Tax Planning Tips

It’s tax planning season!

Now’s the time to get one step ahead of the tax man.

Tax planning allows us to take a look into your future at 30 June. To do this we take a detailed look at your financial results, extrapolate these to the end of the year, and calculate what your tax position is likely to be.

Based on that data, we can then put thought into specific strategies that you can consider implementing prior to 30 June so that you spend money on what YOU want, rather than paying it to the ATO.

The ATO are happy for you to do tax planning, as long as it doesn’t turn into tax avoidance. See what they have to say here. Engaging qualified & experienced professionals will help you keep on the right side of the law.

If you are after general tax planning tips, click here.

Posted by Sigrid Arundel | Posted in Business Planning, My Accountant Qld, Tax Planning, Uncategorized | Tags: MAQ Clients, planning |

Mar 2018

New Rules for Exempt Vehicles

31 March is the last day of the FBT year.

If you claim your vehicle as a business expense then there’s some changes which require you to take action before then.

What’s the big deal?

The ATO are cracking down on exempt car and residual benefits. This catches any ute, dual cab ute or van provided to employees (including business owners) for use in a business.

They have now issued clear rules that taxpayers should follow to ensure they will not be targeted for audit, especially if claiming 100% business use. This new Practical Compliance Guideline PCG 2018/3 will apply to this FBT year & onwards.

Essentially you do not have to keep a log book to support the business use of your vehicle if you meet ALL these requirements:

(a) the vehicle is provided to perform work duties

(b) employer takes all reasonable steps to limit private use of the vehicle and have measures in place to monitor such use

(d) the vehicle had a GST-inclusive value less than the luxury car tax threshold at the time the vehicle was acquired (see what they were here; for 2017-18 it’s $65,094 for vehicles with fuel consumption greater than 7l per 100km)

(e) the vehicle is not provided as part of a salary packaging arrangement and the employee cannot elect to receive additional remuneration in lieu of the use of the vehicle, and your employee uses the vehicle to travel:

a. between their home and their place of work and any diversion adds no more than 2km to the ordinary length of that trip
b. no more than 750km in total for each FBT year for multiple journeys taken for a wholly private purpose, and
c. no single, return journey for a wholly private purpose exceeds 200km.

What do I need to do about this?

1. If you meet every condition above, then you do not need to do anything.

2. If you do not meet every condition above, then you should keep a log book for a continuous 12 week period to support your business use claim. More info about logbooks here.

You can purchase a paper log book from Officeworks or Newsagents, or you can use the ATO myDeductions app

Start your log book BEFORE 31 March & continue to keep a logbook into the next year so it covers the required 12 weeks

If you establish your business-use percentage using a logbook from an earlier year, you must keep that logbook and maintain odometer readings for 1 April and 31 March the following year

For exempt vehicles, travel from home to place of work is considered BUSINESS use. This is different from cars generally, where travel from home to place of work is considered PRIVATE.

3. In addition to 1 or 2, please download & fill in the vehicle summary & return it to our office by 13 April. There’s a completed example of the form here.

The Practical Compliance Guideline PCG 2018/3 is quite easy to read, and contains simple examples to help understand these concepts & apply them practically.

** This information was first published in March 2018, however, it’s still relevant for 2019. If you download the form to provide us with your vehicle summary you’ll see that it’s for the 2018 FBT year. If you need to do this form for 2019 (which runs from 1 April 2018 – 31 March 2019) or for 2020 (which runs from 1 April 2019 – 31 March 2020), then please change the dates. We’ll provide a more elegant form in the future.**

Refresher – what’s FBT (or Fringe Benefits Tax)?

Fringe benefits tax (FBT) is a tax employers pay on certain benefits they provide to their employees – including their employees’ family or other associates. If you are a director of a company or trust, benefits you receive may be subject to FBT.

FBT is separate to income tax and is calculated on the taxable value of the fringe benefits provided. You can learn more here.

Normally, our clients don’t need to lodge an FBT return because we calculate an FBT Reimbursement to eliminate the value of any benefit received. That is, we raise an FBT Reimbursement for private use of the business vehicle.

Posted by Leanne Roberts | Posted in My Accountant Qld | Tags: FBT, MAQ Clients |

Jan 2018

Business New Year’s Resolutions

New Year’s resolutions are easy to make; the hard part is sticking with them. Business New Year’s resolutions are no different.

Here are our tips to freshen up your business and renew your enthusiasm for getting your business into shape.

Review your budget – have you stuck to it so far?

Of course you did your business budget back when the financial year started in July, but have you looked at it since? Usually a budget will have considered the changes you wish to make, the KPI’s you wanted to achieve, and targets which aid you in achieving the goal you’ve set.

Now is the time to look at how you’re actually travelling, and make any adjustments to what you are doing so that you can build on wins or help turn around any losses.

Check health of cash flow – do you need to plan ahead?

December, January & February are often the months that cause a heavy toll on business cash flow. Generally staff enjoy celebrations and time off so cash flow feels the extra pressure of holiday payments, bonuses, entertainment, as well as all the usual expenses like GST, PAYG, and superannuation outflows.

You may be lucky enough to be in an industry which is at it’s highest cash flow inflows at this time, and if not, you had to plan for it (and may still be doing so). Many of our clients have separate bank accounts where they park cash regularly to cover GST, PAYG, and superannuation so they’re not caught short when these payments are due.

Improve your understanding of your own numbers

We strongly recommend that you learn to understand your Balance Sheet as well as your Profit & Loss Statement (P&L). Your business is much more than the money you have in your bank account, and ideally business decisions should not be based on cash flow alone.

All your assets, liabilities & equity play a part in making smart strategic decisions, and it’s so important you have the knowledge to check information on these pieces of paper is accurate before you commit yourself to a course of action.

Get your time back

You may have asked yourself “where did last year go?”. We did too. Many businesses are now taking advantage of new technology and online solutions to make routine tasks quick & easy. The result is that transactions & decisions taking place in the world around you are speeding up, whether or not you join in. Your competitors probably already are.

Give yourself back the time to focus on what will let you achieve your budget & cash flow targets. Avoid the pressure cooker from being out of control.

You may have balked at the cost of an online solution in the past; however, the true cost of not automating is probably much higher. Now is the time to check in on whether you should look at an online accounting solution like Xero which links in to so many apps to make your life simpler, cash flow faster and reporting more accurate.

If you would like our help with budgeting (creation or review), cash flow or online accounting solutions, just give us a call on (07) 5446 1226.

Posted by Sigrid Arundel | Posted in Inspiration, My Accountant Qld | Tags: MAQ Clients, planning, strategy |