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

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

On 30 January 2019, the Prime Minister, Scott Morrison delivered some good news for business owners, announcing that the instant asset write-off scheme is expected to be extended through to 30 June 2020 and the current threshold of $20,000 increased to $25,000.    The government will be seeking to legislate this change when Parliament resumes on 12 February.

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 $25,000 and immediately write-down the asset”.

We look forward to providing an update following formal parliamentary approval.

In the meantime, for help with planning your tax effectively and taking advantage of all available business tax benefits contact us.

 

 

 

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Key Considerations For Grandparents Funding Private School Fees

Key Considerations For Grandparents Funding Private School Fees

As we roll into a new school year, it’s not uncommon for grandparents to contribute to their grandchildren’s private school education.

If you are supporting your family by helping fund a grandchild’s private education, before the first term’s school fees are due it’s important to receive professional advice on the best way to contribute towards private school fees. At PrimeWealth your advisor can offer specific guidance based on your unique circumstances, however here’s a quick checklist of the key considerations:

Do the maths

Make sure that you have accounted for all your living expenses allowing you to live comfortably without the need to draw on any retirement savings in a way that is unsustainable.

Plan ahead

This will avoid selling investments at a time that may not be optimal, it’s important to ensure that ample funds are accessible when you need them, including a buffer.

Understand the impact on Asset testing

If you are maintaining control of the funds set aside for fees, these will be considered as an asset by Centrelink and could impact any Age pension entitlements.

Understand the gifting rule

If you are transferring funds to one of your children or grandchildren, be aware that the Department of Human Services gifting rule currently allows for a gift up to $10,000 in one financial year and a maximum of $30,000 over five financial years without your pension entitlements being affected.

Taxation

Get advice on the best structure for investing any funds set aside for school fees. “Education Savings” products can be internally taxed at a corporate tax rate which could be more than holding an investment directly.

Estate Planning

If you are no longer around to manage any funds for education purposes, ensure that you have considered this in your estate planning.

Control

Ensuring you maintain control of funds until they are required means you keep the funds in any circumstance that you may not have prepared for such as a child not attending private school or university.

 

Please contact PrimeWealth for further support and advice, taking into account your unique circumstances and financial goals.

 

 

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20 Financial Questions You Should Answer This New Year

20 Financial Questions You Should Answer This New Year

As we kick off another New Year, many of us are thinking about how this year might look different from the last and how we might ensure we are healthier and happier overall.

It’s also a time where we often reflect on what matters to us and whether we can prioritise those things in life.  Being able to do so is inevitably linked to our financial situation and how well our finances and financial management is structured to enable us to live life according to what we value purposely.

What we do know in our work dealing with hundreds of clients supporting them to achieve what they want out of life is what questions need to be answered to get you on track.

The Important Income Questions

–    Is your income and employment secure and does it meet your living costs?  Is it well-structured and tax efficient?

–    Are your education costs covered?

–    Is any surplus income invested efficiently for wealth creation?

 

The Important Investment Questions

–    Do you have clear goals for where you want to be wealth-wise in the next five years?

–    Do you have a tax-efficient investment structure?

–    Do you know if your current investments are achieving your goals?

 

The Important Debt Questions

–    Are your overall debt levels appropriate for where you are at in life?

–    Do you have the right mix of personal and investment debt?

–    Do you have a plan to eliminate personal debt in the shortest possible time?

 

The Important Risk Questions

–    Does insurance cover you for any possible circumstances?

–    Are you getting the best possible rate for insurances?

–    Are you covered appropriately?

–    Would your family be able to live comfortably if you were no longer able to provide for them?

 

The Important Retirement Questions

–    Are you clear on what you want your retirement to look like?

–    Do you know how much you need to live on to have the retirement you want?

–    Do you know if you are on track to have the income you need when you retire?

–    Do you know if your tax is structured effectively for retirement?

 

The Important Estate Questions

–    Is your Will up to date and does it reflect your current wishes

–    Have you arranged for someone to make financial decisions on your behalf if you’re unable to do so?

–    Is any relevant documentation regarding your estate easy to find and is your family aware of any medical and lifestyle wishes?

 

Take the first step in getting an accurate understanding of your financial position and how well it supports what you want in life with our complimentary online financial health check

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Business Tax Planning Guide FY18

Business Tax Planning Guide FY18

Imagine what you could do with 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 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 2018 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 2018 year. Note that this company must have business operations to qualify for the reduced company tax rate.

INSTANT DEDUCTION FOR ASSETS LESS THAN $20,000

If your business is a Small Business Entity, the following tax concessions apply:

  • Depreciating assets valued at less than $20,000 will be immediately deductible
  • Depreciating assets valued at more than $20,000 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 $20,000 before applying any other depreciation deduction, the entire pool balance can be written off.

You should buy these assets before 30 June 2018.

If your business is not a Small Business Entity, you will need to depreciate all assets purchased over $300. Any assets purchased for $300 or under can be immediately deducted.

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS

The concessional superannuation cap for 2018 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 2018 contribution cap, it must be received by the fund by 30 June 2018.

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 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 2018.

PAY EMPLOYEE SUPERANNUATION NOW

To claim a tax deduction in the 2018 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 2018.

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 2018.  This strategy pushes tax payable to future years.

BRING FORWARD EXPENSES

Purchase consumable items BEFORE 30 June 2018. 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 2018.

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 2018.

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 2018. You should make a record of your odometer reading as at 30 June 2018 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 2018. 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 2018. 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 tax payable.

 WRITE-OFF BAD DEBTS

Review your Trade Debtors listing and write-off all bad debts BEFORE 30 June 2018. 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 2018.

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 2018 and obtain a full tax deduction in the 2018 financial year.

TRUSTEE RESOLUTIONS

Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2018 for all Discretionary (“Family”) Trusts. Please see us for more information about these resolutions.

Talk to your Client Advisor TODAY before the 30 June 2018 deadline for assistance to reduce your tax!

 

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How to improve your life NOW for a brighter future: 15 tips

How to improve your life NOW for a brighter future: 15 tips

by Julie Tassone

Are you in your twenties and wondering how to improve your life now so that the future is brighter?

One of the characteristics of the Y-generation and people born this millennium is that they like to ponder the future. The trouble is, good, honest guidance about this future can be in short supply.

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