Eligibility Criteria For Training Tax Deductions​

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Claim an additional 20% expenditure

Claim an additional 20% of expenditure that is incurred for the provision of external training courses to their employees.

Eligibility

  • Small Business
  • Employee is in Australia
  • Course is provided by a registered provider in Australia

Make sure that not only does your entity qualify but also that the money you’re spending it on.

Suppose your bookkeeping has been done for this financial year, and you’ve reconciled the training clearly. In that case, you should talk with your accountant to ensure they have been accurately recorded and accounted for.

* This measure will apply to expenditure incurred in the period commencing from 7:30 pm AEDT 29 March 2022 until 30 June 2024. Please note: These measures are not yet law.

If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions. 

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax. 

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us. 

Business Structure Tax Rates

Tax Rules
 

You can use a business structure for doing anything like investing in shares, separating your assets out of your personal name. Also, you can even run a businesses out of companies and trusts. We use that a lot with our clients here at Inspire when we are structuring their businesses where we incorporate companies and trusts into their family group. This is where we take into consideration the business structures tax rates.

A reason to incorporate trusts or companies is because of the investment in cryptocurrency. One of the big reasons why you might want to do that is because of the alarming tax rate where individuals pay up to 47% tax, depending on their income.

Tax Rates

The business structure tax rates:

Company

Companies are taxed at two different rates, depending on what the company does. 

  • 30% Tax Rate– If it’s a purely investment company. It doesn’t run a business, a business of trading cryptocurrencies, or a business of mining cryptocurrencies. 30% tax rate is a passive investment, and not an active trading.
  • 25% Tax Rate–  is for small business concessions. You need to have most of the company’s income to access this lower 25% tax rate. You can see 25% is almost half of the highest marginal tax rate of an individual.

We are not saying, “Everyone, just set up a company if you’re trading,” but that is something that we might consider if we were to advise you on what structure to use for your investments. 

 
Trust

A trust doesn’t necessarily not pay tax, but a trust gives its profit to other individuals or companies or other entities in the family group, and they pay the tax on the trust’s behalf. We do have clients who invest through trusts and they have to distribute at the end of each year the profits. The people who receive that pay the tax. 

 
SMSFs (Self Managed Super Fund)

There are two rates of taxes for SMSFs.

  • 15% Tax Rate– is what we call the Accumulation Phase where you’re growing your balance in super throughout your lifetime. Majority of Australians are in the accumulation phase, and they’ll be paying 15% tax on the profit that they make in their SMSF.
  • 0% Tax Rate– is for the Pension Phase. When you’re drawing on your super at a certain age or older, and you’ve met the conditions of release for super, then you have the option for your super to be taxed at 0%.
Asset Protection

Asset Protection

At Inspire, we work with a lot of business clients and so asset protection is key with what we do. Basically, we want to make sure that the business is not in their own name as a sole trader. If the entities are set up right, we get some form of protection.  

Got a burning question you want to get off your chest? Book a complimentary 20-minute strategy chat with an Inspire Accountants.

Family Business Distribution Rules Explained

Family Business Distribution Rules Explained Infographic

Rules explained:

If you’re distributing to a family member, the money should directly go to them, and they should be the one utilising that money for their economic benefit.

If you’re a family business and you distribute funds to your spouse, that’s generally acceptable. For example, if you transfer the money to a joint account and spend all the income together, it’s considered permissible. 

If you’re a parent and your children are living with you and you provide financial support by giving them money directly, you can distribute that money through your business instead.

If the idea of the whole distribution was just to reduce your tax, then that’s going to be a no. You have to be very careful about what the reason is, and what sort of arrangement you have with your children as well.

If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions. 

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax. 

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us. 

Get 20% Extra Tax Deduction
On Tech Expenses

Tax Deduction

Get 20% extra tax deduction on tech expenses with the Small Business Investment Technology Boost

You can claim extra 20% on expenses that support digital operations and digitising operations, such as: 

  • Digital Enabling Items – e.g. cost to set up a digital payment system, any subscriptions that help digitisation etc
  • Digital Media and Marketing – Audio and Visual content that can be created, accessed, stored or viewed on digital devices
  • E-commerce – Supporting digitally ordered or platform-enabled online transactions.

The concept here is that you can claim an additional 20% as a tax deduction. For example, if you have spent $100,000 (which is currently the limit), you will be able to claim a deduction on $120,000, allowing you to claim 20% on the increased amount of $120,000.

 

If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions. 

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax. 

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us. 

Why I Will Probably Never Retire

Here’s a snippet from the Young Family, Small Business Podcast where we did a reverse interview with the host, Ben Walker.

The question was asked,
“When are you going to retire? When are you going to stop working and enjoying life?”

 

We asked Ben the question, when are you going to retire? When are you going to stop working and start enjoying life?

Here’s what Ben said – 

“In all honesty, I feel like I will never retire.

But I’ll refine my working week, my life with my kids, and my family  so that I can do what I love. I’m aiming from 80% to 95% of the time with balance. And if I do that till the day I die, that’s winning. 

One of those things that sank into my mind is what, if money wasn’t a thing? If you asked me that question, I’d be sharing this ‘wealth for life’ message with clients, growing our team, helping them, being able to service the work with their clients better and all the training that goes into that. Personally, helping out with some tricky client advice restructures, and financial control – this lights me up and gets me out of bed.”

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If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions. 

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax. 

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us. 

Margin Scheme - A Brief Overview

In this article, we will discuss the Margin Scheme and the prerequisites for its application in your business. The Margin Scheme is particularly relevant for developers, as the Goods and Services Tax (GST) can significantly impact their operations.

The Margin Scheme Explained

Let’s suppose that you’re in the process of purchasing a block of land. If you bought it from a vendor who is registered for the Goods and Services Tax (GST), it means that the seller is already obligated to pay GST on the sale. In this scenario, the purchase is considered a taxable supply.

For instance, let’s assume that you purchased the land for $100,000. Since GST applies to the sale, the total amount you would need to pay the seller is $110,000 (inclusive of GST). As a result, it’s crucial to discuss with the seller that you want to apply the margin scheme if you intend to use it. If the seller agrees to this arrangement, it should be clearly outlined in the contract.

If you have purchased the land as a taxable supply, then the Margin Scheme cannot be implemented, as you will be able to claim the GST cost of $10,000, as stated in the earlier example of buying the land. However, if the land was purchased as a taxable supply, it has been discussed that the Margin Scheme will apply then Margin Scheme can be applied.

In case you have acquired the land as an input tax supply, meaning it was purchased from a non-business private seller, and it’s just residential land, then it is not subject to GST. If the Margin Scheme can be implemented, it still needs to be mentioned in the contract that both the vendor and the purchaser have agreed to use it.

Benefits of the Margin Scheme

Instead of GST being calculated as 10% of the GST exclusive purchase price, GST payable under the margin scheme is calculated on the difference between the selling price and the costs of acquiring the premises. As a result, the amount of GST payable under the margin scheme can be considerably less than that which would be payable under ordinary methods.

How can the Margin Scheme be applied?

There are two methods when applying the margin scheme:

Consideration Method

The first method for implementing the Margin Scheme is known as the Consideration Method, which has been in effect since July 1, 2000. If the property was purchased after this date, you can use this method. Essentially, to calculate the Margin using the Consideration Method, you need to deduct the purchase price, along with any settlement costs or adjustments, from the selling price. This difference represents the Margin or Consideration that you can calculate. It’s important to note that this calculation does not include any development costs, only the selling price of the land itself. Therefore, applying the Margin Scheme requires some calculation and is not as straightforward as it may seem.

Valuation Method

Another method for applying the Margin Scheme is the Valuation Method. This approach requires obtaining the market value of the land, which must be determined by an approved valuer. The valuation is based on the payment received by the seller as outlined in the contract of sale, or it can be a valuation prepared by a state or department for tax purposes.

To calculate the Margin using the Valuation Method, subtract the value of the land as per the valuation from the selling price of the property. It’s worth noting that while the Consideration Method is more commonly used, the Valuation Method may be more appropriate depending on the specifics of each case.

How to report the Margin Scheme on your BAS

Applying the Margin Scheme involves a complex calculation process, which spans across multiple financial years and takes into account various development costs. The total margin needs to be reported in the BAS sales figure, which reflects the amount of GST on the margin.

Businesses that are applying the Margin Scheme need to report the gross figures on their BAS after calculating the GST after the margin, the ATO will automatically include the GST that has been withheld, and the ATO will refund or request payment for any difference. Additionally, for GST on Purchases (1B) transactions, which involve GST on purchases, developers can claim their development costs normally.

The primary benefit of applying the Margin Scheme is that it can make a significant difference from a GST perspective, especially for developers. As the cost of land continues to rise, being exempt from the GST net for land costs can greatly improve a project’s feasibility.

This is a brief overview of the Margin Scheme, and if you have any further questions, like eligibility for the margin scheme, please don’t hesitate to contact us online.

Great Tax News For Businesses & Individuals

Small Business Skills
Unlocking great tax news for businesses & individuals


1. Small business skills and training boosts

This was released in March earlier this year, where you make an investment in training, or in your employees. There’s some eligibility criteria that’s not being taken off the table, not that we can see. And draft legislation is also under consultation right now which is great news because some people acted on that back in 30th of June ‘22 as part of some of your tax planning strategies as well.

Small Education Expenses

2. Self education expenses.

This is more for individuals, but if you incurred any expenses to educate yourself in relation to the job or the work that you do, you can claim a deduction. 

Previously, they would reduce the course or the self education expense by $250, they’re trying to get rid of that which is still in place.

If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions. 

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax. 

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us. 

Write Off Bad Debts To Reduce Tax

Debt 2

In a scenario where you have provided a service to someone and they refuse to pay despite your efforts to resolve the matter, it may be wise to consider writing off the unpaid invoice instead of dwelling on it. By doing so, you can claim it as a deduction in the same tax year instead of keeping it as a receivable on your books. 

However, it’s important to note that you shouldn’t write it off too soon. If you haven’t exhausted all possible means of recovering the debt, it may not be appropriate to write it off. But if you have taken all necessary steps, then you can proceed with writing it off and claiming the deduction.

https://inspire.accountants/chat/If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions. 

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax. 

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us. 

Ben Walker Gives Tips
For Sustainable Success

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Being a business owner, you’re not capable of doing everything. You need to delegate and let go of some core business and key responsibilities for sustainable success.

You have so many lives and livelihoods under your responsibility, which is why oversight is crucial.

We’ve seen some business owners just brush off tasks as ‘someone else’s problem,’ but the truth is, even if someone else is doing it, it’s still your problem if that plate drops at the end of the day.

Delegating while still maintaining oversight is crucial for sustainable success and work-life balance.

You need to make sure you don’t get stuck in the business to the point where you neglect spending time with your family. Ben Walker, Founder of Inspire said, “I’ve made so many of those mistakes in the past. There comes a point where you have to snap yourself out of it and ask yourself, what am I here for? Once you’ve had that realisation, you make necessary changes and keep pushing forward.”

By finding the right balance between delegation, oversight, and personal priorities, you can build a thriving business and lead a fulfilling life.

We firmly believe that having a strong team around you is one of the most crucial factors for success. Having a reliable and capable team can make all the difference in achieving your goals. 

If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions. 

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax. 

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us. 

How Do Banks Calculate Buying Capacity?

We invited Colin O-Loughlin, Director and Mortgage Broker of Arch Brokerage on the topic, “Buying A Commercial Property In SMSF”. In the video he walks us through how banks calculate the buying capacity.

How Do Banks Calculate

When it comes to securing a loan from a bank, understanding how they calculate buying capacity is essential.

Other things that banks will consider, on a case by case basis, is the remaining assets and funds, and the potential returns that they’ve got coming back into the fund. 

Keeping in mind, the combined net incomes need to provide a minimum 1.25 times cover of the assessed debt repayment. 

Essentially, let’s say that you had a repayment of $50,000 a year from a loan. 

It just needs to cover 1.25 times that with the income. 

So, if we looked at $50,000, as long as there’s about $62,500 in market rent, super contributions, or potential remaining returns, then it would be sufficient to tick off and be able to get the loan. 

There’s no extra buffers or worries or anything else that you need to consider when looking at it. 

It’s a very simplified version of, “Is there enough income coming in? What’s the outgoing? And is there a positive part there?” 

That’s a simple view on how the buying capacity is calculated from the bank’s point of view.

If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions. 

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax. 

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us. 

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