Tag Archive: business

Kirsten Armstrong

Posted on December 16, 2019 by Grace Dawson

Graduate Accountant

 

There was always going to be maths involved in Kirsten’s career, whether as an accountant or maths teacher. But accountancy was always her real goal and wanting the hands on experience of working in a firm while at University, Kirsten discovered the role at BLG. She has now been with us since 2015, making the office an even brighter place and working brilliantly with our clients, all while completing her Chartered Accounting qualification.

Kirsten enjoys building strong relationships with her clients, which also allows her to understand their operations and the outcomes they want to achieve so she can help them grow their business. She goes out of her way to assist and put them at ease, with detailed explanations of what is happening and why, so they have a clear understanding. A talent across all areas of business advisory services, Kirsten most enjoys tax planning where she can provide clients with noticeable value.

Kirsten believes she has the best of both worlds at BLG. A fun and friendly work environment, paired with the challenges her role offers, keeps things interesting on a daily basis. But her time away from the office is spent with her real loves – her fiancé and energetic dog. She loves going for walks, playing a bit of netball, spending time with her family and planning her wedding!

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Succession Planning – How to Prepare and Protect Your Business and People

Posted on December 2, 2019
by Cem Ozer

All businesses have lifecycles. From humble beginnings, where your once peaceful evenings capitulate into countless sleepless nights, contemplating how you are going to pay your staff. To the satisfaction of achieving your business goals and helping your employees grow professionally and personally. To the inevitability that one day, your journey within the business will come to an end.

It can be a daunting task to think of the potential hurdles your business may come across in the future, along with what will happen when you are no longer running the business. It is only natural that you want your business to have a life after you. Whether you dream about handing over the reins to your children, consider it a great personal achievement to pass it over to an employee who has been with you since day one, or even if you sell your business to a third party during it’s prime, putting a succession plan in place now safeguards everyone involved in the business, including if the unexpected occurs.

What is Succession Planning?

Succession planning means setting up your business for the future, with strategies in place for when you exit the business.

From an organizational level, this can include developing the skills of the people in your business to more than just the bread and butter of their daily work. This can mitigate the gap in knowledge within a senior role in the unfortunate event a position is vacated unexpectedly. On a larger scale however it develops individuals who can take over at the point that you exit the business.

From a personal perspective, it involves having the necessary foundations, policies and structures in place, to allow for a smooth transition when you exit the business.

Key Components of a Succession Plan

For a business owner, succession planning can vary greatly depending on your individual circumstances. However, there are a few key components that are common and essential for it to be successful:

  1. Start Planning Ahead of Time

It’s important to note that succession planning should not begin at the point you decide to move on from your business. The issues around business succession planning are varied and complex. As such, the earlier this is considered, the greater emphasis you can put on ensuring that the plan suits your intentions and any issues can be resolved.

  1. Structure Your Business for Your Future

One of the key benefits of planning ahead, is being able to review the way your business is structured. This plays an important role in both your personal and business’s future. Business structures are not only important for managing your tax requirements, but your personal assets also need to be taken into consideration.

It’s not uncommon for a business structure to be overlooked, especially upon its establishment. As part of BLG’s review process for new clients, we’ll often find their business structures are not set up in a way that provides the best outcome for their individual needs. Identifying ineffective structures early on can prevent avoidable consequences in the future.

  1. Prepare Your Business for Life Without You

The years leading up to your exit are often crucial. Therefore, deciding what the plans are for your business when you do leave can make this period easier to manage. If you are passing your business onto family or an employee, it’s important those next in line have the complete range of skills and knowledge to keep the business running effectively, and for the transition to be as smooth as possible. Furthermore, if you plan on selling your business, it’s ideal to show a strong financial position for potential external purchasers to maximize your proceeds.

  1. Be Aware of the Tax Implications

For many business owners, the sale or transition of their business will represent the most significant part of their retirement funding. Maximising your after tax proceeds will be a key goal, so it’s critical to get advice on your exit strategy, the tax implications themselves and how to best structure your retirement assets to minimise your tax liabilities.

  1. Safeguard Your Assets

In the unfortunate event that you exit the business because you have passed away, it’s important to form a plan for what happens to your personal assets alongside your business succession plan. This is known as Estate Planning, and is usually established via a Will. It is always beneficial to consult a specialized Estate Planning lawyer to assist in preparing a Will for this purpose, and BLG can put you in touch with our network of professionals if required.

How to Get Started on Your Plan

Succession planning shouldn’t be a reactionary tool. It should be considered through all the phases of your business lifecycle, and requires you to be proactive in your planning.

Do you intend to hand the reins over to the next generation, to someone from within the business, or sell to a third party? To get you started with succession planning here are some of the questions to ask yourself:

  • Who will run the business when you are no longer there?
  • Does the next generation share your passion for the business? Do they have the skills to run the business?
  • How can you maximise the ‘value’ of the business ready for sale?
  • What are the tax and legal implications of selling?
  • What will happen to the business upon an unexpected exit?

Establishing your succession plan can be a daunting task. The amount of information that needs to be considered can be quite overwhelming. As such, we recommend you speak to a trusted accountant or business adviser to guide you through this process. If you don’t have an adviser to help, you may decide our team at BLG can be of significant value to you. Have a talk with our team so you can find out if our approach suits your needs.

Wishing you and your business every success!

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Tax Planning – Strategies & Opportunities for Business Owners

Posted on November 12, 2019
by Tim O’Brien

4 min 30 sec read

Contents

  • Taking Time for Your Bottom Line – Why Tax Planning is Important
  • What does Tax Planning involve?
  • How to get Started – Questions to Ask Yourself
  • Questions to Ask Your Accountant or Business Adviser
  • When Should You See Your Accountant or Business Adviser?
  • Little Effort, Big Gain – Next Steps

As a business owner you probably have some goals you want to reach for your business. Do you know what strategies to put in place to get there or have a trusted adviser guiding you?

One strategy that all businesses should have set up is tax planning. As a business owner tax planning can be an exciting process – as it’s a real opportunity to stop, reflect and take charge of your business by planning ahead and focusing on the numbers of the future rather than of the past.

Achieving your business goals is much simpler with tax planning, but it’s equally important even if you don’t have goals and just want to make sure the business is running smoothly. It’s not until someone delves into the business that you realise there are improvements you can make.

Unfortunately, not all accountants offer tax planning or business advice, so if you work with an accountant it’s worth asking them about it. If they do then it’s a great opportunity for you to move forward, but if they don’t then we suggest seeing a business adviser to guide you through the process.

Taking Time for Your Bottom Line – Why Tax Planning is Important

Why does our team at BLG believe tax planning is one of the most important annual events for all our clients?

For business owners, it’s a great opportunity to down tools for 5 minutes and take stock of where they are at. It’s also as good a time as any to take a moment to be proud of what you have achieved, critical of what you haven’t, and envisage where you want your business to be in 3 months-time, in a years-time, in 5 years-time depending on your goals.

As business advisers, tax planning is an opportunity for us to help business owners be proactive with their business, provide valuable input around their projected earnings and tax position and show you how the business is performing as opposed to how you think it’s performing. This planning is extremely important for the long term success of any business.

Make tax planning that one time of the year where you actually do set aside a day to step back from your otherwise hectic schedule to assess the health of your business (and yourself for that matter). There’s a good chance your customers, employees, family and friends, and business bottom line will thank you for it!

What does Tax Planning involve?

In more detail, tax planning means reviewing your current business, asset, and liability position before the end of the financial year, and will give you an understanding of where the money you are making is going. It also involves identifying any opportunities or areas of concern in your business so you can make financial decisions in the short to medium-term that are well-informed. Through tax planning, business owners have the option to implement strategies before 30 June that manage your tax position.

How to get Started – Questions to Ask Yourself

If you are unsure about seeing an accountant or business adviser it’s a great idea for you, as the business owner, to review your business by asking some key questions. Answering these questions will help create a picture of how your business is tracking:

  • Are your sales in line with your expectations? If not are there opportunities to reach out to new customer bases? Are less profitable customers impeding your ability to service your better ones?
  • Do you have issues with collection of debtors? If not do you need to address your payment terms? Are you chasing your debtors promptly and regularly?
  • Are you incurring unnecessary expenses? Are you getting an adequate return on any advertising spend?
  • Are there expansion opportunities within your current business? If so what do you need to put in place to explore these?
  • Are your investments providing the returns you were hoping for?
  • How does this year’s performance compare to last year?
  • Are there any opportunities you should be taking advantage of?
  • Have you provided for any potential tax liability?
  • Are there any strategies you should be implementing prior to 30 June to manage your tax liability?

Once you’ve answered these questions it is our hope that you will feel comfortable with your business position and ready to forge ahead. Or maybe the results were not crash hot like you were expecting and you need some direction. Whatever your review turned up, setting up tax planning is the recommended next step.

Whether you decide to see an accountant or business adviser following your business review, just make sure they offer ‘Tax Planning’, not just Tax Advice, as they require different approaches. We give you a hand with this below.

Questions to Ask Your Accountant or Business Adviser

So what about us? What should accountants or business advisers be able to offer to create an effective tax planning strategy for your business?

To determine whether the accountant or business adviser you are meeting with can help you in the right way, you should really only need to ask two questions to receive the necessary feedback. But make sure that any advice they do offer is tailored for your business. Following are the questions and the types of responses you should be getting back.

  1. How does your tax planning process work?

The accountant or business adviser should offer the following:

  • A review of your year-to-date performance in comparison to previous financial years
  • Feedback on your business performance compared to industry standards
  • Commentary on any trends or areas of concern in your year-to-date figures
  • A review of your financial structuring
  • Business profit and income tax projections which in turn assist in all important cash-flow planning
  • A projection of your year end results based on our knowledge of your business
  • The ability to implement any changes that need to be made before the end of the financial year
  1. What are some of the tax planning strategies you suggest?

On the back of the above business analysis they should then suggest some strategies to help manage your tax liabilities and strengthen your balance sheet. Some of these include:

  • Taking advantage of any government incentives like the $30,000 instant asset write-off
  • Reviewing the remuneration packages of related employees
  • Maximising your superannuation contributions following past reforms, and detail any impact the reforms may have on you and your family group
  • Advising the minimum pensions to be paid from your superfund for the fund to maintain its tax exempt status
  • Assessing the viability of any salary-sacrifice options
  • Reviewing your current business structure
  • Review of the groups assets and liabilities
  • Ensuring compliance with Division 7A in relation to Director’s loan accounts and unpaid present entitlements (unpaid trust distributions)
  • Reviewing your ledger for potential unrecoverable debts or obsolete items of stock or equipment to be written off
  • Reviewing your Estate Planning and Succession Planning
  • Managing and advising you of your estimated tax position

At the end of a tax planning process with your accountant, you should expect to walk away with more insight into your own business, a greater level of surety to make short to medium-term financial decisions, and therefore be in a better position to take advantage of any opportunities available to you.

If you are ready for the next step to make sure your business future is strong and secure, feel free to take our team through the tax planning hoops and get the answers you deserve here.

When Should You See Your Accountant or Business Adviser?

When it comes to tax planning there are specific items that need to be performed ahead of the end of financial year. So it’s important to decide on an accountant or business adviser you are happy with now and meet with them in the last quarter of the financial year to ensure your strategies are set up in the right way.

Making sure you have covered all your bases ahead of financial year end will put you in good stead and may save you thousands or even tens of thousands off your tax bill. Like many other aspects of your financial life, through knowledge and understanding comes clarity and improvement.

Little Effort, Big Gain – Next Steps

No matter how big or small your business is, tax planning is worth considering.

Remember, it’s not just about tax, it’s about gaining a better understanding of your business as a whole and putting goals in motion. With the right advice you can achieve more than what you expect.

Although the process may involve an extra trip to the accountant, I believe it is an area of our work where we provide further value for money.

Your business is your livelihood so make sure you meet with a trusted accountant or business adviser for your tax planning.

If you are investigating a number of business advisers before making your decision, our team at BLG are available to delve into your business and show you a clear direction. There is no cost involved in an initial discussion with us about your business, and if you feel we aren’t the right fit for you then there’s no obligation to work with us, so why wait? We encourage you to get in touch today and get things moving!

Keep in mind your tax planning will need to be done prior to 30 June, ideally early in the last quarter of the financial year, so that any necessary action can be taken before year end.

Wishing you every success!

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Payroll Tax for your Business – The Details and Next Steps

Posted on October 8, 2019
by Peter Ryan
Payroll Tax in Australia is often misunderstood by business owners, which can be costly if you qualify but don’t register for it. So if you are an employer in Australia, you may be liable for payroll tax depending on your total wages expenses – which means you need to read on for more details.

Payroll tax is a state and territory-based tax that employers with wages over the threshold need to pay. Each state or territory sets its own payroll tax threshold and once an employer reaches that threshold, they are required to self-register for payroll tax.

So far it’s simple, right? While it’s true that the basics aren’t that complicated, it becomes more complex if:

  • You use contractors in your business,
  • Your business is part of a group employer, or
  • You employ people in other states.

It’s important to get it right – there can be steep penalties for failing to register or make payroll tax payments!

Following is a guide to help you out.

Payroll Tax Rates

The amount to be paid will depend on several things:

  • The business’s total ‘liable wages’ compared to the threshold amount
  • The state or territory payroll tax rate
  • Any exemptions the employer is entitled to

What is included in ‘liable wages’?

The most common types of remuneration subject to payroll tax include:

  1. Salaries, commissions, director fees, bonuses, allowances and any ordinary earnings, penalty rates, overtime and leave payments
  2. Apprentice/trainee payments (depending on the state or territory)
  3. Some payments to Contractors
  4. Fringe benefits – all benefits subject to the Fringe Benefits Tax Assessment Act 1986
  5. Superannuation contributions (including super guarantee and salary sacrifice)
  6. Leave and termination payments (those declarable for income tax purposes)
  7. The value of shares and options given to employees and directors.

2020 Financial Year Thresholds & Rates

Payments for employees in: Threshold Payroll Tax Rate
New South Wales $900,000 5.45%
South Australia $1,500,000 4.95%*
Victoria $650,000 4.85%**
Queensland $1,300,000 4.75%
Northern Territory $1,500,000 5.5%
Tasmania $1,250,000 4.00%***
Western Australia $850,000 5.50%
Australian Capital Territory $2,000,000 6.85%

* variable amount from 0%-4.95% between $1.5 million and $1.7 million.  4.95% from $1.7 million.

** 2.425% for regional employers.

*** 6.10% above $2 million

Employee Exemptions

Some payments to employees are exempt from payroll tax, including Paid Parental Leave (PPL) under the Commonwealth Government scheme, expense reimbursements and tax-exempt redundancy payments.

Contractor Payments

Payments to contractors are subject to payroll tax, unless an exemption is met. There are specific criteria a contractor arrangement must meet to be exempt from payroll tax.

Registration, Lodgement and Payment Obligations

Registration for payroll tax is required in each state once your total monthly Australian wages exceeds the monthly threshold for that state.

Once registered, your reporting and payment obligations are monthly. At the end of the year an annual reconciliation is required to be lodged. For NSW, the lodgement and payment obligations are:

  • Monthly – 7 days after the end of the month
  • Annual – 21stJuly

Other Payroll Tax Factors to Consider

Grouped Employers

Employers may be grouped for payroll tax purposes. This means their wages are added together and one payroll tax threshold applies. Grouping can occur when two employers have common control or common use of employees.

Threshold Entitlement – employees in multiple states or territories

If an employer has employees in different states, the threshold entitlement for each state is calculated on a proportional basis. For example, if 25% of your liable wages are in Sydney and 75% are in Melbourne, your threshold entitlement would be 25% of the NSW threshold and 75% of the VIC threshold.

What Are The Next Steps?

By now you should know whether you are liable for Payroll Tax. If you are and you haven’t yet registered then you can do that via Payroll Tax Australia.

However, even if you are not currently required to register for Payroll Tax, it is important for all businesses to understand, monitor and continually review their Payroll Tax obligations considering that:

  • Payroll tax thresholds are continually changing and vary between States and Territories;
  • The definition of ‘taxable wages’ for Payroll Tax purposes has a wide application and is not restricted to salaries and wages paid to employees;
  • Grouping rules can result in two or more businesses being entitled to only one Payroll Tax threshold (i.e. related companies, use of common employees, commonly controlled businesses etc); and
  • Payroll Tax compliance programs of state revenue offices have increased within recent years with substantial penalties imposed for non-compliance (including penalty tax and interest).

So make sure you stay updated with the changes to avoid costly ramifications, and if you would like to discuss your situation in more detail then please don’t hesitate to get in touch with our team who will certainly assist you.

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Commercial Property – a Good or Bad Investment?

Posted on August 2, 2019
by Phil Grant

There is always a lot of conversation and discussion over residential property. Topics like where the market is, where it’s going, if it’s a good time to sell, stories of missed opportunities to name a few. What isn’t discussed nearly as much is the subject of commercial property. The reason is simply because the residential property market is bigger – there are more people than businesses.

But the question businesses should be asking is whether buying commercial property is a good investment? This can be a difficult decision to make with limited information available. So here let’s go through the pros and cons of purchasing commercial property.

Pros

  • Gross rental yields are usually much higher than residential property, averaging 7-8% compared to residential property gross yield of 3-4.5%
  • Lease terms are generally longer than residential properties which provides security for tenancy and financing purposes
  • Interest rates are very low at the moment which keeps the financing costs of the property down
  • If the commercial property is to be used to run your business you may be able to access small business Capital Gains Tax concessions upon a sale or transfer of the property
  • A commercial property may be owned by your SMSF which can provide you with both short term and long term benefits

Cons

  • Generally it is harder to find tenants for a commercial property than a residential property
  • The value of the property generally doesn’t appreciate over a period of time like residential property
  • Finance to purchase a commercial property is generally more difficult to obtain than a residential property
  • The option period within a commercial property lease is at the discretion of the tenant

So is commercial property a good investment? Well I can’t say yes or no for you because every person’s situation and business is different and every property is different. However if you think about your own circumstances and run through the pros and cons like those outlined above, then I’m sure you’ll come up with the right answer for you.

If you have any questions and would like to discuss your business situation, please get in touch with our team at BLG Business Advisers online or by calling 02 4229 2211.

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Land Tax – What is it?

Posted on July 22, 2019
by Maria Ackroyd

Land tax is a state tax and is one of several charges you may be required to pay when you buy property. This tax generally applies to those who own, or jointly own, a property in NSW that is not their primary place of residence, or that is not exempt and is above a certain land value threshold.

We go through all the details below.

Land Tax Exemptions

You are generally not required to pay land tax on:

  • your home (primary place of residence)
  • your farm (primary production land)
  • land you own with a total taxable value below the land tax threshold (listed below)

Land Tax Key Points

  • Land Tax is payable on property you own with a total taxable value above the land tax threshold and can apply to vacant land, commercial premises, investment properties or holiday homes
  • Land tax is assessed on 31 December each year on unimproved land you own
  • Land owners need to self-assess and register for Land Tax if required

Land Tax Thresholds

Land Tax is a state tax where thresholds change every year so you need to be aware of the rates and limits in each state where you hold property.

  • 2019 General land tax threshold is $692,000
  • 2019 Premium land threshold is $4,231,000
  • Individuals, most partnerships, companies and superannuation funds are generally entitled to the threshold
  • ‘Special Trusts’, including most discretionary trusts, are NOT entitled to the threshold and taxed on the total value of their property
  • If the combined value of your land does not exceed the threshold, no land tax is payable
  • Land tax is calculated on the total value of all your taxable land above the land tax threshold
  • Land Tax for general land is calculated at $100 plus 1.6% in excess of the land value threshold, where the premium land attracts a higher charge of 2%

If you are registered for Land Tax you will receive your Land Tax Assessment in January, outlining properties that are liable and whether they qualify as general or premium land. If you disagree with any land values used in your assessment, you can submit an objection within 60 days from the date of issue.

Find out more about NSW Land Tax here, and if you would like to discuss your property situation our team is happy to assist you. Get in touch with BLG Business Advisers online or by calling (02) 4229 2211.

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Dealing with Change

Posted on June 4, 2019
by Clayton Childs

Over the last few weeks we have seen Bill Shorten lose the ‘un-losable’ election and Scott Morrison win the ‘un-winnable’ election… ‘losers’ & ‘winners’ out of the same situation. The difference is all a matter of perspective some would say.

It has been interesting to assess the post-election opinions in the media. One fairly constant refrain has been that the promotion of too much change was a contributor to Bill Shorten & Labor’s downfall.

I tend to think it is human nature to not like change, especially when we perceive nothing is ‘wrong’ with the current situation we find ourselves in. Some would say however that change is inevitable and thus one of the few knowns in a world of unknowns.

In many years of business consulting I have found clients are faced with change constantly, and in recent years it has come faster and in higher volume due to technology. The clients who have embraced the change and tried to make it work on their terms, through well thought out strategies and early planning, have generally been positive and content at the end of the process.

Next time you are faced with a situation where the only option is change, try to see it for the opportunities it presents, not just the potential annoyance it may also bring.

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So the Coalition won – What does this mean?

Posted on May 27, 2019
by Luke Bland

The Liberal-National Coalition has emerged with a surprise victory following the election, with the promise of lower taxes evidently enough to sway voters. With the vast majority of media coverage leading up to the election focusing on Labor’s proposed tax policies (restricting negative gearing, denying franking credit refunds, taxing trusts at a minimum of 30% and reducing the 50% discount on capital gains to 25%), what does it mean now that we know the Coalition has retained power?

Firstly, they were strongly opposed to Labor’s four core policies mentioned above, so taxpayers don’t need to worry about the issues that were being raised by these policies. Outside of opposing these policies, there wasn’t much that the LNP brought to the election other than what was previously announced, either in their budget on 2 April or prior.

Businesses

Instant Asset Write-off

The instant asset write-off has been increased and extended. From 2 April 2019, businesses with annual turnover of less than $50 million will be able to claim an outright tax deduction for asset purchases under $30,000 (rather than having to capitalise and depreciate these asset purchases).

Small Business Company Tax Rate

The government will decrease the company tax rate (and the franking rate) for companies with annual turnover of less than $50 million to 26% for the 2020-21 tax year and to 25% from 1 July 2021.

Deferral of Proposed Division 7A Changes

The proposed changes will not be implemented until 1 July 2020 (as opposed to the previously announced 1 July 2019) as there have been many issues raised that need to be addressed before the legislation can be drafted.

ABN Holders

ABN holders will be required to meet their income tax return lodgement obligations from 1 July 2021 and confirm the accuracy of their details on the ABN register annually from 1 July 2022, in order to remain an eligible ABN holder.

ATO Tax Avoidance Taskforce

The LNP have announced an extra $1 billion over 4 years for the ATO to undertake additional compliance activities targeting high wealth individuals, trusts and family groups, as well as large public companies and multinationals.

Individuals

Tax Offsets

An additional low and middle income tax offset of up to $1,080 will be available for individuals earning up to $90,000, being phased down to nil once your income exceeds $126,000.  This offset will automatically be applied upon lodgement of your 2019 income tax return.

Marginal Tax Rates

Individuals earning over $37,000 will see a decrease in their marginal tax rate from 1 July 2022, when the upper limit of the 32.5% tax bracket jumps from $37,000 to $41,000. The 37% bracket limit will increase from $90,000 to $120,000.

From 1 July 2024, the 32.5% rate will fall to 30% and this rate will apply from $41,000 to $200,000. Labor opposes these “high end” tax cuts so the government may find it challenging to have these measures enacted.

Superannuation

Individuals aged 65 or 66 will be able to make voluntary superannuation contributions without having to meet the work test. Further, they will be able to access the “bring-forward” rule, allowing them to contribute up to $300,000 of non-concessional contributions (depending on other factors).

If you are looking for some assistance to navigate the legislations our team are available to guide you. Take this opportunity to get in touch with BLG Business Advisers online or by calling 02 4229 2211.

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Deductibility of Conference Expenses – What can you claim?

Posted on May 16, 2019

In any industry it’s necessary to attend events that form part of your training or offer useful industry and business information. You’ll be happy to know that conferences that require a cost to attend can be claimed as a tax deduction as long as they relate to your business or work activities.

Here’s a run down of what types of event costs can be claimed as a tax deduction and what records are required to be kept.

What can be claimed?

You can claim the cost of attending the following events if they are sufficiently related to your work activities (ATO website), such as:

  • Conferences
  • Seminars
  • Education workshops
  • Formal education courses provided by professional associations

The claimable expenses related to the above events you attend include:

  • Cost of the conference/event/training
  • Transport costs, including airfares, train, buses and taxi fares
  • Tolls, parking fees and short-term car hire
  • Meals and accommodation costs (if your trip includes an overnight stay)
  • Expenses incurred that relate to motor vehicle travel e.g. petrol and repair costs for a hire car

It is important to remember that any private/personal portion of your event and travel costs are not tax deductible and you need to show that your claim excludes any private part of a trip.

In addition, you can only claim travel expenses that you have paid – you will not be able to claim expenses that have been reimbursed.

What records need to be kept?

Whether your conference is domestic or international, written evidence needs to be kept for all conference-related expenses incurred. Written evidence simply means keeping your receipts (e.g. conference, airfares, accommodation, taxi fares and hire-car expenses).

If a conference or business-related event requires you to be away from home for six or more consecutive nights, you will need to use a travel diary (or a similar document) so a higher level of detail can be recorded.

A travel diary needs to record the following:

  1. The nature of the activity
  2. The day and approximate time the business activity began
  3. How long the business activity lasted
  4. The name of the place where you engaged in the business activity

Have you incurred conference or other travel expenses this year? We have a number of long-term medical specialist clients we work with and we know your time is valuable.

Find out more about what you can claim and further details that can assist your situation prior to the end of financial year. Get in touch with our team at BLG Business Advisers online or by calling (02) 4229 2211 today.

 

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Owning Your Business Premises – Considerations & Buying Options

Posted on May 7, 2019

Have you established a new business and you are on the hunt for a business premises? Is your business growing too big for its current space?

The decision of whether to lease a business premises or buy your own can be a difficult one to make. It depends on your current situation and the long-term goals for your business.

Being the owner of your business premises can offer a number of benefits in the right circumstances. Below we take you through what to consider, the potential benefits and the options for buying.

Buying Considerations

  • Upfront costs – when purchasing a property, the upfront costs are significantly higher than the upfront costs of leasing a property. Ensuring you have the appropriate amount of capital available to invest in a property and run your business is key. You will need to budget for a deposit, appraisal costs and potentially renovation/fit-out expenses depending on the needs of your business.
  • Cashflow – owning your own business premises requires you to have the cashflow for the ongoing associated expenses, including (but not limited to) loan repayments, rates, strata, repairs & maintenance and property insurance.
  • The right size – If your business is in a growth phase then you need to consider the size of the premises you want to buy. In this case, the flexibility of a lease might be more appropriate for you.
  • Start-up business – If you are just starting up then you need to consider whether leasing a small space alongside like-minded businesses, or being able to obtain a more desirable location while you are establishing your image, are more appropriate options than committing to a property purchase and loan.
  • Commercial property loan – As a general guide, banks will only loan up to 70% of the market value of the commercial property that you are looking to purchase, which is known as a 70% loan-to-value ratio (LVR). Plan ahead to understand the deposit required for your intended purchase, plus on-costs such as stamp duty and legal fees.

Benefits of Owning Your Premises

  • Asset & equity – a business premises is an asset that generally appreciates over time. The equity growth in the property gives you an opportunity to seek additional finance for business growth and can lead to long-term capital gains.
  • Flexibility & control – owning your own premises gives you the flexibility to fit-out and make changes to the property at your own leisure – you can make the space exactly what you need.
  • Tax – the costs associated with owning your business premises are generally tax deductible. This includes the interest on your property loan, repairs and maintenance, rates, electricity and any other ownership costs incurred. You may also be able to claim depreciation on the building itself.
  • Security – owning your own premises secures your location. The right location can have a huge impact on the success of your business.

Buying Options

So you have decided that buying a premises is the right direction for you? Here are ways to move forward.

Generally you should try to hold passive assets such as a commercial property in a separate structure to your business, so that the asset is protected if the business faces financial difficulties for any reason.

Some of the options that you could consider when buying a business premises include:

  1. Personally – buying a premises in your name is the cheapest option as there are no fees to set up or maintain a structure. However, property should only be held personally if the individual has a low risk of being litigated. Sole traders and company directors generally do not fall into this category.
  2. Trust – holding property in a Trust offers asset protection. A trust also gives you the flexibility to distribute the rental income earned across your family group. The disadvantage of owning property in a trust is that trusts do not receive a Land Tax threshold. This means that more land tax could be payable compared to holding the property in another structure.
  3. Self-Managed Superannuation Fund (SMSF) – Your SMSF may be able to purchase your business premises, subject to the Deed and Investment Strategy of the SMSF.

A business property purchase in an SMSF may be funded by cash or via a Limited Recourse Borrowing Arrange (LRBA) i.e. a loan to the SMSF. Obtaining an LRBA is becoming increasingly difficult with many banks opting to not offer an LRBA product. LRBA’s generally require higher deposits and shorter loan terms than other loans.

Investing in a commercial property and weighing up your options can be a complex process, so it’s important to seek advice from a trusted business adviser. We have an experienced team available to assist you, whether during or after business hours, depending on your availability. Make your purchase work for you. Get in touch with BLG Business Advisers online or by calling (02) 4229 2211.

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