How To Cut Your Tax Bill Through Super`
With super, it’s not a trust distribution but a tax deduction from a trust. We need to consider our $25,000 cap per person, per year. If you do have under $500,000 in super on the 30 June of the previous financial year, you are able to carry forward any unused cap from 2019 onwards.
We’ve got clients where they might have been building their business and they’re not contributing to super. A lot of self-employed people don’t often prioritise super.
So let’s say you’re not contributing to your super, then you’ve got 2019, 2020, 2021, 2022, 2023, 2024 – if you’re under $500,000, you can carry forward up to 5 financial years. Let’s say you didn’t put in a cent, then you can whack $125,000 per person into super in your fifth year.
If you have a massive year and make heaps of profit, that’s one way of reducing your tax in a big way.
Learn more and register to our next Online Save Tax Workshop – https://info.inspire.business/save-tax-workshop
Interesting Statistics About The Impact Of JobKeeper
We’ve gone through April, May and June with JobKeeper supporting Australian small businesses. Now we can see some results that we are able to extract from.
In the video, Inspire Chartered Accountant, Rizal Ramzan walks us through a bit of an update that was released in the JobKeeper reviews, this was a report done by the government recently.
If you need to have a chat with an Accountant about your business – book in a free Strategy Chat with an Inspire Life Changing Accountant today – https://inspire.accountants/chat/
#Inspire #lifechangingaccountants #Jobkeeper #Accountants #Business #covid19au #qldjobs
The Difference Between Businesses That Succeed And Those Who Fail
I had the pleasure of joining Natasha Hawker on a webinar last week around the topic of JobKeeper 2.0. Natasha is an employee expert and founder of Employee Matters.
Here’s what she said –
“It’s not the strongest of the species that survives, not the most intelligent that survive, it is the one that is the most adaptable to change.” – Charles Darwin.
I think this is really compelling at the moment. I love this quote because I would like to ask yourself, “are you adaptable to change?” I think everyone needs to get really comfortable because this is the new norm for us and the only constant is going to be change.
For those that survive this in business, and there are some fairly scary statistics flying around at the moment, but for those who survive, they absolutely need to have their team on what is going to be the rollercoaster ride with them. And those teams that have that buy-in to the business’s success will be the teams that succeed. They won’t be the teams or businesses that fail.
For HR advice, get in touch with Natasha at http://employeematters.com.au/
Rapid Fire Strategies To Pay a lot less tax
Don’t pay tax on money you haven’t received yet.
This is applicable more so for service-based businesses where you’re primarily providing a service. You can choose to pay tax on what they call the receipts based method of your sales, rather than an accruals basis which is when you raise the invoice. So we’ve had tradies where they made $200,000 in profit on an invoice base, but they were owed $200,000 at the end of the year. So, really they made no profit from a cash perspective. We can take that off their income and they pay no tax there.
Bring forward expenses.
As a small business, you can pre-pay up to 12 months of expenses. An example is pre-paying rent. You could even pre pay-rent into a self managed superfund up to 12 months for a small business and claim it. Usually, this is the sort of thing we do in June for pre-paying the next financial year. We’ve had clients top up the stationery cupboard. If you know your travel schedule for the next 6 to 12 months you could book in some flights, or pay for some hotels you would otherwise have to pay for anyway. We have clients pre-pay accounting fees as well, which is a nice bonus in June.
Accelerated asset depreciation.
If you purchase an asset, like a printer, a car, a desk that’s not built into the floor, anything that you can pick up and move, you can write off if it’s under $150,000 at the moment. Now that was extended through till the end of December. This is relevant if your business is equipment heavy, medical practices will be one of those. Manufacturing is another big one.
With cars, the limit is around $59,136. If the car costs more than that, and it’s not considered a commercial vehicle (ute, van or truck), that would be exempt. You can claim more than the $59k. Tradies are usually fine with their utes as an example.
If you need to have a chat with an Accountant about your business – book in a free Strategy Chat with an Inspire Life Changing Accountant today – https://inspire.accountants/chat/
A Quick Self Assessment To Find Out How Your Business Is Doing Without The Stimulus Measures
This is the stuff we need to know now, because at the moment, with all these stimulus measures, we’re making a profit. But, if your business would no longer be eligible after September, then you may have some cashflow issues with this business.
In the video, we’ll be walking through step by step, how to give your business a quick self-assessment on how you’re doing without the stimulus measures.
For those without Xero, you might have to work backwards on getting the same report style. This sort of reporting that we’re going to have a look at only works if your bookkeeping is up to date and of decent quality which is a must at any time especially when we’re in uncertain times in business.
If you need to have a chat with an Accountant about your business – book in a free Strategy Chat with an Inspire Life Changing Accountant today – https://inspire.accountants/chat/
#Jobkeeper #Business #InspireCA #LifeChangingAccountants #Accounting #Accountants #Finance
Simple Tweaks To Your Business Can Have A Massive Financial Impact
On a recent webinar, Inspire’s Chartered Accountant, Rizal Ramzan shared his story on simple tweaks he made for our clients that have made a massive financial impact.
Here’s what he said –
I want to share a story with our Emergency Assistance Meetings – we did quite a few of them back in April, May and June. We’ve had clients that actually had the opportunity to have a deep dive on their business as well as seeing what they can do to trim the fat (unnecessary expenses.) And interestingly enough, that exercise taught them that there’s actually quite a lot of wiggle room in terms of just doing little things to increase profitability of their business, and keeping more cash on hand and how to manage cashflow.
We’ve seen clients talking the same language now and even using the forecast that we use to get them across the bridge to actually run their business.
It is actually an interesting process. Even if you’re not sure, it’s a process that you can go through to learn more about how to lift up that profitability and see how those numbers really play out. If you tweak one or two things, you can see a massive impact to your business.
If you need to have a chat with an Accountant about your business – book in a free Strategy Chat with an Inspire Life Changing Accountant today – https://inspire.accountants/chat/
How To Manage Your Cashflow
Cash is the lifeblood of the business. We need to make sure that we’ve got enough coming in and not too much going out (“in versus out”.)
If our “in” is coming down because we’re getting less sales or we had to shut our doors, then we need to manage what’s going “out” to make sure that it’s not more than what’s coming in as best we can to get through this window.
Watch the full episode with @SimonBell on the Zen Business Podcast on Youtube – https://www.youtube.com/watch?v=IH_K3yzQ_Rs&t=706s
If you need to have a chat with an Accountant about your business – book in a free Strategy Chat with an Inspire Life Changing Accountant today – https://inspire.accountants/chat/
JobKeeper 2.0 - Employment Date 1 July
One of the changes with JobKeeper 2.0 is the employee eligibility date.
In the original JobKeeper package, an employee, either full time or part time, needed to be employed before the 1st of March 2020. Now, if they were casual, they needed to have been working for that business for at least 12 months as at 1st of March 2020.
The change to the employment date of the 1st of March has now moved to the 1st of July. Take into account, if you’ve hired any full-time or part-time people throughout the COVID period and you had them hired at the 1st of July 2020, they could be eligible for the second round of JobKeeper 2.0.
If you’ve got casuals, let’s say they hadn’t worked 12 months up to 1st of March, but maybe they were 10 months or 11 months in working for you, you need to have a look at if your casuals are now eligible, given the extra three month window we’ve got to test that 12-month rule for casual employees.
There are a few more changes so do check out the other videos where we share the quick updates on what’s changed in JobKeeper 2.0.
JobKeeper 3.0 - Update 7 August
Last week we hosted a JobKeeper 2.0 webinar. In that webinar, we shared that to be eligible for the JobKeeper extension, the June quarter of a business’s turnover needed to be down compared to last year as well as the September quarter.
Now, on the 7th of August, which was last Friday, the government amended the rules that they’ve initially released on the 21st of July. So, our webinar is actually outdated already a week after it was released.
The distinction was, instead of the June and September quarters, it’s now just the September quarter to be eligible for the first extension to JobKeeper.
What the test period for the March quarter next year will be, is only having a look at your December quarter – not what we originally said in that webinar.
The reason why they did that is because what happened in Victoria with a second round of lockdowns, is that we saw businesses take a hit from March, onwards. They might have picked back up towards June, July, and now they’re going to take another hit. So, technically, a lot of Victorian businesses who’ve had to close again, wouldn’t have been eligible for JobKeeper 2.0 under their original rules. So they’ve adjusted it and it’s much more favourable to businesses and much more in the essence or in the spirit of what they’ve wanted to do here.
So here are the 3 key changes:
- We no longer need to test the June quarter.
- If we want to claim for the JobKeeper payments for December, we look at the September quarter’s actual results.
- When you’re claiming from March quarter next year, we’re looking at the December quarter’s actual results.
So these are the updates we wanted to share with you in case you haven’t seen any sort of information since Friday the 7th of August, which is when they released these changes.
Keep an eye out for more details to come.
JobKeeper 2.0 - What's changed?
On the 21st of July, the federal government announced the extension of the JobKeeper Programme – they’re calling this JobKeeper 2.0.
Here are a few changes that are happening –
Extension to the JobKeeper Program
In terms of the timeline of the extensions, the first JobKeeper package ran from April through till September this year, which hasn’t finished yet. But, there’s actually a two stage extension to the JobKeeper Programme. The first one is from the October to December quarter. The second is a three-month window from January to March next calendar year. All together, this is a further six month extension to the JobKeeper Programme.
Payment Rates
Payment rates will now depend on the hours that your employees worked.
If your employees worked more than 20 hours, and the test period was before March this year, their payment rate for the initial three-month extension drops down from $1,500 a fortnight down to $1,200 a fortnight. And for the second three-month extension, January to March next year, we’ll see that drop down again to $1,000 a fortnight.
If they work less than 20 hours a week, the payment rate drops from $1,500 a fortnight down to $750 per fortnight for the October to December quarter – because they didn’t account for hours that person worked. Then down to $650 a fortnight for January, February, March next year.
Test Period
The other significant change is the test periods. With JobKeeper 1.0, if you’re eligible for a month-versus-month in the previous year or, quarter-versus-quarter, from that point that you were eligible, you’re eligible for the initial six-month window regardless if your business picked up again. But with JobKeeper 2.0, these two three-month extensions will test your actual turnover.
Based on Actual Results
The initial release was on the 21st of July just as Victoria was going into their second round of lockdowns. The feedback was that it’s actually not going to be great for Victorian businesses who had their initial hit. They’ve picked up and now they’re down again because a lot of them wouldn’t have been eligible for the second round.
What they’ve done is, for the October to December three-month window, you need to review your September quarter versus your September quarter last year and see if there’s been a drop in turnover that way. We need to look at actual results now, not projected.
Alternative Testing
The second extension (January, February, March next year) you need to look at how your December quarter 2020 has gone, versus December quarter last year. They have flagged that there will be alternative tests.
Let’s say you’re a new business or you’re a high growth business and comparing it to one year ago, the quarter doesn’t quite work to actually look at the true impact on your business. So keep an eye out for the alternative tests for the JobKeeper 2.O, because they’re yet to be released and, further detail around the 20-hour rule.
What does that mean for people who are on regular hours or maternity leave, or even business participants, the owner of the business? How does that work with the 20-hour rule? There’s still a few details to emerge there. We’re expecting late August or early September for these things to be clarified.
So let’s get ready for JobKeeper 2.O, work out if you’re eligible, and always reach out if you need a hand.
If you need to have a chat with an accountant book in a strategy call at https://inspire.accountants/chat
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