With the start of autumn comes the promise of cooler weather, as well as the end of the Fringe Benefit Tax (FBT) year, and the lead in to the end of the financial year.
With the holiday season behind us, the Budget ahead of us, plus local, state and federal elections looming, there is the possibility of change ahead.
How do you navigate the announcements and rumours and set yourself for these possible changes?
As we have seen from prior years, many of the more controversial changes don’t make it through parliament to actually become law. For those changes that do make it (like the $20,000 immediate deduction for assets), it is a matter of waiting to see the detail of the legislation before having a crystal clear understanding of how to best take advantage.
Moral of the story: announcements of future policy and intentions are good for politics and padding out newspapers and online news sites, but it comes down to the government actually taking action on those ideas before we can have any certainty of change and the effect it might have.
Is Your Bookkeeping Holding You Back?
One of the inevitable aspects of running a business is the need to keep control of your paperwork and keep your accounts in order.
On top of the monthly and quarterly activity statements, quarterly superannuation reporting and yearly tax returns, up to date accounts provide valuable information on the state of your business and its cash flow.
So how do you keep on top of the paper and continuous barrage of invoices and receipts, payroll and sales information?
There are smarter options than a shoe box!
With the continuing evolution of accounting software, and the move to cloud based systems which allow greater integration between different systems like payroll, Point of Sale (POS) systems, and websites, it has never been easier to simplify, integrate and automate so many aspects of your bookkeeping.
With so many options available, how you do pick a solution to fix your problems?
Firstly, review you business to identify the pain points – those tasks that seem to take too long, and chew up too much of your precious time. These are typically centred around payroll, stock management, accounts receivable and accounts payable.
Next, work out why they take longer than you want them to. Is it getting the source documents into your accounting package that takes too long? What about entering timesheets from employees? Or do you have a problem preparing and sending quotes or invoices to your customers?
Now that you know what areas of your business need fixing and what is causing you the issues, you can now review the options available and find a solution to match.
With the right software options and integration between various systems, we have seen reductions of up to 80% in the amount of time spent keeping accounts up to date.
In the majority of cases, with a little discipline financial statements can be kept up to date every day, or at the very least every week. The major benefit of doing this is the availability of financial information to keep a track of the performance your business, and to keep on top of your cash flow.
Tools such as the ability to email invoices directly from your accounting package and automatic reminders sent to your customers if they haven’t paid their invoices can not only reduce the time taken chasing debtors, but also improve the speed with which customers pay you which improves your cash flow.
If you are unsure about which options are best for you, contact us at Value Beyond to discuss your needs and find the right solution for you.
Last Call/First Call on Salary Packaging
The current FBT year ends on 31 March 2016, and the new year starts on 1 April 2016.
This also means that yearly limits for various fringe benefits, exemptions and rebates also end on 31 March 2016.
If you haven’t been salary sacrificing during the last 11 months, there may be an opportunity to take advantage of some of these benefits in the next 30 days, which could see you receive some significant savings in tax.
Who is best able to take advantage of these tax savings?
If you work for a charity, not for profit, or public benevolent institution, then you may have access to various FBT exemptions and rebates which could see you saving $3,000-$4,000 or more in tax by salary packaging various benefits.
For others, it could be the ability to salary package a motor vehicle that will see the greatest benefits. Depending on the type of vehicle, the vehicle’s cost, and the running costs of the car, it may be beneficial to have these costs taken out of your pre-tax salary.
A word of warning through – do your numbers first before jumping in. Those who are on lower marginal tax rates who do not do a large number of work related kilometres may find it is cheaper to pay for their car with after tax salary.
This can be especially true with electric vehicles such as the Tesla. As there are little to no running costs to claim each year, there may be little benefit in having these types of vehicles salary sacrificed. Another option for salary packaging is to make additional contributions to superannuation.
As the contributions are taxed in the super fund at only 15%, the tax benefit is the difference between your marginal rate and the 15% rate – this could be a saving of up to 34% of your contributions, or a maximum tax saving of $11,400.
The best starting point is to investigate what type of salary packaging is available at your workplace to know what options you have. From there, review the numbers to ensure that there actually is a saving/benefit.
Keep in mind that the whole reason for salary packaging is to ensure that there is a saving in tax, which leaves you with more money in your pocket or in your superannuation.
What is a Trust?
Have you every wondered just exactly what is a trust?
In conjunction with our downloadable e-book, we have put together a series of videos to explain the basics and help give you a better understanding of trusts.
As always, if you have any questions around trusts and how they might benefit you, call us at Value Beyond.