While there are many parts of this years’ Budget that apply to future years, we have summarised below the key changes you need to know about for the next 12 months.

There are 3 key areas we would like to make you aware of.

LOWER TAXES

Tax cuts were the headline act of this year’s “back in black” (a forecast return to surplus) bonanza.

The government has announced immediate tax relief for low and middle income earners (earning from $48,000 to $90,000) of up to $1,080 for singles or up to $2,160 for dual income families to ease the cost of living.

If the Coalition Government is re-elected, then this means immediate cash back to individuals in July 2019 when they lodge their tax returns.

The Coalition will also be lowering the 32.5 per cent rate to 30 per cent in 2024-25, increasing the reward for effort by ensuring a projected 94 per cent of taxpayers will face a marginal tax rate of no more than 30 per cent.

INSTANT ASSET WRITE OFF

Smaller businesses (income under $10 million) will be able to immediately deduct purchases of eligible assets costing less than $30,000 from budget night 2 April 2019 up until 30 June 2020. This has increase from the previous amount of $25,000, which if legalisation is passed, will approve a deduction of up to $25,000 from 29 January 2019 to 2 April 2019.

Medium sized businesses (income from $10 million to $50 million) will also be able to immediately deduct purchases of eligible assets costing less than $30,000 from budget night 2 April 2019 to 30 June 2020.

SUPERANNUATION

Fortunately, super hasn’t been tinkered with too much this time.

The government will allow voluntary superannuation contributions (both concessional and non-concessional) to be made by those aged 65 and 66 without meeting the work test from 1 July 2020. People aged 65 and 66 will also be able to make up to three years of non-concessional contributions under the bring-forward rule.

Those up to and including age 74 will be able to receive spouse contributions, with those 65 and 66 no longer needing to meet a work test.

NEXT STEPS

We’re here to help you! If you have any questions about how the 2019 Budget affects you – please contact our office and one of our expert accountants will help you!

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This may happen if you:

1. Don’t lodge your BAS’s on time; or
2. Don’t lodge your payroll each week using Single Touch Payroll (STP); or
3. Don’t properly withhold a tax amount from a payment before you pay it to an employee or a contractor.

Make sure that this doesn’t happen to you!

WHAT HAS CHANGED?

From 1 July 2019, you can only claim deductions for payments you make to your workers (employees or contractors) where you have complied with the pay as you go (PAYG) withholding and reporting obligations for that payment.

If the PAYG withholding rules require you to withhold an amount from a payment you make to a worker, you must:

• withhold the amount from the payment before you pay it, and
• report the amount to the ATO.

Any payments you make where you haven’t withheld or reported the PAYG tax are called non-compliant payments. You won’t be able to claim a deduction if you don’t withhold any PAYG tax or report the PAYG tax to us. If you make a mistake and withhold or report an incorrect amount, you will not lose your deduction.

WHAT CAUSES THIS PROBLEM?

The deduction is only denied where no PAYG withholding amount has been withheld at all or no notification is made to the ATO, either in a Business Activity Statement (BAS) or a Single Touch Payroll (STP) pay event.

WHAT DO YOU NEED TO DO?

The approved forms for making a voluntary disclosure for reporting or correcting PAYG withholding obligations are the BAS or the STP pay event report.

If a taxpayer does not report their PAYG withholding using the STP pay event report they can still report using the BAS and not lose their deduction. A voluntary disclosure using the approved form can be made any time up until the ATO tells you they are commencing a review or other compliance activity.

NEXT STEPS

To ensure that you don’t lose your tax deduction for your employee or contractor payments, ensure that you lodge your BAS’s on time, ensure you lodge your STP events every time you pay wages, and ensure that you withhold the correct amounts from your payments to employees and subcontractors.

Please contact Wealth Definition today if you have any questions about these recent tax law changes.

We are here to help you!

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The Australian Taxation Office (ATO) is closing in fast on everyone who doesn’t properly declare their income and pay the correct amount of tax.

 

As your Tax Accountants, we want to help you be aware of what the ATO is doing and how you can protect yourself.

 

Click here for full article

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Fear of Failure

Earning and saving money from your salary is all very well. But setting up an alternative income stream from an investment portfolio can help you make the most of your personal wealth potential. So, what is it that holds people back from taking their first steps into investing? According to recent surveys, 70% of millennials would rather keep their savings in cash¹ instead of investing it and getting the benefit of compound interest. And one of the main reasons for their reluctance is their fear of losing what little money they have.

Fear is certainly one of the biggest reasons for avoiding the risks. Large or small, that come with investing money. And no-one has a magic wand to eliminate these risks altogether. But with advice from a professional who understands your financial circumstances and goals, you can get off to a successful start in investing that builds your confidence as well as your wealth.

Waiting for wealth

It’s all too easy to just wait for someone else to sort out your financial future. You might keep saying that you’ll start building your savings and wealth when that golden goose lays its egg for you. And that egg you’re counting on – whether it’s a higher salary, bonus or redundancy payout for your employer or a gift or inheritance from your family – may never arrive.

If this is the fairy story you’ve been telling yourself, it’s time to rewrite it with yourself as the hero. By sticking to a budget, coming up with your most important goals and creating a financial plan to help you reach them, you’ll soon become your very own golden goose.

The high price of inertia

We’re all busy people and we all have a comfort zone. And that’s why inertia can so often stand in the way of spending less and saving more. In fact, inertia is considered, such a big problem for personal financial security in the UK that a new Institute of Inertia has been established at the University of Sheffield to study behaviour that’s estimated to cost the nation £7.6 billion².

Inertia can mean spending more than you need to on your energy or grocery bills. It could also be stopping you from tracking down lost super and/or bringing together all your super savings in a single fund to save on fees. Or it could mean sticking with the same mortgage when you could be saving thousands in interest by switching. Whatever it is that you’re not getting around to doing to save money, having a financial coach – personal or professional – can keep you accountable in taking small steps towards big savings.

The lifestyle inflation trap

The “earn more, spend more” phenomenon has been dubbed “lifestyle inflation” and it’s something that can really get in the way of preparing for a better financial future. The dangers of behaviour that comes from lifestyle inflation are twofold. The first is what’s known as the Diderot effect³. This happens when you buy something new, stylish and beautiful and it makes all your other stuff seem shabby and old. So, you start to replace everything else as well.

The second issue is your new level of wealth can’t last forever. Even if you keep earning more a time is going to come when you’ll stop. We call it retirement and if you’re not saving and planning for it, the fall in your spending and standard of living is going to be very steep indeed. So, if you’re finding it hard to save even when you’re earning more, try looking in to the future and imagining how much you’ll be enjoying life when you must budget carefully to pay for food and other essentials, let alone buy anything new.

Winging it won’t work

Leaving your finances to chance won’t bring you the peace of mind that comes with prosperity. Having the money to back future choices – for your career, family and lifestyle – isn’t going to happen by accident. People who make it look easy have probably put in quite a lot of time and effort to ensure they’re in a good place financially.

If you’re naturally a happy go lucky kind of person you’re probably well-liked for your carefree generosity. Especially when you’re the first among your friends to open your wallet and pay the lion’s share of the bar or restaurant bill. Sticking to a budget doesn’t have to mean being stingy. It’s more a case of picking and choosing your generous moments so you can still cover your day-to-day expenses and put some of your money towards providing for your future.

Whatever obstacle you’re trying to overcome on the path to financial success, a financial planning professional can offer valuable advice on making changes to get you in control of your finances.

Contact us today for a free initial meeting with us, and we will give you a plan to make your business worth a lot more when you decide to eventually sell it.

Source: Financial Planning Association Money & Life

1. Nerdwallet, “Fear keeps millennials on investing sidelines”, Brad Sherman, 2 August 2016, https://www.nerdwallet.com/blog/investing/millennials-fear-investing/?trk=nw-wire_305_283020_24452
2. The University of Sheffield, “Britain’s psychological inertia contributes to ‘financial hardship’”, 23 September 2015, https://www.sheffield.ac.uk/news/nr/psychological-inertia-contributes-to-financial-hardship-1.510235
3. Lifehacker, “The ‘Diderot Effect’ Turns You into A Weak, Mindless Consumer,” Kristin Wong, 16 September 2015, https://www.lifehacker.com.au/2015/09/the-diderot-effect-turns-you-into-a-weak-mindless-consumer/

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

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Yes, we do provide traditional tax return and accounting services.  At Wealth Definition we don’t look at your business from just that historical perspective.  Instead, we actively work with you to develop your business and improve it as it happens. We want to work with you to help you achieve these goals:

• Increased business profit and cashflow
• Wealth Creation for education, holidays and ultimate retirement
• Protect your family and your assets
• Minimised taxation
• Less pressure and worry

We have a unique 5-STEP PROCESS that we use with all of our clients to give them peace of mind that their financial affairs have been cared for in the best manner possible.

#1 Asset Protection & Business Structuring

• Family Trusts used as asset protection vehicles.
• Secured Loan Agreements to protect the funds you have loaned into your business.
• Separation of the “risk” and “asset” areas of your business and personal assets.
• Estate Planning, including establishing your Wills and Powers of Attorney.

#2 Advanced Tax Planning

• Companies used to “cap” your tax at a maximum 30%.
• 100% tax deductions for notebook computers, mobile phones / PDA’s, and briefcases (one of each per year).
• Tax-effective Home Loans and Debt Recycling Plans (reducing your non tax deductible debt while at the same time maximising the interest you can claim on your tax return).

#3 Accounting & Compliance Services

• Financial Statements, Tax Returns, Business Activity Statements (BAS’s).
• We provide you with simple to use Checklists to put together the information we need to prepare your financial reports.
• Our plain English letters help to clearly communicate to you your business obligations and taxation responsibilities.

#4 Business Profit Improvement

• Strategies and tools to increase your business profits and cash flow.
• Business Valuations for Succession Plans and Insurance purposes.
• Cash Flow Forecasts and Strategic Plans.
• Systems and procedures (so that your business can run without you).

#5 Wealth Creation

As an Authorised Representative of Count Financial, Tony Fenwicke can provide you with wealth creation* advice in the following areas:

• Establishment of an Investment Plan
• Investment into Managed Funds and Shares
• Superannuation Advice
• Margin lending
• Personal Insurances
• Meeting your Retirement Goals
• Leases, Home Loans, and Business Loans are provided as a Credit Representative of Finconnect**

To get started with us, come in for a FREE initial consultation!  Contact Wealth Definition here.

*Financial planning services provided as an Authorised Representative of Count. ‘Count’ and Count Wealth Accountants® are the trading names of Count Financial Limited, ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 (‘Count’) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. **Lending services are Authorised by Finconnect (Australia) Pty Ltd ABN 45 122 896 477 Australian Credit Licence No. 385888 a wholly owned subsidiary of Count Financial Limited. Please note that any taxation and accounting services are not endorsed nor the responsibility of Count Financial Limited.

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Do I need business insurance?

Are you 2 or more business owners and need protection if something happened to any of you (either death or a non-death event)…. as you ALL are key persons to the continuation of the business. Are you concerned how you are going to fund acquisition of an exiting proprietors equity if he/she wish to leave or retire? Can an insurance lump sum help provide funding? How many insurance policies do we need? Who should own the policies and are the insurance premiums deductible to the business or the business owner (insured person)? Do we really need a buy-sell agreement or are their alternative solutions?

These are all questions that you need to consider! If you require assistance in formulating the best approach to your business insurance contact us now!

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In prior years, there were many changes to superannuation and small business taxation. This year’s Budget only had a few changes in these areas.

Here’s a brief summary of what the Wealth Definition team believes are the key changes that may affect many of our clients.

Taxation

Small business depreciation

The Government will extend by 12 months (to 30 June 2018) the ability for businesses with aggregated annual turnover less than $10 million to immediately deduct purchases of eligible assets costing less than $20,000, first used or installed ready for use by 30 June 2018. Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool (the pool) and depreciated at 15% in the first income year and 30% each income year thereafter. The pool can also be immediately deducted if the closing balance of the pool at 30 June 2018 is less than $20,000 (including existing pools). From 1 July 2018, the immediate deductibility threshold will reduce back to $1,000.

Increase in Medicare levy

From July 2019, the Medicare levy will increase by half a percentage point from 2.0 to 2.5 % of taxable income. Other tax rates that are linked to the top personal tax rate, such as the fringe benefits tax rate, will also be increased.

Lower threshold for HELP debt repayments

From 1 July 2018, a new minimum threshold of $42,000 will be established with a 1% repayment rate and a maximum threshold of $119,882 with a 10% repayment rate.

Disallow certain deductions for residential rental property

From 1 July 2017, the Government will disallow deductions for travel expenses related to inspecting maintaining or collecting rent for residential rental property. Also, plant and equipment depreciation deductions will be limited to outlays actually incurred by the investors in residential real estate properties. These changes will apply on the prospective basis, with existing investments grandfathered. Plant and equipment forming part of residential investment properties as of 9 May 2017 (including contracts already entered into at 7:30PM (AEST) on 9 May 2017) will continue to give rise to deductions for depreciation until either investor no longer owns the asset, or the asset reaches the end of its effective life. Subsequent owners will no longer be able to claim deductions for plant and equipment purchased by its previous owner.

Capital gains tax changes for foreign investors

From 7:30PM (AEST) on 9 May 2017, Australia’s foreign resident capital gains tax (CGT) regime will be extended to deny foreign and temporary tax residents access to the CGT main residence exemption. However, existing properties held prior to this date will be grandfathered until 30 June 2019.

From 1 July 2017, there will be an increase in the CGT withholding rate foreign tax residents from 10% to 12.5%, and a reduction of the CGT withholding threshold from $2 million to $750,000.

Taxable payments reporting

From 1 July 2018, the courier and cleaning industries will join the building and construction industry in needing to complete taxable payments reporting each year. More red tape!

Cash economy crack-down

The ATO now have an additional $32 million to target the cash economy. Expect more ATO audits with the data matching capabilities. Cafés, restaurants and other businesses that accept cash should ensure their point of sale systems have proper audit trails that match their cash deposits.

GST on new residential property and sub-divisions

In an approach designed to crack down on some property developers failing to make GST payments to the ATO, property developers will no longer manage the GST on sales of newly constructed residential properties or new subdivisions.  Instead, the Government will require purchasers to remit the GST directly to the ATO as part of the settlement process.

Superannuation

Contribute the proceeds of downsizing to superannuation for older Australians

From 1 July 2018, a person aged 65 or over will be able to make a non-concessional contribution of up to $300,000 from the proceeds of selling their home. These contributions will be in addition to those currently allowed under the existing rules and caps and will be exempt from the existing age test, work test and the $1.6 million balance test for making non-concessional contributions.

* This measure will apply to sales of a principal residence owned for the past 10 or more years and both members of a couple will be able to take advantage for the qualifying home. *

First Home Super Save Scheme

To encourage home ownership, voluntary contributions to superannuation made by first home buyers from 1 July 2017 can be withdrawn for a first home deposit, along with associated deemed earnings. Concessional contributions and earnings that are withdrawn will be taxed at marginal rates less a 30% offset. Under the measure, up to $15,000 per year and $30,000 in total can be contributed (within existing contribution caps). Contributions can be made from 1 July 2017. Withdrawals will be allowed from 1 July 2018 onwards. Both members of a couple can take advantage of this measure to buy their first home together.

Foreign Workers

There has been lots of news recently about the removal of the 457 visa program. Businesses that employ foreign workers on certain skilled visas will pay a levy that will be channelled into the Skilling Australians Fund. From 1 March 2018, Businesses with turnover of less than $10 million per year will make an upfront payment of $1,200 per visa per year for each employee on a Temporary Skill Shortage visa and make a one-off payment of $3,000 for each employee being sponsored for a permanent Employer Nomination Scheme.

Book in your End of Financial Year Meeting with us Today!

This is just a general summary of how the Budget may affect you. If you haven’t met with us yet, now is the time to contact us to arrange an End of Financial Year meeting, so we can help you limit your tax payments, discuss your goals and plans for the next year, and grow your wealth. Remember, we both need time to implement any appropriate tax savings strategies for you well before 30 June 2017.

General advice disclaimer

General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.]

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