Posts in Business Planning
Have you Restructured your Business Lately?

Many business owners decide to change their structure, often from sole proprietor to company or from partnership to company. But what happens with tax consequences?


When you sell a business, you would usually be up for paying income tax since the business has been sold or transferred its assets.

But when you change the structure of your business, ownership of the assets doesn’t change - so the ATO have a rollover process. This allows you to transfer assets as part of a restructure without having to pay income tax on that transfer. Yeah!

However, there used to be other tax consequences of transferring depreciating assets when undergoing a restructure. For example, a company transferring a depreciating asset (such as a ute/car, plant and equipment) to a sole trader could inadvertently create a dividend.

With the latest tax change in November 2018, there will no longer be any income tax consequences when your restructure involves the transfers of depreciating assets. This will automatically apply.

Remember, registered tax agents like Team Accounting can help you with your tax planning and compliance.

Your Opinions Wanted on Payment Delays

The ATO writes that invoice payment times in Australia are among the worst in the world, with invoices paid on average, 26 days late. This can affect your cash flow significantly.

The Australian Small Business and Family Enterprise Ombudsman has announced an urgent review of payment times, to measure how late or extended payment practices affect the cash flow of small businesses and family enterprises.

The Ombudsman wants to hear your experience with payment times and what is on your contracts to customers.

Fill out the survey out here: Payment times and Practices

Information gathered will be used to provide advice on how late and extended payment practices might be improved in small businesses.

Is your Accounting Work Reactive or Proactive?
Accountants support your business and your life in many ways. Source:

Accountants support your business and your life in many ways. Source:

As small business owners or wealth builders, most of us want a proactive accountant: one who keeps an eye on their figures (alerting if they go off-track). One who communicates 2-3 times a year, with an eye to the future. In fact, MYOB found that 93% of Australian business owners wanted that type of relationship!

So, we are no longer looking for simply a tax compliance and set-up service. As real-time accounting software is used more, it is ever more important to have a business advisor interpret the prime figures. You are saving on data entry and cross-checking work by using software, so accounting advice adds value here.

As banking and loan documentation becomes more demanding, that too can be an area to discuss and plan (when advising on cash flow and budgeting).

There are so many areas that you and your accountant can resolve to proactively plan… rather than reactively finding out your incoming cash won’t meet the needs of that December tax bill and overheads!

As busy accountants, there are some hurdles to giving proactive advice. One, finding out when clients are free to converse and which areas of need they have. Then, ensuring to put the planned call into a calendar.  Also, not having too many other client accounts that are priority one. But here at Team Accounting, your personal tax accountant will always put time aside for you to discuss important issues.

Another proactive measure is alerting you, the client or prospective client, to issues surrounding your financial world. Team Accounting has just printed 18 information sheets, covering most-asked subjects, like:

buying a business, choosing sole trader or company, selling a business, investing in property, employees or contractors, what does a SMSF do, salary sacrificing to super, the Medicare levy and surcharge, valuing a business, retirement planning, and trusts.

You can come into the office at 131 Sutton Street, and pick up a few for free!

Being a Proactive Business Person

You can help the accountant help you, by being clear about which aspects of business and life are of concern to you in the next six months. OK, we’ve done your tax return, now what about planning your director’s 9.25% super contributions? (Ensuring any employees’ super is up-to-date too).  Now might be the time to look at your yearly budget. What else can you save towards as a business asset?

As a proactive accountant, we must also advise if it’s suitable to switch to an online accounting software and the steps involved. For some, it’s not needed, but for multiple property owners and modern businesses with lots of activity, the benefits of real-time accounting software most likely outweigh the trouble of setting it up.

Again, it’s about asking your accountant a question and getting a full response. Every professional at Team is never too busy to properly understand your problems and goals – that is all part of being a proactive accountant.

Although our business advisory isn’t free, you might find that it’s cheaper than some business coaches, while being immensely practical. This is because time is charged hourly and not by arbitrary value. The value you receive by planning with your accountant (in business and for property) is returned both in dollars and in peace of mind.  

Could you Apply for a Business Grant to Enable Growth?

Every year, government agencies distribute millions of dollars in grants to eligible small and medium businesses. But, securing funding is not easy, as you can imagine. Those successful have undertaken detailed research and solid preparation.

You’ll first need to assess if your business has enough time and the resources to make an application – because the research and planning takes quite some work. Here’s basically what you need to do:

·         Read the funding program’s guidelines and start the process plenty of time before the grant’s due date.

·         Gather a business plan or detailed description of business

·         A detailed project description (why you are applying for it, aims and outcomes)

·         A list of your team’s experience and skills, and

·         Complete the application forms.

Typical Grants for Business Growth

While we missed the deadline on the Small Business Digital Grant for this year, there are also grants to help a business innovate.

The Entrepreneurs' Infrastructure Program, delivered by the Australian Government Department of Industry, Innovation and Science, provides easy to access practical support and funding. This programme is the Government’s ‘flagship’ initiative for business competitiveness and productivity. It aims to help small and medium enterprises to commercialise novel products, services and processes. It supports with business management advice in your industry, start-up incubator support, and innovation facilitators’ connections (a bit like a mentor) and accompanying connections grant.

Part of this program that might be of interest is the Business Growth Grant. This provides matched funding of up to $20,000 for the cost of hiring an expert to help with implementing the advice and strategies. It is accessed once you have undertaken advice from Business Evaluation, Growth Services, Supply Chain Facilitation or Tourism Partnerships programs.

For Queensland-headquartered, high-growth aspiring businesses with a turnover of at least $500,000 last year (and fewer than 50 employees), there is also the Business Growth Fund. Government provides funding of up to $50,000 for eligible businesses wanting to purchase specialised equipment or services (e.g. feasibility study, engaging an advisory board) that directly enable more growth. A co-contribution of 25 to 50% to the total project cost is requested.   

It is interesting to note that ‘high-growth’ is considered to be at least a 20% increase in turnover or employment rates within the next two years.

Need financial support?  Take a ride through the Queensland Govt Grants Finder.

Cash-flow Projections

When planning your cashflow and budgets for innovation or digital business growth, consider taking the time to get a Cashflow and Budget Analysis done with your business accountant.

This session is more than just looking at current numbers; it will help you see what figures are needed for your objectives and what would potentially come in from the changes (i.e. return on investment). Having a clear path to financial growth may also take the angst out of making the bigger decisions.

An Exciting Discussion about Tax-Deductible Investing

Coming up to the tax reporting season, many of us consider viable tax deductions… oh wait.  If you’re a business owner, you won’t even be thinking of doing end-of-year tax preparation now. But you might be finalising needed purchases that are within the $20,000 immediate asset deductible limit. As a canny business owner, you may be considering ways your business and life can improve in the next Financial Year.

Rather than focussing on short term tax planning, what about investing for the longer term?

So let’s talk about Deductible Debt. Excited? Good.

This is debt where the interest and costs may well be tax deductible – either in advance or in arrears.  A song to the hearts of many a medium to high individual earner on the 32.5% or 37% marginal tax rate. But remember your tax-free margin – making it a little tricky to work out in the head.

You could be deciding whether to invest through company, or through individual, or through a trust. The base rate entity company tax is 27.5% for the companies with aggregated turnover threshold less than $25 million for 2017-18.  Trust taxes – it depends on the trust beneficiaries’ tax rates.

Where to Invest for the Future

Some of the areas where you might consider expending on an investment and then getting tax deductible interest – now or at the end of next financial year – are:

  • Commercial premises – buying your own or a nearby premises. (As well as accounting advice, you’ll need a commercial loans broker for this big step)
  • Share/ETF investing – possibly with margin lending and deductions on the interest rate. (Currently it varies depending on whether in advance or in arrears and how long, but say around 6.49% topline, quite a bit less after tax deduction)
  • Super – on personal drawings, rather than just 9.5% SG, you might elect to pay in 11 – 15% of your pre-tax individual income, as a director or shareholder. However, your ability to pay only 15% contributions tax is limited to the concessional cap, which has gone down to $25,000 per year from 2017-18, for every age.  

Getting a tax-deductible loan is only one reason to invest, so ensure all the other variables are in place first, like a secure and growing asset.

Most newer premises have tax deductible components on the building and fittings that can also aid cash-flow (the Depreciation Schedule will clue you in). And franked dividends are by nature, already taxed either on part or 100% of the amount. The thing with shares and ETFs is they are more liquid and while they should be held more than one year, they can be sold right away if in dire need.  

Helping your Net Wealth

The exciting part comes in to play when you realise that your personal wealth can be helped by the leverage combined with some growth in:

a)  the ASX, or b) commercial property, or c) a mix of assets in your super.

It also helps to diversify away from having every wealth hope based on your business’s future. Call us if you would like some holistic advice on investing in a tax-minimising manner.

Which Update in the 2018 Federal Budget Affects You?
Photo by from Pexels

Photo by from Pexels

The $20,000 Immediate Write-Off for Small Business is Extended

The Government will extend the $20,000 immediate write-off for small business to 30 June 2019 for businesses with aggregated annual turnover less than $10 million. So, small businesses will be able to immediately deduct purchases of eligible assets costing less than $20,000 first used or installed ready for use by 30 June 2019.  Only a few assets are not eligible (such as horticultural plants and in-house software). 

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to qualify for the simplified depreciation pool -- depreciated at 15% in the first income year and 30% each income year thereafter. The pool can also be immediately deducted if the balance is less than $20,000 over this period (including existing pools). 


No Withholding Payments - No Tax Deduction

From 1 July 2019, businesses will no longer be able to claim a tax deduction for:

• Payments to their employees such as wages where they have not withheld any amount of PAYG from these payments (despite the fact the PAYG withholding requirements apply). 

• Payments made by businesses to contractors where the contractor does not provide an ABN and the business does not withhold any amount of PAYG (despite the withholding requirements applying).

Other Business Changes

Under the contractor payment reporting system, businesses are required to report payments to some external contractors to the ATO.  In addition to building & construction, cleaning and courier sectors, the Government has announced it will further expand the contractor payment reporting system to the following industries: 

  • security providers and investigation services; 
  • road freight transport; and
  • computer system design and related services.

Personal Tax Changes

Another change that might affect you personally is from 1 July 2018, the Government will increase the topmost threshold of the 32.5% personal income tax bracket from $87,000 to $90,000. The Medicare Levy is no longer changing, and will stay at 2% of income.

Future proposed changes in July 2022 include extending the top threshold of the 32.5% personal income tax bracket from $90,000 to $120,000. But as we all know, a change of Government may well overturn future-dated decisions.


Superannuation Changes

The Government are working to reunite people with their lost Super. Accounts under $6,000 will be effected, from 1 July 2019, the Government will introduce a 3% annual cap on passive fees charged by superannuation funds on accounts. Government will ban exit fees on all superannuation accounts.

The new rules for SMSFs from 1 July 2019 allow a maximum of six (6) rather than four members in a SMSF, which is good news for the joint management of retirement savings in large, working or retired families.

If you have a question about the new May 2018 Budget Changes, or general tax planning, please contact one of our friendly Accountants at Team Accounting today.