John, Author at Finness Advisory

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John

Don’t let TAX ruin your Great Australian Dream

First home buyers are increasingly turning to property investments as they are priced out of the homes they want to live in.

House prices have surged more than 20pc over the past year, CoreLogic data shows.

This brings up a very important topic around taxation.

5 WAYS TO MANAGE A CASH CRUNCH

A little while back we went through the one report I believe every business owner needs right now, which is known as a 13-week cash flow forecast.

The insights from this report will help you be decisive and allow you to act, giving your business every chance of meeting these challenges head-on.

Are you confident you have enough cash in your business for the next few months?

What business owners need to know about a cashflow forecast

There is no doubt that many businesses are going through challenges that seem insurmountable at the moment.

One report I recommend every business owner should look at is a 13 week rolling cashflow forecast.

This will give insights on the potential cash coming in, and cash going out of the business over the next few months. Importantly it will indicate where the gaps might be.  

Is the right accountant on your team?

Another financial year done and what a year it’s been!

If you’re a business owner, ideally by 30 JUNE you should have a fair idea of what your tax liability for the 2021 year will be and have all the appropriate documentation executed.

Over the last number of weeks, we have been posting daily tax tips here outlining just some of the ways you can legally organise your business affairs and minimise your tax position for 2021.

This is what great accountants do with their clients to ensure they are just paying the “right amount” of tax so more of your hard earned money stays in your pocket and you know what you’re estimated tax is well in advance of the due date.

Use a bucket company to save more tax

Recently we have been discussing family trusts and the ability to potentially split income across the family and reduce your overall tax bill.

I have since been getting a lot of enquiries asking what could be done if the trustee has split the income as much as possible within the family, but every family member is now on the top rate of tax (because of their income levels).

The answer might be having a company as another beneficiary of your trust.

Are you in the right business structure?

There are several structures to choose from when it comes to running a business but there is no “one size fits all” approach and needs to be based on your specific circumstances..

One option is what are commonly known as “family trusts”.

An advantage of a family trust, is that the trustee has discretion each year with regard to who gets the income and gains from the trust. From a tax perspective, this could split the tax burden very efficiently across the family.

A dividend that comes with credit

Some dividends that are paid to shareholders have a refundable tax credit known as a franking credit.

This simply means that the company has paid tax on company profits and the tax credit attaches to the dividend when paid to the shareholder.

A tax deduction that is often overlooked

Having a property depreciation schedule performed on your rental property by a qualified quantity surveyor, who produces a depreciation schedule for your Accountant, can literally save you thousands of dollars in tax each year.

It’s money for nothing and many property investors either forget about it or simply have their local accountant knock together a “best guess” schedule that rarely maximises your deductions.

Trustee resolutions make sure its done to avoid 47% tax.

If you have a trust as part of your business group, it’s absolutely paramount that the trustee resolution for the trust is prepared and signed ON OR BEFORE 30 JUNE 2021.

This sets out how the trustee (usually the business owner) will allocate the current year income to the beneficiaries of the trust.

In other words, it sets out who gets the income and this will impact what tax they will ultimately pay.

𝐂𝐨 𝐂𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧 – 𝐰𝐚𝐧𝐭 $𝟓𝟎𝟎 𝐟𝐨𝐫 𝐅𝐑𝐄𝐄? …𝐖𝐞𝐥𝐥 𝐬𝐨𝐫𝐭 𝐨𝐟.

If your partner earns taxable income of less than $39,837 (up to maximum threshold of $54,837) and you put an after-tax contribution of $1,000 into super, the government will kick in $500. It’s a no brainer if you’ve got the cash.