Posts Categorized: General

STP – changes at the top

It came as a personal surprise to see that the super impressive head of Single Touch Payroll (STP) at the ATO resigned on Friday. He has done so just two weeks before some 700,000+/- small businesses are required to report wages at the time of payment.

What are we to make of that?

As of two weeks ago, not even 120,000 businesses in the country were registered for STP. One can only therefore conclude that the vast majority businesses will not be ready for STP come 1st July.  That is just 2 weeks from today.

In part, this is not really surprising. STP is the biggest operational change since GST.  Moreover, it relies heavily on public accountants being able to help all of their clients.  And the reality is that the majority of public accountants haven’t been able to meet their 2018 tax lodgement program and are drowning in overdue Tax Returns.  They simply don’t have the time and resources to support what is required to implement STP.

At Maggs Reid Stewart, we are progressively taking our clients through a series of weekly preparatory tasks. And as part of this process, we are guiding clients to clean up their HR systems.

If you are struggling with STP and/or your accountant is not helping you, then please call us. And do so today because this is not something you can attend to on the first pay day in July.

Super contribution warning

A quick super contribution warning.

In order to claim a tax deduction for a personal or employer super contribution, it must be paid by year end.

This year is a bit of a trap with June 30 falling on a Sunday.

Another trap is that I just read that the ATO’s own employer super clearing house requires payment to be made by the close of business on Monday 24th June.  Pay later than that and the contribution will go into the next financial year.  That’s a real problem if you have retired and are aged over 65 as you will thereby breach the work test rule in the first week of July 2019.

Some clearing houses and super funds close off earlier than the 24th.  Make sure you now what you cut-off dates are.

$30,000 asset write-off – Part 3 of 3

In our last of three blogs, we look at another 7 tips and traps in respect of claiming the $30,000 instant asset write-off.

  1. You can only claim the business portion on an asset that is used both for business and privately – such as a car or lap-top.
  2. That said, one can deduct the whole cost of cars provided the Fringe Benefit Statutory Formula method.
  3. If your business has current or carried forward losses in excess of your intended asset purchase(s), then your business will not gain any tax saving in this financial year.
  4. The $30,000 threshold also applies to the written down value of the depreciable (general pool) assets. If their collective written down value is under $30,000 on 1st July 2019, then the balance can be claimed in full in the 2019/20 year. For 2018/19, the balance can only be written off if it was less than $20,000 on 1st July 2018.
  5. It’s assessed on an item by item basis – so a business can buy 50 computers and deduct the lot!
  6. I should point out that the threshold is due to fall back to $1,000 come 1st July 2020. They may not happen though as it has already been extended multiple times.
  7. If you are thinking of buying an asset under finance do so quickly. Post Royal Commission, it is far from easy as it once was to obtain finance. Moreover, the whole process is not as quick as it once was – which may mean you are not in possession of your asset by Friday 28th June. We hasten to add though that we can put you in contact with financiers. And beware of glitzy app based products as their rates tend to start above credit card rates.

Please time to read the other 14 useful tips and traps in Parts 1 & 2 of the $30,000 instant asset write-off.   Or better yet, call us on 9899-7511 to discuss your particular situation.

$30,000 asset write-off – Part 2 of 3

In our second of three blogs, we look at another 7 tips and traps in respect of claiming the $30,000 instant asset write-off.

  1. Your small business must own the asset. Your business either needs to pay for it or finance it by a loan, hire purchase or by way of a chattel mortgage contract. Assets that your business leases from others do not qualify for the write-off (as one does not own the asset until the final payment is made or the lease contract is paid out early).
  2. The incentive also doesn’t apply to assets that are leased by your business to others.
  3. It’s not about when you buy the asset. Your entitlement to claim is based on when you held the asset first ready for use. So for assets you need to have installed, it is not when you buy it; it is when you can first use it.
  4. Make sure you when buy an asset to have the installation date agreed upon.
  5. Installation and delivery costs comprise part of the cost of the asset.
  6. When buying a car, make sure the delivery date will be before July.
  7. If you trade-in an asset, it is the cost of the new asset that qualifies. So if your business buys a car for $40,000 and trades in an old car for $8,000, there is no entitlement as the cost of the new asset exceeds $30,000.

Please keep come back to look at third listing of tips and taps in respect of claiming this valuable tax concession. In the meantime, we welcome any questions you may have – call us on 03 9899-7511.

Be ready for STP

Single Touch Payroll (STP) will be here in just 4 weeks!

It is critical to use the month of June to prepare yourself.  Don’t fall for the trap of delaying and then finding you can’t meet your first pay run in July.

Our clients will be receiving weekly STP reminders and action steps.  Please fill in the contact form if you want either STP assistance or to simply receive the weekly STP emails.

 

$30,000 instant asset write-off – Part 1

If small businesses didn’t already love the instant asset write-off they will now!  The threshold was increased from $20,000 to $25,000 for assets first used from 29th January 2019.  And as of Budget night (2nd April) the qualifying threshold increased to $30,000!

Amongst many other assets, a $30,000 threshold brings a whole of quality cars into the realm of tax planning.

So if your business needs a small asset, now is the perfect time to buy it.

But before doing so, please ensure you have factored in the following considerations:-

  1. The claim is based off the ex GST price. So if your business buys a car from a car yard for $32,000, the GST exclusive price will be less than $30,000.
  2. However, if you buy a car privately, there will be no GST. So if you buy a car privately for $31,000, you will not be able to write-off the whole balance.
  3. Only buy an asset if you need it. So if a company registered for GST buys and asset for $11,000, it will get back $1,000 of GST and will have a tax deduction of $10,000. It will pay $2,750 less company income tax. It will still be $7,250 out of pocket. As tempting as this limit is, don’t get too carried away and buy assets that your cash flow cannot support.
  4. A tax deduction in the 2019 tax year will have a flow on effect as it will reduce the PAYG Instalments for 2019/20 and part way into 2020/21.
  5. An asset purchased in 2018/19 will also have a flow on effect for those small businesses paying GST under the instalment method. It will reduce the GST Instalments for 2019/20 and part way into 2020/21
  6. You need to elect or have previously elected to use the small business general pooling depreciation method. A business qualifies as a small business if its current year or prior year turnover is under $10,000,000.
  7. That said, the incentive has been extended to medium sized business with group turnover up to $50,000,000.

We will list other considerations in our upcoming Parts 2 and 3.  In the meantime, please contact us if you have any questions.

 

Single Touch Payroll webinar

Are you wondering what you should be doing in preparation of Single Touch Payroll?

Do you know that from 1st July all employers in the country are required to report how much every employee will be paid, the PAYG WH tax thereon as well as what their super will be at the time of payment?  And yes whilst there are exemptions it just means more work later.

You need to be ready for Single Touch Payroll now or in the process of getting ready.

So do you know what you need to do before 1st July?

So do you know what you should be doing from 1st July?

If you can’t answer these questions then you need to attend out STP webinar on Tuesday 28th May at 5pm.

You can enrol by clicking on the following link:-

https://zoom.us/webinar/register/a10dbea62247ddf5d746f627e8486654

 

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!