Interaction

Alas, the end of another year comes to rest on the 30th of June, 2011 for all those Australian businesses... Along comes 2012, usually without any change and a "she'll be right" attitude!

Don't just settle, take some action!

Well, we're here to challenge you over the next month to put some plans of action in place so as you can "SHAKE THE FOUNDATIONS" in your chosen field and spruce up your business for the next 12 months, 3 years, 5 years and beyond.

Here's just a few ideas to stimulate your entrepreneurial spirit:

• Set your Sales/Revenue Targets
• Set your budgets
• Look at going paperless
• Streamline your systems
• Look at going into the cloud (our favourite!)
• Get organised!
• Clean-up
• Product Development
• Expand/Consolidate
• Innovate
• Renovate
• Reinvent
• Fire up your staff!
• Exit Strategy

 

Now these words may seem to have no link whatsoever, but, we challenge you to focus on answering the following questions with regards to the above:

• How you're going to implement your ideas (resources required)?
• What is the Opportunity/Cost?
• How can you measure the results of this change accurately?
• Does this tie in with our business plan?
• Will this make us an Industry Leader?

 

So grab a room, a Skype call, a Google Doc, some butchers paper, A chalk board, an overhead projector or even use your feet in the sand and take some steps to shake things up, improve your business and start focusing on what you're going to improve, by how much and how can we measure it in 2012!

Everyone wants to know how they can effectively, legally and legitimately minimise their tax bills for 30 June, 2011. We've put together a few little basic scenarios, that, if suitable you should consider implementing in the next month.

For businesses, remember, a few additional points:

• You are building an asset and most businesses are sold as a multiple of profit before income tax,
• Always reinvest in your business to boost the above and focus on the value add for the long term, not short term tax breaks (new assets, systems improvements etc. won't be a tax deduction straight away, but, should build your future profits).
• Never spend money for a tax deduction at most you get 30c for every $1 spent!

 

So without further ado, the tax lovers at Interactive have put together the following tax saving ideas:

 Businesses

• Invoice on 1 July instead of 30 June, it will reduce your tax paid in this year, but, you pay the tax next year (it's simply a timing method).
• Employers can pay their June Super liability before 30 June to claim the tax deduction, super expenses are only claimed when paid.
• Accrue bonuses for your key staff before 30 June and claim a tax deduction. This must be paid out before the end of the financial year and you will not receive a tax deduction when it's actually paid,
• Prepay your deductible expenses.
• If running on a cash basis, remember, that you claim your deduction and get back GST credits when paid. So consider this before 30 June.
• If you're running on accrual basis, review and write off any bad debts. Aim to have no debtors over 30 days by June 30!
• Directors and Trustees need to look at their balance sheet and review their loan accounts. If you've overdrawn cash from the business, consider repaying this before 30 June to avoid interest being charged on the loan and compulsory dividends being paid (Div7A).
• Make sure you get all your receipts in order, so you can be kind to your accountant!

 

Individuals/SMSFs/Trusts

• Consider salary sacrificing your unneeded pay in June into your superannuation fund if you earn more than $80,000 before Super. (check your payslip for your year to date earnings and your credit card bill to make sure you can survive!)
• Take advantage of the Super Co-Contribution (yes it's still happening) if you earn <$60,000 from your take home pay and the government will match up to $1,000.
• Make sure you don't exceed your super contributions, but, you've put in the appropriate amount as it's the lowest taxed saving vessel for the future!
• Review your investments and any sales of assets during the year to take advantage of keeping your portfolio in check. Remember,
  
  • losses and gains can offset each other,
  • Losses can be carried forward indefinitely,
  • When applying losses to capital gains, you lose half the benefit of the loss as it's applied before the 50% discount available on assets held >12 months that are sold for a gain. 
• Remember that items for education are able to be rebated in your tax return, so, if the kids need something to take their learning abilities up to the next level, consider buying it before 30 June. (50% rebate for families eligible for Family Tax Benefit A).
• Make sure you get all your receipts in order, so you can be kind to your accountant!

 

Don't forget to Set some Financial Resolutions and Goals for  the coming year, we've got some ideas & hints here.

Just a note, that the Flood Levy needs to be considered as per our budget blog. If you have any queries on the above, get in touch here!

Last night Treasurer Swann handed down his budget highlighting the expected financial results of the Australian Economy for the 2011 financial year and to present the governments proposed changes to it's projects and revenue streams for the 2012 financial year. 

Mr Swann has proposed to deliver the Australian Economy out of deficit by the 2013 financial year. Delivering the following results: 

• 2011- a deficit in 2011 of $50bn
• 2012 - a deficit $22.6bn 
• 2013 - surplus $3.5bn

So what effect does that have on me? Well, the Australian government funds the majority of its operations through direct tax collection from businesses and individuals just like you. Now, for the full Government release, please click the following link:

The Official 2011 Budget Documents

Alternatively, we've provided a simple list of the changes that we think effect our clients in the SME & Investment entity category and associated individual tax payers. So without further ado, please see below:

• Family Trusts and the distribution of passive income
• Review of Rebates, (Child Care Rebate in particular)
• Review of Negative Gearing on rental properties
• Review of company cards and FBT to try and reduce Australia's carbon footprint
• Government spending cuts & their tax implications
• Superannuation - Contributions, Pension Payments & Excess Contributions

Interactive’s selected budget updates

Family Trusts and the distribution of passive income

There was no clarification of the expected taxation of trust and linked entities (eg. Company beneficiaries). However, the government has made the change to the Low Income Tax Offset for minors to effectively reduce the eligible tax free amount of distribution to a minor to $416 in each Financial year from July 1, 2011.  

Review of Tax Offsets (“rebates in the old language”)

• Removal of the Low Income Tax Offset for minors who earn passive income > $416 from July 1, 2011.
• Removal of the spouse rebate when your spouse is <40, is not working, without children and without disability.

Review of Negative Gearing

After much hype, there were no changes to negative gearing regime imposed by the government.

Review of FBT to reduce Australia’s carbon footprint

The government will phase in a flat rate for statutory method of FBT of 20% over the next 4 years on new contracts from 7.30pm 10^th May, 2011. This has been reduced to discourage unnecessarily travelling more kilometres to achieve a tax benefit available with the current regime and provide a greener solution.

SME specific items

• The Entrepreneurs Tax Offset has been removed from 1.7.11
• The Depreciation on a new car in first year is increased by $5,000 in the first year accelerating the deduction. This additional benefit of $1,300 ($5k x ~30%) will not be realised until lodgement of your 2012 tax return.
• Super Guarantee Charge (9% standard super) will from 1 July 2011 will now present a personal liability for Directors of companies where the employees super contributions are not paid within 3 months of the due date (28 days after the quarter end) with no grace period provided at this time for payment.  
• New rules for payslips – from 1 July 2012 employers will need to provide the total cash payments made to super on employee payslips.
• Company Tax Rate 29% - from 1 July 2012 for eligible small business entities (dependent on the country's financial results)

Superannuation

Superannuation Contribution thresholds for the 2012 financial year

• Concessional Super Contributions thresholds will remain at $25,000 for those taxpayers <50 years of age.
• Taxpayers >50 years of age will be able to contribute up to $50,000 in Concessional Super Contribution providing their member account balance (per member of Superfund) is under $500,000.
• The additional $25,000 for >50 will not be indexed, only the base for all taxpayers of $25,000 will be indexed at intervals of $5,000. At present, there has been no indexation of this amount.

Pension payment rules for 1 July, 2011 and outlook for FY13

Please read the points below in conjunction with the ATOs guidelines on minimum pension payments.

• There has been a increase in the minimum pension amount payable from 50% of the “normal” minimum pension payment to 75% of the “normal” minimum pension payment amount. This applies for the Financial Year commencing 1 July, 2011.
• For the Financial year commencing 1 July, 2012, the minimum pension payment amount will revert to the “normal” rates.

Excess Contributions Penalties – A “minor” relief

A new option will be provided to avoid excess concessional contributions tax, for an excess of up to $10,000, on a once-only basis from 1 July, 2011. <Concessional contribution caps<

Conclusion

After much media hype, there’s been a reasonably conservative budget delivered.

The major point of interest will be whether or not the government blows out proposed expenditure items with natural disasters (let’s hope we don’t have any more!) and whether or not we are able to ride the commodity boom to a surplus in 2013…….?

At Interactive Accounting we believe in the best of breed model that SaaS platforms allow you choose, however, this does not suit all businesses as they grow beyond the capabilities of these small, agile platforms. 

At some stage of operation these small platforms lead to large user management requirements:

• Whom has access to what platform?
• What level of access do they have within each platform?
• Adding/Deleting users from multiple platforms, why does it take so long?

When these issues become more problematic, then it's usually time to move to a all in one ERP (Economic Resource Procurement) system that allows for one central management system for your CRM, Calendar, Inventory, Sales, Freight tracking, Webshop integration and general Accounting for all of your locations/branches in one central platform. 

Traditionally ERPs have, like all other software, been server based. The movement to the cloud means the following:

• Low cost of implementation
• Hardware updates not necessary on such a large scale
• Access to data anywhere at any time
• Automated backups and offsite redundancy plans

To find out more about how your business could improve it's efficiencies by implementing a SaaS based ERP system and what system is best suited for your business, please contact us at hello@interactiveaccounting.com.au