At Affinitas Accounting we like to share and celebrate our client’s success.
Congratulations to The Brisbane Plumbers for being our ‘Client of the Quarter’.
For a business that started less then a year ago Courtney & Joseph have done extremely well in growing their client base and brand name around Brisbane.
Foreign residents (also known as non tax residents) of Australia will soon have to pay tax if they sell their own homes at a profit.
This change, announced in the 2017-18 Federal Budget, potentially affects all property owners from 9 May, 2017 in two broad categories.
The first is those who sign a purchase contract for a property after 7.30pm on 9 May, 2017, and sell that property as a non tax resident of Australia. These people will need to calculate whether a capital gain has been made and pay tax accordingly. This will apply regardless of your tax residency status when you bought the property.
After many years of hard study, starting your medical career can be a rewarding time – from both a work and financial perspective.
The early months and years will be busy – getting to know different hospitals and the new rotations each term. Long term financial planning may not be your immediate priority, but there are still a few things you should spend some time on in this early part of your career.
Super is often overlooked when you’re starting in the workforce and usually we sign up to the one recommended by our employer. There may be nothing wrong with the fund offered by your employer, but you should get at least a basic understanding of how it works – after all, it’s your money!
Things to consider are the return the super fund is making, what fees they are charging and what, if any, insurances are housed within the fund – and whether you could be paying too much for these insurances – in some cases up to 40% too much. Your super investment strategy needs to fit your long term goals and also what is known as your risk profile. Knowing your risk profile helps guide you towards the investments that might best suit you.
Keeping yourself registered, insured and up to date isn’t cheap. There’s no getting out of paying these expenses but, on the plus side, most of those costs are tax deductible. Those annual registration fees to APRHA for example are deductible, as is rofessional indemnity insurance, subscriptions to medical journals, training courses and text books.
Make sure you keep receipts for all expenses that relate to your work and then you can discuss with a tax professional whether or not they can be claimed in your annual tax return. Remember, deductions don’t work on a straight dollar for dollar basis – but they should get you some extra money back to help ease the financial pain.
We often see professionals do some locum work on the side, for example after hours doctor services, on top of their main wages job. Two misconceptions relating to this work can be:
1) It’s all extra spending money.
Well this is partly true, but it’s important to factor in that tax is usually not withheld on these payments, it will be payable in your year end tax return.
2) It’s not worth it – you just end up working for the tax man.
The extra hours that you work will mean extra tax to pay. But after the tax man takes his cut, you will still be left better off than before. It’s up to you to decide if what you get in the hand from this extra work is worth the extra hours.
If you are looking at starting a second job, even if that job will be withholding tax from payments, it is always a good idea to have a look at how the second job will effect your overall tax position. At the end of the year your two incomes are added together with any other assessable income, deductions taken away and a final taxable income calculated.
The tax you owe is then calculated based on this taxable income and this figure can include any amounts you owe for HECS, Medicare Levies and Medicare Surcharge. This final tax figure you owe is then compared with the tax that has been withheld on your behalf during the year – and that is how your tax bill or tax refund is calculated.
After working for a while you may find surplus cash building up in your bank account. After all those years of being a student, most of you will want to set yourselves up with a car and probably shout themselves a decent holiday. But what about other financial priorities?
Should you pay off your HECS debt? Invest it in shares/property? Should I borrow some money to invest and where will I get the best deal? Put extra into super? It is important to get advice on the financial options that best suit you and everyone is different. There is no one solution that suits everyone.
You probably won’t have a 100% financial blueprint for the rest of your life at this point in your career. But you should use these early months and years to gather a good team of advisers around you – ones that can help you now with your immediate priorities and also be there for you in the future.
At Affinitas, we understand the medical industry and have the tax, insurance, investment and lending advisers that you can call on when you need them. Contact us for a chat on 07 3359 5244, or even send us a message on Messenger.
Medical professionals study long and hard to establish their careers and the best way to secure a long-term vision to start your own medical business.
Often, medical professionals choose their path to make a difference – to the lives of their patients, their families, and their own futures.
But whether you are a GP working with patients in a suburban practice or a specialist with consulting rooms and an operating list, it always pays to remember that a medical practice is a small business.
Successful medical practitioners realise that to achieve their goals and be properly rewarded after the years of hard work and study, they need to get both the medicine and business working together towards a common outcome.
To do this, you need to get the right advice and gather a good team around you – preferably as early as possible in your career. And during your hospital training years can be an ideal time to start.
The following are five tips/traits that are commonly found in successful medical practices:
1. Identify Your Greatest Asset and Get It Insured
The most valuable asset in any medical practice is the medical practitioner themselves. A medical practitioner has the ability to earn many millions of dollars in fees over a working life – so getting this insured should be one of your first priorities. Source advice on putting quality policies in place and get it done early when you are young and fit. Beware of just insuring for the now, make sure you insure with an eye on your future needs as a practitioner and a breadwinner in your family.
2. Get Your Business Set Up Right
There is no off-the-shelf solution that suits the set-up needs of every medical professional business. Each medical practitioner has his/her own existing assets, debts, family situation and future needs. Sit down with a professional accountant early in your career and start discussing these options well before you make a decision to go into private practice.
3. Outsource Non Core Work
You should understand how your business works, but do not try to be the medical practitioner, practice manager, financial adviser and business accountant. Find good people to fill these roles, pay them appropriately for their skills and experience – then concentrate on your own area of expertise.
4. Run Your Medical Business – Don’t Let It Run You
As a medical professional, your own health and personal relationships can suffer from the strain of stress and overwork – just like your patients. Be ruthless with your time management and make sure you set aside slots for personal and family time. Getting point number 2 correct (Outsourcing Non Core Work) can be a big help in this area.
5. Tax Savings Are Important, But Only One Part Of Wealth Creation
Many medical professionals are high income earners and that usually means a large tax bill to pay each year. This tax bill can be taken out as part of your salary when you are working at a hospital, or paid via your business structures when you are in private practice. Your business and investment planning priorities should always be mindful of being tax effective, but tax is just one element in the overall picture. Focusing only on maximising tax deductions can reduce your tax bill, but it may not produce the best overall wealth accumulation outcome. Make sure you have a financial adviser who considers BOTH your tax and investment strategies.
Truck Drivers – both long haul or short haul – are an essential part of the lifeblood of any western nation.
Whether it be our food, fuel, building materials, furniture, motor vehicles or any other general parcel – they all need to be trucked around our country and within our cities.
Trucking is not for the faint-hearted, with professional drivers often spending up to 300 days per year on the road. And when things go wrong and bad accidents occur it is always a tragedy for all concerned.
Our farms and other small business depend on the trucking industry. And most truck drivers, themselves, are small business owners who are trying to earn a living and feed, house and clothe their family.
As accountants and financial advisers, we have spent more than 25 years helping family owned trucking businesses. The following are some helpful suggestions gleaned from more than 25 years of dealing with these hard working small business owners.
While Santa is double checking his naughty and nice lists, small business owners should make and review their own list of tasks to ensure the festive season shut-down and return to work is a jolly time for all concerned.
Get into the festive spirit
December is a busy time of year for most businesses trying to wrap up work before the holidays. But don’t forget that the end of a year is also a great time to celebrate and acknowledge the hard work and achievements of your team over the past twelve months. Start by creating a festive environment and getting creative with Christmas decorations, activities and events. If you use social media, then include festive season themes in this communication.
The following ten tips will help rental property owners avoid common mistakes.
Getting these things right will reduce the risk of failing an ATO audit and save you time and money.
1. Keeping the right records
You must have evidence of your income and expenses so you can claim everything you are entitled to. Capital gains tax may apply when you sell your rental property investment. So keep records over the period you own the property and for five years from the date you sell the property.
2. Make sure your property is genuinely available for rent
Your property must be genuinely available for rent to claim a tax deduction. This means that you must be able to show a clear intention to rent the property. Advertise the property so that someone is likely to rent it and set the rent in line with similar properties in the area. Avoid unreasonable rental conditions.
3. Getting initial repairs and capital improvements right
You cannot claim initial repairs or improvements as an immediate deduction in the same income year you incurred the expense. Repairs must relate directly to wear and tear or other damage that happened as a result of you renting out the property.
Initial repairs for damage that existed when the property was purchased, such as replacing broken light fittings and repairing damaged floor boards, are not immediately deductible. Instead these costs are used to work out your profit when you sell the property. Ongoing repairs that relate directly to wear and tear or other damage that happened as a result of you renting out the property such as fixing the hot water system or part of a damaged roof are classed as a repair and can be claimed in full in the same income year you incurred the expense.
Replacing an entire structure like a roof when only part of it is damaged or renovating a bathroom is classified as an improvement and not immediately deductible. These are building costs which you can claim at 2.5% each year for 40 years from the date of completion.
If you completely replace a damaged item that is detachable from the house and it costs more than $300 (e.g. replacing the entire hot water system) the cost must be depreciated over a number of years.
4. Claiming borrowing expenses
If your borrowing expenses are over $100, the deduction is spread over five years. If they are $100 or less, you can claim the full amount in the same income year you incurred the expense. Borrowing expenses include loan establishment fees, title search fees and costs of preparing and filing mortgage documents.
5. Claiming purchase costs
You cannot claim any deductions for the costs of buying your property. These include conveyancing fees and stamp duty (for properties outside of the ACT). If you sell your property, these costs are then used when working out how much, if any, capital gains tax you need to pay.
6. Claiming interest on your loan
You can claim interest as a deduction if you take out a loan for your rental property. If you use some of the loan money for personal use such as buying a boat or going on a holiday, you cannot claim the interest on that part of the loan – regardless of whether the money is secured against the property or not. You can only claim the part of the interest that relates to your purchase of the rental property or money borrowed to pay for expenses or renovations for the property.
7. Getting construction costs right
You can claim certain building costs, including extensions, alterations and structural improvements as capital works deductions. As a general rule, you can claim a capital works deduction at 2.5% of the construction cost for 40 years from the date the construction was completed.
If the previous owner claimed a capital works deduction they are required to give you the information they used to calculate the costs so it always pays to ask them for this. If they didn’t use the property to produce assessable income you can obtain an estimate from a professional.
If you use the services of a professional to establish these deductions, make sure they are qualified, use a reasonable basis for their valuation and exclude the cost of the land when working out construction costs. (we recommend BMT: http://www.bmtqs.com.au)
8. Claiming the right portion of your expenses
If your rental property is rented out to family or friends below market rate, you can only claim a deduction for that period up to the amount of rent you received. You cannot claim deductions when your family or friends stay free of charge, or for periods of personal use.
9. Co-owning a property
If you own a rental property with someone else, you must declare rental income and claim expenses according to your legal ownership of the property. As joint tenants your legal interest will be an equal split, and as tenants in common you may have different ownership interests.
10. Getting your capital gains right when selling
When you sell your rental property, you will make either a capital gain or a capital loss. This is the difference between what it cost you to buy and improve the property, and what you receive when you sell it. There may also be some add backs if you have claimed capital work deductions. If you make a capital gain, you will need to include the gain in your tax return for that financial year. The year it must be included is based on the date the contract is signed. If you make a capital loss, you can carry the loss forward and deduct it from capital gains in later years.
Find more tax tips for first time rental property investors here. For any questions about your existing rental properties or a potential purchase, contact us, your property investment accountants in Brisbane on (07) 3359 5244, email or reach us through Messenger below.
Business owners are, by nature, optimists.
To open and run a small business you have to believe in your industry, your ideas, your team and yourself.
Working with potential business owners to buy or set up a new business is an exciting time for all concerned.
Everything is bright, shiny and new – and pointed towards successful outcomes.
Many, via working hard and smart, achieve their growth and profit goals. Successful businesses can produce strong income for the owners and sometimes eventually be sold at a substantial profit.
But the sobering statistic is that 66% of small businesses in Australia fail within the first six months.
Goods and Services Tax (GST) was introduced more than
17 years ago.
Most people understand the basics, but there are still some
areas that prove tricky to understand.
Imported Services and Digital Products
From 1 July 2017, Australian GST applies to imported services and digital products.
Some common examples of imported services and digital products include:
• online supplies of software
• digital trade journal/magazine subscriptions
• website design or publishing services
• legal, accounting or similar consultancy services.
In the wake of the confusion surrounding which companies may qualify for the new lower company tax rates, the government (via Treasury) has released draft legislation on how the rules may apply.
The draft legislation outlines that companies will only qualify for the new lower 27.5% tax rate if:
- The company carries on a business in the relevant tax year
- Its aggregated turnover is less than the applicable threshold ($10M for the 2017 year) and
- Less than 80% of the company’s assessable income is passive in nature