Tax Blog

  • Ever thought about buying an existing business and are unsure on where to start?

    Buying an existing business can be scary and unless you get the right information and the correct advice, it could be a costly exercise.

    Here are 8 important factors you need to know when purchasing a business.

    1. Location
    2. Purchase Price and what is included
    3. If a retail business, analyse stock turnover and current stock on hand
    4. Get a list of current customers and see what sort of spending they are doing and weather they are loyal or not.
    5. Analyse previous year’s figures to determine whether it’s profitable and work out if it can deliver a comfortable income stream for you. The reports that as Accountants we analyse for our clients are Profit & Loss statements and Balance Sheet. The Profit & Loss Statement will give you the performance whereby the Balance sheet will outline the Assets & Liabilities. With formulas and Due Diligence we can determine whether the business is good or bad.
    6. Find out the current market in that particular industry and find out if anyone else is providing the same product or service nearby
    7. Understand and know the obligations of current employees. Employees help you grow your business so you must understand any current obligations so you can manage them effectively when taking over.
    8. When starting a business, consider the different structures and pick the best which would suit you. Some structures can be cheap but will not give you the protection you need especially if you have assets to protect.

    For more information on structures or if you are wanting assistance in purchasing a business even if you are just starting a new business from scratch, give us a call on 1300 799 906 and we will be able to assist you making your business journey easier.

  • ATO targets borrowing expenses and/or legal claimed on rental properties

    On reading and after several discussions with other Accountants, some clients may receive letters from the ATO in relation to reviewing expenses especially borrowing expenses and/or legal expenses claimed on their rental properties.  These letters are to advise the clients that the expenses claimed look higher than average and must show evidence to support their claim. See below article from the ATO:

    https://www.ato.gov.au/Individuals/Data-matching-letters/Types-of-letters/Rental-expenses/

    You need to be aware that certain borrowing expenses are claimed over 5 years not upfront. Examples of borrowing expenses would include:

    • Lenders Mortgage Insurance
    • Loan Establishment Fees
    • Title search fees
    • Costs for preparing Mortgage Documents.

    In relation to legal expenses, this relates to any legal services incurred in regards to the rental property. A few clients have issues with their tenant which forces them to take matters further which in turn will incur legal fees.

    Now, if you receive these letters you have two options:

    1. If you agree with the information contained in the letter then no need to do anything as the ATO will issue an amended assessment.
    2. If you disagree with the information, then you must reply to the ATO in writing.

    For more information, contact TaxPro today.

  • Medical Expenses Rebate to be phased out

    In the past as you may all know, you can claim the medical expenses rebate on any out of pocket medical expenses over $2,160. As part of the Federal Budget last year in May, this was all changed.

    The rebate still exists for the 2013/14 year, but only if you meet one of the following criteria:

    • You claimed the medical expenses rebate in the 2013/13 year
    • out-of-pocket medical expenses relating to disability aids, attendant care or aged care expenses until 1 July 2019.

    Now, if you are eligible for the rebate in the 2013/14 then you can keep claiming it until 2019. The one year that you stop claiming then you can no longer claim the rebate as this will be phased out by 2019.

    Please note that the medical expenses rebate is also means tested. The more you earn the bigger the threshold. So in other words the standard threshold is $2,160 but if you are single and your income is over $88,000 then your threshold bumps up to $5,100 and your rebate is 10% instead of 20%. Below please find the table from the ATO.

    Table 1
    Family status ATI threshold What can I claim?
    Single

     

    (single at 30 June 2014 and no dependent children)

    $88,000 or less 20% of net medical expenses over $2,162
    above $88,000 10% of net medical expenses over $5,100
    Family

     

    (with a spouse at 30 June 2014, or dependent children at any time during the year, or both)

    $176,000* or less 20% of net medical expenses over $2,162
    above $176,000* 10% of net medical expenses over $5,100

    Contact TaxPro today on 1300 799 906 if you would like to discuss this further.

  • Private Health Insurance Government Rebate now means tested

    Private Health Insurance Government Rebate now means tested

    as from the 1st July 2012, the Private Health Insurance Government Rebate was means tested. This means that the government rebate you would receive on your premium would be affected in regards to the income you earn. The government rebate you would of previously received was as follows:

    – Under 65 years of age – 30%
    – 65-69 years of age – 35%
    – 70+ years of age – 40%

    Below please find the income tax thresholds

    Currently, the income test thresholds are as follows:
    Single Income ≤$88,000 $88,001-102,000 $102,001-136,000 ≥$136,001
    Combined Income ≤$176,000 $176,001-204,000 $204,001-272,000 ≥$272,001

    Rebate
    < age 65 30% 20% 10% 0%
    Age 65-69 35% 25% 15% 0%
    Age 70+ 40% 30% 20% 0%

    Medicare Levy Surcharge – No Private Health Insurance
    All ages 0.0% 1.0% 1.25% 1.5%

    So in summary, if your single income is more than $136,000 or $272,000 combined with your spouse, you will not get any rebate from the government.

  • Tax Tips From TaxPro

    Last minute tax tips from Taxpro

    As mentioned, only 2 days left to the close of what has been a year of decisions and changes. It is never too late for last minute deductions etc. Below please find some tips from us here at Taxpro.

    1. If you are self employed and are looking for a tax deduction, pay some money into super. Most super funds are excepting payments up to 5pm today. This means you will get a tax deduction for this in the 2011/2012 year. Please bear in mind that if you are claiming a tax deduction for this contribution, the superfund will tax you 15%. So if you are in a 15% tax bracket already, it is not worth doing.

    2. In regards to work related expenses, especially courses and subscriptions, please make sure you pay for the course and/or subscription by 30 June to give you the tax deduction in this year even though the course is to start in the New Year.

    3. For business clients operating on a cash basis please be aware that your customers might pay you at the last minute so please be careful and plan ahead. If you are 100% sure you are getting the money in before the 30th, please start paying for outstanding bills. Please be aware that this will only help you if your income is high and you want to reduce your tax. In some cases where your tax rate is low, the deduction is better in the following year so it will not be worth paying for it now.

    4. As it is end of year and you operate a business with trading stock, please conduct a stock take and value your trading stock. There may be great deductions if your closing stock is less than your opening stock at the beginning of the year.

    5. Please keep your receipts for medical expenses especially if your out of pocket expenses are over $2,000. This will entitle you to a 20% rebate of the amount above $2,000. Please ring up Medicare and your Private Health insurance company and request a report on your out of pocket spending throughout the year.

    6. If you don’t have any private health insurance and your income for the year was $80,000 as a single person or $160,000 combined with your spouse, you will get stung the extra 1% surcharge. If you fall into this category, please take out private health insurance to cover you for next year.

  • 2012 Tax Returns Perth

    2012 Tax Returns Perth The end of the year is fast approaching and we must be getting ready to lodge our tax returns. With the ATO keeping a close eye on all taxpayers, we must ensure we are keeping our records correctly and accurately. Our Staff at Taxpro understand what the ATO need but are on your side when it comes to claiming the most out of your refunds. We prepare your tax returns in perth and all surrounding areas. We come to you day or night 7 days a week to your home and your office. Our tax accountants have many years of experience and know the law of taxation, so we strive to get you the maximum refund you are allowed by the ATO. Never miss out on those extra deductions. We know that you all get taxed quite a bit during the year and are anxious to know what you are entitled to get back at the end of the year. We are now taking appointments for July so don’t miss out and give us a call on (08) 9248 5495 to experience the Taxpro Difference.

  • Medical Expenses

    Do your out of pocket expenses medical expenses exceed $2060? If so you may be entitled to an offset of your income

    During the financial year July 2011 to June 2012, if you have spent more than $2060 in medical expenses, you will be entitled to an offset of 20% of the difference between what you spent and the threshold of $2060. The $2060 threshold did increase from $2,000 which was the previous amount in the 2010-2011

    Such medical expenses include:

    1. Dental

    2. Prescriptions

    3. Medicare Gaps

    4. Private Health Insurance Gaps

    Please call our friendly staff at Taxpro on 9248 5495 for more information.

  • Tax Depreciation

    Property Tax Depreciation

    Have you recently invested in a newly investment property and are wanting to maximise your deductions. We recommend in getting a quantity surveyor report done on the property. This repost will give you endless deductions on your investment property to maximise your negative gearing.

    We recommend and use a company called depwest. They are very professional when it comes to depreciating your property. If the property is between 0-10 years old, the property is likely to have substantial depreciation in which you can claim on your end of year tax.

    Properties which are older than 10 years may still have some value there for depreciation so please do not hesitate to give the professionals at Depwest a call as they will be able to advise you further on this.

    Please feel free to visit their website on www.depwest.com.au

  • Is Now The Right Time For You To Refinance?

    Mortgage Refinance Guide

    Refinancing your current home loans can be a difficult choice. Just because you see a better rate is available, it doesn’t necessarily mean you’ll end up saving money by switching. However, if you do it right, and at the right time, you could end up saving large sums!

    Unsatisfied with your rates or seeking better customer service? You’re certainly not alone. There are always plenty of borrowers looking for a better deal.  But while it might look like a good idea on a quick glance, refinancing needs to be considered carefully before going forward.

    Despite the smaller number of players and number of mortgage products in the mortgage market, competition is still alive in Australia.

    What To Consider First When Refinancing

    When it DOES make Sense

    •   Your lender’s rate isn’t staying competitive with others in the market
    •   A major change occurs in your financial situation
    •   You are looking for more money to pay for home renovations, a child’s education costs, or invest in another property
    •   Switching to a fixed rate at an opportune time
    •   You’ve started to see large credit card debts and want to consolidate

    When it might NOT make sense

    •   You might not own the property for much longer
    •   Prepayment penalties are high on exiting home loan
    •   Since your previous loan your credit history has taken a hit due to outstanding debts, making it less likely you’ll get a good rate
    •   You’ve got an uncertain income over the period of the loan, such as work as a freelancer
    •   Your loan balance is low and you’re not thinking of redrawing on available equity

    Before refinancing, a borrower should consider their circumstances for usually over the next three years. You should ask yourself whether flexibility, a lower rate, lower fees or debt consolidation is the goal.

    Just chasing a lower interest rate won’t be enough. You need to think about the entire life of the loan, not just the headline interest rate. Also think about the costs of changing to another lender.

    Some of the most important things for borrowers to be aware of when considering refinancing include the impact of any fees that may be applied, such as entry, exit, application, valuation, stamp duty and legal fees, as well as any other ongoing charges.

    It’s also worth talking to your existing lender when considering refinancing with another one. Some lenders might go to unexpected extreme lengths to keep you, such as waiving fees, rather than let you go to a competitor. That can be especially true if you’ve made all your payments on time and have been with that lender for a number of years already.

    If you approach another lender, it’s important to always present the best financial picture of yourself to them. Make sure you’ve paid off as much of your other debts as possible and drop unnecessary credit cards.

    Those who want to refinance but have been late in paying their bills and owe considerable amounts on a credit card might not be able to find a lender who is going to offer very good rates.

    Wanting a lower interest rate and lower repayments is one of the more common reasons to refinance. Many borrowers have been frustrated that their lender increased their interest rate by more than what was set by the Reserve Bank of Australia, while other lenders have only passed on the set increase or even less.

    Even a slight increase (or decrease) in your interest rate can make a major difference over a long-term loan. Others who are looking to refinance might just want to fix their repayment, especially if they sense rates have – or soon – will bottom out.

    Another reason to refinance your home loan might be to consolidate your debts and only have one monthly repayment. If you have multiple debts from various sources or institutions such as a home loan, personal loan, credit card or other high interest loans, and you’re having trouble paying these off, then it could make sense to roll these debts together with your home loan. The main advantage here is that your home loan rate is typically a lower rate.
    The key is to make sure you don’t lower your repayments once you’ve consolidated. The same is true if you manage to get lower interest rates on your variable home loan. The savings that this provides should be used to pay the loan off faster, so don’t be tempted to use this as spending cash.

    As it can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. A professional Mortgage Broker can help guide you through this process.

    4 Reasons why you should use a Mortgage Broker in 2016

    The start of a new year is a great time to review your finances.  Work may have slowed down just enough to give you a window of time to figure out what processes and practices you can improve upon.

    Do you need advice on your home loan? Are you getting the best possible mortgage rates and terms? Do you have a mortgage plan customised to your needs? Are you using the equity in your property to its advantage?

    Here are the top 4 reasons why a good broker can help get your new year off to a great start.

    1. EXPERT ADVICE

    Banks deal with all types of loans that only relate to their bank, whereas mortgage brokers are specialists in selling mortgage and mortgage related products from various lenders.

    Whether you are a first home buyer, investor or re-financer, your mortgage broker has the knowledge to expertly guide you through the process. They stay up to date with new products, promotions and regulations and are a great source of information about all things home loan.

    2. PERSONAL ATTENTION

    There are many steps in the home loan process and a professional mortgage broker will help you through: taking care of the paperwork, managing the application process, assisting with settlement. They take the time to work one-on-one with you to evaluate your specific needs and find a lender that suits you personally.

    3. SAVE MONEY

    Mortgage brokers have access to a large network of lenders, which puts them in the driver’s seat when it comes to securing competitive rates and terms that fit your situation. They deliver advice on your financial options, and unlike banks they are not necessary restricted to choosing the products of one lender.

    4. SAVE TIME

    Often people avoid refinancing their loan because it takes so long to compare one lender to the next. Mortgage brokers can save you the leg work by showing you multiple lender product offerings at just one visit. The amount of time they can save in phone calls and emails to make sure your loan is set up properly and approved on-time is priceless.