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.”
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
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.
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
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
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.
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.
Is A Budget The Same As A Forecast?
On a recent webinar, a client had asked, “Is a budget the same as a forecast?”
Here’s what we said –
We prefer to use the word ‘budget’. There are many different ways that Accountants, or CFO people forecast or budget. For us, it’s using the budget feature in Xero.
We use this in our own business and it’s working well. It gives us so much clarity. Our team gets involved in it. And there are forecasting add-ons you can get with Xero that take your budget and turn it into a cash flow forecast or a three-way forecast. It relies on your Xero chart of accounts and your budget being spot on.
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.
Who Pays The Parental Leave
A commonly asked question when it comes to parental leave is, “who pays the parental leave – Is it the employer or the federal government?”
Who pays the Parental Leave?
The answer is: The Department of Human Services.
They manage any welfare payments such as age pension and paid parental leave. Once you have a Department of Human Services “customer reference number” (CRN,) all you have to do is give that to your employer and let them know that you are going to be receiving parental paid leave.
What happens after that is, they funnel the money through your employer and then your employer passes that money onto you. Alternatively, they can also pay directly, however that’s where it can get confusing.
Overall, your employer doesn’t pay for parental leave, it still comes from the Federal government and The Department of Human Services is how it is managed.
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.
Should I Put My Home Into A Trust?
By buying the family home in a personal name, we ensure we get the ‘Capital Gains Tax Main Residence Exemption’ when we sell that house later.
There is a stamp duty concession once you’ve bought a home in your name.
Those things often outweigh the benefits of putting the family home in a trust’s name.
The other thing to consider is a setup and admin fees of a trust – it’s another “tax” from the accountant to go and manage.
There are only limited situations where we have seen that it makes sense.
As a general rule, we would always put the family home in the asset person’s name.
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.
The Company Business Structure Explained
The company structure is one of the most common business structures.
Clients who have already done their research, or new clients who are looking at setting up a business, a company structure is usually what they opt-in.
For this structure, we have two different tax rates
- 25% – It used to be 27.5% last 2021 financial year, and it has dropped to 25% in the 2022 financial year.
- 30% – The 30% is for big entities that are over $10 million, and entities that have passive income.
If they’re receiving income from rental property dividends and they have millions of dollars in shares, they will be taxed at 30% for those kinds of entities.
A company structure gives us some kind of flexibility when it comes to tax planning – if the structure is set up correctly
There are two key roles that we put in place in a company:
- Director – A director is someone who controls and does the daily lease agreement and looks after the day-to-day activities of the company.
- Shareholder – A shareholder is someone who benefits from the company’s profit. If the company’s making a profit, they can take benefits of that profit when we declare dividends. The shareholder’s job is to make sure that the shares are held correctly. We can hold the shares personally through a discretionary family trust or a self-managed super fund. There are different ways you can hold shares.
Asset Protection
We want to make sure when you’re trading via company, we have those asset protections in place. Make sure that the director of the company doesn’t have too many assets in their name. That is just to protect their wealth aside.
If something happens in the company, people can only go after the company’s money, nothing personally in the director’s name. We want to make sure that the director’s wealth or the assets they have bought outside the company are protected.
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 Cashed Up
