Would you give employees ‘wedding leave’?

By Marketing Coordinator - Candice Dolley

This is hardly an Accounting, Business Advisory or Financial Planning topic, it is interesting all the same.

Would you give employees wedding leave?  Some countries allow marriage leave.  In France, for instance, employees are entitled to a minimum of four days paid ‘marriage leave’ when they get married. Over the border in Spain, that entitlement more than triples to 15 days’ paid leave.

I got married just shy of three years ago. I never even thought about hitting up my employer  for "wedding leave".  I simply put it through as annual leave.  

Before you start thinking this is going to become a "thing" it isn't.  “Under the Fair Work Act, there is no obligation to pay employees when they are off work to attend such events. Most employers would ask their employees to take these days as annual leave. Some might allow staff to take unpaid time off, but that would be up to the employer,” 

Just like I did for my wedding.  However, when I continued reading through the article (you can read the article here), other countries allow paid leave for weddings, religious holidays, school sport days, kids birthdays etc, arguing it increased productivity and reduces absenteeism.  

Wedding leave, in my opinion, should be taken as Annual leave (please note, this is my personal opinion). Leave or the flexibility to attend children's events, I like this idea (I have three children).

Trying to balance work and life  is hard.  I have been lucky in the businesses I have worked for.  I have had the flexibility to attend sports days (or similar days).  It makes it easier when you live in a smaller town and it takes 15 minutes to drive to your kids events.  You can pretty much use lunch breaks to watch events.  However, if I have missed an event it has been due to meetings I could not change.

But if I lived in Sydney or Melbourne where I had to travel an hour to and from work each day, I would not have the ability to just "duck out" to watch my child run laps of the oval.  Having the flexibility to use my leave or have additional leave per year, to watch my child participate in an event would be ideal.  

Some of my greatest memories as a child was having Mum on the sideline as I played my sporting/musical events.  As my sister and I grew older, she returned to work and couldn't attend as many of our events, I still found myself looking for her in the crowd.  

This article got me pondering, should leave for children be incorporated into the leave system?  Or is it discrimination for those who do not have children?  So many questions from reading one article.

Let me know your thoughts below

Franking credits and your SMSF

You may have noticed significant media coverage recently regarding the Australian Labor Party’s proposed policy to stop SMSFs from receiving tax refunds for the franking credits they receive in conjunction with the dividends paid from Australian companies they own. 

First of all, what are franking credits and how do they benefit SMSFs? 

Under the Australian tax system companies pay 30 per cent tax on their profits. When these profits are then passed on to their shareholders in the form of dividends, the company also hands the shareholders a credit for the tax the company has already paid (the “franking credit”). The individual shareholder then pays tax on the profit they received from the company less the credit for the tax the company has already paid. The franking credit ensures that the company profits are taxed at a shareholder’s marginal tax rate. 

For SMSFs in retirement phase which generally have a zero tax rate, this means they can receive a full refund of the tax already paid by the company on their behalf. 

SMSFs who have members in accumulation phase benefit from franking credits reducing the tax they pay on their SMSF’s earnings and may receive partial refunds of their franking credits depending on the fund’s overall tax liability. 

Labor, if elected, will change the law so that SMSFs and other low tax paying entities will no longer be able receive a tax refund for the franking credits they receive. This will affect all SMSFs that own Australian shares, especially funds that have received tax refunds in recent years. 

This could have a significant impact on the retirement income of many SMSF members in retirement. For example, an SMSF with $500,000 in retirement phase with 40 per cent of assets held in Australian shares could lose around $4,285 per year in tax refunds from their franking credits. This impact could be a significant hit to your annual retirement income. 

How can we help? 

SMSF Specialist advisors can help you understand how a change in the tax treatment of franking credits may impact your SMSF portfolio and retirement income. Please feel free to give me a call to arrange a time to meet so that we can discuss your particular requirements in more detail. 

Also, if you are concerned by the franking credit policy and want to ensure your voice as an SMSF trustee is heard in Canberra on this and other important superannuation issues, then I recommend that you consider joining the SMSF Association as an SMSF trustee member to support their advocacy for SMSFs. (http://trustees.smsfassociation.com/). The SMSF Association strongly opposes the proposed change to the tax treatment of franking credits and is looking to resist the introduction of this policy for the benefit of all SMSFs.

If you would like more information about this article please contact us.

Useful Links

• SMSF Myths Busted - Fact Sheet
• Personal Superannuation Contributions - Fact Sheet 

This information is of a general nature only and has been provided without considering your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate considering your objectives, financial situation and needs.

Women flock to work, but super still needs work

Originally written by Nicki Bourlioufas for Morningstar

Australia's female labour force participation rate reached an historic high of 60.5 per cent in January 2018 and continued growth could help to grow women's superannuation balances, which still significantly lag those of men.

Average superannuation balances in 2015-16 for people aged 15 and over were $111,853 for men and $68,499 for women, according to data from the Australian Bureau of Statistics.

Moreover, women are still retiring with substantially lower savings. Average superannuation balances at the time of retirement (at ages 60 to 64) in 2015-16 were $270,710 for men and $157,050 for women. This falls well short of the $545,000 needed for a comfortable retirement, according to the ASFA Retirement Standard for a single person.

Even more worrying is that one in three women reported retiring with no superannuation savings in 2015-16. That compares to 27 per cent of males who reported nil superannuation. 

According to the Association of Superannuation Funds of Australia (ASFA), there are several reasons women have less superannuation. Women spend more time out of the paid labour force for family reasons, including caring for children as well as parents. Women are also more likely to be employed in part-time and lower-paid jobs. 

ASFA CEO Dr Martin Fahy says lifting the Superannuation Guarantee (SG) to 12 per cent needed to happen sooner rather than later to adequately address the lack of sufficient superannuation held by women. 

"Security for women in retirement is an important issue. Despite increasing workforce participation by women, there still remains a significant disparity between the retirement incomes of men and women. There are a number of factors that contribute to this, including broken working patterns," Fahy says. 

"While this is not confined to women, given that caring for children, parents, and other family members is more often than not performed by women, this results in both breaks in employment, and frequently, significant periods of part-time employment. 

"The gender pay gap and the increasing casualisation of the workforce also contribute to the gap. While this is not unique to women, this does have a tendency to affect roles which predominantly employ women, such as the caring professions, hospitality, and retail." 

Dr Fahy recommends women make the best use of the federal government's tax concessions for superannuation contributions. 

"There is a $25,000 annual concessional contribution cap and the ability to make catch-up contributions from 1 July 2018, using previously unused cap amounts on a rolling five-year basis for anyone with less than $500,000 in super," he says. 

"You may also be eligible for a super co-contribution from the government of up to $500 if you make personal super contributions and earn less than $51,813. The Low Income Super Tax Offset (LISTO) provides a refund of contributions tax for anyone earning up to $37,000, up to a maximum of $500. 

"If you have received a large windfall (such as from an inheritance) or sold an investment property, think about putting the proceeds into super. You can make a $100,000 after-tax annual contribution if your super balance is less than $1.6 million as at 30 June of the previous financial year." 

Financial adviser Jay Adamson with countplus one says women need to take a greater interest in their superannuation. 

"It is 9.5 per cent of your salary and it is important. Make sure you are invested in the right asset allocation to achieve your objectives. Check on fees and charges and find a fund that meets your current needs (and this may change over time)," she says. 

Salary sacrificing is also important. "Ask your employer to contribute part of your pre-tax salary directly to your superannuation fund. For example, if your taxable income is $80,000 a year, a superannuation contribution of $100/week will reduce your net take home pay by only $59/week," she says. 

"If you are self-employed, don't neglect to make superannuation contributions--they are a tax deduction for your business." 

She also recommends working with your spouse. "If you earn less than $40,000, then your partner can get a tax offset of up to $540 on contributions made to your complying superannuation fund. There may also be advantages for you in 'superannuation splitting' where part of your spouses' superannuation can be transferred to top up your own superannuation account," says Adamson. 

ASFA recommends other policy changes that would further improve superannuation outcomes. These include payment of superannuation contributions linked to paid parental leave. 

In addition, removal of the $450 a month threshold for payment of Superannuation Guarantee contributions would also benefit women, say Ross Clare, director of research, ASFA, in a recent research paper.

If you would like more information about this article please contact us 

This information is of a general nature only and has been provided without considering your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate considering your objectives, financial situation and needs.

Super Health Check

Before long your baby is an adult

Article first published by Colonial First state - 1 March 2018.  


It’s never too early to start planning for your retirement, so here’s some useful tips to boost the health of your super today for a more comfortable lifestyle in the future.

Even if retirement feels a long time away, it’s important to start thinking about when you’d like to retire, the type of lifestyle you want in retirement, how much debt you have and what assets (including your super) you will have when you finish working.

Are you retirement ready?

If you’re planning your financial future, a great place to start is to understand where you are today.

Our retirement calculator helps you estimate your projected retirement income from your super and other assets, to help you work out if you’re retire ready.

By entering in details such as your age, salary, super balance and other income, the calculator estimates how much income you could have per year when you retire.

You can then compare this estimated income to your desired annual income in retirement. If you have a shortfall, you can learn about strategies to help grow your retirement income.

Take the first step towards becoming retire ready by visiting our retirement calculator today.

While an online calculator can never replace personalised advice from an expert, it will help you get a clearer idea of where you stand today and how you could change your situation for the better.

If you’re planning your financial future, a great place to start is to understand where you are today.

How to boost your super

Want to see your super grow faster? Here’s five ways you might be able to add to your super savings today.

1. Salary sacrificing

Salary sacrifice is when you make additional contributions to your super from your pre-tax salary. These pre-tax contributions can help reduce your taxable income, meaning you can potentially pay less tax.

This portion of your income is generally taxed at just 15 per cent, which can be less than your normal marginal tax rate – helping you save money for your retirement.

Once you have worked out how much of your income you can comfortably contribute to your super, you need to arrange for your employer to regularly redirect this amount to your super instead of your bank account.

But it’s important to keep in mind that there are caps on the amount you can contribute to your super.  To find out more about the cap, contact us on (07) 4616 9000 to speak to our Specialists.

2. Consolidating your super

It’s a good idea to make sure all your super is in the same place. If you’ve changed jobs, different employers might have made your super guarantee payments to different funds over the years. This means you could have ‘lost super’ in accounts you’ve forgotten about.

If your super is in multiple funds, you also have to pay separate administration fees to each fund, which eats into your retirement savings.

On the other hand, if you roll over all your super into a single fund, you’ll not only save on fees but you’ll also find it easier to keep an eye on your money.

If you think you might have lost track of some super from past jobs, search for it online via the Australian Taxation Office website and consolidate it all into one fund to minimise fees.

Before making a decision, it makes sense to compare the costs, risks and benefits of your other funds against your current super fund. You should also consider whether you will lose any existing insurance cover upon rolling over and whether any cover you may have will be sufficient.

3. Don’t forget spouse contributions

If your partner earns less than $37,000 a year, you may be able to claim a $540 tax offset when you make a $3,000 contribution to their super fund.

The offset available reduces as your spouse’s income exceeds $37,000 or if your contribution is lower than $3,000, and phases out once your spouse’s income reaches $40,000.

But, this isn’t just about tax. The spouse contribution – which can also be made on behalf of a de facto partner or same sex partner – is a good way to boost the retirement savings of a partner who earns less or has taken time out of the workforce to care for children.

4. Get government assistance

Also, if you earn income up to $37,000, you may be eligible to receive a low-income super tax offset (LISTO) contribution into your superannuation account. This is a refund on the tax paid on your concessional superannuation contributions up to a cap of $500.

And if your spouse earns a low income, you could receive a tax offset up to $540 by contributing to their super fund for them. Find out more at the Australian Taxation Office website.

5. Know your limits

It’s important to keep in mind that there are caps on the amount you can contribute to your super.

The government imposes different caps on contributions depending on your age and contribution type. Additional tax applies if you exceed the contributions cap.

Find out more about super contributions caps.

Get the right advice - contact us today.

This information is of a general nature only and has been provided without considering your objectives, financial situation or needs. Because of this you should consider whether the information is appropriate considering your objectives, financial situation and needs.

10 ways to identify a failing business

1. Too much debt

If a company’s operations are mostly funded by creditors instead of the business owners, and it may have some difficulty servicing that debt, then it is under stress and may not be a valuable business partner.

2. Overexpansion

Overexpansion can quickly lead to cash flow troubles, even for experienced operators. This then leaves them running the risk of taking on large amounts of debt in a bid to keep the business going.

3. Lack of clarity

Clarity around what the business is trying to achieve is critical to its ongoing success.  If it’s not clear what the business does or how it generates cash, there is likely to be a significant amount of risk.

4. Qualified accounts / going concern commentary

Qualified accounts are audited accounts where the auditor has doubts or disagreements with the firm’s management.

Going concern commentary is not as serious as qualified accounts but it can be a sign that the auditor is protecting themselves from litigation but is still signing off on the accounts.

This is a huge red flag; don’t do business with a company showing these warning signs.

5. Profit warnings

Profit warnings are most commonly the domain of listed companies. 

6. Profit versus cash flow

It is important to differentiate profits from cash flow, as current profitability is not an accurate measure for determining the ongoing viability of a business.

Strong profits but little cash flow could indicate problems lurking behind the scenes, and can even be “a sign of dodgy accounting practices”.

7. Irregular payments

Another common indication a business is in strife is its payments become irregular – even if they make sizeable lump-sum payments at ad hoc intervals.

It’s a sign the company’s cash flow is compromised. Deciding to continue doing business with a company in this situation can depend on past payment history, current relationships, and the reasonable likelihood of the business getting its cash flow back on track.

8. Unstable leadership

Aside from finances, instability among a business’ management team and senior employees can indicate problems. Beware of a significant turnover among senior member of staff and management.

9. Trappings of success

When directors have high-end, brand-new cars, computer systems, and furnishings, it can be a sign that directors are rewarding themselves at the expense of the company.  

10. Late filing of accounts

It pays to dig into a company’s history of lodging documentation.

If the company files its accounts late, it could be a sign of general disorganisation or it could indicate that the business had trouble getting an auditor to sign off.

If your company identifies with any of these items on the list, do not fret, contact us and we can help you develop ways to improve.  

Simple Options to Improve your Personal Cashflow

It is very simple: To gain wealth, you must spend less than you earn.Being fiscally astute is not rocket science.

Let’s review simple options to help you turn your spending habits around and achieve a positive personal cash flow.

Settle bills by the due date unless there is an incentive to pay early. Your money is better placed to work for you in an interest-bearing account.

Pay off high-interest rate debt to free up money. This is your priority task. Debt is not a given. Break the cycle and pay off your debts. Pay as much extra off the debt as you can. This will ultimately reduce the amount of interest you are paying and save you money. Short-term pain for long-term gain.

Use credit cards as a means of delaying cash payments to manipulate your cash flow to your advantage.

Be market savvy. Keep an eye on the interest rates you’re paying on your debts and make sure they’re competitive. If they’re not, speak to your bank.

Evaluate your daily spending habits. Keep track of every item of expenditure for a month. It is probable that you will be shocked. Consider carpooling to work, making your own lunch and ditching the gym membership in favor of going for a walk with friends and family. You will be surprised how much you can save!

Be Mean. Develop an attitude toward cutting costs, no matter how small. Turn lights out when you leave a room, sleep on purchasing decisions, never impulse buy, etc.

Making changes to your spending can feel hard. Persist. Being cost-conscious will have a far greater and positive impact on your life.

If you are struggling to determine where your cash is disappearing to and where you need to stop spending to improve your wealth, contact DC Advisory Group today. We offer a Lifestyle Package which tells you where your money is going by linking directly to your bank account. 

By inputting simple information you can discover your overall financial position. You can store all your important documentation, such as insurances, wills and power of attorneys all in the one place.

This package is great to help you achieve your financial goals.

If you have any questions for us about the Lifestyle Package contact us.

Tax Planning - SMSF News

Our SMSF Specialist Advisor - Tony Beckett has pulled together some key things you need to take into consideration when working with your SMSF.  .  

With June 30 2018 fast approaching this will be the first full financial year post superannuation reforms that came into effect July 1 2017.

Some important numbers if considering maximising your contributions for the 2018 financial year.

Change in Non-Concessional Limits (NCC)

• These have been reduced from $180K per year ($540K utilising the bring forward rule) to $100K ($300 utilising the bring forward rule). This is also assuming you have room under the total superannuation balance (TSB) of $1.6M to contribute this type of contribution 

Change in Concessional Contributions (CC)

• These have been reduced to $25K from July 1 2017. In previous years they were $30K or $35K depending on your age. 
• Previously only the self-employed could claim a personal tax deduction for concessional contributions made. The 2018 financial year sees the first year in which anyone is able to top up their concessional contributions to the cap of $25K and be able to claim these as a deduction in their individual names. 

Another new way of getting money into super is the addition of downsizer contributions. Now while these only come into effect from July 1 2018 these could influence the sale of a property approaching the end of the financial year. There are rules and conditions imposed on this type of contribution and some of these are as follows

• The downsizer cap is $300,000 per member 
• The contributor must be 65 years or more. The 1.6M TSB does not come into effect with this contribution nor does the work test have to be satisfied for this type of contribution to be made. 
• The contribution must be made within 90 days after the change of ownership occurs. 
• The contribution must be all or part of the capital proceeds from the sale of a dwelling in Australia, which is not a caravan, houseboat or other mobile home. 
• The contributor, their spouse or former spouse must have owned a interest in the property for the10 years prior to sale 
• An interesting point on this contribution is that there is no actual requirement to ‘downsize’ or even buy another property 

Some other very important considerations are needed prior to making any NCC’s for the 2018 financial year. The TSB! 

Remember the ability to make NCC’s to superannuation is based on the members TSB. If you are approaching the $1.6 million cap and have more than 1 super fund it is essential that you calculate TSB of all of the funds as at June 30 2017 (it does not work on a fund by fund basis. It is an all-encompassing 1.6m cap). This will determine the amount available in NCC’s that can be made for the 2018 financial year.

There needs to be a lot more care and consideration taken when it comes to contributing to super prior to June 30 2018. If you have any questions in relation to any of the above information do not hesitate in contacting the DC Advisory Group team.

Useful information 

• SMSF Myths Busted - Fact Sheet
• Personal Superannuation Contributions - Fact Sheet

This article is provided as general information only and does not consider your client’s specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of a client's specific circumstances.

Tax Planning - Minimise your business tax

Imagine what you could do with tax saved? 

IS YOUR BUSINESS A “SMALL BUSINESS” ENTITY? 

Small businesses can access a range of tax concessions from the ATO. To qualify as a “Small Business Entity”, the business must have an aggregated turnover (your annual turnover plus the annual turnover of any business connected / affiliated with you) of less than $10 million and be operating a business for all or part of the 2018 year. 

REDUCTION IN COMPANY TAX RATES FOR SMALL BUSINESSES 

The company tax rate for businesses with less than $10 million turnover is 27.5%. 

If you use a Trust structure, one strategy is to allocate profits to a “Bucket Company” and cap your tax at 27.5% for the 2018 year. Note that this company must have business operations to qualify for the reduced company tax rate. 

INSTANT DEDUCTION FOR ASSETS LESS THAN $20,000 

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

• Depreciating assets valued at less than $20,000 will be immediately deductible 
• Depreciating assets valued at more than $20,000 will be depreciated in one pool at a rate of 15% in the first year and 30% in future years 
• If your pool balance at the end of the year is less than $20,000 before applying any other depreciation deduction, the entire pool balance can be written off. 

You should buy these assets before 30 June 2018. 

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

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS 

The concessional superannuation cap for 2018 is $25,000 for all individuals. Do not go over this limit or you will pay more tax! 

Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge. 

For the contribution to be counted towards the employee’s 2018 contribution cap, it must be received by the fund by 30 June 2018. 

TOOLS OF TRADE / FBT EXEMPT ITEMS 

The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to buy equipment with a tax benefit. 

Items that can be packaged include handheld/portable tools of trade, computer software, notebook computers, personal electronic organisers, digital cameras, briefcases, protective clothing, and mobile phones. 

If structured correctly, the employer will be entitled to a tax deduction for the reimbursement payment to the employee (for the equipment cost), claim any GST input credit, and the employee’s salary package will only be reduced by the GST-exclusive cost of the items purchased. 

You should buy these items before 30 June 2018. 

PAY EMPLOYEE SUPERANNUATION NOW 

To claim a tax deduction in the 2018 financial year, you need to ensure that your employee superannuation payments are received by the super fund or the Small Business Superannuation Clearing House (SBSCH) by 30 June 2018. 

You should avoid making last minute superannuation payments as processing delays may cause them to be received after year-end. If for any reasons you end up having to make last minute payments and you would like to claim them as deductions for the current year, contact us immediately and before you make any payments for possible resolutions. 

DEFER INCOME 

If possible, defer issuing further invoices and receiving cash/debtor payments until after 30 June 2018. This strategy pushes tax payable to future years. 

BRING FORWARD EXPENSES 

Purchase consumable items BEFORE 30 June 2018. These include marketing materials, consumables, stationery, printing, office and computer supplies. Spend the money now and get the deduction this year. 

REPAIRS & MAINTENANCE 

Make payments for repairs and maintenance (business, rental property, employment) BEFORE 30 June 2018. 

DEFER INVESTMENTINCOME & CAPITAL GAINS 

If possible, arrange for the receipt of Investment Income (e.g. interest on Term Deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2018. 

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

MOTOR VEHICLE LOG BOOK 

Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2018. You should make a record of your odometer reading as at 30 June 2018 and keep all receipts/invoices for motor vehicle expenses. 

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

INVESTMENT PROPERTY DEPRECIATION 

If you own a rental property and haven’t already done so, arrange for the preparation of a Property Depreciation Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property. 

PRIVATE COMPANY (“DIV 7A”) LOANS 

Business owners who have borrowed funds from their company in previous years must ensure that the appropriate principal and interest repayments are made by 30 June 2018. Current year loans must be either paid back in full or have a loan agreement entered in before the due date of lodgement for the company return, or risk having it counted as an unfranked dividend in the return of the individual. 

YEAR-END STOCKTAKE / WORK IN PROGRESS 

If applicable, you need to prepare a detailed Stock Take and/or Work in Progress listing as at 30 June 2018. Review your listing and write-off any obsolete or worthless stock items. 

Talk to us about your different options for valuing Stock, and how they affect your tax payable. 

WRITE-OFF BAD DEBTS 

Review your Trade Debtors listing and write-off all bad debts BEFORE 30 June 2018. Prepare a management meeting document listing each bad debt, as evidence that these amounts were written off prior to year-end and enter these into your accounting system before 30 June 2018. 

SMALL BUSINESS CONCESSIONS - PREPAYMENTS 

“Small Business Concession” taxpayers can make prepayments (up to 12 months) on expenses (e.g. loan interest, rent, subscriptions) BEFORE 30 June 2018 and obtain a full tax deduction in the 2018 financial year. 

TRUSTEE RESOLUTIONS 

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

Talk to us TODAY, before the 30 June 2018 deadline for assistance to reduce your tax!

This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.

Tax Planning - Minimise your personal tax

Imagine what you could do with tax saved? 

• Reduce your home loan 
• Top up your super 
• Have a holiday 
• Deposit for an Investment Property 
• Upgrade your Car 

KEY SUPERANNUATION CHANGES 

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

NEW CONCESSIONAL CONTRIBUTION CAP (CC) OF $25,000 FOR EVERYONE 

The tax deductible super contribution limit (or “cap”) is $25,000 for all individuals under age 75. Individuals need to pass a work test if over age 65. 

Consider making the maximum tax deductible super contribution this year before 30 June 2018. 

The advantage of this strategy is that superannuation contributions are taxed at between 15% to 30% compared to typical personal income tax rates of between 34.5% and 47%. 

Ordinarily, self-employed individuals and those who earn their income primarily from passive sources make super contributions close to the end of the financial year and claim a tax deduction. However, this is the first financial year that individuals who are employees may also use this strategy. 

Individuals who may want to take advantage of this opportunity include those who: 

• work for an employer who doesn’t permit salary sacrifice 
• work for an employer who allows salary sacrifice, but it’s disadvantageous due to a reduction in entitlements, and 
• are salary sacrificing but want to make a top-up contribution to utilise their full CC cap. 

SPOUSE SUPER CONTRIBUTIONS 

From 1 July 2017, higher income thresholds apply when determining eligibility for the spouse contributions tax offset. 

From this date, you may be eligible for a tax offset of up to $540 on super contributions of up to $3,000 that you make on behalf of your spouse if your spouse’s income is $37,000 p.a. or less (previously $10,800 p.a.). 

The offset gradually reduces for income above $37,000 p.a. and completely phases out at $40,000 p.a. and above (previously $13,800 p.a.). 

ADDITIONAL TAX ON SUPER CONTRIBUTIONS BY HIGH INCOME EARNERS 

The income threshold at which the additional 15% (‘Division 293’) tax is payable on super contributions has reduced from $300,000 to $250,000 p.a., effective 1 July 2017. Where you are required to pay this additional tax, making super contributions within the cap is still a tax effective strategy. 

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

GOVERNMENT CO-CONTRIBUTION TO YOUR SUPER 

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

In 2017/18, the maximum co-contribution is available if you contribute $1,000 and earn $36,813 or less. A lower amount may be received if you contribute less than $1,000 and/or earn between $36,814 and $51,812. 

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

MAXIMISE DEDUCTIBLE SUPER CONTRIBUTIONS 

The concessional superannuation cap for 2018 is $25,000 for all individuals. Do not go over this limit or you will pay more tax! 

Note that employer super guarantee contributions are included in these caps. Where a concessional contribution is made that exceeds these limits, the excess is included in your assessable income and taxed at your marginal rate, plus an excess concessional contributions charge. 

10 ways to reduce your tax 

OWNERSHIP OF INVESTMENTS 

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

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

PROPERTY DEPRECIATION REPORT 

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

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

MOTOR VEHICLE LOG BOOK 

Ensure that you have kept an accurate and complete Motor Vehicle Log Book for at least a 12-week period. The start date for the 12-week period must be on or before 30 June 2018. You should make a record of your odometer reading as at 30 June 2018 and keep all receipts/invoices for your motor vehicle expenses. Once prepared, a log book can generally be used for a 5-year period. 

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

SACRIFICE YOUR SALARY TO SUPER 

If your marginal tax rate is 19% or more, salary sacrifice can be a great way to boost your superannuation and pay less tax. By putting pre-tax salary into super rather than having it taxed as normal income at your marginal rate you may save tax. This can be especially beneficial for employees nearing their retirement age. 

PREPAY EXPENSES AND INTEREST 

Expenses relating to investment activities can be prepaid before 30 June 2018. You can prepay up to 12 months of interest before 30 June on a loan for a property or share investment and claim a tax deduction this financial year. Also, other expenses in relation to your investments can be prepaid before 30 June, including rental property repairs, memberships, subscriptions, and journals. 

INSURANCE PREMIUMS 

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

WORK RELATED EXPENSES 

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

REALISE CAPITAL LOSSES 

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

DEFER INVESTMENT INCOME & CAPITAL GAINS 

If practical, arrange for the receipt of Investment Income (e.g. interest on term deposits) and the Contract Date for the sale of Capital Gains assets, to occur AFTER 30 June 2018. 

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

IS AN SMSF SUITABLE FOR YOU? 

Now is a good time to seek specific advice in relation to this question, as it may be appropriate to establish an SMSF in conjunction with other tax planning opportunities, to maximise the benefit of the SMSF in your circumstances.

Talk to us TODAY, before the 30 June 2018 deadline for assistance to reduce your tax!

This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.

Tax Planning - Why use a "bucket company"

In the lead-up to 30 June 2018, we want you to know why using a “bucket company” can be a great strategy to saving tax on trust profits distributed. 

PROFITS FROM A TRUST?

Do you have a Trust that generates profits? If yes, then read on!

 A “bucket company” allows you to “cap” the tax on profits distributed by a trust to 30% or 27.5% This is much less than the individual top marginal rate of 47%!

Here’s how this works:

Assume a trust earns $250,000 in profits from business or investment.

Option 1: Distribute profits 50 / 50 to Individuals 1 and 2. Total tax (inc. Medicare Levy) payable = $72,764 (29.1%)

Option 2: Distribute $87,000 each to Individuals 1 & 2 and distribute balance of $76,000 to a “bucket” company at a 30% tax rate. Total tax payable = $65,924 (26.4%)

Value of strategy is $6,840 in tax saved!

The cash in a “bucket company” can be used to invest in shares, property, or to lend to other entities at a specific interest rate.

But: You need to discuss this with us BEFORE you do it. There are different tax laws that affect the use of this strategy, and whether your “bucket company” can use a tax rate of 30% or 27.5%.

As Accountants, we are very aware of these tax laws and can make this easy for you.  Contact us  to make your Tax Planning appointment.  

KEYLINKS
Why use a Bucket Company (Graphic)

Tax Planning - Contributing to super and claiming a tax deduction

With all the new contribution cap rules, it’s easy to forget that there is one way the Government has made it easier to save tax and get money into super. 

Before July 2017, only people who were self-employed could contribute money to super and get a tax deduction. 

The only way for employed people to do this was to salary sacrifice and get their employer to divert part of their pay to their super before it had been taxed. The problem with this is that you may decide after the fact that you would like to contribute to super, but the opportunity to salary sacrifice is long gone. 

Here’s the very good news! Since 1 July 2017, people under the age of 75 are now eligible to contribute money from their bank account to their super and claim a tax deduction for it (if certain conditions are met). 

This is especially useful for people who are on higher marginal tax rates or their employer refuses to set up a salary sacrifice arrangement. 

The people who would benefit the most are those who earn above $37,000 per year, as this is where the marginal tax rate plus Medicare Levy rises to 34.5%. Claiming a tax deduction on super contributions effectively makes your tax 15%. That’s a big tax saving! 

Things to remember: 

• There is still a $25,000 concessional contribution cap, which includes any guaranteed contributions your employer puts in and any salary sacrificing you do. 
• Personal contributions are only tax deductible if you ask your super fund to treat them that way. Therefore, there is paperwork to be done. We can help you with this. 
• Anyone over 65 must meet certain conditions to contribute to super, namely the ‘work test’. The ‘work test’ involves working 40 hours in any 30-day period in the financial year in which you plan to contribute. You must be paid for that work. 
• Claiming a tax deduction for your personal contributions means there may be tax payable on the way out of your super.

If you get unexpected bonuses, have a high marginal tax rate, or don’t like to or can’t salary sacrifice – this strategy may be something to consider! 

IMPORTANT 

Please contact us, ASAP for assistance with making your super contributions. There are a few things we need to check for you to ensure you don’t exceed your super caps, plus the timing of your contributions is crucial to get right to entitle you to a tax deduction for them in the 2018 year.

Tax Planning - Lifestyle Package

3 Financial things that will make a huge difference in your financial life – action required

1. HOW TO NEVER, EVER MISS OUT ON A TAX DEDUCTION 

Many people miss out on tax deductions, every year, because they: 

• Lose receipts 
• Forget about payments they make 
• Don’t thoroughly review their records at tax time 

We can now give you something that fixes this, for good. We guarantee it! 

If you are interested in using our new Lifestyle Package, please CLICK HERE now for full details. 

How much tax in the future will you save by using this? 

Tracking your spending on tax deductible items has never been easier with live feeds from your bank accounts straight to your Personal Wealth Portal, and tools to ensure that you never miss a tax deduction again. 

Plus – it’s as simple as clicking one button at tax time to provide us with everything you need to give us for your tax return. Amazing – and available right now. 

2. YOUR FINANCIAL WORLD – SORTED! 

Should anything bad happen to you – would your spouse / partner / family know how to find and understand your financial life? 

Would you like to get financially sorted? Bring your entire financial world into one place with real-time data feeds on all your property, loans, super, investments, wills, insurance, banking and tax. You can easily see everything you need at once. 

With all your financial information securely stored in the cloud for easy access, you'll never have to hunt through spreadsheets and filing cabinets again. And with access available on any device, at any time, keeping on top of everything will be easy. 

Knowing where you are financially, is the starting point to growing your wealth and making better decisions now so you can have an amazing financial future. 

Get started TODAY with the new Lifestyle Package. CLICK HERE now for full details. It’s very inexpensive, and it’s tax deductible! 

You'll thank us for helping you to finally get sorted! 

3. IN CASE SOMETHING HAPPENS TO YOU 

Where can your Important Papers and Passwords / Logins be found in case something happens to you? 

Taking time to organise your important papers and records may be the best investment you ever make. It is important for all responsible members of the household and designated family members who live elsewhere, to know where papers or records are kept and who to contact for advice in case of an emergency. 

The new Lifestyle Package “Personal Information and Estate Record” has been designed to assist you in preparing for such an occasion. 

Would you like a FREE copy of this very important document? CLICK HERE now to request it, and we’ll immediately email to you. 

By planning ahead and completing this document you save time, stress and money if an emergency should arise or a death occur. 

Plus, the best place to keep this completed document is in your “Personal Wealth Portal” – available to be accessed by you, your spouse or partner, and anyone else you decide to grant access to – your adult children, your parents, or other trusted family members. 

If you would like to get started with your Lifestyle Package - contact us TODAY.