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How Business Relocation Expenses Get Tax Deduction

Business Relocation Expenses

If you are relocating your business to another country, state or even just a different part of the country, there may be some ways that you can deduct your business relocation expenses. The first step is to determine how much the move will cost you in terms of both time and money. This may be your first piece of advice when it comes to the subject of deductions.

Business relocation expenses tax deduction in Australia
Business relocation expenses tax deduction in Australia


Start by estimating the direct and indirect costs that you will incur as you move your business to the new location. These include utility bills, transportation and other expenses that are related to the move. These are not your only expenses. You need to also consider indirect costs such as your investment in the new location and its affect on your future revenue from that location. These expenses may be tax deductible depending on the tax rules applicable in your particular state.

What Expenses are Deductible?


Now that you know what kind of expenses are deductible, you must determine which deductions are available to you. There are several categories of deductions that you can claim for this move. You must choose the ones that will be the most beneficial to you and will ultimately result in the highest savings. If you are not sure which deductions you can take, an experienced professional can help you make the right choices.

Business Depreciation


Business depreciation is one of the most popular deductions. This deduction allows you to depreciate your property over a period of time. You may be eligible to reduce your capital gains tax (CGT) at the same time. You may also be eligible to claim depreciation based on an increase in the fair market value of the property or improvement that you have made to your residence. If you use any personal or computer skills in the business-related improvement, you may also qualify for a deduction.

How Business Relocation Expenses Get tax Deduction in Australia

Employment Expenses & Others


Some other deductions that you may be eligible for include: Employment expenses, charitable contributions, mortgage interest, property taxes and some casualty losses. Business Liens are claims that you may also be eligible for if you hold more than one lien. Business Real Property Tax Deduction claims may also be eligible for if you have used a portion of your residence for business purposes.

Insurance Cost


Your insurance costs are deductible expenses. If you have your own insurance policy, the policy may include in your tax deductible expenses. The policy is a qualified written order (RPO) when you finish all the necessary documents and signing your policy. RPOs are considered tax deductible if you are properly classified as a dependent of yours and if your insurable interest is maintained on your own insurance policy. Business Insurance may also be claimed as a tax deductible expense.

Emergency Expenses


If you have to relocate for reasons related to emergencies, you may also claim emergency expenses. Excavation fees, replacement cost, transportation and storage charges and utilities are considering deductible expenses. However, if your relocation is due to an emergency, you should get in touch with a Relocation Expense Determination Service (REIDS). REIDS provides assistance to taxpayers who need assistance with tax claims. You will need to provide proof of your emergency. The tax deduction has limit to the amount that is eligible for and used as relief.

Conclusion


The above mentioned are some of the common exemptions that may be claimed as tax deductible business relocation expenses. If you are unsure about any tax deduction, it is advisable to consult a qualified tax professional. There are many tax professionals and accounting firms who offer tax advice and assistance to individuals and companies who are planning to relocate or increase their business presence in a new or different location. They can assist in preparing your business tax return and advise you on the various tax breaks available to you. You may also seek their advice on business loans and grants that may be available to you.

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Small Business Income Tax Offset

Small Business Income Tax Offset

For small businesses, there is a small business income tax offset which can reduce the tax you are required to pay by up to $1,000 each year! The way in which these offset works is that it is calculated based on the proportion of tax payable on your business income.

Eligibility

To be eligible for this small business income tax offset, you are required to be carrying on a small business as a sole trader or have a share of net small business income from a partnership or trust.

After the 2016-17 tax year – you are required to have an aggregated annual turnover of less than $5 million. Please see the below table for the progressive changes to the small business tax offset.

Calculating the Offset

The offset is worked out based on the proportion of tax payable relating to your total net small businesses income. Your aggregated turnover threshold and your rate of offset depend on the income year of your return. Your offset will be your rate of offset of the following amount, up to the limit of $1,000:

If your total net small businesses income is greater than, or equal to, your taxable income, your offset will be your rate of offset of your basic income tax liability for the year. The offset amount will be shown separately on your notice of assessment.

Claiming the Offset

We calculate your offset using information from your tax return. Your offset amount will be shown on your notice of assessment.

Your net small businesses income is the sum of your assessable income from carrying on your business, minus any deductions. If your net small businesses income is a loss, it’s treated as zero and you’re not entitled to the offset. If you had more than one sole trader business during an income year, you combine all your assessable business income from all your sole trader businesses and then minus the deductions from that total income.

Get in Contact with Us!

If you’re interested in how the small business income tax offset can help you save thousands, then don’t be afraid to get in touch with your local tax experts at R T Accounting & Taxation Services.

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Tax Returns

Tax Returns – A Summary

What is a Tax Return?

A tax return is a document you submit to the Australian Taxation Office at the end of every fiscal year. The document contains all the relevant information about your taxes. These include how much money you made in the year, your assets, your superannuation funds, the amount you paid in taxes, etc. Furthermore, you also need to provide information about your additional income and any tax deductions you’re eligible for. However, you’ll only have to lodge a tax return if you’re eligible for it.

How do Tax Returns Work?

Your tax returns help the authority determine the technicalities of your taxes. Once you file a tax return, the authority goes through your documents. It determines whether you’ve paid the accurate amount of taxes based on the paperwork you provide.

Once the details are calculated, the tax officials will let you know whether you need to pay any additional taxes based on your income and assets. Furthermore, the deductions you’ve claimed in your form will also be evaluated, and you’d receive the amount of money you’re eligible for.

Eligibility for Filing Tax Returns

Australian Residents

For Australian residents, you must lodge tax return documents if you have any tax deductions to avail of your payable tax. Furthermore, if your income exceeds the tax-free threshold or you have income from assets, investments other than your current job. Also, if any of your payments were already tax-deducted, especially for independent contractors or people who work on a temporary basis.

Furthermore, suppose you’re planning to leave Australia for at least one fiscal year. In that case, you’d have to lodge tax returns and adequate paperwork for your departure.

Non-Australian Residents

So, you might wonder how do tax returns work for non-residents in Australia? It’s not complicated at all. Non-residents, they must lodge tax documents for any amount of money they make. However, they must be working in a proper job in Australia to be eligible for it.

However, if your only income from Australia was investments for non-residential projects or you’re a working holidaymaker (417 or 462 visas) you still must lodge any tax return documents. In essence, every taxpayer deriving income in Australia must lodge a tax return, whether they are receiving a refund or not is irrelevant.

Once you fulfill the requirements to be considered an Australian resident, you might be eligible to apply for tax deductions based on the tax you paid on your time as a non-resident. However, these involve some technicalities and might not be available for everyone.

How to Lodge Tax Returns

Filing tax returns can seem a bit complicated at times due to their nature. Firstly, you must make sure you have all the documents prepared and ready before the end of the fiscal year (30th June). 

Firstly, you can use the tax return tool to determine whether you’re eligible for tax returns or not. Make sure to put accurate and correct information for correct results. Afterward, if you’re eligible, you must submit your documents.

The simplest way to lodge tax returns is by using the myTax section of the myGov app. You have to register at myGov and access the myTax section. Afterward, you can submit the necessary documents, attach the required paperwork, and fill the form for a seamless submission.

Otherwise, you can also collect a tax return form and fill it up manually. Once you’ve filled it up, you can send it to the necessary authority for evaluation. Although this is a bit more tedious, you can use it if you don’t have access to soft copies of certain documents. 

For a more secure option, however, you can reach out to a tax accountant for help. They’ll manage all your necessary taxation papers at once. From making tax-related documents to making essential applications, a tax accountant will do everything for you.

However, you must ensure that you’re investing in the right accountant. Your accountant needs to have the necessary certificates and accreditations to be eligible to deal with your paperwork.

When Are Tax Returns Due for Individuals in Australia?

As with most queries tax-related in Australia, the answer depends on several factors, but here are a few key things to keep in mind for the 2021 tax year which ends on 30th June 2021.

If you are lodging directly with ATO

So, if you intend on preparing your own tax return through the Electronic Tax Pack in myGov, your return is due to be lodged on 31st October, or given 31st October falls on a Sunday this year, 1st November!

Also, if you correctly file your own tax return, and the ATO does not raise any queries, you will likely receive your Notice of Assessment over the next 28 working days after the tax return has been lodged. If you are due a tax refund, it will hit your bank account around the same time as the Notice of Assessment. On the contrary, if you have a tax payable, the Notice of Assessment will tell you the payment date along with payment details for an efficient transaction. This could change based on several things, but generally, it should be paid within 4 weeks after the Notice of Assessment is issued.

If you lodge through R T Accounting & Taxation Services (Registered Tax Agent)

If your Accountant, who is a registered tax agent is lodging your tax return on your behalf, if you have a good history with the ATO, you could receive a large extension on both your due date for lodgement and payment compared to those lodging by themselves. R T Accounting & Taxation Services have a very good lodgement history with the ATO and unlock the full range of extensions for our current clients as well as any future clients.

Most individual tax returns will be due around mid-May 2022, which is close to 11 months after 30th June 2021. However, some individual tax returns will be due at the end of March 2022 as those who often have a tax payable at the end of the year as opposed to a refund will be among those affected. This date usually only applies to those who have made a substantial income from sole trader, investment, or business income where the tax does not periodically tax out during the year as it would for those on salaries and wages.

Regarding refunds and payments:

  • Tax returns tend to be processed within 5 to 7 days of lodgement by registered tax agents, and usually the refund will be received within that time frame also should there not be any additional ATO queries.
  • If you have a tax payable, it will rarely be due prior to February 2022, and often it is some time in the first week of June 2022.

So, there are some definite benefits to have a registered tax agent lodge a tax return on your behalf. It would primarily be beneficial to those with tax payables as they essentially have a year from financial year-end to pay the liability. This can help with cash flow for your business or yourself.

If you have a poor lodgement history?

If you have a poor lodgement history with the ATO, your return will be due 31st October 2021 regardless of if you lodge through a registered tax agent or lodge it yourself. Your tax payable, if applicable, will also be due that same day also.

Need an Extension?

If you would like to qualify for an extension to lodge and/or pay, let alone mentioning ensuring that you receive any deductions you are entitled to, as well as lodging correctly with a relatively lower risk of ATO queries, you will need to be on our client list before 31st October 2021. If you have a historically poor lodgement history and this return is due by 31st October, we can help lodge your return before this date so in the 2022 financial year you qualify for the lodgement extensions.

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Professional Services For Your Business

What You Need To Know When Hiring Professional CFO Services For Your Business

Professional CFO Services

CFO provides affordable, professional services to individuals and small businesses in Australia. Based in Eastern suburbs, we blend experienced business knowledge with tax and accounting subject matter knowledge to bring these highly specialized services to a personable and personal way. We work hard to exceed your expectations and are committed to exceeding your expectations by providing cost-effective professional services with a personal touch. From day one, we understand that our goal is to work as closely with you as possible to give you professional tax, accounting, and general business advice from beginning to end.

Whether you’re looking for CFO professional services to handle the complex internal controls of your business or just a simple accountant, we’ll find the perfect match for you. Many people hire a CFO to handle their financial affairs because they understand that an accountant doesn’t have the same level of technological expertise. By contrast, a CFO understands how to use computers and the Internet to conduct business. The CFO also has extensive knowledge of payroll, profit & loss analysis, and financing. In short, a CFO is a go-between for you and your tax and accounting departments.

How Do You Select the Right CFO Professional Services for Your Business?

Budget

When selecting a CFO service provider, you must first determine what your budget is and then determine what the specific requirements of your business are. You will want to hire a CFO that not only has the ability to handle your financial affairs but also one that will put the needs of your business ahead of their own.

Time & Money

When you begin to develop your budget, ask yourself how much time and money you’re willing to invest in hiring a CFO. Are you interested in outsourcing services? Outsourcing services are often less expensive than hiring an in-house CFO and this can save you valuable time and money.

Experience

If you decide to outsource your CFO needs, be sure you choose a company that has ample experience in the field. Make sure the company has managed accounts, finance and internal controls. Look for a company that specializes in outsourced CFO services because this type of account requires a unique set of skills and experiences. A CFO that is experienced in an outsourced CFO service will understand all of your company’s needs and will have the ability to serve you effectively.

Solid Reputation

The company you select should also have a solid reputation within the industry. Ask friends and business associates if they have used the services of a CFO and if they are happy with their results. If they are not satisfied, then look elsewhere. You don’t want to waste money and time on a company that will not provide you with the services you need and deserve.

Benefits of Hiring CFO Services in Eastern Suburbs, Sydney

There are several benefits to hiring a CFO. They will provide

  • significant support during times of trouble or turmoil within your business.
  • Increase cash flow and improve profitability.
  • Ensure that your business is efficient from an accounting standpoint
  • Implement cost cutting measures.
  • Analyze the operations of your business
  • Develop a game plan for increasing sales and profits.
  • A CFO can help you acquire new business so that you can maximize your potential.

Where to Get the #1 Professional CFO Services in Sydney?

As now you have understood the advantages of professional CFO services, You are looking for Professional CFO services in the Eastern suburbs of Sydney. RT Taxation & Accounting will be the best firm to outsource the CFO services.

Why RT Taxation?

  1. Highly Professionals
  2. 11 Years experienced
  3. Best experts at accounting & taxation
  4. #1 Accounting consultant in Eastern suburb
  5. Cost Effective

Conclusion

The first step when choosing a CFO service is to do research online. You can find plenty of service providers on the Internet and learn about their strengths and weaknesses. Then, contact a few of these companies and evaluate the level of their professionalism. You may wish to even schedule a consultation with the company you select in order to learn more about their business and their experience. Hiring a CFO is an important decision and it is important to hire the right professional services for your business.

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Virtual CFO Services

How Virtual CFO Services Can Help Your Business

Virtual CFO Services

Virtual CFO services are certainly something that your company must consider. There are lots of benefits, including being able to have a CFO who has extensive experience and the capability to bring new ideas to the team. If you’re ready to hire a virtual CFO, just contact CFO Network for more information.

Most businesses today have not been able to completely outsource their accounting needs. There are many reasons why this is the case, but the bottom line is that there simply isn’t enough time in the day to be able to cover all of the various responsibilities related to accounting. In addition, the process of hiring an accountant to take care of all of these responsibilities can be costly. Instead, many businesses turn to virtual CFO services to help out. With all of these responsibilities taken care of, the company can now concentrate on what they do best: running the business.

Here is How Virtual CFO Services Can Help Your Business

As previously mentioned, there are several benefits to hiring a virtual CFO. Not only can this individual do a better job handling the financial aspects of your business, but he can do it while being in a different province of the country. This is beneficial for a few reasons. If you are based in Australia and if you are operating businesses internationally, you have a number of concerns that must be addressed.

In Depth Analysis of Your Business

Hiring a virtual CFO to help out means that the individual will be located where your business is as well. For businesses that have offices in multiple provinces, hiring the right individual to handle your accounting can be extremely important. Virtual CFO services can report on your cash flows, your profit margin, your expenses, and other important items. Because of the variety of reports that the company can provide, you should be able to get an in-depth analysis of the operations of your business.

Getting Various Level Accountant Expert

Of course, there are many other benefits that come with using virtual CFOs. There are actually three types of accountants that are typically preferred by small and medium-sized businesses. There is the certified public accountant (CPA), the independent certified public accountant (IPA), and the hybrid of, which is a combination of the first two. In addition to being available in any part of the country, preferred CFOs are typically available in high-level financial positions. For instance, the top financial officers at large corporations are typically required to be CPAs. In addition to that, most preferred for also have high-level experience in the fields of banking, insurance, investment, and more.

High-Level of Financial Strategy Services

One thing to keep in mind when selecting preferred for is that they can provide a high level of financial strategy services. The preferred cfo can help businesses develop and implement their overall financial strategy. This includes mergers and acquisitions, asset management, capital budgeting, and more. The financial strategy services that a virtual cfo can provide can help businesses improve their cash flow, customer service, productivity, flexibility, and market share. This is why it is important for you to find a good, experienced, virtual CFO.

Growth-Stage Economy

Finally, hiring the services of a virtual CFO can also be a great idea if you are in a growth-stage economy. Growth-stage businesses require fast execution, customized solutions, and a high level of communication with accounting personnel. This is why it can be a better idea to hire the services of a full-time CFO rather than hiring individuals full-time who do not have the necessary skills and knowledge on accounting issues for your growing business. The cost of hiring a full-time virtual CFO can be significantly less than hiring an individual full-time accountant.

Conclusion

In conclusion, businesses can use virtual CFO services in many different ways. Whether it is to improve cash flow, increase customer service, reduce costs, or address any other accounting issues, businesses need to consider all options when deciding on hiring a full-time CFO. It is up to the company to carefully consider all of the pros and cons of hiring a virtual CFO versus hiring an in-house full-time CFO. Keep the above information in mind as you make your decision about hiring a virtual CFO.

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What is a Small Business Income Tax Offset?

What is a Small Business Income Tax Offset?

Small Business Income Tax Offset


The small business income tax offset (or also referred to as the unincorporated small business income tax offset) may decrease the tax that a company pays by as much as $1,500 per year. The offset is calculated on the amount of tax paid on business income alone. In general, the smaller the business, the more the business will be eligible for the tax break. It is important that you keep all these facts in mind so that you can properly take advantage of the offered tax benefits. In short, the more you can save on your taxes, the more you can invest and thereby increase your wealth.

The advantages of the small business tax offset

You may be able to

  • lower your taxable income;
  • increase your cash flow
  • take advantage of special tax breaks
  • write-off your interest paid on your investment along with a tax reduction.

Lower Taxable Income

There are several ways by which you can lower your taxable income and/or increase your cash flow. These include:

  • Increasing your share of retained earnings
  • Increasing the amount of working capital
  • Using non-deductible expenses on accounts receivable and inventory
  • Reducing the cost of operating overhead
  • And reducing your service costs.

Basically, you can avail of a tax reduction if you have more cash than you need to cover your expenses. If your business generates a large part of its income from customers, then you can easily get a tax reduction when selling your goods and services.

What is a Small Business Income Tax Offset

Tax Burden

You can further reduce your tax burden by maximizing the number of deductions available to you. These include itemized deductions, standard deductions, and tax credits. You must however understand that these deductions are only available to you if you itemize your deductions, qualify for the itemized deduction, and attain the maximum standard deductions allowed for your filing status.

Tax Credit within Corporate Structure

You can also take advantage of the small business income tax offset by claiming a tax credit within the corporate structure. This means that all profits made by your business as a sole trader will be fully credited as a deduction. Your small business entity can claim up to two personal tax credits within the same year. However, there is a limit of one personal credit per year for sole traders. You can increase this amount by making sure that all of your employees or members in a formal organization or partnership benefit similarly to how their counterparts in a sole trader unit would.

Other Tax Deductions

There are also many other tax deductions available to you as a small business entity. Most of these deductions require an itemized list of expenses and incomes and prove helpful in showing that you spent less than your income to earn your expenses. Some examples of deductions to use at the small business income tax offset include the regular expense deduction, charitable contributions, and state and local taxes, as well as mortgage interest and property taxes. There are many other deductions you can choose from, but they are generally more complicated to understand. It is best to consult a professional before deciding which deductions to use.

What Small Business Income Tax Offset

The small business income tax offset allows you to include interest paid on mortgages, as long as it was not included in your taxable income. You can include dividends received from equity investments, but you need to list the portion of the dividends that were included in your taxable income. Business casualty losses may also be included in your income when applying the offset, depending on the type of loss. Casualty income is not usually included in the offset portion of the deduction; however, you can claim deductions for personal injuries and similar expenses. A casualty loss is any financial loss resulting from theft, destruction, or damage of your vehicle or other property.

Where to Find the Best Taxation Services in Sydney?

If you are looking for the best quality taxation consultant or services provider, then RT Accounting and Taxation will be the perfect company for you. RT taxation has a long experience and professionals in this industry. So, If you are looking for any sort of taxation consultant or business tax return services, Contact RT Taxation.

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Tax Brackets for Small Businesses

Tax Brackets for Small Businesses

Business Tax Brackets

Business tax brackets are a way of calculating profits and tax payments for businesses. A company’s tax burden can be calculated using different methods depending on its earnings and cash flow. Business tax rates can also be determined by taking certain business variables into account. These include depreciation, taxes, and statutory charges.

What are Business Tax Brackets?

Business tax brackets are determined by taking one or more business factors into consideration. These include the amount the firm makes in profit, the total number of employees, and its geographic location. All corporations Tax Rate 2021/2021 must pay a specified amount of taxes on all profits earned by the company. This includes the gross income of the firm.

Income from the sale of property and accounts receivable, as well as gross receipts, must be reported by a corporation. Also included in these reports are the payments made by customers to the firm for goods. A firm may report any part of its gross income which is derived from sources outside the United States. Examples of such sources are dividends paid by shareholders, gifts, advances, and property sold.

Tax Bracket Systems in Australia

Most of the countries that a firm has its operations in have progressive tax systems. Consequently, as income is earned by a corporation, more tax brackets are paid overtime. The rate may increase if a company makes more sales or takes on more employees. Also, if a share of the firm is owned by an individual, dividends may also be taxed differently. In general, though, most small business owners are advised to get their companies’ tax brackets before investing so they don’t end up paying too high a tax due to corporate status.

This can greatly reduce a company’s ability to offset losses and therefore lead to hefty tax payments. Because most small businesses rely on borrowed money to finance operations, owners often have little choice but to pay the full amount of state and local taxes. In addition, because many businesses have only one location, they are frequently required to pay local taxes even if they operate out of state. Business owners, therefore, need to do all they can to minimize their taxable income.

IRS Services

All salaries paid to employees must be reported to the Internal Revenue Service. This includes any commissions paid to employees. All revenues acquired by the business and any excess must be subtracted from salaries to calculate the taxable income of a company. All net profits must be given to the appropriate tax authority.

Because of these factors, many people wonder whether a large corporation truly needs to file a form with the IRS in order to take advantage of the small business tax system. The IRS states that it merely requires information that would be available to any person. This means that virtually anyone can obtain the information necessary to calculate the business’ income tax liability. Many small businesses and sole proprietors have no desire to spend time filling out additional forms with the IRS. They prefer to keep things as simple as possible and pass on the required information to the tax authority without further hindrance.

Conclusion

Regardless of the tax type chosen, every business owner must remember that income and expenses must be properly estimated for tax purposes. This means that an honest business owner will not simply deduct expenses from income without ensuring that the amount of income is sufficient to cover those expenses. Every business owner should also remember to make sure all required tax deductions are properly claimed. Doing so can help ensure that a small business owner doesn’t owe more money to the government than he earns.

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How Often Can a Business Be Audited by the ATO?

How Often Can a Business Be Audited by the ATO?

In Australia, the ATO usually conducts audits on businesses every 3 years, or if their data matching system triggers warnings that returns may be incorrect. If the tax returns contain incorrect information or the ATO finds that the figures do not meet GST obligations, the ATO may choose to audit your business immediately.

Due to the current pandemic, ATO has been cracking down on businesses and as a result, more audits are being performed than ever before to ensure every entity is paying its fair share of tax. The process is a stressful and time-consuming process that is best avoided by simply lodging returns in a correct and precise manner.

Common Ways to Trigger an Audit

What these triggers show is that tax compliance – annual income tax returns – are much more than a routine compliance process. It is the main way they interact with the ATO and manages their risk of being selected for audit.

Note that those businesses, who demonstrate best practice, will have an active tax risk management process in place involving both senior management of the business and their key external advisors such as those clients already with R T Accounting & Taxation Services. You can add significant value by being proactive in looking for (and addressing) likely audit triggers. Below are few ways businesses trigger an ATO audit.

Have out of normal Financial Performance not in line with your industry

  1. The ATO has benchmarks and data matching software to compare your business entity with others in the same industry. If you are inconsistent with the industry you operate in, this can raise a red flag with the ATO and in turn, trigger an audit.

Not paying the correct super to your employees

  1. If employees complain to the ATO that they haven’t been paid the correct super or nothing at all, this is a well-known way to get an Audit from the ATO. Most cases begin with a check of the employer’s superannuation obligations and snowball into income tax, GST and FBT if the superannuation obligations were found not to have been met.

Variances between Tax Return and BAS

  1. If there is a variance between the income amount you reported in your BAS’s during the year and what you report on your final tax return, then the ATO may review you accounts to check which amount is correct.

Large fluctuations between years

  1. This one is a little easier to manage currently as COVID has resulted in many businesses showing large discrepancies between their 2019 returns and their 2021 returns. However, be prepared for an ATO inquiry if it doesn’t match in line with other businesses in the same industry.

Have International Transactions

  1. Any entity who deals internationally should seek a tax agents’ advice when dealing with international companies as legislative changes could increase potential risk in getting audited.

Consistently lodge tax returns late

  1. It is important to lodge and pay your obligations to the ATO on time. It goes without saying, that if you regularly lodge and pay returns late then the ATO will submit enquiries about the reasons why you aren’t lodging these items on time.

Consistently show losses

  1. If you have recorded a loss in 3 out of the 5 years the business is operation, the ATO will likely want to investigate these.

Own Motor Vehicles, but don’t lodge an FBT Return

  1. A common mistake by small and medium sized businesses is to buy a car in their company’s name. The ATO have a data matching partnership with the state and territory motor vehicle registries to outline what cars have been purchased under whose name.
  2. It is generally expected that these cars in the company’s name will be used for private purposes at some point, so if the company or trust fails to lodge an FBT return or include Fringe Benefit Employee Contribution in the tax return, the ATO audit is likely to be knocking on your door sooner or later.

Get in Touch with Us!

Nobody wants to be audited by the ATO. The Australian Taxation Office (ATO) and the audit are usually two of the most dreaded phrases for Australian SMEs. However, these are a few tips and tricks and some insightful, accurate and consistent advice we want to share with you to make any interaction with the ATO less stressful for you.

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Small Business Tax Guide

Small Business Tax Guide

The end of the 2021 tax year has already come, so it is important to review your small business strategies to help you maximise your returns and minimise your tax payable come June 30th, 2022. Now is the perfect time to review your expected taxable income (assessable income less allowable deductions) for the past financial year 2020-21, as well as your projected taxable income for 2021-22, as these two key figures will help form a base of your tax planning strategy.

Here are a few tips if you are expected to have a higher income in the current financial year, compared to the next financial year projections.

Get in contact with your local Accountant at R T Accounting & Taxation Services to consider the following steps:
  • Prepay some of your 2021-22 expenses including.
    • Rent
    • Insurance
    • Business Subscriptions to professional associations before June 30th, 2021, as up to twelve months of the following year’s expenses can be deducted in the current tax planning year provided you pay the cost upfront.
  • The instant asset writes off of up to $150,000 has been heavily publicised until now and has been extended to June 30th, 2021, provided the asset was bought and first held ready for use prior to this date, so if you need to buy a new car for the business, now would be the time to do so. Be wary, however, as the moment you use a company car for personal use, this invokes a fringe benefit payable by the company, so it is best to contact your accountant at R T Accounting & Taxation Services to see whether this is right for your business.
  • Reviewing and perhaps even postponing some of your client invoicing for the current tax planning year so the income is then reported in the 2022 tax year.
  • Topping up your voluntary superannuation contributions and making the payment prior to June 30th, 2021.
  • This item is not done nearly enough by many small businesses, but it is very important to constantly review your trade debtors and write off any unrecoverable debts as you do not want to be paying tax on income you will not receive.
  • If you are in the maiden year of your business, deducting any start-up expenses you incurred, such as obtaining legal and/or financial advice on your business structure along with any fees relating to the setup and establishment of your business will reduce your tax payable for the 2020-21 tax year.

If you are expecting to have a higher income in the 2021-22 tax year, you should get in contact with us to discuss:

  • Bring forward any client invoices into the 2020-21 tax year for work that will be carried out in the 2021-22 tax year. Having clients pay your invoices by June 30, 2021, will help reduce your taxable income in the 2021-22 tax year where you are expected to have a higher assessable income.
  • Paying your expenses on their due date as opposed to paying them early and getting the deduction in the tax year where your assessable income is expected to be low anyway.
  • Postponing the purchase of any assets you may require in the 2020-21 tax year into the 2021-22 tax year. However, it is important to note that instant asset write off rules can change in the 2021-22 tax year so get in touch with us to help guide you through the process.

The most important tip we can give you is that you should avoid spending on business assets for the pure sake of claiming the tax deduction. In most cases you will be paying $1, to save 26 cents in tax (based on the small business tax rate). It is simply not worth buying these items as it means less net money in your pocket. Everything you purchase for the business should have a purpose in enhancing your business to be the best it can be.

Additional Tips for Small Businesses

GST Cash Accounting

Ask yourself this, why and how should I pay GST on income I have not yet received? If you do not know the answer to that question and are on the accruals-based GST accounting method, it’s time to get in contact with R T Accounting & Taxation Services to change your accounting for GST to cash basis rather than accruals. GST Cash Accounting is also much better for your overall cash flow.

Instant Asset Write-Off Vs Depreciation

The whole idea of starting up a business is to grow and make more income over time. You could take full advantage of the Government’s instant asset write-off scheme mentioned earlier and claim the deduction in the current tax year, potentially reducing your tax planning significantly, or you can choose to depreciate the asset over its useful life and claim a portion of the asset over several years. What we are doing is reducing your taxable income by a smaller amount over the years as opposed to taking the full deduction in one year. This is very beneficial for those small businesses in high-growth industries.

Is Your Information Correct & Up to date?

Having the most accurate and current information is another key aspect of tax planning that can help you minimise your tax payable as well as help us, your accountant to help you make more informed tax decisions. This can include:

  • Ensuring the logbooks for your company vehicles are correct and up to date. You will need to start a new logbook if your current one is more than five years old anyway. It is often best to create a new logbook every year to get the true cost of operating your business vehicle. There are many free apps that you can use to track mileage of your vehicles.
  • Ensure you do your stock take as of 30th June 2021 is your business trades with stock.
  • Accounting for private use on business assets in your GST returns. You cannot claim GST on private expenses, so if you use your car for 20% private use for example, you will need to adjust your GST on expenses component accordingly to factor in the personal use.

Been Affected by COVID-19?

R T Accounting & Taxation Services are here to help you in these tough times as we can help liaise with the ATO to:

  • Give you extra time to pay your debt or lodge tax forms such as activity statements.
  • Help re-construct tax records that are lost or damaged.
  • Setting up payment arrangements tailored to your individual circumstances including an interest-free period.
  • Remitting penalties or interest charged during the time where you have been affected.
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Investment Rules for Self-Managed Super Fund

Investment Rules for Self-Managed Super Funds

What is a Self-Managed Super Fund?

Super Fund is a kind of mutual fund, which has been actively managed by the administrator or the manager. Self-managed funds are generally less risky than actively managed funds and have a number of advantages over them. They can be invested in various types of assets, including government bonds, stocks, and so forth. Super Fund Investment Rules lets you know how to invest in Self-managed Funds in the most suitable way.

Self-managed super funds are usually more liquid than actively managed funds. Because of this, the investment options can be explored to a greater extent. These investment plans can also be designed to meet your own requirements. However, there are certain rules that you must observe in order to follow these investment plans. These rules include the amount permitted to be invested, annual income, minimum balance amount, and maximum drawdown amount. The purpose of these rules is to provide investors with a clear idea about the various investment options available to them and to make investment decisions according to their requirements.

The Main Aspect of Self-Managed Super Fund

The most important aspect of any investment plan is that the money should be used for its intended purpose. If the purpose is not fulfilled then there will be no profit from the investment plan. Therefore, if you are planning to make a long-term investment plan then only unqualified securities like bonds, shares, and so on should be included in the portfolio. If you are planning to make a short-term investment then you can include equity instruments like common equity or preferred stock, government bonds, corporate bonds, and so on.

Rules of Self-Managed Super Funds

 Invest a Limited Amount of Money in Each Investment Option

The rules allow you to invest a limited amount of money in each investment option. For example, you cannot make a single purchase of $10 million worth of the company’s common stock in order to create a diversified portfolio. Your portfolio must be selected after considering the risk factor as well as the potential growth of the portfolio. There is an allowance of up to 25% of the total amount invested in each such option. The rules allow you to stop the investment if the conditions do not favor your investment plans.

Allow You to Re-invest a Portion of Your Funds

Another rule is that the rules allow you to re-invest a portion of your funds. However, this amount is deducted before calculating your annual return. This amount of investment is considered as pre-tax income. You are allowed to invest a certain amount of your annual return towards paying off any debts of the fund.

Lifetime Cap

The rules state that a person cannot select a self-managed fund if his or her net income is less than a prescribed minimum. This is considered a lifetime cap. A person who is retired and living on a pension can also make use of the fund. Such a person may also contribute to the fund but his contributions are not subjected to the lifetime limit. This way retirement income is tax-deferred till such time that the investor withdraws from the fund.

Specify the Rate of Interest that One is Eligible For

The rules on investment also specify the rate of interest that one is eligible for. One can opt for a variable rate of interest, fixed or flexible rate of interest. This is necessary so that you know whether your investments are yielding good results. If you opt for an equity mutual fund, it is advisable that you invest small amounts. However, if you choose a balanced fund, you may also opt for higher rates of interest.

Why Do You Need to Consult an Accounting Firm Before Investing?

There are a lot of valid reasons to consult with an accounting firm before investing in a Self-Managed Super Fund. RT Taxation and Accounting is such a firm to guide you in the self-managed super fund’s investment. Then why late? Contact RT Taxation & Accounting for the consultation to get the best return of investment (ROI)

Conclusion

While investing in a self-managed fund, you should remember that the returns depend a lot on your choices and the type of investments you have chosen. These investments are designed to generate high returns. Thus, one should be careful about the type of investments, the rates of interest, and the rules pertaining to the management of the fund. Only after careful consideration should one go ahead with the investment.

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