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GST increase

Yes, you can be sure there's a GST increase coming when the treasurer goes out of his way to downplay it or put it into 'context'.

I'm reminded of a Kiwi Dairy Farmer mate who said that when GST was introduced at 10% even the dumbass dairy farmers could work it out. When it went to 12.5% everyone had to buy calculators. It now sits at 15%.

Given Australia's burgeoning deficit and shrinking tax base, it's inevitable. It might be a slow burn to get the states and electorate onside, but it's coming.

The interest will be the amount of 'give and take' from the states, ACOSS and other parties with self interest.

My tax saving tip is to avoid the GST increase by spending less and you should do as I say, not as I do.

New Years Resolutions

Happy New Year

30 June is the end of the Financial Year and I hope you avoided the Accountants who were out celebrating and painting the town beige!

It's also the time to consider some solid New Financial years resolutions. How much attention did you pay to your tax circumstances last year? Could you improve?

It's rare that any of use could say we absolutely could do no more to improve our tax position and there are a myriad of ways to achieve it.

Prudent tax planning doesn't start  on 30 June, it starts on 1 July.

Be wise, tax minimise!

Attack of the Budget Smugglers !

Attack of the Budget Smugglers !

Very soon the Abbott government will hand down its second Federal budget. It's not unusual for budgets to be selectively 'leaked' before the second Tuesday in May. This can soften the blow for spending cuts or tax hikes.

What is unusual this time is for a proposal to increase tax that has bipartisan support. That is to say, the opposition agrees with the government. The tax to be considered is a superannuation tax aimed at the wealthy individuals.

We will soon find out 'Who' is a wealthy individual and 'How' the tax will be applied.

There are a couple of definitions of 'Who'. It could be defined by taxable income, assets within super or income generated by those assets within super.

The 'How' could be by way of increased contributions tax or increased tax on earnings within super.

I don't think we object to everyone paying their fair share of tax. My concern is that once legislated, future budgets could lower the thresholds so as to include more taxpayers and increase rates to raise the taxes. Effectively they will have 'budget smuggled'.

Are you 'keeping the right company'?

Are you 'keeping the right company'?

Is your business in the right business structure? Are your investments in the right investment structure?

The right decision at the start can be critical in terms of tax planning.

Typically the choice is between;

·         Sole trader/Individual

·         Partnership/Joint

·         Company

·         Trust

·         Super fund (effectively a trust for investments only)

You can get combinations of these as well as some exotic hybrid models.

The right choice will depend on;

·         Capital growth

·         Complexity

·         Cost/Benefit

·         Profitability/Tax

·         Asset protection

To summarise the differences between the alternatives would take up all of this edition of 'About'. Sometimes there is no solution that will address all requirements. There may be conflicting requirements and the answer will be one of 'best fit'. The defining question to ask is "What is the most important goal that you want to achieve?". The answer will flow from here.

A skilled advisor can ask the right questions about your circumstances to come up with an enduring  solution that will see you 'keeping the right company'!

By now we've mostly heard of 'the cloud' and how technology is increasingly in the cloud.Our online banking is in the cloud, our emails are in the cloud and our purchases are in the cloud. But I hear you say "Back up the bus. What does it all mean?"

Simply put, the cloud is a storage device. Modern life generates enormous amounts of data it becomes more cost effective to store this data outside of the four walls of a business or a household. If the storage provider is reputable then the data (information, photos etc) is secure. The cloud can also eliminate the need for backups, a critical service but overlooked and underestimated by many.

Many business owners are rightly concerned about the security of their information if they are using cloud based accounting. In my experience, the providers make it a high priority. They are acutely aware of the need for a secure and reliable service.Sometimes the same cannot be said for the business owner who stores information on their own devices. it could be found by employees, hacked or the whole computer stolen.

Another aspect of cloud accounting is ease of access to information. As long as there is an internet connection it can be literally anywhere, anytime any device.

This cloud accounting revolution is just the start. It can lead to serious business development. With the advent of real time and accurate information, your accountant can become your business partner and get the power of numbers working for you.

Santa Vs Federal Commissioner of Taxation

Today saw the conclusion in court of a dispute between Santa and the tax office.

While Santa argued for employees to be granted up to $1,000 each worth of Christmas party and presents, the court ruled in favour of the tax office and capped the benefit at $300.

However Santa successfully argued that this minor benefit should be exempt from Fringe Benefits Tax. Unfortunately a condition of this was that the employer cannot claim it as a tax deduction or claim the GST credit on the expense.

Outside the court Santa said he would appeal against this as he thought it should be an essential 'Claus'.

Tax Avoidance Vs Tax Evasion

Tax Avoidance, now that's OK. Tax Evasion is not cool - according to the law. The problem is that the line between the two is not clear and this twilight zone is exploited by big business. Simply put, the more money you have, the less tax you will pay.

Again this week the likes of Fed Ex, Pepsi and IKEA joining the list of international companies operating in Australia and paying no tax on profits made in Australia. MR HOCKEY STOP THINKING ABOUT YOUR STOMACH. SAVE SOME ENERGY FROM RAILING AGAINST INJUSTICE CAUSED TO PIZZA SHOP OWNERS AND SAVE SOME FOR THIS INJUSTICE!

Take a Selfie!

Yes, take a Selfie - a Self Managed Super Fund (SMSF). You won't be alone. Currently there are 534,000 SMSFs in Australia with over $557 billion in assets. They're big numbers and reflect their growing popularity.

In recent times we've seen an extension to SMSFs because they are allowed to borrow in certain circumstances. Yes it's complex and yes it's costly, but it can be done and there are now over $8 billion in SMSF borrowings.

It can be powerful medicine because you take super,the most tax effective structure - bar none, and gear it with borrowings. It's not for everyone and a skilled accountant can crunch the numbers for you. Call me today and I'll see if it all 'adds up' for you.

Big business-little tax bills

It's always been the case that the more money you have, the less tax you will pay. That's because there's schemes available to the big end of town that are not available to the 'schmucks' like us.

However the big end always likes to cross the line between tax avoidance (legal) and tax evasion (illegal). The latest hot spot is the practice of internationals 'transferring' profits made in Australia to other countries and paying less tax there and none in Australia.

Note to the treasurer - DO SOMETHING ! At a time when revenue is down and expenses are up we are bleeding revenue to multinationals - it's not good enough.

Apples with Apples

Tax is the second most thing that's on our minds and that's particularly so with a federal budget a month away. Prepare for a lot of discussion about GST, personal and company rates of tax. There will also be discussion about whether Australia is a highly taxed country. Here the waters get a bit murky and has sharks circling. New Zealand has a higher GST (20%),other countries have lower company tax etc etc. Politicians, experts and your highly informed mates tend to be selective in their argument.
There is one source of information that compares 'Apples with Apples' - The Treasury. Their report is that pretty much anyway you carve it up, Australian is a lower taxed country.
The next argument is whether that's good in terms of the services we receive - ie we get what we pay for.