How Quarterly Themes Help PrimeAdvisory Stay ‘On Track’

How Quarterly Themes Help PrimeAdvisory Stay ‘On Track’

For several years now at PrimeAdvisory we’ve been able to achieve consistent year on year growth by implementing ‘Quarterly Themes’. Planning and reporting quarterly and annually has been a key success factor in helping us stay ‘On Track’ with our annual and 5-year business goals.

Once a year we develop our one-page strategic plan that maps out our:

  • Core Values/Beliefs
  • Our Purpose
  • Our Targets
  • Our Goals for the year to help us achieve our 5-year goal

Each quarter we review how we are tracking to our plan and as part of that process put in place a quarterly plan with a ‘Quarterly Theme’.

Quarterly themes are a way for us to be able to communicate what we want to focus on to help our team drive their activities to achieve the results we want.

Overall, they help us achieve our long-term plan by identifying any current issues or obstacles and dealing with them effectively and efficiently throughout the year.  Our ‘Quarterly Themes’ help us know where we are going long term and keep us focused on the little 90-day baby steps towards that.

90 days is short enough to do detailed planning for and it means we can see clearly for 90 days.

Our themes and associated activities for the last three quarters this year showcase how we communicate and keep our team aligned and on track.

October – December 2018 – Quarterly Theme: ‘Ship Shape’

‘Ship Shape’ was about tightening up processes.  Looking at our systems and people.  How do we develop our team to ensure they have the right technical skills, how do we get a good understanding of career and personal goals and what training do we need on the tools we use every day.

January – March 2019 – Quarterly Theme: ‘Help Me Help You’

‘Help Me Help You’ was all around getting feedback from our team on what they needed to deliver awesome client results.  We developed an understanding of our training needs in the business as well as identifying any pain points our staff had in their day to day working and the solutions that they had identified.

April – June 2019 – Quarterly Theme: ‘Renovate and Rejuvenate’

This quarter we are undertaking an office space renovation, so it’s a good opportunity to look at what else we could rejuvenate across the business.  Primarily looking at things in the business that are not fully implemented or perhaps activities that have dropped off and need rejuvenating.  These include formalising a training incentive programme for 2020 and getting a training budget together.

Finally, we will conduct our annual internal ‘Heartbeat Survey’ of all staff members to get important feedback on the happiness and health of our people.

How we close off our ‘Quarterly Themes’

PrimeAdvisory celebrated achieving their last quarterly goals with a team day of barefoot bowling

The team will enjoy a celebration at the end of the quarter when all our goals and targets have been met with an end of financial year lunch.  This quarter we’re hosting a celebration at Cork and Canvas where we will enjoy sipping on a glass of wine whilst painting on a canvas.  Every quarter when we launch a theme, we also clearly communicate the goals aligned with the theme and how we will celebrate when we achieve them.

Assisting with developing annual strategic plans and helping clients stay ‘On Track’ are a key component of our ‘Business OnTrack’ program. If you would like to discuss how a one page strategic plan and quarterly planning could help your business contact us.

 

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Minimise Your Business Tax – Tax Planning Guide

Minimise Your Business Tax – Tax Planning Guide

Imagine what you could do with any business tax saved!

  • Reduce your home loan
  • Top up your super
  • Have a holiday
  • Deposit for an investment property
  • Upgrade your car

Here’s a guide to the strategies you can use to minimise your business tax.

IS YOUR BUSINESS A “SMALL BUSINESS” ENTITY?

Small businesses can access a range of business tax concessions from the ATO. To qualify as a “Small Business Entity”, the business must have an aggregated turnover (your annual turnover plus the annual turnover of any business connected / affiliated with you) of less than $10 million and be operating a business for all or part of the 2019 year.

REDUCTION IN COMPANY TAX RATES FOR SMALL BUSINESSES

The company tax rate for businesses with less than $10 million turnover is 27.5%.

If you use a trust structure, one strategy is to allocate profits to a “Bucket Company” and cap your tax at 27.5% for the 2019 year. Note that this company must have business operations to qualify for the reduced company tax rate.

INSTANT DEDUCTION FOR ASSET PURCHASES

If your business has a turnover under $10 million, business assets purchased up to the following threshold amounts (exc. GST) will be immediately deductible:

  • $20,000, from 1 July 2018 to 28 January 2019
  • $25,000, from 29 January 2019 to 7:30pm 2 April 2019
  • $30,000, from 7:30pm 2 April 2019 to 30 June 2019

Depreciating assets valued at more than the above threshold amounts will be depreciated in one pool at a rate of 15% in the first year, and 30% in future years.

If your pool balance at the end of the year is less than $30,000 before applying any other depreciation deduction, the entire pool balance can be written off.

If your business has turnover from $10 million to $50 million, business assets purchased up to the following threshold amounts (exc. GST) will be immediately deductible:

  • $30,000, from 7:30pm 2 April 2019 to 30 June 2019

You should buy these assets and use them or have them ready for use before 30 June 2019.

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS

The concessional superannuation cap for 2019 is $25,000 for all individuals. Do not go over this limit or you will pay more tax!

Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge.

For the contribution to be counted towards the employee’s 2019 contribution cap, it must be received by the fund by 30 June 2019.

TOOLS OF TRADE / FBT EXEMPT ITEMS

The purchase of “Tools of Trade” and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a business tax benefit.

Items that can be packaged include handheld/portable tools of trade, computer software, notebook computers, personal electronic organisers, digital cameras, briefcases, protective clothing, and mobile phones.

If structured correctly, the employer will be entitled to a tax deduction for the reimbursement payment to the employee (for the equipment cost), claim any GST input credit, and the employee’s salary package will only be reduced by the GST-exclusive cost of the items purchased.

You should buy these items before 30 June 2019.

PAY EMPLOYEE SUPERANNUATION NOW

To claim a tax deduction in the 2019 financial year, you need to ensure that your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) by 30 June 2019.

You should avoid making last minute superannuation payments as processing delays may cause them to be received after year-end. If for any reasons you end up having to make last minute payments and you would like to claim them as deductions for the current year, contact us immediately and before you make any payments for possible resolutions.

DEFER INCOME

If possible, defer issuing further invoices and receiving cash/debtor payments until after 30 June 2019.  This strategy pushes business tax payable to future years.

BRING FORWARD EXPENSES

Purchase consumable items BEFORE 30 June 2019. These include marketing materials, consumables, stationery, printing, office and computer supplies. Spend the money now and get the deduction this year.

REPAIRS & MAINTENANCE

Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2019.

DEFER INVESTMENT INCOME & CAPITAL GAINS

If possible, arrange for the receipt of investment income (e.g. interest on term deposits) and the contract date for the sale of capital gains assets, to occur AFTER 30 June 2019.

The contract date is generally the key date for working out when a sale occurred, not the settlement date!

MOTOR VEHICLE LOG BOOK

Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2019. You should make a record of your odometer reading as at 30 June 2019 and keep all receipts/invoices for motor vehicle expenses.

An alternative (with no log book needed) is to simply claim up to 5,000 business kilometres (based on a reasonable estimate) using the cents per km method.

INVESTMENT PROPERTY DEPRECIATION

If you own a rental property and haven’t already done so, arrange for the preparation of a “Property Depreciation Report” to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property.

PRIVATE COMPANY (“DIV 7A”) LOANS

Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2019. Current year loans must be either paid back in full or have a loan agreement entered in before the due date of lodgement for the company return, or risk having it counted as an unfranked dividend in the return of the individual.

YEAR-END STOCKTAKE /WORK IN PROGRESS

If applicable, you need to prepare a detailed stock take and/or work in progress listing as at 30 June 2019. Review your listing and write-off any obsolete or worthless stock items.

Talk to us about your different options for valuing Stock, and how they affect your business tax payable.

 WRITE-OFF BAD DEBTS

Review your trade debtors listing and write-off all bad debts BEFORE 30 June 2019. Prepare a management meeting document listing each bad debt, as evidence that these amounts were written off prior to year-end and enter these into your accounting system before 30 June 2019.

SMALL BUSINESS CONCESSIONS – PREPAYMENTS

“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) BEFORE 30 June 2019 and obtain a full business tax deduction in the 2019 financial year.

TRUSTEE RESOLUTIONS

Ensure that the “Trustee Resolutions” are prepared and signed BEFORE 30 June 2019 for all Discretionary (“Family”) Trusts. Please see us for more information about these resolutions.

Talk to us TODAY before the 30 June 2019 deadline for assistance to reduce your tax!

 

This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances. Last Updated 7 May 2019

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Tax – What The 2019 Federal Election Means For You!

Tax – What The 2019 Federal Election Means For You!

There is only a short time before the Federal Election on 18 May 2019, and there’s a lot of wild speculation and “fake news” in the media.

We’re not trying to recommend who you should vote for, but instead we believe that it is vital that our clients understand how they will be affected by the result of the Election.

Here are some of the key ways you may be impacted:

  • The amount of personal income tax and Medicare levy you will pay
  • The amount of capital gain that will be subject to personal tax
  • Opportunity to continue to convert excess franking credits into cash tax refunds
  • Altering the tax treatment of trust distributions
  • Ability to offset prospectively investment losses against other income (i.e. negative gearing)
  • Ability to claim a full deduction for the cost of managing your tax affairs; and
  • Remove deductibility on personal superannuation contributions and lower the annual concessional contribution cap

A note of caution here, as there is little detail associated with some of the proposed changes. While we have listed below the main policy announcements, the detailed legislation might differ substantially, so we encourage you to be mindful of this!

This is what we know so far (at time of writing):

LABOR’S TAX POLICIES

  1. A tax on those receiving distributions through Family or Discretionary Trusts at 30%. These are small business structures, and this will affect many business owners.
  2. Doing away with the cash refunds for excess franking credits through a SMSF.
  3. Increasing the personal tax rate in the top tax bracket by an additional 2%.
  4. Maintaining a company tax rate at the full 30 per cent (%) for companies with turnover exceeding $50 million.
  5. Higher personal tax rates at the top end and lower personal tax rates at the lower end (i.e. less than $125,000).
  6. Limit negative gearing on investment properties to newly built residential dwellings from a yet to be determined date after the election. Property investments made before this date will not be affected as they will be grandfathered. The ability to negatively gear other asset classes will also be restricted. If the total of the interest and deductions related to investments exceed the investment income, the excess will not be able to be used for offset against other non-investment income such as salary and wages. This excess will need to be carried forward for offset against future investment income or capital gains. It will apply on a prospective global basis to every taxpayer. In other words, it will apply to property and shares alike (and any other relevant asset classes) and it will apply by looking at a taxpayer and assessing their overall investment income as measured against their overall investment interest expenses;
  7. Providing landlords who build new residential dwellings an annual subsidy for 15 years of $8,500 a year if the home is let out at 20 per cent below market rates;
  8. Much higher capital gains tax when you sell an investment property or other taxable asset due to the halving of the Capital Gains Tax (CGT) discount to 25 per cent for individuals. All investments made prior to 1 January 2020 will be fully grandfathered, so the new rules won’t apply to them.
  9. A new deduction (the Australian Investment Guarantee) that will enable a 20 per cent deduction in respect of the purchase of any eligible asset worth more than $20,000.
  10. Capping of deductions for managing tax affairs to a maximum of $3,000. This cap will impact individuals, trusts and partnerships. A carve-out is to apply for individual small businesses with positive business income and annual turnover up to $2 million.
  11. Whistle-blower rewards for tax evasion; and higher penalties for tax exploitation promoters.
  12.  Superannuation:
    • Oppose catch up contributions on concessional contributions and tax deductibility on personal superannuation contributions;
    • Lower annual non-concessional contribution cap to $75,000 and reduce high-income super contribution threshold to $200,000 so that more Div293 Tax will be paid by higher income earners;
    • Increasing the superannuation guarantee to 12 per cent when fiscal circumstances allow;
    • Phase out the $450 minimum monthly threshold to receive super guarantee contributions, as part of a broader women’s super-security package; and
    • Higher penalties for employers not paying SG.

 

THE COALITION’S TAX POLICIES

  1. Companies with a grouped turnover of less than $50 million have a reduced company tax rate of less than 30 per cent. Tax cuts already enacted as follows:
    • 5 per cent 2019-20 income year
    • 26 per cent for the 2020-21 income year
    • 25 per cent for the 2021-22 income year and for subsequent income years

The government will no longer proceed with implementing its plan to have a 25 per cent tax rate apply to all companies;

  1. The government has legislated changes to personal income tax thresholds, as announced in the 2018-19 federal budget. Personal tax changes legislated are to be rolled out in three tranches over the next seven years as detailed in the table above;
  2. No change to current arrangements regarding negative gearing of investment property;
  3. No change to the CGT discount, which currently sits at 50 per cent for individuals;
  4. No change to the current arrangements regarding trust distributions from discretionary trusts. Currently distributions are subject to tax in the hands of beneficiaries at marginal income tax rates, which could result in a lower effective tax rate for those distributions;
  5. No change to the current arrangements regarding imputation, in particular the full refund of excess imputation credits. This means that excess imputation credits can be converted into cash refunds;
  6. Superannuation – While not directly a tax policy, the government is proposing a three-year audit cycle for SMSFs that have a history of good record-keeping and compliance;
  7. The $30,000 immediate asset write-off is available to 30 June 2019. There is no certainty beyond this date; and
  8. Establish a Small Business Concierge Service within the Australian Small Business and Family Enterprise Ombudsman’s office to provide support and advice about the Administrative Appeals Tribunal process. It will also create a dedicated Small Business Taxation Division within the AAT which will include a supporting case manager, a standard application fee of $500 and fast-tracked decisions to be made within 28 days of a hearing.

CONCLUSION

It’s hard to imagine not being impacted in any way.

There are many other election issues that will influence a voter’s preferences and, at the end of the day, it is about making informed choices.

Please contact us anytime if you would like our advice (before and after the Election) about these proposed tax policies and how they may affect you. We’re here to help you!

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ATO gets tough on business reporting PAYG withholding tax for employees and contractors

ATO gets tough on business reporting PAYG withholding tax for employees and contractors

Effective from the 1st July 2019 the ATO has announced a proposed change of rules for businesses claiming a tax deduction for PAYG Withholding payments for employees and/or contractors.

In short, you could be denied your ability to claim a tax deduction if you do not meet your obligations when it comes to Pay-As-You-Go withholding.

As a business owner you need to ensure you are;

  • Withholding tax from employee wages and salaries, contractors’ payments, this also applies to commissions, bonuses, allowances and director’s fees.
  • Deducting PAYG Withholding tax at the top marginal tax rate for suppliers who do not quote an ABN
  • Reporting and lodging your PAYG withholding tax in the appropriate Business Activity Statement or Instalment Activity Statement by the due date

What happens if you don’t meet the PAYG withholding tax obligations?

  • You may permanently lose your tax deduction for wages paid

What happens if you make a mistake?

  • If you make a mistake, and proactively notify the ATO before they ask you an exemption is available. And note that the ATO’s data collection systems are very good at picking up non-compliance and then making an enquiry.

What you can do to prepare:

To make sure you comply with the withholding requirements PrimeAdvisory strongly recommends that you take this opportunity to;

  • Review your systems for PAYG withholding tax and reporting
  • Ensure you have a valid ABN from all suppliers

With any questions or concerns about your PAYG withholding tax obligations please Contact us.

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Good News For Small Business With Instant Asset Write-Off Scheme To Be Extended

Good News For Small Business With Instant Asset Write-Off Scheme To Be Extended

Recently that the Prime Minister, Scott Morrison announced an intended extension of the instant asset write-off scheme is being extended through to 30 June 2020 and an increase in  the current threshold of $20,000 increased to $25,000.

What is the Instant Asset Write-Off Scheme?

Initially, the Instant Asset Write-Off allowed for businesses with an annual turnover of less than $10 million to write-off business assets worth up to or less than $20,000, bought and used or installed ready for use.  This applied irrespective of whether the asset was purchased new or second-hand. This would then allow for business owners to claim a deduction for that asset in the same financial income year as the asset was purchased.

What does The Extension Mean?

In the words of “Sco-Mo” himself, it means that “Businesses can go out and invest today, whether it’s a vehicle, a piece of plant or equipment, all of it up to $30,000 and immediately write-down the asset”.

 

The legislation is expected to be passed through parliament in February 2012.

 

 

 

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