Selling the Backyard? Check the Tax Implications First!

With real estate prices booming, and the supply of land in inner-suburban suburbs falling well short of demand, there have been instances where homeowners have sliced off a portion of the house block for a bit of extra cash, only to find themselves in the sights of the taxman.

It would seem straightforward enough; it’s your home it should be exempt from capital gains tax. The key issue is that the exemption of the home from CGT hinges on actually selling the home (i.e. the building that was inhabited), not just the surrounding land. Many unassuming homeowners who sliced off and sold the vacant part of their block have been left with a nasty surprise.

Tax is complex, so check with your RDL accountant each time; you’ll be glad you did.

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Time is Ticking for the $20,000 Immediate Write-Off

The $20,000 immediate write-off was introduced in the May 2015 budget, to give “small” businesses an immediate tax deduction on the purchase of most assets (eg cars, equipment, etc) where the cost of each item is below the $20,000 threshold.

The concession has had a good run and is due to finish on 30th June 2017, so small businesses have a window of opportunity before then to purchase assets and claim an immediate tax deduction.

This concession has only been available to “small businesses” which until 30th June 2016 meant businesses with a turnover under $2m. However, the announcement in the 2016 Federal Budget to expand the definition of a small business to businesses with a turnover under $10m has significantly broadened the scope for larger businesses to take advantage of this concession, albeit in the short run to 30th June 2017.

Talk to your RDL advisor about how you can benefit from this concession.

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ATO to visit small businesses

Some people would think that a visit from the ATO would be about as enticing as root canal.  Nonetheless, the ATO has announced that it plans to make contact with small businesses to discuss its range of digital services.  The ATO may directly contact taxpayers who are new to small business or whose circumstances have changed, and offer to visit (lucky you!) to demonstrate the ATO products and services.  In an attempt to provide some assurance, the ATO has said that such visits will be covered by the ‘Commissioner’s Guarantee’ i.e. no information gathered in those visits would be used for any other purpose.  I guess time will tell.

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Will you be SuperStream compliant by 28th October?

SuperStream is a government reform that has been in the implementation stage for some time.  The intention is to require employers to use electronic means to report and pay super, doing away with forms and cheque payments, and creating efficiencies.  Employers with less than 20 staff were initially to be compliant from 30th June 2016 but that was deferred to 28th October 2016.  If you are not currently compliant, this is your last chance.

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Public Ancillary Fund Reporting simplified

charityACNC registered public ancillary funds don’t have to lodge public ancillary fund returns to the ATO anymore. The ATO will get the information it wants from the ACNC annual information statement.  This starts from the 2016 AIS.  Any outstanding Ancillary Fund Returns still need to be lodged.  Less red tape is always good news!  Contact Claire Harris at rdl for more details.

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Is your business structure still the right fit?

Many business owners don’t realise that the business has outgrown its structure until something comes up – and this something is usually something negative.business structure advice

Are your assets at risk?

Legal action by employees, customers and suppliers as well as divorce are the
two primary risk issues for many business operators. If you have been operating as a sole trade or as a partner in a partnership or have simply been holding all business assets in a single entity, your structure may not provide sufficient asset protection.

If any personal assets or valuable assets of the business are held in the same entity which carries on the trading operations of the business, those assets may be at risk. To protect your assets it is generally preferable to separate as many valuable assets as possible from the trading operations.

Making the change

Changing your business structure is not something you necessarily want to do with regularity. The benefits and costs need to be weighed-up to ensure that the decision is the right one for the long term. While tax will always be a significant consideration, current Capital Gains Tax (CGT) concessions can provide significant relief.In addition, the announcement in the May 2015 Federal Budget of further concessions for the restructure of small businesses (turnover under $2m) should help reduce the tax cost of restructuring a business. This measure takes effect from 1st July 2016.

In addition, the announcement in the May 2015 Federal Budget of further concessions for the restructure of small businesses (turnover under $2m) should help reduce the tax cost of restructuring a business. This measure takes effect from 1st July 2016.

If you think you have, or your about to outgrow your business structure, or would like further business advice, please contact us for a friendly chat.

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Finding and keeping great staff

It’s a question I constantly hear from business owners. Some business owners constantly face this dilemma, while others do not. Those faced with the issue desperately want to know how to get and keep great staff.
I have found finding and keeping great dedicated staff comes from multiple sources. One of the main ones being a management system that gives your team clear structure, including systems and procedures.
Too often high performing staff are not given consistent guidance and are unsure of the expectations on them. Having a management system increases the chances that your staff will be constantly delivering the high quality work you expect.

Nigel Mason
General Manager

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Are You a Sprinter?

superannuation tax and self management super fund blog post

Who could ever forget Usain Bolt’s record-setting run in the final of the Men’s 100m at the 2012 London Olympics? Bolt ran the race of his life in a time of 9.63 seconds, setting a new Olympic record for that distance and defending his gold medal from the 2008 Beijing Summer Olympics, cementing his place in athletic history as one of the greatest sprinters of all time.

But how would he have fared running the marathon against Stephen Kiprotich of Uganda, one of the most elite long distance runners of our time, and the marathon gold medallist at the same London games?

The fact is that each of these races requires its own unique physique, training regime and conditioning. You just can’t approach a long distance race the same way as you would a sprint.

Historically some have left building up their super as something to be done in the later years of their working life, when the kids are off their hands and both spouses have returned to full-time work. For many RDL clients, this strategy has worked well in the past. A kind of “sprint to the line”, made possible by generous superannuation tax incentives.

Government changes to the tax incentives on superannuation as recently as the May 2016 Budget have signalled that saving for retirement is now going to be more of a long-distance race than a sprint.

Lower limits for concessional (tax-deductible) contributions, as well as the $500,000 cap on non-concessional (non-tax deductible) contributions, will force a change in strategy – contributing to super regularly, rather than relying on big contributions closer to retirement.

Despite many changes over the years, super still remains, and is likely to remain, the most tax effective means of saving for and investing during retirement.

See your RDL advisor about how you can wisely plan for your retirement, and remember – to date no-one has successfully sprinted a marathon.

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Seeking professional advice when starting a business

From 1 July 2015, the professional expenses associated with starting a new business, such as legal and accounting fees, are deductible in the year those expenses are incurred rather than deducted over a five-year period as was the case in previous years.

If you established a business in 2015-2016, you should speak to your client manager about claiming professional advice fees as an expense.

Nigel Mason
General Manager

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Fake CEO Fraud

Got an email from the CEO requesting urgent payment of an invoice (or something similar)? Don’t rush in to get the job done, because you might just be participating in a clever new social engineering hack. In other words, that email might not be from the boss at all. Instead, you might have received an order from a hacker, to pay a hacker.
Nigel Mason
General Manager

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