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Q: Further to my philosophical rant about corporate tax rates, what does everyone think about individual tax rates??? Is the marginal tax system the best tax system??? are the rates and margins right? Should the wealthy end of town pay more? Do low income earners pay enough??? Is the current system of rebates and government benefits based on income too complicated?? (YES!!!) Should families be taxed as "families" not as "individuals"????
cheers
BC
A: Should families be taxed as families and not individuals?
Absolutely!!!
Brendan Curran
7 years ago
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Q: My parents live overseas and have offered to help with my home loan. If they were to pay something like $1,000pm do I have any obligations or issues in regards to tax?
A: Hi Maxine
There is no tax issue as the money received from your parents is merely a gift and not your income.
Hope this helps.
Regards
Suresh Rajani
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Q: I am employed full time and paid a salary.
On the weekend, I have been paid for photography services that I have provided. I have received $4000 so far.
How do I need to report this to the ATO? At the end of the financial year add this money to my annual income?
If so, is the tax rate 35%? Can I claim all expenses as tax deductible such as, travel, equipment etc.
Thanks
A: Hi Andrew
When you do the tax return for the 2018 financial year, you would need to report the $4,000 as business income and you can show as a deduction any expenses you incurred to earn that income, e.g. printing and stationery, advertising, travel, equipment (depreciation rules apply) etc. Your net income would then be added to your salary and wage and any other income and you will then be taxed on your total income (taxable income).
The extra tax you will have to pay would depend on your other income levels.
Hope this helps.
Regards
Suresh Rajani
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Q: Hello,
I am a software developer contractor for $700/day and my partner is not working at the moment. Can I hire her for $200 / day , is that legit ? What are the options (have her own ABN , need to pay super ) ?
Thanks
A: Hi Eugene
If she can help you with the work then yes you can hire her and there is nothing preventing you from doing that. If however you just pay her the wage and she doesn’t do any work, you might be seen as being involved in a tax avoidance scheme.
You will need to treat her like any other employee you would have had. So yes super, WorkCover, etc would be applicable too.
Hope this helps.
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Q: I am shortly going to be doing freelance writing in addition to my normal full time job. I have my own ABN. Do I need to include GST in my invoicing or does this apply only after reaching a certain level of income? If so, is that income purely from my business, or including the income from my normal day to day job?
A: Hi April
You will need to include GST if your ABN is registered for GST. Did you register it for GST?
You must register for GST if your annual turnover is expected to be more than $75,000.
GST (if applicable) will only be included on your ABN income. It’s not applicable for your wage related job.
Hope this helps.
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Q: I understand that the log book method, which you use your business klms traveled and multiply by 0.66c per klm = total allowable deduction in dollars. Does this log book method also incorporates all vehicle maintemce and repair costs or can i claim them seperatlry?
A: Hi Ric
The 66c per km you mentioned is the cents per km method whereby you are allowed to claim a maximum of 5,000 km and it includes fuel, repairs, etc.
With the logbook method, you add up all your motor vehicle expenses: Fuel, repairs, insurance, depreciation, etc and then apply the logbook percentage to determine your deduction.
Hope this helps.
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Q: We are considering whether to buy an established house, or a new home and land package. What are the risks involved when buying a home and land package? Any tips for doing this?
A: Hi Ansopny
The biggest plus point of buying an established house is that you see what you get. With a house and land package, you have to visualise how your house is going to turn up. It might be good on paper and in your mind but the end product might be different than what you may have pictured (for the better too at times).
Also the biggest thing about home and land package these days seems to be the fact that all the builders are too busy and so are their contractors and they are rarely keeping their promises they make about the completion timing (some of the big and reputable ones too).
Home and land package also has it’s set of advantages such as you having a say in some aspects of the layout and appliances, etc.
Also the stamp duty payable might be lower if you buy the land separately from the building contract.
Hope this helps as a start.
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Q: I am not a financial planner but I have always believed that being debt free would have to be a prerequisite to retirement.
What are your thoughts on this?
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Q: Hi, we are still catching up with our BAS payments from October and worried about the next payment in February. It is possible to get finance to help in case we need it?
A: Hi Sean
Depending on your history with the tax office, the ATO may offer you a payment plan to help you catch up with your tax debts. The condition being you will stick to the payment plan and meet your future tax obligations as they fall due.
Give them a call and you may be surprised that ATO is more helpful than people may make them out to be.
Hope this helps.
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Q: I would like to start a small online business I would like to know if this will affect our family benifit , a simple example.
I purchase a product for say $10 I then sell the item for $20 including free delivery which cost me $8 so I have only made $2 profit but I recieved $20 .
when I declare earned income to centerlink is it $20 or $2 ?
Regards
Paul
A: Hi Paul
Congratulations on you thinking to start a business. All the best.
On to your question. Yes it will affect your family benefit received if the business makes a profit.
In your example the income you will have to declare to Centrelink will be $2 but don’t forget you will have other business expenses - telephones, internet, etc and this can be claimed against your business income reducing the profit and thus your taxable income.
Hope this helps.
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Q: A client has recently purchased a new business. Should the preliminary expenses incurred such as legal fees, site valuation, stocktaking fees, web/domain and business registration fees be expensed in the P&L or should I capitalise those items in the balance sheet because they relate to setting up a new business?
Thanks,
A: Hi Sarah
You can create an account on the balance sheet called Business Start Up Costs and capitalise them. When the accountant does the year end, he/she would go through each item and be able to treat them appropriately and reclassify them as necessary.
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Q: in a trial balance for end of year, do I show the credit card opening balance or the amount spent on the credit card for the year?
A: Hi Richard
Its the balance that needs to be input as the trial balance is as the name suggests a balance as a particular date.
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Q: I am thinking of leaving a full time role to set up my own business but concerned about the initial cashflow. Everyone is telling me to go for it so I’d like to ask about finance and can I extend my home loan before starting the business. The unit is probably worth 500k and the home loan is $210k. Is this a good way to get started as I already have a number of clients in the waiting?
A: Hi Jacqui
First congratulations on the decision to start your own business. It is a very exciting time I am sure and all the best!
Most people do use up the equity in their homes to start a business as banks are not too keen to finance the startup of a business just on its own. So I believe it's the way to go.
Do have a budget and a cashflow projection as a start and you can adjust it as you go and things become clearer. Though things will rarely go to plan, it will help you keep measure of things.
Hope this helps.
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Q: I bought a property a few years ago through my self managed super fund, however at the time I was just short of the funds required to purchase so made up the difference and ended up with a small percentage ownership in the property. The superfund now has enough funds to buy my share out but I was told that I would have to sell the property to get my funds back which I don’t want to do. Why can’t I just sell the percentage of the property to the superfund so I can get back the money I put in?
A: Hi Carol
As a general rule a self managed super fund can't acquire an asset from a related party unless it's at market value AND is a listed security, a business property or if it does not exceed 5% of the total market value of your fund's assets.
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Q: I'm looking at an Income Statement. Inventory obsolescence is $990,000 while provision for inventory obsolescence is $1,133,000. Can you explain to me why the provision is higher than the expense account?
A: Hi Courtney
Without looking at the financial statements, the simple answer would be that the inventory obsolescence ($990,000) is the inventory that went obsolete in the reporting year while provision for inventory obsolescence ($1,133,000) is the value of the inventory the business expects to be obsolete (from the current inventory in stock) in the coming years. Though they can be linked, they are not one and the same thing.
Hope this helps.
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Q: Hi, my family sold a property overseas and want to send me money as a gift. Do I pay tax on money received as gift from an overseas account and is there an amount that is free of tax? Thank you!
A: Hi Joanna
There is no tax on money coming in as a gift.
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Q: Hi we are a family of 3, Mum, Dad & Daughter. We are going to run a caravan park which pays $350pw retainer plus 30% of income. (Average annual income is only $110,000 so we will get about $33k pa plus retainer).
We know we have to set up an abn but how would we do that so it shows each of us earns a third to reduce the tax?
A: Hi Debbie
You should be setting up a trust or company structure or a combination of both to run the business.
The business can pay each of you wages for the time put in and then in case of trust structure, you should be able to distribute the profits left in the business as they suit you.
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Q: My husband and I are starting a new business. We had to declare estimated salaries for employees for the rest of the financial year. We guess it might be approx 120k however now have decided to payroll all staff through an agency and staff will be covered by agency workcover. Will we still get a bill from workcover at the end of the financial year??
A: Hi Sarah
With WorkCover you pay estimate WorkCover during the year and at end of year you declare actual wages and reconcile what you had to pay with what you have actually paid.
If you had over declared the wages and overpaid the WorkCover, you get refunded the excess.
Hope that helps.
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Q: Hi just wanting to know if got shares for free and have now sold them for about $16000 what are the capital gains implications what is my cost base is it nil? Also I probably qualify for 12mths discount on the gain. Thanks in advance for your answers.
A: Hi Pal
Short answer: You will need to include $8,000 as capital gain income in your tax return. This will get added to your other income and you will have to pay tax on that.
Long answer: You would have made a capital gain of $16,000 and as you held the shares for more than 12 months you are eligible for for a 50% discount. This means you only have to pay tax on half the amount i.e. $8,000. Capital gain tax is not a separate tax and thus the capital gain you make gets added to your tax return and increases your taxable income. The tax you pay would depend on your other income.
Hope this helps.
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Q: Is a Quantity Surveyors Report required for a positive geared investment home ?
Was looking to get one done but now im confused as I've been told that i may not need one as the home is positve geared, will it be beneficial to get one done anyway?
A: Hi Oz
You have to be careful who you get told things by. Getting a depreciation schedule has nothing to do with positively or negatively geared property.
Short answer is yes it will be beneficial as you get a deduction against the rental income you generate now, reducing your taxable income and the tax payable.
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Q: My partner and I live together in my PPOR. The house is in my name but we both contribute to the mortgage payments which are in the form of a loan from my parents. We both pay the mortgage payments directly into the loan account.
Just wondering if the money he contributes is counted as taxable income? Could you break this down for me please?
Best,
A: Hi Jack
There is no taxable income here.
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Q: If there is a fuel rebate of per say 75.000
Do you add that into the 'Income' column when doing your financials?...My husband has had his aunt doing the Co financials the Co is in earthmoving they spend supposedly 170.000 for Fuel & Oil and get a rebate between 56.000 and 75.000. would that be classified as 'Other Income' which she has added onto the 'Trading Income' column
A: Hi Kartia
Assuming you are referring to Fuel Tax Credits here.
Yes Fuel Tax Credits are income and they need to be declared and disclosed as such.
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Q: Hi
I am a Director and co-founder of a small start up business. My business partner and I hold the shares 55 to 45 (me). My business partner is the Managing Director and invests 20 hours+ each week operationally. I invest around 5 hours. My question pertains to how to best capture the Directors' lost time in a business without revenue at this stage. Should we come up with a seperate agreement to pay out once profitable or journal in balance sheet?
A: Hi Sussane
The best way to capture directors' investment of time in the business would be to accrue director's fees via a journal entry. Say you have agreed that each hour you invest in the business is worth $100, if you have spent 20 hours in a week that would equate to $2,000. To accrue this you would debit directors fees account (profit and loss) and credit directors fees accrued account (balance sheet). Once the company has sufficient cash flow, the accrued directors fees can be paid out.
The above $2,000 would be counted as wages for purposes of Workers Compensation Insurance, so would be needed to be included in there too.
Hope this helps.
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Q: Hi, I have recently purchased half of the Family farm. For accounting/ bookkeeping purpose, is it best to set up a partnership or trust? Open to other suggestions
A: Hi Tammy
If you have already purchased the family farm then you already own it under some structure or in your own name. Changing that may result in possible stamp duty and capital gain.
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Q: I have been offered a job but need to get an ABN as that's how they pay just wondering what taxes I have to pay week to week as the job is using there truck there fuel and there insurances just need to know what I have to put aside each week?
A: Hi David
If your turnover is over $75,000 then you will need to register for GST, charge GST, collect GST and submit it to the ATO. If your turnover is less than $75,000, you don't have to register.
In addition to GST (explained above), the only tax you will need to provide for is income tax. Unlike when you are employed and your employer withholds PAYG from your pay, being self employed comes with the benefit of getting money before tax and the responsibility on yourself to set aside the amount to be paid to ATO later. You can however enter into a voluntary agreement for PAYG withholding with the company.
As a rough guide based on taxable income, below are figure of tax you would need to pay (including medicare and taking into account low income tax offset but not medicare levy surcharge):
$25,000 - $1,182
$40,000 - $4,947
$50,000 - $8,547
$75,000 - 17,422
$100,000 - $26,632
$125,000 - 36,382
You can plan according to your income and set the amount to be paid to ATO at year end when you do your tax return.
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Q: I need to ask about ways of reducing my taxable income and various deductions. I work for an outsource company who's head office is in Botany NSW but I am always onsite at clients presmises. Some days I am having to start work at Botany and then travel to the client (public transport both journeys). Am I able to claim a deduction for some of the public transport for this?
A: Hi Mark
Yes you are able to claim deduction for travel between your office and clients' premises. You can claim both public transport fares and taxi fares.
If you were using your own car instead of public transport to travel between your office and client's premises, you can claim that too.
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Q: My husband and I recently had a business which only lasted 18 months (wrong timing). We have poured alot of money into this business and find it hard to believe we will not receive anything back tax wise. We are not really sure how this works. Can somebody please explain this to me like i'm a 2 year old. Is he able to claim anything back through his personal tax?
A: Hi Natasha
What structure was the business run under? i.e. Sole trader, partnership, trust or company.
The type of structure used determines the recoupement of losses.
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Q: Business question... I'm thinking of leaving my employment and becoming a contractor. I think I have a handle on the things I need to be considering but would like to get some advice from people running their own business on how they found it starting out, what they didn’t expect and what they found work for them? Thank you
A: Hi Tony
Congratulations on thinking to start on your own.
Starting out is always exciting but can be very stressful and unrewarding at the beginning but it's always good to look at the 6 months from the start or 1 year from the start goals and work towards that day by day.
Some traps to avoid:
1. Giving out low prices to get new business
2. Not planning for tax and "spending" all money you receive. Unlike being employed where you get after tax income, when self employed you get the full lot and have to plan set aside money for tax
3. Over planning
4. Thinking that all will go to plan
What works:
1. Being genuine - don't over promise just to get new business
2. Giving yourself a break and not working yourself to the ground
3. Using the technology to your advantage
Hope this helps.
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Q: Hi… what are the benefits of buying an investment property in a family trust and what impact does it have on being able to get a loan?
A: Hi Oliver
The benefits depend on if the investment property is negatively or positively geared.
If the investment property is negatively geared and results in a trust tax loss then the loss is carried forward until the trust has a profit and then the losses are recouped. If held in individual name then negative gearing can be used to reduce your taxable income.
If trust has a profit scenario then it's beneficial as the profits can be distributed to various beneficiaries.
The discretionary trust also has a lower land tax threshold and since land tax is levied each year, this might be a sizeable disadvantage over the life of the investment property holding.
Hope this helps as a start.
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Q: This is about tax incentives - I currently live in a an apartment property that I have paid off to a degree but want to utilise the equity to buy a house. I understand that I can borrow 80% of the current properties value but unsure what sort of tax benefits I am going to be able to claim? Thanks in advance for your help.
A: Hi Aaron
First you will have to decide which property you will live in and what property you will rent out.
You will be able to claim against the rental income all the outgoings on the property. Outgoings such as council rates, water rates, insurance, interest expense, depreciation, rental agent fees, etc.
If your rental deductions are greater than your rental income (negatively geared property) then you will be able to use that to reduce your taxable income.
Hope this helps.
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Q: Just got my statement from my income protection which I was on for 5 months they didn't tell me I wasn't getting talked on it until my last payment in June .My question is I wasn't getting super or any allowances during the period and incurred medical cost whilst overseas when I returned to Australia had on going therapy is there anyway I can incorporate these into reducing my tax .I received 50.000 in the 5 months of which 20.000 was a lump sum .?
A: Assuming your income protection policy is outside super then any premiums you pay are tax deductible and any payouts you receive are taxable.
The net medical expenses tax offset is being phased out and from 2015–16, claims for this offset are restricted to net eligible expenses for disability aids, attendant care or aged care. I believe this won't apply to you.
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Q: Are repairs and maintenance to a fixed asset an expense or an increase in value to the asset?
If they are an expense, are they operating profit or non-operating profit.
Thanks in advance.
A: Hi Clive
Repairs to an asset are an expense.
Whether they are operating or non-operating depends on what the asset is being used.
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Q: I am keeping the books for a club. When I get an annual membership payment, is that an income or capital account?
Thanks in advance.
A: Hi Clive
Definetly Income.
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Q: My mum has a substantial amount of shares that were left to her by her father 840000 she is wanting to leave them to my sister and I in her will. She doesn't want to sell them as she said she would have to pay nearly half back in tax. as they were a lot cheaper when he bought them?. What happens with the price of them when left to us thanks?
A: Hi Tiffany
Will just point out a couple of things in general about your question without going into too specifics of your questions as need dates and a whole lot other things to be able to advise re tax.
1. Anything that was acquired before 20 September 1985 does not attract capital gain tax
2. If they were subject to capital gain tax she does not pay nearly half in tax. Say her capital gain was $300,000. She would get whats called a 50% discount on the capital gain i.e. she pays tax on only $150,000 because of this 50% discount it works out to be less than 25% of the total gain of $300,0000
Hope this helps as a starting point.
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Q: I have started a handymen buisness I am purchasing a vechile can I claim 100% of the gst back if I register for gst and Can i claim 100% of the value over a period of time for depreciation . The car will be used for both personal and buisness ?
A: Hi Alan
If you use a motor vehicle partly in carrying on your business and partly for personal use, you are generally entitled to claim a partial GST credit based on how much you use the motor vehicle in carrying on your business. You must keep a logbook for a 12 week period to determine your business usage.
The same applies to claiming depreciation i.e. only the business percentage of the total cost can be claimed as depreciation over a period of time or depending on the value of the car, it can be claimed as an immediate deduction using the tax office's small business concessions.
Hope this information helps.
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Q: Hi,
I am over 55 and am planning on withdrawing my uk pension pot, value approx £20,000, and bringing into Australia. I would like to keep half in cash and pay the other half into my Super. The pension has grow by about £8,000 since we became residents. My question is -will I pay any extra tax other than the 15% concessional tax if I pay £10, 000 into my super as a personal contribution ? Am I correct in thinking that the £12,000 value before coming to Australia will be tax free? Thanks, Karen
A: Hi Karen
I am not a financial planner so can't give you any financial advice but here is a link from the ATO on transfer of super from foreign funds https://www.ato.gov.au/Individuals/International-tax-for-individuals/In-detail/Super/Tax-treatment-of-transfers-from-foreign-super-funds/
You should seek help of a financial planner in your local area whom you can have a face to face meeting with and have a chat about this.
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Q: Hi,I am planning to set up a travel and international tour package services ,do I need to apply for any legal permission?
A: Hi Rashi
Travel agents do not need a license to operate any more. The Australian Federation of Travel Agents (AFTA) has however developed a voluntary accreditation scheme (ATAS).
You would however need to comply with regulations that all other businesses need to in regards to taxes, wages, superannuation, consumer laws and wights, etc.
I think the best way for you to start would be with a business plan i.e. put all that's on your mind on paper and then start from there.
If I can help you in any way, let me know.
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Q: Personal Services Income
Hi, could anyone help please? I have a question about personal services income. I have a new business as a sole trader repairing jewellery. Would my income be classed as personal services income? Thanks
A: Hi Karen
In all likelihood it would be classes as personal services income as when you are repairing jewellery, 50% or more of what you charge would be for your skill, labour or expertise.
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Q: Hi. i am buying a small business. Is is best tax wise , to get a business loan,or pay cash for the business , and get a loan for the vehicle required so i can claim depreciation?
A: Hi Paul
Firstly congratulations on your decision to buy a business and all the best of luck with the venture. There are so many things in play when it comes to your question but I will keep it simple.
You would be able to claim the depreciation for a business vehicle irrespective of it being purchased outright or via finance.
If you have the funds its always best to buy a business outright as interest on the loan is claimable but to claim the interest you have to pay the interest. So why pay the interest when you have the funds to buy the business outright.
Loan for business vs loan for motor vehicle - This decision would depend on the interest rate for the finance. Whichever mode of finance gives you the lowest rate should be used.
Hope this helpd
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Q: Hi, I’m interested in understanding the techniques people use to keep their staff motivated and interested. We are getting too many complaints from customers and it is starting to affect our business?
A: Hi Joanne
Start with reviewing the remuneration first. That is the first root of demotivation. Employees who believe they are not being remunerated enough would put a less than 100% effort.
Secondly - make sure that they are trained well. They should know how to do whatever their function requires them to do. The most common excuse for employees not doing something is that they dint know how to do it.
Thirdly - try to create a positive work place environment. This would need a sit down with the employees and telling them that things are not going well and as an owner you want to change things around and ask for their suggestions as to how this can be achieved. If they come up with ideas/suggestions, they are more likely to follow them than if your put it to them.
Fourthly - appreciate the time they out in your business. This is more than paying them wages. This is about showing them that you genuinely care about them as people. Things like a cake on their birthday (from the business), a day off on their birthday, Christmas bonus etc goes a long way.
Just a few things I could think of from the top of my head.
Hope it helps.
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Q: Today the RBA decided to leave the cash rate at 1.5%.
The cash rate has not moved since August 2016 yet the banks have repriced a number of their loans in Dec 16, March 17 and again in June 17. The three rate increases (most recent by 0.30% on interest only loans) will conservatively generate in excess of $150M in additional revenue annually for each bank.
We all, along with the federal government need to be asking why? It'd be good to generate some discussion.
A: Banks at the end of the day are businesses owned by shareholders who want the highest possible return on their investment.
As borrowers we may want to get loans at the lowest possible rates but as investors we want to have the highest possible profits for the banks. Their job is to balance the two out.
The banks are neither charities nor not for profit institutions and as long as there is demand for their funds, they will and should be able to charge interest rates determined by the power of supply and demand.
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Q: I am about to sell a development can I give the proceeds of the sale to my wife?
A: Hi Adam
You can give the proceeds of the sale to whoever you choose to but the more important question is who will get taxed on the profits of the sale of the development.
The entity/individual who will get taxed will depend on what the structure was of the development activity. Depending on if it was carried under your name, your joint names, partnership, company, a trust or a combination of these; the tax consequences will be different for each of those.
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Q: I want to start an online business.
I also work full time at the moment.
If I purchase a new laptop and various new office equipment and software for my new start up business. Can I claim all the expenses within my next tax return? If so what is the maximum I can claim on my start up? Would expenses claimed also cover items/servicrs bought online from other countries?
A: Salary and Wage income is different from your business income.
Regarding claim of equipment - You will be able to claim all the business related expenses against your business income but some items may need to be depreciated over their useful life rather than claimed all at once. There is a small business immediate write off provision available to 30/06/2018 and you can write off anything less than $20,000 as an immediate expense and I would assume there might be very few things you would buy for your start up business that would cost more than $20,000.
Regarding how much you can spend - There is no limit as such. You can spend as much as you want and as required by the business to get it off the ground.
Regarding expense claim from overseas - There is no problem claiming it as a deduction as long as you have a receipt for the good/service.
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Q: I have a small Automotive Engineering business that currently turns over around $50k per year.
Started out with big plans 5 years ago but has now become a one man part time operation from home workshop, and I work full time for someone else.
It's still registered as a company (PTY LTD) but with operating costs like accounting fees etc it feels like it's not worthwhile.
Would appreciate advice on pro's and con's of sole trader vs Hobby business?
A: If the activities are carried out in a business form then you would be treated as a business and it surely wont be treated as a hobby.
If you decide to start trading as a sole trader then your income will be assessable in your own tax return. If it was a hobby (in this case its not) then the income would not be taxable.
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Q: Hi there I am seeking advice, I am a subcontractor courier driver, I would like to know my options for lodging my tax payments! I do not want to get in debt. please help??
thanks
jaylene
A: You could enter a voluntary agreement for PAYG Withholding.
A voluntary agreement is an agreement between a business (the Payer) and a contract worker (Payee) to bring work payments into the pay as you go (PAYG) withholding system. Doing so will ensure that some tax amount will be withheld and paid to the ATO from your income and when you do the tax return at the end of the year you can claim a credit for that.
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Q: Hi,
I bought a property in Nov 2006, moved in Mar 2007. Lived there until early 2010. It is leased out since Jul 2010. I have no other main residence until Jun 2014. It is sold in last month. It was my main residence from Nov 2006 to Jun 2014. As it was Home First Used to Produce Income, I should use value at time of it first rented as cost base. But I didn't have it valued. So, must I use purchase price as cost base?
Thank you!
Regards,
Laura
A: Hi Laura
A good qualified property valuer should be able determine the estimated market value of the property back in time. You may want to get a couple of valuations done just to make sure that they are not too far off.
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Q: Hi.
I have set up a family trust with a corporate trustee and a bank account to go with it.
How do I transfer ownership of my cash to the trust.
Obviously I can put it in the account but how do I record the transfer of ownership?
A: If you want to use your trust as an investment vehicle then you should transfer the money to the trust bank account first and then buy the asset in the trust's name. You having lent the trust money is not a bad thing at all. It only means if one day the trust has excess money you can take out whatever you had put in (repay yourself).
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Q: Hi.
I have set up a family trust with a corporate trustee and a bank account to go with it.
How do I transfer ownership of my cash to the trust.
Obviously I can put it in the account but how do I record the transfer of ownership?
A: In the financial statements / bookkeeping software when you do the books.
It is a loan as the money doesn't belong to the trust. You are giving (loaning) the money to the trust to start whatever activities you intend to carry in the trust.
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Q: Hi.
I have set up a family trust with a corporate trustee and a bank account to go with it.
How do I transfer ownership of my cash to the trust.
Obviously I can put it in the account but how do I record the transfer of ownership?
A: Hi Brian
The money you put in the trust's bank account will have to be recorded as loan from your self to the trust.
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Q: What are the minimum details that must be included in a request for payment to be a valid financial document and enforceable debt in Australia?
A: For a tax invoice for sale of less than $1,000 the following seven details must be included:
1. That the document is intended to be a tax invoice. Usually done with the words "Tax Invoice" written in big bold letters at the top
2. Seller's identity i.e. name
3. Seller's ABN (Australian Business Number)
4. Date of invoice
5. Description of items sold
6. GST amount (if any) payable or a statement clearly stating if GST is not applicable or if total price includes GST
7. Extent to which each sale includes GST
Tax invoices for sale of over $1,000 must also include:
1. The buyers identity or ABN
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Q: I'm a new Zealand citizen but live and work in Australia. Can I take my super with me when I move back to nz?
A: From 1 July 2013, individuals may transfer retirement savings between Australia and New Zealand after emigrating from one country to the other.
You may transfer your retirement savings from a participating Australian super fund to a New Zealand KiwiSaver scheme. You may only transfer retirement savings between a complying APRA-regulated superannuation fund and a KiwiSaver scheme.
Check with your fund and KiwiSaver scheme to see if they will charge any fees for transferring or accepting funds on your behalf.
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Q: Hi,im currently am full time employed an am looking at starting up business up as a partner ship with a name and abn number i was told if i get a business name and a abn number and the hasnt stared up or made any money i would be still taxed on it at tax time any feed back on this ?
A: Hi Clayton
If you don't make any profits then you wont have to pay any tax. Tax is levied on net income of the business. GST might still be payable depending on what your income and expenses are.
Having said that, the fact that you don't register a business name and/or get an ABN doesn't mean that there would no tax on the income if the business generates income.
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Q: I work as an Engineer in the IT industry. I'm required to drive my car to work everyday so that I can drive to client sites in the event of emergencies that can't be resolved remotely.
Just want to stipulate my car being available is a work requirement.
Am I able to claim the parking expenses for when my car is parked outside of my work?
A: Hi Stephen
Unfortunately the parking expenses for your car parked outside your work would not be claimable by you. If you took the car to see a client and incurred the parking expenses there then the parking expenses would be claimable.
Agree with Amy's comments above to ask your employer for reimbursement for the expenses or your salary can be adjusted accordingly to reflect the expenses you would have to incur.
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Q: As the importance of company culture is widely recognised for not only financial success, but also staff retention, job satisfaction, and productivity within the business, I’m wondering, what strategies have others found effective in building and promoting a positive and high-spirited team culture?
A: Hi Camille
The first thing would be to make sure that they are paid well. Other strategies/policies/practices to follow:
1. Being open about what is happening in a business (including financial numbers) and getting rid of "need to know basis" system. This will ensure everyone is on the same page.
2. Have a good financial bonus system. Set a financial target of say $250k in profits and once that is reached then out of the excess say 15% of profits are distributed amongt the team.
3. Have genuine appreciation of what the employees do
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Q: Hi, I'm setting up an online computer store and am confused about the tax side of things, if i buy a product for example, for $600 inc GST, then sell it on my site for $700 inc GST, Can I claim GST credit on the GST paid to the supplier? Or are you not able to claim GST credit for this? Thanks,
Jamil
A: Hi Jamil
You will be able to claim the GST credits for the GST paid on Purchase of Computer.
Using your numbers:
Sale of Product $700 (including GST of $63.64)
Purchase of Product $600 (including GST of $54.54)
Net GST you will have to pay $9.10 (i.e. $63.64 - $54.54)
Regards
Suresh
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Q: I have a business/app idea that would require capital to get it off the ground - what are the first steps go about funding and what would be needed on my end to ensure a positive outcome?
A: Hi Nicola
The first step is always to do your market research and get a business plan together on how you are going to turn a good idea into a business that will make profit.
One thing to note is that the earlier you go asking for funding, the more it will cost you as the risk is higher for the investors.
Regards
Suresh Rajani
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Q: I rent in Victoria, prior to moving in I had to pay a bond plus 6 weeks in advance. I want to give my 28 days notice to move out, do I need to continue to pay rent or should the 6 weeks that was paid in advance cover my rent for the next 28 days? Also should I be refunded the other 2 weeks that was paid?
A: Hi Niki
A real estate agent might be able to answer this in more details but my understanding is that you will need to pay rent to the day you are there and after you have moved out, the owner/agent will carry out an inspection of the property and if its all in good order then they will arrange for your bond to be refunded.
Regards
Suresh Rajani
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Q: Hi There,
I am taking on a "hobby" job as a mystery shopper, an have been asked to fill out a "Statement by a Supplier" form as i dont have an ABN, can someone please advise which box i need to tick in the reasons for not supplying an ABN? I currently also work full time. Thanks in advance.
A: Hi Dayna
It sounds more and more like an income making activity and not a hobby. You can apply for an ABN at https://abr.gov.au/For-Business,-Super-funds---Charities/Applying-for-an-ABN/
Most of the times you would get it at the end of submitting the application, if not then you can call the ATO with the reference number on application and they will work through the application and provide you over the phone.
Regards
Suresh Rajani
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Q: Hi There,
I am taking on a "hobby" job as a mystery shopper, an have been asked to fill out a "Statement by a Supplier" form as i dont have an ABN, can someone please advise which box i need to tick in the reasons for not supplying an ABN? I currently also work full time. Thanks in advance.
A: Hi Dayna
Straight answer to your question is you have to tick one of the 9 options that describe your situation. The hobby option is the fifth I believe "Made in the course or furtherance of an activity done as a private recreational pursuit or hobby"
There could be a couple of issues here that you need to consider:
1. Hobby vs income producing activity. Even if you are doing something as a hobby but making money, you might be considered to be doing it for income producing purposes and as such the payment would be taxable
2. Contractor vs Employee - The fact that you have been asked for an ABN suggests that you would be treated as a contractor by the payer but you might actually be an employee
Hope I have not made it as clear as mud.
Regards
Suresh Rajani
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Q: I have $100,000 in my SMSF and want to invest it in the stockmarket, where do I start?
A: Hi J A
Only professionals with Australian Financial Service Licence can provide such financial advice after having considered your personal and financial situation.
I would recommend you look for someone in your local area who holds such a licence and you can trust. Best way to find such a professional is to ask friends, family and colleagues if they know someone.
Regards
Suresh Rajani
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Q: Hi. If i rent out a room in my principal place of residence that i live in do i pay land tax?
A: Hi Jason
As you may be aware principal place of residence is exempt from land tax but If you let out part of your principal place of residence to another person and receive income from this, you may still be able to claim a concession. i.e. you definitely wont be paying full land tax value.
You would need to provide Office Of State Revenue (NSW) details of the property e.g. total area, area of the room rented out, etc and they will work out the amounts.
Regards
Suresh Rajani
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Q: How would I go about setting up a business of 'Share Trading'?
A: Hi John
By setting up, do you mean setting up the business structure or setting up share trading and bank accounts etc.
Just for your information I note the following for tax side of things:
Based on if you are a share trader or share investor (for tax purposes) there is a big difference between how profit/gain and loss are treated. If you are a share trader then the profits or loss will be treated on revenue account. If you are considered a share investor then they would be considered on capital account and subject to capital gain tax rules.
The following are factors that can determine if you are a share trader or share investor (for tax purposes):
1. To be considered a share trader, you must be carrying on the activities for the purpose of earning income from buying and selling shares with a systematic approach e.g. with a business plan, systematic research and analysis, etc
2. The repetition, volume and regularity of the activities, and the similarity to other businesses in your industry
3. The keeping of books of accounts and records of trading stock, business premises, licences or qualifications, a registered business name and an Australian business number
4. The volume of the operations - The higher the volume the more likely it will be treated as a business
5. The amount of capital employed - not a very crucial factor in differentiating between a share trader and investor
Regards
Suresh Rajani
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Q: Is it more beneficial getting a company car or a car allowance of $1000 per month? Fuel paid for by company for both options.
A: Hi KJ
Getting a company car has no tax implication for you as it the company that deals with the Fringe Benefit Tax (FBT) issues.
Getting a car allowance has tax implications as you will need to include the allowance as income and then claim a deduction against it for work related percentage of the out of pocket expenses incurred. If the allowance is more than the usage, then you will have to pay tax on the difference.
For simplicity of your tax affairs it would be best to take the company car but quite a few employees do not take this option as they want to drive their own car around.
Regards
Suresh Rajani
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Q: I'm looking for an accounts person for my small business. What is a reasonable amount to expect to pay?
A: Just a quick addition to John's comment on getting the information from the http://www.fairwork.gov.au website.
They would give you the minimum you have to pay and my advice is to always pay more than the minimum as paying just the minimum may just result in the minimum effort from the employee.
Regards
Suresh Rajani
Natalie Hillar
8 years ago
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Q: Hi my husband and I have a block of land which we bought in 2011. We are selling it and I have heard that if we do not make a profit that we my be able to claim expenses, interest,rates etc through our tax. Is this the case?
Regards Patricia
A: Hi Patricia
It all comes down to intention you had when you bought land.
A vacant land acquisition is usually considered a capital asset and any profit or loss is subject to Capital Gain Tax (CGT). When you make a profit it's all nice and good as you can claim a capital gain discount of 50% on the profit. When you sell it for a loss, the capital loss is not offset against other income but is carried forward to be offset against any future capital gain. You generally can't claim income tax deductions for expenses associated with owning it – such as interest on an investment loan, rates, etc – because the land does not generate income. When selling the land, you can add these expenses to the capital cost to work out any capital gain or capital loss.
I think where you might be getting confused is the fact that when you buy vacant land with the aim of building a rental dwelling on it, you can claim tax deductions for expenses such as loan interest and council rates.
For the associated costs to be deductible, the land should be able to be treated as trading stock for income tax purposes rather than as a capital asset and this would be the case if:
1. You had begun a business activity that involves dealing in land, or
2. You held the land for the purpose of resale.
I note that when land is treated as trading stock GST is applicable and you would need to include GST in selling price.
Hope this helps.
Suresh Rajani
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Q: Hi I run a small buisnees gardening as a sole trader plus receive Centrelink payments I'm wanting to know do I include both payments & add them together when it comes to the threshold or just include my business? I did ring centrelink to help explain but they left me more confused. Any help is much appreciated thanks.
A: Hi Clint
Assuming we are talking about tax threshold; payments such as Family Tax Benefits, Child Care Rebate, Child Care Benefit, Rent Assistance and a whole lot more received from Centrelink are not to be included as income for tax purposes and can therefore be excluded from working out the threshold and tax brackets.
Suresh Rajani
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Q: So I'm looking at starting up a web hosting company,. I already have a full time job and it's something I'd be looking to work on after work and on weekends. What's the best way to go about setting the company up as I want to make sure it's done the right way. I don't want a massive tax bill at end of year want everything to be done right. Could anybody offer me any advice?
A: Hi Kevin
First question about setting up a company: You can either do it yourself as there are a few DIY websites that will allow you to do this, you must have knowledge about how the company structure works and if it is right for you. You can alternatively approach an accountant who can go through the structures with you and advise you accordingly.
I am glad you asked about the tax side of things as that is the place many new businesses get a shock at the end of the financial year. In your case as you already have a full time job it becomes even more critical to get the tax side right. Below are two options for you:
1. If you are going to leave the money in the business in the first year or so then it becomes pretty straightforward. From your net income every week/fortnight/month set aside 27.5% as tax (assuming you would be small business)to be paid to ATO at end of financial year. Note also GST may be applicable depending on where your customers are.
2. If you are going to be taking the money out as your wages then you would need to withhold from your wages the tax as per ATO's PAYG withholding table/calculator (and pay the PAYG Withholding to ATO) and pay yourself the net wages.
I suggest you keep a very close eye on things and review your revenue/expenses/tax every quarter if not monthly.
Regards
Suresh Rajani
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Q: I'm about to take a new job and my salary package includes car and phone allowances. I can't, however, see myself spending as much as my allowances. I understand any allowances not spent become taxable income at the end of the financial year. If so, is there any real benefit of having a phone and car allowance? Should I ask for the base salary to include the allowances instead? Either way, I would still claim my business vehicle use and phone expenses as a deduction or am I missing something?
A: Hi Maurice
Both the car and phone allowances you would receive would be treated as your assessable income. You would be however be able to claim the actual work related usage of your car and phone as a work related deduction.
You are right, in your case whether the allowances are separated or added to your base salary would not change your tax situation. Employers on the other hand like to separate your base salary from the allowances so in the future if you are not using your car or phone as much, they can bring the allowance down or if you are using it a more, they can increase it without playing around with your base salary.
Regards
Suresh Rajani
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Q: Hi we finished our farm business end dec16. We subdivided 1 1/2 acres off and are selling it foe around $500000. We have our own super fund. Husband retired I work a bit. We will pay capital gains and split into our super fund. Do we need to pay gst too...our account is on holidays and can't be contacted?. Thankyou.
A: The sale of subdivided land used for a farming business for at least five years is GST-free if both of the following apply:
1. It's permissible to use the land for residential purposes
2. The supply is made to an associate of the supplier – such as a relative or a closely connected company or trust – for less than market value.
If you sell farmland and you don't meet the above conditions, the sale is taxable and you're liable for GST on the price.
Regards
Suresh Rajani
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Q: I work full time with an annual income of $65k, I also run an eBay business that has a turnover of $50k this year, my net margin is around 5%, which is $2500. If I purchase some eligible assets under $20k and write off the full amount this year, then am I able to offset the loss of $17k against my income from day time job? Does that mean I am only liable for tax on $48k ($65k minus $17k)?
A: Hi Thomas
Given the facts you would be able to offset the business loss against you other income.
Assumed the following per info provided:
Business Income: $50k
Salary Income: $65k
Net Business Loss: -$17k
To be eligible to offset business loss against other income you must meet the income requirement/eligibility first: Other Income less than $250k. You meet this
You must then pass one of the four tests:
1. Assessable Income Test: Business Income of at least $20k; or
2. Profit Test: 3 out of past 5 years profit; or
3. Real Property Test: Value of Real Property continuously used in business to be at least $500k; or
4. The other assets Test: Value of assets (excluding real property, cars and other vehicles) to be at least $100k
Conclusion: You can offset
You are eligible as your other income is less than $250k
You pass at least one test - Assessable Income Test for sure (not sure about the others as there is limited information)
Regards
Suresh Rajani
