Imagine what you could do with tax savings? You could:

• Reduce your home loan
• Top up your super
• Save for a holiday (when we can travel again)
• Deposit for an Investment Property
• Pay for your children’s education
• Upgrade your car

The most important thing to remember is that there is no point in spending money to get a tax deduction unless it’s going to result in something useful for you.

HOME OFFICE EXPENSES

If you have been working from home, you may have expenses you can claim a tax deduction for. The ATO allows you to claim using a “Revised Fixed Rate Method” an amount of $0.67 per work hour for the 2024 year. This amount covers most expenses from working from home, and you need to keep a detailed record of how you calculated the number of hours you are claiming. You can also claim expenses using an “Actual Cost” method – so please keep all invoice and receipts during the entire year to prove all claims.

SUPERANNUATION CONTRIBUTIONS

While you might not be flush with cash now and able to put large amounts into superannuation, it’s important that you are aware of what is possible to maximise your super balance and possibly reduce your personal tax at the same time.

DEDUCTIBLE SUPER CAP OF $27,500 FOR EVERYONE

The tax-deductible super contribution limit (or “cap”) is $27,500 for all individuals under age 75. Individuals need to pass a work test if over age 67.

To save tax, consider making the maximum tax-deductible super contribution this year before 30 June 2024. The advantage of this strategy is that superannuation contributions are taxed at between 15% to 30% compared to typical personal income tax rates of between 34.5% and 47%.

 CARRIED FORWARD CONTRIBUTIONS

Carry-forward contributions are not a new type of contribution, they are simply new rules that allow super fund members to use any of their unused concessional contributions cap on a rolling basis for five years.

This means if you don’t use the full amount of your concessional contribution cap ($25,000 from 2019 to 2021, and $27,500 for 2021 and 2022), you may qualify to carry-forward the unused amount and take advantage of it up to five years later.

Carry-forward contributions are calculated on a rolling basis over five years, but any amount not used after five years expires. These carry-forward rules only relate to concessional contributions into super, not non-concessional contributions, as they have different caps.

SPOUSE SUPER CONTRIBUTIONS

You can make super contributions on behalf of your spouse (married or de facto), provided you meet eligibility criteria, and your super fund allows it. This is known as contribution splitting.

Doing this not only helps to boost your spouse’s retirement savings, but it can also help you save tax if your spouse has limited income.

You may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a. or less.

The offset gradually reduces for income above $37,000 p.a. and completely phases out at $40,000 p.a. and above.

ADDITIONAL TAX ON SUPER CONTRIBUTIONS BY HIGH INCOME EARNERS

The income threshold at which the additional 15% (‘Division 293’) tax is payable on super $250,000 p.a. Where you are required to pay this additional tax, making super contributions within the cap is still a tax effective strategy.

With super contributions taxed at a maximum of 30% and investment earnings in super taxed at a maximum of 15%, both these tax points are more favourable when compared to the highest marginal tax rate of 47% (including the Medicare levy).

17 Ways to Reduce Your Personal Tax

GOVERNMENT CO-CONTRIBUTION TO YOUR SUPER

If you are on a lower income and earn at least 10% of your income from employment or carrying on a business and make a “non-concessional contribution” to super, you may be eligible for a Government co-contribution of up to $500.

In 2024, the maximum co-contribution is available if you contribute $1,000 and earn $43,445 or less. A lower amount may be received if you contribute less than $1,000 and/or earn between $43445 and $58,445.

OWNERSHIP OF INVESTMENTS

A longer-term tax planning strategy can be reviewing the ownership of your investments. Any change of ownership needs to be carefully planned due to capital gains tax and stamp duty implications. Please seek advice from your Accountant prior to making any changes.

Investments may be owned by a Family Trust, which has the key advantage of providing flexibility in distributing income on an annual basis and an ability for up to $416 per year to be distributed to children or grandchildren tax-free.

PROPERTY DEPRECIATION REPORT

If you have an investment property, a Property Depreciation Report (prepared by a Quantity Surveyor) will allow you to claim depreciation and capital works deductions on capital items within the property and on the property itself.

The cost of this report is generally recouped several times over by the tax savings in the first year of property ownership.

MOTOR VEHICLE LOGBOOK

Ensure that you have kept an accurate and complete Motor Vehicle Logbook for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2024. You should make a record of your odometer reading as at 30 June 2024 and keep all receipts/invoices for your motor vehicle expenses. Once prepared, a logbook can generally be used for a 5-year period.

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

SACRIFICE YOUR SALARY TO SUPER

If your annual income is $45,000 or more, salary sacrifice can be a great way to boost your superannuation and pay less tax. By putting pre-tax salary into super rather than having it taxed as normal income at your marginal rate you may save tax. This can be especially beneficial for employees nearing their retirement age.

PREPAY EXPENSES AND INTEREST

Expenses relating to investment activities can be prepaid before 30 June 2024. You can prepay up to 12 months of interest before 30 June on a loan for a property or share investment and claim a tax deduction this financial year. Also, other expenses in relation to your investments can be prepaid before 30 June, including rental property repairs, memberships, subscriptions, and journals.

INSURANCE PREMIUMS

Possibly your greatest financial asset is your ability to earn an income. Income Protection Insurance generally replaces up to 75% of your salary if you are unable to work due to sickness or an accident. The insurance premium is normally tax deductible, plus you get the benefit of protecting your family’s lifestyle if you cannot work due to sickness or an accident. It’s a small price to pay for peace of mind. Like rental property interest, income protection premiums can also be pre-paid for 12 months to increase your deductions.

WORK RELATED EXPENSES

Don’t forget to keep any receipts for work-related expenses such as uniforms, training courses and learning materials, as these may be tax-deductible.

REALISE CAPITAL LOSSES

Tax is normally payable on any capital gains. You should consider selling any non-performing investments you hold before 30 June 2024 to crystallise a capital loss and reduce or even eliminate any potential capital gains tax liability. Unused capital losses can be carried forward to offset future capital gains.

DEFER INVESTMENT INCOME & CAPITAL GAINS

If practical, 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 2024.

The Contract Date (not the Settlement Date) is generally the key date for working out when a sale or purchase occurred.

IMPORTANT INFORMATION IF YOU WANT TO REDUCE YOUR PERSONAL TAX

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice from your accountants at Middleton Business Advisers Information is current at the date of issue and may change.

Talk to us TODAY before the 30 June 2024 deadline for assistance to reduce your personal tax!

The post Reduce Your Personal Tax With This 2024 Tax Planning Guide appeared first on Middleton Business Advisers, Accountants Merredin, Business Advisers Merredin.

• Reduce your home loan
• Top up your super
• Save for a holiday (when we can travel again!)
• Deposit for an Investment Property
• Pay for your children’s education
• 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 2024 year.

LOWER COMPANY TAX RATES

The 2024 company tax rate for businesses with less than $50 million turnover is 25%, if 80% or less of a company’s assessable income is “passive income” (such as interest dividends, rent, royalties, and net capital gains).

If you use a Trust structure, one strategy is to allocate profits to a “Bucket Company” and cap your tax at 25% for the 2024 year. Note that this company must qualify as a “base rate” entity to be eligible for the lower 25% company tax rate. Please discuss with us whether your company will qualify.

FULL EXPENSING FOR ASSET PURCHASES

Businesses with an aggregated turnover of less than $10 billion can immediately deduct the business portion of the cost of eligible depreciating assets, costing less than $20,000

You should buy these assets and use them or have them ready for use before 30 June 2024 to qualify for a 2024 tax deduction. Talk to us today about your options!

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS

The concessional superannuation cap for 2024 is $27,500 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 2024 contribution cap, it must be received by
the fund by 30 June 2024.

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 2024.

REPAIRS & MAINTENANCE

Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2024.

PAY EMPLOYEE SUPERANNUATION NOW

To claim a tax deduction in the 2024 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 2024.

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 2024.  This strategy pushes tax payable to future years.

BRING FORWARD EXPENSES

Purchase consumable items BEFORE 30 June 2024. These include marketing materials, consumables, stationery, printing, office and computer supplies. Spend the money now and get the deduction this year.

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 2024.

The Contract Date is generally the key date for working out when a sale occurred, not the Settlement Date!

MOTOR VEHICLE LOGBOOK

Ensure that you have kept an accurate and complete Motor Vehicle Logbook for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2024. You should make a record of your odometer reading as at 30 June 2024 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.

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 2024. 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 2024. Prepare a management meeting document listing each bad debt, as evidence that these amounts were written off before year-end and enter these into your accounting system before 30 June 2024.

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 2024 and obtain a full tax deduction in the 2024 financial year.

TRUSTEE RESOLUTIONS

Ensure that the Trustee Resolutions are prepared and signed BEFORE 30 June 2024 for all Discretionary (“Family”) Trusts. The ATO have recently released a number of Tax Rulings that may affect trust distributions to adult children, so Tax Planning for 2023 will be vital for anyone using a Family Trust.

IMPORTANT INFORMATION IF YOU WANT TO MINIMISE YOUR BUSINESS TAX

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from your financial adviser and seek tax advice from your accountants at Middleton Business Advisers, Information is current at the date of issue and may change.

Talk to us TODAY before the 30 June 2024 deadline for assistance to minimise your business tax!

The post Minimise Your Business Tax With This 2024 Tax Planning Guide appeared first on Middleton Business Advisers, Accountants Merredin, Business Advisers Merredin.

Who needs a director ID

You need a director ID if you’re an eligible officer of:

• a company, registered Australian body, or registered foreign company under the Corporations Act 2001 (Corporations Act)
• an Aboriginal and Torres Strait Islander corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act).

An eligible officer is a person who is appointed as either:

• a director
• an alternate director who is acting in that capacity.

You will only ever need one director ID. You don’t have to apply for another one if you become a director of other companies or corporations.

You must apply for your own director ID to verify your identity. No one can apply on your behalf.

When you need to apply

You can apply for a director ID now.

When you need to apply is determined by when you were first appointed, and under which Act.

If you plan to become a director, you can apply before you’re appointed.

Corporations Act directors

When you must apply for your director ID depends on the date you first become a director.

If you can’t apply by the date you need to, you can complete an Application for an extension of time to apply for a director ID (NAT 75390, PDF 271KB). We are continually working to improve the accessibility of this website and our forms. If you need further assistance, you can contact us.

To be a director under the Corporations Act, you must:

• be an individual who is at least 18 years old
• not be disqualified from managing corporations, unless the appointment is made with the permission of ASIC or the Court.

Notice

Note: If you were already a director on or before 31 October 2021, you have until 30 November 2022 to apply. That’s still the case even if you become a director of another company after 31 October 2021.

CATSI Act directors

When you must apply for your director ID depends on the date you become a director.

To be a director under the CATSI Act, you must:

• be an individual who is at least 18 years old
• be a member of the Aboriginal and Torres Strait Islander corporation and an Aboriginal and Torres Strait Islander person (unless the corporation’s constitution or rule book says otherwise)
• not be disqualified from managing an Aboriginal and Torres Strait Islander corporation, unless the appointment is made with the permission of the Registrar of Aboriginal and Torres Strait Islander Corporations or the Court.

For more information please visit Australian Business Registry Services here.

The post Have You Set Up Your Director ID Yet? appeared first on Middleton Business Advisers, Accountants Merredin, Business Advisers Merredin.

Whether it’s registering as a limited company, or setting up an accounting system that meets the latest digital requirements, it’s important to get the basics right.

How to tick the right compliance boxes

As a director, it’s your job to make sure your new business meets its regulatory requirements and stays compliant with the latest business and tax laws.

To help you get the basics sorted, here are 5 core areas to consider:

• Become a limited company – becoming incorporated shows you’re serious and limits your liability, separating your personal wealth from your business profits.
• Set up a bank account – as a limited company, you’re legally obliged to set up a bank account in your company name. Use this for all business transactions, and keep the company’s money separate from your personal banking.
• Choose an accounting system – keeping records of your financial transactions is mandatory, and cloud accounting software, like Xero, makes this easy – track all income and spending and give your accountant the data needed to produce accounts.
• Register for business taxes – you’ll qualify to pay corporation tax, and probably goods and services taxes too, so you need to register with your local tax authority.
• Check your other regulatory requirements – depending on your size, turnover and number of employees, there may be other legal requirements you need to factor in.

Talk to us about setting up the right foundations

As you can see, ticking those compliance boxes can get complicated. We’ll help you lighten the compliance load by getting the legal and financial foundations sorted.

Get in touch to see how we can help.

The post Setting up the right legal and financial foundations appeared first on Middleton Business Advisers, Accountants Merredin, Business Advisers Merredin.

Your business plan is the route map that defines your goals, explains your strategy and gives real direction to the everyday running of the company.

So what should you include in your plan?

5 key elements to include in your business plan

To create a truly robust and meaningful plan:

• Outline your vision – explain WHY you’re in business and how you intend to add value for customers. For example ‘We promote a healthy lifestyle through organic produce’.
• Set out your goals – outline your personal goals as a founder, and your wider strategic goals for the business. Then explain how these key goals are aligned. If your aim is to exit in 10 years, build this into your long-term plan.
• Define your funding and budget – to start trading, you need finance, so outline the investment that’s needed and how you’ll access that funding. Then break down this initial investment pot into clear budgets for each operational area.
• Forecast sales and cashflow – define the profit number you need, then calculate the volume of sales needed to deliver that income – and give a clear breakdown of the cash inflows and outflows needed to achieve positive cashflow.
• Set your timelines for success – set key milestones and give the business some concrete deadlines for meeting the goals, sales and revenues that you’ve projected.

Talk to us about creating a watertight business plan.

We’ll help you define your purpose as a business, and systematically set out how you’ll achieve your aims, giving you the best possible blueprint for success.

Get in touch and let’s start planning.

The post You need a plan for your business appeared first on Middleton Business Advisers, Accountants Merredin, Business Advisers Merredin.

With the rapid growth of online shopping and affordable ecommerce platforms, some of the traditional barriers to launching a small business are gone. You can potentially make sales without buying a shop or giving up your day job. Here’s some thoughts to help you monetise your hobby and turn your passion into a business!

1. Be prepared to lose some love – Once you turn your passion into a business, you’ll never feel the same way about your hobby again. The idealism of doing what you love for a living will collide with the reality of:

• tracking sales and cash flow
• hitting targets
• managing inventory
• watching competitors

2. Balancing creativity and commercialism – When you create something for personal fulfilment, you can make it to suit yourself. But when that creation becomes a service or product you wish to sell, you have to work within boundaries that suit your customer’s needs and requirements.

3. How do you monetise your hobby? – You’re enthusiastic about your hobby and the business idea that flows from it but ensure you fully test ideas within your market to find out what works and what doesn’t. Try to solve a problem or find a product that already exists and find how you can improve on it.

4. Building your brand with free content – Sharing relevant content is a great way of building up your customer base.

5. A pragmatic approach to social media – Find out where your audience spends their time (Facebook, Twitter, Instagram) and focus there. It sounds obvious but this simple piece of research can save hundreds of hours of lost effort.

6. Separate your personal and professional goals – When you turn your passion into a business, it’s easy to lose track of time. Both the passion and the business soak up a lot of energy – making it hard to get your work-life balance right.

Talk to us about turning your business ideas into reality.

Turning your passion into a business is an exciting prospect and you could earn money doing what you love. Talk to one of our team and we can help you to come up with a plan and put steps in place to help turn your passion into a business reality!

The post How to turn your passion into a business appeared first on Middleton Business Advisers, Accountants Merredin, Business Advisers Merredin.

They’ve got a Security Noticeboard that offers updates on known phishing and other scams, as well as any recommendations on how to protect yourself from them. Any other security related news is also published on the Noticeboard.

W recommend you keep an eye on the Security Noticeboard and of course I’ll let you know of any Xero security-related news that I receive.

The post Protect your business with Xero’s online security update appeared first on Middleton Business Advisers, Accountants Merredin, Business Advisers Merredin.

The dashboard is where you’ll see what’s in your bank account, who’s paid your invoices, and which supplier bills are due for payment – all customisable to show you the important numbers and metrics you need to stay in control of your business accounts.

The hub for your key numbers

Getting to grips with your finances can be confusing. Xero’s approach is to keep everything as simple as possible, giving you the core numbers and key performance indicators (KPIs) you need, while also tracking the accounting and tax information required by your accountant.

When you log into your Xero Dashboard, you’ll see:

• Your Xero direct bank feed– showing your bank account, balance and statement
• Invoices you’ve raised– and when your customers are due to pay you
• Bills you need to settle– and the dates when you need to pay them
• Cash in and out of the business– broken down by month to keep you in control
• Your custom KPIs– tailored to show the important metrics in your dashboard

Find out more about the dashboard in this Xero TV video

Talk to us about getting more from your Xero Dashboard.

If you’d like to customise your Xero Dashboard, we can help you create a bespoke view of your key numbers – and get you in real control of the financial health of your business.

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