property owners will generally be entitle to an immediate deduction if plant costing $300 or less is purchased before July 1 2011. Some purchases you may consider include: Fax machines Beepers and pagers Books and journals Briefcases and luggage Calculators Software and Stationary Tools of trade Clothing expenses purchase or pay for work related clothing expenses prior to the end of the income year, such as: Compulsory (or non compulsory and registered) uniforms, and occupation specific clothing Other expenses associated with such work related clothing such as dry cleaning, laundry and repair expenses
Business Checklists Self Education Expenses Consider pre paying the following self education items before the end of the income year: Course fees (but not HECS HELP fees), student union fees and tutorial fees Bring forward the purchase of stationary items and text books Other work related expenses Unions fees Subscriptions to trade, professional or business associations Magazine and newspaper subscriptions Seminars and conferences Income protection (excluding death and total permanent disability) 2010/2011 Year end Checklist for Business Many of our clients like to review their tax position at the end of the financial year and evaluate any year end strategies that may be available to legitimately reduce their tax. Traditionally, year end tax planning for small business is based around two simple concepts accelerating business deductions and deferring income. However Small Business Entities (SBE s) have greater access to year end tax planning due to particular concessions that only apply to them. Tax payers that qualify as an SBE can pick and choose which of the concessions they wish to use each year (although some restrictions still remain in relation to the SBE depreciation rules). The basic requirement to be eligible is that the business taxpayers annual turnover (including that of some entities) is less than $2 million. Deductions for SBE taxpayers Accelerating expenditure all SBE taxpayers can choose to write off depreciable assets costing less than $1000 in the year of purchase. Also all assets costing more than $1000 or more with an effective life of less than 25 years can be depreciated at 15%(which is half the full rate of 30%) in their first year. Prepayment strategies including rent on business premises and equipment, lease payments, interest prepayments if possible. Business trips, training courses and cleaning Deductions for non SBE taxpayers Prepayment of expenditure under $1000, salary and wages or expenditure incurred under the law Accelerating expenditure whereby the taxpayer brings forward the expenditure on a regular ongoing deductible basis. The following is a checklist of possible items: - Depreciating assets costing $100 or less can be written off in the year of purchase - Repairs - Consumables/spare parts - Client gifts - Advertising - Fringe benefits - Superannuation (that are actually made they cannot be accrued Accrued Expenditure (including the following: - Salary or wages and bonuses - Interest - Commercial Bills - Commissions - Fringe benefits Tax - Directors fees Call us before its too late! In the areas of income protection insurance, reviewing a vehicle and equipment finance quote, reviewing your current commercial investment or even doing a cost benefit analysis of swapping your home loan to a lower interest rate, please give us a call. Don t let yourself get caught in the trap of being too late to do something. We have a number of professional support people that can assist in each of these areas. If you need to make a time to do some Pre June 30 planning call us ASAP. if you want to make a time to book in to do your tax as early as possible we are making appointment times as well.
Factoring or Invoice Financing - Can I use it? To start with they are the same thing, basically (they are also called Debtor Finance or Discounting). Firstly, this sort of financing is only available for certain industries and businesses. The client who you invoice, must be another business, not retail; your payment cannot be staged or performance based, like builders or contractors. The facility ideally works for businesses such as: Labour hire Crash repairs Quarries Distribution Wholesale fashion Manufacturing Wholesale Business services Transport Printing Secondly, the facility operates like a line of credit secured against your invoices. There are lots of different options in regards to lenders and products. These products are particularly useful for Growing businesses - accelerating cash receipts from debtors assists businesses with ongoing (and growing) working capital commitments. Often businesses in a growth cycle do not have sufficient cash flow funding facilities to accommodate the growing commitments required to increase sales. Debtor Finance offers a growing facility in line with the sales growth of the business. More Debtors = More Cash. As a means of Risk Protection - Many small / medium sized businesses who trade with a cash gap fund their working capital with bank facilities secured by personal assets. It is highly usual for businesses to use a bank overdraft that is secured by the owner's home. Risk protection is an important strategy for personal wealth creation and peace of mind. Funding the business by leveraging the business assets allows personal assets to be kept separate and safe from the business commitments. Standard Debtor Finance facilities do not require real estate security. Financial freedom requires not just insights but also actions, and to carry out these actions you must learn about money and how it needs to be treated. True financial freedom is not only having money, but having power over that money as well. Suze Orman, The 9 Steps to Financial Debtor Finance helps create equity for these purposes. If you are looking to grow your business by way of Acquisitions - Leveraging assets to raise funds for acquisition purposes is a very important component. Debtor Finance offers maximum leverage against assets. Up to 90% can be advanced against debtors with standard facilities which offers greater leveraging opportunities. More access to cash through Debtor Finance allows for a more efficient use of equity in acquisition transactions. Should you be interested in obtaining any further information please contact our office to discuss. To assist with your personal/family Financial Planning - Not only does removing the personal real estate from securing business finance facilities add risk protection (an important financial planning strategy) but alleviates the equity in the property to be utilised proactively for wealth creation strategies.