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"Tax
Tax

Tax planning now equals money in your pocket later

We could all do with a little extra cash these days.

And, with a little bit of careful planning, reducing your tax may give you the flexibility to do some of the things you may not have thought possible. Not just for your business but to help out with some other personal big-ticket items.

By reducing your tax bill, you can think about:

  • Reducing your home loan
  • Topping up your Super
  • Saving for a holiday (now that we can travel again!)
  • Putting a deposit on an Investment Property
  • Paying for your kid’s education
  • Upgrading your car

Make a plan to make a difference.

Tax Planning involves two critical things: Putting strategies in place to reduce your tax, and planning for your upcoming tax payments over the next 12 months.

To properly help you with your Tax Planning, we need to start now. Here’s a look at what we’ve developed at The Financial Foreman to help you over the next few months leading up to 30 June 2022:

  • April – We’ll review your personal income for the nine months to 31 March 2022, estimate your income for the entire 2022 year, and develop some initial tax planning strategies to reduce your tax.
  • May – You can look forward to your personal TaxPlan Report. We’ll then have a face to face or a Zoom meeting to discuss our recommendations. We’ll agree on an action plan to get things done before 30 June 2022.
  • June – We’ll contact you again to ensure that all important actions have taken place to reduce your tax.
Make a plan to make a difference

How you’ll benefit.

We’ll forecast your expected 2022 income and tax payable for all individuals and entities in your family group. We’ll then develop strategies to spread your income across your family group in the most tax-effective way — and legally reduce your tax. This will amount to an overall benefit to you as a family group tax reduction.

Putting your TaxPlan into play.

To achieve this extra benefit for you, we will need to:

  • Estimate the 2022 taxable income for all individuals and entities in your family group
  • Estimate the initial 2022 tax payable for all individuals and entities
  • Develop income-spreading strategies to reduce your overall family group tax payable
  • Advise you of tax reduction strategies for 2022
  • Meet with you and answer any questions you may have about our tax reduction strategy advice

We estimate that the tax savings and other benefits you’ll receive from our advice will be far greater than the price of our TaxPlan service!

Putting your TaxPlan into play

Three tips from The Financial Foreman

  1. Make the decision to reduce your tax bill
  2. Determine what you’d like to spend some extra cash on 
  3. Make a plan to get in touch with The Financial Foreman to talk about tax planning

If you’re interested in saving tax, top of your ‘to-do’ list is to book a time to get together with the team at The Financial Foreman. Although our Tax Saving and Tax Planning advice is entirely optional, we strongly recommend it.Call Josh at The Financial Foreman on (08) 7326 3040 and set up an appointment to talk about tax planning and what it can mean for you, your business and your family.

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Christmas Parties

Christmas Parties

’Tis the season to party, but how up-to-date are you on fringe benefits tax [FBT] and Christmas dos? If you’ve had a fairly solid year and want to give back to your employees, their associates and contractors by way of an end-of-year shindig, you might need to know what you’re options are around FBT and Christmas work extravaganzas. 

Do you hold a gathering on your premises, or take them to a pub/restaurant or the like? How much should you spend? Are you thinking of slipping your employees a Christmas bonus or a yuletide gift?  Whatever you decide to do for your employees around the festive season, there are all sorts of FBT implications and trying to make sense of them may add to your already growing December stress levels. 

Fortunately, the Financial Foreman [with thanks to the ATO] has put together a list of naughty and nice implications for FBT. Take a look, and if there is anything you’d like more information on, please give Josh a call.

Firstly, there is no separate FBT category for Christmas parties.

You may come across many different circumstances when providing Christmas events to your staff or dealing with clients’ expenditures. Fringe benefits provided to an associate or under an arrangement with a third party to any current employees, past and future employees, and their associates (spouses and children), may attract FBT.

1. Implications for FBT

The following explanations may help you determine whether there are FBT implications arising from a Christmas party.

2. Exempt property benefits

The costs (such as food and drink) associated with Christmas parties are exempt from FBT if they are provided on a working day on your business premises and consumed by current employees. The property benefits exemption is only available for employees, not associates.

3. Exempt benefits — minor benefits

Putting on a Christmas party for employees may be a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met. The benefit provided to an associate of the employee may also be a minor benefit and exempt if the cost of the party for each associate of an employee is less than $300. This threshold applies to each benefit provided, not to the total value of all associated benefits.

4. Gifts provided to employees at a Christmas party

Giving a gift to your employee at Christmas time may also be a minor benefit that is an exempt benefit where the gift’s value is less than $300. Where a Christmas gift is given to an employee at a Christmas party [that’s also provided by the employer], the benefits are associated benefits, but each needs to be considered separately. If both the Christmas party and the gift are each less than $300 in value and the other conditions of a minor benefit are met, they will both be exempt benefits.

5. Tax deductibility of a Christmas party

The cost of providing a Christmas party is entertainment and is income tax deductible only to the extent that it’s subject to FBT. Therefore, any party costs exempt from FBT (ie; exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction, and no GST is claimable. So, from a tax point of view it’s better to not be able to claim the deduction than being subject to FBT, which has a higher rate of tax.

After all that, you should be in a joyous and festive frame of mind and ready to host a cracking show for your employees, associates, and perhaps even your clients and suppliers. Just remember, the Financial Foreman has all the answers and loves a great Christmas party.

If you’re looking for a jovial read, you can find out more about FBT and Christmas parties from those jolly folk at the ATO.

https://www.ato.gov.au/general/fringe-benefits-tax-(fbt)/in-detail/fbt-and-christmas-parties/

Fa la la la la, la la la la.

Josh Gloede
The Financial Foreman

"The
Finance, New Accountants

The Financial Foreman expands new additions

Like many businesses, The Financial Forman is expanding. As such, we’re putting on a couple of new additions. Not the bricks and mortar kind, but a couple of young accountants that will help drive our business forward and streamline our operations so that your business reaps the benefits.

We are pleased to announce and welcome Phi Nguyen and Brayden Hayes to the Financial Foreman family. Both Phi and Brayden have shown exceptional skills in accounting and finance but, most importantly, share a commitment to help others succeed.

""/
Plumbers, The Financial Foreman Insights

Know your numbers, what your plumbing business should be making!

 

The Financial Foreman Insights – Plumbing Part 4

The Final instalment in the series, if you would like a summarised guide click here and subscribe to receive more helpful hints. We will focus on the key numbers form all plumbers operating in the plumbing industry, giving you a true indication of how you stack up.


 

Profit – 12%

For every $100 in sales, the business should have $12 the bank left over. Is this your profit margin? If not let’s see why it’s different.

Wages – 28%

For every $100 in sales, $28 should be going to Wages. Be sure to include owner wages or what you should be playing yourself in this figure.

Purchases – 37%

For every $100 in sales, $37 should be going to Materials.

 

“Sole Proprietors drawing an income from profit can inflate industry profit margins and wage costs”

Other – 20%

Other is made up of all other expenses that make up the costs of running the business. I.e. Subcontractors (10%), Motor Vehicle Expenses (5%), Insurance, Repairs and Maintenance, professional fees etc.
For every $100 in sales, $20 should be going to Operating Costs.

Depreciation – 2%

Decline in value of equipment.
For every $100 in sales, $2 should be from the depreciation of equipment (non-cash item).

Rent – 1%

Most small contractors don’t rent out an office or warehouse space, so if you don’t you should see this amount left over in the bank.
For every $100 in sales, $1 should be going to rent.


 

What to do next

These benchmarked ratio’s give a good indication for improvement areas for your business. If Wages are too high, are your staff spending more time travelling to pick up supplies too frequently? If Materials are too high, have you got your Materials to mark up right? Or you might have issues with wastage of Materials. As accountants we love numbers, so if you have a question or something doesn’t quite add up feel free to get in touch and we can help get to the bottom of it.

Download your free cheatsheet to improving your plumbing business.


Disclaimer: This article should not be intended as your primary source of Tax, Accounting or Financial Advice. Always contact your Accountant for help.


 

An accountant with nearly a decade of industry experience, Joshua has worked extremely close with his clients, educating and guiding them with through building, growing and preparing their businesses for the future.

 

 


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