ascent-accountants

Putting A Deposit Down on Property Purchase: How it Works.

Mon, 13 Apr 2026 02:43:10 GMT

In Perth’s competitive property market, showing a seller you’re serious is more critical than ever. This is where the holding deposit comes in. A holding deposit is an initial prepayment that forms part of the total funds you contribute to the purchase.

However, at Ascent Property Co, we see this as more than just a payment. It is the essential first step to securing your contract and moving toward settlement.

While these deposits are standard practice to lock in a contract, understanding the fine print of when your money is safe—and when it isn't—is essential for every buyer.

When is the deposit refundable?

A holding deposit is not automatically lost if a contract falls through, provided there are contractual grounds for the exit. Common valid reasons that trigger a refund include:

Subject to finance: If your offer is contingent on securing a loan and your circumstances change—such as losing your job—the contract becomes void and your deposit is refunded.
Unexecuted agreements: You should never transfer funds until you have read and signed a contract that has been fully executed by both parties.
Conditional clauses: If the sale is subject to other specific conditions (like a building inspection or a successful "subject to sale" clause) and those conditions aren't met, the deposit typically remains protected.

When is the deposit non-refundable?

The primary risk to your capital occurs when a buyer attempts to exit a contract without valid legal grounds.

Change of mind: Simply deciding not to proceed after the contract is fully executed can result in forgoing the holding deposit.
Missing deadlines: Most holding deposits are due within three to five business days of the offer being accepted. Failure to meet these financial obligations can jeopardize the contract and your claim to the property.

Strategic deposit benchmarks.

While the amount is often negotiable, we typically suggest round figures based on the property's price point.

Ascent Pro-Tip: Remember, the holding deposit isn't an extra fee. If you prepay $10,000 on a $100,000 price point, you simply pay the remaining $90,000 at settlement.

Ready to secure your next property?

We’re here to help you navigate every step of the purchase process—from the first inspection to the final settlement. Understanding how to use a holding deposit to your advantage is key to winning in today’s competitive market.

Before you make your next move…

Have your funds ready: Knowing the typical round-figure deposit for your price point ensures you can act fast when you find the right home.
Review your contract: Never transfer funds until you have a fully executed agreement in hand.
Talk to our team: When you buy through Ascent, we can help you negotiate deposit terms and ensure your interests are protected by the right contractual grounds.

Why Small Business Owners Switch Accountants.

Mon, 13 Apr 2026 02:36:22 GMT

When a small business owner decides to move their financial world to a new accountant, it is rarely about the numbers on the page. It’s almost always about the relationship— or lack thereof.

Whether the realisation that you need a change happens overnight or it’s a slow-burn that hits a breaking point, the reasons tend to be the same. If you find yourself nodding along to the below reasons, you’ve likely outgrown your current provider.

1. The "ghosting" accountant.

The most common complaint isn’t about tax strategy; it’s about simple communication. If it takes three days to get a reply to a quick question, or if you feel like you’re chasing them down for your own files, the relationship is broken. As a business owner, you’re busy—you have things to do. You need an advisor who is reachable and can get back to you quickly.

Takeaway: Slow communication signals that your business isn't a priority, which breaks down the relationship faster than a minor tax error would.

2. Slow-motion workflow.

In business, late tax paperwork can lead to disaster. If your BAS or year-end returns are consistently down to the wire, it creates unnecessary stress. Slow work isn’t just an inconvenience—it’s a sign that your firm is either understaffed or doesn’t prioritise your timeline.

Takeaway: Don’t risk getting fines from the ATO for late paperwork that your accountant is responsible for submitting.

3. An impersonal, box-ticking service.

Many large firms treat small businesses like a number in a queue. You get a generic template, a standard bill, and zero conversation. Maybe they know your industry, but they don’t know your business—and they certainly don’t know you. If your accountant doesn't know your business goals or your specific challenges, they aren’t an advisor—they’re a data entry clerk.

Takeaway: You’re missing opportunities that come with the personalised service an accountant that genuinely wants you to succeed can offer.

4. Reactive vs. proactive planning.

This is the biggest differentiator. A reactive accountant tells you what you owed last year. A proactive accountant tells you what you’re going to owe next year and how to reduce it today. If you only hear from your accountant once a year in June/July, you aren't getting tax planning; you’re getting a post-mortem.

Why more business owners are swapping to Ascent.

We’ve built our firm specifically to solve these frustrations. We believe that an accountant should be a catalyst for your growth, not a bottleneck.

We’re approachable. We speak your language. No jargon-heavy documents or meetings—just clear, actionable advice from people who actually enjoy talking to their clients.
We value speed. We utilise modern accounting tech to ensure your work is processed accurately and fast. We also ensure there’s always someone available to answer your questions.
We ’ re proactive. We keep an eye on your numbers throughout the year, identifying tax-saving opportunities and cash-flow risks before they become problems. If we see something, we’re proactive and give you a call, working with you on solutions and new opportunities.

You deserve a partner who’s invested in your success.

If your current accountant feels like a hurdle you have to jump over throughout the year, it’s time to consider a switch. Ascent Accountants move at the speed of your business. We’re reachable, responsive, and proactive so you can focus on growth, not your inbox.

There’s no rush—take a look at our services and five star reviews , then schedule a no-pressure chat to experience our personal attention for yourself.

How to Communicate with ATO & Access ATO Documents: A Guide for Individuals & Businesses

Mon, 13 Apr 2026 02:27:41 GMT

For individuals and business owners, the days of waiting for paper mail from the Australian Taxation Office (ATO) are largely over. The ATO has moved almost entirely to digital "self-service" portals.

If you aren’t set up correctly, you risk missing critical deadlines, including PAYG Instalments, Business Activity Statements (BAS), and Notices of Assessment. At Ascent Accountants, we want to ensure you have the right access to stay compliant and informed.

Individuals, it’s time to master myGov.

For individuals, your myGov account linked to the ATO is your digital ATO mailbox. This is where the ATO sends your Notice of Assessment (NOA) after you lodge a tax return and where you manage your personal tax affairs.

View PAYG instalments: If you have investment or business income, the ATO may require you to pay tax in instalments. These letters are sent to your myGov inbox.
Access NOAs: Your Notice of Assessment is a vital document often required for bank loans or financial planning.
Update details: Change your bank account for refunds or update your address instantly.

How to set it up:

Create a myGov account: Visit my.gov.au and sign up.
Link the ATO: Once logged in, go to 'Services' and select 'Australian Taxation Office'.
Setup MyID: You will need your Tax File Number (TFN) and two pieces of identifying information.

Businesses, know your Online Services for Business portal.

Managing a company, trust, or partnership requires a more robust digital setup. The Online Services for Business (OSB) portal is the hub for managing your entity’s obligations.

Lodge BAS: View, lodge, and pay your Business Activity Statements and Fringe Benefits Tax.
Secure mail: Send and receive secure messages directly to the ATO regarding your specific business account.
Manage employees: View Single Touch Payroll (STP) reports and manage superannuation obligations.

How to set it up:

Set up your myGovID. This is your digital ID. Download the myGovID app on your smart device. Yes—this is different from a myGov account! You will need to scan documents like your Passport and Driver’s Licence as part of the setup.
Link your business in Relationship Authorisation Manager (RAM). Log into authorisationmanager.gov.au using your myGovID. If you are the principal authority (e.g., a director or partner), you can link your business ABN to your identity.
Log in to Online Services. For easy management, you can log into the Online Services for Business portal. This is where you will find your BAS, PAYG, and ATO correspondence.

Key ATO communication channels.

While online portals are preferred, sometimes you need to speak with a human. Use the following direct lines for the most efficient service.

Note: When you call the ATO, have your TFN or ABN ready. You will be asked to complete a "voiceprint" or answer security questions to verify your identity before they can discuss your account.

Need help navigating these portals?

Although the set-up for these portals has been made as simple as possible, setting up myGovID and RAM can be frustrating if you’re not tech-savvy. If you’re an existing client, contact the team at Ascent Accountants and we can direct you to the relevant section at the Tax Office or answer your questions.

If we haven’t met yet—we’d still love to help you! Let’s have a conversation about becoming your tax agent. Get in touch with the Ascent team today.

The Power of the Cash Offer.

Fri, 13 Mar 2026 03:09:00 GMT

At Ascent Property Co and Ascent Accountants, we know that in a competitive real estate market, how you structure your offer is just as important as the price you're willing to pay. While "cash is king" is an old adage, in property, it’s all about the certainty it provides.

Here is everything you need to know about navigating cash offers to secure your next home or investment.

How a "cash offer" actually works.

There is a common misconception that a cash offer requires a literal suitcase of money. In reality, a cash sale simply describes an offer where the finance clause is removed from the contract.

By signing a contract stating the finance clause is not applicable, you are making an unconditional offer.

It doesn't necessarily mean the money is sitting in a transaction account today; it means you are waiving the right to walk away if a bank denies a loan. You are declaring you have guaranteed access to the funds required for settlement.

The legal process of selling for cash is identical to a standard sale, minus the 21–28 day waiting period usually required for finance approval.

Why sellers prioritise cash offers.

Sellers are often motivated by more than just the highest number. Many will accept a lower purchase price if the offer is cash.

Sellers love cash offers because they remove the "finance fallback". There’s no anxiety over whether a buyer’s bank valuation will come in short or if their loan will be rejected.

Plus, without a finance clause, the sale process is hastened. Buyers can often move in sooner, which is a major draw for sellers looking for a quick transition.

In a multi-offer situation, a cash unconditional offer acts as a point of difference, making your bid significantly stronger than those subject to finance.

Preparing your cash offer.

Because a cash offer removes your safety net, being organised is non-negotiable. Experienced purchasers—such as repeat buyers and savvy investors—often use this strategy because they have prepared their financial position in advance.

Verify your liquidity . Before waiving the clause, ensure your funds (whether from a previous sale, equity, or private wealth) are ready for settlement.
Assess the risks . The risks of a cash offer are the same as a financed offer after approval—the primary danger is defaulting on the contract.
Build agent trust . Agents cannot legally demand to see your bank statements, so they rely on professional judgment to determine if an offer is genuine. Presenting yourself as a serious, organised buyer is key.

Ready to make your move?

Whether you need to review your tax structures for an investment or want to discuss the logistics of an unconditional offer, Ascent Property Co and Ascent Accountants are here to help succeed.

When Do You Need a Vehicle Logbook?

Fri, 13 Mar 2026 03:08:36 GMT

If you claim work-related car expenses using the logbook method, keeping an accurate and up-to-date logbook is essential. Many taxpayers assume a logbook automatically lasts five years but that’s not always the case.

Changes in your work, travel patterns, or vehicle can mean it’s time to complete a new 12-week logbook sooner than expected.

Here’s what you need to know.

How long does a vehicle logbook last?

Under guidance from the Australian Taxation Office (ATO), a valid logbook can generally be used for up to five years. During that period, the logbook establishes your work-related percentage of vehicle use, which is then applied to your total car expenses when calculating your deduction.

However, that five-year period only applies if your work-related driving patterns remain substantially the same. If your circumstances change, you may need to complete a new 12-week logbook earlier.

When you need to start a new logbook.

A new logbook should be kept if your current one no longer accurately represents how you use your vehicle for work. Common situations where this happens include:

Changing jobs . If you move to a different role or employer and your driving habits change.
Moving house or workplace . A new home or work location can significantly alter your work travel patterns.
Changes to work duties . For example, if your role now requires more (or less) travel than before.

If these changes affect the way you use your car for work, your existing logbook may no longer be valid.

New car, same logbook (maybe).

If you purchase a new vehicle, you may still be able to rely on the logbook from your previous car, but there are conditions. You must make a written nomination before lodging your tax return stating:

You are replacing your original vehicle with a new one.
The date the new car replaces the old one.

This allows you to apply the same business-use percentage to the new vehicle without completing another 12-week logbook.

Records you need to keep.

When using the logbook method, it’s not just the logbook itself that matters. The ATO requires you to keep records for all car expenses, including:

Odometer readings at the start and end of the financial year.
Purchase documents or lease agreements.
Fuel or charging costs.
Registration and insurance.
Servicing, repairs and tyres.

These records support your claim and ensure your deduction can be substantiated if required.

One logbook per car.

If you use more than one vehicle for work, each car must have its own logbook, and the logbook periods should cover the same timeframe. This helps ensure your work-use percentage is calculated correctly for each vehicle.

A note on employer-provided vehicles.

If your employer provides you with a car, or you salary-sacrifice a vehicle through a novated lease, you generally cannot claim car expenses using either the logbook or cents-per-kilometre method. This is because the vehicle is not considered to be owned or leased by you personally for tax purposes.

Instead of claiming deductions personally, the tax treatment typically happens through Fringe Benefits Tax (FBT) and your salary package. Because these arrangements can vary significantly, it’s worth getting advice to make sure your vehicle setup is tax-effective and compliant.

Need help with car expense claims?

Keeping proper records and understanding when to update your logbook can make a significant difference at tax time. Claiming the right amount (with the documentation to support it) helps avoid problems later.

If you’re unsure whether your current logbook is still valid, it may be worth reviewing your circumstances before lodging your next return.

The team at Ascent Accountants can help you ensure your car expense claims are accurate, compliant, and working in your favour. Talk to us today.

Sole Trader, Company or Trust: What’s the Difference for Small Business Owners?

Fri, 13 Mar 2026 03:07:32 GMT

Choosing the right business structure is one of the first and most important decisions a small business owner will make. The structure you choose affects how your business is taxed, how much paperwork you deal with, your level of personal risk, and even how easily you can grow in the future. In Australia, the most commonly used business structures are:

Sole traders.
Partnerships.
Companies.
Unit trusts.
Family trusts.

Each structure works differently and has its own advantages and responsibilities. Understanding the differences can help you choose the structure that best suits your business goals.

1. Sole trader

A sole trader is the simplest and most common structure for small businesses. As a sole trader, you operate and control the business yourself, even if you employ staff. The business and the owner are legally the same entity. This means the business income is treated as your personal income for tax purposes.

Simple and inexpensive to set up.
Minimal legal and tax formalities.
Full control over decision-making.
You keep all profits after tax.
Straightforward reporting through your personal tax return.

Things to consider.

You are personally responsible for all business debts.
Personal assets (such as your home or vehicle) may be at risk if the business cannot pay its debts.
Access to finance can be more limited.
Tax is paid at your personal marginal tax rate, which may become higher as profits grow.
There are fewer tax planning opportunities compared to other structures.

Tax & reporting

Sole traders report business income and expenses in their individual tax return and pay tax at individual tax rates.

2. Partnerships

A partnership is when two or more people or entities operate a business together and share income, responsibilities, and decision-making. Partners run the business together and share profits or losses according to the partnership agreement. The partnership itself does not pay tax, but it must lodge an annual partnership tax return.

Relatively simple and inexpensive to establish.
Combines the skills, resources, and capital of multiple people.
Shared workload and responsibility.
Flexible profit-sharing arrangements.

Things to consider.

Each partner is personally liable for the debts of the partnership
Partners can be responsible for debts incurred by other partners
Personal disagreements can impact the business
Partners cannot transfer ownership without agreement from the others
Income is taxed at each partner’s personal tax rate

Tax & reporting.

The partnership lodges a tax return showing the business income and each partner’s share. Each partner then reports their share in their personal tax return.

3. Companies

A company is a separate legal entity that operates independently of its owners (shareholders). Companies are regulated by the Australian Securities and Investments Commission.

The company earns income, pays expenses, and pays tax in its own name. Directors manage the company, while shareholders own it.

Limited liability—shareholders are generally not personally responsible for company debts.
A company can continue even if ownership changes.
Greater access to finance and investment opportunities.
A flat company tax rate (currently 25% for eligible small businesses).
A more professional structure for larger operations.

Things to consider.

Higher setup and ongoing administrative costs.
More complex compliance requirements.
Directors must meet legal obligations.
Money earned by the company belongs to the company, not the owners personally.

Tax & reporting.

Companies lodge an annual company tax return and pay tax on profits at the company tax rate. Owners can access company profits through wages, director fees, or dividends.

4. Trusts

A trust is a structure where a trustee manages assets or a business for the benefit of beneficiaries. The trustee can be an individual or a company. Two common types used by small businesses are family (discretionary) trusts and unit trusts.

The trustee runs the business and distributes income to beneficiaries. In discretionary trusts, the trustee decides how profits are distributed each year.

Strong asset protection compared to sole traders and partnerships.
Flexibility in distributing income to beneficiaries.
Potential tax planning opportunities.
Beneficiaries are generally not liable for trust debts.

Things to consider.

More complex to establish and manage.
Higher setup and administration costs.
The trust must operate according to the trust deed.
Losses cannot be distributed to beneficiaries.
Undistributed income may be taxed at very high rates.

Tax & reporting.

Most discretionary trusts do not pay tax themselves. Instead, income is distributed to beneficiaries, who pay tax at their own marginal tax rates.

Risk, administration & growth considerations.

When comparing structures, three major factors usually matter most for small business owners.

Risk & asset protection.
Sole traders and partnerships expose personal assets to business debts. Companies and trusts can provide greater separation between personal and business assets.
Administration & compliance.
Sole traders and partnerships have minimal reporting requirements. Companies and trusts require more documentation, annual returns, and ongoing compliance.
Growth & tax planning.
Companies and trusts often provide more flexibility for tax planning, investment, and expansion. They can also make it easier to bring in partners or investors.

Need help deciding which structure is right for your business?

Many businesses start as sole traders and later transition to a company or trust structure as they grow. However, there is no single “best” structure—it depends on your business goals, risk tolerance, expected profits, and future plans.

Getting professional advice from Ascent Accountants early can help you choose the structure that saves you tax, protects your assets, and supports your long-term plans. Get in touch with the Ascent team today.

What Registrations Do I Actually Need When Starting a Business?

Fri, 13 Feb 2026 02:33:30 GMT

Starting a business is an exciting milestone, but the paperwork can quickly become overwhelming. At Ascent Accountants, we often see new business owners get caught in the "registration trap"—either registering for everything at once (and creating unnecessary admin) or missing critical deadlines that lead to penalties.

Knowing which registrations are mandatory and which are optional depends on your business structure, turnover, and whether you have a team. Here is our high-level guide to the essential registrations you need to consider.

1. The Foundations ABN & TFN.

Australian Business Number (ABN): Your ABN is your business’s unique 11-digit identifier. While not strictly compulsory for everyone , you almost certainly need one. Without an ABN, other businesses must withhold 47% of any payments they make to you.
Tax File Number (TFN):
Sole Traders: You use your personal TFN.
Companies, Partnerships, and Trusts: You must apply for a separate business TFN.

2. Tax Registrations (ATO)

Goods and Services Tax (GST): You must register for GST if your business has a GST turnover of $75,000 or more ($150,000 for non-profits). If you drive a taxi or provide ride-sourcing services (like Uber), you must register regardless of your turnover.
Fuel Tax Credits: If your business uses fuel in heavy vehicles, machinery, or for other eligible activities, you can claim a credit for the excise or customs duty included in the price. Note: You must be registered for GST before you can register for Fuel Tax Credits.

3. Employer obligations when hiring a team.

If you’re moving from a "solo-preneur" to an employer, your registration requirements change significantly:

PAYG withholding: You must register for Pay As You Go (PAYG) withholding before you make your first payment to employees or certain contractors. This allows you to withhold tax from their wages and send it to the ATO.
Superannuation: You don't "register" for super in the traditional sense, but you have a legal obligation to pay the Superannuation Guarantee (currently 12% on July 1, 2025) for eligible employees. We recommend setting up a Superannuation Clearing House to streamline these payments. On 1st July 2026, super will be required to be paid each payday.
Workers’ compensation insurance: This is a mandatory insurance policy for almost all employers in Australia. It protects you and your employees in the event of a work-related injury. Each state has different rules; for example, in WA, you must have a policy if you employ anyone defined as a "worker."

4. Business Identity: ASIC

If you want to trade under anything other than your own legal name (e.g., "John Smith" vs. "Smith’s Landscaping"), you must register the name with the Australian Securities and Investments Commission (ASIC).

Our advice? Don’t over-register too early.

We often see clients register for GST before they reach the $75k threshold. While this allows you to claim GST credits on your setup costs, it also means you must lodge regular Business Activity Statements (BAS).

Speak with us before you hit "submit" on your registrations. We can help you determine the most tax-effective timing for your specific situation. Contact the team today.

Protecting Your Property Investment With Title Insurance.

Fri, 13 Feb 2026 02:31:46 GMT

When you find your dream home, the process often feels like a whirlwind of inspections, mortgage documents, and packing boxes. Most buyers are diligent about checking for termites or structural cracks, but there is one significant risk that a physical inspection can’t uncover: legal defects in the property’s title.

When it comes to real estate, one of the most effective ways to safeguard your equity is through Title Insurance.

What is title insurance?

Unlike standard home and contents insurance—which covers future events like fires, storms, or theft—Title Insurance is a specialised policy that protects you against existing but unknown legal risks that occurred before you bought the property.

It is a one-off premium paid at the time of settlement that provides cover for as long as you own the home. Despite its value, statistics suggest only about 50% of buyers currently opt-in.

How it works: real-world scenarios.

Title insurance steps in when "discrepancies" surface after you’ve already moved in. Here are the most common ways it protects you:

Illegal building work & conversions: It’s common to find a garage that was converted into a bedroom or a deck built without council approval. If the local council discovers this later and demands you bring it up to code or demolish it, Title Insurance can cover the legal and construction costs.

Boundary & encroachment issues: Imagine discovering your fence, garage, or driveway is actually sitting on your neighbour’s land or Crown land. The cost of surveys, new building plans, and reconstruction can be staggering. Title insurance handles these expenses.

Unpaid rates or taxes: If the previous owner left behind land tax or council rate debts that weren't discovered during settlement, the policy can cover these outstanding costs.

Planning & zoning violations: Protection against loss if you cannot live in the house because it doesn't comply with local zoning laws.

Is it worth It?

These problems often stay hidden for years. You might buy a house that looks perfect, only to find out it has issues when you apply for your own renovation permits.

For a relatively low, one-time fee, Title Insurance offers "peace of mind for your purchase." However, it is not a substitute for due diligence.

Before you sign:

Consult your conveyancer: They can help you finalise the policy during the settlement process.
Research the provider: Ensure the company has a strong history of payouts and longevity in the market.
Review the coverage: Understand what is specific to your property type (e.g., strata vs. green title).

The Ascent perspective.

From a financial planning standpoint, an unexpected $20,000 council-ordered demolition or a boundary dispute can derail your investment strategy. Title insurance is a small price to pay to ensure your property remains a secure asset rather than a legal liability.

Are you planning a property purchase? Talk to the team at Ascent Property Co and Ascent Accountants to ensure your tax and financial structures are as solid as the roof over your head.

Understanding the New Payday Superannuation Requirements (1 July 2026).

Fri, 13 Feb 2026 02:30:21 GMT

From 1 July 2026, the way employers make superannuation guarantee (SG) contributions will change. The Australian Taxation Office (ATO) has introduced Payday Super . This reform requires employers to pay super at the same time they pay employees’ wages.

This is a significant update to the timing of super payments, and it’s important that your payroll processes and software are prepared well before the new rules commence.

For full details, including eligibility and exceptions, see the ATO’s information on Payday Super.

Key changes.

Current requirements.

Under the existing system, employers can make Super Guarantee payments to an employee’s fund up to 28 days after the end of the quarter. SG can be paid quarterly or more frequently (for example, monthly), and the current quarterly due dates are 28 October, 28 January, 28 April, 28 July.

From 1 July 2026

Under the new Payday Super regime, Super Guarantee payments must be paid to an employee’s super fund at the same time as paying qualifying earnings (QE) — that is, on the employee’s payday .

The payment must be received by the super fund within 7 business days of payday. There are limited exceptions to this 7-day deadline, such as for new employees.

What you should do now.

To ensure compliance with the new requirements, we recommend the following steps:

1. Review your payroll software and processes

Confirm that your current systems can support on-payday super payments. If updates or changes are required, plan for implementation well in advance of July 2026.

2. Adjust internal procedures

Update payroll calendars and workflows to align with the new payment timing, and ensure responsibilities and deadlines within your team are clear.

3. Seek advice if needed

If you are unsure how the changes affect your business, or if your current setup requires modification, please contact us! We are here to help.

4. Review business cashflow.

Ensure that the business cashflow will allow you to pay the superannuation on time, each payday. If not, you’ll need to put plans in place.

We’re here to support you.

These changes will affect all employers with staff and will require planning and preparation. If you have any questions or need assistance reviewing your systems and processes, please get in touch with the Ascent team.

Setting Business Goals for the Year.

Wed, 14 Jan 2026 05:17:20 GMT

The start of a new year is like a blank whiteboard; full of possibility! Or, panic when you realise you still haven’t finished last year’s goals… But with the right approach, goal-setting can be more strategic than stressful, and actually help your business grow.

Here’s how to set business goals that stick, track them professionally, and reward yourself when you meet your objectives.

1. Set clear, meaningful goals.

The first rule of goal-setting is to be clear. Don’t set vague objectives. “Grow revenue” is nice, but “Increase monthly revenue by 20% by June” gives you a target you can see and measure. Outline your goals using the SMART approach:

S pecific.
M easurable.
A chievable.
R elevant.
T ime-bound.

2. Break big goals into smaller milestones.

Huge goals feel great, until they don’t. Break them into weekly or monthly milestones so you can keep momentum and celebrate smaller wins along the way. Small wins build confidence as well as measurable progress. For example:

Week 1: Audit current processes
Month 1: Improve customer onboarding
Month 3: Hit first revenue milestone

3. Monitor & measure performance.

Goals without measurement are just wishes. Choose key performance indicators (KPIs) that relate directly to your goals, like:

Sales growth.
Customer acquisition cost.
Client retention rate.
Profit margins.

Track these regularly — weekly, monthly, quarterly — so you can see what’s working and what needs tweaking. If a strategy isn’t moving the needle, adjust it early rather than later.

4. Hold regular performance check-ins.

Don’t wait until year’s end to see how you’re tracking. Schedule periodic performance reviews (with yourself and your team) to evaluate progress, discuss challenges, adjust timelines, and realign expectations if needed. These reviews turn goals into ongoing actions instead of a to-do list that you may or may not get to.

5. Celebrate & reward success.

When you reach a goal, big or small, celebrate. It doesn’t have to be grand, but recognition matters for yourself and for your team. They mark progress, keep momentum going, and boost workplace morale. Rewards could be:

A team lunch or outing.
Bonuses or profit-share.
Extra time off.
Coffees for everyone.

6. Learn & reset regularly.

On top of regular check-ins, a big annual review is essential. Review what you achieved and what you didn’t . Understand why goals were missed and adjust future plans. A reset isn’t failure; it’s refinement and helps you get around the same mistakes year after year.

Make this year worth measuring.

Goals are more than hopeful statements. They’re a framework for action, growth and accountability. Set them clearly, measure them frequently, and reward progress generously. Give your business direction, and you’ll be amazed how far you can go.

Goal-setting is what we do! Let us help.

If you need help turning your business goals into numbers you can track — or want expert support interpreting performance —Ascent Accountants has your back. Contact the team today or visit our Business Growth page for more information.

Major Defect vs Minor Defect (Usual Wear & Tear) in a Building Inspection

Wed, 14 Jan 2026 05:09:59 GMT

Buying a property is a huge deal emotionally and financially. One of the smartest steps you can take before you commit is a prepurchase building inspection. This report doesn’t just point out things that look a bit shabby; it tells you whether there’s a dealbreaking issue hiding behind that fresh coat of paint.

Let’s break down the difference between major defects and minor defects (wear and tear) and why it matters for your contract and peace of mind.

What is a major defect?

A major defect is a serious problem that affects the structure, safety, or longterm performance of a building. In practical terms, these are the kinds of issues that could make part (or all) of a home unsafe or unusable if left unchecked. According to industry standards, a major defect is something that:

Could lead to unsafe conditions if it isn’t repaired.
May result in loss of utility (for example, a part of the home can no longer be used as intended).
Would likely worsen over time if ignored, like structural issues with foundations, loadbearing walls or roof framing.
Significant water ingress causing damp and rot.
Serious termite damage affecting structural timbers.
Major cracking or subsidence in key structural elements

These aren’t just cosmetic—they could cost tens of thousands to fix and affect your safety or the building’s longterm value.

Why it matters when buying.

In most standard property contracts (including common ones used in WA), a major defect found in a prepurchase building report gives you the right to withdraw from the contract or renegotiate terms—typically because these issues impact habitability or safety.

What is a minor defect?

Minor defects (sometimes called “general wear and tear”) are issues that don’t threaten the structure or safety of the building. They’re often cosmetic or maintenancerelated, or typical for a property of that age and use. These might include:

Small cracks in plaster or paintwork.
Loose door handles or minor hardware problems.
Minor wear on flooring or fixtures.
Cosmetic blemishes or superficial damage.

These items generally don’t impair the use of the home and are expected as part of ordinary property use over time. A minor defect doesn’t usually give you the right to cancel the contract. However, you can still negotiate repairs or price adjustments if you want them fixed before settlement.

How inspectors decide what’s major vs minor.

There’s no hardandfast rule based on cost alone. Instead, inspectors look at whether an issue:

Affects structural integrity or safety.
Reduces the usability of a part of the home.
Is likely to get significantly worse without proper repair.

If all of those are true, it’s likely a major defect. If not it’s more about ageing, finish quality or routine maintenance, it’s minor.

Summary (and the key takeaways).

Major defects : serious, potentially dangerous issues that could void your contract or force expensive repairs.
Minor defects : normal maintenance items that don’t affect safety or structural soundness, but might still be annoying or costly in the future.

Getting a prepurchase building inspection and understanding these definitions can save you from nasty surprises, protect your legal rights, and give you confidence that the place you’re about to call “home” really deserves that title.

Need help sorting the big from the small?

The team at Ascent Property Co . have trusted contacts—when you buy a property through them, you gain access to experienced inspectors and tradespeople who can assess any issues quickly, giving you confidence to move forward (or walk away) with peace of mind.

Your First Steps in Starting a Small Business

Wed, 14 Jan 2026 05:01:09 GMT

Starting a small business is equal parts exciting and overwhelming. One minute you’re dreaming up names and logos, and the next you’re knee-deep in paperwork, registrations, and acronyms you swear didn’t exist yesterday.

The good news? With the right structure in place, your business becomes easier to run, easier to grow, and less stressful. Here’s a simple, practical guide to the setup essentials every new business owner needs to know.

1. Choose the right business structure.

Before you start trading, you need to decide how your business will legally operate. The four big options are:

Sole trader
Partnership
Company
Trust

Each has different tax implications, risks, and admin requirements. If you’re unsure which suits you best, don’t stress—this is exactly where our Business Start Up advice pays off. The right structure can protect your personal assets, reduce tax, and set you up for future growth.

2. Register with the ATO.

Once your structure is sorted, the next step is getting the important registrations in place. Depending on your situation, this may include:

ABN (Australian Business Number)
TFN (Tax File Number)
GST registration
PAYG withholding if you plan on hiring staff

These registrations make you “official” in the eyes of the ATO and ensure your business is compliant from day one.

3. Get your superannuation obligations right.

If you’re planning to employ staff—or even paying yourself through a company—you’ll need to make super contributions. This includes:

Understanding the Superannuation Guarantee (SG) requirements
Choosing a default super fund
Setting up payroll so super is calculated and paid correctly

Getting this wrong can cost you in penalties, so it’s worth doing properly from the start.

4. Understand workers compensation requirements.

Every state has its own rules, but in most cases, if you have employees, you’ll need workers compensation insurance. It protects both your team and your business if someone is injured at work.

Not hiring yet? Keep it on your radar. It’s one of the most commonly overlooked setup steps for new businesses.

5. Keep an eye on what comes next.

Setting up your business is just the beginning. Over the coming months, we’ll break down each of these topics in detail so you can build a business that’s strong, compliant, and ready to grow.

Get help with your setup.

If you’d like help with your setup—or you’d rather skip the admin altogether—Ascent Accountants are ready. We specialise in working with new businesses (especially trade-based businesses), and would love to ensure things go smoothly for you.

Contact the team at Ascent Accountants today, and check out our free info sheets too.

The 5% homebuyer deposit for first home buyers.

Mon, 15 Dec 2025 01:17:01 GMT

The Australian Government’s expanded 5% Deposit Scheme, which commenced on October 1, offers a fast-tracked path to home ownership for many aspiring buyers. By drastically reducing the deposit required and eliminating Lenders Mortgage Insurance (LMI), this program aims to unlock the door to your very own home sooner than ever thought possible.

However, like any major economic policy, it has significant implications that buyers and taxpayers must consider.

Here is a breakdown of how the scheme works, who qualifies, and what the potential impact could be on the property market.

What is the 5% Deposit Scheme and how does it work?

The scheme is designed to make home ownership more achievable, particularly for those struggling to save a 20% deposit.

Low Deposit:  The home buyer secures a loan with a minimum deposit of 5% (for First Home Buyers) or 2% (for single parents/legal guardians).
Government Guarantee:  Instead of the buyer paying LMI (which protects the lender), the Australian Government provides a guarantee to a Participating Lender. This guarantee allows the lender to provide a home loan covering up to 95% or 98% of the home's value without the usual LMI fee.
No LMI:  The buyer avoids paying Lenders Mortgage Insurance, significantly reducing upfront costs.

Key features of the expanded program include no income caps, as well as unlimited spots and no waiting list. The Scheme also makes a wider choice of home types available (houses, apartments, house/land packages, vacant land with a building contract, new or existing homes).

It’s not just for first home buyers!

General eligibility for all applicants.

Must be an Australian citizen or permanent resident, at least 18 years old.
Must live in the home as an owner-occupier (no investment properties).
The purchase price must be at or below the location's property price cap (e.g. up to $850,000 in Perth)

The downside for buyers.

While the scheme is genuinely designed to help buyers, it carries a financial trade-off for the market as a whole.

The major concern is that, with the Scheme enabling more people to buy, home-buying competition will increase. This will put upward pressure on property prices as a whole, but especially in the first-home buyer segment. Additionally, while a buyer might save tens of thousands of dollars on LMI, they will end up borrowing even more overall if the average property price increases by a larger amount.

We can help you navigate the home loan headaches.

Buying your first home or starting over is one of the biggest financial decisions you'll make. Before you commit to the 5% Deposit Scheme, ensure your overall financial position is strong enough to handle a larger loan amount and potential interest rate changes.

Contact Ascent Property Co. today .

6 personal budgeting tips for Christmas.

Mon, 15 Dec 2025 01:16:47 GMT

Christmas can be the most wonderful time of the year—it can also be one of the most expensive. The key to enjoying the festive season and reducing the risk of financial stress is careful planning. As your financial partners at Ascent Accountants, we want you to focus on what truly matters—time with friends, family, and peace of mind.

Six essential budgeting tips to help you take control of your Christmas spending.

1. Make a detailed budget list.

The sooner you start, the more control you have. Begin by listing every expense you anticipate, including gifts, food, clothes, travel, and entertainment. Once you have your total, check it against your available funds. If the total feels too high, look at where you can cut back or spread the cost. Being realistic from the beginning prevents surprises later.

2. Prioritise what truly matters (and pay your priority debts!).

When money is tight, focus your funds on the essentials and the things that genuinely bring the most joy. Order your list by priority (e.g., gifts for children first, then shared family meals, then travel). It’s okay—and essential—to say 'no' to extras that don’t fit your budget.

Always consider your priority payments and debts before any other Christmas spending. Priority debts, like rent, electricity, or car insurance, must always come first as they significantly impact your day-to-day life if left unpaid.

3. Be cautious with credit and 'Buy Now, Pay Later' arrangements.

It's tempting to use a credit card or a Buy Now, Pay Later option, especially when promotions promise delayed payments. However, small instalments add up quickly, and missing a payment can result in fees and/or negatively impact your credit record. If you do use credit, only borrow what you can comfortably afford to repay, and make a solid plan to pay it off as soon as possible in the new year.

4. Compare prices & shop smart.

Always take time to research before you buy. Comparing online and in-store prices can result in significant savings. Be wary of high-pressure sales events like Black Friday, which often encourage impulse spending.

Before purchasing, ask yourself three questions:

Do I really need this?
Is this on my original budget list, or is it extra?
Is this truly a bargain if I don't actually need it?

5. Suggest a 'Secret Santa'.

If your family or friend group has traditionally bought gifts for everyone, suggest switching to a Secret Santa arrangement. Setting a sensible spending limit or pooling funds for one thoughtful gift makes things easier and less expensive for everyone. Often, homemade gifts or vouchers for experiences are more meaningful and last longer in the memory than expensive presents.

6. Plan ahead for next year.

The best way to guarantee a calm, affordable Christmas next year is to start preparing now. After this year's holidays, take note of exactly what you spent and where the money went. Set a goal for next year and start a small savings fund. Even setting aside $5 or $10 a week can make a monumental difference in managing next Christmas without stress.

Need to tidy up your finances after the holidays?

If the Christmas period leaves you needing advice on debt consolidation, setting up a savings plan, or just better budgeting habits for the new year, contact the team at Ascent Accountants. We can help you build the confidence to hit your financial goals!

FBT on Work Christmas Parties & Gifts

Mon, 15 Dec 2025 01:16:11 GMT

As the end of the year approaches, businesses are gearing up for the festive season, which means planning the annual Christmas party and showing appreciation with gifts. While the cheer is high, so too are the complexities of Fringe Benefits Tax (FBT).

Getting the FBT treatment wrong can turn a simple celebration into an unexpected tax bill. As your trusted advisors at Ascent Accountants, here is a breakdown of the key tax rules, with a focus on the crucial $300 per person limit, to ensure your end-of-year generosity is tax-effective.

The critical $300 minor benefit threshold.

The Minor Benefits Exemption is your best friend for managing FBT. A benefit is generally exempt from FBT if its total notional taxable value is less than $300 (GST inclusive) per person, and it is provided infrequently and irregularly.

Christmas parties (entertainment)

The location and cost of your party are the key factors for FBT.

Recap:

Under $300 per head: if you host your party off-site (e.g. at a restaurant) and the GST-inclusive cost per person is less than $300, the event will generally be FBT-exempt under the minor benefits rule. However, the cost is then not tax deductible, and you cannot claim GST credits.
$300 or more per head: If the cost of an off-site party is $300 or more per person, the entire benefit for that person becomes subject to FBT, and the expense then becomes tax deductible (including claiming GST credits).

On-site vs. off-site.

The location of your party provides two distinct tax outcomes for employees:

On-site party (exempt property benefit): If you host the party on your business premises on a working day, the cost of food and drink provided to your current employees is generally exempt from FBT. Crucially, this exemption applies regardless of the cost per head. If you invite an employee's partner or family (associates), their portion of the cost must still be kept under $300 to qualify for the minor benefits exemption.
Off-site party (minor benefits exemption): For parties held at a restaurant or other external venue, the Exempt Property Benefit does not apply. You must rely on the Minor Benefits Exemption by ensuring the cost remains under $300 per person for both employees and their associates to avoid FBT.

Important information about gifts.

The rules for gifts are more favourable than for parties, particularly for non-entertainment gifts.

For the most tax-effective outcome, you should aim to give non-entertainment gifts (like a gift card, hamper, or bottle of wine) that cost less than $300 (GST inclusive) per employee. These are FBT-exempt and fully tax deductible with GST credits claimable.

The Minor Benefits Exemption applies separately to the party and the gift. This means you can provide an off-site party under $300 per head and a non-entertainment gift under $300 per head, and both may be FBT-exempt.

For clients & suppliers.

The good news is that FBT rules generally do not apply to benefits provided to non-employees like clients and suppliers.

Christmas parties (entertainment): The costs associated with clients or suppliers attending your Christmas party are not subject to FBT. However, the cost of entertaining clients is classified as a non-deductible entertainment expense, meaning you cannot claim an income tax deduction or GST credits for their portion of the party.
Gifts (non-entertainment): Gifts given to clients or suppliers (e.g., wine, hampers) are not subject to FBT and are generally tax deductible with GST credits claimable, provided the gifts are for the purpose of generating goodwill or future income.

Don’t risk a law suit.

If you’re currently organising Christmas celebrations and need certainty on where FBT implications may be involved, contact the team at Ascent Accountants. We can help you navigate these rules to ensure a festive and responsible end to the year.

Burnout & mental health in a post-pandemic workplace.

Wed, 12 Nov 2025 06:31:37 GMT

Thanks to COVID 19, the rapid shift to remote work came with plenty of growing pains. Many people had to master new technologies almost overnight, juggle blurred boundaries between home and work life, and adapt to changing roles and expectations. For others, job losses and altered working conditions added another layer of stress. No matter the circumstance, it’s safe to say the past few years have left their mark on everyone’s well-being.

The rise of workplace burnout.

The World Health Organization defines burnout as a condition caused by prolonged workplace stress, leading to exhaustion, reduced motivation, and a decline in professional performance. Unfortunately, it’s now become a shared experience for many.

Recent surveys reveal that around three in four employees have experienced burnout , with nearly half saying it happened during the pandemic. Extended or blurred work hours, uncertainty, and constant digital connection have only made things worse.

What’s even more concerning is that many employees don’t feel supported. Only about one in five workers say they’ve had open conversations with HR about their stress or mental health, while over half report that their workplace doesn’t encourage such discussions.

Mental health takes a hit.

Before the pandemic, only a small percentage of workers reported poor mental health. Now, those numbers have more than tripled. Financial pressure, changing job expectations, and the general uncertainty of the world have all contributed to rising stress levels.

The top causes of stress remain familiar:

Health concerns for themselves and their families.
Financial insecurity.
Current events and global instability.
Heavy workloads and job uncertainty.

How employers & workplaces can make a difference.

Work and mental health are deeply connected. Around 76% of employees say workplace stress directly impacts their mental health, often leading to anxiety or depression. However, there are clear steps employers can take to create a healthier environment.

Flexible scheduling is at the top of the list. More than half of surveyed employees said having greater flexibility would significantly improve their wellbeing. Other popular measures include:

Encouraging regular time off or “mental health days”.
Offering access to wellness programs like meditation, nutrition, or yoga sessions.
Hosting webinars that open up the conversation around mental health.
Offering flexible work arrangements such as not a strict 9am – 5pm—especially for employees with families.

Practical tips to avoid burnout.

While businesses play a crucial role, individuals can also take steps to protect their mental health and avoid burnout—whether working remotely or back in the office.

Set boundaries: Have a clear start and finish to your workday, and create a dedicated workspace you can physically leave behind. This is also true for remote work.
Switch off after hours: Mute work emails and notifications once you clock off. Your downtime is important and valuable.
Prioritise personal time: Schedule hobbies and social activities that help you recharge.
Negotiate flexibility: If possible, discuss flexible work arrangements that suit both your lifestyle and productivity.
Stay focused during work hours: Avoid multitasking between work and home duties. Staying efficient during the day makes it easier to log off completely at night.

Make mental health initiative a part of your business plan & budget.

Investing in your team’s mental health and sustainable growth isn’t just the right thing to do—it’s a smart business decision. By building dedicated support and wellbeing initiatives into your annual budget, you’re proactively creating the conditions for higher productivity, improved retention and reduced downtime.

At Ascent Accountants, we help you build those strategies into your financial plan with tailored budgeting, forecasting and KPI-tracking to support both your people and your bottom line.

Let’s partner up to turn your growth ambitions into real outcomes. Check out our Business Growth Services and see how we can help you embed the investment in wellbeing right alongside profit and performance. Then, when you’re ready, contact us .

Dealing with divorce; your property guide.

Wed, 12 Nov 2025 06:30:27 GMT

Divorce or separation is rarely straightforward—emotionally, legally, or financially. Among the toughest decisions to make is what happens to shared property. Whether it’s the family home, investment properties, or assets held in a self-managed super fund, understanding your options early can help you make informed choices and avoid costly surprises down the track.

At Ascent Property Co, we work alongside both parties and are happy to be the liaison, especially if things are strained. This can be a very challenging time, so we also consult with Ascent Accounting to help clients navigate the numbers—from property valuations to capital gains tax implications.

Here’s a practical guide to help you through the process.

1. Know what you own.

Before any decisions are made, you’ll need a clear picture of your property portfolio. Ask yourself:

Is the home jointly owned or under one name?
Are there investment properties, land, or holiday homes involved?
What’s the current market value and equity in each asset?

Independent property valuations (or at least two or three appraisals) are a useful starting point. If parties can’t agree on a value, both lawyers can instruct a single valuer—their determination typically forms the accepted figure for negotiations.

2. Understand the legal framework.

Property division in both marriages and de facto relationships is governed by family law. While each case is different, the Family Court generally follows a four-step process:

Determine the total asset pool.
Assess each party’s contributions, both financial and non-financial (like raising children or managing the home).
Consider future needs, including income capacity, health, and care of dependents.
Apply the “sniff test”—a final check to ensure the overall outcome is just and equitable.

This framework applies whether you were married or in a long-term de facto relationship. A good family lawyer can clarify how the law applies to your situation and help formalise agreements to keep you out of court.

3. Don’t overlook superannuation.

Superannuation is often one of the largest assets in a relationship, and its part of the overall property pool. Even if property was purchased through a self-managed super fund (SMSF), it will still be considered in the division of assets. This is where accounting advice becomes crucial—understanding contribution limits, compliance obligations, and potential rollover or tax implications can make a significant difference to your financial outcome.

4. Consider a Binding Financial Agreement (BFA).

Also known as a “prenup” or “postnup,” a Binding Financial Agreement can be worth its weight in gold. It allows couples to agree in advance on how assets will be divided if they separate, potentially avoiding long and expensive legal battles later.

However, BFAs must be carefully drafted and reviewed by both parties’ lawyers—poorly written agreements can be overturned if they result in an unfair outcome.

5. Explore your property options.

Once you understand the financial and legal framework, it’s time to explore what’s possible:

Sell and split: Selling the property and dividing proceeds is often the simplest path to a clean break.
Buyout: One partner purchases the other’s share, often requiring refinancing.
Temporary co-ownership: In some cases, particularly when children are involved, parties may retain joint ownership for a period. This arrangement should always be documented to protect both parties.

6. Know the tax implications.

Selling property can trigger Capital Gains Tax (CGT), especially if the asset wasn’t your primary residence or was generating rental income. Even if a property is transferred as part of a separation, there may be future tax liabilities to consider when that property is eventually sold.

Ascent Accountants can help clients:

Identify and calculate CGT obligations.
Understand rollover relief options available during divorce settlements.
Plan for any ongoing tax implications tied to assets they retain.

7. Think long-term.

It’s easy to make emotional decisions in the moment, but your financial wellbeing depends on long-term thinking. Consider whether keeping the family home is sustainable, or if selling and downsizing might provide better security and flexibility. Aim to make choices that set you up for stability and growth, not stress.

We’re here to help.

The Ascent Property Co team offers clear, confidential advice to help you make informed financial decisions—and move forward with confidence.

If you’re going through a separation or supporting someone who is, reach out to our team for a no-obligation conversation.

Does your business need public liability insurance?

Wed, 12 Nov 2025 06:23:00 GMT

If your business interacts with the public in any way (from welcoming customers into your shop to visiting client sites) then public liability insurance isn’t just “nice to have.” It’s essential protection.

Whether you’re a sole trader, a café owner, or running a construction company, public liability insurance helps safeguard your business against unexpected (and often costly) accidents.

What Is public liability insurance?

Public liability insurance covers your business if a member of the public suffers injury, death, or property damage as a result of your business activities.

In simple terms, it’s there to protect you financially if something goes wrong—such as a customer slipping in your store, a tradie damaging a client’s property, or a product you sell causing harm.

Without it, you could be personally liable for significant compensation and legal costs.

What does it cover?

A typical policy covers:

Injury or death to a third party caused by your business operations.
Damage to property belonging to someone else.
Compensation and legal costs you’re ordered to pay following a covered claim.

For example, if a customer trips over a cable in your office or a carpenter cracks a client’s TV while working onsite, public liability insurance steps in to cover the costs.

What isn’t covered?

While every policy is different, public liability insurance usually won’t cover:

Damage involving vehicles.
Defective work.
Breach of professional duty or negligence in advice (that’s covered by professional indemnity insurance).
Defamation or advertising liability.

Understanding these exclusions helps you choose the right combination of cover for your business.

Who needs public liability insurance?

If your business has any level of public interaction, you likely need it. Common examples include:

Customer or supplier visits: If anyone comes to your premises or you work on theirs.
Public events: Markets, expos, and pop-ups.
Retail, trade, and construction: High public contact increases your risk.
Leased premises: Many shopping centres and landlords require proof of cover.
Contractor or license requirements: Many trade licenses (like electricians and plumbers) require it to operate.

Even if it’s not legally required, most Australian businesses choose to have public liability insurance for peace of mind.

How much cover do you need?

The level of cover depends on your industry, business size, and risk exposure. Most businesses opt for between $5 million and $20 million. It’s worth reviewing your policy regularly, especially if your operations expand or you start working in new environments.

Is it compulsory in Australia?

Public liability insurance isn’t legally mandatory for all businesses, but some industries and licences make it a condition of operation. For example, in Queensland, electrical contractors must hold a minimum of $5 million in public and product liability cover.

Similarly, councils or venue owners may require proof of insurance before approving an event or leasing a space.

Don’t risk a law suit.

Being sued for negligence can be financially devastating. Even a minor incident can mean you lose hundreds of thousands—not to mention the impact on your brand and business reputation. Public liability insurance ensures your business can keep operating, even when the unexpected happens.

If you’re unsure whether your current cover is adequate, our team at Ascent Accountants can help you review your business risks and recommend the right level of protection for your situation. Contact us today to learn more.

Prepare to adapt your retirement when life changes.

Mon, 13 Oct 2025 05:25:25 GMT

It’s very common for retirement priorities to shift over time. But for some, the change arrives with a jolt. You may spend years—even decades—planning exactly what your post-work life will look like. While life can throw a curveball into your plans at any stage, the closer you get to retirement, the more unsettling the disruption can be.

Whether it’s family breakdowns, the death of a loved one, an inheritance received, or unexpected expenses, you'll face a different personal and financial landscape. One that no longer matches the retirement you envisioned.

Adjusting your working life.

When a major life change hits, the most important rule is: don't rush anything. While you're reshaping your future and contemplating big moves, avoid making any rash decisions that are irreversible.

The event may alter the required length of your working life or your willingness to continue working:

Health issues could force you to retire earlier than planned
A substantial inheritance might enable a more enjoyable, earlier exit from work.
Conversely, a divorce late in life, particularly for someone with high spending habits, might necessitate staying chained to a desk longer. The separation may leave you with an unexpected mortgage or simply drain your finances through the legal process, creating difficulties.

Make a basic plan.

Take the time to sit down and rationally think through what your new retirement might involve. If retirement is still five to 10 years away, that's a good timeframe to start contemplating your next steps.

The most critical step is to determine how much money you will need to spend. While most people worry about whether they "have enough money," the key question is almost always, "How much do I need to spend in retirement?".

Consider this example: If you retire with $1 million and your annual spending requirement is $50,000, you're likely secure. However, if you have $1 million but need to spend $150,000 per year, you have a problem. You'll need to either dramatically increase your savings or significantly reduce your spending expectations.

If you are struggling with these figures or want a professional opinion, see a financial adviser ( we can direct you to one ). Paying for a few hours of their time will help you consider things you hadn't thought about.

A change of pace.

Remember, retiring from your main career does not mean leaving the workforce for good. You have options:

Moving part-time in your current job for a few years, using your extra days for hobbies.
Taking on volunteer work.
Leaving a stressful executive role for paid work you actually enjoy.

Hopefully, your surprises on the path to retirement are positive ones. If they are not, don't panic. Stay calm and seek advice.

We can help.

Early advice and planning can make a real difference in managing your retirement well—understanding the tax implications is a huge part of that. Don’t wait — let us help you !

Lodging a tax return as a visa holder in Australia.

Mon, 13 Oct 2025 05:14:03 GMT

If you're living and working in Australia on a visa, you may be required to lodge a tax return with the Australian Taxation Office (ATO). Australia's tax system is complex—even more so if you're a visa holder.

We specialise in helping visa holders understand and manage tax obligations with clarity, compliance, and confidence. With years of experience in this niche area, our dedicated team of tax professionals is here to make tax time stress-free.

Do visa holders need to lodge a tax return?

If you earn income in Australia, you're likely required to lodge a tax return. This applies even if you're on a temporary or bridging visa. Common visa types that often require a tax return include:

Working Holiday Visa (subclass 417 or 462)
Student Visa (subclass 500)
Temporary Skill Shortage Visa (subclass 482)
Graduate Visa (subclass 485)
Partner Visa (subclass 820/801 or 309/100)

If you earn more than the tax-free threshold (currently $18,200), you must lodge a return. Some visa holders, however, don’t qualify for this threshold—more on that below.

Australian Tax Residency Test explained.

When it comes to lodging your tax return, your tax residency status makes a huge difference. Even if you're on a temporary visa, you could still be a resident for tax purposes. This affects how much tax you pay, what deductions you're eligible for, and whether you can claim the tax-free threshold.

1. The Resides Test (Main Test)

This is the primary test. You’re likely a resident if:

You live in one place and have regular routines (like renting a place, going to work or uni)
You’re part of the local community (bank account, phone, gym, etc.)
You stay in Australia for a continuous period of 6 months or more
You intend to stay long term—even if your visa is temporary

2. The Domicile Test

You may be a resident if your domicile (legal home) is in Australia, unless you can prove your permanent place of abode is overseas. This usually applies to:

Australian citizens or PRs working overseas temporarily
People who still maintain strong ties to Australia

Note: Most temporary visa holders don’t pass this test unless they’ve been in Australia long-term.

3. The 183-Day Test.

If you’re physically in Australia for 183 days or more in a financial year (doesn’t need to be consecutive), you may be a resident—unless your usual place of abode is clearly overseas and you don’t intend to live here. You’re likely a resident if:

You stay for 6 months or more
You rent long-term accommodation
You’re working or studying with the intention to remain for an extended time

Common visa types & how tax applies.

1. Student Visa (Subclass 500)

Likely considered a tax resident if you stay over 6 months
Can claim the tax-free threshold ($18,200)
Can deduct eligible expenses (like textbooks, computers for study if working in a related field)

2. Working Holiday Visa (Subclass 417 or 462)

Taxed at a flat rate of 15% on income up to $45,000
Must lodge a return if you earn any income
Generally, not eligible for the tax-free threshold
Superannuation can be claimed back when leaving Australia (through DASP)

3. Temporary Skill Shortage (TSS) Visa (Subclass 482)

Often considered a tax resident, especially if you're working full time and have relocated
Must lodge a return and may be eligible for tax offsets
Can claim work-related deductions and rental expenses (if conditions apply)

4. Partner Visa (Subclass 820/801 or 309/100)

Usually treated as a resident for tax purposes
Same obligations and entitlements as an Australian citizen
Tax returns may support future PR or citizenship applications

Key differences for visa holders.

1. Tax Residency Status

Your tax residency is not the same as your immigration residency. You could be a temporary visa holder and still be considered an Australian resident for tax purposes.

If you're a resident for tax purposes, you may be eligible for the tax-free threshold and lower tax rates.
If you're a non-resident, you’ll pay tax on every dollar earned (no tax-free threshold) and possibly at higher rates.

Factors like how long you’ve been in Australia, your living arrangements, and whether you plan to stay long-term affect your tax residency status. The ATO provides a residency test to help determine your status.

2. Working Holiday Makers

If you hold a working holiday visa, you're taxed at a special flat rate (15% on income up to $45,000 as of 2024-25), regardless of your residency status. You're still required to lodge a return if you’ve worked.

3. Access to Tax Offsets and Benefits

Only Australian tax residents can access certain tax offsets, such as the low-income tax offset. You may also qualify for superannuation contributions, but you'll need to apply for a Departing Australia Superannuation Payment (DASP) when leaving the country permanently.

What are the common mistakes to avoid?

We see four common mistakes:

Assuming you don’t need to lodge because you're a student or on a short-term visa
Not declaring all income (including freelance or cash jobs)
Using the wrong tax residency status
Forgetting to lodge a return when leaving Australia

Let us take care of your tax return.

Whether you're a student, skilled worker, working holiday maker, or about to leave Australia permanently, getting your tax return right is crucial.

This is a niche area Ascent Accountants specialises in. We understand the unique situations that come with different visas—and we make sure you claim every dollar you’re entitled to. Contact us today to get started.

Bringing clarity to concealed sales prices.

Mon, 13 Oct 2025 05:09:14 GMT

Bringing clarity to concealed sales prices.

Scrolling through property listings and seeing phrases like 'offers from', 'expressions of interest', 'all offers considered', or simply 'contact agent' instead of a clear price can be frustrating for buyers. This lack of transparency makes it difficult to figure out what a seller is truly expecting for a property.

In fact, the frustration at properties advertised with no price at all is consistent feedback clients give to agents. Buyers often report frustration after calling agents and not being given any guidelines on where the property sits on a price scale.

The absence of price information can impact user engagement, with industry feedback suggesting it can significantly influence how users interact with property websites. Clear, visible pricing may enhance user trust and interest.

Strategic steps for buyers.

How to overcome the problem when agents don't give a price guide.

Navigating a property purchase without a price guide is challenging, but buyers can take strategic steps to reduce uncertainty and strengthen their buying position.

Research comparable sales: Understanding market trends and researching comparable sales in the area is crucial for setting realistic expectations. While median values are widely referenced, they don't always accurately reflect individual property values, so look at recent sales of similar properties for a clearer picture.
Know your financials: Have a clear understanding of your risk profile and financial position. Know your borrowing capacity and secure a loan pre-approval. This streamlines the buying process and makes your offer more appealing to sellers in a competitive market.
Use online tools: Experimenting with the minimum-to-maximum price range feature online can assist in providing a general price range.

The limitations of desktop valuations.

While desktop valuations can be handy, be careful not to overstate their accuracy due to certain variables. Desktop valuations are just averages based on an area's lot size, house size, nearby sales, number of bedrooms, and bathrooms.

They may not accurately account for homes that are unique, have views, or don't fit the suburb's prescribed pattern. Furthermore, distinct features are ignored. A significant difference between properties may be that one has been totally upgraded and renovated, with sellers spending hundreds of thousands, versus a property in original condition. This difference is often not taken into account by automated valuations.

We’re here to help.

Buying a home is a financial and an emotional decision. If you’re buying, do your homework on comparable sales and understand the tax implications with Ascent Accountants . You can also consult with Ascent Property Co. and be matched with a home that suits your needs.

Interest on ATO debts are no longer deductible.

Mon, 15 Sep 2025 01:23:03 GMT

Starting 1 July 2025, the ATO will introduce a significant change that will affect small businesses, sole traders, and individual taxpayers with unpaid tax debts. Interest charged on outstanding tax—known as the General Interest Charge (GIC)—will no longer be tax-deductible, creating a potential financial burden for many.

How the change works.

Currently, interest on unpaid tax debts can be claimed as a deduction, offsetting some of the cost against taxable income. From July 1, 2025, this will no longer be allowed. With the GIC rate at 11.17% per year, a $100,000 tax debt could cost $11,700 annually—entirely non-deductible. For taxpayers already stretched to their limits, this is a substantial new expense.

The rule change will particularly affect, small business owners and sole traders, individuals on payment plans who owe personal tax, and property investors who miss BAS or PAYG instalments.

Many taxpayers use outstanding tax payments to manage cash flow and fund business operations. Removing the deductibility of GIC adds a layer of financial pressure that could contribute to business failure or, in extreme cases, bankruptcy. If this is you, you should contact us so we can discuss your options with you.

Strategies to manage the impact.

Some taxpayers may consider borrowing funds to pay off their ATO debt, as interest on the loan could potentially be claimed as a tax deduction. However, the borrowed funds must be used for income-producing purposes, and the loan must be properly structured and documented. Simply taking out a loan to clear a tax debt does not automatically make the interest deductible.

In any case, borrowing may not even be an option for you. Those with ATO debts often owe because their finances are already stretched to the limit.

Professional advice is critical.

With the GIC and shortfall interest charge in play, seeking expert guidance is essential. A qualified tax agent can:

Review your current tax obligations.
Explore potential strategies to minimise financial impact.
Ensure any loan or payment arrangement is structured correctly for deductibility.

Early advice and planning can make a real difference in managing cash flow and avoiding unexpected penalties. Don’t wait — let us help you now to protect your business and personal finances.

The risks of cheating on your tax return.

Mon, 15 Sep 2025 01:04:32 GMT

At the moment, more than 15 million Australians are preparing their tax returns—if they haven’t already. Around 60% will use an accountant, while the rest will lodge through their MyGov account. Whatever method you use to lodge your return, the ATO is doing their due diligence. But, even with the ATO heavily scrutinising every claim, people are still tempted to cut corners. Some even willingly attempt to cheat the system, hoping not to get caught…

Did you know the ATO receiving around 1,000 tip-offs regarding illegal tax returns every week? They investigate around 90% of them.

It’s never been more important to get things right. Here’s what to keep in mind this year.

Preparing your return.

These days, the ATO prefills much of your income information, from wages to some bank interest and dividends. You’ll know your income statement is “tax ready” when your MyGov account confirms it.

But don’t rush to lodge on July 1. Other items—like managed fund distributions, bank interest, and private health insurance—may take longer to appear. Always check prefilled data for accuracy and add in any missing information such as:

Capital gains from investments.
Income from a second job or contracting work.
Overseas income.
Rental income.

Some details are only partially prefilled, so double-check that all questions are answered before submitting.

Claiming deductions.

To claim a deduction, three rules apply:

You must have spent the money yourself (and not been reimbursed).
The expense must be directly related to earning your income.
You must have a record to prove it—a receipt or diary entry.

The ATO’s myDeductions app is a handy way to store and organise receipts.

ATO Focus Areas for 2025.

Each year, the ATO highlights specific areas it will scrutinise. For 2025, these are the big four:

1. Working from home expenses.

Two methods apply here.

Fixed-rate method – claim 70c per hour worked from home. Covers energy, phone, internet. Requires a record of hours, but no receipts.
Actual-cost method —claim the real costs of a dedicated office space. Requires receipts and no private use of the area.

Remember: you can’t claim home loan interest or rent unless you’re running a business from home, and personal items (like coffee machines) are not deductible.

2. Motor vehicle expenses.

Again, there are two options here to work out your motor vehicle expenses. Please note, you can’t combine these methods.

Logbook method —keep a 12-week record to calculate business use %. Apply this to expenses.
Cents per kilometre method —claim 88c per km up to 5,000km. No receipts required, but you must justify your claim.

3. Rental properties.

Interest deductions apply only to the rental property loan, not your personal home. You can only claim your share of expenses (e.g. 50% ownership = 50% of costs). If you have a holiday home, this is only deductible for the period it was genuinely rented out.

4. Cryptocurrency & gig economy income.

Buying, selling, or swapping crypto triggers capital gains or losses that must be declared. Income from gig work, rideshare driving, food delivery, or online sales must also be included.

Don’t be tempted to cheat.

The ATO uses advanced data matching across banks, employers, share registries, and even internet platforms. If claims don’t line up, expect questions. Penalties for false claims range from 25% to 75% of the tax owed. Some of the stranger (and rejected) claims in recent years include:

Lego, school uniforms, and kids’ sporting gear.
$9,000 worth of wine consumed on a holiday.
A conference claim for an event the taxpayer didn’t attend.

If your claim doesn’t directly relate to earning income, don’t even try it.

If you make a mistake…

Mistakes happen—the ATO realises this. If you realise something’s wrong, you can amend your return through myTax. The ATO generally won’t penalise you if you’ve taken reasonable care, but you will need to repay any shortfall.

Additionally, mistakes can mean your accountant will have to liaise with the ATO on your behalf. This comes with additional fees for their time.

Lodgement dates.

The deadline for lodging your own return is 31 October 2025.

If you’re using a registered tax agent like Ascent Accounting, you’ll usually have longer to lodge—even up until the 15th May 2026. This is provided you’re on their books before the cut-off, you’re not a high-income earner, and you don’t have a bad lodgement history.

Get your 2025 tax return right with professional support.

Tax time can feel overwhelming, but you don’t have to go it alone. We’ll help you identify every deduction you’re legitimately entitled to and make sure your return is accurate and compliant.

If you’d like professional support preparing your 2025 tax return—and maximising your outcome— talk to us today.

These things are devaluing your property in 2025.

Mon, 15 Sep 2025 00:52:53 GMT

In today’s market, buyers are more informed (and more particular) than ever. With online listings, comparison tools, and endless property research at their fingertips, even small details can make or break the value of your home.

Some factors—like location, block size, or nearby amenities—are out of your control. But many of the elements that shape your sale price come down to the choices you make before listing. At Ascent Property Co., we see it every week: sellers who invest time into avoiding simple pitfalls consistently achieve stronger results.

From the finance side, we often help clients prepare for the tax and financial implications of their property sale—meaning the effort you put in now can pay off well beyond the settlement date.

Here are the most common things that devalue a property in 2025 (and how you can avoid them).

1. Poor presentation & clutter.

Presentation is your silent salesperson and unfortunately, mess speak volumes. Buyers want to see light, space, and potential—not worn armchairs, cluttered bookshelves, or wardrobes bursting at the seams.

This includes property photos online—not just private walk-throughs and home-opens. Presentation shapes first impressions online and in person, and we all know first impressions are everything. So, what can you do maximise presentation?

Declutter and store away bulky or overly personal items.
Deep clean of every surface, including built-in storage like kitchen cupboards and walk-in wardrobes (buyers always check storage).
If you want to go to the ‘nth’ degree, put away anything that reflects you, like family photos, so potential buyers can start imagining the space as their own from the get-go.
If budget allows, consider professional styling—properties that are styled often sell faster and for a higher price.

2. Loud colours & quirky décor.

Of course, your home should feel like you—a place that reflects your style and brings you joy. But when it comes to selling, the rules shift. That bold purple feature wall might be your signature, but most buyers are looking for a neutral canvas. Details and décor that are too loud or eccentric makes it harder for people to imagine their own life in the space.

Additionally, most people want a move-in ready home. If they have to spend time and money painting over statement choices, it feels like an instant project—and many won’t want the hassle.

Repaint walls in warm, neutral shades.
Scale furniture to the room—oversized pieces make spaces feel smaller.
Tuck away statement ornaments and décor. For example, remove any particularly bold artworks and replace them with more neutral pieces. These don’t have to be expensive. Kmart, for example, has heaps of affordable neutral prints and artworks perfect for home opens.

Remember, it’s not about discrediting the space you’ve loved—it’s about setting up your sale for success. A neutral home appeals to the widest pool of buyers, maximising demand and sale price.

3. Unpleasant odours.

This seems obvious, but you’d be surprised at how often people walk into a home that smells less than pleasant. Odour is a deal-breaker! Pet odours, damp, stale air, or drain smells can push buyers out the door before they’ve seen the living room.

Sometimes when you live in a space, certain scents wash over you and you don’t even notice them anymore. Invite a friend for an honest “sniff test.”
Steam-clean carpets, wash linens and curtains (if possible), and open windows every day to circulate fresh air.
Deal with any leaks or mould at the source, not just the symptoms.
Avoid using strong garden fertilisers before inspections.

Buyers focus on what their senses are telling them. If they’re distracted by odours, they’re not picturing themselves living happily in the space.

4. General disrepair.

Even in a prestige suburb, visible neglect hurts your bottom line. Buyers add up repair costs in their heads—and lower their offers accordingly. A home that looks well maintained reassures buyers that it’s structurally sound and not a hidden money pit.

Refresh paintwork, grout, and silicone.
Replace worn carpet and polish floors.
Fix jammed doors, squeaky hinges, and sticking windows.
Tidy sheds and garages to signal care and order.
Repair cracked tiles or chipped benchtops.
Service air conditioning units and fix squeaky ceiling fans.

5. Neglected street appeal

Like online images, kerb appeal massively sets expectations. Overgrown lawns, flaking paint, or a cluttered front porch can sour the mood before buyers even step inside. On the other hand, a fresh, welcoming exterior tells buyers: This home has been loved and looked after.

Mow lawns, trim hedges, and pull weeds.
Clear out gutters.
Pressure clean your driveway and/or porch and sweep paths.
Wash or repaint the façade and front door.
Replace old house numbers, letterboxes, or outdoor lights.

6. DIY jobs gone wrong.

If you’ve tackled DIY projects around the house, you’ll know the satisfaction of getting hands-on. But when the results aren’t up to scratch, that pride can quickly turn into regret.

Crooked tiles, patchy paint, and dodgy finishes instantly devalue a home. Buyers see corner-cutting and factor in the cost of professional fixes. Shoddy work tells them they’ll spend more fixing mistakes, and they’ll lower their offers to cover it.

Only tackle tasks you can complete to a professional standard.
Use licensed trades for plumbing, gas, and electrical work.
If something’s not right, fix it before open homes.

7. Illegal home improvements.

That deck or extra bedroom you added without council approval? If it’s not signed off, it’s not legally part of your property listing. And once buyers discover the truth, they’ll slash their offer or walk away completely. Legal compliance isn’t just about ticking a box—it protects your sale from unravelling at the eleventh hour.

Check with your council on how to lodge paperwork for any unapproved works (yes, you can do this retrospectively).
Secure final certificates before listing.
If approvals aren’t possible, be prepared to price the home as if those spaces don’t exist.

8. Outdated kitchens & bathrooms.

It’s a well-known fact that kitchens and bathrooms sell homes. Outdated ones can kill enthusiasm fast. Buyers see ageing tapware and dated cabinetry as “instant renovation bills.” Fresh, clean kitchens and bathrooms help buyers imagine moving straight in—not budgeting for a gut-and-replace.

Prioritise small upgrades: new tapware, handles, splashbacks, or lighting.
Degrease rangehoods, scrub tiles, and replace cracked or mouldy grout.
If budget allows, modern benchtops and appliances make a huge impact.

9. Choosing the wrong agent.

The wrong agent can cost you more than a bad paint job or a tired kitchen. Without the right strategy, presentation, and negotiation, your property can linger on the market and ultimately sell for less.

Research and interview multiple agents to find the right fit.
Look at reviews from home owners who have sold with them before.
Choose someone who communicates clearly, listens to your goals, and has proven results.

The right agent doesn’t just sell your home—they sell it well. They position it for maximum interest and negotiate hard on your behalf.

Bringing it all together.

Selling a home is both a financial and emotional decision. On one hand, you want the best possible return for all your years of investment. On the other, you want the process to feel smooth and stress-free.

That’s why Ascent brings both sides of the equation together. Ascent Property Co. works alongside you to present, market, and sell your property for its true worth. Ascent Accountants help you understand the tax implications, plan for your next step, and maximise your financial outcome.

Understanding car fringe benefits.

Wed, 13 Aug 2025 05:38:31 GMT

If your business provides a car to an employee (or you’re the business owner/employee using it), there’s a good chance the Fringe Benefits Tax (FBT) rules apply.

A car fringe benefit arises when a car owned or leased by an employer is made available for the private use of the business owner, an employee or their associate (such as a family member). “Private use” doesn’t just mean weekend road trips — it can include everyday commuting and even cases where the car is parked at an employee’s home, making it available for personal trips.

Understanding how FBT is calculated and what records to keep is essential for compliance — and for avoiding paying more tax than necessary.

What counts as a “car” for FBT purposes?

The FBT law defines a car as a motor vehicle (except a motorcycle or similar) designed to carry less than one tonne and fewer than nine passengers.

From 1 July 2022, some zero or low-emission vehicles are exempt from FBT, provided they meet certain criteria — for example, they must be first held and used after 1 July 2022 and must not have attracted Luxury Car Tax. Electric vehicle running costs, such as charging, are also exempt when the vehicle itself qualifies.

Two main methods for calculating FBT on cars

There are two ways to calculate the taxable value of a car fringe benefit.

1. Statutory formula method

This method applies a flat 20% statutory rate to the base value of the car, adjusted for the number of days in the FBT year the car was available for private use.

The formula is: (A × B × C ÷ D) − E

A = Base value of the car (cost price plus GST and certain accessories, less registration, stamp duty and eligible reductions)
B = Statutory fraction (generally 20%)
C = Days available for private use
D = Total days in FBT year (365)
E = Employee contributions

If the car has been owned for at least four full FBT years, the base value can be reduced by one-third.

2. Operating cost method

This method calculates the taxable value by applying the private use percentage to the total operating costs of the car (actual and deemed costs).

The formula is: Taxable value = [Operating costs × (100% − Business use %)] − Employee contributions

Operating costs include:

Fuel, oil, repairs, maintenance, registration and insurance
Lease costs (for leased cars)
Deemed depreciation (25% diminishing value) and deemed interest for owned cars

Certain costs, such as tolls, car parking and insurance-funded repairs, are excluded. The business use percentage is determined by odometer readings, logbook records, and a reasonable estimate based on usage patterns.

The three-month logbook requirement (operating cost method only).

If you use the operating cost method, you must keep a logbook for at least 12 continuous weeks (roughly three months) to record:

The date of each trip
Odometer readings at the start and end
Total kilometres travelled
Whether the trip was for business or private purposes
The purpose of each business trip

This logbook is generally valid for five years, but you must start a new one if usage patterns change significantly (e.g., a role change, relocation or different duties).

You also need to record odometer readings at the start and end of each FBT year.

Why record-keeping matters.

Keeping accurate records can support a higher business use percentage (and therefore a lower FBT bill). They also ensure you claim only legitimate business kilometres and help you provide evidence if the ATO reviews your FBT calculation.

Finally, your records help you decide which calculation method (statutory or operating cost) is more tax-effective.

Key takeaways for businesses and employees.

If a car is available for private use, FBT may apply — even if the car isn’t driven often for personal trips.
Electric cars may be FBT-exempt if they meet eligibility criteria, but you may still need to calculate their taxable value for reporting purposes.
The operating cost method often works better if business use is high — but only if you have a compliant logbook.
Keep odometer readings, expense records and a valid logbook to support your claims.

Need help with your FBT obligations?

Get it at Ascent Accountants.

We guide business owners through every step of FBT compliance — from choosing the right valuation method to maintaining the right records for ATO peace of mind.

If you provide cars to employees or use a company vehicle yourself, now is the time to review your FBT position before the next FBT year rolls over. Let’s talk .

EOFY checklist for FIFO workers.

Wed, 13 Aug 2025 05:24:37 GMT

As the end of the financial year rolls around, most Australians start sifting through receipts and bracing for tax time.

For WA’s fly-in, fly-out (FIFO) workforce, EOFY isn’t just about lodging a tax return — it’s a golden opportunity to check in on your financial strategy and set yourself up for long-term security.

With high earning potential, complex income structures, time away from home and often a lack of regular financial routines, approaching EOFY with a clear plan is essential. Here’s our practical checklist to help FIFO workers make the most of their money.

1. Collate all income.

FIFO workers often earn above-average incomes, which can push them into higher tax brackets. That’s why it’s crucial to gather all your income information — income statements, interest statements, dividends and rental income (if applicable).

If you’ve worked across multiple contracts or sites during the year, make sure every source is declared. The Australian Taxation Office is increasingly using data matching, so accuracy is your best ally.

2. Track work-related expenses.

Working remotely can mean significant out-of-pocket costs. Depending on your role, you may be entitled to claim:

Tools and protective gear.
Travel between work sites (but not between home and site).
Self-education relevant to your current role.
Union fees and licences.

The ATO has tightened its rules around deduction claims, so keeping solid records — receipts, invoices and logbooks — is essential. Using a tool like the free app ReceiptHub can make collating expenses much easier.

3. Understand your LAFHA.

Some FIFO employees receive a Living Away From Home Allowance (LAFHA) to offset additional costs like meals and accommodation.

However, LAFHA isn’t always tax-free, and eligibility rules vary. Check with your employer and accountant to make sure it’s reported correctly and you’re not missing potential benefits.

4. Check your super contributions.

Many FIFO workers miss the opportunity to boost their retirement savings and reduce taxable income through voluntary contributions.

If you haven’t reached your $30,000 concessional contribution cap this financial year, there may be room to top up. You may also be able to claim a tax deduction for personal contributions.

If your partner earns less than $40,000, spouse contributions can offer extra tax benefits. An accountant or financial adviser can help calculate the right amount based on your cash flow and savings goals.

5. Review your loan structures.

EOFY is the perfect time to assess your loans — mortgages, investment property finance and personal loans. Ask yourself:

Am I on the most competitive rate?
Is my loan structure aligned with my income cycle?
Would refinancing free up equity or help consolidate debt?

For FIFO workers, offset accounts or redraw facilities can help keep cash flow flexible between swings and rosters. Even a small interest rate change can mean big savings over the life of a high-value loan.

This is also a good time to explore long-term tax-reduction strategies, such as negative gearing through investment properties. With your current earning power, you can start setting yourself up financially now so that you’re making the most of your time working away — and creating income streams that support you well into the future.

6. Set clear goals for the year ahead.

You work hard — often in challenging conditions. Make EOFY your reset button.

A step-by-step approach can help:

Pay off small personal debts first — they quickly drain cash flow.
Reduce your owner-occupied mortgage to a level you could maintain if you moved to local work.
Direct additional surplus cash into investments or savings.

Get the right professional support.

Your situation is unique, and your financial strategy should be too.

Engage a combination of independent advice from an accountant, financial adviser and mortgage broker — ideally those experienced in FIFO finances. Many offer after-hours or virtual appointments to fit around your roster.

At Ascent Accountants, we work alongside FIFO workers to make tax time a stepping stone towards lasting financial success. Talk to us today.

Understanding R-Codes: Why zoning matters in WA’s property market

Wed, 13 Aug 2025 05:11:07 GMT

For homebuyers, investors, builders and developers, understanding Residential Design Codes (R-Codes) is key when navigating the Western Australian property market. These codes guide residential development across the state and play a key role in determining what can be built on a property and how land can be used.

R-Codes were first introduced in 1985 and have since evolved to become subsidiary legislation under the Planning and Development Act 2005 . They apply to all residential land and set consistent planning and design standards for houses, townhouses, units and apartments. The codes also govern subdivision and influence key elements such as housing diversity, neighbourhood amenity, and overall design quality.

R-Codes also affect internal aspects of a home, such as the size and orientation of living spaces and how much natural sunlight those spaces receive.

What are R-Codes?

Each residential property is assigned a code (such as R20, R30 or R40). The higher the number, the more dwellings can typically be built per square metre. For example, R20 usually allows one dwelling per 450 square metres, while R40 zoning may support multiple dwellings on the same lot.

These codes offer a quick way to assess the development potential of a block. A higher R-Code can significantly increase the potential value of a property because it opens up more development options.

Why R-Codes matter for property value.

R-Codes aren’t just about legal compliance. They’re also a major driver of market interest and property value. A block with R30 or R40 zoning may command a higher price due to the possibility of building multiple dwellings or subdividing. This makes it appealing to investors and developers, as well as families looking for long-term flexibility.

At the same time, lower R-Code areas remain attractive for buyers who prefer a quieter, low-density lifestyle. Understanding these dynamics is important for both buying and selling decisions.

How rezoning transforms suburbs.

Rezoning can dramatically reshape a suburb. In many parts of Perth, areas that were once considered sleepy or low-demand have become development hot spots after zoning changes. Suburbs like Nollamara and Girrawheen saw sharp increases in development activity following upcoding, and other areas like Booragoon have experienced similar attention based on the potential for change alone.

Emerging opportunities also exist in suburbs where rezoning has occurred but hasn’t yet been fully leveraged. Willagee, Thornlie and parts of Dianella are examples where larger blocks and favourable zoning remain underutilised, offering potential upside for early movers.

The risks of misunderstanding zoning.

Just because a property has a higher R-Code doesn’t guarantee it can be subdivided or redeveloped. Factors like lot size, shape, access, local council rules, easements, sewerage connections and split codes (such as R20/40) all influence what’s actually possible.

A thorough understanding of these variables is essential before making a purchase or development decision. It's recommended to consult with town planners, surveyors or local councils for clarification.

R-Codes are not fixed

R-Codes are reviewed and updated to reflect changing community needs and planning priorities. Recent amendments in April 2024, for example, were designed to support greater housing choice, respond to lifestyle changes, and promote more vibrant communities across WA.

It’s important for buyers to be aware that zoning and R-Codes can evolve over time, and staying informed is key to making smart property decisions.

What buyers and investors should consider

Even if there are no immediate plans to build, zoning can shape long-term strategy. Whether it’s subdividing and selling part of a lot, adding a granny flat for rental income, or partnering with a builder to redevelop an entire site, zoning knowledge can unlock significant value.

Buyers should use tools like PlanWA to check zoning information and seek advice from qualified professionals early in the process.

Need help?

Ascent Property Co works closely with property investors, developers and everyday buyers. If you’re exploring opportunities tied to zoning or development, they’re ready to provide tailored guidance. Get in touch today .

What does “comfortable retirement” really mean?

Mon, 14 Jul 2025 01:15:03 GMT

Why it’s different for everyone — and how to plan for yours.

For many Australians approaching retirement, the idea of being "comfortable" in retirement can feel vague, even overwhelming. What does it actually mean to live comfortably? Is it regular dinners out, annual holidays, or simply knowing your bills are paid without stress?

At Ascent Accountants, we work with many government retirees and self-funded individuals who are starting to plan, or are already in retirement. A common challenge is not just figuring out how much money they’ll need — but what kind of lifestyle they truly want. Because at the heart of good retirement planning is one simple truth: there is no one-size-fits-all definition of comfort.

Step 1: Define what “comfortable” means to you.

For some, a comfortable retirement includes travelling, dining out regularly, enjoying hobbies, keeping a well-maintained home and garden, helping kids financially or leaving an inheritance.

For others, comfort might simply mean having enough to pay the bills on time, avoiding financial stress, staying in the family home, or not relying solely on the aged pension.

Start by thinking honestly about your expectations. What expenses are essential to your lifestyle now? How might they change in retirement — will your mortgage be paid off? Will you stop commuting? What extras would make retirement more enjoyable for you?

Step 2: Work backwards to determine what you’ll need.

Once you’ve visualised your ideal lifestyle, it’s time to reverse-engineer a plan to support it. Let’s say you want $80,000 per year in retirement income. You have two broad options:

Preserve your capital and live off investment income only.
Draw down your capital over time to supplement your income.

Each strategy will dramatically affect the amount of capital you need.

Step 3: Consider your investment strategy.

Your risk tolerance and investment style will also shape how much you need.

A retiree with a growth-focused portfolio who accepts market ups and downs might need less capital because they’re targeting higher long-term returns.
Someone with a more conservative, stable portfolio may need more savings to produce the same income, due to lower expected returns.

Using our $80,000 income goal as an example:

A growth investor might need $1.15 million
A conservative investor might need $1.6 million or more

There’s no right or wrong here — it’s about finding the balance between your comfort, risk tolerance, and financial security.

Step 4: Tax structure matters!

Two retirees with the same amount of savings can end up with very different incomes, depending on how their money is invested and structured.

A couple with $2 million earning a 5% return could receive $100,000 tax-free if their funds are in superannuation pension phase. But if the same $2 million is held outside of super in one person’s name, about $23,000 may be lost to tax, leaving only $77,000 after-tax income.

If structured through a family trust and income split evenly, the pre-tax income needed to net $100,000 might still be $124,000 or more, depending on marginal tax rates.

The right tax strategy could reduce the capital needed to maintain your lifestyle by 25–35% — that’s a massive difference.

So, how much do you really need?

There’s no universal answer — and anyone who says otherwise is selling a shortcut. The real key is to start with your own lifestyle expectations and personal goals, then build a financial plan that supports them.

Ask yourself:

What does comfortable mean to me ?
Am I okay with drawing down savings, or do I want to preserve capital?
What investment approach matches my risk tolerance?
Am I taking advantage of tax-effective structures like super or trusts?
What role might the age pension play later in life?

Let’s define your retirement — on your terms.

At Ascent Accountants, we help clients not only understand how much they’ll need to retire, but also create tax-effective strategies to protect their lifestyle. Whether you’re five years out or already retired, it’s never too late to take control of your future.

Reach out to the team at Ascent Accountants for personalised guidance. Let’s define your version of comfortable — and build a strategy to support it.

What is a Clearance Certificate? Why do you need one when selling property?

Mon, 14 Jul 2025 01:05:34 GMT

If you're selling property in Australia, you may have heard about the Clearance Certificate and wondered why it’s now a crucial part of the selling process. This certificate is issued by the Australian Taxation Office (ATO) and serves as confirmation that the seller is an Australian tax resident and not subject to Capital Gains Withholding (CGT withholding tax) on the property sale. 

Why you need Clearance Certificate. 

The Australian government introduced Capital Gains Withholding Tax to ensure that foreign residents meet their tax obligations when selling Australian property. However, Australian residents are not subject to this tax. The Clearance Certificate is the official document that proves you are an Australian resident for tax purposes and ensures that no tax is withheld from the sale proceeds.

Without a valid Clearance Certificate, the buyer of the property is legally required to withhold 15% of the sale price and remit it to the ATO. This can cause unnecessary delays and reduce the amount you receive from the sale. To avoid this, it's essential to obtain your certificate before settlement. 

Applying for a Clearance Certificate 

Who needs to apply? 

A Clearance Certificate is required for individuals and entities selling any taxable Australian real property. The rate that has to be withheld if you don’t have a clearance certificate is 15%. This applies to: 

Individuals 
Companies 
Trusts 
Superannuation funds

If you're selling through Ascent Property Co , we highly recommend applying for your certificate well in advance to ensure a smooth transaction. 

How to apply.  

Applying for a Clearance Certificate is straightforward and free. Here’s how to do it in three easy steps. 

Prepare your details . Have your Tax File Number (TFN) and Australian Business Number (ABN) (if applicable) ready. 
Complete and submit the online form . The ATO provides an easy-to-use online application form. Access it here: Apply for Clearance Certificate . Once submitted, the ATO typically processes applications within 28 days , but it may be even faster. 
Provide the certificate to the buyer . Once received, give the certificate to the buyer (or your Agent on your behalf) before settlement to avoid any tax withholding.

Let Ascent Accountants & Ascent Property Co assist you. 

At Ascent Accountants, we help property sellers navigate tax compliance, including applying for Clearance Certificates. Contact us to get started . 

If you're selling through Ascent Property Co, or would like to, the friendly team will guide you through the necessary legal paperwork ( everything — not just Clearance Certificates) ensuring a seamless and hassle-free sale experience. Reach out to learn more . 

Need help getting EOFY-ready?

Whether you’re fine-tuning your tax deductions, reviewing your super, or planning ahead for future investments, our team is here to support you. Contact Ascent Accountants today to book your EOFY review or loan health check, or speak with Ascent Property Co for a free property appraisal. Let’s make this EOFY work smarter for you.

Is your TPAR lodged? Don’t be penalised this August.

Mon, 14 Jul 2025 00:56:11 GMT

Avoid late penalties & stay compliant with your contractor payment reporting.

For many small to medium-sized businesses in Perth, staying on top of your tax obligations can feel like a constant balancing act — especially as EOFY rolls around. One important yet often misunderstood reporting requirement is the Taxable Payments Annual Report (TPAR).

If your business has paid contractors or subcontractors during the 2024–2025 financial year, you may need to lodge a TPAR with the ATO by 28 August 2025. Missing the deadline could result in late lodgement penalties, so it’s vital to take action now if you haven’t already.

At Ascent Accountants, we regularly help clients navigate this reporting process, and we often hear the same questions:

Do I need to lodge a TPAR?
What exactly do I need to report?
Can I do this myself, or should I get help?

This blog post outlines everything you need to know about TPAR — who it applies to, what you need to include, how to lodge, and how to stay compliant with confidence.

Who needs to lodge a TPAR?

You must lodge a TPAR if your business paid contractors or subcontractors for services in any of the following industries:

Building and construction
Cleaning services
Courier and road freight services
IT services
Security, investigation, and surveillance services

If your business operates in one of these sectors — or offers multiple services where one of the above is included — it’s important to review your payments for the year.

What if my business only provides these services part-time?

If your business provides both TPAR-reportable and unrelated services, the ATO applies a 10% threshold:

If 10% or more of your income comes from reportable services — you must lodge a TPAR.
If it's less than 10% — you may be exempt, but it’s wise to check with your accountant.

This area can get tricky, so don’t hesitate to seek guidance if you’re unsure. It’s better to clarify than risk underreporting or missing an obligation.

Inclusions & exclusions.

What do I need to include in my TPAR?

When preparing your TPAR, you must report all payments made to contractors or subcontractors that include:

Labour only
Labour and materials combined (if included on a single invoice)

The report should include the contractor’s ABN, name, address, total amounts paid (including GST). This applies to all invoices paid on or before 30 June 2025 — regardless of when the service was delivered.

What not to include in your TPAR.

Some payments do not need to be included in your TPAR, such as:

Payments for materials only (with no labour)
Incidental labour (minor or non-essential)
Unpaid invoices as of 30 June (only report payments already made)
Payments to employees (report separately via Single Touch Payroll)
Payments to labour-hire workers (reported under a different system)
Foreign residents working outside Australia
Contractors who do not have an ABN (different PAYG rules apply)
Payments within consolidated corporate groups
Payments for private or domestic services

How to lodge your TPAR.

There are a few ways to lodge your TPAR with the ATO. Choose the one that suits your setup:

Via business software (SBR-enabled)

If you use Standard Business Reporting (SBR)-enabled software, you can create a TPAR file and lodge it using the file transfer function.

2. Online Services for Business

Using your ABN and myGovID, you can lodge via the ATO’s online platform. Access the Relationship Authorisation Manager (RAM) to submit under “Lodgements”.

3. Online Services for Individuals/Sole Traders

Sole traders can also lodge through myGov. Go to Tax → Lodgements → Taxable Payments Annual Report.

4. Through your BAS or tax agent

Your trusted tax or BAS agent (like us!) can prepare and lodge your TPAR on your behalf — ideal if your business has multiple contractors or complex reporting needs.

5. By paper (not recommended)

If you must lodge by post, the ATO requires original documents — no photocopies or scans — and they must arrive before 28 August. Allow postage time if using this method.

Top tips for getting TPAR-ready

Use the ATO’s free worksheet to track payments throughout the year (this isn’t submitted but is a great internal tool).
Keep contractor ABNs, payment details, and invoices well organised.
Review payments early to avoid last-minute panic or missed deadlines.
If in doubt — ask for help . Getting it wrong can lead to compliance issues!

Need help?

Lodging a TPAR can feel overwhelming — especially if you manage multiple contractors, large volumes of payments, or operate across service categories.

We can take care of your TPAR reporting from start to finish — making sure every detail is correct, submitted on time, and backed by the latest ATO guidance. Get in touch today for personalised tax support.

June 30 Checklist for Business Owners

Thu, 12 Jun 2025 02:48:39 GMT

We’re already halfway through June, which means time is running out to tick off those important business tasks before the end of the month — and the end of the financial year. This is a crucial period for business owners, especially those juggling multiple responsibilities, such as owner-operators. The lead-up to 30 June is often hectic, with a long list of administrative and financial duties that must be completed to comply with legal and regulatory requirements.

At Ascent Accountants, we’re here to help make this busy time more manageable and ensure your business is ready to start the new financial year strong.

Your end of year business checklist.

Breaking down these tasks into manageable steps means you can focus on what matters most — growing your business. Here are the key actions to prepare and complete before, and just after, 30 June:

1. Wages reconciliation

Ensure all wages are correctly paid and reported through Single Touch Payroll (STP). Confirm wages are accurately reflected in your Activity Statements lodged with the ATO.

2. Single Touch Payroll finalisation

Complete your STP reconciliation with the ATO by 14 July through your payroll software.

3. Superannuation reconciliation

Check that all superannuation contributions are correct and paid by 28 July at the latest.

4. Superannuation payments

Make superannuation payments for staff and any additional contributions by 25 June to claim the tax deduction in this financial year.

5. Private use and Fringe Benefits Tax (FBT) calculations

Perform final calculations for private use and FBT for your 30 June BAS return. Reconcile private use on vehicles and other assets, including these as contributions in the BAS.

6. Bank reconciliation

Complete bank reconciliations for all business accounts and credit cards as at 30 June.

7. Stock take

Conduct a thorough stock take on 30 June to verify your inventory.

8. Owner’s drawings review

Review any owner’s drawings taken from the business and ensure they are repaid before 30 June.

9. Bonus agreements

Establish bonus agreements aimed at tax minimisation based on your financial targets.

10. Annual contractor payment summary statements

Prepare and complete these statements by 28 August if you pay contractors in specified industries.

11. Planning for 2025/2026

Review your business performance comprehensively, create budgets, and set strategic goals for the upcoming financial year.

Additional notes on EOFY prep.

Ensure your payroll software is calculating superannuation at 12% on wages by 1 July.
For small businesses, the instant asset write-off allows you to immediately write off second-hand or new assets and equipment up to $20,000 for the 2024/25 financial year. Items must be purchased, installed, or first used by 30 June 2025.
Bonus agreements should be carefully structured to align with your tax planning and business goals.

Let’s do it right the first time.

Completing these tasks accurately and on time is vital to avoid penalties and streamline your financial planning. If you feel overwhelmed or need assistance, Ascent Accountants are ready to support you with tailored solutions for reconciliations, form preparations, and all other critical EOFY processes.

Our EOFY Guide for Taxpayers.

Thu, 12 Jun 2025 02:30:46 GMT

As the end of the financial year (EOFY) approaches, many taxpayers feel the pressure of looming paperwork and deadlines. But for those who plan ahead, EOFY presents a unique opportunity to optimise your financial position—and potentially unlock valuable savings.

At Ascent Accountants, we view EOFY not just as a compliance deadline, but as a strategic moment to reassess, reset, and maximise returns. Whether you're an individual taxpayer, investor, or business owner, this guide will help you navigate the season with confidence.

Understand and claim your deductions

A surprising number of taxpayers miss out on deductions simply because they’re unsure what they can claim. Here are some common deductible expenses to review:

Work-related expenses. Uniforms, tools, work-specific travel, and professional development courses.
Home office expenses. If you work from home, you may be able to claim internet usage, equipment like laptops, and electricity costs.
Investment expenses. Interest incurred while earning investment income.
Charitable donations. Contributions to registered charities are deductible—just make sure you have receipts.
Income protection insurance premiums. These are tax-deductible if they relate to policies covering your income.

Maximise your super contributions.

Contributing to your superannuation is a smart, tax-effective way to save for retirement—while also reducing your taxable income.

For FY24–25, the concessional contributions cap is $30,000.
From 1 July 2025, the super guarantee (the amount employers must pay) will increase to 12%.
If your super balance is under $500,000 at the start of the financial year, you may be eligible to ‘catch up’ on unused contribution caps from the past five years—particularly useful in years of higher income.

SMSFs: Key tasks before 30 June

If you manage a self-managed super fund (SMSF) , EOFY is an important time to review and report. Here are the essentials:

Update your investment strategy. Ensure it reflects your current financial goals, risk appetite, and any changes in member circumstances.
Get market appraisals. If your fund holds residential or commercial property, ensure you obtain updated valuations.
Review related party rent arrangements. If a related party is renting a property owned by the fund, a market appraisal is required to ensure the rent is at arm’s length.

Individual & company tax rates you should know.

Resident Tax Rates 2025–26

Note: The above rates do not include the Medicare levy of 2%.

Company Tax Rates for 2025/2026

Base Rate Entities: 25%
All Others: 30%

(Base Rate Entities are businesses with a turnover under $50 million.)

Concessional Contribution Cap

Includes employer contributions and personal contributions claimed as a tax deduction.
2025/2026: $30,000

Non-Concessional Contribution Cap

Includes contributions made as personal after-tax contributions.
2025/2026: $120,000

Super Guarantee

Employers must make super contributions at least quarterly at the following rates:
2024/2025 : 11.5%
2025/2026 : 12%

Superfund Tax Rate

2025/2026 : 15%

Note: If your income threshold (including super contributions) is over $250,000 , then Division 293 tax of 15% is also payable on contributions.

Threshold for Government Super Co-Contribution

A government scheme that contributes $500 into superannuation if you contribute $1,000 after-tax income.

Lower threshold (your income) :
2025/2026 : $47,488
High income threshold (above this level, no government co-contribution is available):
2025/2026 : $62,488

PAYG Instalments

The amount of instalment is based on your last tax return lodged.
Paid quarterly to the Tax Office.
Check your myGov account for PAYG Instalment Activity Statements.
Can be varied down if your income circumstances have changed.

Things to do before June 30.

Review if extra super contributions need to be made before 30th June 2025.
Ensure you have your home office log for hours worked at home for the year (must be kept for the whole year, for substantiation).
If using your vehicle for work, have you kept three-month logbook or four-week diary of kms.
30th June is a great time to review your finances and wealth.

Have you had your home and net equity appraised?
Contact us if you want Ascent Property Co to provide a free appraisal on your home or rental property.
If you have loans, interest rate and terms reviewed: through our trusted associates we can organise a free loan checkup so we can ensure your loan is best option and at the best rate.

5. Review superannuation performance.

6. Review your investments and their performance.

7. Review life insurance and income protection policies.

8. Ensure your wills and powers of attorney documents are up to date.

Be aware that as of July 1 2025, interest paid to the tax office is no longer tax deductible. Ensure everything you owe is paid by the due dates!

Need help getting EOFY-ready?

Maximise Your Rental Property Tax Deductions this EOFY

Thu, 12 Jun 2025 01:50:04 GMT

As the end of financial year (EOFY) approaches, savvy property investors across Western Australia are asking one key question: Am I making the most of the tax deductions available on my investment property?

Whether you’re a first-time landlord or managing a growing portfolio, knowing exactly what you can legally claim can have a substantial impact on your cash flow, tax position, and long-term return on investment.

At Ascent Accountants and Ascent Property Co , we work closely with our clients to ensure they’re well-prepared at tax time. Below, we’ve outlined the most common (and often overlooked!) deductions you should be aware of.

Common rental property tax deductions.

Loan interest
The interest portion of your investment loan is often the single largest deduction available. Just ensure the loan is used solely for investment purposes—mixed-use loans may complicate your claim.
Property management fees
All fees paid to your property manager—management fees, leasing commissions, annual statements—are 100% deductible.
Maintenance and repairs
Repairs that restore an item to working condition (e.g. fixing a leak or patching a wall) are fully deductible. Improvements (e.g. new cabinetry) are depreciated over time.
Depreciation (capital works & assets)
Claiming depreciation on your building and fixtures (carpets, blinds, appliances, etc.) can unlock thousands in deductions. You’ll need a tax depreciation schedule prepared by a qualified quantity surveyor.
Insurance premiums
Landlord insurance, building insurance and contents insurance premiums are all deductible and provide essential protection for your property.
Council rates and water charges
You can claim council rates, emergency services levies, and water charges you pay directly (when not paid by the tenant).
Advertising costs
Expenses for advertising your rental—online listings, brochures, signage—are fully deductible if the property is available for lease.
Travel (some exceptions)
Since 2017, individual investors can no longer claim travel expenses related to their residential rental property. However, trusts and companies may still qualify—check with your accountant.
Legal and professional services
Accounting fees, lease preparation, and property-related legal advice are deductible if they relate directly to managing the rental.

What to prepare for your tax return.

To make EOFY as smooth as possible, provide your accountant with:

End-of-Year Agent Summary . This is issued by Ascent Property Co. around 1 July.
Receipts for expenses you paid personally . This is not covered by your agent.
Loan statements covering the full financial year (1 July to 30 June).
Depreciation report if you’ve had one prepared for the building depreciation.

These documents help us accurately assess your entitlements and ensure nothing is missed.

EOFY is also the ideal time to review your investment strategy.

The end of the financial year isn’t just about deductions—it’s also a great time to assess:

Your property’s current value
Available equity for future investments
Whether your loan is still competitive

Through our trusted associates, we offer free property appraisals and loan health checks to help you stay financially fit. You might discover opportunities to refinance, access equity, or structure your loans more effectively.

Let’s make the most of your investment

We support property investors with clear advice, accurate reporting, and expert insights to help you grow your portfolio with confidence. Get in touch today for personalised tax support, or contact Luke Langford directly at Ascent Property Co on 0493 672 956 to book your free appraisal.

What is a Bridging Loan? And When Would You Need One?

Mon, 12 May 2025 03:48:03 GMT

Buying and selling property rarely lines up perfectly. The logistics of it all can be incredibly stressful. If you’ve found the perfect next home but haven’t sold your current one yet, a bridging loan can make your move easier, without having to wait on your current property sale.

What is a bridging loan?

A bridging loan is a short-term loan that gives you the funds to buy a new property before your current property has sold. It’s designed to bridge the gap between buying and selling.

These loans are generally interest-only and are typically offered for up to 12 months, giving you time to sell and settle on your current home while already owning the next one.

When would I need a bridging loan?

You might consider bridging finance if:

You’ve found your next home but haven’t yet sold your current one.
You want to avoid renting or moving twice between sales.
You want more time to prepare your home for market to get the best sale price.
You're building a new home while still living in your existing one.

How does it work?

Peak Debt: The lender combines your current mortgage, the cost of the new property (including stamp duty and legal fees), and any interest (if it’s being capitalised). This total is known as your Peak Debt.
Interest Only: During the bridging period, you’ll typically pay interest only — or the interest may be capitalised (meaning it’s added to your loan rather than paid upfront).
Sell Your Property: Once you sell your existing home, the sale proceeds are used to reduce your Peak Debt.
End Debt: The remaining balance becomes your End Debt, which then continues as a standard mortgage.

An example of a bridging loan.

Your current home loan = $200,000
New home = $800,000
Total bridging loan (Peak Debt) = $1,000,000
After selling your home for $600,000, that amount is used to pay down your loan
Remaining loan (End Debt) = $400,000

Things to consider.

Like any major financial decision, it’s important to understand all the moving parts before you commit.

Time pressure: You typically have 6–12 months to sell. If you don’t sell in time, the lender may step in to sell the property and/or charge default interest. This is an extra interest rate that a lender charges when you fail to meet your loan obligations — in this case, not selling your property within the agreed timeframe.
Interest costs: If interest is capitalised, it means you're not making repayments during the loan period, so the interest gets added to the loan balance instead of being paid separately. This means your loan grows each month. Making even small repayments can help keep this under control.
Equity & serviceability: Lenders will assess how much equity you have and whether you can manage the loan during the bridging period.
Loan-to-value ratio: If your End Debt ends up being more than 80% of the new property’s value, you may have to pay Lenders Mortgage Insurance (LMI).
Existing loan setup: If your current lender doesn’t offer bridging loans, refinancing may be required — sometimes triggering break fees if your existing loan is fixed. This means you may have to pay a penalty if you end a fixed-rate home loan early (before the agreed term is up).

Is a bridging loan right for you?

That’s the big question. Bridging finance can offer flexibility and peace of mind, helping you move forward with confidence rather than being held back by uncertain sale timing. But it’s not without risk or cost — so it’s vital to understand the structure, timeframe, and repayment expectations.

If you’re considering your next property move and want tailored advice on whether bridging finance suits your situation, talk to the team at Ascent Property Co. or Ascent Accountants. We can also put you in touch with finance brokers to discuss what is best for you.

The true cost of work perks.

Mon, 12 May 2025 03:36:37 GMT

We get it. When it comes to work perks, it’s hard to say no — whether it’s a fun Christmas party, a weekend-ready company car, or a fully paid conference trip. But behind the scenes of these fringe benefits is a complex and often costly layer of tax law that can leave both employers and employees out of pocket. So, is FBT worth the hassle?

What is a fringe benefit?

A fringe benefit is essentially the non-cash part of your pay — something extra your employer provides in addition to your salary. Unlike a work-related expense that clearly benefits the business, such as tools or training, fringe benefits are more personal in nature.

The ATO recognises that employers like to keep staff happy, but it also sets strict limits. If the benefit is valued over $300, fringe benefits tax (FBT) may apply.

This $300 limit covers things like the Christmas party and a gift. But beyond that, there are no restrictions. Your employer could pay your mortgage, private health insurance, or even fund your European holiday. That’s where salary packaging comes in.

Salary packaging: More bang for your buck?

In theory, salary packaging can be a smart move. It allows certain expenses to be paid from your pre-tax salary, which reduces your taxable income.

For example, a $1,000 trip might only reduce your take-home pay by $610 if you’re on a 37% marginal tax rate plus the 2% Medicare levy — because the money comes out before tax is applied.

Sounds great, right? Not always.

The FBT sting.

Many people don’t realise is that FBT is charged at 47% — which is very high. It’s equivalent to the top tax rate for high-income earners.

Because it’s so expensive, most regular employers won’t absorb the cost themselves. Instead, they’ll take it out of your total salary package — which means you'll either get fewer perks, or your base salary might be adjusted down to cover it.

So, while salary packaging can be a smart tax move in some cases, in many others, the benefit is cancelled out by the hefty FBT. This can mean that salary packaging ends up leaving employees worse off than if they’d just taken the cash.

FBT-free options.

They exist, but they’re limited.

Some items, such as work-related phones, laptops and tablets, may be exempt if they’re used primarily for business purposes. Tools of the trade, protective clothing, and even certain software can also be FBT-free.

There’s also the “otherwise deductible rule”, which allows you to salary-package items you could otherwise claim as a tax deduction — like income protection insurance or professional membership fees.

Vehicles are a grey area. Unless your employer is FBT-exempt or you’re driving an electric car (which has specific concessions), salary packaging a car often results in more cost than benefit—especially when you add record-keeping and compliance costs.

Buying the car outright and claiming any work-related costs yourself is often the more financially effective option, but it may not be as convenient.

Our two cents on FBT.

While fringe benefits and salary packaging can offer savings, they often come with hidden tax complications. If you're considering any kind of salary packaging arrangement—or if you're an employer looking to offer staff perks—speak to us first.

And, do it before the financial year ends. May and June are the key months to get your tax planning sorted!

Reach out to learn more and schedule a confidential consultation.

Act Fast to Reduce Your Tax Bill!

Mon, 12 May 2025 02:59:39 GMT

Time is running out.

If you’re expecting a high income this financial year, there are several legitimate ways to reduce your tax bill — but most of them require action before 30 June. That means now is the time to start tax planning.

By putting the right strategies in place, you could save thousands of dollars — money that’s better in your bank account than with the ATO. Whether you want to reinvest in your business, boost your retirement savings, or enjoy a well-earned lifestyle upgrade, acting now gives you more options.

Nine key strategies worth considering.

Write off bad debts
You’re taxed on income you’ve invoiced — even if it hasn’t been paid. Review your debtors list and write off any bad debts now to avoid paying tax on money you’ll never receive.
Reduce your stock value
The higher your closing stock, the higher your taxable profit. If you’re holding obsolete or slow-moving stock, now is the time to scrap or revalue it down.
Review business assets
Obsolete or unused assets can be written off to reduce your taxable income. There may also be accelerated depreciation options available. Let’s review which approach suits your business best.
Defer income
If your cash flow allows, deferring invoicing until July can push income into the next financial year — and defer the tax liability. However, we recommend discussing this with us to manage any impacts on your budget.
Review advance invoices
If you’ve issued invoices for services that won’t be delivered until the next financial year, you may not need to declare that income yet. Let’s check the details and apply the correct treatment.
Pay June quarter super early
Super is deductible when paid — not when it’s due. By bringing forward the June quarter super payment and making it in June, you can claim the deduction this year rather than next.
Maximise your super contributions
If growing your super is part of your plan, use your annual contribution cap before 30 June. We can help calculate how much you can still contribute.
Finalise staff bonuses
Employee bonuses are tax-deductible when committed to in writing, not just when paid. Finalise and document bonuses now to claim the deduction this year.
Plan for Capital Gains Tax (CGT)
CGT is all about timing. Have you held the asset for more than 12 months? Do you have losses you can realise to offset a gain? Are you eligible for any concessions? We’ll walk you through the options to minimise CGT where possible.

Let’s talk before 30 June.

Yes, that’s really soon!

Don’t leave it too late — small actions now can lead to significant savings later. If any of these apply to you, we need to sit down soon to tailor a strategy for your specific situation. Reach out to our team today .

Why Every Business Sale Needs a Lawyer (and an Accountant)

Mon, 14 Apr 2025 03:31:00 GMT

If you’ve been thinking about buying or selling a business in 2025, you’re not the only one. The first few months of the year have brought promising signs for business owners planning an exit and entrepreneurs looking for their next opportunity. With a stabilising economy, anticipated interest rate cuts, and a regulatory shake-up coming in 2026, now could be an ideal time to act.

While timing and preparation are critical, having the right team in your corner can make all the difference. At Ascent Accountants, we regularly work with businesses navigating sales and acquisitions — and one of the smartest moves you can make is bringing a lawyer into the process early.

What’s Happening in the Market?

Three things are happening — a stabilising economy (finally!), future regulatory changes, and strong buyer interest.

A stabilising economy. Lower inflation and the possibility of interest rate cuts are making business acquisitions more accessible. This means a broader pool of qualified buyers for sellers, and more attractive financing for buyers.
Regulatory changes ahead. New business transfer regulations will roll out in January 2026. Completing a transaction before then could save time and reduce complexity for both parties.
Strong buyer interest. Private investors and cashed-up buyers are actively seeking opportunities. If you’re selling, this could mean multiple offers. If you’re buying, there are great businesses available across various industries.

How a Lawyer can help.

Whether you’re buying or selling, legal advice isn’t just helpful — it’s essential.

Transaction support. A lawyer can guide you from initial negotiations through to final settlement, helping draft and review contracts, flagging critical clauses, and ensuring everyone understands their rights and responsibilities.
Risk assessment. Before you commit to anything, a Lawyer can help assess any legal, financial, or operational risks that may be buried in the business’s paperwork. This protects you from costly surprises down the line.
Regulatory guidance. With changes on the horizon, it’s crucial to ensure your transaction complies with current laws while preparing for what’s next. A Lawyer stays across these developments so you don’t have to.
Strategic insight. A Lawyer who understands business transactions (not all have expertise in this area) can offer practical advice beyond the legal paperwork—like how to structure the deal, manage handovers, or handle staff transitions.

Where Ascent Accountants come in.

Obviously, a business sale is as much a financial transaction as it is a legal one. Our team at Ascent Accountants helps clients:

Prepare and present accurate financials.
Conduct valuations to ensure a fair price.
Structure deals in a tax-effective way.
Liaise with legal professionals to streamline the process.

We often work hand-in-hand with lawyers to give our clients a seamless experience — ensuring the financial and legal elements of the sale are aligned.

Thinking of buying or selling a business in 2025?

Now’s the time to get the right advice. Ascent Accountants can help you understand your numbers, evaluate opportunities, and connect you with experienced legal professionals to support your journey.

Get in touch with us today to plan your next move with confidence, or contact Vitalis Legal directly .

Understanding PAYG Instalments.

Mon, 14 Apr 2025 03:22:38 GMT

If you're running a business or earning investment income, you’ve likely come across the term PAYG instalments — but many people still aren’t clear on what they are, how they work, or why they're important.

In this article, we break down PAYG instalments and explain what you need to know to stay on top of your tax obligations, avoid penalties, and manage your cash flow with confidence.

What are PAYG instalments?

PAYG (Pay As You Go) instalments are regular pre-payments of your tax, made throughout the financial year. They’re designed to help individuals and businesses avoid a big tax bill at the end of the year, by splitting the bill into smaller payments throughout the year.

The system applies if you earn income that hasn’t had tax withheld — for example:

Business income (as a sole trader, company, or trust).
Investment income (such as rent, dividends, or interest).

Instead of paying your full tax bill at tax time, you pay portions in advance, based on the income you earned last year.

How do you know if you’re in the PAYG system?

“How did I get here!?”. This is a question a lot of people have.

You’re automatically enrolled into the system based on your tax return. The ATO will notify you if you’ve entered the PAYG instalment system. This typically happens after you lodge your tax return, and the ATO determines that your income meets the threshold for PAYG.

The ATO automatically adds people to the PAYG system if:

Your business or investment income is over $4,000 (individuals).
You had at least $ 1,000 in tax payable on your last return.
You're not already paying enough tax via PAYG withholding (like employee wages).

If you’re unsure, check your myGov account, or speak with us — we can check your ATO account and confirm your PAYG status.

How are PAYG instalments calculated?

Your instalment amount is based on your last lodged tax return. The ATO uses your reported income to estimate your likely tax bill and then splits it into quarterly payments. For example, if your 2023 return showed $60,000 in business income, the ATO will estimate your 2024 tax and issue PAYG instalments based on that.

This is helpful — but not always perfect. If your income is higher or lower this year, you may want to vary the instalment amount.

If you’re going to vary your instalment, do it early.

If your income has changed — up or down — you can vary your PAYG instalment to better match your current situation. But there’s a catch… You must lodge the variation before the due date of the instalment.

For example, if your next instalment is due 28 April, you must submit the variation before that date. Once the deadline passes, the amount is locked in — even if your actual income is lower than expected.

Also, varying too low without reasonable basis may result in interest charges or penalties, so always check with your Accountant before adjusting.

When are PAYG instalments due?

If you’re in the PAYG instalment system, you usually need to pay quarterly on the 28 ^th of July, October, January, and April. So, four times a year, by or on the 28 ^th of those months. It’s essential to make your payment on time — missing a deadline can result in interest charges or penalties from the ATO.

Where to find your PAYG instalment notice.

The ATO won’t always send you a letter in the mail. If you’re an individual or sole trader, your PAYG instalment notices will appear in your myGov account, under your linked ATO services. You must check your myGov inbox each quarter. If you don’t, you could easily miss a payment date — and that can cost you.

If you run a business and use a tax agent or BAS agent, the notice can also be accessed through your business portal or agent’s portal. However, you must check your myGov account and business portal.

Opting out of PAYG instalments (spoiler alert: you can’t).

Many clients ask us whether they can opt out of PAYG instalments. The short answer is: no — you can’t simply opt out for convenience.

However, in certain cases, you can request to be removed from the PAYG instalment system entirely. This usually applies if your business or investment income has dropped below the ATO’s threshold and is not expected to return to that level. You or your Accountant can make this request to the ATO, and if they accept it, you may be taken out of the system. Alternatively, if your next tax return shows income below the threshold, the ATO may automatically remove you.

The bottom line.

PAYG instalments help smooth out your tax payments across the year — but they only work if you stay on top of the due dates, check your myGov notifications, and update your payment amounts if your income changes.

We help business owners and investors across Perth manage their PAYG obligations with confidence and clarity. Whether you’re new to the system or want help varying an instalment, we’re ready. Get in touch with Ascent today.

Selling a Business? What You Need to Know About Goodwill, Plant & Equipment, and Stock

Mon, 14 Apr 2025 02:59:27 GMT

We regularly help Perth-based business owners navigate the complex process of selling a business. Whether you're preparing for retirement, pursuing new ventures, or simply ready to move on, understanding how your business is valued is crucial — and a big part of that is knowing what buyers are really paying for.

While there are multiple methods used to value a business — from asset-based approaches to future earnings projections — three key components typically make up the final sale price: goodwill, plant and equipment, and stock.

Goodwill (AKA, the hidden value in your business).

Goodwill represents the intangible assets that make your business more valuable than just the sum of its parts — essentially the buyer’s expectation of continued profitability. It’s what makes your business unique and desirable, especially if you have a strong presence in your local market or niche industry. This could include:

Your customer base.
Brand reputation.
Location advantage.
Established supplier relationships.
Staff expertise and retention.

Because goodwill is an intangible asset, it's often the most heavily scrutinised in negotiations. Having strong financials and consistent earnings can help justify a higher goodwill valuation.

Plant & equipment — your business’s backbone.

Plant and equipment include all the physical assets your business owns — from office furniture to manufacturing machinery or even company vehicles. The condition, age, and market value of these items directly affect your business valuation.

For capital-intensive industries (like construction, manufacturing, or logistics), this component can make up a large share of the sale price, while other sectors won’t be impacted too heavily by this area. Even so, it’s still important.

A well-maintained equipment list with clear records of depreciation will help strengthen this part of your valuation.

Stock at date of sale.

What’s on the shelves or in the warehouse matters to your buyer. Stock — or inventory — includes all the goods your business holds for resale or use in operations. The quantity, quality, and turnover rate of your stock at the time of sale can significantly affect the final price.

In some cases, businesses also hold shares in distributors or suppliers, which can increase stock value and influence negotiations. Just remember that stock is assessed at the date of sale, and must be itemised separately in the contract for tax clarity.

Why this separation matters.

When preparing your sale agreement, it’s essential to clearly separate goodwill, plant and equipment, and stock because each is treated differently for tax purposes. For example:

Goodwill may be subject to capital gains tax (CGT).
Plant & equipment may fall under depreciable assets.
Stock is often treated as trading stock for income tax purposes.

Additionally, while the sale of a business as a going concern is typically GST-free, mistakes in structuring the agreement could lead to unexpected GST obligations. That’s why we strongly recommend working with both an Accountant and a Lawyer to ensure your contract is correctly structured and tax-compliant.

Ready to sell? Talk to Ascent first.

Selling a business is a major financial event — and getting the valuation right is key to a successful outcome. At Ascent Accountants, we help business owners in Perth understand the true value of their business and guide them through the sale process, from valuation to contract support and tax planning.

Reach out to learn more and schedule a confidential consultation.

8 Smart Upgrades to Boost Your Investment Property

Mon, 14 Apr 2025 02:49:24 GMT

At Ascent Property Co , we understand that building long-term wealth often includes smart property investment. Whether you're a seasoned landlord or just dipping your toes into the market for the first time, making strategic improvements to your rental properties can significantly increase your rental income and capital value.

If you’re evaluating your existing property or looking to buy, here are eight property upgrades that can enhance tenant appeal and increase your return on investment.

1. Create an extra bedroom.

Large master bedrooms (that you could split into two), unused attics, or games rooms are prime opportunities to add an extra bedroom, which can dramatically increase your rental yield. In some cases, it could be as simple as adding a single wall. Just ensure there’s enough space for a double bed and wardrobe, or the effort may not pay off.

2. Comply with building codes.

Sometimes it’s okay to break the rules, but not when it comes to building codes. If you're making structural changes, always check local building codes with your council and secure the right approvals. Non-compliance can lead to costly reversals, fines, and lost income.

3. Add a half-bath.

A compact bathroom addition — like a shower and small sink — can work wonders, especially in older properties. This is even more important if you envision your home as a share house (as opposed to family living), where more bathrooms are highly valued. Where possible, stick with the existing plumbing layout to keep costs down and protect your ROI.

4. Install laundry facilities.

Yes, it’s 2025, but units without laundries are more common than you’d think. If space is tight, consider integrating a front-loader into the kitchen cabinetry, the bathroom, or even a hallway cupboard. Then, weigh up whether you want to provide the washing machine yourself, and ensure the rent offsets any extra costs.

5. Upgrade the kitchen.

Tenants love modern kitchens. Replacing benchtops, cupboard doors, or even just the handles can instantly elevate the space without an expensive remodel. This is a space people use every day, so most prospects are happier to pay higher rent for a brighter, cleaner kitchen.

6. Don’t overlook the hot water system.

An ageing water heater is a ticking time bomb. Knowing when it was last replaced and scheduling preventative upgrades can save you from costly damage and emergency callouts.

7. Refresh the flooring.

While tiles are a must-have in wet areas, timber or modern laminate flooring (not that old stuff) is increasingly popular for the rest of the home, with many tenants preferring it over carpet. It’s a worthwhile upgrade that offers durability and aesthetic appeal, with options available to suit all budgets.

8. Add a fresh coat of paint.

Possibly the easiest upgrade of them all — nothing beats a fresh paint job! Stick with neutral tones to appeal to a wider range of tenants and avoid polarising feature walls. Keep track of your chosen colours for easy touch-ups between tenancies.

Here’s how we can help.

We’re do more than crunch numbers. We work with clients to maximise their investment property returns through smart financial strategies, capital works planning, and proactive tax structuring. We also help ensure the money you’re spending will lead to maximised returns.

Reach out to our team today ; we’re here to help you grow your portfolio with confidence. If you’d like to discuss how you can maximise your property returns, feel free to contact Ascent Property Co on 0439 672 956.

Why Public Liability Insurance is Essential for Your Business

Fri, 14 Mar 2025 02:22:23 GMT

In the course of running a business, unexpected incidents can occur that lead to financial and legal risks. Whether you operate a small enterprise or a large corporation, public liability insurance is a fundamental safeguard against claims arising from injury or property damage caused by your business activities.

While it’s not legally required in Australia, why risk it? The majority of businesses choose to have it as a precautionary measure against unforeseen events.

What is public liability insurance?

Public liability insurance provides coverage for businesses against claims made by third parties — such as customers, clients, suppliers, or members of the public — who suffer an injury or property damage as a result of the business’s operations. For example:

A customer slips and falls on a wet floor inside a retail store, resulting in medical expenses and potential legal action.
A tradesperson accidentally damages a client’s property while carrying out repair work.
A business participating in a public event is found responsible for an incident that causes harm to attendees.

In each of these scenarios, public liability insurance would help cover compensation costs and legal fees, preventing significant financial strain on the business.

Is public liability insurance legally required in Australia?

Public liability insurance is generally not compulsory by law in Australia. However, there are circumstances where it is required, such as:

Trade licensing requirements: Electricians, plumbers, and builders often need public liability insurance to obtain and maintain their licences.
Contractual obligations: Businesses working with government agencies, large corporations, or event venues may be required to hold a certain level of public liability insurance.
Lease agreements: Many landlords and shopping centre managers mandate a minimum level of coverage for tenants.

Even when not required, having public liability insurance is a responsible business decision that can protect against unforeseen financial losses.

So, no one legally needs public liability insurance, but who should get it?

Public liability insurance is relevant to businesses across various industries, particularly those that interact with the public or operate in environments where accidents could occur. The following businesses and professionals should strongly consider obtaining coverage:

Businesses with customers or public interactions. If you have customers, suppliers, or visitors to its premises, there is a higher risk of accidents occurring. Retail stores, restaurants, salons, medical clinics, and office spaces with regular foot traffic should have public liability insurance to cover potential claims.
Businesses operating in public spaces. Companies that work in public areas — such as construction firms, event organisers, and market stall operators — face higher exposure to third-party claims. Public events, in particular, present a risk of injury or damage due to large crowds and various moving parts.
Tradespeople, contractors & sub-contractors. Tradespeople frequently work on client premises, where there is a risk of property damage or injury. Many trade licences, such as those for electricians and plumbers, require proof of public liability insurance as part of the licensing process.
Businesses leasing commercial property. Many commercial landlords require tenants to have public liability insurance as part of their lease agreement. Shopping centres, office buildings, and industrial properties often have mandatory minimum coverage levels that tenants must meet before occupying a space.
Businesses manufacturing or selling products. Product liability insurance is typically used to cover claims related to faulty or dangerous products. It can also provide coverage if a defective product causes injury or damage while being used in a business setting. For example, a café serving food that results in food poisoning could face a claim from affected customers.

What public liability insurance covers.

A comprehensive public liability insurance policy typically covers the following:

Legal liability for injury or death. If a third party is injured or dies as a result of your business activities, public liability insurance covers compensation costs and related legal expenses.
Property damage. If your business causes accidental damage to third-party property, the policy will help cover repair or replacement costs.
Legal costs. If your business is taken to court over a public liability claim, the policy will cover legal defence fees and settlements.
Compensation payments. If a court or insurer determines that your business is liable, the insurance will cover the compensation you are ordered to pay.

What public liability insurance doesn’t cover.

While public liability insurance is a broad form of coverage, it does not protect businesses from every type of risk. It is important to be aware of its exclusions, which may include:

Injuries to employees . Employee-related injuries are covered under workers’ compensation insurance, not public liability.
Defective workmanship . If a job is completed poorly and results in damages, professional indemnity insurance may be required instead.
Advertising liability . Claims related to false advertising, copyright infringement, or misleading statements typically require a separate form of coverage.
Vehicle-related accidents . If your business vehicle causes an accident, you will need a commercial motor vehicle insurance policy.
Intentional acts of harm . Any deliberate harm caused by your business or employees is not covered.

How much public liability insurance does a business need?

The amount of coverage required depends on several factors, including the industry, size of the business, level of risk, and contractual obligations. Standard coverage levels range from $5 million to $20 million, with businesses in high-risk sectors typically requiring higher limits. For example:

A small café may opt for $5 million coverage to meet lease requirements and customer risks.
A construction firm working on large projects may require $20 million coverage due to high-risk work environments.
A business hosting large public events may need $10 million or more in coverage to protect against potential liabilities.

Assessing your business risks and consulting with an insurance advisor can help determine the appropriate coverage amount.

Looking for public liability insurance?

Public liability insurance is a key component of risk management for businesses, providing essential protection against financial and legal risks associated with accidents, injuries, and property damage.

For businesses of all sizes, understanding the level of coverage needed and ensuring compliance with industry standards is essential. Get in touch with us today and take the first step toward a safer, risk aware, protected business.

The Challenges & Costs of Exiting a Co-Ownership Property

Fri, 14 Mar 2025 02:16:23 GMT

Co-owning a property can be a practical and financially beneficial arrangement, but when circumstances change, sometimes one party needs to jump ship. Whether due to financial strain, health issues, relocation, relationship breakdown, or differing property goals, it’s not uncommon for one co-owner to buy out the other. While this process may seem straightforward, there are several financial and legal considerations to consider.

Key financial considerations.

1. Stamp duty.

When one co-owner buys out the other, the transaction is generally subject to stamp duty, which applies to the portion of the property being transferred. This can add a significant cost to the transaction, though exemptions may be available in certain cases, such as settlements reached through the Family Court for married or de facto couples.

2. Capital Gains Tax (CGT).

If the property has appreciated in value since its purchase, the exiting co-owner may be liable for capital gains tax on their share of the increase. The exact tax liability depends on factors such as the length of ownership, whether the property was a primary residence or an investment, and any applicable exemptions or concessions.

3. Refinancing & increased loan repayments.

The remaining owner must secure financing to purchase the exiting co-owner’s share. This may involve refinancing an existing mortgage or obtaining a new loan, often resulting in increased repayments. Lenders will reassess the borrower's financial position, and loan approval is not guaranteed, particularly if the property value has changed or if the borrower’s financial situation has shifted.

The process of buying out a Co-owner.

1. Agreeing on a valuation.

To determine a fair buyout price, both parties should obtain multiple property appraisals from real estate agents or independent valuation reports. This ensures that neither party is disadvantaged and that an equitable agreement is reached.

2. Engaging a settlement agent.

A settlement agent facilitates the legal transfer of ownership by preparing the necessary documentation and lodging it. The process typically takes between one to six weeks, depending on whether a bank is involved in the mortgage discharge or new loan setup.

3. Exploring alternative funding options.

If the buyer is unable to secure traditional financing, alternative options such as vendor finance agreements or private lending may be considered. However, these options come with additional risks and should be carefully evaluated.

Additional considerations.

Buying out a co-owner can be beneficial in allowing one party to maintain ownership and control of the property. However, it means assuming full financial responsibility for the mortgage, maintenance, rates, and other holding costs. Additionally, the buyer remains liable for the entire property, even if ownership is split proportionally.

It is crucial to assess whether the timing is right, both in terms of personal financial stability and the property market cycle. Consulting with a mortgage broker can help navigate financing complexities, while an experienced settlement agent can ensure a smooth transaction.

Do it right with Ascent Accountants.

Exiting a co-ownership arrangement requires careful planning, financial assessment, and professional guidance. By understanding the potential costs and implications, co-owners can make informed decisions that align with their financial goals and personal circumstances.

We can run you through the tax implications and connect you to trusted brokers, property exerts, and legal advisers within our network. If you’re going to exit a co-ownership, it’s important to do it right — contact us !

Expenses to Consider When Selling a Property

Fri, 14 Mar 2025 02:09:59 GMT

Expenses to Consider When Selling a Property

Most people who sell a property — especially if it’s their first time doing so — are surprised (and frustrated) at how complicated it can be. Expenses (expected and unexpected) are a big part of that — and there are numerous costs throughout the process. These include real estate agent fees, legal expenses, marketing costs, and property preparation. Understanding and anticipating these expenses beforehand can help ensure a smooth and well-prepared road ahead.

Real estate agent fees.

One of the largest expenses when selling a property is the fee paid to a real estate agent. This doesn’t come out of your packet beforehand, but typically ranges from 1.5% to 3% of the sale price. While it is possible to sell a property independently, working with an experienced agent has a huge range of benefits:

Market knowledge — access to local market trends, pricing, and suburb insights to help sellers set a realistic, informed, strong selling price.
Stress reduction — handles paperwork, home opens, and coordination of transactions and manages all aspects of the process, reducing hassle for sellers (that’s a big one!).
Legal & contract expertise — ensures compliance with contracts and legal requirements.
Access to professional networks — connections with mortgage brokers, inspectors, and lawyers, if you need them.
Professional negotiation — skilled at securing the best deal for sellers.
Marketing & advertising — professional listings, photos, platforms, and strategies to attract interest.
Wider exposure — access to online platforms and private networks to reach more genuinely interested buyers.

So, an agent does more than stick a “For Sale” sign out the front. Your fee goes to knowledge, networks, and convenience, and agents can add significant value to the sale process.

Conveyancing & legal costs.

To ensure the legal aspects of the property transaction are handled correctly, sellers should engage a conveyancer or solicitor (something a good real estate agent will help you do).

Conveyancing is the process of transferring legal ownership of a property from the seller to the buyer, ensuring all contract conditions are met before settlement. These services typically range from $1,000 to $2,500, with experienced professionals helping to facilitate a smooth transaction and addressing any legal issues that may arise.

Marketing expenses.

Again, this comes back to working with a good agent! Marketing plays a crucial role in attracting potential buyers, and these costs are required upfront. The cost of advertising a property can vary significantly based on the chosen strategy and the level of exposure desired — something your agent will discuss with you. Online listings are particularly essential (and pricey), as property search websites are often where most buyer inquiries originate.

Marketing expenses generally range from $2,000 to $6,000, but high-end listings may require additional services such as virtual tours, drone footage, or premium online listings. On the other hand, if the seller market is strong and you have a favourable property in a desirable suburb, you may require very little marketing at all.

Property preparation & repairs.

Before listing a property for sale, it’s a good idea to invest in preparing the home to maximise its appeal. This may include minor repairs, painting, landscaping, and general maintenance. In some cases, sellers may need to address defects identified in a building inspection before proceeding with the sale.

Additionally, it is considered best practice to obtain an electrical safety certificate before settlement. This ensures that smoke alarms and residual current devices (RCDs) are compliant and functioning correctly. If upgrades are required, particularly for older electrical systems, the costs can be significant.

Staging & property styling.

Presenting a home in the best possible light can make a big difference in attracting buyers. In many cases, working with existing furniture and making small cosmetic improvements can be enough to achieve a strong sale price. However, property styling or staging, where professional furniture and decor are rented to enhance the appeal of the home, is another option some sellers choose. This is particularly beneficial for empty properties that lack warmth.

Costs vary depending on the size of the house and style of staging. For example, staging a spacious four-bedroom character home in Fremantle will obviously be more expensive than staging a two-bedroom apartment in Cockburn.

Thinking of selling? Think about Ascent Property Co.

Selling a property involves a range of expenses that go beyond just agent commissions. Being aware of these costs in advance can help you budget effectively and maximise your return. If you're thinking of selling, Ascent Property Co can guide you through process, ensuring a seamless and hassle-free sale experience. Reach out to learn more .

Understanding Dividends — Franked & Unfranked

Fri, 14 Mar 2025 02:02:35 GMT

As an accounting firm, we understand the importance of structuring investments wisely. One key aspect that investors should carefully manage is their participation in Dividend Reinvestment Plans (DRPs). These plans can be a strategic way to grow an investment portfolio, but they also come with tax and record-keeping responsibilities can’t be overlooked.

What are dividends?

Dividend payments are a fundamental aspect of many investors' strategies. A dividend is a portion of a company's profit that is distributed to shareholders, typically once or twice a year following the company's financial results. These payments are made on a per-share basis and can significantly contribute to an investor’s total returns by providing a steady income stream in addition to potential capital appreciation.

It’s essential to note that companies are not obligated to pay dividends. Some businesses may opt to reinvest profits into growth initiatives rather than distribute earnings to shareholders. This approach can lead to increased share value over time, benefiting investors in a different way.

Franked vs. unfranked dividends.

Dividends can be franked or unfranked.

Franked dividends come with a “franking credit”, which reflects tax already paid by the company. This means shareholders may receive a tax offset , reducing their personal tax liability.
Unfranked dividends do not come with franking credits, meaning shareholders must pay tax on the full dividend amount.

The ex-dividend date.

When a company declares a dividend, its share price often rises as investors purchase stocks before the ex-dividend date. This date marks the point when new buyers are no longer entitled to receive the upcoming dividend. To qualify for the dividend, an investor must own shares before the ex-dividend date .

What is a Dividend Reinvestment Plan (DRP)?

A Dividend Reinvestment Plan (DRP) allows shareholders to reinvest their dividends to acquire additional shares instead of receiving cash payments. Many companies offer this as an option, sometimes at a discount to the current market price.

Participating in a DRP can be a smart way to compound returns over time, as investors continuously accumulate more shares without incurring brokerage fees . However, it’s important to understand that these additional shares are considered new purchases , and the cost base of these shares must be tracked for tax purposes.

Keeping records of your DRP investments.

One of the most critical aspects of participating in a DRP is maintaining accurate records of your cost base. When you sell your shares in the future, you will need to calculate capital gains tax (CGT) based on the original purchase price of your shares, including those acquired through a DRP.

Failing to keep proper records can lead to unnecessary tax complications, potentially resulting in overpayment of CGT. To avoid this, we recommend keeping detailed records of:

The number of shares acquired through each dividend reinvestment.
The purchase price of these shares (which is usually the market value on the reinvestment date).
Any applicable franking credits.

Here’s how we can help.

Dividend Reinvestment Plans can be an excellent way to grow wealth over time, but they require diligent record-keeping to ensure compliance with tax obligations. If you participate in a DRP, it’s crucial to track your cost base accurately and seek professional guidance to optimise your tax position.

We’re here to help you navigate investment complexities and ensure your financial strategy is tax-efficient. If you need assistance managing your investment records or understanding the implications of dividend reinvestment, reach out to our team today !

Six things to consider when starting a business

Thu, 13 Feb 2025 01:13:53 GMT

Have you come up with an innovative product or service idea but feel unsure whether you’re ready to start a business? There are several critical factors to consider if you want to build a successful and sustainable venture. Below, we explore six key aspects you should think about before taking the leap.

1. Insurance

The type of insurance you require will depend on the specific needs of your business. For instance, will you need content insurance for your merchandise? If you plan to hire employees, do you need to provide them with workers' compensation? Ensuring that you have the necessary coverage in place before hiring staff and trading can help protect your business from potential legal and financial risks.

2. Accounting

Managing business finances can be time-consuming and complex. As a new business owner, your focus should be on growth, not bookkeeping. Hiring an accountant or using accounting software can help streamline your financial management, ensuring you meet tax obligations, maintain accurate records, and make informed financial decisions.

We actually have tailored accounting services for Business Set-up , Business Accounting , and Business Growth ! Everything you need in one place.

3. Financing

Starting a business requires capital, and unless you have significant personal funds, you’ll likely need financial assistance. There are various financing options available, including business loans, investors, and leasing equipment to spread out costs. It’s essential to assess your funding needs and choose the best financing option to support your business goals.

4. Tax Structure

Before you begin trading, selecting the right tax structure is crucial. Setting up the appropriate structure can help minimise tax liabilities, provide financial flexibility, and reduce risks. Whether you choose to operate as a sole trader, partnership, company, or trust, ensuring the right setup from the start can save you from costly changes down the line.

5. Cash Flow Management

A steady cash flow is vital for the survival of any new business. Before launching, consider the following:

How much cash flow you need to start the business.
Setting aside money for taxes and compliance requirements.
Planning for future capital purchases to sustain and expand your business.

Having a clear financial plan and maintaining liquidity can prevent cash flow issues that may hinder business operations.

6. Marketing & growth strategy.

A well-defined marketing and growth plan is essential for attracting customers and scaling your business. Without one, you’re essentially trying to find treasure without a map. Consider developing:

A business plan outlining your immediate and long-term goals, as well as your operational structure.
A marketing plan to effectively reach your target audience and build brand awareness. This includes plans for a brand identity and logo, a brand voice, a website, advertising initiatives, SEO efforts, understanding your audience, and much more.

By planning ahead, you can ensure that your business is positioned for long-term success and growth.

What’s next?

Feeling overwhelmed? Don’t worry — Ascent Accountants provide expert business planning services to Perth start-ups, offering tailored advice to help new businesses thrive. Get in touch with us today and take the first step toward building your successful business.

Understand tax implications for tax donations

Thu, 13 Feb 2025 01:13:51 GMT

Donating to charitable organisations is a great way to give back to the community while also receiving potential tax benefits. However, not all donations are tax-deductible. Understanding the rules around donation deductions can help ensure you maximise your tax return while supporting causes that matter to you.

Donations you can claim.

To claim a tax deduction for a donation, there are some conditions that must be met.

The donation must be made to a Deductible Gift Recipient (DGR) . A DGR is an organisation that has been officially registered with the Australian Taxation Office (ATO) to receive tax-deductible donations.
The donation must be a gift , meaning you do not receive anything in return. This means payments for things like raffle tickets, event tickets, or crowdfunding campaigns such as GoFundMe are not tax-deductible.
The donation must be a monetary contribution of $2.00 or more , or a gift of property under certain conditions.
If the donation is non-monetary , such as shares or goods, there may be specific valuation rules that apply.
You must keep records and receipts as proof of your donation to claim it in your tax return.

How to claim your deductions.

If your donation meets these eligibility requirements, you can claim it as a tax deduction when lodging your tax return. Simply include the donation amount in your tax return under the deductions section. And remember — you must have a receipt from the registered charity or organisation as the ATO may request proof of the contribution.

Donations you can’t claim.

While many charitable contributions can be deducted, there are specific types of payments that do not qualify, including:

Donations made to individuals or crowdfunding campaigns that are not registered as DGRs.
Payments for event tickets, such as charity dinners or galas.
Purchases of raffle tickets or items at charity auctions.
Gifts that provide you with a personal benefit in return.

We’re here to help.

Understanding tax rules can be complex, but Ascent Accountants are here to help. If you’re unsure whether your donation qualifies or need assistance with tax planning, we can help ensure you’re maximising your deductions while staying compliant with ATO regulations.

For more information on claiming tax deductions for donations, contact us !

Managed Funds vs ETFs: Which is right for you?

Thu, 13 Feb 2025 01:13:42 GMT

If you're an investor in the Australian stock market or considering entering the investment space, you've likely come across the term ETFs. Exchange-Traded Funds (ETFs) have gained popularity as one of the fastest-growing investment vehicles globally. However, another significant investment segment that continues to experience strong growth in Australia is managed funds. Many investors are already participating in this space, either directly or through superannuation funds investing on their behalf.

Understanding the differences.

ETFs and managed funds are quite similar. Both are professionally managed investment products designed to provide diversification by pooling funds from multiple investors and allocating them across various asset classes such as shares, bonds, infrastructure, and commercial properties. Often, a managed fund is launched first, followed by an ETF version of the same investment strategy, allowing investors to choose the structure that best suits their needs.

So, what are the differences? One of the primary distinctions between ETFs and managed funds is how they are bought and sold.

ETFs.

ETFs are listed on the stock exchange and can be traded in real-time during market hours, much like individual shares. Their prices fluctuate throughout the day based on market demand and other economic factors. Investors typically pay brokerage fees when buying or selling ETFs, with transaction costs varying depending on the investment platform used.

Managed Funds.

Managed funds, on the other hand, are unlisted investments. Their prices are determined once daily based on the net asset value (NAV) calculated after the stock market closes. This means that regardless of when an order is placed, all investors will receive the same price for that trading day. Managed funds also offer income distributions on a regular basis — monthly, quarterly, or semi-annually — which investors can opt to receive as cash or reinvest to potentially compound returns over time.

Making the choice.

Deciding whether to invest in ETFs or managed funds ultimately comes down to personal preference and investment goals. Some investors prefer ETFs for their intraday trading flexibility and price transparency, while others appreciate the stability and structured pricing of managed funds. Additionally, many investors choose to diversify by holding a mix of both.

Key factors to consider.

Key factors to consider before investing include your risk tolerance, expected returns, investment time horizon, and associated fees.

It's important to assess the investment strategy and costs of each product to ensure they align with your financial goals. By using low-cost, diversified ETFs and managed funds, you can create a balanced portfolio designed to achieve long-term investment success.

Here’s how we can help.

For personalised advice on constructing an investment portfolio that meets your financial objectives, reach out to Ascent Accountants. While we help you understand associated taxes and maximise the benefits, our team can connect you to strategic partners who will help you navigate the investment landscape and make informed decisions. Reach out to us for tailored advice .

Tips to avoid tax on superannuation on death

Tue, 14 Jan 2025 06:46:09 GMT

You’ve likely heard the adage: "The only certainties in life are death and taxes." While death and probate taxes were abolished in Australia by the early 1980s, a potential "inheritance tax by disguise" could still be lurking in your superannuation or pension fund… The good news? With the right planning, this tax burden is avoidable .

At Ascent Accountants, we’re here to empower you with the knowledge and strategies to optimise your financial legacy. Here's what you need to know about managing taxes on your super and leaving more for your loved ones.

Why your super might be taxed after you’re gone.

Superannuation funds enjoy generous tax concessions while you’re alive:

Accumulation phase: Earnings are taxed at just 15%, with a reduced 10% tax on capital gains.
Pension phase: Balances up to $1.9 million are completely tax-free.

However, a tax trap arises when super funds are passed to non-dependent beneficiaries (e.g., independent adult children). In such cases, a lump sum death benefit can attract a tax of 15% or 30%, plus a 2% Medicare levy.

On the other hand, funds transferred between tax-dependent beneficiaries, such as between spouses, are not taxed. Understanding this distinction is key to effective estate planning.

Strategies to minimise or eliminate super taxes.

1. Understand the taxable component.

Only the taxable portion of your super balance is subject to this tax. By assessing the taxable versus tax-free components of your fund, you can calculate the potential tax liability for your beneficiaries.

For young, healthy retirees with a long retirement horizon, the tax savings from super's concessional tax environment may outweigh the risks of tax on their death. However, older retirees or those with health concerns might find the potential tax liability for beneficiaries outweighs the benefits.

2. Withdraw funds from super.

If you decide the risk of tax to your beneficiaries is too high, consider withdrawing funds from the super environment. These funds can then be invested in your name or another structure. Just remember that this is a complex decision requiring tailored advice to ensure your financial security while managing tax implications.

3. Implement a re-contribution strategy.

A re-contribution strategy aims to increase the tax-free component of your super balance. You simply withdraw funds with a high taxable component, then re-contribute them as non-concessional contributions.

While this approach can significantly reduce the tax liability , it must be executed carefully due to restrictions like contribution caps , work test requirements (for those over 74), and total super balance limits.

In some cases, contributing to a spouse’s super fund can offer additional benefits, such as improving Centrelink eligibility.

4. Nominate your estate.

Funds paid directly to non-dependent beneficiaries from super are subject to the Medicare levy. By nominating your estate as the beneficiary and having funds distributed via your will, this 2% levy can be avoided.

However, directing benefits via your estate has its drawbacks. It’s vital to weigh this option against alternative strategies, especially if direct beneficiary payments better align with your financial goals.

5. Appoint a power of attorney.

While your will is essential, an enduring power of attorney is equally important. This person can make financial decisions on your behalf if you become incapacitated, ensuring the best outcomes for your beneficiaries.

Take the next step towards financial certainty.

Want to ensure your beneficiaries receive the maximum benefit from your hard-earned wealth? We specialise in helping individuals and families navigate these complexities . From re-contribution strategies to estate nominations, we provide personalised guidance to protect your financial legacy.

Reach out to Ascent Accountants . Together, we can develop a strategy to minimise taxes and maximise your legacy for the people who matter most .

Interest-only loans: when are they best for you?

Tue, 14 Jan 2025 06:36:12 GMT

In the world of home financing, an interest-only loan can be a strategic choice, particularly for investors. With the high cost of mortgages impacting household budgets, an interest-only loan may provide a temporary financial cushion. However, it's essential to evaluate your unique circumstances and understand the implications of this loan type before making a decision.

What is an interest-only loan?

An interest-only loan allows you to pay only the interest component of your loan for a specified period, typically ranging from three to ten years. This means you won’t be reducing the loan’s principal during this period, which results in lower monthly repayments compared to a standard principal-and-interest loan.

Why choose interest-only loans for investment properties?

One of the key advantages of an interest-only loan is its potential tax benefits for property investors . The interest component of a loan for a rental property is tax-deductible, whereas principal repayments are not. By opting for an interest-only loan, you’re only paying the portion that is tax-deductible, which can enhance the cash flow on your investment property.

For investors, this structure provides an opportunity to claim higher tax deductions. This can be particularly beneficial when managing other expenses or reinvesting in additional properties. However, the benefit largely hinges on the property’s ability to generate income and increase in value over time.

Key considerations.

While interest-only loans offer flexibility and immediate cash flow benefits, they come with certain risks. It’s important to thoroughly understand these factors:

End of interest-only period: When the interest-only period ends, the loan will convert to a principal-and-interest loan, leading to significantly higher monthly repayments. Borrowers must be prepared for this transition to avoid financial strain.
No equity growth: Since you’re not paying off the principal during the interest-only period, the loan balance remains unchanged. This means you’re not building equity in your property unless its market value increases. In the event of a market downturn, you could face the risk of negative equity.
Loan servicing requirements: Lenders require documentation such as tax returns, employment verification, and statements of assets and liabilities to assess your ability to service the loan. Carefully review your financial situation to ensure you can meet repayment obligations both now and in the future.
Budgeting for the future: An interest-only loan is not a permanent solution. Use the reduced repayment period wisely to build a financial buffer. Saving during this time can help you prepare for higher repayments once the principal component is added.

Final thoughts.

Interest-only loans can be a valuable tool for investors , especially when managed strategically. By focusing on the tax-deductible interest component and leveraging the reduced repayment period, you can optimise your investment’s financial potential. However, it’s essential to plan for the future, anticipate higher repayments , and seek professional advice to mitigate risks. With careful planning, an interest-only loan could be the key to achieving your investment goals .

The Importance of professional advice.

Navigating the complexities of interest-only loans can be challenging . Consulting with financial professionals is critical to making informed decisions. We can help you understand how this loan aligns with your broader financial goals, ensure you’re not overextending yourself, and guide you in structuring your investments for long-term success. Contact us today to get started.

Tips to stop overspending & start saving

Tue, 14 Jan 2025 06:23:12 GMT

Managing finances can feel like a daunting task, but taking control of your spending and starting a savings plan is not just possible — it’s empowering. Let's explore some practical tips inspired by the story of Sarah and Liam, and their journey to regain financial stability.

Sarah & Liam’s financial struggles.

Sarah, 36, and Liam, 38, have been married for 13 years. They started with very little and haven’t made much financial progress since. Currently, they’re facing $227,785 in debt, including their mortgage, car loans, student loans, credit cards, and medical bills. With a combined annual income of $137,000, they’re struggling to balance debt repayments and living expenses for themselves and their daughter.

This is a reality many Australians face, but with the right strategies, financial freedom is achievable .

Ready to start saving?

1. Set a clear budget for yourself.

The foundation of financial stability is having a budget. Start by tracking your income and expenses for a month to see where your money is going. Once you know your spending habits, divide your income into categories:

Needs (50%) : Rent/mortgage, groceries, utilities, and debt repayments.
Wants (30%) : Entertainment, dining out, and non-essential purchases.
Savings (20%) : Emergency fund, retirement, and long-term goals.

Sarah and Liam realised they needed to prioritise their goals over impulsive spending. By setting a monthly budget and sticking to it, you’ll have a roadmap to guide your financial decisions.

2. Align your spending with your goals.

What do you want your money to do for you? Whether it’s building an emergency fund, saving for retirement, or affording occasional family holidays, your spending habits should reflect your aspirations.

For Sarah, cutting down on impulse purchases helped her align her spending with her vision of financial stability. Consider pausing before buying non-essentials and asking, “Does this align with my goals and my budget?”.

3. Automate your savings.

Create good saving habits ; automation is a game-changer when it comes to saving. Set up automatic transfers to your savings account as soon as your salary is deposited. This “pay yourself first” approach ensures you’re consistently building your savings without even thinking about it.

For example, Liam set up an automatic transfer of $500 per month to their emergency fund. Over time, this became a habit, helping them grow their safety net effortlessly.

4. Reduce temptation.

Unnecessary subscriptions and constant exposure to marketing can derail your financial progress. These simple steps can make a huge difference:

Unsubscribe : Cancel streaming services or memberships you rarely use.
Declutter your inbox : Unsubscribe from promotional emails and mailing lists that tempt you to spend.
Be aware of social media ads : Be mindful of how often influencers and ads push you towards impulse purchases.

By unsubscribing and reducing exposure to marketing, Sarah and Liam found it easier to stay focused on their financial priorities.

5. Review & adjust regularly.

Financial planning isn’t a one-time task. Review your budget and spending habits regularly. Celebrate small wins — whether it’s paying off a credit card or saving for an exciting purchase! Adjust your strategy as needed to stay on track.

Some additional support goes a long way!

Getting your finances under control starts with intentionality and small, consistent changes. By setting a budget, aligning spending with goals, automating savings, and reducing temptations, anyone can enjoy financial freedom.

At Ascent Accountants, we’re here to help you navigate your financial journey. Let’s make your money work for you. Reach out today to get started!

Crypto as a personal use asset & the tax you can expect

Tue, 14 Jan 2025 06:04:04 GMT

As the popularity of cryptocurrencies continues to grow, so does the complexity of understanding their tax implications. One common question we get is whether a crypto asset can qualify as a personal use asset and what that means for your tax obligations. Here at Ascent Accountants, we aim to provide you with clear and concise guidance to help you navigate this often-confusing area.

What is a personal use asset?

A personal use asset is something you keep or use primarily for personal purposes, such as buying items for personal use or consumption. In the context of cryptocurrency, this can include using crypto to purchase goods or services directly. However, whether a crypto asset qualifies as a personal use asset depends on how you use it and the circumstances of its acquisition and disposal.

Determining if your crypto is a personal use asset.

The key time for determining whether your crypto asset is a personal use asset is when you dispose of it. For example:

If you acquire crypto and use it shortly after to buy personal items, it’s more likely to be considered a personal use asset.
If you hold crypto for an extended period, with only a small portion used for personal purchases, it’s unlikely to qualify as a personal use asset.

Your original intention when acquiring the crypto may be relevant, but it’s not the deciding factor . Instead, your actual use of the asset will determine its classification. That’s why maintaining accurate records of your crypto transactions and usage is essential.

When is a personal use crypto asset exempt from CGT?

If your crypto asset is classified as a personal use asset, certain tax exemptions may apply:

Capital Gains Tax (CGT) Exemption : A capital gain on the disposal of a personal use crypto asset is exempt from CGT if:
The crypto asset was acquired for less than $10,000.
Capital losses exclusion : Any capital losses made on personal use assets, including crypto, cannot be used to offset other capital gains or carried forward to future income years.

Example: Crypto asset for personal use.

Michael wants to buy concert tickets that are discounted for payments made in crypto. He spends $270 on crypto assets and uses them to purchase the tickets on the same day. Because the crypto was acquired and used in a short period for personal use, it qualifies as a personal use asset and is exempt from CGT.

When crypto is not a personal use asset.

In most cases, crypto assets are not personal use assets when they are:

Held as an investment : For example, holding crypto to sell at a favourable exchange rate.
Part of a profit-making scheme : Such as actively trading crypto for profit.
Used in a business : For example, accepting crypto payments for goods or services.
Used as top-ups. For example, topping up prepaid debit cards or gift cards, or if a payment gateway (e.g., PayPal) is used to facilitate purchases.

Example: Crypto held as an investment.

Emma regularly buys crypto intending to sell at a favourable rate. After some time, he decides to use a portion of his crypto to purchase goods. Since Emma’s primary purpose for holding the crypto was investment, it doesn’t qualify as a personal use asset.

Record-keeping is essential.

To ensure you meet your tax obligations, it’s important to keep detailed records of:

Your intention when acquiring the crypto.
How and when the crypto was used.
The value of the crypto at the time of each transaction.

For more detailed guidance, check out this ATO resource on keeping crypto records .

Here’s how we can help.

At Ascent Accountants, we’re committed to helping you understand your tax obligations and make informed decisions about your crypto assets. If you’re unsure whether your crypto qualifies as a personal use asset or how tax rules apply to your situation, reach out to us for tailored advice .

By working with us, you can ensure your crypto compliance while maximising any potential tax benefits.

10 Things to Ask Your Parents: Estate Planning to Prepare for the Future

Fri, 13 Dec 2024 01:26:07 GMT

As our parents grow older, planning becomes more than a thoughtful gesture—it's a necessity. Whether preparing for a time when they can no longer manage their affairs, deciding on late-life care, or end-of-life arrangements, ensuring the following ten essentials are in order can make things easier when the time comes.

1. Prepare an Enduring Power of Attorney

This legal document designates someone trustworthy to make financial and medical decisions on your parent's behalf if they become incapable of doing so themselves. Discussing and documenting who will be appointed is essential while everyone is of sound mind.

2. Update and Have Access to the Will

Your parent's will is the key to handling their estate as they would want, so knowing its exact location allows you to act quickly if necessary. Ensure the document is easily accessible, valid, and up to date before it's needed.

3. List of Professionals

Be sure to have a list of any professionals your parents use for their estate, including their lawyer and accountant.

4. Provide Access to Paperwork

If your parents keep their paperwork somewhere, be sure to know where. If keeping the documentation in a safe, a deposit box, or with a professional, ensure that you have access to the code or the details of their representative when the time comes.

5. Update Financial and Legal Documents

It's essential to ensure that your parents' financial and legal documents are up to date. This includes tax records, bank account details, and personal identification information. Keeping this documentation organised will make it easier for you to manage their affairs after they pass away, avoiding delays or complications.

6. Check Superannuation and Beneficiaries

It's crucial to know whether your parents have a super account, who the non-lapsing binding death nominated individual is to handle the funds, and who the nominated beneficiaries are. Confirm the specifics and ensure that the beneficiaries are still relevant beforehand.

7. Make a List of Logins

Creating a list of logins, passwords, PINs, online accounts, and parties to be notified after death will make the notification process much more manageable. Policies like life insurance should be documented, including premium details and the beneficiaries. This will prevent confusion later and ensure claims are processed smoothly.

8. Understand Assets and Debts

Having a list of your parent's assets and any outstanding debts is essential in managing their financial affairs when they pass. A clear record of your parents' assets and investments may include any property, shares, bank accounts, and any other valuables or assets. Do the same for debts, and include mortgages, personal loans, credit card debt, or other financial obligations. Having a complete list of both will make it easier to handle the distribution of the estate and avoid misunderstandings.

9. Final Wishes and Health Care Preferences

Ensure you understand your parents' final wishes regarding health care and end-of-life decisions are recorded. This may include having an enduring power of guardianship or an advanced health directive. One allows another person to make decisions on your parent's behalf while the other records their wishes. Any end-of-life wishes should be documented to avoid unnecessary stress or conflict when the time comes.

10. Pre-Plan Funeral Arrangements

Discussing funeral arrangements and paying in advance can save the family financial stress at an already difficult time. Working with your parents to record their wishes or help them pre-plan and pay for their funeral will ensure everything is organised as they would like.

The Importance of Using a Professional to Manage Your Property

Fri, 13 Dec 2024 01:22:24 GMT

Investing in property can be a highly lucrative venture, but it requires dedication, time, and attention to detail. The key to maximising your returns and safeguarding the value of your asset lies in how well you manage the asset while protecting its value. Managing a property yourself can be overwhelming, and if you don't have the expertise or resources, you may be compromising the long-term success of your investment. That's where a professional property manager or management service can make all the difference.

Why Hire a Professional Property Manager?

A professional property manager offers several key benefits that make managing your property easy, efficient, and profitable while ensuring your investment thrives.

A Property Manager Keeps You Compliant

The rental market in Australia constantly changes. These shifts in the industry and reviews of the law can catch landlords, especially those who don't have the time to keep up and fail to realise they are not compliant. Having an experienced property manager sidesteps this issue as they must stay updated with compliance changes.

Great Property Managers Bring Expert Knowledge and Experience

Professional property managers have a deep understanding of the real estate market and know how to navigate maintenance, tenant selection, and property compliance issues. With years of experience in the industry, they can help you avoid costly mistakes and ensure that your property is maintained to the highest standard.

Assist With Quality Tenant Selection and Retention

Property managers have access to a broad network of potential tenants and are skilled at selecting those who are reliable and responsible. This reduces vacancies and provides you with a steady income stream.

Provide Efficient Maintenance For Long-Term Value

A well-maintained property is more attractive to tenants and can significantly improve its long-term value. A professional property manager oversees regular maintenance, repairs, and inspections, ensuring everything is in great shape. They also stay current with regulations and compliance requirements, reducing the risk of legal issues.

Offer Time and Stress Management

Managing a property is more than just collecting rent - it's also acting as a front line for tenants' property issues, saving the owner time. These issues may include handling tenant complaints, dealing with repairs, and managing emergencies. A property manager takes care of these tasks, giving owners the peace of mind that nothing is overlooked.

The Best Property Managers Help to Maximise Your Investment

A skilled property manager works to maximise your rental income. They do this by advising on a competitive rental price to minimise vacancies while selecting tenants that will keep your property in excellent condition. Their ability to handle all aspects of property management allows you to reap the full financial rewards of your investment.

Secure a Quality Property Manager

Get in touch with the team at Ascent Property Co to discover how our services can unlock your property investment's full potential. For more information or to get started, call Luke Langford at 0493 672 956 or Nigel Parker at 9356 8033. Alternatively, you can email Luke at luke@ascentpropertyco.com.au . Let us handle the hard work and enjoy leaving your property in expert hands.

Workers’ Compensation Insurance: Why It's Compulsory

Fri, 13 Dec 2024 01:20:56 GMT

Workers’ compensation insurance is not just a safety net—it's a legal must for every business in Australia, big or small. Whether you're a solo entrepreneur or managing a growing team, the law requires that you have workers’ compensation insurance from day one of employment. This includes covering yourself, your employees, and any associates you bring on board. It is a legal obligation for employers under Australian law to cover all employees, including full-time, part-time, casual workers, and even volunteers in some cases. We've broken down the details below to help both experienced companies and new startups navigate this complex issue.

What Is Workers’ Compensation Insurance?

Accidents happen, and often it's unavoidable. Workers’ compensation insurance provides financial support and assistance to employees who become sick or injured while at work. By having insurance coverage, the injured employee can recover with assistance to pay lost wages, medical and hospital bills, rehabilitation costs, and payment for permanent incapacity. If the worst were to happen and an employee is tragically killed, the insurance also covers funeral expenses and future support for their remaining dependents.

Why is Workers’ Compensation Insurance Compulsory?

There are several compelling reasons for workers’ compensation insurance to be mandatory.

Financial Protection for Employees : The insurance offers vital support to employees who experience work-related injuries or illnesses. It ensures that they receive compensation for lost wages, medical treatment, and rehabilitation services so they can focus, lump-sum payments for permanent impairment, and even funeral expenses and payment for dependents in the unfortunate event of a work-related death. This comprehensive coverage ensures that both the employee and their family are protected.

Employer Liability Protection : Insurance limits a business's potential financial liability. If an employee is injured and the company is not covered, the employee can take legal action against the employer and the business for damages. This could be financially devastating and cause the business or the owner to go bankrupt.

Support for Employee Rehabilitation and Return to Work : This insurance includes provisions for rehabilitation services, including physical therapy, workplace accommodations, and other necessary adjustments to help employees return to work safely and with support.

What Happens If You Don't Have Workers’ Compensation Insurance?

An uninsured employer or business could be required to pay for medical expenses, lost wages, and rehabilitation costs directly from the company or owner's pocket. There may also be legal repercussions for failing to hold insurance, including hefty fines, penalties, and legal action. The risks of operating without this essential coverage far outweigh the cost of securing insurance.

Get Professional Advice and Insurance

Securing the right workers' compensation insurance is essential for every Australian business. Each state and territory have its own workers' compensation scheme, so it's crucial to seek the correct coverage for your area. If you need guidance to get your business the correct coverage, Ascent Accountants are here to help. We offer professional insurance advice to ensure your business is fully covered. Don't wait until it's too late – act now and get the coverage you need to protect what matters most in your business – your workforce.

Our Guide to FBT on Festive Season Spending

Fri, 13 Dec 2024 01:19:40 GMT

The festive season is a time for personal and professional celebrations, with many companies showing appreciation for employees and clients. Many businesses throw Christmas parties, host celebratory meals, or give gifts to celebrate the festive season with those who have contributed to their success.

However, these seasonal gestures may come with tax implications that need to be considered, including Fringe Benefits Tax (FBT), tax deductibility, and GST. Discover how these relate to seasonal parties and gift-giving below with our quick reference guide.

Throwing a Christmas Party

A festive celebration is a mainstay of the Christmas season. However, where, when, and how you celebrate will determine whether there is tax implications attached to your party.

On-Site Parties

Keeping it in-house? Hosting a Christmas party on the business premises during a workday can provide significant FBT advantages.

FBT Exemption: Meal and entertainment benefits provided to employees during an on-site event are exempt from FBT, regardless of cost.

Associates: If associates (e.g., family members) attend, their costs are subject to FBT unless the minor benefits exemption applies and expenses are under $300 per person, including GST.

Clients : Client meal and entertainment benefits are not subject to FBT. They are also not tax-deductible or GST-creditable.

Off-Site Parties

When a Christmas party is held off-site, the tax implications differ depending on the amount spent per person.

Minor Benefits Exemption: Costs under $300 per person (including GST) for employees and associates may be exempt from FBT.

FBT Liability: Costs exceeding $300 per person are subject to FBT.

Clients: Client expenses remain not subject to FBT nor tax-deductible or GST-creditable.

Transport Costs

Travel to and from the Christmas party can also attract FBT in certain circumstances.

On-Site Events: Transporting employees to a workplace party on a company-owned worksite is FBT-exempt.

Off-Site Events : FBT may apply unless the transport fee falls under the minor benefits exemption and totals under $300 per person.

Associates: Transport costs for associates are subject to FBT, regardless of location or cost.

Christmas Gifts

The tax treatment of gifts depends on who they are for, their cost and the nature of the gift. Gifts given to clients are generally not subject to FBT, but tax deductibility depends on the type of gift.

Employee Non-Entertainment Gifts (e.g. hampers and gift cards): This gift type is subject to FBT for employees unless the minor benefits exemption applies for gifts under $300. It is also tax-deductible and GST-creditable when the minor benefits exemption does not apply.

Client Non-Entertainment Gifts: Client gifts are tax-deductible and GST-creditable, provided they are business-related.

Employee Entertainment Gifts (e.g., movie or sports tickets): Entertainment gifts are subject to FBT unless the minor benefits exemption applies. They are only tax-deductible and GST-creditable if not exempt under the minor benefits exemption.

Client Entertainment Gifts: These are not subject to FBT, are not tax-deductible or GST-creditable for clients

Planning Your Company Festive Season

Careful planning of your company's seasonal celebrations and gift-giving can help maximise FBT exemptions and minimise tax liabilities. By navigating these nuances carefully, companies can celebrate the festive season cost-effectively while maintaining tax compliance. Contact the Ascent Accountants team for further guidance on reducing your festive FBT liability or advice on your unique circumstances.

Fringe Benefits Tax: A Guide to Exemptions and Concessions

Thu, 14 Nov 2024 07:00:30 GMT

A Guide to Reducing Fringe Benefits Tax

Dealing with Fringe Benefits Tax (FBT) doesn't have to be a headache for your business. In fact, with the right strategies, it can be an opportunity to streamline your tax liabilities and maximise financial efficiency. From exemptions and concessions to savvy benefit planning, there are powerful ways to reduce your FBT burden and put those savings back into your business. Let's explore how a strategic approach to FBT can make a tangible difference to your bottom line.

Leveraging the 'Otherwise Deductible' Rule

One effective way to reduce FBT is to provide benefits that would be tax-deductible for the employee if they paid for them directly. This approach allows you to apply the "otherwise deductible" rule, lowering the taxable value of the benefit. For example, suppose an employee uses their home internet for work and personal use. If an employer reimburses the total cost, but 40% of the usage is work-related, the employer can reduce the taxable value by 40% using the otherwise deductible rule. The employee must provide a declaration or, where applicable, business records substantiating this use.

Utilising Employee Contributions

Employee contributions can further reduce the FBT liability by lowering the taxable value of a fringe benefit. Contributions typically involve the employee reimbursing a portion of the benefit's cost, which reduces the amount subject to FBT. Take a company that covers green fees for its monthly golfing day. If employees reimburse 75% of these fees, the employer only pays the remaining 25% FBT. This strategy reduces FBT and makes employee contributions part of the employer's assessable income.

Opting for Cash Bonuses

Providing a cash bonus instead of a fringe benefit can sidestep FBT entirely. Cash bonuses are subject to the employee's income tax rate, so while employees will pay tax on the bonus, the employer won't have any FBT liability. For instance, if an employee requests a gym membership valued at $800, the employer could instead offer a cash bonus equivalent to $1,221. This amount would provide the same post-tax benefit to the employee while avoiding the additional FBT costs associated with a gym membership.

Providing Exempt or Concessional Benefits

A range of benefits qualify for FBT exemptions or concessions. These include:

Work-related items, including laptops, phones, and other tools used primarily for work, are exempt from FBT.
Minor benefits under $300 that are provided infrequently may qualify for a minor benefits exemption.
Certain types of emergency assistance provided to employees are exempt.
Programs aimed at helping employees retrain, develop skills, or transition to new roles are exempt, allowing employers to support their teams without incurring FBT.
Benefits like taxis and public transport for work purposes or car parking on business premises may also be exempt or subject to concessional treatment.
Special exemptions apply to specific situations, such as employees working in remote areas. Benefits like accommodation, meals, and travel for employees working away from home can qualify for exemptions, making these essential provisions more cost-effective.

Maximising Benefits While Minimising FBT

Employers can minimise FBT obligations by carefully choosing how to structure employee benefits. Whether through strategic use of the otherwise deductible rule, employee contributions, cash bonuses, or exempt items, each tactic helps reduce costs and boost overall tax efficiency. Employers and employees can enjoy meaningful benefits with a reduced tax burden with the right approach. For more guidance on reducing your FBT liabilities, contact the Ascent Accountants team.

When Is Food, and Recreation Considered Entertainment?

Thu, 14 Nov 2024 06:04:31 GMT

When Is Food, Drink, and Recreation Considered Entertainment?

Understanding when food, drink, and recreational activities qualify as "entertainment" is essential for every company, business, and employer. It's great to pick up the tab for a nice meal or a fun outing for the team, but did you know that these activities can impact your business's tax obligations if declared incorrectly? So, when do ordinary perks, like a work lunch or gym membership, cross the line into entertainment? Let's dig into the factors that define entertainment and some common scenarios where these perks can become taxable benefits.

The Basics

Generally, food, drink, and recreation perks become entertainment when provided in a social or leisure context rather than as necessary support for completing a workday. According to the ATO, the following criteria must apply for these perks to qualify as entertainment:

The food, drink, or recreational activity is provided for enjoyment, not just sustenance.
The activity is outside the regular work environment, perhaps off-site or after hours.
The perk is not part of an exempt benefit package, meaning it doesn't fall under exclusions like meals for sustenance or on-premises canteen food.

Defining Entertainment Through Specific Factors

To determine if food, drink, or recreation qualifies as entertainment, employers need to consider the "why," "what," "when," and "where" factors.

Why: If you provide food so employees can enjoy themselves (e.g., a team-building lunch), it's likely considered entertainment. However, providing coffee and light snacks to keep employees comfortable during a busy workday is not.

What: The type of food and drink matters. Alcohol and elaborate meals lean toward entertainment, while simple snacks and non-alcoholic drinks do not.

When: Timing is essential. Food provided outside work hours, like a weekend gathering, is more likely considered entertainment.

Where: If the perk occurs off-premises—such as at a restaurant or hotel—it's more likely to be entertainment. Meals on business premises typically don't fall under entertainment in a work cafeteria.

Is Recreation Entertainment?

Recreation that qualifies as entertainment includes leisure activities. A few examples that would fall under this category include:

A company-paid round of golf
Gym or sporting club memberships for employees
Theatre or movie tickets for employee outings
A weekend trip for staff to a resort

The Tax Implications of Entertainment

When food, drink, or recreation is classified as entertainment, the employer may be subject to fringe benefits tax (FBT). However, FBT classifications fall into one of four fringe benefit categories depending on the circumstances. Correctly categorising expenses ensures compliance and avoids unintended tax liabilities - examples below:

Expense Payment Fringe Benefit: When an employer reimburses an employee for entertainment-related expenses, like theatre tickets.
Property Fringe Benefit: When the company directly provides food or drink.
Residual Fringe Benefit: For entertainment-related accommodations or transport.

Tax-Exempt Body Entertainment Benefit: When a tax-exempt employer (such as a charity) provides entertainment.

Know When a Perk is More Than a Perk

While some perks, like on-premises coffee, don't trigger tax implications, others, like off-site team dinners or gym memberships, can. Understanding these distinctions can simplify tax compliance for employers, ensuring that those perks designed to celebrate and support employees can avoid unforeseen liabilities down the road. For professional advice on this and any other taxation related topic, contact our Ascent Accountants team.

Declaring Foreign Income as an Australian Resident

Thu, 14 Nov 2024 03:48:44 GMT

Declaring Foreign Income as an Australian Resident: What You Need to Know

As an Australian tax resident, you must annually declare all global earnings in your Australian tax return. But what exactly counts as foreign income, and how should you approach reporting it? Here's a breakdown to make the process easier.

What Exactly is Foreign Income?

If you've earned it outside Australia, it's likely counted as foreign income, which must be included in your tax return. This can come from various sources, including:

Pensions and annuities.
Business activities or consulting services.
Employment, including any salary, wage, or service fees
Assets and investments, including interest, dividends, or rental income from properties overseas.
Capital Gains from selling an overseas asset.
Even if you haven't received any funds, involvement with overseas trusts may need to be declared.

Working or Providing Services Overseas?

If you're earning income from overseas employment, a consultancy, or even freelancing through international platforms, it's essential to declare it. Common examples of income include:

Salaries and Wages: Pay from foreign employers or entities.
Consultancy and Directors' Fees: Income from international clients or boards.
Platform Payments: Earnings from services like content creation or influencing paid by foreign companies.

Understanding Capital Gains Tax (CGT) on Overseas Assets

If you're an Australian resident for tax purposes, capital gains from selling overseas assets are also subject to CGT. If you acquired assets before becoming a resident, you're treated as having acquired them at the time of residency. Similarly, ceasing residency may imply a 'deemed disposal' of assets. This area can be complicated, so consider seeking professional guidance to manage exemptions and maintain accurate records.

Reducing Your Tax Burden with Foreign Income Tax Offsets

If you have already paid tax on your foreign income to another country, you might qualify for a foreign income tax offset, which can help you avoid double taxation. It's best to take professional advice on your unique circumstances to find what applies to your international income and earnings.

Exemptions on Certain Foreign Employment Income

Sometimes, your overseas work income may be exempt from Australian tax. These rare exemptions include:

Approved Foreign Projects
Employment with Recognized International Organisations in Australia
Australian Defence Force Deployments and Joint Projects

Check with the ATO if your situation meets the specific conditions for these exemptions and if you can claim the offset.

Dealing with Different Tax Years?

Foreign countries often have different tax year endings compared to Australia's June 30 deadline. In cases where income doesn't align, you may need to apportion your foreign earnings across multiple Australian tax years.

Staying Audit-Ready

The ATO has robust data-matching systems, partnering with international financial institutions and tax authorities. Keep detailed, up-to-date records that accurately reflect your global earnings to avoid discrepancies and issues in the case of an audit.

Stay Compliant in Australia

Declaring foreign income isn't just a requirement—it's essential. There are many ways to ensure you're compliant, benefitting from offsets, and avoid penalties. If you need assistance staying on top of your finances, reach out to our team of tax experts at Ascent Accountants.

Home Stay Arrangements

Thu, 14 Nov 2024 02:53:05 GMT

Home Stay Arrangements: How Does it Compare to Renting a Room?

The cost of living in Australia has been rising steadily, affecting everything from housing and groceries to utilities and transport. With inflation impacting everyday expenses, many Australians are feeling the financial pinch and are actively seeking ways to supplement their income and ease the strain on the budget. A popular solution is to rent a room or a section of your house - which comes with a unique set of taxation requirements to be aware of. An alternative (without the tax implications) is to host students through a homestay arrangement. But what exactly is that, and which is best? We will explore how homestay differs from renting a room below to help you make an informed decision for your situation.

What is a Homestay Arrangement?

A homestay arrangement goes beyond the standard room rental; it's an immersive experience that welcomes students into a local family environment. Typically coordinated through universities or educational institutions, homestays provide students with full-board accommodation, which includes a private room, daily meals, and shared access to household spaces like the kitchen, laundry, and living areas. Unlike traditional rentals, homestays invite students to become part of their host family's daily life, fostering a sense of belonging and cultural exchange. These arrangements are often short-term, lasting less than a year, making them ideal for students who want a supportive home base while studying in Australia.

How Homestay Differs from Renting a Room

The primary difference between homestay and renting a room is a homestay is considered non-commercial. Payments cover household costs for the student, and hosts are not taxed on these payments. Private room rental is considered a commercial enterprise, making the income assessable. Hosts must declare this rental income and may apportion expenses, such as utilities and mortgage interest, as deductions.

Tax Treatment of Homestay Arrangements

The Australian Taxation Office (ATO) classifies homestay payments as non-assessable income, provided they only cover basic costs like food, utilities, and other necessary living expenses. Hosts have no additional tax obligations or reporting requirements. However, this also means hosts can't claim deductions for expenses. Beyond financial simplicity, hosting creates a unique opportunity for cultural exchange, enriching the lives of both hosts and students in a mutually rewarding experience.

Capital Gains Tax (CGT) Considerations

One notable advantage of homestay arrangements is their minimal impact on Capital Gains Tax. Since the payments are considered non-assessable income, they do not jeopardise any main residence exemption (MRE) entitlement. In contrast, renting out part of a home commercially may expose a portion of the property to CGT upon sale.

Which is Best?

For Australians looking to open their homes to local or international students, homestay arrangements offer a unique blend of cultural enrichment and financial benefit. Unlike commercial rentals with taxable income and potential CGT implications, homestay payments are tax-free, covering only hosting costs, leaving your main residence exemption untouched. A homestay also provides a rewarding way to welcome students into a supportive environment without the complexities of traditional room rental. For more information on whether this arrangement or room rental is best for you, consult your Ascent Accountants advisor .

The Benefits of Subdividing Property: Unlocking Potential Value and Lifestyle Benefits

Mon, 14 Oct 2024 05:47:45 GMT

Subdividing property has become an increasingly popular option for Western Australian homeowners looking to make the most of their land. Subdivision offers a range of benefits for Western Australia's housing supply limitations by helping free up land in established suburbs while providing a financial boost for homeowners. Let's take a closer look at the benefits of subdividing property and why it may be an excellent option for you.

Unlock Financial Gains

A primary reason homeowners choose to subdivide is the potential for financial gain. Some may choose to sell their land as a development lot, while others want to create opportunities to build a rental property to create long-term cash flow.

Downsize Without Moving

Subdivision allows downsizing without leaving your home neighbourhood. Many people opting to create a smaller house on their current block can sell or rent their original property to supplement income while cutting their house running costs. Others open it up for family to live in so everyone can be nearby.

Increase Housing Supply

Subdividing a large block can help meet the growing demand for housing in established areas. Buyers can avoid living in new land estates, which often come with longer commute times, and instead build in a well-connected, established suburb.

Maximise Land Use

If you have unused or underutilised land, subdivision allows you to make the most of it. Rather than letting a large backyard or vacant space sit idle, you can turn it into an asset that benefits you and the community.

Planning the Subdivision

There are two primary types of subdivision in Western Australia:

Survey-Strata: Created under the Strata Titles Act 1985, survey-strata lots allow for sharing services like sewer, water, and common property for access.
Green-Title: Created under the Transfer of Land Act 1893, green-title lots are independent with no shared ownership or common property, but services like water and sewer cannot be shared.

Both types of subdivisions require approval from the Western Australian Planning Commission, and it's important to consider the timeframes and practical requirements of the process. Typically, it can take anywhere from six to nine months to complete a subdivision and receive a new title.

The Costs of Subdivision

Titling the Lot

While subdividing property offers many benefits, it's not without its costs. Subdividers must factor in the total costs of creating a new titled lot, including surveyor fees, government approvals, clearing the backyard, and providing essential services such as sewer, water, and underground power. A typical subdivision budget in Western Australia could be around $60,000, depending on the property and your local council.

Tax Considerations

Before jumping into subdivision, it's essential to understand the potential tax implications, particularly around capital gains tax (CGT).

CGT on Post-1985 Properties: If you purchased your property after September 20, 1985, any profit from selling a subdivided lot may be subject to CGT.
Exemptions for Pre-1985 Properties: For homeowners who purchased before CGT was introduced in 1985, subdividing and selling the new lot may be CGT-free, which is a significant financial advantage.

To clearly understand your costs, obligations and possible tax liability, it's essential to consult a qualified accountant. Contact our team at Ascent Accountants for advice. If you wish to get an idea on what your subdivision could be worth, contact Ascent Property Co on 0493 672 956.

Maximise Your Property's Potential with Professional Advice

Before making any decisions, it's crucial to evaluate whether subdividing is the right option for you. We recommend speaking to the property experts at Ascent Property Co. for a thorough appraisal of your property and its subdivision value based on your location, zoning, and market demand.

A Comprehensive Guide to Capital Gains Tax on Crypto

Mon, 14 Oct 2024 05:46:24 GMT

Cryptocurrency has become a popular investment category in recent years. As with any asset, investors must understand their tax obligations, including Capital Gains Tax (CGT), which applies when crypto assets are sold or exchanged. This article will guide you through working out capital gains on crypto when CGT applies and how to report it.

When Capital Gains Tax Applies to Crypto

For most Australian taxpayers, cryptocurrency is classified as a CGT asset with CGT payable when certain events occur, including:

Selling crypto for fiat currency (e.g. Australian dollars)
Gifting crypto to another person
Trading or swapping one crypto asset for another
Purchasing goods or services with crypto
Converting crypto to another type of currency

Each of these scenarios counts as a CGT event and may result in either a capital gain or a capital loss.

Working Out the Timing of the CGT Event

The timing of the CGT event is essential for calculating your tax obligations. Generally, a CGT event occurs when you dispose of your crypto asset, which could be when you:

Sell the asset
Exchange or trade one crypto asset for another
Use it to pay for goods or services

Other CGT events can include destroying or losing your assets and creating new contractual rights. It's essential to keep accurate records of these events to ensure that your CGT calculations are correct.

How to Calculate Your Capital Gains Tax

To calculate your CGT, you must assess whether you made a capital gain or a loss. Here's how.

Determine the cost base: This is what you originally paid for the crypto asset, including transaction fees and other incidental costs.
Determine the capital proceeds: This is the value you received from the disposal of the crypto asset. For instance, if you sold your crypto, the sale price (in Australian dollars) is your capital proceeds.
Calculate the difference: If your capital proceeds exceed your cost base, you have made a capital gain. If they are less, you have incurred a capital loss.
Apply the CGT discount: If you held your crypto asset for more than 12 months before the CGT event, you may be entitled to a 50% discount on your capital gain (if you are an individual taxpayer).

Remember, while capital losses can reduce your capital gains in the same tax year, they cannot be deducted from other income.

Reporting CGT on Crypto in Your Tax Return

Once you've calculated your capital gain or loss, the next step is to report it in your tax return.

Individual Taxpayers can report capital gains or losses using the Capital Gains section in myTax if lodging online or following the paper return instructions manually.
For Companies, Trusts, or Funds: The Capital Gains Tax Schedule should be used to report any CGT events involving crypto assets.

Keeping Records for Crypto Transactions

To make your CGT calculations and reporting easier, it's vital to maintain accurate records of all crypto transactions, including:

The dates of each transaction
The value of the cryptocurrency in Australian dollars at the time of each transaction
What the transaction was for (e.g., purchase, sale, swap)
Details of any associated transaction fees

You can also use online calculators and record-keeping tools provided by tax authorities to simplify this process.

Know Your Obligations

Paying capital gains tax on crypto may seem daunting but understanding when CGT applies and how to calculate it is essential for every investor. Crypto assets are treated like other investment assets for tax purposes, so staying informed and organized will help you avoid potential pitfalls and ensure a smooth tax season. For more information, visit the ATO's advice on Crypto CGT or contact Ascent Accountants for advice.

10 Effective Ways to Boost Your Focus at Work

Mon, 14 Oct 2024 05:44:22 GMT

It's normal to have moments when your focus wavers or attention to detail slips. Many factors can affect your concentration, such as feeling tired, hungry, stressed, or working in a distracting space. Fortunately, there are many practical and easy ways to improve productivity and reclaim your work focus. Here are ten tips anyone can try to help you stay on track no matter what is thrown your way.

1. Minimise Distractions

Sounds, phone alerts, and email dinging can make concentrating on complex tasks difficult. Try to minimise them as much as possible to create an environment that supports focus. Find a quiet spot, use noise-cancelling headphones or earbuds, silence or switch off non-essential notifications, and close browser tabs unrelated to your current task. A clean and organised workspace can also contribute to better concentration, so consider tidying up your space if clutter is an issue.

2. Use Caffeine Wisely

Caffeine can be helpful when used in moderation, but overconsumption can have the opposite effect, leading to jitteriness or anxiety. Getting a cup of tea or coffee may kick-start your morning but be sure not to overdo it.

3. Try the Pomodoro Technique

To make the most of your time, try the Pomodoro Technique, designed to break your work into manageable intervals. Work for 25 minutes, then take a five-minute break. After completing four rounds, reward yourself with a more extended break of 20–30 minutes. Your brain works better with short, regular rest periods.

4. Limit Social Media

Social media can be a significant distraction. Put your phone away and log out on your PC. If you can't stop your thoughts from drifting to check your profiles, consider using apps that block access during work hours or set times. Apps such as Freedom allow you to block a range of online distractions, helping you stay focused on what's important.

5. Maintain a Healthy Diet

What you eat impacts focus. Eat balanced meals with lean protein, complex carbs, and healthy fats to maintain steady energy levels. If you need a snack, reach for fruits, nuts, or seeds, and stay hydrated by drinking plenty of water throughout the day. Stay away from anything that makes you feel sluggish and sleepy.

6. Prioritise Quality Sleep

Set yourself up for a productive day with enough sleep the night before. Aim for 7–9 hours of sleep each night to keep your mind sharp. To improve sleep quality, avoid caffeine, shut down electronics at least an hour before bed, and create a comfortable sleep environment.

7. Break Large Tasks into Smaller Steps

Are you feeling overwhelmed by a big project? Breaking it down into smaller, more manageable tasks using the SMART method can help. Ensure each task is Specific, Measurable, Achievable, Relevant, and Timely, making significant goals more achievable. A lack of overwhelm will help with focus.

8. Practice Mindfulness

Developing a mindfulness practice can help you stay present and attentive if you often get lost in your thoughts. Techniques like deep breathing, meditation, or mindful walking can help you bring your attention back when it drifts, allowing you to refocus on your task.

9. Organise with a To-Do List

A clear plan of action for your day can help keep you organised and on track. Write down your tasks and prioritise the most critical tasks when your energy levels are high. This structure helps prevent overwhelm and ensures you complete essential work without stress.

10. Stop Multitasking

Despite the common belief that multitasking is efficient, research suggests that our brains underperform when juggling multiple tasks. Instead, focus on one at a time for the best results.

What Works for You?

Everyone is different, so there can be trial and error in determining which works best for you. Why not start incorporating one or two of these strategies into your daily routine to take control of your workday and increase your productivity?

Tips for Investing: Important Lessons from the Experts

Mon, 14 Oct 2024 05:44:09 GMT

Investing is both an art and a science; investors learn valuable lessons over time and with experience. However, most people want to learn without trial and error - instead, they seek expert advice. Our team at Ascent Accountants have significant collective experience supporting investors in navigating market cycles and trends. The following are nine key lessons that have stood the test of time.

Recognise the Cycles

An investing constant is the cyclical nature of markets. There are always phases of growth and downturns, with cycles repeating over time. Maintaining a long-term perspective during both the highs and the lows is essential, knowing that each cycle has its time.

The Crowd Isn't Always Right

Investor psychology often leads to herd behaviour, and when large groups of people make the same mistakes simultaneously, it can substantially affect the markets. Following the crowd can be tempting, but evaluating whether that approach is right for your strategy is crucial. Frequently, the crowd gets it wrong, and it's wise to go against the grain.

What You Pay Determines What You Get

The price at which you buy an asset is a significant factor in its potential returns. Lower-priced assets offer more room for growth, while overpriced assets may be overvalued. Metrics such as price-to-earnings ratios for stocks or bond yield can help guide your decisions, helping you evaluate each asset critically.

Predicting Markets is Difficult

Even professional market forecasters are influenced by the same emotional biases as regular investors, making accurately predicting markets challenging. For most investors, focusing on the long-term return trajectory rather than short-term movements is a better approach. Patience is critical if you want to reap investment rewards.

Markets Repeat the Same Mistakes

History tends to repeat itself, especially in the investment world. Investors continually fall into the same traps, often driven by fear or greed. Understanding that markets don't learn from the past can give you an edge. Stay current and aware of market extremes and resist the temptation to act on panic or euphoria.

The Power of Compounding

Over the long term, reinvesting returns can dramatically grow your wealth. If $1 had been invested in Australian shares in 1900, it would be worth almost $880,000 today. In contrast, $1 invested in cash would only be worth around $259, and bonds would yield about $924. This stark difference highlights the compounding power of shares over time.

Keep it Simple

The complexity of financial markets can be overwhelming, so keeping your investment strategy simple is often the best approach. Don't overcomplicate things, manage your debts wisely, and ask when you need help. Understanding, forward planning, and taking manageable risks yield better results over the long term.

Know Yourself

Every investor has their own risk tolerance and psychological tendencies. It's essential to understand your preferences and manage your weaknesses accordingly. A self-managed super fund or frequent trading might work for you if you prefer being hands-on with your investments. If not, a more passive, long-term strategy may be better.

Optimism Pays Off

At the heart of every successful investment strategy is optimism. Investors need confidence in the ability of banks to safeguard deposits, in borrowers to repay loans, in companies to grow profits, or in properties to generate rental income. Belief in the fundamental mechanisms of the economy is essential to take the necessary steps to start.

Get Support on Your Investing Journey

Investing requires patience, discipline, and self-awareness to help you build wealth steadily over time. Contact our Ascent Accountants team for further advice or assistance in managing the tax on your investment portfolio.

A Quick Guide to SMSF Valuations for ATO Compliance

Fri, 13 Sep 2024 07:33:53 GMT

The ATO has warned SMSF trustees about the importance of maintaining accurate asset valuations, highlighting that over 16,500 funds have reported the same asset value for three consecutive years. This raises concerns about assets like residential and commercial property in Australia, prompting the ATO to look closely at these funds.

Why Accurate Valuations Matter for SMSFs

Accurate valuations are critical, as they directly impact member balances, contribution limits, and eligibility for tax-free pension income, concessional contributions, and the work test exemption. With the new Division 296 $3 million super tax in effect, precise valuations are essential for those with balances nearing or exceeding $3 million. Additionally, correct valuation is crucial for assets like related unit trusts to ensure compliance with the 5% limit on in-house assets. Exceeding this limit could lead to the sale of assets to restore balance, potentially affecting the fund's financial health. Trustees must prioritise market valuations to ensure their SMSF's compliance and financial health.

It's a Legal Requirement

Accurate asset valuation is not just a good practice, it's a legal obligation for SMSFs. Trustees who fail to report assets, such as property or shares, at their actual market value may face serious consequences, including ATO scrutiny and fines or prosecution. Reporting at market value is not just about compliance, it's about ensuring that your fund's financial reports reflect its actual financial position. Additional regulations include:

Valuing at Market Value: SMSF assets must be valued at their 'market value' annually. This approach, which is particularly crucial for collectables like art, jewellery, or cars, ensures that your fund's financial reports reflect its actual financial position. Independent valuations are required, especially when these assets are sold. It's recommended that these assets be revalued every three years to maintain accuracy.

Valuing Real Property: Independent valuations aren't always necessary for real estate but are recommended for unique or difficult-to-value properties such as heritage-listed buildings or properties in remote areas. If self-valuing, document the property features and use multiple reliable data sources. Commercial properties require proof of comparable market rent. It is recommended you get an appraisal report each year from a real estate agent.

Valuing Unlisted Companies and Trusts: These investments can be complex to value, but trustees should assess market value based on capital growth and income potential before investing, making annual valuations easier. If the investment is in property, get an accurate valuation from a professional where possible.

Unique Assets and Division 296 Tax: For unique assets with no clear market value, either professional valuation or an estimate is required. Accurate valuations are crucial for those with super balances nearing $3m due to the impending Division 296 tax on super earnings.

Do You Need a Formal Appraisal for Your SMSF Property?

Trustees must ensure that SMSF assets, including property, are correctly valued. The ATO is less concerned with who performs the valuation and more focused on the method used. Trustees must ensure that the valuation is based on objective, supportable data. However, when it comes to personal use or certain specialised assets, the ATO recommends obtaining an independent, qualified valuer to perform the assessment. This is especially vital if your SMSF is subject to an audit.

Ensure Compliance for Peace of Mind

Ensuring your SMSF assets, including property, are correctly valued is crucial for compliance with Australian tax laws and effectively managing your retirement savings. If you need a property valuation or are facing an SMSF audit, we can help. We can also coordinate with Ascent Property Co, whose appraisals meets ATO standards. Contact us for assistance.

Salary Packaging: Key Facts and Tips

Fri, 13 Sep 2024 07:33:51 GMT

Many Australians are assessing their financial situation, especially with the rising cost of living and the pressure of paying household bills. Now more than ever, maximising take-home pay is vital, and one often overlooked option to do this is salary packaging. Also known as salary sacrifice, salary packaging allows payment of certain expenses using pre-tax dollars, reduces taxable income and increases take-home pay.

What is Salary Packaging?

Salary packaging involves an arrangement between an employer and an employee, where part of the employee's salary is used to cover specific expenses before tax is applied.

Everyday items that can be salary packaged include:

Rent or mortgage repayments
Car leasing and running costs
Superannuation contributions
Health insurance
Childcare or school fees
Laptops or other essential work-related items

The benefits of salary packaging depend on your work sector, your employer's offerings, and the specific expenses you choose for your salary package. Two key areas where salary packaging can be particularly beneficial are electric vehicle leasing and employees working in the non-profit sector.

Salary Packaging for Electric Vehicles

One of the most popular uses of salary packaging is through novated leasing, which allows employees to salary package a car. Thanks to the Australian federal government's Electric Car Discount Policy, employees can now enjoy significant savings when packaging electric vehicles (EVs).

Under this policy, eligible electric and hybrid vehicles are exempt from Fringe Benefits Tax (FBT). This exemption can save workers thousands of dollars over the life of the lease. Additionally, when salary packaging an EV through novated leasing, employees don't have to pay GST on the purchase price or running costs of the vehicle, potentially saving an additional $3,000 to $5,000 a year. With transport being one of the most significant household expenses, salary packaging an electric car can provide much-needed relief for workers looking to reduce their outgoings while contributing to a greener future.

Salary Packaging for Non-Profit Workers

Non-governmental workers can access some of the most generous salary packaging options. Many charities and not-for-profit organisations offer salary packaging for rent, mortgage repayments, and meal and entertainment costs, significantly affecting take-home pay. For instance, a charity worker earning $70,000 annually can package up to $18,500 in everyday expenses such as rent and meal costs. This could add over $5,800 to their annual take-home pay. Similarly, healthcare workers, such as nurses, can have salary packages up to $11,600 in eligible costs, resulting in an extra $3,595 in their pocket each year. Salary packaging allows these workers to make the most of their income to improve their financial well-being.

Top Tips for Salary Packaging Success

Salary packaging can be a powerful tool for boosting take-home pay, but it's essential to approach it strategically. Here are five tips to make the most of salary packaging:

Assess Your Financial Goals: Review your financial goals and tax position at the start of the financial year. Salary packaging can help achieve goals like saving for a home, boosting retirement savings, or managing everyday costs more effectively.

Do Your Research: Understand how salary packaging works by visiting reputable sources like MoneySmart to learn about the benefits and potential limitations.

Speak With Your Employer: Check with your employer or their salary packaging provider to understand what benefits they offer. Each workplace may have different policies and eligible items.

Seek Professional Advice: Consult your accountant or a tax advisor to ensure you maximise salary packaging benefits while complying with tax rules.

Monitor and Adjust: Salary packaging isn't a set-and-forget strategy. Regularly review and adjust your salary package as your financial situation changes to ensure you always get the most out of it.

Contact Ascent Accountants

For further advice on salary packaging, reach out to our accounting team. With planning and professional guidance, salary packaging can help stretch your money further.

The Value of Legal Services: Why You Should Use a Lawyer

Fri, 13 Sep 2024 07:33:48 GMT

In today's increasingly complex world, navigating legal matters without the guidance of a qualified lawyer can be risky. Professional legal services offer far more than just representation in court; they provide invaluable expertise, strategic advice, and peace of mind. Whether you're a business owner, an individual, or part of an organisation, there are many reasons to engage legal expertise.

Expertise and Knowledge

Lawyers are trained to support clients in complex matters requiring extensive legal knowledge. Even minor oversights can result in significant consequences for a client, so a lawyer ensures that every detail is addressed. This could range from interpreting regulations to preparing precise legal documents.

Risk Management

A significant benefit of having a lawyer on your team is risk management. Legal risks often lurk beneath the surface in contracts, business deals, or regulatory requirements. A lawyer helps identify potential pitfalls, advise on strategies to mitigate risk, and find a proactive approach to prevent costly disputes, litigation, or regulatory penalties to safeguard your personal and professional interests.

Compliance with Regulations

Legal compliance is an ever-changing landscape. Laws, regulations, and industry standards evolve and staying up to date with every single change that may affect you can be overwhelming. A lawyer keeps abreast of these developments, ensuring clients' actions align with current legal requirements. Whether it's employment law, tax regulations, or business compliance, a lawyer can protect you from legal consequences arising from non-compliance.

Contractual Clarity

Drafting and reviewing contracts is a cornerstone of legal services. Contracts are essential to business and personal transactions; even minor ambiguities can lead to disputes. Lawyers ensure that contracts are clear, enforceable, and serve your best interests while also negotiating terms to achieve outcomes in your favour.

Effective Dispute Resolution

In a dispute, having a lawyer on your side is critical. Lawyers offer strategies for resolving disputes, whether it's a business conflict, a property issue, or a personal matter. They represent your interests in negotiations, mediation, arbitration, or litigation, advocating for the best possible outcome while protecting you.

Strategic Advice

Lawyers don't just provide legal solutions; they offer strategic advice tailored to your goals. Whether running a business, managing your personal affairs, or planning, a lawyer can help you make decisions and guide you in complex situations.

Confidentiality and Client Privilege

A key benefit of engaging a lawyer is the confidentiality provided by lawyer-client privilege. This protection ensures that communication between you and your lawyer remains confidential, enabling open and honest discussions about sensitive matters.

Customised Solutions for Your Circumstances

Lawyers tailor advice to each client's situation. They consider your specific goals, concerns, and circumstances. Whether you're dealing with a complex business deal, a personal estate plan, or a family law matter, a lawyer provides customised solutions to get you the best possible outcome.

Contact Ascent Accounting for Peace of Mind

Hiring a lawyer offers peace of mind and protects your interests, allowing you to focus on what matters most. With expert guidance, strategic advice, and tailored solutions, legal services help you navigate legal complexities to save time, money, and stress. Ascent Accountants can refer you to lawyers that we have used in the past to help you obtain the help you need.

Property Valuations vs Property Appraisals: Understanding the Key Differences

Fri, 13 Sep 2024 07:33:38 GMT

When navigating the world of real estate, whether you're buying, selling, or refinancing a property, understanding its worth is not just important, it's empowering. This is where property valuations and property appraisals come into play. Although these terms are often used interchangeably, they represent distinct processes with different implications. Here's what you need to know about the differences between property valuations and appraisals—and when you should use each.

What is a Property Valuation?

A property valuation is both a formal and legally binding assessment of a property's market value. This is typically conducted by a qualified and licensed property valuer who estimates the property's worth via several factors, including:

The property's size and location

Condition and quality of construction
Recent sales of similar properties in the area
Zoning restrictions and future development potential
Local market trends

Property valuations are detailed and often include valuation calculations, evidence of similar property sales, and a comprehensive property description. These reports are used in a variety of situations, including:

Tax assessments: Capital Gains Tax (CGT) valuations or market assessment valuations for determining your tax obligations.
Stamp duty calculations: During property transfers between owners or entities like trusts.
Legal disputes: In divorce settlements or litigation over property values, property valuation is essential. Its legally binding nature provides security and protection, ensuring a fair resolution.
Pre-purchase and pre-sale: Helping buyers and sellers understand the property's fair market value.

Since property valuations are legally enforceable, they are the most reliable way of determining a property's true market value. This reliability can provide you with a sense of security and confidence, knowing that they can be used in court or with tax authorities.

What is a Property Appraisal?

A property appraisal is an informal estimate of a property's value, typically provided by a real estate agent. Real estate agents, due to their experience and knowledge of the local market, can provide an estimate of based on recent sales in the local area and current market trends. However, it's important to note that these appraisals are not as detailed or precise as formal valuations and are not legally binding documents.

Appraisals lack the detailed analysis of formal valuations and do not involve complex calculations. These calculations include the use of various valuation methods like the sales comparison approach, cost approach, and income approach, which are used to arrive at a precise property value. They are quick and general estimates meant to give homeowners or prospective buyers a ballpark figure for a property's value.

When to Use a Property Valuation

For Tax Purposes: A property valuation is often required when calculating capital gains tax or determining the value for stamp duty purposes. Since tax authorities need precise figures, only a formal valuation conducted by a licensed valuer will suffice.

During Legal Proceedings: In cases of divorce settlements or disputes over estate inheritance, a property valuation is essential because it is legally binding and can be used as court evidence. For instance, if there are multiple heirs and they disagree on the value of the property they inherited, a formal valuation can provide an objective assessment.

Refinancing or Securing a Loan: If you're applying for a mortgage or refinancing your property, lenders often require a formal property valuation to determine how much they are willing to lend.

Before Selling: While an appraisal might give you an idea of your home's worth, a property valuation offers an accurate, legally enforceable figure that can help guide pricing decisions.

When to Use a Property Appraisal

For General Knowledge: If you're curious about the approximate value of your home or are in the early stages of selling, a property appraisal from a local real estate agent can provide an estimate based on market conditions. This can give you a good starting point and help you feel more informed and prepared.

Listing Your Home: Real estate agents commonly provide property appraisals when listing a home to give sellers an idea of a competitive asking price. This informal estimate serves as a starting point, helping you feel more prepared and informed as you begin the selling process.

Which is Right for You?

In summary, valuations are legally binding and more detailed, while appraisals are informal and less precise. Ultimately, both valuations and appraisals play essential roles in the property market and knowing when to use each can save you time, money, and potential legal headaches. If you need an official assessment of your property's value, or an appraisal on your property, contact Ascent Accountants or Ascent Property Co for an accurate and legally compliant valuation or an obligation free appraisal.

The Importance of Regularly Reviewing Your SMSF Trust Deed

Thu, 15 Aug 2024 01:40:37 GMT

A Self-Managed Superannuation Fund (SMSF) operates as a trust, governed by a set of rules outlined in its trust deed. This document is crucial as it defines what your SMSF can and cannot do, guiding its operations and ensuring compliance with the law. However, many SMSF trustees overlook the need for regular reviews and updates of their trust deeds, leading to potential issues with fund management and estate planning.

Why Your SMSF Needs a Trust Deed

The Role of the Trust Deed

Rule Book: The trust deed acts as the rule book for your SMSF, detailing permissible activities and restrictions.
Legal Compliance: While legislation allows for certain actions within super funds, your trust deed must specifically permit these actions for them to be valid.

Example: Binding Death Benefit Nominations

Legislative Allowance: Current legislation permits non-lapsing binding death benefit nominations, which ensure that death benefits are distributed according to your wishes without needing to update nominations regularly.
Trust Deed Requirement: To implement a non-lapsing nomination, your trust deed must explicitly allow it. Older deeds might require updates every three years, making non-lapsing nominations invalid if the deed does not accommodate them.

The Importance of Regular Reviews

Why Regular Review is Essential

Avoiding Issues: Regularly reviewing your trust deed helps prevent potential issues with invalid nominations and ensures that your SMSF complies with current legislation.
Adapting to Changes: Legislative changes can affect what is permissible within your SMSF. Regular reviews ensure that your trust deed remains up-to-date and relevant.

Recommended Review Frequency

Every 5 Years: It is generally advised to review your trust deed every five years, especially when there are legislative changes to superannuation laws.

Options for Updating Your Trust Deed

Minor Changes

Deed of Variation: For minor amendments, a deed of variation can be used. This document outlines the changes and is attached to the original trust deed.

Major Changes

New Deed: If significant changes are needed, a new trust deed must be established. This ensures that the updated rules and provisions are fully integrated.

Professional Assistance

If it has been five or more years since your last SMSF update, talk to us so we can provide a qualified lawyer experienced in SMSF trust deeds. We can provide expert guidance and ensure that your trust deed is l legally compliant and aligned with your financial goals and estate plans

Let’s Talk Strategy: Options For Listing Your Property

Thu, 15 Aug 2024 01:35:47 GMT

Once you've decided to sell your property, the next step is to determine a listing strategy. Your real estate agent will evaluate your options and recommend the most effective approach for your property. As always, the Western Australian market exhibits its own unique trends.

What are the options?

In broad terms, properties are either advertised with or without a price, but there are various strategies and approaches within each method that can influence buyer interest and market response.

1. Price-Listed Advertised Method

A fixed pricing strategy is where the property is listed at a set, non-negotiable price. This means the seller does not entertain offers below this price, and buyers are aware that the listed price is the final amount required to purchase the property. This approach can simplify the selling process by avoiding lengthy negotiations and attracting buyers who are ready to pay the stated price. When the property’s value is well-established and supported by recent sales data, a fixed price can be straightforward and appealing. It is not commonly used in WA.
A price range, or a ‘from’ price indicates a minimum expectation and guides buyers. It communicates that the seller will consider offers above the price, without imposing a ceiling. It also aims to catch more buyers searching in price brackets on real estate web sites.

2. No Price Advertised Method

When there is no recent comparative property, advertising without a price allows sellers to gauge interest and test the market. This is more common in premium suburbs when it is difficult to predict what a buyer will pay. Some sellers employ this strategy to protect their privacy.
While WA is not as auction happy as the eastern states, in a high demand market where multiple offers are likely, auctions remain a strong strategy to drive up the final sale price through competitive bidding and ensure a quicker transaction with a set sale date. The process demands serious buyers, reducing the need for lengthy negotiations.
Another variant is an end date sale, where offers are invited no later than a submission date. This creates some urgency if there is strong demand but can backfire if no offers are received.

Follow your agent’s advice

Trusting your agent's advice when setting a pricing strategy is crucial because they have deep knowledge of the local market trends and buyer behaviour. Their experience and data-driven insights can help tailor a plan for your specific property and situation. Sellers should ensure their property is well-presented and maintain a realistic expectation.

At Ascent Property Co we can help provide guidance on the pricing strategy that maximises your return.

Once the property sells and settles, you will be required to meet all ATO tax obligations. Contact us for support to guide you through these requirements and to ensure you claim all deductions and entitlements.

Tax Compliance Advice: What You Need to Know About GAAR, PSI & PSB

Thu, 15 Aug 2024 01:20:58 GMT

Navigating Australia’s tax compliance regulations can feel like a journey through a maze, with potential pitfalls at every turn. Understanding these rules is crucial for businesses and individuals to avoid costly penalties. A few essentials for sole traders and small businesses to know are PSI (Personal Services Income), PSB (Personal Services Businesses), and GAAR (General Anti-Avoidance Rules).

Understanding PSI & PSB

Personal Services Income (PSI) is income earned through an individual’s efforts or skills. It typically applies to sole traders, freelancers, and contractors who provide services rather than goods or products. PSI rules prevent individuals from splitting income with others to minimise tax liability or retain profits in lower-taxed entities. However, not all income derived from personal efforts falls under PSI. If a business can demonstrate that it meets specific conditions, it may qualify as a Personal Services Business (PSB). This type of business will be exempt from PSI rules and allowed to operate under a business tax structure.

The Role of General Anti-Avoidance Rules (GAAR)

Even if a business qualifies as a PSB and is exempt from PSI rules, it is not free from scrutiny. The ATO employs GAAR to address tax avoidance strategies that companies or individuals may use to structure income arrangements to gain a tax advantage, such as splitting income or diverting profits to a lower-taxed entity such as a company, partnership, or trust. The ATO considers these actions tax avoidance and GAAR violations involve costly fines - something no business wants.

When Does GAAR Apply?

GAAR application is based on a detailed assessment of whether the arrangements are designed for tax avoidance. The ATO uses several factors to determine this:

Is the remuneration commensurate to the value of services provided? The ATO examines whether the salary or wages paid to the individual providing services are proportionate to the income received by the PSB. If the remuneration is significantly less than what the business earned, it could indicate that the arrangement is aimed at minimising tax liability.
Does the PSB distribute income to associates and not to the business owner? If the PSB distributes income to others, such as associates or family members, rather than paying the service-providing individual, this may be viewed as an attempt to reduce tax.
Are salaries or wages misaligned? When salaries or wages do not align with skills or services, it raises questions about income distribution and intentions.
Is a company, partnership, or trust used to retain profits or avoid PSI? Income splitting and misuse of an entity can trigger the application of GAAR if it leads to a lower overall tax liability.

An Example of When GAAR May Apply

Sam is a software developer who offers his expertise through his SX Trust. The trust secures a contract valued at $120,000 for Sam’s services. Over the course of the year, SX Trust pays Sam an annual salary of $50,000 and records $25,000 in deductions. The remaining $45,000 is then allocated to Sam’s wife and children, who are beneficiaries of the trust. The trust falls into a lower tax bracket. The SX Trust meets the criteria of a PSB by passing the results test, so Personal Services Income (PSI) rules don’t apply. However, the ATO could interpret the arrangement as an attempt to reduce tax by distributing income to Sam’s family, triggering a GAAR investigation.

Do You Require Further Assistance?

Understanding PSI, PSB, and GAAR rules and seeking professional advice can help when navigating these complex tax rules and ensure you remain in good standing with the tax office. Contact the Ascent Accounting team for more information or assistance in maintaining compliance.

Proven Ways to Beat Uni Debt

Thu, 15 Aug 2024 01:17:47 GMT

Over the past ten years, tertiary education costs have increased, posing financial challenges for students and graduates. While some students are fortunate to be able to cover educational costs upfront, most will rely on the Higher Education Loan Program (HELP), known as HECS. Whether undertaking your first undergraduate degree or taking an additional course to upskill and stay ahead in your career, further education comes at a hefty price tag. While study costs are hefty, there are ways to lessen the debt burden with a bit of planning before and during study, and after graduation.

Before/ During Study

Gather Some Savings (If Possible!)

Some people have a buffer saved for studying, others don't. As a school leaver, saving may not be a priority before starting Uni, and not everyone can rely on their parents for help. In these situations, there may be no option but to take extra debt or apply for grants for subsistence and course fees. However, if there is an option for working for a while to save before starting or if you are studying as a mature student, having a savings buffer will save you significant money and interest on HECs loans in future. Plus, even a small emergency fund can help you avoid debt when unexpected costs arise.

Consider Additional Costs

When you start studying, especially if you are moving out on your own for the first time, keeping costs down and sticking to your budget is essential. Consider your rent, food, transport, and utility bills costs carefully and be savvy about living arrangements. For example, sharing a place can be much more affordable than trying to live alone. Keeping your living costs as low as possible will ensure there is more money to cover costs, such as books and resources not rolled into your fees. This will ensure you don't take more debt than is essential, meaning fewer repayments later.

After Graduation

Now is the time to pay off the debts accrued during university. So, where to start tackling your loan?

Understand your HELP/ HECs Debt

HELP or HECS loan debts must be paid back and are subject to compound interest, known as indexation. The indexation rate increases yearly on June 1 and is based on inflation, meaning your loan balance grows yearly. While a degree is an investment in your future, rising costs can quickly add up alongside this annual increase, so it is best to clear your debt faster by paying more than the minimum if possible.

Understand Repayment Obligations

Repayments are only due once you earn above the set threshold of $48,361 annually. However, indexation will still accrue, meaning your loan will grow year-on-year even if you earn below the threshold. Once your income exceeds the repayment threshold, the Australian Taxation Office (ATO) will automatically deduct HEC payments.

Important Tip: If you receive Reportable Fringe Benefits in your salary package, ensure your employer is taking out HELP/HECs repayments, as this must be done manually.

Make Extra Repayments Whenever Possible

While you might not be able to pay off the entire amount before indexation kicks in, even small additional payments can help lower the balance of your debt over time. Additional voluntary repayments are a great way to take control of your debt if you have extra cash, allowing you to become debt-free faster.

Important Tip: Any payments made before 1 ^st June will reduce the debt before the index increase is calculated.

Consider Salary Sacrifice Options

If you want to reduce your taxable income and compulsory HELP/ HECs repayment, salary sacrificing into superannuation can lower your taxable income to reduce repayments. This approach boosts your retirement savings and lowers repayments.

Seek Professional Advice

Navigating the complexities of education debt can be daunting, but you don't have to do it alone. Professional advice can help you plan to meet repayment obligations and get on top of the debt faster.

Reach Out to Us

Ascent Accounting specialises in developing personalised strategies to help manage educational HELP and HECs loan debt effectively. Reach out to our team for assistance.

Tested & Safe: Reasons Smoke Alarm Maintenance Matters in a Rental

Mon, 15 Jul 2024 03:29:39 GMT

Functional smoke alarms save lives. A loud and fast-acting alarm can be the difference between life and death, ensuring occupants can grab their loved ones and get out in time. It can also determine whether anyone has time to call for help before an entire property is lost—a fast-acting alarm can ensure fire crews are on the scene fast to mitigate property damage.

When a house is rented out in Perth and around Australia, the owner commits to protecting both people and property by always considering the well-being of tenants. As a landlord, you are responsible for ensuring that any rental property has a working alarm and complies with legislation.

Neglecting smoke alarm maintenance can have dire and deadly consequences, and non-compliance with smoke alarm regulations can result in legal repercussions for landlords. This may include fines, potential lawsuits, and culpability if anyone is severely injured or killed.

Legal Obligations for Landlords

Proper smoke alarm installation and maintenance are a landlord's responsibility in accordance with the Australian Standard AS 3786 of the Building Code. The legislation is designed to protect both landlords and tenants and avoid terrible outcomes.

Installation

The law mandates that landlords must install smoke alarms in rental properties Australia-wide. Alarms should be placed on each level of the dwelling, in hallways near bedrooms, and in other strategic locations to maximise early detection of smoke and fire, providing occupants with crucial time to evacuate. Smoke alarms must be correctly installed and in good working order before a tenant moves in.

Maintenance

Smoke alarms must continue to be maintained and tested throughout any tenancy. Regular testing is essential for battery-operated and hardwired alarms to ensure they function correctly and are safe. To comply with legal obligations, landlords should test smoke alarms in rental properties every six months.

Replacement

Smoke alarms last around ten years, depending on the type and quality. Landlords must continually test and replace alarms before they become unreliable and threaten safety.

Get Help from Professionals

As with many other aspects of being a landlord, smoke alarm maintenance is an excellent requirement to outsource. Organise a company like Smoke Alarms Australia to come out every six months. They will test and maintain smoke alarms of all types, ensure each is compliant, and will save lives if the worst happens. While monetary fines and legal liability are terrible, your tenant's lives matter far more.

Outsourcing smoke alarm maintenance is tax deductible, so there is no reason to DIY. For an installation or maintenance quote, contact Ascent Property Co or Smoke Alarms Australia via their website or phone at 1300 125 276.

Are You an Ascent Property Co Client?

Ascent Property Co. is dedicated to protecting our clients and their properties. As part of our services, we can provide smoke alarm maintenance services on any property we manage, offering you peace of mind. To discuss whether we have already taken care of this for you or to arrange our assistance, contact Luke Langford on 0493 672 956.

TPAR: What You Need to Know for Timely Lodgement in 2024

Mon, 15 Jul 2024 03:26:15 GMT

For small to medium-sized business owners in Perth and around Australia, staying compliant with tax obligations is crucial. For many companies, filing a Taxable Payments Annual Report (TPAR) is essential for end-of-year compliance. Understanding and fulfilling this reporting obligation is essential to avoid potential penalties, yet, understandably, many businesspeople are still confused about it.

Our Perth tax accountants often hear questions such as, "Why do I need to lodge a Taxable Payments Annual Report?" and "What is a TPAR report?" or "Can I lodge a TAPR myself?" To make things easier for your 2024 filing, we have listed all the essential TPAR information below.

Who Needs to File a TPAR?

Most businesses must file a TPAR if they engage contractors or subcontractors—such as cleaners, couriers, and tradies. Companies must report all payments to contractors and subcontractors in specific industries. These industries include:

Building and construction services
Cleaning services
Courier services
Road freight services
IT services
Security, investigation, and surveillance services

Who Can Lodge My TAPR?

Can you lodge your taxable payments annual report by yourself? The answer is yes, but if your business employs quite a few contractors or has complicated circumstances, it's likely better to hire a business accountant to help.

What to Include?

When compiling your report, you will need to include the total payment amount for invoices covering labour and materials. Both are required reporting figures for your TPAR.

What to Exclude?

Certain payments are excluded from TPAR reporting, such as:

Payments for materials only
Incidental labour
Unpaid invoices after 30 June 2024 (only report paid invoices paid before the end of the financial year)
Payments to labour-hire workers, employees, and foreign residents working in Australia
Contractors without ABN or those who are international
Payments within consolidated groups
Payments for private or domestic services

Resources

The ATO provides a resources hub and a free reporting worksheet to help you track payments and get organised for annual reporting. This worksheet helps your company recording stay on track, making TPAR submission easier at tax time. Be sure not to submit the worksheet when filing.

What if the Business Supplies Unrelated Services?

This area can be tricky if TPRS services are only a portion of the business's services. In these cases, a percentage must be determined to calculate TPAR requirements. If unsure how to do this, it's always best to take professional advice from an accountant or contact the ATO. It's better to be safe than sorry.

When to Lodge Your TPAR

Your TPAR must be lodged by 28 August 2024, so if you still need to start preparing your report, now is the time to get organised!

How to Lodge Your TPAR

There are several ways to lodge your TPAR:

Create a TPAR data file and use the file transfer function through SBR-enabled business software that can interact directly with ATO online.

Access the ATO's online services via myGovID using the Relationship Authorisation Manager (RAM) and your ABN. File your TPAR under Lodgements.

Use the ATO's online services for individuals and sole traders via myGovID. Select Tax, Lodgements, then Taxable Payments Annual Report.

Have your Business Activity Statements (BAS) agent file your TPAR.

Submit the original TPAR documents to the ATO via post. Please note that the ATO will not accept photocopies or scanned images and must receive the paper before the 28 August deadline.

Need Help with Your TPAR?

If you need assistance with your 2024 TPAR, contact us before the 28 August deadline. Our Ascent Accountants team are here to help you navigate the TPAR lodgement process and ensure your business meets its reporting obligations.

Making a Seamless Sale: Your Comprehensive Guide to a Smooth Property Transaction

Mon, 15 Jul 2024 03:14:52 GMT

Whether you're a property buyer or seller, navigating the complexities of the sale contract is crucial to ensuring a smooth and stress-free transaction. Known as conditions of sale, these terms outline the vendor's proposal to sell and the obligations required to finalise the purchase. Adhering to these conditions can prevent potential issues and streamline the process. Here’s a detailed guide to making your property sale seamless, with insights from Ascent Accountants.

Understand the Basics: Offer and Acceptance

An offer to buy property is formalised using the Contract for Sale of Land or Strata Title by Offer and Acceptance form, along with the Joint Form of General Conditions for the Sale of Land. These documents, combined with the general conditions, create the standard contract for real estate sales in Western Australia. It's important to strictly adhere to these conditions to avoid severe financial and legal repercussions, such as contract termination, court proceedings, and potential penalties.

Special Conditions: A Critical Component

Both buyers and sellers must be aware of any special conditions attached to the offer. It is essential for these conditions to be precisely worded to prevent disputes. Here are a few examples of prominent special conditions:

1. Building and Termite Inspection: Ensuring the property is in good working order and free from termites is crucial. This includes compliant pool or spa barriers if applicable.

2. Electrical and Plumbing Fixtures: All fixtures and fittings should be in proper working condition before the sale.

3. Items Included in the Sale: Clearly state what items will remain with the property and what will be removed before settlement. This includes fixtures, chattels, and other significant items.

Special Sale Conditions

Special sale conditions can include a 48-hour clause allowing the buyer to make their offer unconditional if the seller receives a higher offer from another buyer. In cases where the property is an investment, it’s essential to include details of the existing lease as a special condition to inform the buyer of the necessary specifics.

Role of the Selling Agent

The selling agent plays a pivotal role in ensuring both parties understand their responsibilities regarding the conditions to prevent problems from arising. Agents should help buyers and sellers fully grasp the implications of each condition, especially when it comes to potential future issues, like unapproved structures.

Common Pitfalls and How to Avoid Them

Buyers often face challenges such as over-ambitious timeframes in their offers and failing to include special conditions to protect their interests. We suggest:

Including realistic timeframes: Ensure the timeframes promised are achievable.
Adding protective conditions: Safeguard yourself against future issues, such as unapproved structures or necessary council approvals.

Ensuring Special Conditions are Clear

Seek expert advice to ensure special conditions are well-drafted, specifying what needs to be done, by whom, and within what timeframe. Clearly outline who is responsible for costs and the consequences of failing to meet these conditions by the due date.

Seller's Disclosure Statement

To minimise risks, selling agents should assist sellers in completing a Seller’s Disclosure Statement. This comprehensive four-page document details the property’s specifics, ensuring transparency and clarity for potential buyers.

Follow expert advice

Taking the time to understand and adhere to the conditions of sale can significantly impact the success of a property transaction. By following expert advice and being meticulous about special conditions, both buyers and sellers can achieve a seamless and stress-free property sale.

For a more detailed understanding of your responsibilities and the conditions applicable to your specific property transaction, consulting with a professional real estate agent or legal advisor is highly recommended. This proactive approach will help you avoid common pitfalls and ensure a smooth and successful sale.

At Ascent Property Co and Ascent Accountants, our team offer a comprehensive suite of services. We’re here to get alongside you as an active partner in your journey of business success. From maintaining the property, selling the property to offering strategic business planning and formulating growth strategies, Ascent Property Co and Ascent Accountants have the expertise and experience to put your company on the path to prosperity. Each service is completely tailored to your business, industry, challenges, and goals.

Claiming Home Office Expenses: Post-Financial Year Considerations

Mon, 15 Jul 2024 03:11:59 GMT

As the end of the financial year has just passed, Australian business owners now need to turn their attention to a critical task: claiming home office expenses. With remote work continuing to shape the landscape of modern business, understanding how to navigate the ATO’s guidelines on home office deductions is crucial. In this guide, we explore the two methods recognised by the ATO to calculate your claim and maximise your tax deductions: the Fixed Rate Method and the Actual Cost Method.

Are you eligible to claim?

Before you put in the hard work to claim working from home expenses, you need to find out if you are eligible to make a claim. To be eligible, you must:

Be working from home to fulfil your employment duties, i.e., not just answering occasional emails and phone calls.
Incur additional expenses as a result of working from home.
Keep records that show you incur the expenses.

1. The Fixed Rate Method

The Fixed Rate Method is a straightforward way to calculate your home office expenses. You can claim 67 cents per hour for every hour worked from home, covering additional expenses such as heating, cooling, lighting and internet or data expenses.

Advantages:

Simplicity. Requires minimal record-keeping—just track your hours worked from home.
Multiply your total hours worked from home by the applicable rate to determine your deduction.

Considerations:

Ensure you have accurate records of your hours worked from home to support your claim. A log for the year must be kept of the hours worked.
A separate system is required to claim expenses not covered by the fixed rate, such as the decline in value of depreciating assets (like home office furniture).
This method is ideal for those who prefer a simplified approach to claiming home office expenses without the need for detailed expense tracking.

2. The Actual Cost Method

Alternatively, the Actual Cost Method allows you to claim the actual expenses incurred while working from home. This includes:
Utilities: Proportion of electricity and gas bills attributable to your home office.
Internet and Phone: Costs related to work-related use of internet and phone services.
Depreciation: Decline in value of home office equipment and furniture.

Advantages:

Precision: Claim expenses based on actual costs incurred, potentially maximising your deduction if your home office expenses exceed the fixed rate.
Flexibility: Suitable for those with higher-than-average home office expenses or specific equipment depreciation needs.

Considerations:

Requires detailed record-keeping and documentation of all expenses claimed.
Keep invoices, receipts, and records that clearly demonstrate the connection between expenses and your work activities.

Consult the experts

In order to ensure that you are maximising your tax return, consult an expert like Ascent Accountants. Our team offers a comprehensive suite of services that go beyond the scope of a traditional accountant role. We provide active partnership in your business journey.

Successfully preparing your home office expense claims post-financial year hinges on careful consideration and adherence to ATO guidelines. By selecting the appropriate method—whether Fixed Rate or Actual Cost—and partnering with seasoned professionals like Ascent Accountants, you ensure your claims are precise, compliant, and optimised for maximum tax benefits. Contact us today to explore how we can assist in achieving your financial objectives and steer your business towards continued growth and success.

Checklist for June 30th: essential business tasks.

Fri, 14 Jun 2024 03:05:52 GMT

We’re already halfway through June, which means time is running out when it comes to ticking off those business essentials for the end of the month — and the end of the financial year. This is a crucial period for businesses as they prepare for the new financial year — it’s particularly hectic for business owners who juggle multiple responsibilities (such as owner operators). We’re here to help!

Why June 30th is a busy time for business owners.

For business owners, the lead-up to June 30th is often filled with various administrative and financial tasks that need to be completed to comply with legal and regulatory requirements. The volume and mental load of these tasks can be overwhelming, especially when combined with the day-to-day operations of running a business.

From reconciling accounts to finalising payroll details, the to-do list seems endless. This checklist is designed to streamline these tasks, making it easier for business owners to navigate this busy period and ensure nothing is overlooked.

Essential tasks to prepare & complete.

By following this checklist, business owners can break down the end-of-year process into manageable tasks. This not only helps in ensuring compliance with tax and payroll regulations but also allows for better financial planning and strategic decision-making. Utilising a checklist can significantly reduce stress and the potential for errors, giving business owners more time to focus on core activities and growth strategies.

1. Wages Reconciliation

Ensure all wages are correctly paid and reported through Single Touch Payroll (STP).
Verify that wages are accurately reflected in your Activity Statements that have been lodged with the tax office.

2. Single Touch Payroll Finalisation

Complete STP reconciliation with the Tax Office by July 14th.

3. Superannuation Reconciliation

Ensure all superannuation contributions are correct and paid by July 28 ^th (at the latest).

4. Superannuation Payments

Make superannuation payments for staff and additional contributions by June 25th to claim the tax deduction for this financial year.

5. Private Use/FBT Calculations

Perform final calculations for private use and Fringe Benefits Tax (FBT) for the June 30th BAS return.
Reconcile private use on vehicles and other assets, including these as contributions in the BAS.

6. Bank Reconciliation

Complete bank reconciliations for all accounts and credit cards as of June 30th.

7. Stock Take

Conduct a thorough stock take on June 30th.

8. Owners Drawings Review

Review any owner’s drawings from the business and ensure they are repaid before June 30th.

9. Bonus Agreements

Establish bonus agreements aimed at tax minimisation based on financial targets.

10. Annual Contractor Payment Summary Statements

Prepare and complete these statements by August 28th if you pay contractors in certain industries.

11. Planning for 2024/2025

Conduct comprehensive reviews of business performance.
Create budgets for the new financial year.
Set strategic plans and goals for the upcoming financial year.

Do it right the first time.

It’s important all these tasks are done correctly and on time. If you need assistance, Ascent Accountants are ready to provide tailored solutions. Contact us for support with reconciliations, form preparations, and other vital end-of-year tasks.

Our end of financial year guide for taxpayers

Fri, 14 Jun 2024 03:05:50 GMT

While the end of the financial year (EOFY) comes with a sense of burden for some (have a lot to do? Use our checklist!) it’s actually an exciting time for financial professionals and taxpayers alike.

With a helping hand from the ATO, EOFY brings a unique opportunity to optimise your financial position. As the end of June approaches, it's time to maximise your tax return and ensure compliance with tax regulations. Whether you are an individual taxpayer or a business owner, these tax tips will help you navigate the season effectively.

Understand & claim deductions.

Knowing which deductions you’re eligible for can significantly optimise your taxable income (ensure you keep all receipts and statements for any deductions claimed). Common deductions include:

Work-related expenses: Uniforms, tools, and professional development courses.
Home office expenses: If you work from home, you can claim expenses related to your home office (like a new laptop or WiFi charges).
Investment expenses: Interest related to managing your investments.
Charitable donations: Contributions to registered charities.
Income protection insurance premiums: Premiums for insurance policies that protect your income.

Maximise contributions.

Super contributions.

Contributing to your superannuation is a tax-effective way to save for retirement. The guaranteed super rate increased to 11% of salary in the 2023 – 2024 financial year, with a maximum limit of $27,500. If you earn less than $250,000, consider topping up your super contributions to the maximum limit. For example, a personal contribution of $5,000 could potentially save you up to $1,700 in tax! A financial professional can assist with the numbers and check the annual contribution caps to avoid penalties.

Additionally, you may wish to consider unused catch-up contributions. If you have less than $500,000 in super and haven't fully used the concessional cap from previous years (since July 1, 2018) you may be eligible. This strategy is useful if you have other capital gains tax events, such as the sale of an investment property. Ensure you use the unused portion before the EOFY, or it will be lost forever. The easiest way to check your unused balance is through your myGov account.

Changes to the "bring forward rule" have widened the contributions age threshold from 67 to 75, with the work test no longer applied. This means senior Australians can boost their super balance with a lump sum contribution of up to $330,000, bringing forward three years' worth of $110,000 non-concessional contributions. This is applicable for balances less than $1.68 million, with a reducing amount for balances between $1.68m and $1.79m.

Downsizer contributions.

The "downsizer" contribution is another way seniors can access the wealth in their homes by contributing the proceeds to super. This applies to individuals aged 55 or older who sell their main residence and make a downsizer contribution of up to $300,000 (or $600,000 per couple). From January 1, 2023, the age threshold was reduced from 60 to 55, enabling more flexibility for those considering this option.

Review investment strategies.

EOFY is an excellent time to review your investment portfolio. Both property and shares have experienced healthy gains over the past few years, and it’s a good time to consider offsetting capital gains with losses from underperforming investments.

If you’ve sold an investment property or shares during the financial year and formed capital gains, consider selling underperforming investments to realise losses, which can offset these gains.

Claim small business breaks.

If you own a small business, ensure you’re aware of the specific tax concessions available, such as the instant asset write-off for new or second-hand assets or equipment (up to the $20,000 threshold).

If you’re in the market for an electric car, you’ll save on fringe benefits tax or eligible plug-in hybrid electric vehicles and associated expenses. The Electric Vehicle (EV) Discount allows 100% pre-tax payments on eligible EVs under the Luxury Car Tax threshold of $89,332.

Don’t tackle the challenges alone.

Tax laws are complex and constantly changing — we keep up with the changes so you don’t have to. Our tax professionals can ensure you’re maximising your deductions, complying with tax laws, and effectively planning for the future. Get in touch to get started.

Individual & company tax rates you should know to help EOFY tax planning

Fri, 14 Jun 2024 03:05:48 GMT

Whether you’re an employee, self-employed, or run a business, everyone should understand their obligations to the taxman.

Knowing your tax rates is essential for financial planning and decision making, ensuring you meet compliance requirements. This knowledge can also spotlight opportunities for refining and optimising your tax strategy so you more effectively reach your financial goals, whatever they may be.

Individual tax rates.

Know your tax bracket.

Australia has a progressive tax system, which means the higher your income, the more tax you pay. Income tax is applied to an individual’s taxable income and is payable on all forms of income, including wages, business profits and investment returns. It can also apply to the sale of assets, such as shares or a house.

The following individual income tax rates apply for both the 2023 – 2024 and the 2024 – 2025 financial year:

Income of $0 - $18,200 : $0.00
Income of $18,201 - $45,000 : 16c for each $1 over $18,200
Income of $45,001 - $135,000 : 30c for each $1 over $45,000
Income of $135,001 - $190,000 : 37c for each $1 over $135,00
Income of $190,001+ : 45c for each $1 over $190,000

Please note, these rates do not include the Medicare levy of 2% and the tax-free threshold may be higher for eligible taxpayers, e.g. Seniors.

A quick look at Pay As You Go.

Employees generally pay income tax through Pay As You Go (PAYG) withholding. This is where your employer withholds a portion of your wage each pay period to cover their projected tax liability come June 30.

PAYG ensures employees meet end-of-year tax liabilities and may cover other payments such as superannuation, allowances, and certain government payments. Most notably, PAYG helps taxpayers avoid a large tax bill at the end of the financial year.

Info for sole traders.

If you’re a sole trader, it’s important that you understand that, for tax purposes, your income is considered personal income. This means you’ll pay the same income tax rate as an individual, and only need to lodge one tax return. In other words, the tax brackets above apply to your sole trader income.

Similarly, in a partnership, you’ll also pay individual income rates on your share of the partnership income. Both may pay their tax liability via PAYG instalments quarterly, rather than a lump sum at the end of the financial year.

A tax planning tip!

Consider paying deductible expenses before June 30 ^th . Doing so is a proactive tax planning strategy that can help minimise tax liability, maximise tax benefits, and improve your financial management for the current and future tax years.

This would include investment expenses for rental properties (e.g. repairs), work related expenses, and making voluntary super contribution.

Company tax rates.

In Australia, companies are required to pay tax on their earnings. Company (or corporate) tax is a particular rate of income tax that only applies to incorporated businesses. This federal tax is a flat rate, meaning it doesn’t vary based on the amount of income.

The following company tax rates apply for both the 2023 - 2024 and 2024 - 2025 financial year:

Base rate entities: 25%
All others: 30%

Base rate entities are generally small or medium-sized businesses which fall below the aggregated turnover threshold of $50 million (combined between connected entities).

A company with predominantly passive income (more than 80%) cannot access the lower company tax rate as they’re not considered a base rate entity. Passive income includes rent, interest, or net capital gains — earnings not derived from the active operation of a business.

This tax will be applied to the company’s assessable income which is calculated by deducting allowable expenses from total income. It does not include GST collected on sales. As a distinct, legal entity, every company is required to lodge a tax return. Most companies pay this tax liability in quarterly instalments (via PAYG) throughout the year.

Professional tax planning is the way to go.

Gain a professional advantage in your tax preparation this year with Ascent. We’ll minimise your tax, maximise your benefits, help optimise your tax strategy and streamline the preparation process. saving you time, stress and money. Get in touch with our team today, and look forward to stress-free tax prep.

Superannuation thresholds & tax rates

Fri, 14 Jun 2024 03:05:44 GMT

Ensuring you don’t over-contribute to your superannuation can save you from paying excessive tax. Understanding superannuation thresholds and tax rates for contributions, employment termination payments, super guarantee, and co-contributions is crucial for strategic tax minimisation and building a substantial retirement fund.

Today’s article covers the basics of superannuation tax rates and contribution caps to aid your retirement planning.

Superfund tax rates.

In Australia, complying superannuation funds benefit from tax concessions, with investment income typically taxed at a maximum rate of 15%, significantly lower than the income tax rate. This concessional tax rate encourages retirement savings via superannuation.

Different tax rates apply within a complying super fund for various income types and contributions:

Concessional contributions: 15%
Non-concessional contributions: 0%
Fund earnings (interest, dividends, capital gains, etc.): 15%
Capital gains on assets held for >12 months: 10%
Benefits paid to members aged >60 years: 0%

Understanding contribution caps.

Knowing your super contribution caps is essential because exceeding them results in additional tax.

Concessional contributions cap.

Concessional (pre-tax) contributions include employer contributions (such as salary sacrifice) and personal contributions claimed as a tax deduction. The current concessional contributions caps are:

2023-24: $27,500
2024-25: $30,000

Exceeding the concessional contributions cap results in the excess being taxed at your marginal tax rate. However, unused concessional contribution amounts can be carried forward under certain conditions. If your super balance is under $500,000 as of June 30th of the previous financial year, you can take advantage of this carry-forward provision.

Non-concessional contributions cap.

Non-concessional (post-tax) contributions include personal contributions made with after-tax income. The current non-concessional contributions caps are:

2023-24: $110,000
2024-25: $120,000

Capital Gains Tax (CGT) cap.

The CGT cap allows contributions to superannuation from capital gains without counting them against the non-concessional contributions cap. This lifetime limit applies to specific contributions from the sale of certain small business assets. The current CGT cap amounts are:

FY2023-24: $1,705,000
FY2024-25: $1,780,000

Super guarantee.

Employers must make super contributions for employees at least quarterly at the following rates:

FY2023-24: 11%
FY2024-25: 11.5%

Important for employers: Ensure your accounting software is updated by July 1st to reflect the 0.5% increase for correct super payments.

Income thresholds for government co-contributions.

The government co-contribution scheme helps boost superannuation for low to middle-income earners by contributing 50c for every $1 contributed, up to a maximum amount.

Lower income threshold.

Below this level, contributing $1,000 of after-tax income to your super results in a maximum government co-contribution of $500.

FY23-24: $43,445
FY24-25: $45,400

Higher income threshold.

Above this level, no government co-contribution is available.

FY23-24: $58,445
FY24-25: $60,400

Between the thresholds.

If your income falls between these thresholds, the government co-contribution gradually decreases as income increases, reducing by 3.33 cents for each dollar over the lower income threshold until it ceases at the higher income threshold.

Plan your retirement with Ascent.

Don’t neglect your superannuation — it’s never too early to start planning your retirement. For professional help in building a comfortable nest egg, reach out to Ascent Accountants. Our tailored advice can help secure your financial future. Contact us today for more information and practical steps forward.

Turn your main residence into an investment property

Wed, 15 May 2024 01:00:44 GMT

If you're considering upgrading your current home or downsizing, retaining your original property as an investment can be a strategic financial move. However, before you embark on this journey, it's crucial to understand the tax implications.

Here’s a comprehensive guide to ensure you're well-prepared.

Capital Gains Tax & main residence exemption.

Typically, any profit or loss from selling your main residence is exempt from CGT. However, if you convert your property into a rental, the exemption rules change. Here's what you need to keep in mind:

Initial investment property : If your property was first used as an investment and later became your main residence, you'll need to apportion any capital gains based on the time the property was used for each purpose.
Main residence first : If you first lived in the property and then rented it out, the CGT calculation will involve determining the property's market value at the time you started renting it. You only pay CGT on the gains from that point onward.
Non-residents : If you’re a non-resident when selling your property, you don't qualify for the main residence exemption. This is crucial for expatriates and those living abroad who maintain properties back home.

Six-Year Rule

Under the Six-Year Rule, you can treat your property as your main residence even after moving out. This allows you to keep the main residence exemption for up to six years if the property is rented. After six years, any gains during the rental period become fully taxable. However, you can only have one main residence at a time; if you buy another property to live in, you might lose your six-year exemption.

Here are two important considerations:

If you purchase a new residence, you might forfeit the exemption for the old property if it's rented.
If the property remains vacant (and you don’t own another residence), the exemption period is indefinite. However, recent changes in vacant land costs may make leaving the property empty a costly choice.

Taxable income & deductions

Rental income is fully taxable, but you can offset it with a variety of deductions. These include immediate deductions and spread deductions.

Immediate deductions : Interest on property loans, advertising costs for tenants, repairs and maintenance (after the property is rented), rates and taxes, body corporate fees, managing agent fees, and insurance premiums.
Spread deductions : Borrowing costs, depreciating assets, and capital works (building costs) are spread over time.

Note that repairs and improvements made before renting the property are not immediately deductible. They might qualify as depreciation, or they could form part of the capital costs, reducing the overall taxable capital gains later on.

Depreciation, capital works, and the 2017 depreciation deduction change.

Depreciation and capital works deductions offer substantial benefits. A qualified quantity surveyor can prepare a detailed depreciation report to outline the deductions available.

However, there have been changes in depreciation rules for previously used residential properties. As of July 1, 2017, Investors can no longer claim depreciation on second-hand assets (e.g., appliances or furniture) purchased with the property. Instead, these assets are factored into the overall capital gain or loss when selling the property.

Important considerations before renting out your home

Renting out your home involves a number of strategic, and even emotional, decisions. Here are a few key points to keep in mind.

Market timing : Consider whether it's the right time to rent out your property based on the rental market and property values. Talking with a trusted real estate agent ( Ascent Property Co ) can provide powerful insights and peace of mind here.
Property management : Decide if you'll manage the property yourself or hire a professional agent ( Ascent Property Co ).
Legal compliance : Understand your obligations as a landlord under local tenancy laws. If you choose to hire a professional property manager, they’ll assist here.
Insurance coverage : It vital to secure adequate insurance coverage that includes landlord-specific protections.
Tax planning : Every investment property is unique, and strategic tax planning will ensure you're maximising deductions and minimising future liabilities. The level of equity in your old house also needs to be reviewed to determine whether it’s more tax effective to rent out or sell.

Ready to turn your home into a lucrative investment?

Retaining your original property as a rental requires expert advice. Every property is unique, and tailored tax planning can ensure you're maximising your investment. Contact us to understand your potential financial gains and minimise any risks involved, and reach out to Ascent Property Co for tailored guidance and support on selling or leasing your property.

Rise in Superannuation Contribution Caps from July 1, 2024

Wed, 15 May 2024 00:55:02 GMT

Australia's superannuation contribution caps are set to increase for the first time in three years, giving individuals a significant opportunity to boost their retirement savings. Effective from July 1, 2024, the concessional contribution cap will rise from $27,500 to $30,000, while the non-concessional contribution cap will increase from $110,000 to $120,000.

In this article, we’ll explore what this change means for you and your future financial security.

Understanding concessional vs. non-concessional contributions.

Concessional contributions

These are typically made through salary sacrifice arrangements or by employers as part of the Superannuation Guarantee. They are taxed at a concessional rate, making them an attractive option for individuals looking to minimise their tax liabilities while growing their retirement savings.

Non-concessional contributions

Made with after-tax money, non-concessional contributions do not provide immediate tax deductions. However, they allow you to maximise your retirement savings within superannuation's tax-friendly environment.

Two key benefits of the changes.

Turbocharge tour retirement savings: Non-concessional contributions enable you to bring up to three years' worth of contributions into a single financial year. This "bring forward" rule allows you to contribute a lump sum to your superannuation, perfect for those who receive large payouts from asset sales or inheritances.
New limits: Under the new rules, you can contribute up to $360,000 from July 1, up from the previous $330,000 limit if you fully utilise the bring-forward provision.

Something to keep in mind…

Balance limitations still exist. If you have more than $1.9 million in superannuation, non-concessional contributions will be off-limits. Additionally, restrictions apply to the bring-forward rule if you have a super balance exceeding $1.68 million ($1.66 million next year).

Maximising Your Contributions

For those aiming to make the most of these increased caps, consider making a $110,000 contribution before June 30 and then adding a further $360,000 from July 1. This approach allows you to maximise your retirement savings potential within the concessional framework. Please note, you may need to review any salary sacrifice arrangements in place so that you can take advantage of the new $30,000 cap. If you need support doing any of this, just ask us .

The key takeaway.

These changes present a strategic opportunity to strengthen your retirement savings plan. By understanding the new caps and how they apply to your financial situation, you can make informed decisions that will help you enjoy a more comfortable retirement. To ensure your contributions align with your long-term goals and the current regulatory framework, contact us !

How to teach kids about money & budgeting

Wed, 15 May 2024 00:50:14 GMT

In WA, many families with mortgages and young children are facing increasing cost-of-living pressures. As parents, we try to protect our children from the stress of financial challenges. However, a new, more inclusive approach might be called for. Have you ever considered involving your children in your family’s budget planning?

While it’s essential not to overburden kids with financial stress, sharing the reality of managing a household budget — in a safe and age-appropriate way — can empower them with valuable skills for the future. Let’s explore it a little more.

Involving your kids in the family budget

Like many parents, you may be used to responding to your children's requests with "that’s too expensive”, or “we can’t afford that right now”.

Financial Advisor Dawn Thomas recently decided to take this conversation further with her 13-year-old son. Together, they did a cashflow course and constructed a new family budget. Through this process, Dawn’s teen learned to differentiate between fixed expenses (loan repayments, insurances, etc.), savings contributions, and discretionary spending (fun money!). He quickly grasped that reducing fixed costs would create more room for discretionary spending, helping make decisions based on importance and priorities.

Set your kids up for success! Here are the benefits of involving them.

Understand the value of money : Children gain a foundational, practical appreciation for the effort required to earn money and the importance of managing it responsibly.
Build financial literacy development : Kids learn fundamental concepts like saving, spending, and investing, which helps prepare them for financial independence and lead to better financial habits in adulthood.
Build decision-making & problem-solving skills : Help kids understand trade-offs and prioritisation when allocating limited resources. They learn to identify problems, assess available options, and make decisions to balance a budget.
Foster teamwork & communication : Discussing financial goals and challenges together enhances family communication and teaches kids to work collaboratively.
Set financial goals: Involvement in budgeting encourages them to set and strive toward achievable financial goals, reinforcing discipline, ownership, and patience.

Balancing financial transparency

We’re not saying parents should start allocating major budgeting tasks to children, but keeping them completely in the dark can leave them unprepared for managing money in the future. Here are four strategies that worked for many families:

Learn together: Take a cashflow course or read a book about money management together. The Glen James Spending Plan and Moneysmart offer free resources to get started with budgeting and expense tracking.
Reframe financial choices: Being honest about priorities builds trust, even if it may not be what your children want to hear. Instead of saying "We can't afford that," reframe it to "We're choosing to save for XYZ". This language shift helps children see budgeting as an intentional decision rather than a restriction.
Contextualise bills: When adding bills to your budget, explain what each one is for, giving kids a clearer picture of what it takes to run a household.
Share the knowledge: Have older kids explain the budget to their younger siblings. This reinforces their understanding and ensures the whole family is on the same page.

Do your kids a favour.

There’s no denying that being open with your kids about finances will benefit them in managing their money. By involving them in the process, you'll create a supportive environment where they can learn valuable budgeting skills while understanding your family’s financial journey (within reason).

If you’re looking for support in this area, we can put you in touch with an excellent, reputable Perth Financial Advisor. Get in touch to get started.

Nine ways to pay less tax

Wed, 15 May 2024 00:45:34 GMT

We’re already halfway through May, which means time is running out when it comes to money-saving tax initiatives.

But, if you act fast (very fast!), you can still take these proactive steps to minimise or defer your tax payments this financial year. Effective tax planning could save your business thousands, keeping more of your hard-earned money in your pocket.

If you’re expecting high or higher incomes and want to put strategies tin place, reach out to us in May or June so we can get everything arranged before EOFY.

Here's the list — how many are relevant to you?

1. Review debtors:

Income tax is due on invoices you've issued, even if they haven't been paid. Don't pay tax on invoices you know will never get settled; review your accounts receivable and write off any 'bad debts' immediately.

2. Review stock levels:

Your closing stock value affects business profit, and thus your tax. Higher stock values lead to higher taxable profits. Identify obsolete or old stock, and scrap or revalue it appropriately. Individual stock items can be valued at cost, market, or replacement value.

3. Review business assets:

Write off any obsolete assets and claim their remaining book value. Asset pooling can also boost depreciation expense. Though it may not fit all businesses, it's worth exploring.

4. Defer income:

If cash flow allows, consider delaying invoices until July. If the income isn't invoiced this financial year, it won't be taxed now. Ensure you have a budget to manage income and expenses during this period ( we're happy to assist with this ).

5. Review issued invoices:

Advance invoices for services in the next financial year might not count as earned income for this tax year. We can help you confirm if the income belongs to the next financial year, providing a clearer view during tax planning.

6. Pay the June quarter superannuation:

Did you know superannuation payments are deductible when made on time? If you can afford it, bring forward the 11% payment to June to claim the deduction immediately; this reduces your taxable income now rather than waiting a full year. The super guarantee rate will increase to 11.5% as of July 1, 2024.

7. Maximise your superannuation cap:

If superannuation is integral to your retirement plan, contribute as much as possible. We'll help you determine the contribution limits to make the most of this opportunity annually, particularly if you have a SMSF .

8. Employee Bonuses:

Bonuses become deductible once formally approved and not discretionary. Finalise and sign off on this year's bonuses to minimise taxable income.

9. Capital Gains Tax (CGT):

Reducing CGT is often about timing. Own assets for over 12 months before selling. If you have a capital gain, consider selling investments at a loss. Explore CGT rollover relief concessions with our guidance for significant savings.

Don’t pay tax office more than you need to.

If any of these apply to you, contact us as soon as possible (ideally in May or June) to schedule a consultation. We'll determine which of these preventative measures best apply to your unique circumstances and take it from there.

Mastering Capital Gains Tax

Mon, 15 Apr 2024 02:03:58 GMT

As property investment continues to be a lucrative venture for many Australians, understanding the intricacies of Capital Gains Tax (CGT) is crucial. Whether you're a seasoned investor or new to the real estate market, navigating CGT can significantly impact your investment outcomes.

An overview of CTG.

Calculating your capital gain.

Capital gains tax is payable when you sell a property at a profit. The ATO provides three methods to calculate your capital gain, allowing you to select the one that minimises your tax liability.

The discount method: Ideal for resident individuals who have held an asset for more than 12 months, this method offers a 50% discount on your capital gain, significantly reducing your taxable amount.
The indexation method: This method adjusts the cost base of your asset according to the consumer price index (CPI), effectively accounting for inflation. It's applicable only to assets acquired before 21 September 1999 and held for at least 12 months.
The "other" method: When assets are held for less than 12 months, the other method comes into play, calculating the capital gain by simply subtracting the cost base from the capital proceeds.

Understanding these options and selecting the most beneficial one can lead to considerable tax savings.

Timing is everything.

The timing of a CGT event, such as the sale of a property, is critical. It's the date you enter the contract, not the settlement date, that determines the income year in which you must report your capital gain or loss. This timing affects your tax liability and planning.

Inherited property (special rules apply).

Inheriting property comes with its own set of CGT considerations. The ATO provides guidelines for calculating the cost base of inherited property, which can differ from other assets. Understanding these rules is essential for accurate tax reporting and planning.

Apportioning gain or loss.

If you co-own an investment property, any capital gain or loss must be divided according to your ownership share. This apportionment ensures that each owner is taxed fairly based on their investment in the property.

Navigating CGT as a foreign resident.

Foreign residents for tax purposes face specific CGT considerations when selling residential property in Australia. The ATO's rules in this area can significantly impact your tax obligations, so it’s important to familiarise yourself with these regulations.

By consulting resources like the ATO's guide on foreign residents and main residence exemptions, you can navigate these complexities with greater confidence and clarity.

Exemptions.

If your property has been used to earn income and qualifies for a CGT exemption or rollover, remember to make the appropriate election in your tax return. This is crucial for taking advantage of any tax reliefs or exemptions available to you.

The main residence exemption.

Your primary home is generally exempt from CGT — as long as it truly serves as your main residence. You can extend this exemption for up to six years if you rent out your home, or indefinitely if it's not used to generate income. However, this exemption cannot apply to more than one property at the same time, with certain exceptions during transitional periods, such as moving homes.

Income-producing use (partial exemptions & rules).

Using part of your main residence to generate income, such as renting out a room, can affect your eligibility for the full main residence exemption. If you acquired the property after 20 September 1985 and meet specific criteria, including the interest deductibility test, you might only qualify for a partial exemption.

Moreover, if your property began generating income after 20 August 1996, you need to know its market value at that time to accurately calculate any capital gain.

The importance of diligent record-keeping.

Effective CGT management hinges on the maintenance of comprehensive records. These include, but are not limited to:

Contracts of purchase and sale.
Receipts for stamp duty.
Records of major renovations.
Any other costs associated with acquiring, holding, and disposing of the property.

Such records must be kept for at least five years after the sale of the property or the year in which you declare a capital gain. For capital losses, the records should be retained for an additional two years after they have been offset against a capital gain. This disciplined approach not only facilitates accurate CGT calculations but also ensures compliance with ATO requirements.

Real-world CGT scenarios.

To illustrate how these principles apply in practice, let’s examine three snapshot case studies.

1. Main residence for part of the ownership period.

Consider Vrinda, who bought a house for $350,000 and lived in it until she moved and began renting it out. When she sold the property, she used its market value at the time it started generating income as part of her cost base, leading to a capital gain. Opting for the discount method, she was able to halve her taxable gain, showcasing how understanding CGT rules can lead to significant tax savings.

2. Renting Out Part of Your Home

Thomas's situation, where he rented out part of his main residence, highlights another aspect of CGT. By calculating the proportion of his home used to generate income, Thomas was able to determine the taxable portion of his capital gain accurately. This example underscores the need to understand partial exemptions and the impact of income-generating use on CGT obligations.

3. Sale of a Rental Property

Brett's experience with renovating and selling a rental property illustrates the complexities of determining the cost base and the final capital gain. By carefully accounting for renovations and other costs, Brett was able to accurately calculate his CGT obligation, choosing the discount method for the most favorable outcome. Brett’s scenario emphasises the significance of detailed record-keeping and strategic planning in managing CGT liabilities.

Call in the experts.

Understanding the intricacies of Capital Gains Tax helps property investors maximise returns and minimise tax liabilities. By choosing the right method, keeping detailed records and applying CGT calculations effectively, investors can navigate the complexities of property investment with greater ease and efficiency.

We’re here to help with that as well. Ascent Accounting can provide invaluable personalised advice, assistance, and insights for your situation. To get started, contact us today .

Starting & understanding PAYG instalments

Mon, 15 Apr 2024 01:57:54 GMT

Managing taxes can be daunting, especially when juggling business and investment income. Today’s guide aims to demystify the PAYG instalment system, helping you navigate through its nuances to ensure a healthy financial stance for your business or investment ventures.

Introduction to PAYG instalments.

PAYG instalments are a tax system designed for individuals, businesses, and investors to manage their income tax obligations by making regular payments throughout the year. This proactive approach to tax management helps in avoiding large lump sum payments at the end of the financial year, assisting in better cash flow management and financial planning. Almost everyone uses PAYG!

A note on entry thresholds & requirements.

The ATO determines your requirement to pay PAYG instalments based on the information in your latest tax return, focusing on your gross business and investment income. Various thresholds apply, depending on whether you are an individual, trust, company, or super fund, with specific criteria such as instalment income, tax payable on the latest assessment, and estimated notional tax.

How PAYG instalments work in three clear steps.

Enter the system: Upon meeting the criteria, the ATO will notify you of your automatic entry into the system through various communication channels, including myGov, online services for business, or traditional mail, based on your registered preferences. Entry into the system can also be upon request (via MyGov for individuals or the ATO for businesses) if you anticipate crossing the income threshold. It’s important that your myGov for the PAYG instalments to pay each quarter.
Make instalment payments: Payments are typically made quarterly and are calculated based on your business or investment income, aiding in spreading out your tax liabilities over the year. Payments must be made by July 28, October 28, January 28 and April 28 each year.
Be reconciled: The instalments paid are adjusted against your total tax liability when you file your annual tax return at the end of the financial year, potentially leaving you with minimal or no additional tax to pay.

The difference between PAYG instalments & PAYG withholding.

PAYG instalments and PAYG withholding are different components of Australia's tax system, designed to manage tax obligations in different contexts. However, they’re often confused for one another. Understanding the differences between PAYG instalments and PAYG withholding is crucial for businesses and individuals to ensure compliance and optimal tax management.

Application. PAYG instalments apply to taxpayers with business or investment income, whereas PAYG Withholding applies to payments made to employees and certain contractors.
Purpose. Instalments help manage expected tax liability on non-withheld income, while withholding ensures tax on wages and similar payments is collected throughout the year.
Control. Taxpayers have some control over their PAYG Instalment amounts (e.g., they can vary instalments if their income changes), but they do not control the amount withheld under PAYG Withholding; this is determined by tax tables and legislated rates.

Real world examples.

Case study 1: Rob — Individual investor with rental income.

Rob owns three investment properties and anticipates that the rental income from these properties will amount to $55,000 for the financial year. Besides rental income, he doesn’t have any other sources of income. However, he incurs expenses related to the maintenance of these properties, including repairs, real estate fees, and gardening. These total $5,500 .

Managing his tax obligations efficiently, Rob decides to utilise PAYG. He uses the PAYG instalments calculator available for individuals to estimate his tax liability:

After entering his total investment income of $55,000 and deducting his allowable expenses, Rob's taxable income comes down to $49,500 .
The calculator estimates that Rob's tax for the financial year on his investment income would be $7,544 .
As such, Rob voluntarily enters the PAYG instalment system to manage this liability. By dividing the estimated annual tax by four, Rob calculates his quarterly instalments to be $1,886 each.
This allows Rob to plan ahead for his tax payments, ensuring that he doesn't face a large tax bill unexpectedly and can manage his cash flow more effectively throughout the year.

Case study 2: Danielle — sole trader business income.

Danielle operates her business as a sole trader and estimates her business income will be $100,000 for the upcoming financial year. Danielle is also entitled to allowable business tax deductions amounting to $10,000 , which she plans to claim.

To prepare for her tax obligations, Danielle uses the PAYG instalments calculator for individuals.

She inputs her estimated business income and deductions, resulting in an adjusted taxable income of $90,000 .
Based on these figures, the calculator estimates her PAYG instalment amount to be $20,437 for the year.
To manage cash flow and ensure she has enough funds to cover her tax obligations, Danielle divides the annual instalment amount by 52 weeks, setting aside $393.02 each week.

In doing so, she comfortably accumulates the necessary funds for her quarterly tax instalments. When Danielle receives her quarterly business activity statement (BAS), she’s well-prepared to meet her PAYG instalment payment. Upon lodging her annual tax return, the PAYG instalments she has paid throughout the year significantly reduce her final tax liability, leaving her with little to no additional tax to pay.

The key takeaway.

Utilising the PAYG system is the easiest way to avoid a huge tax bill at the end of the year. Whether you’re an individual or a business, Ascent Accountants is committed to guiding you through the intricacies of this instalment system so you can navigate your tax obligations confidently.

Remember, accurate planning and regular payments can significantly ease your tax burdens, providing peace of mind and financial stability. To get started with PAYG, contact us !

Understanding compulsory repayments for study & training support loans

Mon, 15 Apr 2024 01:45:36 GMT

Study and training support loans can be daunting. However, understanding how compulsory repayments work can go a long way in giving you clarity around it all, as well as peace of mind. In this article, we'll explore how and when these repayments are made through the income tax system, providing clarity and guidance for those navigating educational financial commitments.

How repayments works.

Understanding compulsary repayments.

Compulsory repayments for study and training support loans are integrated into the income tax system — that actually makes the process pretty straightforward for you. For example, when you lodge your tax return, you don't need to supply any loan information because it’s already sitting there ready to go.

If your repayment income exceeds the minimum threshold, the ATO calculates your compulsory repayment and includes it in your Notice of Assessment. This calculation is based solely on your income (without consideration for your parents' or spouse's earnings).

Importantly, the rate of repayment scales with income. This means that, the more you earn, the higher your repayments are.

Making voluntary repayments.

When in the financial position to do so, some people like to make voluntary repayments. Although study and training loan repayments don’t have interest, it’s indexed each year and increases with inflation. If voluntary repayments are made before June 30 each year, those payments are not subject to indexation. Additionally, voluntary repayments help pay off the debt faster, and this gives a lot of people peace of mind.

When you won't have to repay.

In certain situations, you may not have to compulsory repayments. For example, if you have a spouse or dependants and your family income is below a certain threshold, making you eligible for a reduction or exemption from the Medicare levy, compulsory repayments may not apply. In these cases, you can inform your employer via a Medicare Levy Variation Declaration Form to prevent additional withholdings from your pay.

Regarding your employment.

Advising your employer.

Whether starting a new job or already employed, you have to inform your employer if you have a study or training support loan. Your employer should provide you with the appropriate paperwork to disclose this.

Under the Pay As You Go (PAYG) withholding system, employers withhold additional amounts from your income to cover the compulsory repayment. Once your loan is fully repaid, updating your withholding declaration ensures no further deductions are made.

Understanding additional amounts.

The additional tax withheld by your employer is remitted to the ATO and applied to your loan account after you've lodged your tax return, and a compulsory repayment has been calculated. This ensures that repayments are accurately aligned with your income, keeping everything fair and affordable.

For business or investment income earners.

For those earning business or investment income, the PAYG instalments system allows for regular payments towards your expected tax liability, considering any study or training loan debt when calculating your instalment amount and rate. This flexibility accommodates personal circumstances, allowing variations in instalment amounts or rates.

The ATO's commitment.

The ATO provides accurate, consistent, and clear information to help you understand your rights, entitlements, and obligations. Their commitment extends to taking responsibility for any incorrect or misleading information provided, ensuring you can rely on the guidance provided.

We're experts on PAYG and study and training loans.

Understanding compulsory repayments for study and training support loans is crucial for managing your educational debts. Through the income tax system, the process is made as straightforward as possible, but a little help from an expert goes a long way. If you’re looking for support in this area — or anything tax-related for that matter — we’ll help you navigate financial responsibilities confidently. Get in touch to get started.

A guide to navigating the sale of property from the deceased

Mon, 15 Apr 2024 01:28:30 GMT

Inheriting a deceased estate — property and belongings from someone who has passed away — often marks a challenging, emotional, and complex period. The sale of such a property, in particular, comes with many legal intricacies and requires a thorough understanding of the process. The journey to legally transferring ownership and proceeding with the sale involves multiple critical steps as well as legal expertise and guidance.

Let's set the scene.

Understanding the legal foundations.

The process starts by obtaining the necessary legal documents: probate or Letters of Administration, contingent upon whether the deceased left a Will. Probate serves as a legal confirmation of the Will's validity, permitting the executor to proceed with estate management. In the absence of a Will, Letters of Administration are essential for an appointed individual to take charge of the estate.

A step-by-step process.

Attain probate or Letters of Administration: The initial step requires securing probate from the Supreme Court, if a Will exists. Without a Will, one must apply for Letters of Administration — a task that, while complex, equips the administrator with equivalent authority to that granted by a Will.
Transfer title: Following the acquisition of the necessary legal standing, the next move involves updating the property title with the executor or administrator's name.
Beneficiary transfers or sale: The final stage encompasses either transferring the property to the beneficiaries or selling the property and distributing the proceeds among them.

The challenges of legal proceedings.

Obtaining probate can be time-consuming, but the absence of a Will complicates matters further. Nonetheless, once Letters of Administration are secured, the path to selling or transferring the property is the same as the process followed when a Will is present. The critical difference lies in the application for Letters of Administration, which demands the consent of all beneficiaries under the Administration Act 1903.

Preparing for sale: consent & considerations.

Even with a Will, selling a property from a deceased estate doesn't always proceed seamlessly. Securing the consent of all entitled parties is a prerequisite for any sale or transfer not explicitly outlined in the Will or under the Administration Act 1903.

It’s a good idea to prepare a deed of family arrangement, detailing agreed terms concerning the property, which requires the signatures of all beneficiaries. This legal document (best crafted by a Lawyer), aims to mitigate potential disputes and streamline the sale process.

The role of professionals.

In case it’s not obvious at this point, this process is extremely complicated, and often, emotionally draining. Given the intricate legal landscape surrounding deceased estates, enlisting professional help is highly recommended. Legal professionals, including solicitors and settlement agents, are invaluable resources for navigating the procedural complexities, ensuring all documentation is meticulously prepared and legally sound.

Let Ascent Accountants & Ascent Property Co help you during this challenging time.

Selling a property from a deceased estate is full of legal challenges and procedural nuances. Each step requires careful consideration and expert guidance, and we have a network of legal experts ready to ease the burdens here. Ascent Property Co can also provide you with estimate values and help sell the property.

Contact us and we’ll connect you with the right professional, facilitating a smoother transition during a difficult time.

Five things to consider before starting a SMSF

Thu, 14 Mar 2024 01:46:37 GMT

Deciding to establish a Self-Managed Superannuation Fund (SMSF) often comes as a reaction to a specific investment opportunity or desire. It could be acquiring commercial property for your business, diving into the cryptocurrency market during a downturn, or investing in that often-discussed unlisted property fund.

The motivations are varied, however, setting up an SMSF isn't solely for those nearing retirement or belonging to a particular demographic. An SMSF is a viable option for individuals at various income and investment levels.

The question is: is an SMSF right for you?

Five essential considerations for those contemplating an SMSF.

1. Age is just a number.

Age does not determine the suitability of setting up an SMSF. Whether you're in your 30s, eager to proactively manage your retirement savings, or in your 60s, seeking control over your retirement funds, the appropriateness of an SMSF is determined by your specific needs and circumstances. What's imperative is having a well-thought-out plan tailored to your personal goals.

2. Cost & control.

While an SMSF offers greater control over your retirement savings, it also incurs costs, notably the annual audit fee. These costs can significantly impact younger individuals or those with smaller superannuation balances. The Australian Securities and Investments Commission (ASIC) has indicated that an SMSF with less than $500,000 might yield lower returns, after expenses and taxes, compared to a regulated superannuation fund. However, having a strategic reason for choosing an SMSF can justify the costs, regardless of your super balance.

3. It’s a big commitment.

Managing an SMSF requires dedication, and for some, it’s too much. Significant time and effort must be invested in researching and making informed investment decisions. For those in their 30s, the idea of taking active control of your super might be appealing, but it's crucial to consider whether you have the time or resources to commit. If not, exploring other avenues for engaging with your retirement planning might be more suitable.

4. Family dynamics.

Including family members in your SMSF to share costs, especially audit fees, might seem advantageous. Yet, differing investment goals and retirement planning needs can introduce conflicts that could easily be avoided with a different superfund structure. Once someone is a member of an SMSF, removing them can be complicated, so it's essential to ensure that inclusion decisions align with your overall plan from the beginning.

5. Know your “why”.

Establishing an SMSF shouldn't hinge on your age, marital status, or family involvement, but rather on a clear and personal "why". If you have a solid reason for starting an SMSF, it might be the right choice for you. Otherwise, sticking with your current retirement planning approach may be the best path forward.

Call in the experts.

Making an informed decision on whether an SMSF is the right choice for your retirement planning strategy is best made with a pro on your side. We have a network of trusted individuals we can connect you with so you can ensure a SMSF will set you up for success. To secure your future with an SMSF, contact us today .

Understanding testamentary trusts

Thu, 14 Mar 2024 01:40:51 GMT

As we approach retirement, the welfare of our loved ones is often a big part of planning ahead. While not everyone considers this a primary concern, for those who do, the potential for their hard-earned legacy to be squandered or misappropriated by beneficiaries is a real worry.

This concern is amplified when considering beneficiaries who may be prone to overspending, are in unstable relationships, or are dealing with significant health challenges.

The prospect of a family fortune vanishing into the hands of outsiders is a daunting one. Testamentary trusts could be the answer.

The solution: testamentary trusts.

Fortunately, there is a strategic approach to mitigating these risks, which not only preserves your estate but also offers substantial tax advantages. This strategy centers around the use of a testamentary trust — a legal mechanism that only comes into effect upon your passing, following the granting of probate.

A testamentary trust is embedded within your will, with your estate bequeathed to the trust rather than to individuals. This setup provides a layer of protection against potential financial pitfalls such as bankruptcy and legal disputes arising from family law proceedings.

The Role of a Lawyer

A will that includes a testamentary trust is not a do-it-yourself task. It requires the expertise of a lawyer — one with experience in estate planning. The complexity of establishing a testamentary trust necessitates a detailed trust deed, which outlines the operational rules of the trust, the forms of investment it may engage in, and identifies the key players - including beneficiaries and trustees.

Tax Benefits and Protections

One of the hallmark advantages of a testamentary trust is its tax efficiency, particularly concerning the distribution of income to minors. Children under 18 who are beneficiaries of a testamentary trust are taxed at adult rates, allowing for a significant income distribution before tax liabilities arise. This can be particularly beneficial for funding education or other expenses tax-free.

The key takeaway.

In essence, testamentary trusts are a great solution for those concerned about the future stewardship of their estate. By incorporating a testamentary trust into your will, with the guidance of a skilled lawyer, you can provide a safeguard for your assets against unforeseen financial risks.

This strategic approach not only protects your legacy but also affords significant tax advantages, ensuring that your descendants can benefit fully from your life's work. If you’d like support in this area, please don't hesitate to contact us today .

Should you buy/sell a property off-market?

Thu, 14 Mar 2024 01:33:46 GMT

Thinking of selling? You probably know the typical scene involves properties being listed, advertised, and showcased through open houses. However, a different, quieter path exists for homeowners and buyers alike, offering exclusivity and a smoother journey from listing to purchase.

This is the off-market sale, a unique approach where properties are sold without public listings, broad advertising, or the traditional open house fanfare.

Understanding off-market sales.

The essence of an off-market sale lies in its discretion and exclusivity. According to Damian Collins, Managing Director of Momentum Wealth, the fundamental difference in off-market is the absence of public marketing. This private nature makes off-market deals more exclusive and potentially less stressful, as the selling and buying process is not exposed to the broad public.

However, Collins also notes that buyers must understand market values and remember that the asking price in off-market deals is not publicly tested. In other words, don’t automatically categorise an off-market property as a bargain…

Why choose the off-market route?

Cath Hart, CEO of REIWA, points out that privacy concerns, avoiding the hassle of preparing for home opens, and the luxury of waiting for the right offer are among the top reasons people opt for off-market sales. Sellers might not want the public to know they are selling or wish to test the market discreetly to see where buyers see value without the pressure of a formal listing.

Pros and cons for buyers and sellers.

Off-market sales have advantages and disadvantages for both parties. For buyers, a key benefit is accessing exclusive opportunities that aren't available through conventional channels, along with a more personalised and flexible negotiation process. This can lead to more favourable terms for the buyer. However, the lack of advertising means potential buyers may be unaware of the property's availability, reducing the competition but also the visibility.

For sellers, a key “win” is the lack of hassle regarding marketing and advertising efforts. This makes listing generally more affordable. However, this also means the property’s visibility is far lower, and the home may not sell as fast as a result.

The importance of trust and due diligence.

Off-market transactions call for a high level of trust between the buyer and seller. Collins warns that the negotiation process might lack the transparency of advertised sales, emphasising the importance of due diligence and professional expertise to avoid overpaying for a property.

Going off-market? Let us help with the tax stuff.

For those looking to buy or sell outside the public eye, understanding the nuances of off-market transactions is key to navigating this less-travelled road successfully. For example, do you know what your tax obligations are here? At Ascent Property Co, we'll help you make the most out of off-market real estate deals and give sound advice around the tax implications. Contact us today .

Capital Gain on the sale of a rental property

Thu, 14 Mar 2024 01:22:01 GMT

Selling a rental property in Australia can have significant tax implications, particularly concerning Capital Gains Tax (CGT). Understanding your CGT obligations is crucial for property investors to navigate the financial outcomes of such transactions. This guide delves into the essentials of CGT on rental property sales, providing clarity and guidance to property owners.

Understanding Capital Gains Tax (CGT).

CGT is a tax on the profit (capital gain) you make from selling or disposing of an asset, such as real estate, which has increased in value. The key to CGT is determining whether you've made a capital gain or loss upon the sale of your rental property, which largely depends on when the property was acquired.

Properties Acquired Before 20 September 1985

If you purchased your rental property before 20 September 1985, you're in luck. Such properties are exempt from CGT, reflecting the tax's introduction date. However, this exemption comes with a caveat. Any major capital improvements made to the property after 19 September 1985 may be subject to CGT if they meet specific criteria, such as constituting more than 5% of the sale proceeds or exceeding the improvement threshold.

These improvements are considered separate CGT assets, and their cost base is compared to the attributable sale proceeds to calculate the capital gain or loss.

Properties Acquired On or After 20 September 1985

For properties purchased on or after this date, the scenario changes. You may incur a capital gain or loss when you dispose of the property. The difference between the sale price (capital proceeds) and the cost base (essentially, what you've invested in the property) determines whether you've made a gain or loss. A sale price higher than the cost base results in a capital gain, while a sale price lower than the reduced cost base may lead to a capital loss.

Calculating the Cost Base.

The cost base of a property includes various elements. It's important to note that certain deductions and adjustments apply, especially concerning depreciable assets and capital works deductions, which can affect the cost base and, subsequently, the CGT calculation.

Purchase Cost: The total money or property value given to acquire the asset.
Incidental Costs: Expenses related to acquiring, selling, or disposing of the asset, such as stamp duty and legal fees.
Ownership Costs: Ongoing costs like insurance, rates, and land taxes. However, for CGT purposes, the reduced cost base substitutes ownership costs with the balancing adjustment amount related to depreciable assets.
Improvement Costs: Costs incurred to enhance or preserve the property's value or to install or relocate assets.
Title Defense Costs: Legal fees spent defending your property's ownership, except when they've been claimed or are claimable as tax deductions.

Exclusions for Certain Costs

Certain costs associated with your property cannot be included in your CGT calculations if:

For All Properties: You have already claimed, or are eligible to claim, a tax deduction for these costs in any tax year. This eligibility remains as long as the option to amend the relevant income tax assessment has not expired.
For Properties Acquired Before 21 August 1991: In addition to the general exclusion criteria, costs associated with assets acquired before 21 August 1991 are specifically excluded, reflecting historical tax legislation nuances.
For Properties Acquired After 31 May 1997: Costs are excluded if you have claimed, or can claim, a tax deduction for them in any income year. This is particularly pertinent to assets acquired post-31 May 1997, aligning with specific tax rulings introduced at that time.

Calculating the Reduced Cost Base

Incorporate All Cost Base Elements With Modifications. Include all original cost base elements but replace the third element (costs of owning the CGT asset) with the balancing adjustment amount. This adjustment is typically related to the sale of depreciable assets within the property, providing a more accurate reflection of your investment's cost.
Exclude Indexation. Avoid applying indexation to the reduced cost base elements. This simplification ensures a straightforward calculation by maintaining current dollar values without adjusting for inflation over time.

Accounting for Capital Works Deductions

If your property was acquired after 13 May 1997, capital works deductions play a significant role in your CGT calculation. Deduct any capital works deductions you have claimed or are entitled to claim. This adjustment is necessary whether you've already claimed these deductions in any income year or if the option to claim them remains open due to an unexpired amendment period for your tax assessment.

Managing Depreciating Assets

Depreciating assets within your property are treated distinctly from the property itself for CGT purposes. When calculating your capital gain or loss, you must exclude the value of depreciating assets at both the time of purchase and sale from the property's cost base and capital proceeds.

Planning for CTG with Ascent Accountants.

Effective planning and understanding of CGT can significantly impact your financial outcomes when selling a rental property. Awareness of how to calculate your capital gain or loss, considering all relevant costs and improvements, is essential. Additionally, being familiar with tax legislation and seeking professional advice will help maximise your investment's potential, while minimising its tax liability.

You deserve peace of mind when it comes to selling your property. To talk about this, contact us today .

Understanding your ATO lodgement & payment requirements (plus key dates!)

Wed, 14 Feb 2024 05:12:47 GMT

As a business owner, understanding and staying on top of your ATO requirements is crucial. This involves lodging forms, reporting to the ATO, and making ATO payments — but it doesn't have to be a daunting task. At Ascent Accountants, we're here to make navigating the tax landscape as seamless as possible. Plus, the Tax Office sends notifications when forms or correspondence are added to your myGov account.

Gone are the days of drowning in paper forms and reminders cluttering your mailbox. The Tax Office has embraced the digital age, and now, all correspondence, forms, and reminders are sent straight to your myGov account. It's recommended that you setup your myGov account for your business to access these records. However, you should now your key lodgement and payment dates so you don’t miss anything.

Key dates to remember (or better yet, write down).

1. Tax Returns (for the year ending 30th June)

With Ascent Accountants by your side, you have until May 15th to lodge and pay your taxes stress-free.
If you prefer the DIY approach, you've got until October 31st to get it done.
If you have outstanding tax returns from previous years, October 31st is your deadline.
Started a new entity in the previous 12 months? You've got until February 28th to get that entity lodged.
For those high earners out there, give yourself until April 1st to lodge and pay the 30th June tax return.

2. BAS lodgements & payments

It may help to think of your Business Activity Statements, in terms of seasonal deadlines:

September quarter: due by November 25th .
December quarter: due by February 28th .
March quarter: due by May 25th .
June quarter: due by August 25th .

3. Monthly Instalment Activity Statements or Monthly Business Activity Statements lodgements & payments

Remember to lodge and pay by the 21st of the following month .

July: must be lodged and paid by 21/8.
August: must be lodged and paid by 21/9.
October: must be lodged and paid by 21/11.
November: must be lodged and paid by 21/12.
January: must be lodged and paid by 21/2.
February: must be lodged and paid by 21/3.
April: must be lodged and paid by 21/5.
May: must be lodged and paid by 21/6.

4. Superannuation payments to employees on their wages

Make sure your employees' super is squared away:

September quarter: paid and received by October 28th .
December quarter: paid and received by January 28th .
March quarter: paid and received by April 28th .
June quarter: paid and received by July 28th .

Feeling overwhelmed?

Ascent Accountants is here to lend a helping hand. Whether you need clarification on key dates, assistance with obtaining forms, or expert advice on your entity's obligations, we've got you covered. Even though we don't receive your forms automatically, we can log onto your Tax Office account and lodge on your behalf, thanks to our Tax Agent portal.

Your peace of mind is our top priority. To talk about this and more, contact us today .

New Client-Agent linking requirements from the ATO

Wed, 14 Feb 2024 05:12:45 GMT

Get ready for a game-changer in how the ATO safeguards you against fraud and identity theft.

The ATO has made some major upgrades rolling out from 13 November 2023 that will strengthen the way we interact with clients and the ATO. This change is all about strengthening security in the ever-evolving digital landscape. We're tightening the screws to ensure that every connection between us, our clients, and the ATO is ironclad (staying one step ahead of nefarious activities is non-negotiable!).

What’s the change?

As of November 13th, all types of entities with an ABN (excluding sole traders) must nominate us (or any new tax agent, for that matter) as their agent before we can add them to our client roster. Say “hello” to the new agent nomination feature in Online Services for Business!

What you need to do.

For those already familiar with the ATO’s Online Services , it's three simple steps: Log in, nominate, notify.

If you’re not familiar with Online Services , you simply need set up your myGovID (if you haven’t already) and then link that ID to your ABN. Once you’re set up, you can complete the nomination in Online Services.

And for those without a myGovID or an ABN , you can contact the ATO through their Secure Practice Mail. For information on when you should contact the ATO about this and how, see this  troubleshooting guide .

If you have any hiccups along the way, pick up that phone and dial 13 28 66. Select option 1 and state that you want to nominate a tax agent, then quote our Tax Agent Number.

Let’s do this!

In essence, this new client-agent link is more secure than ever. A little set up goes a long way, so embrace the change, and let's navigate this digital frontier together!

10 effective ways to stay motivated & reach financial goals

Wed, 14 Feb 2024 05:12:41 GMT

Managing finances effectively and reaching financial goals requires more than just knowing the numbers; it demands motivation and dedication. For a lot of people, that doesn’t come naturally. And that’s okay!

Whether you're aiming to save for a dream vacation, buy a house, or achieve financial independence, staying motivated is key to success, and we’re here to support you. Here are 10 actionable steps to help you stay motivated on your financial journey.

1. Set clear goals.

Begin by defining specific, realistic, and achievable financial goals. Whether it's saving a certain amount of money, paying off debt, or investing for retirement, having a clear sense of what you want to accomplish provides direction and purpose.

2. Break goals into small actionable steps.

Divide your larger financial goals into smaller, manageable tasks. Say your goal is to put $500 into savings each month — great! How are you practically going to do this? This approach not only makes your goals less daunting but also allows you to celebrate smaller victories along the way, keeping motivation levels high.

3. Find your "why".

Understanding the reasons behind your financial goals is crucial for maintaining motivation. Whether it's providing security for your family, achieving financial freedom, or pursuing your passions, connecting your goals to your values can fuel your determination.

4. Develop a routine.

Establish a consistent routine that includes dedicated time for managing your finances. For example, a common and effective routine people engage is immediately delegating funds to separate accounts whenever they get paid ($200 into savings, $600 into a bill account, $1,000 to the mortgage, and so on). Consistency is key!

5. Find inspiration & guidance.

Seek inspiration from books, podcasts, articles, or individuals who have achieved financial success. Learning from the experiences and strategies of others can provide valuable insights and motivation to keep pushing forward.

You should also aim to surround yourself with supportive and positive individuals who believe in your ability to financially succeed. Their encouragement and constructive feedback can bolster your confidence and motivation during challenging times.

6. Stay accountable.

Share your financial goals with a trusted friend, family member, financial professional, or mentor who can hold you accountable for your progress. Regular check-ins and discussions about your financial journey can help you stay on track and motivated. Ideally, you want someone who can give you some tough love and real talk if you need it…

7. Reward yourself.

Set up a reward system to celebrate milestones and achievements along the way. Whether it's treating yourself to a small indulgence or splurging on a special purchase, rewards serve as incentives to maintain momentum and motivation.

8. Embrace failure.

You won’t get it right every time, and that’s okay. Setbacks and failures are opportunities for learning and growth, not reasons to give up . Embracing failure as a natural part of the process builds resilience and strengthens your determination to overcome obstacles.

9. Stay flexible.

Be willing to adapt your goals and strategies as circumstances change — which they inevitably will. From unexpected health costs to rising interest rates, emergency flights, sudden home maintenance needs, and more, being adaptable is essential. Navigating unexpected challenges and setbacks with flexibility allows you to adjust course while staying focused on your ultimate objectives.

10. Monitor progress.

Keep track of your financial progress using apps, spreadsheets, or journaling to measure your achievements. Seeing how far you've come can boost your confidence and motivation, inspiring you to continue working towards your goals.

Consult a financial advisor.

Staying motivated to effectively manage finances and reach financial goals requires clarity, commitment, and resilience. Remember to celebrate your progress along the way and stay focused on the ultimate reward of financial security and freedom. With dedication and perseverance, you can turn your financial aspirations into reality.

If you’d like support in this area, please don't hesitate to contact us . We can connect you with an exceptional financial advisor from our inner circle.

Home buying & selling contracts: understanding clauses

Wed, 14 Feb 2024 05:12:33 GMT

Buying a home (or selling one) is one of the most significant decisions in life. Amidst the excitement, it's essential to approach the process with a critical eye — understanding the intricacies of your buyer’s or seller’s contract is paramount. We’re going to explore the importance of clauses, their role in protecting you, and the necessity of legal comprehension in the homeowner journey.

The importance of clauses.

When examining a home contract, it's not uncommon to ask for modifications before finalising the deal. You’re entitled to do so, and your real estate agent may even advise it.

Including specific clauses empowers you to address concerns and ensure inspections or necessary fixes are completed before ownership transfers. These may include inspections for structural integrity, termite assessments, or verification of council approvals (particularly critical in WA).

The role of real estate agents.

While you can propose clauses as a buyer, you can’t breach legal requirements. Real estate agents typically aid in safely incorporating these clauses into the contract, offering guidance on pertinent additions. Real estate companies commonly provide standard forms for additional clauses, streamlining the process.

However, buyers often forgo legal counsel, relying solely on the agent's assistance. Agents, bound by ethical standards, should highlight crucial property aspects and propose standard conditions, such as ensuring the functionality of utilities and conducting structural assessments, but they don’t always.

Make sure you know what you’re reading and agreeing to before you sign!

You can add an extra layer of protection and scrutiny by seeking third-party legal advice on your contract.

Understanding what you’re looking at is paramount as it’s common for misunderstandings may arise. For instance, a structural report only obligates fixes to structural defects, not cosmetic issues, and many people don’t know this until they’ve already signed.

Legal considerations.

Even if you’re an experienced home buyer or seller, understanding your contract's nuances is crucial because WA lacks a cooling-off period. This calls for thorough scrutiny before signing — after all, no two contracts are the same. Attempting to exit the contract by failing to secure financing is also prohibited. Once signed, buyers must diligently fulfill conditions to finalise the transaction.

Understanding the risks.

In navigating home contracts, a grasp of clauses and legal obligations is invaluable. Seeking legal counsel offers an added layer of assurance, especially for those unfamiliar with the intricacies of real estate law. Ultimately, informed decision-making is key to a successful home-buying journey.

We can help with the tax implications and responsivities that comes with buying or selling property. To get started, contact us today .

Bonds — Are They Worth It?

Mon, 15 Jan 2024 01:00:41 GMT

If you’re interested in investments, you’re probably seeing a lot of hype around the classic asset class of "fixed interest".

Fixed interest, loosely referred to as bonds, is an asset class many Australians don't know much about.

Whether bonds are a good investment for you depends on your financial goals, risk tolerance, and overall investment strategy. Bonds can be a valuable addition to an investment portfolio for several reasons, but their suitability varies from person to person.

Bonds and term deposits: what’s the difference?

Most people get this asset type confused with term deposits. A term deposit is locking up money for a term (usually months or years) with a bank, in return for a guaranteed interest rate. Fixed interest (or bonds) is one of four main investment asset classes. Going from low risk to high, they are: cash, fixed interest, property, and shares.

Bonds in action.

Bonds are financial instruments that represent a loan made by an investor to a borrower. They are a form of debt security, and when you invest in bonds, you are essentially lending your money to the issuer in exchange for periodic interest payments and the return of the principal amount at the bond's maturity date.

Bonds can be cheaper than borrowing from a bank and come without the restrictions banks love to put on loans.

Coupons.

Banks issue bonds for a certain period (such as five, seven or 10 years), make regular cash payments (looks like interest, but is referred to as “coupons”), and then repay the debt at the end of the term.

While the coupon paid on the bond might be 4%, the value of the bond might have fallen 6%, giving a -2% return for the year. The same in reverse — the value of the bond could rise by 6%, making a total return for the year of 10%. But, bonds aren't as volatile as shares or property, which can move more dramatically in shorter periods.

Cash.

Cash is when you give your money to the bank, and the bank decides who to lend it to. Bonds are riskier than cash because they’re often issued at $100, usually in $500,000 lots. But, the value of the bond will move up and down, depending on the health of the company/government issuer, interest rates and inflation, and overall economic health. As a result, they can have negative returns.

Bonds at the moment.

Through an investment cycle, income streams from bonds (coupons) usually sit below the income streams from shares (dividends). Recently, this has inverted. The future expected dividends from shares have fallen well below the more certain coupon payments from fixed interest.

This is partly because of the fall in bond prices. Since the bottom of the interest rate cycle at the end of 2020, the overall average value of Australian bonds has fallen as much as 20%, while international bonds as an asset class have fallen about 30%.

Rising interest rates have been the main reason — when interest rates rise, the capital value of bonds tends to fall.

So, the hype around bonds —with their guaranteed income streams and falls in capital value — has some merit where, comparatively, they believe they are a "no-brainer" over a few years.

Making a return on your investment when you own bonds.

Interest income: As a bondholder, you receive periodic interest payments from the issuer based on the coupon rate. This interest income is typically paid semi-annually or annually, depending on the bond's terms. You can make a return by collecting these interest payments.
Capital gains: If you buy a bond at a price below its face value (at a discount) and hold it until maturity, you will receive the full face value when the bond matures. The difference between the purchase price and the face value is your capital gain.
Selling in the secondary market: You can also make a return by selling your bond before it matures in the secondary bond market. If the bond's market price has increased since you purchased it, you can sell it at a higher price than you paid, resulting in a capital gain. Conversely, if the market price has fallen, you may incur a capital loss.
Yield to maturity (YTM): YTM is a measure that considers both the interest payments and any potential capital gains or losses if you hold the bond until maturity. It represents the annualised return you can expect from the bond if all payments are received as scheduled.

Understanding the risks.

Like any investment, bond investments come with risks, including interest rate risk, credit risk (the risk of issuer defaulting on payments), and market risk (price fluctuations). Understanding these risks and conducting thorough research is essential before investing in bonds— we can help. To get started, contact us today .

Family Budgeting — Should You Run Your Family like a Business?

Mon, 15 Jan 2024 01:00:39 GMT

If a business owner told you that they run their business without a budget, you’d probably have doubts about the longevity of that business.

How do they track expenses and income, and plan for unforeseen events? You might even think they were incompetent, or lazy. In any case, it’s a safe bet that we can all agree: running a business without a budget is a very bad idea.

A huge number of families run their households with no budget. Now, we know a family and business are two completely different ball games. However, financially running your family “like a business”, has its merits. Not convinced? We reckon we’ll change your mind by the end of this article.

The family unit as a “mini business”.

In a sense, your family is kind of like a mini business. You have regular expenses, you have income, you have emergencies and unplanned events. You probably have savings, or want to have some, and maybe want to invest as well so you can set your family unit up for success.

Here comes the pep talk...

Money is a tool that enables you to reach many of your goals in life — travel, homeownership, personal spending, cruisy retirement, and other financial freedoms. The reality is, until you know where your money goes, it’s impossible to make informed decisions about how to use it effectively.

A budget shows you exactly where your money goes and provides a clear plan that lets you save for the things that are important to you. And that’s exciting! Whatever you decide you want to save for and achieve, you can — with the right financial focus, budget, and discipline.

The biggest roadblocks to budgeting.

It’s overwhelming to think about and plan, or families don’t know where to start.
A budget takes time to establish.
A budget calls for new habits and financial discipline.
Fears around limited financial freedoms.
Don’t want to know the realities of how bad the financial situation is (ignorance is bliss!).
Have tried it before and it didn’t stick or was too hard.

The good news is, the pros outweigh the cons.

Clarity on your existing financial situation (even if it’s not what you were hoping for or expecting).
Gives fiscal direction and helps you stay (or get back) on track.
Comfort in knowing when your money is coming in and when it’s going out.
Save for things you want.
Build a “financial cushion” for emergencies (healthcare, pet care, car problems, last-minute flights).

Three tips for an effective household budget.

So, just like running a business, creating an effective household budget is essential for managing your finances and achieving your financial goals. Here are three tips to help you create and maintain an effective household budget.

1. Track income and expenses.

Start by tracking all sources of income, including your salary, rental income, dividends, and any other sources of money coming into your household. A clear understanding of how much money you have available to work with is essential.

Next, track your expenses meticulously. Categorise your expenses into fixed (e.g., rent or mortgage, utilities, insurance) and variable (e.g., groceries, dining out, entertainment) categories.

You can track day-to-day expenses by entering them into a spreadsheet, or better yet, with a purpose-built tool such as Pocketsmith that automatically pulls from bank feeds to save you a lot of manual data entry.

2. Set clear goals and prioritise them.

Determine your financial goals, both short-term and long-term. Examples of short-term goals might include paying off credit card debt or saving for a vacation, while long-term goals could be buying a home, saving for retirement, or funding your child's education.

Prioritise your goals and allocate your income accordingly and realistically. Depending on your income, you might be able to save for multiple goals at once, or you might prefer to save for one thing at a time to reach your goal faster.

Either way, ensure that you are also setting aside money for essentials like housing, utilities, and debt repayment.

3. Create and stick to a realistic budget.

Based on your income, expenses, and goals, create a detailed budget that allocates your money each month. Be sure to include allocations for savings and emergencies.

Your budget should be realistic and sustainable. It should cover your essentials, pay down debt, save for your goals, and still have some space to spend for enjoyment.

Review and adjust your budget regularly. Life circumstances change, and it's important to adapt your budget accordingly. If you find that you're consistently overspending in certain areas, consider making adjustments to ensure you stay on track.

Consult a financial advisor.

Remember that budgeting is an ongoing process, and you probably won’t get it right the first time. That’s normal and okay! If you need more advice and accountability, we highly suggest engaging a financial advisor. These guys really know budgeting and are passionate about helping you succeed.

Please don't hesitate to contact us , and we can connect you with an exceptional financial advisor from our inner circle.

Your Super Health Checklist

Mon, 15 Jan 2024 01:00:36 GMT

Your superannuation is a significant asset that accumulates throughout your lifetime. However, many Australians tend to overlook their super until they approach retirement, with some not giving it any thought at all. Some people don’t even know where their super is held until they need it.

The truth is, it's never too early to start considering your superannuation, and the sooner you take control of it, the better. Regularly reviewing and managing your superannuation is a wise practice. At the very least, you should ensure that you:

Receive the full superannuation contributions you are entitled to from your employer.
Know the exact location of your superannuation account.
The decisions you make today, no matter how small they may seem, can have a substantial impact on your final superannuation balance. For example, missing out on employer contributions now could significantly reduce your retirement superannuation balance due to the compounding effect of earnings. Similarly, lost or unclaimed superannuation now can be bad news later.

A super health checklist is just what you need.

Your super is an investment that deserves your attention, but it can be hard to know where to start. A super health check consists of five simple and important things you can do to get on top of your super so you can:

Manage your super.
Understand your entitlements.
Make better choices now for when you retire.

You can check on your super at any time. However, we suggest you get into the habit of doing a health check each year when you prepare your tax return.

Do it online! Here’s how…

The best and easiest way to perform your super check is either through ATO online services through myGov, or by contacting your super fund directly. You just need a myGov account linked to the ATO. Once you link your myGov account, you can also use the ATO app .

Let's do a rundown below of what each step involves so you have some extra clarity before you go ahead.

1. Check your details.

Check your contact details and tax file number (TFN) are up to date with the ATO and your super fund. This helps prevent lost super and helps the ATO match any unclaimed super you owe. It's also important to ensure your bank account details are up to date.

2. Check your super balance and employer contributions.

Check your super balance each year to see how much you have and keep track of your employer contributions. You can do this anytime on ATO online services or through your superfund. We suggest doing it annually when you do your tax return since you’ll already be in the same headspace.

Your employer should pay your super at least every three months. From 1 July 2023 to 30 June 2024, your employer should pay at least 11% of your salary into your super. Just remember that if you’re under 18, you need to work more than 30 hours a week to be eligible for super.

3. Check for lost and unclaimed super.

If you’ve changed your name, address, or job, you might have lost track of some super.

“Lost super” happens when your fund has lost touch with you, or your account is inactive — this money is held by your fund. “Unclaimed super” is when your fund transfers lost super to the ATO. This is why it’s important to ensure your fund has your current details.

All your super accounts — including lost and ATO-held super — are displayed on ATO online services, so it should be fairly easy to find and retrieve what you’re owed. If you need help, you can contact the ATO.

4. Check if you have multiple accounts and consider consolidating them.

If you’ve had more than one job, you may have more than one super account (and you may not even realise it). It's important to know how many super accounts you have. Combining your super may reduce fees and make it easier to manage, especially when it comes to retirement.

If you decide to consolidate your super, it’s important to choose the fund that’s right for you. You should check which fund provides the best value and the insurance cover suits your needs, which may change throughout your life. If you need advice on which fund is best for you, MoneySmart is a helpful resource. You can also contact Ascent Accountants for independent, unbiased financial advice from someone in our network.

5. Check your nominated beneficiary.

Ensure you have a valid death beneficiary nomination in place with your super fund, as this isn't covered by your will. This means your loved ones will not be put through unnecessary difficulties to finalise your estate.

Most binding nominations expire every three years. Some super funds have an option where nominations do not expire and remain in place until they are revoked — ask your super what their arrangement is.

If you don’t nominate a beneficiary, your fund won’t know who to pay your benefit to. In these cases, they’ll follow the law. This usually means they pay it to one or more of your dependents or your legal personal representative, and you may not want that.

Need support? You’ve got it.

We have an amazing independent financial adviser in our inner circle that we’d love to introduce you to. Talk to us about your super and we’ll put you in touch.

Selling? Prep Your Home for the Market, Fast.

Mon, 15 Jan 2024 01:00:33 GMT

When getting your home ready for the market, there are several maintenance tasks you can prioritise to enhance the potential for a profitable sale.

You’ll never get a second chance at a first impression, so it’s worth investing in the presentation of your property in the lead-up to your market debut.

1. Prepare For Drive-Bys

Whilst a “for sale” sign turns head, it’s the home’s exterior that’ll hold attention. Many people do a drive-by on a property to see what it looks like externally before they organise an appointment to see the inside.

That’s why it’s important to get the garden looking as good as possible. Mulch, weed, prune, and make sure the lawn and garden beds are looking good.

2. Prioritise Outdoor Living

Kitchens and bathrooms are always the main selling points, however, Australians favour an outdoorsy lifestyle. We love our backyards, patios, and outdoor entertaining areas, and these spaces are becoming a priority for home buyers.

As a result, it’s only natural to prioritise these spaces when it’s time to sell — especially if you’re selling in the warmer months or the lead-up to summer. Make sure these are well-kept, tidy, and weed-free. If applicable, you could also add a fresh coat of paint. A beautiful garden (front and back) will go a long way too!

3. Less is More

This cannot be overstated — less is more. When it comes to home opens and private appointments, get rid of junk and clutter. Ensure your home is as tidy as possible so that people have the best experience of your home and can visualise it as their own space.

A simple, minimalist look will always make a room feel bigger, as will letting in as much natural light as possible.

4. The Small but Obvious Stuff

In older homes, there may be small imperfections that have crept up over time. Things like water stains, full gutters, dirty light switches or door frames, little knicks in the walls and paint will draw the eye, so it’s good to fix these up if you can. You should also make sure all the lights are working and replace globes or get the electricals fixed if needed.

5. Some Bigger Stuff

Living in WA, our summers can be pretty unbearable at times. Buyers prioritise homes with good air conditioning, so fixing yours or installing a new one (or some ceiling fans) can add significant value to your property.

Similarly, if you have a pool, make sure the pump and filter are working well, and the levels are correct. You want your pool to look amazing as this will be a huge draw card for families. You should also ensure your garden has great reticulation so the garden is looking its best and is manageable for future homeowners.

6. Manage Pest Problems or Bushfire Hazards

Depending on your location, you may need to ensure your house is adequately protected against fires or pest concerns. For example, if you live in the Perth Hills, bushfires are an added risk for your property.

Some suburbs seem to have more issues with rodents or cockroaches, or have hidden issues like termites. A professional property inspector will pick up on these issues, so it’s worth sorting them out before your property goes to market.

Do You Know the Tax Implications of Selling Your Property?

In the whirlwind of selling, it’s easy to forget about the tax involved. We can help! Talk to us about the tax implications of selling your home, including guidance on capital gains tax, exemptions, and strategies to minimise your tax liability. To talk about this and more, contact us today .

Making the Right Property Investment Choice: Key Factors to Consider

Fri, 15 Dec 2023 00:39:31 GMT

Deciding on the best property to invest in involves a careful balance of your personal investment objectives and the features that make a property attractive to renters. This blog delves into several crucial factors to keep in mind when navigating the realm of property investment.

Aligning Investment Goals with Property Type

The success of a property investment largely hinges on how well it aligns with your financial objectives. If your focus is on generating steady income, properties like commercial real estate or townhouses can be lucrative due to their solid rental yields and manageable overhead costs. On the flip side, those seeking long-term capital growth might find value in properties with significant land components or those in areas earmarked for development. It's vital to avoid the common pitfall of investing in a property that doesn't align with your intended financial strategy.

Rental Appeal and Property Features

The attractiveness of a rental property to potential tenants is greatly influenced by its location and features. Properties situated near essential amenities like schools, lifestyle options (such as beaches or parks), public transport, and shopping centres often see increased demand. Additionally, properties that require minimal maintenance and offer spacious bedrooms tend to stand out in the rental market. It's also worth noting that a property's ability to cater to a broad range of tenant demographics enhances its rental prospects.

Demographic Targeting and Property Selection

Understanding the demographic appeal of different property types is essential in making an informed investment. For instance, certain types of dwellings like villas may attract those in the beginning or twilight of their homeownership journey due to their accessibility and affordability. Meanwhile, townhouses can be a draw for younger adults or small families, although considerations like stairs might become a factor with the arrival of children. Properties that offer a more universal appeal, such as three-bedroom layouts with multiple bathrooms, generally cater to a wider tenant base, which can be beneficial during varying economic conditions.

Selecting the Right Property for Investment

Selecting the right property for investment is a multifaceted process. It requires a deep understanding of your financial goals, the intrinsic qualities that make a property appealing to renters, and the ability to cater to the right demographic. By considering these key aspects, you can make a well-informed decision that aligns with both your investment aspirations and the market demand.

Navigate Through the World of Property Investment

Ready to dive into the world of property investment but unsure where to start? Our team is here to help you navigate the complexities and pinpoint the right investment property that aligns with your goals. Contact us today to take the first step towards a successful property investment journey.

How to Avoid a Financial Hangover This Christmas

Fri, 15 Dec 2023 00:39:29 GMT

As the festive season approaches, it's essential to enjoy this time without falling into financial stress. Here are key strategies to manage your expenses, ensuring you start the New Year on a positive note.

1. Set a Realistic Budget

Begin by assessing your regular expenses like bills, rent, and food. Then, list out the people you plan to buy gifts for, along with any expected spending on food and drinks for the festive season. Allocate a specific amount for each person or item. This will help you track your expenses better and avoid overspending.

2. Pay with Cash

Using cash for your purchases can be a more disciplined approach. If you do use a credit card, aim to pay off the balance quickly in the New Year to prevent debt accumulation.

3. Reduce Spending in Other Areas

Look for ways to cut back on non-essential spending in December. It’s also beneficial to start saving for Christmas expenses well in advance, incorporating it into your monthly budget.

4. Avoid 'Buy Now, Pay Later' Options

Stay clear of 'buy now, pay later' schemes. These can easily lead to debt and financial stress post-Christmas.

5. Spread Out Your Spending

Don’t leave your Christmas shopping until the last minute. Starting early allows you to take advantage of sales like Black Friday or Cyber Monday, spreading the financial impact over several months.

Remember, Christmas is about spending time with loved ones. By following these tips, you can enjoy the festive season without the worry of a financial hangover.

6. Post-Holiday Review

After the holidays, review your financial status. If you've overspent, create a plan to get back on track. This might include temporary spending cuts or a revised budget plan.

Avoiding a financial Christmas hangover is about planning, discipline, and remembering what the holidays are truly about. By following these tips, you can enjoy the festive season without compromising your financial well-being and step into the New Year with confidence and peace of mind.

7. Don’t Let Financial Worries Dampen Your Christmas Spirit

Feeling overwhelmed with budgeting for the festive season? Our team is here to help you create a personalised budget that works for you. We'll assist in managing your expenses, ensuring you can enjoy the holidays without the stress of overspending. Contact us today for expert guidance and start your journey towards a financially stress-free Christmas!

Essential Steps to Take If Your TFN is Lost or Stolen

Fri, 15 Dec 2023 00:39:25 GMT

Losing your Tax File Number (TFN) or having it stolen can be a serious concern. It's essential to act quickly to prevent misuse. This guide will help you understand the steps to take if you find yourself in this precarious situation.

Understanding the Risk

When your TFN is stolen or compromised, the risks are significant. Fraudsters may use your TFN to lodge or amend tax returns to claim large refunds. They might also alter your bank account details with the Australian Taxation Office (ATO), redirecting your tax refunds to their accounts. Recognising these risks is the first step in mitigating potential damage.

Finding Your TFN Online

If you've forgotten your TFN, you can easily retrieve it using ATO's online services. Access it via your myGov account or the ATO app. This method is convenient and secure.

Alternative Ways to Find Your TFN

In case you don't have a myGov account, your TFN can also be found on:

Your income tax notice of assessment.
ATO letters, such as a statement of account.
Payment summaries or income statements from your employer.
Superannuation account statements. Alternatively, your registered tax agent can provide your TFN.

Immediate Action for Lost or Stolen TFN

Report the Loss or Theft : If your TFN is lost, stolen, or accessed by an unauthorised party, it's crucial to inform the ATO immediately. In cases of suspected misuse, contact the ATO's Client Identity Support Centre for assistance. They offer advice and implement security measures to monitor your account for suspicious activities.

Review Your Accounts : Check your tax account statements for any unusual activity or transactions you don’t recognise.

Change Your Bank Details : If you suspect your bank details have been tampered with, contact your bank to secure your accounts.

Preventive Measures

Secure Your Personal Information : Always protect your TFN and other personal information. Avoid sharing it unnecessarily, especially online or over the phone.

Regular Monitoring : Regularly review your tax records and bank statements to catch any unauthorised activities early.

Stay Informed : Keep abreast of the latest methods used by scammers and the advice provided by the ATO.

Protecting Your Personal Information

The ATO also provides guidance on safeguarding your personal information. This includes being vigilant about sharing your TFN and monitoring your financial statements.

ATO’s Commitment and Disclaimer

The ATO emphasises its commitment to providing accurate and clear information. However, they advise seeking professional advice if you're unsure about how the information applies to you.

Need Assistance with a Lost or Stolen TFN?

Navigating through the complexities of a lost or stolen Tax File Number (TFN) can be overwhelming. If you have further concerns or require personalised assistance, don't hesitate to reach out to us. Our team of experts is dedicated to helping you secure your financial information and guide you through the recovery process. Contact us today for reliable support and peace of mind.

Navigating Unused Concessional Contributions

Fri, 15 Dec 2023 00:39:20 GMT

Superannuation is a cornerstone of financial planning in Australia, and understanding its various components can significantly impact your financial future. A key aspect that is often overlooked is the opportunity provided by unused concessional super contributions. This blog aims to shed light on this strategy, ideal for individuals who have not fully utilised their super contribution potential in the past.

What Are Concessional Contributions?

Concessional contributions are payments made into your superannuation fund before tax. This category includes employer contributions, salary sacrifices, and personal contributions for which a tax deduction is claimed. The annual cap for these contributions is currently $27,500.

The Concept of 'Catch Up' Contributions

The catch-up approach allows individuals to carry forward any unused concessional contribution caps over a five-year rolling period. This is particularly beneficial for those who may not have maximised their concessional contributions in previous years and have a super balance below $500,000.

Eligibility Criteria and Benefits

To utilise this strategy, your total super balance must be below $500,000 as of June 30 in the preceding financial year. This approach is especially advantageous for individuals with irregular incomes, those re-entering the workforce, or anyone who has realised a significant capital gain and seeks to optimise their super contributions.

How to Determine Your Unused Contribution Capacity

Many individuals are not aware of their past concessional contribution levels. To access this information, you can log into your myGov account and link to the Australian Tax Office services. Under the "super" section, you can find details about your carry-forward concessional contributions, essentially indicating the amount you can still contribute under this rule.

Strategic Use of Concessional Contributions

Develop a Contribution Strategy: Based on your financial situation, decide how much of the unused cap you want to utilise. This could be influenced by factors like your current income, tax considerations, and retirement goals.

Make Additional Contributions: If it aligns with your strategy, make additional concessional contributions to your super fund. These could be personal contributions for which you claim a tax deduction, or salary sacrifice contributions arranged with your employer.

Monitor and Adjust Annually: Regularly review your super balance, contribution caps, and overall retirement strategy. Adjust your contributions as needed to optimise your super growth and tax benefits.

Consult a Financial Advisor: Consider seeking advice from a financial advisor. They can provide personalised guidance based on your specific circumstances and help you make informed decisions about using your unused concessional contributions.

Understanding and leveraging unused concessional super contributions can be a powerful strategy for enhancing your retirement savings. This approach provides flexibility and tax efficiency, making it an essential consideration in your financial planning toolkit.

Maximise Your Superannuation

Optimising your superannuation through unused concessional contributions is a key strategy for securing your financial future. When it comes to maximising your super and enhancing your retirement savings, we're here to guide you in making the most of every opportunity.

To discuss how you can leverage unused concessional contributions and other superannuation strategies, contact us today .

PSI Deductions: What You Can and Cannot Claim

Tue, 14 Nov 2023 07:44:26 GMT

PSI deductions

Personal services income (PSI) can be a complex topic to grasp, but it's crucial for individuals and businesses to understand so they can navigate the tax landscape effectively. Let’s demystify PSI by breaking down its definition, exploring who can earn it, and providing real-life examples.

What is personal services income (PSI)?

PSI, or Personal Services Income, is income derived primarily (more than 50%) from your individual skills or efforts. This means that if the income you receive from a contract is predominantly a result of your expertise, labour, or skills, rather than assets, the sale of goods, or a business structure, it is classified as PSI.

To determine if your income qualifies as PSI, it's essential to evaluate each contract separately. Consider the terms and conditions of the contract, invoices, and written agreements detailing the work arrangement. These documents can help you determine the percentage of income attributed to:

Your labour, skills, knowledge, expertise, or efforts.
Other factors, such as materials supplied or tools and equipment used.

If 50% or less of your income from a contract is attributed to your personal efforts or skills, then none of the income from that contract is considered PSI.

Who can earn PSI?

PSI can be earned across various industries, trades, and professions. Common examples include freelance workers, financial professionals, information technology consultants, engineers, construction workers, and medical practitioners. Individuals can earn PSI in two ways:

1. Directly as a sole trader

If you provide services as an individual without any intermediary entity, such as a company, partnership, or trust, your income from personal services is PSI.

2. Indirectly through another entity

Some individuals provide services through an intermediary entity, like a company or partnership. In such cases, the entity is referred to as a 'personal services entity' (PSE).

Deductions you can claim against PSI

You can claim deductions against your PSI if an expense occurred earning this income. For example:

The cost of gaining work, such as advertising, tenders, and quotes.
Registration and licensing fees.
Account-keeping fees, including bank fees.
Some insurance costs, including public liability and professional indemnity insurance fees
Salary or wages and super contributions for a “removed” employee (e.g. not an associate).
Reasonable amounts paid to an associate for principal work.
A portion of home office expenses, such as heating, lighting, phone and internet.

To fully understand what you can claim, you (if you're a sole trader), or the entity you're earning PSI through, need to work out if you’re conducting a personal services business (PSB) by using the PSB tests .

PSI and your tax

When completing your tax return, you need to report your PSI even if you’re a PSB and the PSI rules don’t apply to you. How you report your PSI will depend on whether you operate as a sole trader, company, partnership, or trust. In each case, there are specific labels on your tax return that you need to complete.

Consult a PSI expert

We know PSI and the associated deductions can be confusing. We help countless clients understand their PSI requirements every year — we can help you as well. If you have any questions or need advice about PSI, please don't hesitate to contact us .

What income is not personal services income?

Tue, 14 Nov 2023 07:44:23 GMT

Navigating the complexities of Personal Services Income (PSI) rules can be a daunting task. In this blog, we'll break down the key concepts and provide clear examples to help you grasp the essentials.

1. Salary and wage earners

If you receive only salary and wages as an employee, PSI rules generally don't apply to you. Exceptions arise when you indirectly earn PSI through another entity, like a company or partnership in which you're an employee.

2. Supplying or selling goods

Income generated mainly from supplying or selling goods is not considered PSI, and minor material usage within your services doesn't qualify as supplying goods. Let’s look at an example: Tam, a carpenter, designs and sells bespoke furniture through her partnership with Cho. Payments to the partnership are for furniture sales, not Tam's personal skills. Therefore, it's not PSI.

3. Supplying or using an income-producing asset

Income primarily generated by assets rather than personal skills is not PSI. This is likely if assets are essential, large-scale, high-value, or specified in contracts, contributing over 50% of the contract price. Let’s look at Jack’s story for clarity: Jack, an experienced backhoe operator, contracts with Jack & Jill Pty Ltd to dig trenches. The income is mainly from the backhoe and truck, making it non-PSI.

4. Income from a business structure

Income stemming from a business structure, rather than individual services, is not PSI. Factors include income-producing assets, the number of employees or contractors, the presence of goodwill, and the nature of activities.

For example, Bella is an electrician who operates a partnership with her spouse. The partnership has assets, employees, and goodwill. This income is not PSI.

PSI and your tax

When completing your tax return, you don’t need to worry about answering any PSI questions if this area doesn’t pertain to you. If you’re not sure, a tax agent can help!

Partnering with you for PSI understanding

If you're uncertain about your income classification, we can help you understand your position and the PSI rules that do or don’t apply to you. Understanding this is crucial for financial planning and compliance with tax regulations — to get started, contact us today .

Importance of paying home loans on time when you own property

Tue, 14 Nov 2023 04:00:00 GMT

When it comes to managing your finances, few responsibilities are as significant as repaying your home loan on time. Falling behind on your mortgage payments can have serious consequences for your financial wellbeing. In this blog, we’ll explore the concept of mortgage arrears and the potential pitfalls associated with them. We'll also discuss strategies to prevent arrears and what to do if you find yourself in this challenging situation.

Understanding mortgage arrears

Mortgage arrears are simply a term for being behind on your home loan payments. Even missing a single payment can put you in default of your repayment agreement with your lender — a situation you want to avoid at all costs. Failing to meet your mortgage repayments can have several negative consequences:

Additional Repayments: When you fall into arrears, you may be required to repay additional amounts. The longer you stay in arrears, the more these amounts can accumulate.
Default Interest: Arrears typically trigger a higher or default interest rate, which can lead to increased borrowing costs.
Impact on Credit: Being in arrears reflects poorly on your financial responsibility and can negatively impact your credit score. This can make it more challenging to secure credit in the future, including loans and credit cards.
Loan Approval Challenges: Mainstream banks are often hesitant to approve new loans, especially home loans, for individuals with a history of arrears.

Preventing mortgage arrears

Preventing mortgage arrears is essential for maintaining your financial stability. Here are some proactive steps you can take:

Budget Wisely: Create a budget that accounts for your mortgage payments and other financial obligations. Stick to it to ensure you can always make your payments on time.
Emergency Fund: Build an emergency fund to cover unexpected expenses, reducing the risk of missing mortgage payments during challenging times.
Communicate with Your Lender: If you anticipate difficulty making a payment, contact your lender immediately. Many lenders offer options such as payment plans or hardship provisions to help you through tough times.
Seek Professional Guidance: Mortgage brokers can provide valuable advice and connect you with non-bank lenders if you're struggling with your mortgage. They specialise in helping borrowers find alternative solutions.

Be proactive, not reactive

Maintaining a timely mortgage repayment schedule is crucial for your financial stability. Remember, prevention is always better than cure. When it comes to your home loan and finances, we can help you take proactive steps in advance rather than reactive steps when it’s too late.

To talk about this and more, contact us today .

The importance of a super health check-up

Tue, 14 Nov 2023 04:00:00 GMT

Your superannuation is one of the most significant financial assets you'll accumulate during your lifetime. Yet, many Australians tend to neglect it until retirement, or worse, don't think about it at all. We’re here to tell you that it's crucial to start early and regularly review your super. Taking proactive steps today can significantly impact your financial wellbeing in retirement.

The power of early review

Your super is an investment that deserves your attention — start early to reap the rewards later.

A comparative example.

Two individuals, John and Sarah, start their careers at the age of 25. John pays little attention to his super, assuming it's too early to worry about retirement. Sarah, on the other hand, takes an active approach. She monitors her employer contributions and ensures her super is on track.

Fast forward 30 years — John realises he’s missed out on significant employer contributions and the compounding effect of earnings. His super balance is not as healthy as he hoped. Sarah, however, has a substantial nest egg thanks to her early diligence.

What can we take away from this? Small actions, such as monitoring employer contributions and staying informed about your super's whereabouts, can lead to substantial financial gains in the long run.

Navigating lost super

Have you ever moved, changed your name, or switched jobs? If so, you may have lost track of some of your super. This is why it's crucial to ensure your super fund has your current details.

Lost super refers to funds that have lost touch with you, resulting in inactive accounts. Unclaimed super occurs when your fund transfers lost super to the Australian Taxation Office (ATO). All your super accounts, including lost and ATO-held super, are displayed on ATO online services.

Take control of your super

These simple steps can help you have better control of your super and ensure a secure retirement.

Active management: By actively managing your super, you gain peace of mind knowing you're in control of your retirement savings.
Understand your entitlements: Regularly reviewing your super helps you understand the benefits you're entitled to. Super regulations may change over time, so staying informed is key to maximising your super's potential.
Update your contact details: Keep your contact details, tax file number, and bank account information up to date to prevent lost super and ensure a smooth financial journey.
Check your super balance & employer contributions: Monitoring your super balance and employer contributions is essential. Talk to your employer to make sure you understand employer contributions.
Search for lost & unclaimed super: Claiming lost and unclaimed super can significantly boost your retirement savings. You can ask your super fund about this.
Consolidate multiple super accounts: Having multiple super accounts can lead to unnecessary fees and confusion. Consolidate your accounts and choose the right fund for your financial needs.
Nominate your beneficiary: Ensure a smooth transition of super benefits in the event of your passing by having a valid beneficiary nomination in place.
Make informed retirement choices: Whether it's choosing the right investment options or deciding when to retire, the earlier you start making key decisions, the more choices you’ll have.

Need support? You've got it.

We can provide invaluable assistance in managing superannuation.

We’ll help you set financial goals and navigate complex tax regulations to maximise after-tax returns. We can advise on contribution strategies and ensure compliance with superannuation laws. Overall, we’ll empower you to make informed decisions and optimise your superannuation strategies for a secure financial future. Talk to us about your super and let's plan for your retirement.

New Income & Asset Thresholds for Centrelink Pensions

Mon, 16 Oct 2023 03:24:27 GMT

In a significant update from Centrelink, we're about to see a sizeable jump in the means test thresholds. The increase is projected to be nearly 8%, which will allow numerous seniors the opportunity to claim a part-age pension for the first time.

Even more exciting, these pivotal changes aren't only for seniors. They also encompass disability support pensions, carer payments, and those on a Department of Veterans Affairs war service pension.

Centrelink's longstanding practice has been to index its means test thresholds annually on July 1. These adjustments are based on the prevalent inflation rate. Given the historic lows that inflation rates have maintained over the past decade, the increases in the means test have, by and large, been relatively modest. However, that trend seems to have come to an end.

Centrelink's Testing Mechanism

Centrelink employs two specific tests — the income test and the asset test. The applicable test is the one which results in the lowest rate. It's possible for an individual to clear one test, only to be held back by the other if they surpass the stipulated upper limits.

1. Income Test

The income-free area for single pensioners is set to increase by $14 per fortnight, marking a rise from $190 to $204.

For couples, the collective income-free zone will now stand at $360 per fortnight — an uplift of $24 per fortnight. Centrelink now considers couples a singular unit — this means that the entire assessed income could be drawn by just one partner.

In total terms, the assessable income for singles can now touch $2,332 every fortnight, while still qualifying for a part-pension. For couples, this amount is pegged at $3,568, which can rise further if they're separated due to illness.

2. Deeming Rate Thresholds

Deeming rates serve as a nominal interest rate applied to all financial assets, regardless of their actual earnings, to determine the fortnightly amount under the income test. Such financial assets encompass bank accounts, shares, managed funds, superannuation assets, account-based pensions, cash, and bullion.

A lower deeming rate of 0.25% annually will be applied to the first $60,400 for singles and $100,200 for couples. Any financial assets surpassing these figures are deemed at an interest rate of 2.25%. These rates are set to remain unchanged until July of the subsequent year.

3. Asset Test

This test deducts $3 from the pension for every $1,000 that exceeds the thresholds — the family home remains exempt from this test, regardless of its valuation.

As of July 1, single homeowners can possess assets up to $301,750 and still be eligible for a full pension, marking an increase of $21,750. For couples, this limit has risen by $32,500, bringing the total to $451,500.

The upper cut-off thresholds are now pegged at $656,500 for singles and $986,500 for couples — the latter approaching the $1 million mark, exclusive of their primary residence. Moreover, non-homeowners are permitted an additional $242,000 in assets.

Don’t Be Deterred!

Approaching the new thresholds should not deter potential claimants. The minimum annual reception for singles stands at over $1,400, and for couples, it exceeds $2,200. Furthermore, part-pensioners from Centrelink are entitled to the Pensioner Concession Card, which unlocks thousands in discounts.

Stay Up to Date with Current Thresholds

This revamp in Centrelink's income and asset thresholds is a monumental shift, broadening the horizon for many seniors and other eligible beneficiaries. With this shift, it’s important to stay updated and ensure you are receiving what you're entitled to. You can visit the Centrelink website at any time for current information on assets and income and see deeming rates here .

Partnering With You in These Changes

Navigating the intricacies of Centrelink's updated income and asset thresholds can be challenging for many. We can assist beneficiaries in making the most of these changes with services like asset structuring, income planning, tax implications, and more.

In essence, we’ll serve as a bridge between the you and Centrelink, ensuring all financial decisions work towards maximising Centrelink benefits. Our expertise can help demystify this confusing area, leading to better informed and potentially more profitable decisions. To get started, contact us today .

Understanding the Tax Deductibility of Financial Advice

Mon, 16 Oct 2023 03:24:25 GMT

Navigating the complexities of tax deductibility when it comes to financial advice can be daunting for many investors. With the constant ebb and flow of regulations, having a clear grasp of the landscape is paramount.

General Principles of Deductibility

As if things aren’t already confusing enough, there's a distinct absence of specific rules around the deductibility of financial advice fees . Instead, the general deductibility rules are applied. For an expense to be deductible:

It should relate to generating or producing taxable (or "assessable") income.
It shouldn't be capital, personal, or for domestic purposes.
It shouldn't be linked with exempt income.
The tax laws must not explicitly exclude it.

Take a look at two examples

Super Contributions

Personal contributions to superannuation typically fall into the non-deductible category due to their private nature. However, the tax laws carve out certain exceptions, making some of these contributions deductible if specific conditions are met.

Super Fund Pension Income

Earnings from pension income in a super fund are exempt. Therefore, expenses associated with generating this income are not deductible.

Diving deeper into financial advice fees

1. Initial Setup of Investment Portfolio & Financial Plans

This is considered capital expenditure and thus, not deductible. The ATO's 1995 Tax Determination (TD 95/60) specifically addressed this, indicating a lack of sufficient connection between setting up investments and the subsequent income generation.

2. Ongoing Management of Investment Portfolios

Fees related to the upkeep and review of an existing investment portfolio generally qualify for deductions as they relate to ongoing income generation. However, advice that touches upon non-income aspects, such as insurance premiums or pension assets, may only see partial deductibility.

3. Investment Loan Arranging Fees

Classified as borrowing expenses, they’re deductible over the shorter of five years or the loan's lifespan. Crucially, the primary objective of the loan should be for income generation that is subject to tax.

4. Cashflow and Ancillary Advisory Services

Areas like cashflow management or insurance advisory don't correlate directly with taxable income generation, making their fees non-deductible.

5. Commissions

These are not directly borne by the investor, so they don't qualify for deductions.

Optimising deductions

Having financial advisers who itemise their fees can greatly simplify the process of claiming deductions. In situations where this isn't feasible, the ATO has shown flexibility in accepting reasonable approximations.

Over the years, the financial advice sector has been lobbying for a more inclusive approach to deductibility, especially encompassing all advice fees. This persistent endeavour, though not yet fruitful, indicates the industry's commitment to enhancing investor benefits.

Other potentially deductible costs

The ATO's tax ruling (TR 93/17) enumerates several expenses related to superannuation funds that are usually deductible. These range from audit fees to investment advisory costs and more.

Consult an expert

With the ever-evolving tax regulations, it's crucial for investors to stay updated with changes, especially those related to deductibility. As the regulatory landscape shifts, continuous learning and seeking expert guidance becomes the way forward.

That’s where we come in — Ascent Accountants are here to help you make the most of your deductions. If you have any questions or need advice, please don't hesitate to contact us .

Set Up an SMSF to Take Control of Your Retirement

Mon, 16 Oct 2023 03:24:24 GMT

Worried about your retirement savings not putting in as much work as you did earning them? Do visions of peaceful post-retirement years — maybe on a golf course or a beach — feel out of reach?

If you're toying with the idea of a hands-on approach to managing your superannuation, a Self-Managed Super Fund (SMSF) might be your gateway to those elusive golden years. However, the SMSF path has its share of potential legal and financial implications…

Decoding SMSFs

An SMSF, in essence, is a pension scheme tailored to offer financial comfort to its members during retirement. Distinct from traditional super funds, where a team of professionals dictate how your contributions are managed, an SMSF shifts this control to the members (that’s you!). Here, members (a maximum of six) assume a dual role as beneficiaries and trustees, gaining the autonomy to steer investment decisions.

SMSFs are a growing trend in Australians

If you’re thinking about an SMSF, you’re not the only one. The past decade has seen a significant surge in SMSFs; new funds are continuously sprouting, with thousands coming into existence each month. Presently, over half a million SMSFs dot the landscape, accommodating a membership that surpasses a million. An average SMSF boasts a size of around $1 million, with individual member balances typically resting at about half a million dollars.

The Appeal of an SMSF

Unparalleled Control

The most significant advantage of an SMSF is the control it gives you over investment decisions. However, this freedom also demands astute, informed decisions. The success of the journey squarely rests on the shoulders of the trustees, so it’s important that if you decide to take on an SMSF, you’re able to commit to it.

Opportunity for Property Investment

Many SMSF enthusiasts utilise their funds to dip their toes into the residential or commercial property sector, banking on potential appreciation. However, like every investment avenue, it’s essential to remember the inherent risks and the unpredictability of returns.

Strength in Numbers

With provisions to include up to six members, SMSFs offer the possibility of pooling resources. This collective strength can significantly amplify investment capacities. However, a multi-member setup also injects complexity into the decision-making process, necessitating a delicate balancing act to cater to every member's aspirations and objectives.

Laying the foundation for your SMSF

1. Pick Your Structure & Name

Embarking on the SMSF journey begins by choosing individual trustees or a corporate trustee structure. Each has its distinct set of obligations, cost structures, and associated penalties. You also have to select a name that resonates with your vision.

2. Anchor with the Trust Deed

This legally binding document demystifies the operational aspects of your SMSF. It lists members, and trustees, underscores the investment strategy, and clarifies processes in case of fund dissolution. This document is your compass, guiding every decision and action related to the fund.

3. Breathing Life into the Trust

For an SMSF to be recognised, it must have assets — even if symbolic. This initial capital seeds the trust, setting the stage for future growth. Moreover, every member must explicitly acknowledge their trustee responsibilities, ensuring complete transparency and understanding.

4. Formal Registration

The next hurdle is registering your SMSF via the Australian Business Register, electing ATO oversight in the process. This legitimises your fund, listing it on Super Fund Lookup and enabling seamless contributions and rollovers.

5. Dedicated Banking

For an SMSF to function smoothly, a dedicated bank account under the fund's name is non-negotiable. This segregation ensures clarity in transactions and an organised record of contributions.

6. Submission of TFNs

Every member's Tax File Number (TFN) should be recorded. The absence of this data can limit personal contributions and escalate taxes on employer contributions.

7. Digital Integration

For your SMSF to receive employer contributions, it needs an electronic service address, acting as a conduit for SuperStream data.

8. Commence Rollovers

For operational simplicity and a consolidated view, initiate rollovers from other funds. Centralising assets can simplify and focus your investment strategy.

9. Envisioning the Exit

While it might seem counterintuitive, sketching out an exit strategy at the onset ensures clarity and provides a roadmap for potential future dissolutions.

Need support? You’ve got it.

Whether you're contemplating the SMSF route or are in the foundational stages, an accountant plays a pivotal role in your SMSFs success.

Venturing into the SMSF realm is a big decision. It demands thorough research and planning so you can decide whether the effort of managing an SMSF is worth the payoff. And while the idea of complete control is enticing, the complexities of finance often necessitate professional expertise. We’re ready to help! Talk to us about your SMSF and let's plan for your retirement.

Difference Between Buying Property as Joint Tenants or Tenants in Common

Mon, 16 Oct 2023 03:24:21 GMT

When you decide to purchase a property with another person, you're faced with a crucial decision regarding the type of ownership you want to establish. There are two primary forms of co-ownership: Joint Tenants and Tenants in Common. Both have distinct features and implications for the rights and responsibilities of co-owners, especially in the event of one owner's death.

1. Joint Tenants

When two or more individuals purchase a property as joint tenants, they equally share ownership of the entire property.

Key Features

Equal Interest: Each joint tenant has an equally owned interest in the property. This means that no individual can claim a specific section of the property.

Right of Survivorship: A standout feature of joint tenancy is the right of survivorship. If one joint tenant dies, their share in the property automatically passes on to the surviving joint tenant(s). This process bypasses probate, allowing for a smoother transition of property rights.

Requires Mutual Consent: One joint tenant cannot unilaterally sell or transfer their interest in the property without the consent of the other joint tenant(s).

Common Uses: Due to the right of survivorship and equal interest features, joint tenancy is a popular choice for spouses and de facto partners. It ensures that in the event of an unexpected death, the surviving partner retains the property without legal complications.

2. Tenants in Common

As tenants in common, individuals own specific, distinct percentages of the property, which might be equal or different.

Key Features

Varied Interest: Tenants in common can own different percentages of the property. For instance, one can own 60% while the other owns 40%.

No Right of Survivorship: Unlike joint tenancy, if a tenant in common dies, their share doesn’t automatically pass to the other tenant(s). Instead, it goes to their beneficiaries as specified in a will (or by the rules of intestacy if no will exists).

Independent Transactions: A tenant in common can sell or transfer their portion of interest in the property to a third party without the consent of the other tenant(s). However, this can introduce a new co-owner into the arrangement.

Common Uses: Given its flexibility, tenants in common is often favoured by business partners or investors. It's also suitable for friends or relatives buying property together, especially when they've contributed different amounts and wish to reflect this in ownership percentages.

Deciding Between the two

The decision between joint tenancy and tenancy in common should be made after careful consideration of your circumstances and long-term goals. It's vital to reflect on your relationship with the co-buyer, the desired flexibility for future transactions, and the inheritance plan. For instance, if ensuring that your share of a property passes directly to a child or another beneficiary upon your death is a priority, tenants in common might be more appropriate.

In conclusion, understanding the implications of these ownership types is essential when co-purchasing a property. Both have their advantages and potential drawbacks. Regardless of the chosen arrangement, it's beneficial to consult with a legal professional to ensure the chosen structure aligns with individual intentions and offers the best protection for all parties involved.

Your decision and it’s tax implications

When co-purchasing a property and deciding between Joint Tenancy and Tenancy in Common, an accountant can offer invaluable advice and assistance when it comes to the tax Implications.

For example, when selling a property, there may be CGT implications. We can help you understand how your type of ownership will affect your CGT liabilities, especially if the property appreciates in value. Additionally, if the property is rented out, the rental income may have tax implications based on the share of ownership.

To talk about this and more, contact us today .

Is negative gearing into shares a good idea?

Fri, 15 Sep 2023 04:00:00 GMT

Investing with borrowed money — a strategy known as “negative gearing” — is a high-stakes endeavour that a select few navigate successfully. Negative gearing into shares, specifically, entails borrowing money to invest in shares, with the interest on the loan exceeding the dividends earned from the shares.

Without proper financial guidance or market experience, this strategy is more trouble than it’s worth. So, today we'll look at the potential benefits and risks of this strategy to help you make an informed decision.

Understanding your marginal tax rate.

One pivotal factor in determining the viability of negative gearing is your marginal tax rate. When you find yourself in the higher tax brackets, you stand to gain by leveraging borrowed funds for investments. The reason lies in the potential tax deductions on the interest payments made towards your loan. However, it's crucial to proceed with caution here! This approach only works if your post-tax investment returns surpass the associated loan costs. Otherwise, you might find yourself grappling with negative returns…

Unlocking the power of franked dividends.

While franked dividends may not directly enhance your bank account, they still optimise your financial position. Essentially, companies pay a certain amount of taxes, and these tax credits are associated with the shares you purchase from the same company. By investing in franked dividends, you can potentially eliminate tax liabilities, leaving you with more capital for investment.

The benefits of negative gearing.

We’ll get to the risks, but we want to start on a high note and cover the potential benefits of negative gearing.

1. Tax credits.

Investing in quality shares can grant you tax credits on the dividends you receive, thanks to the dividend imputation system (DIS). This can positively impact your cash flow by reducing the tax burden on your income.

2. Wealth accumulation.

Negative gearing allows you to increase your investment capacity beyond what would typically be feasible. This means you could potentially multiply your earnings in a favourable market.

3. Expense & interest deductions.

Current taxation laws permit deduction claims for expenses and interest, which can be offset against assessable income from various sources, including business, investments, or salaries.

Navigating negative gearing risks.

Like any form of investment, negative gearing into shares carries inherent risks.

1. Lower income

There's a high chance that the income generated from your investment will fall short of expectations. Companies may offer lower dividends or none at all, leaving you with limited income.

2. Capital risks.

The value of shares purchased with borrowed funds may not meet your expectations. Investors aiming for capital gains may face a scenario where their returns fail to cover the remaining loan balance. It's a good idea to have a financial cushion to help mitigate this risk.

So… Is negative gearing into shares worth it?

The annoying answer is: it depends. Negative gearing is best suited for those with a willingness to confront potential risks head-on. If you're new to the concept, seeking advice from a business advisor in Perth or a financial professional is essential. The right guidance will help you weigh the pros and cons, enabling you to make an informed financial decision that aligns with your objectives and risk tolerance.

Remember, investing with borrowed funds can be extremely beneficial, but it’s not without its challenges. Success depends on careful planning, market awareness, and sound financial advice. Want some? Contact us today.

Key considerations for SMSF and crypto investments

Fri, 15 Sep 2023 04:00:00 GMT

Investing in cryptocurrency through an SMSF presents unique opportunities, but it also comes with critical responsibilities that require meticulous attention. For example, the intangible nature of cryptocurrencies accentuates the importance of maintaining precise records. This step is often overlooked, yet it’s a step that can result in a comprehensive audit.

So, what measures should SMSF trustees take to preempt potential issues down the road?

Understanding SMSF trustee & member responsibilities.

An SMSF's investment strategy covers the objectives and types of investments it can venture into. Before diving into the world of crypto assets, trustees and members should assess the risks. If needed, they should revise the fund's investment strategy to ensure compliance with the contemplated investment.

Prior to acquiring cryptocurrencies, trustees should review the investment provisions detailed in the SMSF's trust deed to ensure it’s an approved investment. If it’s not, they might like to amend the trust deed to include cryptocurrency investments.

Acquiring cryptocurrency.

To acquire cryptocurrency, an SMSF must establish a trading or exchange account with an external platform in the fund's name. A thorough due diligence assessment of the chosen exchange is essential to ensure proper account setup and that trustees comprehend the ensuing reports. Notable platforms for trading include Swyftx and CoinSpot.

Maintaining asset separation.

Clear separating assets is essential. Crypto investments must be meticulously managed independently from the personal or business matters of trustees and members. A digital wallet should exclusively house the SMSF's crypto assets. Popular and trusted options include Capital, eToro, Trezor Model One, and Ledger Nano X.

Cryptocurrency records required for auditing.

Auditors will necessitate a comprehensive set of records for cryptocurrency investments, including:
Transaction receipts with purchase, transfer, or disposal dates.
A record of each transaction date.
Transaction purposes and counterparty information (e.g., crypto asset addresses).
Exchange records.
Valuation of crypto assets in Australian dollars at each transaction's time.
Documentation of agent, accountant, and legal expenses.
Digital wallet records and keys.
Software costs related to tax management, such as digital wallets.

Other details you need to know.

Each crypto asset should be detailed separately, as they are distinct Capital Gains Tax (CGT) assets. Additionally, an annual trustee declaration is mandatory to verify ownership.

In financial reporting, digital assets must be categorised as "Digital Assets / Crypto / Crypto Currency / Other Asset." However, if the digital investment holds substantial significance, it warrants specific disclosure.

Finally, for tax purposes, it's essential to recognise that crypto assets are not considered currency, but CGT assets. Therefore, any regular income derived from crypto — such as token rewards — must be declared as “other income” in the SMSF tax return.

The ATO's vigilance

The Australian Taxation Office (ATO) has been monitoring cryptocurrency since 2019 through a data-matching program focusing on crypto transactions. This initiative enables the ATO to access data from Designated Service Providers (DSPs) to identify crypto buyers and sellers and quantify their transactions. It then cross-references this data with its own records to detect individuals failing to meet their registration, reporting, submission, and payment obligations.

Here’s what your SMSF auditor must be able to review:

Compliance with the SMSF's investment strategy for cryptocurrency investments.
Adherence to SIS act and trust deed provisions governing the investment.
Proper registration of the digital wallet in the fund's name.
Reconciliation of end-of-year balance with holding statements.
Submission of a detailed transaction listing for review.
Accuracy of cryptocurrency valuations converted to Australian dollars.
Correct asset classification as Digital Assets / Crypto / Crypto Currency / Other Asset.
Receipt of an Annual Trustee Declaration.

Confused? You’re not alone.

The SMSF and cryptocurrency worlds are already complicated enough — it’s no wonder so many people feel overwhelmed when these worlds collide.

One thing is certain: meticulous compliance and record-keeping is paramount, and Ascent Accountants are ready to help. We can also refer you to a trusted financial advisor or other expert in the cryptocurrency SMSF space who can continue to support you. Don't hesitate — reach out to us today and let's embark on this cryptocurrency adventure together!

The importance of professional property management: insights & advice from Ascent Property Co.

Fri, 15 Sep 2023 04:00:00 GMT

When it comes to investment properties, maximising your returns is paramount, which is an area investors often struggle with. One way to achieve this is by enlisting the services of a professional property manager.

Recently, Luke Langford, Director/Licensee at Ascent Property Co, sat down with Chris Brown, Senior Financial Adviser at Chapters Retirement Partners, to explore residential property management.

They cover the key advantages of professional property management, the preferences of quality tenants, and essential questions to ask when considering property management services. Here's a closer look at their conversation.

Follow Ascent Property Co on Instagram & Facebook !

Chris: What are some key advantages for a property owner engaging professional property management when leasing a property?

Luke: Professional property management offers many advantages for property owners leasing their properties — I’ll give you 10 off the top of my head.

Expertise : Property managers possess extensive knowledge of local real estate markets, rental laws, and industry best practices, ensuring optimal rental pricing and tenant selection.
Time Savings : Delegating tasks like tenant screening, maintenance coordination, and rent collection to professionals frees up property owners' time for other pursuits.
Quality Tenants : Property managers rigorously screen potential tenants, reducing the risk of problematic renters and minimizing vacancy periods.
Reduced Vacancies : With efficient marketing strategies, property managers attract tenants quickly, minimizing downtime between leases.
Legal Compliance : Professionals stay updated on ever-changing rental regulations, helping property owners avoid legal pitfalls and potential liabilities.
Maintenance Management : Property managers handle repairs and maintenance, preserving the property's condition and value while minimizing owner involvement.
Rent Collection : Timely rent collection is ensured through streamlined processes, reducing the hassle of chasing payments.
Tenant Relations : Property managers act as intermediaries, addressing tenant concerns, and handling conflict resolution professionally.
Financial Oversight : Comprehensive financial reporting keeps property owners informed about expenses, income, and overall property performance.
Peace of Mind : Entrusting property management to experts provides owners with confidence that their investment is being well-managed.

Chris: Amazing! Just on your point about quality tenants, do you find quality tenants prefer to lease a property managed professionally?

Luke: The short answer is “yes”, definitely. Quality tenants generally prefer to lease a professionally managed property and see the value in it. There are a few reasons for this.

Firstly, reliability: professional property management ensures prompt handling of maintenance, repairs, and tenant communication, giving tenants reassurance. These properties are generally better maintained and have timely repairs which creates a better living experience. Another plus is efficiency. Experienced property managers streamline lease agreements, rent collection, and administrative tasks for smoother tenant processes.

Dedicated management also offers tenants peace of mind because they can rely on managers to address issues during their lease and manage communications with the property owner, which can sometimes feel a bit awkward. Finally, property managers have an extensive knowledge of rental regulations and ensure legal compliance — that’s good news for both parties.

Chris: What questions should you ask a property manager if you’re considering using their services?

Luke: It's essential to ask the right questions to ensure your chosen agency aligns with your needs and goals. Obviously being in the industry, I’ve received just about every question you can think of. These are the topics I think it’s most important to ask about.

Experience and qualifications.
Services and fees.
Tenant screening and placement processes.
How rent collection and other financial aspects work.
Maintenance and repairs.
How communications (particularly, difficult conversations) are managed.
How vacancy and marketing are handled.
Property inspections — they’re frequency and what’s checked.
If needed, the tenant eviction process.
Legal and compliance aspects.
Contract and termination.

Asking questions in these areas will provide a comprehensive understanding of the property manager's capabilities and approach to property management, ensuring a good fit for you and your property.

Chris: And if they choose to go ahead, what are some things a property owner can do to make their home more appealing and achieve the best rental return?

Luke: Making your property appealing to renters involves aesthetic improvements and practical considerations. An obvious one is cleaning and repairing. Take some time to ensure the property is well-maintained, addressing any maintenance issues to create a positive first impression. This could be as simple as a fresh coat of paint — I always suggest neutral colours to enhance the property's appeal. Maintaining the exterior, landscaping, and entrance also makes the property more inviting via good curb appeal.

A more expensive aspect to think about (but well worth it in my experience), includes modernising the home where possible. Consider updating features such as appliances, countertops, and fixtures to increase aesthetics and functionality. Kitchens and bathrooms are no different — if owners can afford to upgrade these key areas, they’ll attract higher-quality tenants.

In saying that, understanding your target market and tailoring improvements accordingly is crucial for achieving the best rental return.

Chris: Talk to me about property management fees. Are these fees normally a tax-deductible expense?

Luke: Yes, property management fees are typically tax-deductible expenses for property owners. These fees are considered operating expenses directly related to the management and maintenance of your rental property. As a result, they can be deducted from your rental income when calculating your taxable rental profit.

Chris: How can professional property management help when a property is to be sold with a tenancy agreement in place?

Luke: Professional property management can be incredibly beneficial here. For starters, they ensure the existing tenancy agreement remains intact, providing a consistent rental income stream during the sale process. This includes documentation and lease transfer — managers handle the necessary paperwork to transfer the lease to the new owner. They also maintain communication with tenants, minimising disruptions and preserving a positive landlord-tenant relationship.

Additionally, property managers are well-versed in local landlord-tenant regulations. They ensure that the sale process is conducted in compliance with these regulations, protecting both your interests and the rights of the tenant whilst ensuring all legal requirements are met during the transition.

Explore the Ascent Property Co advantage

Choosing the right property management team can significantly impact your financial outcomes. Ascent Property Co sets new standards in property management and currently offers a special introductory management package for new clients.

To seize this opportunity, visit their website or reach out to Luke Langford directly on 0493 672 956 or at luke@ascentpropertyco.com.au. You can also speak with Nigel Parker on 9356 8033 or at nigel@ascentpropertyco.com.au.

And, don’t forget to follow Ascent Property Co on Instagram & Facebook!

Understanding the new regulations on interest for vacant land loans

Fri, 15 Sep 2023 04:00:00 GMT

Before July 2019, loans for vacant land were an attractive avenue for entering the property market. The interest on these loans was deductible, making the overall cost lower for borrowers. This had the potential to yield significant profits once the property was developed and either rented out or sold. However, in July of this year, new regulations came into effect.

In this article, we'll explore how these changes in the law could impact your business and what steps you may need to take.

Defining “vacant land” for tax and legal purposes.

Vacant land, for tax and legal purposes, is defined as land that lacks a substantial and permanent structure during the period of ownership. This classification extends to land containing a substantial and permanent structure if that structure falls into the category of residential premises. In such cases, the residential premises must have been constructed or significantly renovated while the entity held the land.

Additionally, these premises must meet one of two conditions: either they are not yet legally fit for occupancy, or they are legally fit but have not yet been rented out or made available for rent.

Notably, certain purchasers of potential residential land are now obligated to withhold a specific amount from the land's purchase price for payment to the relevant authorities. This ensures compliance with tax regulations and legal requirements in the realm of vacant land transactions.

Interest deductibility post-construction.

Previously, if you held vacant land and took out loans for it, you could deduct the interest accrued on those loans as a business expense. However, the legislation now mandates that interest is only deductible once a structure has been built on the land. This means that keeping land vacant with no immediate development plans has become a more expensive proposition. To mitigate the effects of this change, you'll need to expedite construction on the land. By doing so, you not only make the interest deductible sooner but also start generating revenue from the property at an earlier stage.

The impact on existing properties.

If you already own vacant land and have been deducting interest on loans taken out before the law change, the interest on these loans is no longer deductible until a structure is erected on the land. If you've held vacant land for an extended period without any development, your interest expenses will not be tax-deductible.

If this is you, constructing a building on the land can be a smart strategy to reduce your tax liability and generate income. While there may be initial costs associated with starting construction, this approach can be more profitable in the long run.

Entities that are unaffected by this change.

This change doesn’t impact all entities and taxpayers uniformly. There are certain circumstances in which deductions for expenses associated with holding vacant land remain permissible.

Entities falling within the following categories can continue to claim deductions for expenses related to vacant land ownership: corporate tax entities, superannuation plans (excluding self-managed superannuation funds), managed investment trusts, public unit trusts, and unit trusts or partnerships consisting entirely of members belonging to this specified list. This exemption ensures that those with legitimate business or investment purposes involving vacant land can still access deductions within the bounds of the new regulations.

Consult an expert.

The changes in regulations surrounding interest on vacant land loans have altered the financial landscape for property investors. To navigate these changes effectively, it's advisable to consult experts in tax planning, such as Ascent Accountants.

With years of experience, our expert team can guide you through the shifting legal landscape and help you make informed decisions. If you have any questions or need advice on vacant land loan interest changes, please don't hesitate to contact us . We're here to help you make the most of your investments.

See what business structure is right for you

Tue, 15 Aug 2023 02:00:00 GMT

Building a new business? Set yourself up for success from the start by choosing the best business structure for your needs. Regardless of the industry you’re in, the way you structure your business will impact your operations (we’ll cover this later) in the short and long term. This could be good or bad! If you choose the wrong structure, the impacts can seriously impact the success of your enterprise…

So, what are the business structure options, and how can you choose the right fit? For most small businesses, there are four basic choices. Familiarise yourself with each of the four structures to determine which structure is best for your business.

Four business structures for a small business.

There are more than four business structures, however these are the most-widely used and appropriate options for small business owners.

1. Sole Trader.

A sole trader business is where one person owns, operates, and manages the business. This is a structure commonly used by small and microbusinesses, and a sole trader is not considered a separate legal entity. Examples include tradespeople, shop-owners, consultants, freelancers of any industry, and other small businesses with one main person running it.

As a sole trader, even though you are solely responsible for running the business, you can still hire employees. You do not need to pay superannuation and workers’ compensation to yourself as a sole trader.

2. Partnership.

Like the name suggests, a partnership describes at least two people who jointly own and manage the business — but not as a company. Each party contributes funding, labour, and skills to the business, sharing in the income and liabilities according to agreed ratios. This doesn’t necessarily have to be a 50/50 split, and the specifics are detailed in a Partnership Agreement to ensure all parties are on the same page. Like a sole trader, you do not need to pay superannuation and workers’ compensation to yourself in a partnership structure.

3. Trust.

Trusts are legal relationships where a person or persons (the ‘trustees’) hold property or income on behalf of a beneficiary or group of beneficiaries. Trusts are a common business structure for family-run businesses. The benefits include tax minimisation strategies, as well as succession planning opportunities to ensure the future of the business.

Paying superannuation and workers’ compensation to yourself is compulsory with this arrangement.

4. Company.

Companies are a legal entity in their own right, separate from their owners. A different tax structure applies, as well as different administrative requirements. Paying superannuation and workers’ compensation to yourself is compulsory with this arrangement.

How your business structure affects your business.

There are six main business areas that will be affected by how you structure your business:

Finances including tax liabilities, superannuation, workers’ compensation, and so on.
Legal controls and constraints.
Administrative burden and costs.
Asset protection.
Personal liability for debts.
Your ability to raise funds.

Now you know the options, but how do you decide?

To help you select the most suitable structure for your business, we’ve penned some questions for you to consider.

1. How big is the business you’re creating?

If it’s just you in the business (for the foreseeable future at least), its sole trader status will be most favourable. Remember, as a sole trader, you can still hire employees, but you’re solely responsible for running and managing the business. If you have rapid growth plans and require help to run and manage the business, forming a company or partnership may be better.

2. Can you handle a complex set up procedure?

The simplest and cheapest form of business structure to register is sole trader or partnership. They are generally quick and easy to set up. If it’s just you in charge of operating the business, you may want to avoid the complexities involved in setting up a trust or company.

3. How flexible do you need your business to be?

Sole traders enjoy greater flexibility when it comes to management and generally operate with fewer legal controls than companies, partnerships, or trusts. However, they have less flexibility with tax affairs, and there is no income-splitting option like there is with partnership, company and trust setups.

4. Do you want to keep admin and reporting simple?

If you’re considering a trust or company, the administrative and reporting requirements are more cumbersome than with a simpler sole trader set up.

5. How do you feel about accepting full liability?

Sole traders retain all the profits from the business (unlike with a partnership, trust or company) but they’re also responsible for all debts. This can increase the pressures of running the business, and even threaten your home and other personal assets if the business isn’t doing well financially.

Companies are more complicated and expensive to set up, but you won’t be solely responsible for debts incurred. Only the assets of the Company will be at risk, however it is possible for a director’s personal assets to be at risk if they are found to have acted negligently.

6. Will you need to raise capital?

“Capital raising” is when a company asks for money from investors. This money might be used for funding, expanding, or acquiring something. As a company, trust, or partnership, it’s relatively easy to raise capital. However, this becomes much more difficult as a sole trader (and usually isn’t necessary anyway), so you will generally have to rely on savings, home equity or family loans.

7. How much control do you want in the business?

As a sole trader, you have total control over all business decisions. As a partnership, trust, or company, decision-making must be a shared responsibility. It’s not uncommon for business owners to start as a sole trader and then evolve into a more complex structure over time — and the business owner struggles to relinquish control. This causes tension within the company, trust, or partnership. While some business owners want full control, others enjoy knowing that responsibilities are divided and shared. So, what resonates better with you?

So, what happens if you choose the wrong business structure?

It’s annoying, but it’s not the end of the world. You can change your business structure if your circumstances change or if you think you’ve made the wrong decision. However, obviously it pays to opt for the most suitable structure from the start, which is why we suggest engaging a third party to help you with your decision . Changing from sole trader to another structure is relatively simple but changing from a partnership, company, or trust is more complicated.

Get expert advice before you start your business.

Always seek specialist advice before making your final decision. If you want to chat through your options, contact Ascent Accountants today . We specialise in business set up and know the different business structures inside-and-out. We’ll be happy to talk through your options, go over the pros and cons of each, and help you land on the best structure for your business needs. We also do it while considering any business growth plans, so your business is set up for success now and in the future.

How long do you need to keep business receipts and records for?

Tue, 15 Aug 2023 02:00:00 GMT

Record-keeping is an essential part of running your business — it’s important to understand the record-keeping requirements so you can meet legal tax, super and registration obligations for your business. Not only does it make tax time easier, these records help you make informed business decisions backed by data. Keeping accurate records helps you (and banks and lenders) see how your business is going, track income and expenses, and makes your tax return simpler for your registered tax or BAS agent.

What business records you need to keep.

Records you need to keep include receipts and any other evidence of sales and purchases (such as warranties or ownership documents) you made for your business. This might include equipment such as a phone, laptop, or tools, land and property purchases, vehicles, and other assets. You’ll also need to note all records relating to tax returns, activity statements, fringe benefits tax (FBT) returns, contributions to employee super, tax invoices, wage and salary records, and documents about GST.

Payments or amounts you receive.

If you receive income or other payment amounts you need to declare in your tax return, you need records that show the amounts. You may need to provide the ATO with a copy of the records if they review a return you lodge.

For salary, wages, allowances, government payments or pensions and annuities you receive, your records may include:

Your income statement if your employer reports to the ATO through single touch payroll (STP).
Your PAYG payment summary — individual non-business.
Your PAYG payment summary — superannuation income stream.
A signed letter or statement from your payer, that provides the same information as an income statement or payment summary.

For assessable investment income from interest, dividend and distributions from managed funds, your records may include:

Interest, dividends or distributions statements.
Standard Distribution Statement (SDS) and Attribution managed investment trust member annual (AMMA) statement, that shows the amount of your distribution, the amount of any primary production or non-primary production income, any capital gains or losses, any foreign income and your share of any credits.

Deductible expenses.

If you claim a deduction for a deductible expense, you must have records. Examples include the cost of managing your tax affairs or gifts and donations you make to a deductible gift recipient. For most expenses, you need to provide a receipt or similar document as evidence.

Work-related expenses.

If you claim a deduction for a work-related expense, you must have records of those expenses that show you spent the money and how that expense directly relates to earning income. To do this, you need a record that shows private and work-related use, and how you calculate the amount you claim as a deduction. This might include expenses for vehicles and transport, travel, clothing and dry-cleaning, mobile and internet use, and even meals.

Investments and assets.

If you acquire a capital asset, you’ll make a capital gain or capital loss if you later sell the asset. To ensure you don’t pay more tax than necessary, keep accurate records from when you buy the asset. This may include income you receive from an investment property or dividends from shares.

How to keep records of income and expenses.

Written evidence of your income or expenses can be paper-based or electronic — most people find electronic methods of recordkeeping easier. For most expenses, you need a receipt or similar document from the supplier (without it, it will be very difficult to support any expense claims you make in your tax return).

If a receipt is lost, destroyed, or difficult to obtain for some reason, an acceptable record will have the following data:

The name or business name of the supplier.
The amount of the expense or cost of the asset.
The nature of the goods or services.
The date you buy the goods or services.
The date the document was produced.

The importance of keeping records.

Australia's tax system relies on self-assessment. This means that, in most cases, the ATO accepts that the information you provide is accurate. However, if they review your tax return and you don't have evidence to support claims for a deduction, your claims will be taken off your tax return.

Keeping records helps you and your tax adviser prepare your tax return, provide evidence of your income and expenses (in case the ATO asks about it), and ensure you claim all your entitlements. Record-keeping also reduces the risk of tax audits and adjustments, avoids exposure to penalties, and reduces the cost of managing tax affairs.

How long you need to keep these records for.

You must keep written business records for at least five years from the date you lodge your tax return.

Need support when it comes to record-keeping?

We provide our clients with templates and strategies for simple yet proficient record-keeping. We can also help you at tax time and simplify the process as much as possible. Contact us, and we can help you understand more about your record and receipt-keeping obligations.

Want to help your child buy a property?

Tue, 15 Aug 2023 02:00:00 GMT

House prices remain high, the cost of living is skyrocketing, and young adults are taking low-paying jobs just to kick-start their careers and get a foot in the door. The chances of your adult children buying their first home on their own while they’re still young? Not impossible, but improbable. Did you know the average age for first homeownership has jumped up to 34.5 years?

Your child might be ready to spread their wings, but their bank account might have other plans… More and more young singles, couples, and families are at the whim of their landlords, or still living with parents and relatives while they save for a home deposit.

Help is at hand.

All parents want the best for their children, and for many, this means supporting them financially as they leave the nest and venture into homeownership. In fact, a recent report by the Australian Housing and Urban Research Institute states that 40% of people aged 25 – 34 ask their parents for assistance. Whether your child approaches you or you’re the one to put the offer on the table, the “Bank of Mum and Dad” is becoming an increasingly popular option.

With your help, your child is more likely to secure a mortgage (that would otherwise be out of reach) and access larger amounts of money for a deposit to secure a property. This gets them out of the rent-trap and allows them to build equity over the long term. And of course, the most advantageous reason to financially support your child’s homeownership is to get them out of the house!

Here are three ways you can do it.

1. Act as a guarantor.

This is probably to most popular way to provide the support your child needs. As a guarantor, you give up the title of your house as security to your child’s lending bank, and the bank has control over a portion of their security. It also means that your child won’t have to pay mortgage insurance, which could lead to a saving of up to $30,000.

The major risk with being a guarantor is that — in the worst-case scenario — the mortgage lender has the right to sell a child’s home and the parents' property to repay the loan amount. This could potentially leave the parents and child homeless. The good news is, this happens very rarely, but it’s important to ensure you understand all the risks.

A new study by Mozo confirmed that of those parents who acted as guarantors for their child, 26% reported their child had defaulted on their loan. This doesn’t necessarily mean the family home was taken by the bank, but the parents would have had to pick up the slack. If you know your child struggles with saving or managing their finances, entering into a guarantor agreement isn’t advised.

The main benefit to being a guarantor is that you’re able to support your child with no out-of-pocket expenses (unless things go very wrong). Guarantors are kept up to date with whatever the borrower pays, so you’ll never be blindsided and can help manage the payments if things start to go south.

2. Provide a cash boost.

If signing up as a guarantor doesn’t sound like the right fit for you, another option is providing a cash gift so your child can put down the required deposit. Most parents dip into their own savings to do this (Mozo revealed that 64% of parents do this), or take out a portion of their child’s inheritance. Some parents also arrange a payment plan with their child where the child agrees to pay it back overtime. A repayment agreement is between the two of you and can come with or without interest, depending on what you decide. It doesn’t have to be a formal written agreement, although some parents prefer it.

So, how much should you provide? It’s totally up to you. Perhaps your child already has most of the money they need, and only requires an additional $5,000 to reach their deposit goal. However, the average amount parents pay is an enormous $70,000!

The main benefit to offering cash is that you can lend a helping hand without risking your own home to potential foreclosure.

3. Draw on equity.

You may be in a favourable position where you can redraw a home loan secured against your family home. In this case, you can lend the required home deposit funds to your child for their home purchase. This strategy also helps your child avoid costly lenders mortgage insurance.

Do your research.

It’s important that you know what options you have when it comes to helping your child purchase their home. Talk to your bank and your child’s bank (if different to yours) about the most risk-averse option. We can help too — supporting your child in this area will likely have tax implications you should know about. Contact us to talk about this in more detail.

Claiming a tax deduction for a car in your tax return

Tue, 15 Aug 2023 02:00:00 GMT

Like many business owners, you might enjoy the benefits of a company car, but did you know this affects your tax return?

Wait, what’s a “car” again?

To claim a work-related car expense, the vehicle must be a car by the ATO’s definition: “a motor vehicle that carries a load of less than one tonne and fewer than nine passengers (including the driver)”. You can claim for vehicles other than a car, such as a motorbike or truck, but this article specifically pertains to tax deductions for car use within a business.

See if you qualify.

1. You must own or lease the car.

To claim car expenses, you must own or lease the car, or hire it under a hire-purchase arrangement. You do not own or lease the car if you use it under a salary sacrifice or novated lease arrangement. In this situation, the car is usually leased by your employer from a financing company, and your employer pays for the running costs and claims deductions.

2. You must use the car for work purposes.

This means you can claim for trips between workplaces or to perform your work duties. You can't claim for trips between your home and place of work, except in limited circumstances.

You must have spent the money yourself and weren't reimbursed, and have the required records to prove it (for example, receipts for petrol). If you receive an allowance from your employer for car expenses, you must include it as assessable income in your tax return. The allowance amount is shown on your income statement or payment summary.

If you travel for work but then also engage in personal activities while you’re there (e.g. driving to a restaurant for dinner), you can only claim a deduction for the work-related portion of your expenses.

How to calculate car expenses.

There are two methods you can use to calculate your car expenses. The cent/km method or the logbook method. If you are claiming car expenses for more than one car, you can use a different method for each car depending on what works best for your circumstances. You can also change the method you use in different income years for the same car.

1. Cents/km method.

You can claim a maximum of 5,000 work-related kilometres per car. If you and another joint owner use the car for separate income-producing purposes, you can each claim up to 5,000 work-related kilometres.

To calculate your deduction using this method, multiply the number of work-related kilometres (the kilometres your car travels in the course of earning your income) you travel by the rate per kilometre for that income year. The rate for the 2023–24 income year is 85 cents/km. The rate for the 2022-2023 income year is 78 cents/km. The cents per kilometre rate covers the car’s decline in value, registration, insurance, maintenance, repairs, and fuel costs.

If you use this method, you don't need receipts. However, you do need to be able to show that you own the car and how you work out your work-related kilometres. For example, you could record your work-related trips in a diary or using the myDeductions tool in the ATO app.

2. Logbook method.

To calculate your deduction using the logbook method, you need to keep a logbook that shows your work-related trips for a continuous period of at least 12 weeks. Your logbook must include the destination and purpose of every journey, the odometer reading at the start and end of each journey, and the total kilometres travelled during the period. If you are using the logbook method for multiple cars, you’ll need a separate logbook for each car — make sure they cover the same period.

You can keep an electronic logbook using the myDeductions tool in the ATO app, or keep a paper logbook. Either way, your logbook is valid for five years, and you must retain your logbook and odometer records for five years after the end of the latest income year that you rely on them.

You also need to keep receipts (or similar records) or all work-related car expenses. This includes receipts for registration, insurance, lease payments, services, tyres, repairs, electricity expenses and interest charges. Petrol and oil expenses — or a record of your reasonable estimate of these expenses based on the odometer readings for the start and end of the period for which you are claiming — also need to be kept. You must also record the purchase price of the car and how you work out your claim for the decline in value of your car, including the effective life and method you use.

Then, use your logbook to calculate the deductible portion of your car expenses:

Work out the total number of kilometres you travelled during the logbook period.
Work out the number of kilometres you travelled for allowable work-related trips during the logbook period.
Divide the work-related kilometres by the total kilometres, then multiply by 100. This is your work-related use percentage.
Add up your total expenses for the period for which you are claiming.
Multiply your work-related use percentage by your car expenses. This is the amount you claim as a deduction.

Want more support when it comes to car claims?

Australian tax laws can be incredibly confusing, and it can be difficult to keep up with how these laws affect your work vehicle use. If you're claiming work-related car expenses, we can help you with a logbook to ensure you’re claiming the maximum amount at tax time. So, contact us today .

How to avoid delays and maximise your tax return

Mon, 17 Jul 2023 01:42:00 GMT

We are well in the thick of tax return time, and with the cost of living being hiked left, right and centre, it seems a lot of us are talking about how we can make the most of our return.

Getting the best tax return requires foresight, planning, organization, a good tax professional who knows the system and several other key strategies to ensure your refund is the best it can be. Oh, and we all want a quick turnaround time too, don’t we?

To help your tax return reach your bank account hastily and handsomely, follow our top tips below.

Don’t rely on prefilled ATO data

Relying on the prefilled data from the ATO is not a great idea when it comes to getting the best return. While it may be a simple and quick way to push your tax return through the system to lodgement, the ATO’s prefilled information is not always the most accurate or reliable.

“How can this be?” you may think. Well, many third parties don’t actually pass on certain data until they’re legally required to, which can be well into July and in some cases, August. Therefore, you may notice income information doesn’t show in the system when you’re downloading data from the ATO prefill form.

Rather than relying on the prefill form, it’s wise to input your own income statements to ensure the correct information is being lodged. Remember too – the legal burden is on you to ensure all the correct information is there.

Avoid over-claiming on deductions

While this one may seem like a no brainer – and can legally implicate you if you’re not being truthful on your tax submission – over-inflating your expenses can be more of a hinderance than helpful.

Over-claimed deductions on tax returns will delay processing of tax returns as these lodgements will need to be looked at more closely by the taxman. So unless you have the receipts and evidence to back up your expenses, only claim what you should.

Correct claiming can also ensure you receive the most from your return, so if you’ve purchased anything for your work or business in the last financial year like tools, computers, tablets or phones, you can claim all or part of those if you use them for work.

Up to $300 can be claimed for the year items were purchased in, while cost depreciation for pricier items can be deducted as the years roll by.

Monitor your myGov account

It’s important to regularly check your myGov account for any notifications or updates from the ATO, as they may request additional information or documentation to verify your prefill data.

Being proactive and responding promptly to these requests can help avoid delays in processing your tax return, and ensure you get the best tax refund possible when the time comes.

And remember, never ignore letters or notifications within myGov (or anywhere from the ATO, for that matter) that require you to take action. The letters won’t go away and in addition to being penalised for late submission, you could miss out on valuable dollars in your tax refund.

Ensure your personal information is up-to-date

As with the above point, it’s important to ensure all your information is up-to-date to ensure a fast and efficient tax return. Even simple things like address, phone number, bank details or email address changes should be updated as soon as the change occurs to ensure any documentation or refunds are directed to the correct places.

However – it is vital you only update your personal information via the correct and safe avenues because as with our next point, you don’t want to be caught up in a scam.

Be aware of scammers

Around tax time particularly, scammers claiming to be from the ATO seem to appear in droves. Whether it’s a seemingly legitimate email with the ATO and government logos all over it, a simple text message or a phone call from a genuine-sounding ATO representative, there are, unfortunately, people out there trying to steal your hard-earned money and personal information.

Never, ever give your personal details to someone unexpectedly calling, texting or emailing you claiming to be from the ATO or other governing body, no matter how legitimate it sounds. Notifications within myGov are the best way of keeping track of genuine requests for information, as well as you phoning the ATO directly. If something seems “off”, ignore/hang up and contact the ATO yourself to clarify and report the incident, if necessary.

Use a professional accountant

Many people think lodging their tax return is easy. And for some people, like a 17-year-old with a simple employment, no mortgage, no dependants and minimal expenses, it might be. However, as you go through life, things become a little more complicated when other streams of income come in, children are born and other factors come into play to make tax returns a little more complex.

In these cases, it’s really important to consider using a professional accountant. No only will an accountant make sure all bases are covered and leave no stone unturned, they will ensure your tax return is the best it can possibly be, turned around efficiently and submitted legally.

Ensure your next tax return is the best it can possibly be, and avoid lengthy delays by using a professional, registered tax agent.

If you’re seeking a qualified accountant, contact us today and see how we can help.

Selling your home for over $750k? Don’t miss this important detail…

Mon, 17 Jul 2023 01:41:57 GMT

If you're an Australian resident planning to sell your property for a market value of $750,000 or more, it's crucial to familiarize yourself with the clearance certificate requirement. This one important form you need to complete could save you from paying tens of thousands to the ATO – so you don’t want to miss it!

Understanding the clearance certificate process will help ensure a smooth and compliant transaction and of course, save you those precious dollars. So, if you’re considering selling up and your property is worth over $750k, read on to find out all about the clearance certificate, its purpose, and what you need to do in our handy post below.

Firstly…

What is a clearance certificate?

A clearance certificate is an official document issued by the Australian Taxation Office (ATO) that confirms an individual's residency status for tax purposes. It serves as evidence that the seller (you) is an Australian resident and, therefore, eligible for certain exemptions or withholding tax reductions when selling real estate with a market value of $750,000 or more.

Purpose of the clearance certificate

The clearance certificate ensures compliance with the Foreign Resident Capital Gains Withholding (FRCGW) regime. This requires purchasers to withhold 12.5% of the sale proceeds and pay it to the ATO when acquiring Australian real estate from foreign residents. The clearance certificate confirms that the seller is an Australian resident, exempting them from this 12.5% payment. That’s why it is so important to confirm your residency by completing this important form - and avoid paying huge fees to the ATO!

Do I need a clearance certificate?

If you’re an Australian resident planning to sell real estate with a market value of $750,000 or more, then yes! You must apply for a clearance certificate. This requirement applies to both individuals and entities, such as companies or trusts, provided they meet the residency criteria outlined by the ATO.

How do I apply for a clearance certificate?

To obtain a clearance certificate, sellers need to complete and submit the Clearance Certificate Application for Australian Residents application form to the ATO. This form can be found on the ATO website, and lodged electronically through the ATO's online services or via paper. Applicants must provide accurate information about their residency status, contact details, and the property being sold to avoid delays, implications or unnecessary payments.

Processing times

If the vendor is assessed automatically as being an Australian resident, electronic clearance certificates can be issued within a matter of days. Manual processing can take 14-28 days if there are data inconsistencies or exceptions, so you should consider applying well in advance to allow for any potential delays. Unusual cases and higher-risk submissions could take even longer to process, so make sure you factor these time frames into your sale and settlement process as well.

Validity

Clearance certificates are generally valid for 12 months from the date of issue, and can be used during this period for the sale of multiple properties by the same vendor. If the property remains unsold after this period, sellers will need to apply for a new certificate, so make sure you think about this if the sale of your property is taking longer than expected. It's essential to ensure the certificate remains valid throughout the sale process to avoid potential implications, delays or fees.

What happens if I don’t get a clearance certificate?

If you don’t obtain a clearance certificate when required, it can result in the purchaser withholding and remitting a portion of your sale proceeds to the ATO. This amount is typically 12.5% of the sale price, which could mean a minimum of $93,000 you’re missing out on as the seller – and that’s only IF your property sells at the minimum $750k. A few simple calculations on 12.5% of your property’s potential sale price should get you downloading that form ASAP. Yikes!

Variations

From time to time, a seller who does not qualify for the clearance certificate might apply for a variation to avoid paying the 12.5% to the ATO, if they feel it is inappropriate. This could be either because they are a foreign resident who will be making a capital loss on the transaction, or a foreign resident who does not have an income tax liability because of carried-forward capital losses or tax losses.

What if I don’t know how much my property will sell for?

If you’re thinking of selling but unsure whether or not your property will sell for over $750,000 and thus mean you should apply for clearance certificate, the real estate agent you engage will firstly give you a property valuation and an idea of how much your property could potentially sell for.

Following this, if the exact price could go either side of $750,000 (or you choose to auction your property, for example), it’s best to err on the side of caution and just submit the form for the clearance certificate anyway. It’s better to be safe with the clearance certificate if the sale price does go over $750,000, than to be sorry! (And out of pocket, in a big way).

Who should I talk to?

Complying with the clearance certificate requirement is essential for Australian residents selling real estate with a market value of $750,000 or more, so if you’re selling your property, these associated tax obligations can be complex and touch to navigate (especially if you’ve never done it before).

It's therefore super important you seek professional advice from a registered tax agent (like us!) We can provide personalized guidance, ensure compliance, and help you understand any additional implications or exemptions related to your specific circumstances.

For any questions regarding clearance certificates, selling your property, or any other tax or accounting related queries, please contact us – our friendly team are happy to assist.

9 Ways Small Business Owners Keep the Taxman Happy

Mon, 17 Jul 2023 01:41:55 GMT

Benjamin Franklin famously once said: “the only things certain in life are death and taxes,” and the truth is, tax problems can consequentially lead to the death of your small business - unless you take steps to keep the taxman happy.

Small business owners have a lot to think about. From sales meetings and recruitment, to salaries, cashflow issues, marketing, suppliers, and a whole string of other things – the list can go on. There’s no need to add the tax department to the list.

Keeping the ATO happy should be the foundation that underpins your business, so that you can focus on the day-to-day operations of your business and the multitude of other issues that require your attention.

Many authorities are currently tightening the rules and clamping down on tax cheats and tax avoidance, so it’s important to be aware of the many “do’s” and “don’ts” of the tax system!

Nine of the most important general guidelines are detailed below: wherever you’re located, whatever your business size, and whatever industry you’re in. These will help you identify red flags in your tax setup:

1. Understand all the tax requirements - or find someone who does

Do you think your tax affairs are simple? They’re probably not. Many small business owners don’t fully understand tax legislation - so it’s important to seek specialist help.

While it’s tempting to try and look after everything yourself, it can take ages to get to grips with what you need to do, and it’s likely that you’ll miss something important. If that happens to be the case - the taxman won’t be happy.

2. File your returns on time

Make sure you file your tax returns before your deadline – your tax specialist or accountant will let you know this.

Good planning in your business will ensure that you’re ready for the process; you know when it’s coming, have scheduled time to do it each year, and don’t end up scrambling around at the last minute to avoid overdue penalties.

3. Keep consistent & accurate records

As a business owner, you should already understand the importance of accuracy and consistency. Apart from these being general good practice tools in ensuring a successful business, the tax authorities will love you for it too.

Being consistent and accurate will help you flag any changes that affect your tax liability and explain any anomalies that raise questions from the tax authorities.

If you have some bookkeeping experience, you may be able to manage this yourself with user-friendly cloud software like Xero and Quickbooks Online. Otherwise, it’s best to have a certified bookkeeper or accountant keep your accounting records up to date.

4. Keep the ‘evidence’ together

This one sounds pretty obvious, but keep all receipts and invoices for business expenses together! Most business owners know they should do this, but it’s surprising how many find themselves scrambling around looking for receipts when the time comes to do tax returns. Ever hunted for a receipt in your car glove box or wallet? You’re not alone! Furthermore, when receipts are finally located, sometimes the business owner doesn’t even remember what they relate to.

The simple takeaway here? Organisation! All the ATO wants to know is that there is sufficient documentation to justify business expenses, and at the end of the day, only you are responsible for losing receipts or causing confusion about their origin.

Additionally, one of the benefits of using an accounting software such as Xero is the ability to take a photo of a receipt with your smartphone to scan an expense in; or you can use specialist apps that integrate with Xero such as Receipt Bank or Expensify.

5. File business & personal expenditure separately

It’s easy to confuse business with personal expenditure. Unfortunately, it’s also one of the easiest ways to get offside with the tax authorities, and remember you want to keep the taxman happy at all costs.

By keeping your expenditure separate, you can see at a glance what you can deduct and what you can't: that means two separate (probably electronic) filing systems. Don’t be tempted to think “I’ll sort them out when the time comes for my tax return” – or it WILL be a nightmare.

6. If you’re a cash-based business, take extra steps

Some business owners like tradies often get paid in cash, so if this is you, it’s important to take extra steps to keep things transparent. You can guarantee you’ll be on the taxman’s radar at some point.

For income, keep additional records to back up bank deposits, such as cash register printouts or manual records of daily sales that can be matched to the bank records.

We may keep harping on about the benefits of keeping your accounting systems in a cloud-based software, but it’s true – you have the ability to do things faster and easier with paperless processes. For example, trades-based businesses can use apps like ServiceM8 to quote and invoice in the field and even take electronic payments on site, making it easier to not accept cash as payment.

If you’re thinking you prefer to be paid in cash so you don’t have to declare all your business’s income in order to reduce profits and therefore tax – sorry to break it to you but it’s not such a great idea. Not only are you dodging the taxman and putting yourself at risk of fines and serious punishment, your business will actually be more valuable when it comes time to sell it if you have always shown your sales revenue as ‘on the books’.

7. Create a clear policy for employee reimbursement

Tax auditors want to know that you’re following the regulations regarding employee reimbursement. This can be for things such as travel, mileage, personal expenses, etc. They also want to know that expenses are appropriately signed off within the business to indicate that the business accepts liability of those expenses.

The best thing to do here so everyone is on the same page, is document a clear policy that determines what employees can (and can’t!) claim for and how they go about claiming it. Make sure that this is clearly communicated to all employees.

8. Plan for your tax bill

There’s no place for surprise tax bills on the path to success. Tax is generally predictable and consistent, which means that you can - and should - plan for it in advance.

Sit down with your tax professional, understand what’s coming and when, and create a fund that can be used to pay the bill when it arrives. That way there are no nasty surprises ahead and you have the money already there when you need to pay it.

9. Always read the letters

Just because your tax authority writes to you asking questions or requesting records, it doesn’t necessarily mean the worst. Never avoid or delay answering these questions, as they don’t go away.

Answer in a timely fashion - there will normally be an expected response date detailed on the letter. Don’t go beyond this or you could be penalised.

Speak with your accountant or tax specialist and answer the questions to the best of your ability. Most tax issues can be solved relatively easily if they are dealt with before they spiral out of hand.

Don’t get caught out by non-compliance with tax or it can cost you and your business. Get the right tax advice from the start and follow the tips above to keep the taxman happy.

If you need any specialist tax advice for your business, contact us today to talk it over.

Does your business pay contractors?

Mon, 17 Jul 2023 01:41:49 GMT

If your answer is “yes”, and last financial year your business made payments to contractors and subcontractors, for example cleaners, couriers, tradies and more, these payments must be reported in a Taxable Payments Annual Report (TPAR).

In the below post we’ll explore our top tips on TPAR, explaining all about the reporting process, what you need to report, how to do it and any other important information to note.

How do I know if I need to lodge TPAR?

If your business made payments to any contractors or subcontractors last financial year, then you do need to submit a TPAR report for that year.

What do I need to report?

Contractors and subcontractors for the TPAR fall into several categories. If you have made payments to contractors or subcontractors in industries providing the following services, you must report it: 

Building and construction services
Cleaning services
Courier services
Road freight services
IT services
Security, investigation, and surveillance services

In your report, you must include information such as the total payment amount if an invoice you receive from a contractor includes both labour and materials. 

The ATO is a hub for handy resources and offers a free reporting worksheet you can use to help you track payments throughout the year. Simply  download the PDF and enter the details of payments to contractors for services. This sheet does not need to be submitted to the ATO — it’s for internal purposes only and will help you keep track and stay organised. However, you’ll need to refer back to it when it’s time to submit your TPAR so keep it in an easily accessible folder so you can find it when the time comes.

What don’t I need to report?

Some payments don’t need to be submitted in your TPAR. This includes: 

Payments for materials only
Incidental labour
Unpaid invoices after 30 June (only report payments you made on or before 30 June each year)
Workers engaged under a labour-hire or on-hire arrangement
Pay as you go (PAYG) withholding payments (don’t report payments to employees, report these payments through the PAYG withholding annual report or Single Touch Payroll)
Payments to foreign residents for work performed in Australia (These are generally subject to PAYG foreign resident withholding. However, if the payments aren’t subject to PAYG withholding, then you need to report them in a TPAR.)
Foreign residents for work performed overseas
Contractors who do not provide an ABN — in this case, you may need to withhold an amount from the payment for that supply under the PAYG withholding arrangements 
Payments in consolidated groups
Payments for private and domestic projects

Do I need to lodge a TPAR if my business provides taxable payment reporting system (TPRS) services and other unrelated services?

As of 1 July 2019, if your business provides both courier and road freight services, you must combine the payments you receive for both these services. Do this when you work out if you need to lodge a TPAR.

If TPRS services are only a portion of the services your business provides, you’ll need to determine what percentage of the payments you receive are for TPRS services each financial year, and if you need to lodge a TPAR.

This does not apply to   building and construction services  you provide.

If the total payments you receive for TPRS services are:

10% or more of your business income: you must lodge a TPAR
less than 10% of your business income: you do not need to lodge a TPAR.

When do I need to report by?

The TPAR must be lodged by 28 August each year, so if you haven’t already done so, it’s time to get the wheels in motion and get reporting.

Even if you have no contractor payments, you must still lodge a Nil TPAR by the due date.  

How do I lodge my TPAR?

Your TPAR report can be lodged directly to the ATO online through specific software. Sole traders and businesses can use business software if it is  SBR-enabled software , or your business can create a TPAR data file to the required  TPAR specifications . Simply lodge through online services for business using the file transfer function. 

If you don’t have business software, use  online services for business . To use this service, you need an ABN and a secure credential for myGovID and Relationship Authorisation Manager (RAM). Select  Lodgements  then  Taxable Payments Annual Reporting. 

You can also use: 

Online services for individuals and sole traders - select  Tax ,  Lodgements , then  Taxable Payments Annual Report
Your tax or Business Activity Statements (BAS) agent
Paper form – keep in mind if you choose to submit via this option, the ATO cannot process photocopies or scanned images of the form, and it must be posted to the ATO mailing address in NSW, so allow for delivery time to avoid missing the 28 August deadline.

Who can help me with TPAR? 

Lodging your TPAR can be tricky, particularly if you pay a lot of different contractors or subcontractors over the course of a financial year. It’s important to stay organised, keep track of and record all your payments throughout the year, and engage the services of professional tax agents to get you through.

If you need guidance, get in touch with us well before August 28, and we can help lodge your business’s TPAR.  Let's chat!

The individual & company tax rates you should know

Thu, 15 Jun 2023 01:18:25 GMT

Whether you’re an employee, self-employed or run a business, everyone ought to understand their obligations to the taxman.

Knowing your tax rates is essential for financial planning and decision making. Not only will understanding your tax rates ensure you meet compliance requirements, but it can also spotlight opportunities for refining and optimising your tax strategy. This in turn can better serve your financial goals, whatever they may be.

Below we’ve put together some information about individual and company tax rates for the 2022-23 and 2023-24 financial years.

Individual tax rates

Income tax is applied to an individual’s taxable income and is payable on all forms of income, including wages, business profits and investment returns. It can also apply to the sale of assets, such as shares or a house. Australia has a progressive tax system, which means the higher your income, the more tax you pay.

The following individual income tax rates apply for both the 2022-23 and 2023-24 financial year:

These rates do not include the Medicare levy of 2%.

The tax-free threshold may be higher for eligible taxpayers, e.g. seniors.

Employees generally pay income tax through Pay As You Go (PAYG) withholding, where their employer withholds a portion of their wage each pay period to cover their projected tax liability come June 30.

If you’re a sole trader, your income is considered personal income for tax purposes, meaning you’ll pay the same income tax rate as an individual and only need to lodge one tax return. Similarly, in a partnership, you’ll also pay individual income rates on your share of the partnership income. Both may pay their tax liability via PAYG instalments quarterly, rather than a lump sum at the end of the financial year.

Company tax rates

The following company tax rates apply for both the 2022-23 and 2023-24 financial year:

Base rate entities 25%

All others 30%

Base rate entities are generally small or medium-sized businesses which fall below the aggregated turnover threshold of $50 million (combined between connected entities).

A company with predominantly passive income cannot access the lower company tax rate. If passive income makes up more than 80% of the company’s total assessable income for the year, they cannot be considered a base rate entity. Passive income includes rent, interest or net capital gains which are earnings not derived from the active operation of a business.

Professional tax planning

Gain a professional advantage in your tax preparation with the help of an accountant. Minimise your tax and maximise your benefits with Ascent Accountants. Our experienced accountants are here to help optimise your tax strategy and streamline the preparation process, saving you time, stress and money. Get in touch with our team today to get started.

What is the Medicare levy surcharge and when are you required to pay it?

Thu, 15 Jun 2023 01:18:17 GMT

The Medicare levy surcharge is designed to encourage people with higher incomes to take out private patient hospital cover. You may be liable for the Medicare levy surcharge if you exceed the relevant income threshold without an appropriate level of private health insurance.

The Medicare levy surcharge is additional to the Medicare levy. The Medicare levy is a tax Australians pay to cover the costs of our public health system (Medicare). The Medicare levy is 2% of your taxable income and automatically calculated and applied when you lodge your tax return. Typically, the Pay As You Go (PAYG) amount your employer withholds from your wages includes a portion to cover the Medicare levy.

The Medicare levy surcharge is levied against an individual’s taxable income, on top of the Medicare levy, when they don’t have the appropriate level of private hospital cover. Below we’ve outlined the Medicare levy surcharge rates for the 2022-23 financial year.

Medicare levy surcharge (MLS) rates

For each additional child, the income threshold increases $1500.

While a couple’s combined income is used to determine whether the Medicare levy surcharge applies, the actual surcharge is applied individually based on each person’s taxable income. For example, if one partner earns below the low income threshold ($24,276 for 2022-23), they are not liable for the Medicare levy surcharge regardless of the combined income.

Should a taxpayer’s family circumstances change during the year (e.g., they marry or separate), the Medicare levy surcharge is calculated for each period separately, reflecting their circumstances at the time.

Paying the Medicare levy surcharge

When you lodge your tax return, if it’s determined you’re required to pay the Medicare levy surcharge, it will be combined with the Medicare levy and show as one item (Medicare levy and surcharge) on your notice of assessment.

Preparing your tax?

We know tax season can be a real headache, so we’re here to help. For accountants you can depend on for efficient and expert tax preparation, contact Ascent Accountants today.

Superannuation thresholds and tax rates

Thu, 15 Jun 2023 01:18:10 GMT

Make sure you’re not putting too much into super and paying too much tax.

Superannuation thresholds and tax rates apply to contributions, employment termination payments, super guarantee and co-contributions. Being aware of these rates can help you employ strategies to minimise your tax and build a larger retirement nest egg.

In this article, we’ve outlined the basics of superannuation tax rates and contribution caps to aid in your retirement planning.

Super fund tax rates

Superannuation funds in Australia must comply with a set of rules to be eligible for tax concessions. The main tax concession for a complying super fund is that its investment income is generally taxed at a maximum rate of 15%, which is significantly lower than the income tax rate. This concessional tax rate is designed to encourage people to save for their retirement via superannuation.

There are different tax rates within a complying super fund for different types of income and contributions; see below:

Concessional contributions: 15%
Non-concessional contributions: 0%
Fund earnings (interest, dividends, capital gains etc.): 15%
Capital gains on assets held for >12 months: 10%
Benefits paid to members aged ≧60 years: 0%

Contributions caps

It’s important to know your relevant super contribution caps as contributing more than the prescribed amounts means you’ll have to pay extra tax.

Concessional contributions cap

Concessional (‘before tax’) contributions are those made from pre-tax income, such as employer contributions (including salary sacrifice) and personal contributions claimed as a tax deduction.

The current concessional contributions caps are:

FY2022-23 $27,500

FY2023-24 $27,500

Concessional contributions which exceed the cap will be considered taxable income and will be taxed at the marginal tax rate. However, you may be able to carry forward unused concessional contribution amounts in certain circumstances.

Non-concessional contributions cap

Non-concessional (‘after tax’) contributions include personal contributions which you’ve already paid tax on.

The current non-concessional contributions caps are:

FY2022-23 $110,000

FY2023-24 $110,000

Capital gains tax (CGT) cap

The CGT cap allows individuals to make contributions to their superannuation from capital gains without them being counted against their non-concessional contributions cap.

The CGT cap is a lifetime limit that applies to specific contributions arising from the sale of certain small business assets. When the sale of these assets results in a capital gain, the amount can be contributed to superannuation under the CGT cap.

See the current CGT cap amounts below:

FY2022-23 $1,650,000

FY2023-24 $1,705,000

Super guarantee

As an employee, your employer contributions are required to be paid by your employer on at least a quarterly basis at the following rates:

FY2022-23 10.5%

FY2023-24 11%

If you’re an employer, ensure your accounting software is updated July 1st this year to reflect the 0.5% increase to pay your employees’ super at the correct rate.

Government contributions

The government co-contribution is a scheme to boost the superannuation of low to middle-income earners. If an individual is eligible (per the thresholds below) and makes personal contributions, the government will make a co-contribution of 50c for every $1 contributed, up to a maximum amount.

The income thresholds have two levels:

Lower income threshold

Below this level, if you contribute $1,000 of your after-tax income to your super, the government will contribute the maximum amount of $500.

For FY22-23, this threshold is $42,016 and for FY23-24 this threshold is $43,445.

2. Higher income threshold

At this level and above, you are not eligible for a government co-contribution. For FY22-23, this threshold is $57,016 and for FY23-24 this threshold is $58,445.

If you fall between the two thresholds, the amount of government co-contribution gradually reduces as your income increases. The co-contribution amount decreases by 3.33 cents for each dollar of total income over the lower income threshold, up until the higher income threshold (when it ceases).

Plan your retirement now

Don’t neglect your superannuation until it’s too late. Your retirement depends on the planning you put in place today! For professional help building a comfortable nest egg, consider Ascent Accountants. Our professional and tailored advice can help secure your financial future. Contact us today for more.

Buying a house? Consider these tips for securing a home loan.

Thu, 15 Jun 2023 01:17:54 GMT

Are you getting ready to buy a home?

Then it’s time to get your financial ducks in a row. Most homebuyers will have to navigate the complicated home loan process and a big help in successfully achieving that is getting pre-approved for a loan.

Securing home loan pre-approval not only sets a clear budget for your property hunt, but also gives you a competitive edge in the market and accelerates formal loan approval.

Why seek pre-approval for a home loan?

Pre-approval is essentially a preliminary green light for a lender, indicating their willingness to grant you a loan up to a specified amount. This is based on an assessment of your financial status, considering factors, such as your living expenses, liabilities, credit history and employment status, to determine your ability to repay the loan. It provides a snapshot of your borrowing power and demonstrates to sellers that you are a bona fide, qualified buyer.

Obtaining pre-approval can streamline the buying process. Once you find your dream home, you typically only need to provide updated payslips and bank statements to proceed with the loan, eliminating the need to go through the full loan approval process again. While most pre-approvals are generally valid for up to 90 days, many lenders allow extensions if you submit up-to-date financial information, e.g., payslips, bank statements, etc.

It's not a guarantee

While pre-approval can be a big help, it's important to note that it’s not a guarantee your loan will be approved. Final loan approval is usually contingent on meeting a satisfactory property valuation by the lender. If the property’s valuation falls short of the purchase price, you may need to increase your deposit. Additionally, any significant changes in your financial situation – like changing jobs or spending your deposit – can affect your approval. It’s also important to know that each loan application can affect your credit score, so it’s best to seek pre-approval from only one lender at a time.

What else can you do?

If you’re hoping to secure a home loan, consider the following pointers to help get you there:

Starting saving as early as possible. The larger your deposit, the less you’ll need to borrow and pay in mortgage insurance and interest.
Minimise your existing debts. Lenders will consider your debt levels when assessing your loan suitability.
Retain stable, full-time employment. Consistent income is a positive signal to lenders of your ability to repay a loan.
Save in your own bank account. Lenders may not view money in someone else’s account as genuine savings.
Avoid making big changes in your finances, such as applying for additional credit or changing jobs, after seeking pre-approval as this can negatively influence your financial profile.
Familiarise yourself with current government grants and concessions for home buyers to gauge whether they may apply to you.
Speak with a mortgage broker or bank before making an offer on a property. Know your loan limit and the steps to gain loan approval to avoid any unpleasant surprises.

Obtaining pre-approval for a home loan provides clarity on your borrowing capacity, helping focus your property search on affordable options. It gives you a competitive edge by demonstrating to sellers that you’re a serious buyer with secure financial backing. It can also streamline and accelerate the buying process. Additionally, it uncovers potential credit issues early so you can avoid surprises down the line. With a little planning and by following the suggestions above, you can be best situated to secure a home loan and one step closer to owning a home.

Invest in your financial future

At Ascent Accountants, we can help get you financially structured for what will likely be the biggest purchase of your life. If you’re navigating the property buying process, reach out to our team for expert financial advice and support. Contact us today to see how we can help.

What is a buyer’s agent and should you use one?

Mon, 15 May 2023 03:17:43 GMT

Are you in the market for a new home?

Buying a property is an exciting new chapter, but the process can be incredibly stressful. With so many factors to consider and decisions to make, it’s natural to want guidance when navigating the complexities of the real estate market.

This is where a buyer’s agent can be a valuable ally.

Growing in popularity amongst Perth homebuyers, a buyer’s agent can help you find the right property at the right price. (All while minimising the number of headaches in the process.)

What is a buyer’s agent?

While a typical real estate agent represents the interests of the seller, a buyer’s agent is a licensed real estate professional who exclusively represents the interests of the buyer in the property acquisition process.

A buyer’s agent assists in finding suitable properties which meet the buyer’s criteria, negotiating the sale price and terms, and generally guiding them through the process.

Advantages of working with a buyer’s agent

Market expertise

With extensive knowledge of the local property market, buyer’s agents can be a valuable resource for unbiased information on neighbourhoods, property values, future developments and more. Their advice can help you in making smart decisions and even save you money.

Property access

Buyer’s agents often have access to off-market properties, exclusive listings and unadvertised options, which can increase your chances of finding the perfect home. They also have established relationships with sales agents who often let them know about properties before they’re on the market.

Negotiation prowess

Skilled in negotiation and armed with market knowledge, buyer’s agents can help you secure the best price for a property. Buyer’s agents deal with sales agents on equal footing, which is important for the buyer in negotiating terms. Also, having a buyer’s agent signals to sales agents that you’re a bona fide buyer which may give you an advantage over other buyers.

Ongoing support

Buyer’s agents will assist you throughout the entire buying process, from identifying relevant properties to final settlement. They can recommend solicitors, mortgage brokers, conveyancers and building inspectors, to help ensure a smooth, stress-free experience. They can also help take the emotion out of buying a home. This helps you stay on budget, making it easier to walk away from a property if the price isn’t right.

Time and money

Searching for property can be a time-consuming process, but having a buyer’s agent to handle the groundwork makes things a lot quicker and simpler. Their advice and counsel can also save you money by making sure you only pay what a property is worth.

What should you look for in a buyer’s agent?

First and foremost, you’ll want to work with a REIWA-accredited buyer’s agent. This assures you they’ve completed the compulsory regulatory requirements and gained the necessary experience for the profession.

When looking for a buyer’s agent, it’s important to find someone who understands your needs and preferences and is well-versed in the Perth property market. Opt for an agent with a solid reputation in the industry with developed relationships with sales agents.

Buying a home?

At Ascent Accountants, we can help ensure you’re adequately financially structured to make the biggest purchase of your life. If you’re in the process of buying a new property, contact our team to see how we can help.

Add to your superannuation before June 30 to build your balance

Mon, 15 May 2023 03:17:27 GMT

Chipping in a little more to your super can be a great way to bump up your retirement nest-egg.

As an employee, your employer should be contributing 10.5% of your pay towards your superannuation. For those who are self-employed, you’re likely voluntarily adding to your super or receiving contributions from your business. In both cases, it’s a good idea to consider supplementing your super contributions.

Why should you add more to your super?

Making additional contributions is beneficial for two main reasons. It allows for potential tax savings since super contributions are taxed at a lower rate (15% compared to your personal tax rate). And, by investing more and earlier, it means you’ll see greater returns over time and enjoy a higher retirement fund.

For most people, it’s easier and more manageable to consistently contribute small amounts over time, than finding a spare lump sum. The only downside of contributing extra is that you’re locking this money away until you’re eligible to access it upon retirement. However, this can be a great savings strategy without the temptation and means to spend it sooner.

How can you add to your super?

There are two ways you can add to your super: concessional and non-concessional contributions.

Concessional contributions (before-tax) :

Concessional contributions are contributions made to your super account before tax. They serve the dual purpose of increasing your super balance and decreasing your personal tax income. Concessional contributions incur a contributions tax of 15% upon being received by your super fund.

Concessional contributions include:

Employer contributions:
Compulsory employer contributions
Salary sacrifice payments
Additional concessional contributions
Superannuation Guarantee (SG)

Personal contributions (as an income tax deduction)

Per the ATO, the general concessional contributions cap is $27,500 for the 2022-23 financial year. You can also look at contributing your unused superannuation contribution amounts from prior years (check to see if you qualify).

Non-concessional contributions (after-tax) :

Non-concessional contributions are after-tax contributions made from your bank account or savings. They increase your super balance without reducing your personal income tax. However, if you’re eligible, these contributions can enable you to benefit from the government co-contribution or spouse contribution tax offset. Non-concessional contributions do not incur a contributions tax.

The main non-concessional contributions include:

· Personal contributions (not claimed as a tax deduction)

· Spouse contributions into your super account

· Employer contributions (from your after-tax income)

Per the ATO, the general non-concessional contributions cap is $110,000 for the 2022-23 financial year. You may also have the option to use the 3-year bring forward rule to contribute $330,000 (check to see if you qualify).

Government co-contribution

You might be entitled to a bonus government co-contribution if you earn under a certain amount and make non-concessional contributions.

If your annual income is below $42,016 (for financial year 2022-23), you may be entitled to a co-contribution of up to $500 per year. The amount depends on your income and how much you contribute. This is tax-free and doesn’t incur taxes upon deposit or withdrawal from your account.

You don’t need to apply for the government co-contribution. It will be automatically paid into your super after you lodge your tax return.

Don’t wait to plan your future.

If you’re looking for assistance contributing money into superannuation, then Ascent Accountants can help. We know it’s easy to forget about super or put off thinking about it for another time, but that’s where we come in. We can help implement a personalised super strategy so you’ll enjoy more come retirement. Get in touch with our friendly team to schedule an appointment

How to determine and develop your pricing strategy

Mon, 15 May 2023 03:17:22 GMT

Developing an appropriate pricing strategy is fundamental to your business.

It affects your sales volume, revenue and profitability, as well as establishes the position of your brand within the market.

A well-considered pricing strategy ensures your business covers costs, achieves desired profit margins and aligns with your overall marketing strategy and business goals.

There are a number of strategies you can employ when setting your prices, including those based on the cost, competition, perceived value and product .

Cost

Cost-based pricing strategies set prices primarily on the cost of producing, distributing and selling a product or service, such as:

Cost-plus pricing: adding a small mark-up to the cost of producing the product or service. If you calculate your costs accurately, this strategy keeps your price competitive while still making a profit.

Charge per hour: often used by service-based businesses, this strategy calculates an hourly rate that encompasses all the relevant business costs, including wages, taxes and benefits.

Competition

Competition-based pricing strategies set prices based on those of competitors, aiming to stay competitive in the market without sacrificing profitability.

Going rate pricing: setting prices close to, or at the same level as, the market price leader. It’s a strategy that allows businesses to stay competitive without eroding profit margins.

Value

Value-based pricing strategies set prices based on the perceived value of a product or service, rather than the actual cost of production or market rate.

Value pricing: this strategy is based on what customers think a product is worth, rather than costs. This value is determined through market testing.

Premium pricing: this strategy sets prices at a higher level to signify the prestige, luxury or exclusive value of the products or services. At a premium price, customers generally have higher expectations of quality, performance and service.

Product

Product-based pricing strategies involve setting prices based on specific attributes of the product or service.

Penetration pricing: setting a low initial price on a new product or service to generate high sales or capture a significant market share. Once this is achieved, prices are gradually increased to normal levels.

Skimming pricing: setting a high initial price which aims to target customers who desire highly valued products or services in high demand. After the required profits are made, the price is subsequently lowered to appeal to a broader market.

Loss leader pricing: aims to entice customers by offering a product or service below cost price. This is to encourage customers to purchase additional products or services with higher profit margins to offset the initial loss.

Do your research

Research is key when determining the optimal price for your product or service.

Market testing is a valuable tool for gauging how much your customers are prepared to pay for your product or service. By researching purchasing behaviour, pricing of similar products/services and features valued by customers, you can develop a price comparison and test different options to establish an acceptable price range.

You should know who your direct competitors are and how your business compares to them. This information can help determine your price point. While competitor prices can provide guidance, it’s important not to rely too heavily on them and undervalue what you have to offer. Assess the overall value of your business compared to your competitors, including special features, quality and customer service.

External influences can also affect the price of your product or service, such as:

Price sensitivity or the degree to which price fluctuations impact consumer demand. This is the willingness of customers to modify their buying habits in response to price changes.

The level of demand for a product or service can influence pricing by creating balance between supply and demand. If demand is high, relative to supply, businesses can likely increase prices. Conversely, if demand is low, they may want to lower prices to stimulate demand and remain competitive.

Competition can influence pricing based on market dynamics and customer choices. In a highly competitive market, businesses may lower prices to attract customers. While the less competition you have, the more demand for your product.

Government regulation can affect your pricing due to additional fees or levies.

By conducting thorough research and continuing to monitor these influences, you can establish optimal pricing strategies for your business to remain competitive and profitable.

Launching a business?

If you’re starting a business in Perth, consider Ascent for help setting your business up for success. We’ll guide you through the set-up process and ensure you’re positioned to run a profitable venture. Contact us today to get started.

Want to grow your business? Here’s how to plan it

Mon, 15 May 2023 03:17:13 GMT

Your financial records are capable of far more than checking compliance boxes.

They can offer valuable insights into your business’ performance and help with future planning and strategies.

After all, numbers don’t lie.

Use them to guide structured and purposeful reviews of your business. Conducting these reviews regularly will give you the chance to reflect on your business wins, losses and challenges, as well as highlight your opportunities for growth.

In this article, we’ll share what financial metrics you can use to effectively review your business to drive growth.

Measure your KPIs

Key performance indicators (KPIs) are quantifiable metrics which help businesses track their progress towards specific goals. They provide an objective measurement for evaluating your business’ performance over time.

Some examples include:

Financial: revenue growth, profit margin, cash flow, sales target.
Customer: number of leads, customer acquisition cost, complaints.
Operational: inventory turnover, operating margins, delivery on time rate.
Employee: employee turnover rate, satisfaction rating, absenteeism.

Choose KPIs which are relevant to your business as they’ll provide the most helpful, actionable insights.

The most important thing is to keep your record keeping up-to-date and review the KPIs regularly. This will give you an overarching view of the business’ performance to date.

Well-executed, KPIs can serve as a compass, providing invaluable data for improvement and guiding the business towards your goals.

Income vs. expenses

An excellent guide to your business’ financial health is the difference between your income and expenses. It’s a basic way of understanding how much it costs the business to generate revenue.

This will determine whether you’re operating a profitable venture or in need of some strategic readjustments. It can help identify risks, income volatility and potential financial instability.

Your income and expenses can inform your decisions about budgeting, cash flow management and investments.

Budgeting

A necessary evil, budgeting allows you to set financial targets for your business.

To get the most out of the budgeting process, set realistic targets and review the figures month to month.

Budgeting figures can highlight revenue opportunities, allowing you to direct future resources to areas with maximum profitability. Meanwhile, it can also uncover potential overspending, so you can free up cash flow for alternative investment options.

By reviewing your budgeting figures, you’ll gain insight into your business’ financial health and operational (in)efficiencies, as well as guidance for future investments and growth.

Segment your customers

Applying the 80/20 rule (or ‘Pareto principle’), 80% of your revenue often comes from 20% of your customers.

By identifying this valuable segment, you can direct marketing initiatives, product development and other business decisions to cater to their specific needs and purchasing behaviours. By allocating resources to the most profitable customer segment you can maximise returns.

While it can be beneficial to focus on your most valuable customers, it’s still important to maintain a diverse customer base for risk management, so you’re not over-reliant on a single customer group.

Customer segmentation allows your business to take a more personalised and targeted approach, to ensure your operation is sustainable and capitalising on opportunities for growth.

Opportunities

Great opportunities are hidden gems. Most don’t present themselves loud and clear. If they did, everyone would pounce on them.

Being able to recognise opportunities when they come your way can offer avenues for expansion, diversification and increased profitability. They give your business a competitive edge.

Create opportunities by knowing your competitors and their strategies; this can help you to distinguish your business or fill market gaps. Also, review your business’ unique strengths and consider how these can provide new opportunities.

Comprehensive business guidance

Your financials are an excellent resource for planning the growth of your business. Understanding and monitoring your financial records can help you keep tabs on your business’ performance and highlight areas for growth. The path to business

growth isn’t a sprint, but a marathon, requiring consistent effort, strategic foresight and continuous adaption to changing market conditions.

If you’re looking to grow your business and wanting to take the next step, talk to one of our trusted business consultants. At Ascent Accountant, we offer personalised knowledge and mentorship across all facets of business. Speak to us today and let’s reach your business’ potential together.

Determining pricing and pricing objectives

Fri, 14 Apr 2023 05:59:06 GMT

Pricing is the process you use to set the price of your product or service.

Determining a price for your products and services can be challenging with so many factors to consider. If you set your prices too high, you may lose out on sales because customers find your products too expensive. Conversely, prices that are too low will eat into your profits.

Setting the right price is crucial in maintaining a profitable business. When it comes to determining a price for your products or services, consider the factors we discuss in this article.

Calculate your costs & consider the market.

Before you calculate your price, you’ll need to know how much it costs to produce or deliver your product or service.

When calculating that figure, remember to include the material and labour costs of producing your product/service, as well as your overheads, such as rent, utilities and insurance. Don’t forget to factor in goods and services tax (GST) – if applicable – and other relevant taxes in your costing.

Other important influences when setting a price for your products or services are:

• Competition (strength)

• Market condition (supply/demand)

• Brands (familiarity/loyalty)

• Product or service quality (better quality = higher price)

Determine your pricing objectives.

Pricing objectives are also used to inform pricing; they are the goals you hope to achieve in setting a price for your products and services.

Your prices send a message to consumers about your business, creating a perceived value for your products and services. Pricing affects your brand, image and position in the market and consequently requires a lot of consideration. For example, higher prices lead consumers to expect a higher quality product.

When developing your pricing strategy, you need a clear understanding of your objectives. This is more exhaustive than simply making a profit. Many other pricing objectives can affect the final price you set for your products and services, such as:

Market position

This is the consumer perception of your products or services, relative to others on the market. Pricing will help you to establish your positioning, whether that’s high-end or budget products. It can indicate a level of quality, so it’s important your price reflects that and complements your overall brand.

Remaining competitive

Your business might want to prioritise being price-competitive. Competitive pricing is using strategic price points to gain an advantage over competitors in the market. When setting prices, consider your competitor’s pricing and how they may respond to your pricing.

Ability to supply to or increase demand

As a new business, you might set prices to manage supply and demand. Pricing can be used to increase demand, an objective for establishing customers or boosting sales, or to decrease demand, if you’re struggling to keep up with supply.

It’s important when determining your pricing objectives that they complement your overall business and marketing intentions. By establishing the cost to produce your goods and services and your pricing objectives, you’ll be better situated to enter the market.

Professional guidance.

Starting a business in Perth? Consider Ascent Accountants to help guide you through the start-up process and set your business up for success. Our Business Set-up Service is a complete package to get your business off the ground. Contact us today for information on how to get started.

The importance of high-quality property photos when selling your house

Fri, 14 Apr 2023 05:58:57 GMT

As potential homebuyers flick through newspapers or scroll websites of infinite properties, seize their attention with stunning, high-quality photographs of your charming home.

Good-quality photos make a huge difference in converting a scroller into a physical being inspecting your property. They’re your first impression, so make them count.

The better your photos, the more traffic you’ll have at your home opens and the more people in touch with your real estate agent. This can significantly cut your property’s time on the market and hopefully get you closer to your asking price. After all, your big investment ought to deliver a big return.

Below are our tips for getting the most out of your property photos and upping your sales prospects.

Invest in professionals.

Homes with professional photos sell faster.

While they are an expense, professional photos are totally worth the investment. If it’s for an investment property, you’ll be able to claim them as a tax deduction.

A professional real estate photographer, complete with high-end equipment and superb editing skills, is the difference between a good shot and a bad one. Day in and day out, their job is to create well-exposed and composed photos, so they know all the tricks and techniques to get it done.

Timing.

While professional photographers will know how to use lighting to create well-exposed photos, you might want to negotiate for that particularly dreamy time of day.

Twilight photo shoots are a popular choice in real estate photography due to their stunning results, particularly for the exterior shots. The sunset hues of golden hour produce a magical effect that a day shoot could never mimic.

If lighting is a problem inside your home, don’t worry too much. Natural light isn’t overly important because photographers use an external flash during the day and photos can always be brightened during editing.

Rain, shadows and harsh sun can also make photographing more challenging, so try to avoid or mitigate these where you can.

Standout features.

Every home will have its own unique selling points. Your photographer will know what features of your home to accentuate and what will stand out in photos.

Your photos will tell a story about what it’s like to live in your home. Is it a gardener’s dream, a bachelor pad, a romantic abode or a spacious family home? Your photos should reflect and embolden that story to draw in your target demographic.

Photographers typically spend a little more time capturing the external shots, as they are the face of a home and usually offer the most unique shots. Same with the kitchen and living area, the heart of the home, where most people spend the majority of their time.

If your property is vacant land or a knock-down house, aerial or drone photography might be a good option. It’s great for showing a property’s dimensions, location and proximity to points of interest.

Complete the checklist.

Generally, you’ll receive a presentation checklist from your photographer (or real estate agent) before the shoot. Complete the checklist as this will ensure your home is at its most presentable, making the photos more visually appealing. Your home should be tidy and free of clutter (no unmade beds or dirty dishes), which can be off-putting to buyers. Opening the curtains and turning all the lights on will make your rooms bright and airy, and your home more inviting.

Selling your house?

If you’re thinking of selling your property, contact our team at Ascent Accounting to ensure you’re financially structured to see the biggest return from your investment.

Small Businesses Guide to GST

Fri, 14 Apr 2023 05:56:57 GMT

Whether you’re just starting out or have been established for a while, decoding your GST obligations can be a daunting task.

In Australia, most goods and services are subject to the goods and services tax (GST). This 10% tax is included in the price consumers are charged for a product or service. Business owners are then required to pay the GST collected from the sales of their products and services to the Australian Tax Office (ATO) periodically.

To understand your responsibilities, read on for our brief GST guide for small business owners.

Does your business need to pay GST?

Contrary to popular opinion, not every business that sells products or services is required to register for GST. According to the ATO, your business is required to register for GST if you meet any of the following criteria:

• Generate $75,000 or more in revenue annually.

• Operate a non-profit organisation which generates $150,000 or more in revenue annually.

• Provide taxi, limousine or ride-sharing travel services.

If you meet one of these criteria, then your business is required to register for GST and you should be charging your customers GST on the sale of your products and services. However, you might be exempt from charging GST if your product or services falls within a special category.

Does GST apply to your products and services?

As a general rule, GST applies to most products and services sold in Australia. However, there are some exemptions to this tax for classes of items deemed essential. The ATO has a comprehensive list of the products and services which are exempt from GST, but here are some types on that list:

• Basic food products.

• Education courses and materials.

• Medical, health and care services.

• Menstrual products.

• Medicines, medical aids and appliances.

• Water, sewerage and drainage.

• Precious metals.

• Exports and products sold in duty-free shops.

Registering for and paying GST.

Registering and paying GST is very straightforward. If your business meets the above conditions, you’ll need to register for GST with the ATO or risk facing penalties. With your Australian Business Number (ABN), you can register via Online Services, by phone, through your accountant or tax agent, or by completing a form. You’ll be notified in writing to confirm your registration.

Small businesses typically pay GST quarterly through business activity statements (BAS). When you’re registered for GST with an ABN, the ATO will automatically send a BAS to the business myGov account when it’s time to lodge. You can lodge this online or through your accountant or tax agent. You can pay via BPAY, credit card, debit card or payment reference number (online only). Even if you can’t pay the amount due, you should still lodge your BAS on time.

What are GST credits?

When you purchase supplies for your business, the amount of GST you paid is refundable in the form of a credit. This is because GST is a tax for consumers, not businesses or enterprises.

When you go to pay the ATO for the GST you’ve collected through your sales, you can subtract the GST you paid in supplies. So essentially, you’re credited (or refunded if purchases exceed debits on sales) for the GST paid on those items.

What do invoices need to include?

If you’re claiming a GST credit on a purchase greater than $82.50, you’re required to have a tax invoice as evidence. It should include the following information:

• The supplier’s trading name and ABN.

• The invoice date.

• The words “Tax Invoice”.

• A description of the items (i.e., the quantity and price you paid).

• The GST included in the purchase.

• Your ABN (if the item is worth $1,000 or more, including GST).

Need a hand?

We know that GST can be a headache for small businesses and that’s why we’re here to help. For accountants you can depend on to expertly prepare your financial statements, contact Ascent today .

Why you should see an accountant outside of tax season

Fri, 14 Apr 2023 05:54:58 GMT

Accountants don’t cease to exist after tax season; there are plenty of reasons we’re open year-round to provide financial services.

Although it might be the last thing on your mind (even amidst tax season), individuals and businesses can gain a lot from a little forward-thinking when it comes to their tax.

As a significant expense for businesses and individuals, income tax requires prudent planning and management. It’s a good idea to check in with your accountant to ensure your tax strategy reflects your current circumstances and goals.

Individual tax planning.

With effective tax planning, you can lower the amount of tax you’re paying and keep more money in your pocket.

By reviewing your tax position outside of tax season, you’ll be able to implement strategies to minimise your tax liability when June 30 arrives. Unfortunately, it’s too late for us to implement a tax plan while preparing your returns.

An accountant will review your tax position, help you to implement strategies to reduce your tax bill and ensure you’re maximising all the benefits you’re entitled to.

In particular, you should consider a review of your tax position if you:

• Made a capital gain on the sale of property or shares;

• Have income over $120,000;

• Are over 55 and not maximising your superannuation contributions;

• Received lump sum bonuses during the year;

• Have the opportunity to salary package at your work;

• Are currently salary sacrificing into superannuation;

• Have a superannuation account which is underperforming;

• Haven’t reviewed your home or investment loans in the past few years;

• Haven’t reviewed your income protection or life insurance requirements in the past few years and/or your personal circumstances have changed;

• Bought a rental property during the year;

• Have equity in property or savings;

• Have positively geared investments in a high-income earner’s name;

• Are interested in starting a property/investment portfolio, including negative gearing to reduce tax.

Business management & tax planning.

Business management and tax planning are two invaluable reasons for business owners to consult with an accountant. Business owners are often so focused on trying to make and retain profits that they neglect the financial health of their business in other ways. There is where an Interim review can help.

An interim review provides you with a snapshot of where your business is at in relation to end-of-year profits and the resulting tax implications. Reviewing these results before the end of the financial year allows you to make appropriate adjustments to ensure you’re paying a minimum (legal) level of taxation.

We strongly encourage you to invest in your business and have an interim review performed as it can benefit you in the following ways:

• Tax planning can save money on your end-of-year tax bills.

• Highlight and solve any issues that may affect your tax returns.

• Reviewing Business Activity Statements ensures you’re paying GST correctly.

• Provide you with a complete financial summary, detailing your net wealth, asset mix and areas of risk.

• Review your business activity and provide guidance with management issues, sales/marketing strategies and financial planning/restructuring.

• Review key performance indicators for the business.

• Assist in working out areas that will unlock cash flow for the business.

• Gives you a forum to query business and tax concerns.

• Gives your accountant a better understanding of your business issues.

As a business owner, there are important things you should know about the operation of your business. You should know your ‘break-even point’ (where total revenue = total costs). You should also be regularly reviewing the difference between your predicted and actual budget. These help you to keep your business profitable and achieve results that match your expectations. With an accountant to help you analyse this, you can determine what is going right or wrong with the business and, if necessary, put strategies in place to rectify it.

Why professional help?

Accountants have a professional advantage when it comes to minimising your tax and maximising your benefits. They know what the rules are and when they change. They can advise you on claiming deductions for expenses, such as rent or bills. Seeing an accountant ahead of June 30 means you’ll be able to plan these payments (e.g., pre-paying them) to give you more disposable cash throughout the year.

The Ascent way.

If you’re looking for help with tax planning, put your finances in the best hands with Ascent. Our brilliant accountants are dedicated to providing excellent advice which considers your unique needs and goals. Get in touch today to get started.

Changes to working-from-home deductions

Wed, 15 Mar 2023 00:00:00 GMT

Are you part of the growing contingent of Aussies working from home?

As of 1st March 2023, the way you claim a working-from-home deduction on your tax return has changed. You can no longer provide a four-week diary representative of the year; you must now keep a log for the whole year of the hours you worked from home.

Preparing your 2023 tax return.

When making a working-from-home deduction on your tax return, you can either use the Revised Fixed Rate or Actual Cost method to calculate your expenses.

Revised Fixed Rate

Per the latest compliance changes by the ATO, the revised fixed rate is 67c per hour (from 52c previously). This means you can claim a 67c deduction for each hour you work from home. As the simpler, more convenient method, this is more commonly used.

This flat rate includes expenses you incur as a direct result of working from home, such as your use of data, internet, mobile phone, energy, computer consumables and stationery. It does not include general household items, such as coffee, tea or milk, or items that your employer has paid or reimbursed you for. Unlike the old rules, you can no longer make a separate claim for expenses, such as energy or internet, but you may continue to claim for the depreciation of assets, repairs, maintenance and cleaning.

As mentioned above, from March 1st you’ll need to keep a record of all the hours you work from home for the entire year via a diary, roster, timesheet or similar document. However, for the period between 1 July 2022 and 28 February 2023, the ATO will still accept a record that represents the total number of hours you worked from home, e.g., a four-week diary. You will also need to keep a record that you have paid for those expenses covered by the fixed rate, e.g., phone, internet and electricity bills.

Actual Cost

The actual cost method requires significantly more calculations and records, though it may be worthwhile if considerable expenses have been outlaid. Rather than a standard rate, you claim a deduction for the actual expenses you incurred as a result of working from home, such as data, internet, mobile usage, energy, computer consumables, stationery, as well as the depreciation of assets, maintenance, repairs and cleaning.

For this method, you will need to keep detailed records of these costs, down to the price per unit of electricity and the average number of units used per hour. You will need to keep evidence of every expense you claim, i.e., receipts, bills or invoices each showing the supplier, amount, description and date paid. As you can see, this can be quite a bit more complicated and for the vast majority of people, the fixed rate is the preferred method.

Need a hand with tax preparation?

With a professional accountant, you’ll stay on top of industry changes and streamline your tax preparation. As well as saving you time and stress, Ascent Accounting can make sure you’re claiming all the tax deductions you’re entitled to. Contact us today and let our experienced team optimise your financial life.

PAYG instalments: what is and why do I need to pay them?

Wed, 15 Mar 2023 00:00:00 GMT

What is PAYG?

PAYG (Pay As You Go) instalments are regular prepayments towards the tax on your business and investment income. When it comes time to lodge your return, these advance payments will be credited to your tax liability, reducing the amount you’ll have left to pay.

By understanding your PAYG instalment obligations and making these regular instalments, you’ll be better equipped to manage your cashflow and avoid a hefty tax bill after you lodge your return.

Who must pay PAYG instalments?

Is PAYG mandatory?

PAYG instalments can be voluntary (where you opt in), or your business income may reach the threshold for automatic entry (see below).

An individual or trust will automatically enter the PAYG instalments system if they meet all of the following criteria:
Instalment income (gross business and investment income, ex. GST and capital gains) from your latest tax return of ≥$4000.
Tax payable on your latest notice of assessment of ≥$1000.
Estimated (notional) tax of ≥$500.

A company or super fund will automatically enter if any of the following criteria apply:

Instalment income from latest tax return of ≥$2 million.
Estimated tax of ≥$500.
The head company of a consolidated group.

Many new businesses or those expecting to make a profit will plan ahead by opting to make voluntary PAYG instalment payments.

Whether voluntary or automatic, you will be notified when you have entered the PAYG instalments system via letter (to your myGov inbox or postal address), or through Standard Business Reporting software or Online Business Services.

How often are you required to pay?

Individuals, superannuation funds and most companies are required to pay in quarterly instalments. The due dates of the instalments fall 28 days after the end of the quarter; this financial year those dates are 28th October (2022), 28th February, 28th April, and 28th July.

How are instalments calculated?

The ATO uses information from your most recent tax return lodged to calculate your PAYG instalments. You may have the option to pay using the instalment amount or instalment rate if they are both shown on your activity statement or instalment notice. Whichever option you choose, your tax liability will be the same.

Instalment Amount

The instalment amount is calculated by the ATO and if you choose this option, you just pay the amount specified. The amount is adjusted to reflect income growth based on changes in Australia’s GDP. Since it’s an estimate of your expected tax liability for the year, your amount will change with new information, like when you vary your instalment amount or lodge a tax return.

Instalment Rate

This is calculated by you from the instalment rate provided by the ATO and your instalment income (gross business and investment income (ex GST)) for the period. The instalment rate uses information from the previous quarter’s tax return. The amount to pay = instalment income x instalment rate.

While your income tax for the financial year won’t change, you may be able to vary your instalments if your financial situation or circumstances have changed, though this may result in interest charges and/or penalties if there is a significant shortfall.

What happens if you don't pay payg instalments?

If you fail to make your PAYG instalments, the ATO will likely charge interest on unpaid amounts, contact you to follow up on payment and use any future refunds or credits to repay the amount you owe. Even if you can’t make payment by the due date, you should still lodge your activity statements and tax returns to avoid a penalty for failing to lodge.

We’re here to help…

Don’t overlook the financial health of your business; consider seeking advice from Perth accountants to help manage your PAYG instalments before they become overwhelming. Ascent Accounting provides a tailored, non-judgemental approach that aligns with your business priorities. Contact us today for more.

Is a self-managed super fund the right move for you?

Wed, 15 Mar 2023 00:00:00 GMT

Today, more and more people are looking to self-managed superannuation funds (SMSFs) to maximise their hard-earned dollars.

A SMSF is a private super fund where its members are also trustees, meaning they have control over how their retirement savings are invested. SMSFs offer more investment options, tax benefits and the ability to pool resources to scale returns. It can bring your retirement planning to the forefront of your financial decisions, so you are more focused on your future now, rather than leaving it until it’s too late.

However, the upside isn’t a given and they’re not suitable for all personal circumstances and lifestyles. Setting up a SMSF is a big decision that comes with ongoing responsibilities, which can be costly and time-consuming. Consider the challenges of a SMSF before deciding whether it’s the right move for you.

You’ll be audited.

Each year, your SMSF is required to be audited. It’s your responsibility to prepare financial statements and tax returns annually, and ensure it complies with all relevant legislation and regulations. And these laws change constantly.

Depending on the severity, penalties for breaching compliance obligations can range from fines or levies to civil or criminal proceedings. If you don’t have the bandwidth to fulfil these obligations or the means to ensure they are, there can be significant consequences.

Lack of a professional strategy.

Along with compliance, you’ll also be responsible for the operation and investment performance of the fund. This can be a lot of time and work.

Sound knowledge of fundamental investment principles is usually the bare minimum if choosing to invest yourself. Retail funds employ fund managers to invest for them. As professionals in this field, they hold a great deal of financial and investment expertise with which to make decisions. If you are to contend with this, you’d better be dedicated to researching and staying on top of industry news and regulatory changes.

You can outsource the administration, management and investment strategy of your SMSF to a professional, but it will cost you. You may choose to appoint an accountant to prepare your SMSF’s financial statements, perform the audit, ensure compliance and lodge returns. You may also choose to appoint a financial advisor for advice on investment decisions and executing trades.

If opting to run your own fund, you should ensure your investment choices match your short and long-term goals, attitudes to risk and cashflow needs. You will need an appropriate purpose and strategy for your SMSF, as well as enough time to manage it.

Poorly structured.

Many well-oiled SMSFs run into problems when members want or need to exit. If someone dies or gets divorced, things can get pretty messy, pretty quickly with an improperly structured SMSF.

You’ll need to make a lot of decisions, such as whether you’ll have individual trustees or a corporate trustee, whether your children and/or parents should join, what happens in cases of dispute, etc. But most importantly, make these decisions upfront. If you’re considering starting your own SMSF, create an exit strategy when setting up (and preferably with professional guidance) to help you to reduce the difficult and costly pain of removing a member later on.

Considering a SMSF for your future?

If you’d like to know whether a SMSF is right for your future, consider making an appointment with our team. Ascent Accounting will consider your personal circumstances and priorities to determine whether you could benefit from a SMSF. We can help set up and structure your SMSF, and keep it operating smoothly. Contact us today to get started.

Investing in property: 4 fundamentals for first timers

Wed, 15 Mar 2023 00:00:00 GMT

Investing in property can seem like a daunting task, especially if it’s your first time.

It might feel reassuring to know that investment properties are generally considered one of the more stable and lower-risk investments, making them a goal of many investors. Traditionally less volatile, they typically increase in value over time, provide income from renting to tenants and offer numerous tax benefits.

However, there is a risk your property won’t deliver the returns you expect or could even lose money. And at such a steep entry point, you need to be smart about your search for the ideal investment property.

Many factors will influence your decision, but it’s important to understand some of the fundamental tenets of investing in property.

1. Research, research, research.

Do your homework.

It can’t be overstated. Just because property is a stable form of investment, there is a spectrum of returns (via cashflow and capital growth) to be earned from different properties and locations.

It’s so important to look beyond the listing price in finding a property. Gather as much information as you can, and do extensive research and due diligence on market trends over time, as this will be your best bet to mitigate the risks of investing in property. Capitalise on fluctuations that are likely to affect property values, such as council rezonings, changes to flight paths or demographic shifts.

Don’t restrict yourself due to familiarity bias (picking a place in a local suburb), a different location than your current home will diversify the risk of your overall asset portfolio.

If you aren’t confident in your ability to undertake this research or would prefer to be extra thorough, you can engage a buyer’s agent (a property buying professional) to help you find suburbs which offer strong potential for investors.

2. Look for land.

Land appreciates, buildings depreciate.

In further hedging your investment risk, look to properties with a generous land component. While apartments, townhouses and condos have their own advantages (often proximity to beaches, CBD, etc.), historically homes with a decent amount of land grow more in value over time.

This is because land is limited in supply and always in demand. Conversely, buildings decline in value over time because they deteriorate, need repairs or because their style/function no longer appeals to buyers’ tastes. It’s why many old properties often sell at no more than land value.

Of course, this is dependent on location. A huge block of land in the middle of nowhere would hardly compare to a block of land close to the city, in terms of demand. In a good location, first-time property investors stand to gain better long-term capital growth by purchasing a house with a decent amount of land.

3. Have a buffer.

Unfortunately, the paying doesn’t stop when you’ve covered the deposit, loan-application fee, stamp duty, conveyancing costs and inspection fees. So focused on reaching the deposit and securing a loan, that the ongoing costs of a house are often and regrettably overlooked.

Be financially prepared for ongoing costs when purchasing an investment property. You’ll need a comfortable cash buffer to cover council rates, strata fees, property management fees, vacancies, insurance, repairs and maintenance. Cash flow can vary quite a bit from month to month, so ensure you have enough savings to prepare for these short-term fluctuations likely to affect your returns.

4. Long-term planning.

What are your plans beyond the settlement date? Your short and long-term goals will help you to determine if a property is suitable for you.

You may want a solid, long-term investment that slowly and steadily gains value over decades to come, or perhaps you’ll want a fixer-upper and are prepared to outlay a little more cash upfront to flip it for a quicker return. Your property will be a huge, illiquid expense, so take the time to consider whether it meets your personal needs and financial circumstances.

You’ll also want to consider the name in which you buy the investment property (i.e., the name on the certificate of title) as this can affect your overall investment strategy, e.g., to minimise risk. Before purchasing your investment property, it’s worth getting advice on how to ensure it is structured optimally for tax benefits and to reduce your amount of fees.

Choose Ascent.

If you’re thinking of investing in property, contact our team at Ascent Accounting to ensure you’re financially set up to get the most out of your investment.

Thinking about retiring? Think about this…

Wed, 15 Feb 2023 02:50:30 GMT

Depending on what stage of life you’re in, your retirement could be just around the corner or it might be years away. Either way, it’s never too early to start retirement planning. When you do start, here are a few elements you must consider.

Your retirement could last three decades!

Thirty years of retirement — wouldn’t that be nice? Of course, this depends on how old you are when you retire and a number of health factors, but yes, your retirement is likely to last at least two decades, maybe three.

The age pension is a backup; don’t rely on it.

In Australia, the current full single-rate age pension (as of February 2023) only provides around 25% of average weekly male earnings.

Don’t assume inheritance will see you through.

Yes — some people really do put all their eggs in one basket and assume their inheritance will get them through their entire retirement. However, your parents may end up spending all their savings and leave you with very little — as is their right (it’s their money, after all).

You might not have as much in your super as you think.

Alarmingly, many people don’t look at their super at all until it’s time to retire. When they do, they’re disappointed. Although some of your income automatically goes to your super through employer contributions, those contributions don’t guarantee you’ll have enough super to get you through your retirement. Research conducted in 2012 by Rice Warner Actuaries revealed that Australia has a superannuation shortfall of almost $1trillion, which means many Australians won’t have enough super to fund their retirement.

It’s never too early to plan.

Keeping all these factors in mind, it’s important to start planning your retirement early to mitigate any financial shortfalls before it’s too late. With a bit of preparation, it's possible to plan for a long and comfortable retirement — and have one.

We suggest putting more into your super through salary sacrificing, lump sum contributions or using a transition to retirement strategy. These are all intelligent strategies to consider which will definitely boost your super — some of them have tax benefits too.

We’re super helpful when it comes to retirement planning.

On top of the super-adding strategies we just went over, did you know you can use your super to start a pension that pays you a regular income? Some pensions even pay you an income for the rest of your life, negating the risk of outliving your savings. We’ve got heaps of retirement planning insights like this up our sleeve, and can also help you work out the best tax arrangement when it comes to retirement planning. Contact us to talk about this in more detail.

The future tax effect of claiming building depreciation & instant write-off depreciation on business equipment

Wed, 15 Feb 2023 02:50:25 GMT

Like many West Australians, you might not be aware that deductions based on depreciation could come back to bite you with a heavy tax bill. This is even more true for people who are claiming depreciation on investment properties or businesses that took advantage of limited-time COVID-induced tax write-offs.

The big tax sting is a result of a lack of understanding around the rules of claiming depreciation. To make matters worse, these rules are always changing. Perhaps the potential consequences weren’t made clear, or perhaps people were so enticed by COVID-inspired depreciation arrangements that they didn’t care to research beforehand. Either way, under current tax laws, expenses incurred in generating tax-assessable income can be deducted from that income, and you pay tax on what's left.

How do tax deductions work?

There are two depreciation methods used — diminishing value and straight-line. Let’s consider the straight-line method (which is more popular): a tradie might buy a $55,000 vehicle for work purposes, which has an effective life of eight years. Under straight-line depreciation rules, the cost is divided by the life, giving the tradie a tax deduction of $6,875 a year for the next eight years. If you’re interested, the effective life for almost every asset imaginable is available on the Australian Tax Office website.

The problem, or challenge, with depreciation is that if this tradie sells the work vehicle, and the price is higher than the written down value, that extra amount becomes taxable income — a rule many aren’t aware of.

If your business used the COVID immediate write-off rules, it means the written down value is zero dollars. So, any proceeds on the sale will be assessable and form part of the business taxable income.

Property investors face similar issues when claiming depreciation and a capital allowance on their investment property. Buildings have an effective life of up to 40 years but property equipment, such as hot water systems and air-conditioning, have different lifespans.

A qualified quantity surveyor can prepare a special schedule on behalf of investors, as a basis for tax deductions. Based on these schedules, deductions of up to $20,000 are common. However, like our tradie example, there is a problem: the amount claimed reduces the cost-base used for capital gains tax calculations.

Let’s say the owner of a $500,000 investment property claims $20,000 a year building depreciation. After five years, the owner sells the property for $800,000. Sounds great, but the capital gains tax calculations will be based on a $400,000 profit, not a $300,000 profit… That's because the cost base has been reduced by five times the $20,000 (for a total of $100,000). Now, that comes off the original purchase price of $500,000.

What do we learn from this?

Deductions seem like a good idea on the surface — and they certainly can be in the right circumstances — but they can end up costing you. Remember, just because you’re getting a larger tax deduction now doesn’t mean there won’t be additional tax in the future. “Additional” meaning, you only have to pay these taxes because you initially chose a tax-deductible path.

Want more deduction support?

If you're tempted by anything involving tax, it’s so important to talk with a tax expert. Australian tax laws can be incredibly confusing, and it can be difficult to keep up with how tax laws change, and how those changes affect you. When you sit down with a professional from Ascent Accounting, we’ll talk through all the aspects with you and let you know of any certain, or possible, implications around your specific tax deduction choices. So, contact us today.

What’s an ETF investment?

Wed, 15 Feb 2023 02:50:19 GMT

Exchange-traded funds (ETFs) are pooled investments. Similar to shares, ETFs buy a range of assets and then divide ownership into units for investors to buy, and trade on a stock exchange. ETFs can be a simple, cost-effective investment option that provides access to a range of diversified assets, if you know what you’re doing.

How ETFs work.

An ETF is made up of shares from a range of companies or other investments (like bonds). Unlike buying a company's share, which only gives you interest in that one company, buying a share in an ETF gives you an interest in the “basket” of different shares that the fund is invested in. When you buy an ETF, you own a share in the fund and the fund owns the underlying assets.

Low-risk, low-cost diversification is a huge benefit of ETFs. ETFs can diversify your investments quickly because they’re largely designed to invest in companies from a particular sector, country, or region. For example, instead of buying every ASX 200 company, you can purchase a single ASX Index ETF and achieve the same exposure. However, with the single purchase strategy, its managers worry about tracking the 200 individual companies that the ETF is comprised of.

Types of ETFs.

Like all investments, there are a range of pathways you can take. Here are some of the more popular ETF investments.

Equities:

Equity ETFs track indices like the S&P 500 or the ASX 200.

Fixed income:

These invest in things like US Treasuries or Australian government bonds.

Currencies:

These invest in foreign currency.

Commodities:

These are mainly gold, silver, and iron ore. However, agricultural commodities also fall into this category, such as soybeans.

Sector:

These focus on certain industries. Popular ones at the moment include technology and health care.

Regional:

They can be broken down into continents, countries, or a group of countries.

Leveraged/inverse:

These products use financial instruments to boost their investment. Leveraged ETFs, or inverse funds, are very speculative and move in the opposite direction to the index they're tracking. This strategy is much more suited to experienced traders.

How to invest in ETFs.

Just like buying and selling shares, you can buy and sell units in an ETF through a stockbroker (you’ll have to pay brokerage fees). Settlement of trades takes place two business days after you buy or sell the ETF. Another avenue you may be able to buy and sell ETF units through is directly with the ETF provider.

Thinking of investing? Sort your finances out first.

Before you invest in anything, it’s important to ensure that the investment is a measured and wise decision. Contact us , and we can help you understand more about ETFs and how you should structure your ETF investment to minimise tax.

What to consider if you’re thinking of investing in rental property

Wed, 15 Feb 2023 02:50:16 GMT

If you’ve even glimpsed at the news or the current real estate market, you’ll know WA desperately needs more people to invest in rental properties. The rental housing crisis presents new opportunities for first-time investors, who are almost guaranteed to find tenants in an extremely short timeframe. Plus, you’ll be supporting people who are in desperate need of rental living — there are opportunities on all sides.

However, that’s not to say you should jump in, guns blazing, and snap up the first property you see. Like any large investment, it’s vital that you do your research and know what lies ahead in your role as a property investor.

1. Plan ahead.

The property market is somewhat unpredictable. You need to make sure you can effectively manage (and survive!) periods of loss. At some point, you might be forced to lower your rent or have unexpected property repairs and maintenance (like a new retic system or air con unit). It’s also still up to you to pay council and water rates. And, despite a favourable renting market today, there may be times in the years ahead when your property is vacant. If it is, you’ll suddenly be down a passive income stream, but still have the mortgage repayments to make.

2. Ask yourself, “why?”.

Why do you want to invest in rental property? Perhaps it’s to maximise tax through negative gearing, you’re aiming for capital growth, or you like the idea of an additional income stream. If you think about it, the answer could affect the location and the type of property you buy. Let’s lay out a few examples.

Additional income.

Looking for additional income? You’ll want to ensure the rental income exceeds your loan repayments as well as all operating expenses (council and water rates, repairs and maintenance, that kind of thing). One way to ensure this is by putting a large deposit down on the property purchase to keep your mortgage relatively low.

Capital growth.

If, like many other investors, you want capital growth, be prepared for inevitable market fluctuations. Although the market is all over the place at the moment, property prices in WA were stable for several years before the pandemic hit. As a result, many investors had negative equity in their investment property. These investors have only recently been able to sell and break even or make a small profit, which is why so many investors are jumping ship and selling their properties. This is feeding into WA’s rental property crisis.

Property development.

Property development is a popular strategy for income creation. You’ll need to buy a property on a generously-sized block that allows subdivision. Always check this when buying a property — the real estate agent will know whether it’s eligible for subdivision, but you can also check yourself with the council. Sites like Reiwa also show property listings with the block size and zoning.

3. Purchase to please.

Even in this marketing, you’ll have trouble renting a property if it doesn’t appeal to tenants. Do a bit of research to find out what people are interested in. For example, let’s say you’re looking to buy a four-bedroom, two-bathroom house — this will most likely attract families. Is the property near (ideally, within walking distance to) good schools and parks? If you’re buying a one-by-one apartment, this will probably attract a single person or an established couple. Is there public transport nearby? Does the property include a parking bay and storage unit?

It’ll help to speak to your local real estate agents and property managers; they’ll know exactly what people in their suburbs are seeking.

4. Invest in professional management.

You’re already investing so much in your property. It makes sense to do it all properly. That includes investing in professional property management. Property managers know the market well — it’s their job to. A good property manager will give you a heads-up when the market looks like it’ll shift, and can help you navigate those changes. They’ll also help you negotiate a fair rent with the tenants, and help you increase or lower it appropriately depending on market conditions.

Your property manager will also be the middleman between you and your tenant, which means there’s far less direct communication for you (unless you want to do that).

5. Finally, get expert advice before you buy.

On top of real estate agents and property managers, it’s wise to talk to an accountant about your investment strategy. If you don’t have one, that’s even more reason to see an accountant. They’ll help you create an effective strategy, let you know what’s tax deductible, and also get a depreciation schedule prepared after you purchase a property.

An accountant can also advise you on what name and tax structure you should buy the property in. Different tax structures have different benefits, and this is an area many investors aren’t aware of. The right tax structure for your circumstances can save a lot of tax when you decide to sell, and ensure you get the best tax advantage during the ownership of the property.

When you’re ready to talk about entering the property investment market, we’ll help you get started on the right foot. Contact Ascent Accounting now to get started.

Preparing your business for sale: handy tips.

Sun, 15 Jan 2023 23:00:00 GMT

Last month, we spoke in detail about the importance of a concrete business exit strategy. Whether you’re retiring or just moving onto a new chapter, a sound exit strategy is a major part of securing the most returns from the business sale and ensuring a smooth handover. Your exit strategy may be collecting dust for some years before you actually need it, but when you do, the first step is to prepare your business for sale and start creating a succession plan.

Today, we’re laying out three tips to consider when it comes to doing just that — preparing your business for sale.

1. Plan ahead.

Most business owners only think about what to do with their business when their health starts to decline, they are approaching retirement, or they become ill. This often leads to owners making important decisions under unnecessary time pressure. As a result, these rash decisions are usually ill-informed and don’t provide the outcomes one had hoped for.

Another reason business owners start rushing through the sale process is because they’re forced out of business. This might be due to the loss of an irreplaceable employee, unforeseen changes in the market, or shifts in customer demand.

Whatever the reason, waiting for any of these events to happen will almost certainly put you in an unfavourable selling position. Planning ahead with a succession plan means you’re empowered with the ability to be in total control of your business sale — whatever the circumstances. You can forecast and mitigate against such events, helping you exit on your terms.

2. Ask yourself, “why?”.

Everyone starts their business based on something. A feeling, goal, passion, vision, dream, perhaps you just noticed a gap in the market and sought to fill it, or you just needed the income and wanted to work for yourself. The point is, you started your business for a reason. With the sale of your business, you get to be just as clear about what you wish to achieve as you were when you started it.

Usually, there is a lot more to consider than just making a profit from selling your enterprise. For example, a popular desire is that the business will be passed on to a family member, or at least a trusted individual who will continue the business’s good name. You might wish to retain the rights over a particular product, or still be consulted when it comes to major business decisions.

So, think about it — what do you wish to gain from selling your business? For some, it will be purely financial gain (and that’s fine!), but for many, there are other elements to consider.

3. Choose the right time.

When you launched your business, you might have had a vision that it would endure forever — or at least long after you’ve sold it — and become a household name or local legacy. However, 50% of businesses are 10 years old or less, and only 10% reach the 25-year mark. It goes without saying that most businesses close unexpectedly, so knowing when to sell a business is crucial. The question is, how do you know when it's time to let go?

Studies show that the best time to sell a business is when sales are peaking and profits continue to rise. Now, we know it’s tempting to hold on to a business during these times because of course you want to see those profits rolling into your bank account. But, it is significantly easier to sell a profitable business than a failing one. So, let’s say you plan to sell your business in 2028, but in 2026 your profits are suddenly soaring. You might like to sell then, albeit two years earlier than you intended, and make the most of the opportunity to sell a successful, thriving business. Come 2028, your profits might have plummeted, and you’re left with a dwindling business no one wants to buy…

Need tailored advice for succession planning?

Business succession planning is one of our core offerings We provide advice and guidance on how to adopt a succession plan that provides for your future security. So, we’ll work with you to tailor a succession plan and help you roll it out over a set period — ideally, five years. See what’s covered here , or contact Ascent Accounting now to get started.

Real estate lingo explained (finally!).

Sun, 15 Jan 2023 23:00:00 GMT

Real estate jargon can be confusing. We’d like to promise that it’s only confusing if you’re buying or selling for the first time, but even by the third or fourth time… It’s still confusing. Explaining financing, conveyancing, contracts, guarantors, and more are just some of the daily conversations real estate agents have with clients. And it’s no wonder — for many people, these terms are new, fueled with jargon, and a bit intimidating.

These terms (and more) are second nature for real estate agents and are often spoken with such confidence and authority that many people feel too embarrassed to ask what they mean. By learning some of the lingo, you’ll be more confident in your negotiations and general interactions when it comes to your property. Here are some to get you started:

1. Listing authority.

The Listing Authority is also known as a Selling Agency Agreement. It’s the written agreement whereby an agent is authorised by the seller to find a buyer for a particular property. This paperwork outlines property details, listing and commission fees, and how long the agreement will last.

2. Offer contract and acceptance contract.

These two documents are pivotal in transferring homeownership. Together, they form the legal contract of sale. A good agent will ensure you’re involved in every part of this process and have a clear understanding of each document and its respective components. These documents are highly detailed and there can be some negotiations or back-and-forth on different steps. So, be wary of agents who quickly flip to the signing areas without encouraging you to read through and ask questions.

3. Vendor versus buyer.

The vendor is selling the property and can be a person, a superannuation fund, a government entity or an enduring power of attorney. Meanwhile, the buyer is the person making an offer to purchase the property. If more than one person is buying, they need to decide if they will be purchasing as joint tenants or tenants in common.

4. Property chattels and fixtures.

Chattels and fixtures are items that remain at the property. Commonly seen chattels include a dishwasher and oven. However, if someone is moving overseas, they might also leave their fridge and washing machine, for example. Fixtures refer to permanent items like floor coverings, curtains, blinds, TV aerials, light fittings, solar panels, and so on. These are usually included by default, and it’s up to the seller to be clear with the agent about exceptions. For example, the seller might like to take the blinds with them if they know they can be fitted into their new home.

Further, anything left must be left in good working order. It’s not a time to use the property sale as a verge-side collection. For example, all the lights must work, and if the seller leaves a dishwasher, it must be functional.

5. Certificate of Title.

A Certificate of Title is an official land ownership record. This is a public record, which means anyone can order a copy of a Certificate of Title to find current ownership information for any property in Western Australia — even if they don't own it. A copy of this Certificate is given to buyers on the purchase of a property. It’s also used for checking current property ownership, planning applications, as well as research by real estate agents, investors, and home buyers.

6. Special conditions and annexures.

An annexure is an attachment to a document. When writing a contract, annexures are included in the special conditions. “Annexure A” is commonly used and covers areas such as ensuring the buyer has received a copy of the Certificate of Title, included items are in working order, the property is compliant with electrical requirements and more.

7. Guarantor.

If you’re buying for the first time and have limited credit history or finances (which is almost every first home buyer), you might ask a family member — usually a parent — to be a “guarantor” for you. The guarantor “guarantees” your mortgage by promising to repay the debt if you can’t afford to, so it’s a pretty big ask. You’re asking someone to be your fallback in the event that you can’t make your mortgage repayments. Despite being a very serious arrangement, it’s a very popular one — guarantor loans have jumped more than 70% in the last six years!

Thinking of buying? Sort your finances out first.

We’re familiar with these terms and a whole lot more because we know the first step to buyer success is organised finances — the bank knows it, too. Contact us for bookkeeping services, tax accounting, and more.

The importance of staff super and payment dates.

Sun, 15 Jan 2023 23:00:00 GMT

You already know that super must be paid to eligible employees. Did you know an employee's fund must receive their super payments on or before the quarterly super due dates? Aside from being the right thing to do, it’s also the only way to avoid the super guarantee charge (SGC).

Dates to remember.

Payments should be made at least four times a year. This applies from the day an employee starts working for you. These are the quarterly dates for 2023.

Q1: 1 July – 30 September, payment due date 28th October.
Q2: 1 October – 31 December, payment due date 28th January.
Q3: 1 January – 31 March, payment due date 28th April.
Q4: 1 April – 30 June, payment due date 28th July.

Making frequent payments.

You can make payments more frequently than quarterly, for example fortnightly or monthly. If you do, ensure you pay your total super guarantee (SG) contribution for the quarter by the due date.

Payments on weekends.

You aren’t expected to action payments on a weekend or public holiday. So, when a super due date falls on a weekend or public holiday, your contribution must be received by the fund on or before the next business day.

If you miss the mark.

Business owners/directors are personally liable for super for staff. As the employer, you’ll be held accountable for missed payments, not your employees. If you miss the quarterly payment due date or make late super payments, you’ll need to lodge a superannuation guarantee charge (SGC) statement and pay the SGC to the ATO. Missed or late super payments are not tax deductible.

A note on clearing houses.

A clearing house is a financial institution formed to facilitate the exchange of payments. When it comes to super, a clearing house distributes super contributions to your employees' funds on your behalf.

Although convenient, it’s important to note that SG payments made to a commercial clearing house before the SG due date may not reach the super fund until after the due date. Why does this matter? Your employee's super contribution is only considered 'paid' on the date it's received by the super fund, not the date it's received by the clearing house.

What we’re saying is, you must leave enough time for your SG payments to reach the super fund and allow for their processing times. The only exception is if you use the ATO's Small Business Superannuation Clearing House. Here, payments may be considered 'paid' on the date they're received.

The ATO is cracking down.

The ATO has started double-checking payments and dates using the super clearing house and Single Touch Payroll info businesses are lodging. Their only goal here is to catch businesses not paying staff super on time. If you’re caught, there are large penalties on the way, so it’s important to stay organised when it comes to staff super.

We’re super helpful when it comes to super.

We help businesses across Perth with all things tax, including super implications. Contact us to talk about this in more detail — we’d love to help you understand the super obligations you have to your staff.

Checklist for employers paying staff super.

Sun, 15 Jan 2023 23:00:00 GMT

Part of your obligations as an employer is to pay superannuation guarantee — a task that can be easier said than done. Use this checklist to ensure you're meeting your super obligations.

1. Determining eligibility.

Determine which employees (including contractors) are eligible for super contributions.

Determine what payments are considered ordinary time earnings.

2. Selecting a fund.

Offer your employees a choice of superfund.

Provide your employees’ Tax File Number to their fund of choice.

Ensure you understand how to pay super (e.g. ensure you’re paying super into a complying fund or retirement savings account).

If your employee hasn't given you the details of their fund, select your default superfund on their behalf.

3. Pay and report.

Note the quarterly super payment due dates to avoid penalties and the super guarantee charge.

Determine how much super you need to pay each staff member.

Comply with SuperStream by making payments and providing data electronically in one of the following ways:

Through a SuperStream compliant system.
Through a commercial clearing house or the Small Business Superannuation Clearing House.
Through the superfund (if it offers this service).

4. Pay on time.

Check super payment due dates.

Pay super contributions on or before these dates.

Pay super contributions at least four times a year.

If you haven’t paid on time, calculate the super guarantee charge, lodge the superannuation guarantee charge statement, and pay the superannuation guarantee charge.

5. Keep records.

Keep accurate records that are written in English, or can be easily converted into English by yourself or a translator if needed.

Keep receipts and other documents issued by the fund that prove you’ve made the necessary employee contributions.

Demonstrate how much super guarantee you paid for each employee, as well as how you calculated the amount.

Demonstrate that you’ve offered eligible employees a choice of superfund.

Keep these records for a minimum of five years.

Want more superfund support?

The best way to ensure employee super contributions are handled correctly is to get an expert opinion. That’s where we come in — contact us today .

Should you really move superfunds?

Wed, 14 Dec 2022 07:03:20 GMT

At this time of year, many people consider moving superfunds — especially if those end-of-year letters from the superfund are… disappointing, to say the least. Almost all superfunds are going to be showing red this year, but like all financial decisions, the choice to move superfunds should not be rushed.

Let’s look at five factors to consider when thinking about changing superfunds. In the end, you might realise your current situation isn’t as bad as you think.

First, define “bad”.

How bad was it, really? Australian shares, international shares, and international property were off by about 6.5%, while Australian property was down more than 11%. Fixed interest/bond markets were off between about 9% - 13%, and official cash returns were only just above zero.

True, market returns were terrible, but that isn’t your superfund's fault. All superfunds are in the same position here, so in a way, it doesn’t really matter what fund you’re with.

Considering all of that, the average superfund member will be in "balanced" or "moderate" funds. This has about 60% - 70% of your money in growth assets and 30% - 40% in defensive assets. Returns across the board were going to average around 10.5% for the year. So, if your fund did better than that, it actually performed above average.

Think long-term thoughts.

You’ve had one unfavourable year, but you should be focusing on the last five years (or longer) for an accurate return picture. Even with the most recent year dragging everything down, your previous five returns should average at least 4%. If your superfund is performing around that number, or even 2% lower, you're not in the worst-performing funds.

Don’t chase returns.

If you're researching other superfunds, don't get sucked into chasing returns just because one did comparatively well last year. This doesn’t mean they’ll perform well every year, which is why it’s important to consider long-term returns with your current fund (and others you’re thinking about).

Don’t dismiss insurance.

If you consolidate multiple superfunds, you’ve probably unknowingly cancelled a lot of important insurance at the same time. This is particularly dangerous if you need insurance. For example, if someone under the age of 55 or with dependents has health issues, they might not be able to get replacement insurance. So, please don't close any superfund before you've considered your insurance!

Investment options.

In your fund investigations, make sure there are a range of investment options. The more the better! You at least need enough to be aggressive with your investments in the future (if you want to be).

Want more superfund support?

If you go swapping funds hastily, you could end up in a worse position. The best way to explore your options and ensure you’re making an informed decision is by getting an expert opinion. That’s where we come in — contact us today .

What’s a business exit strategy?

Wed, 14 Dec 2022 07:03:17 GMT

As 2022 comes to an end, perhaps you’re also thinking about letting go of your business. Whether you’re retiring or just moving onto a new chapter, a sound exit strategy is a major part of securing the most returns from the business sale and ensuring a smooth handover.

Whether you’re hands-on or prefer to delegate and take a backseat approach, many business owners forget about an exit strategy until they need one. At this point, creating one is stressful and burdensome. To avoid this, it’s a good idea to have one in place, even if you have no intention of selling for many years. Ideally, an exit strategy (also called a “succession plan”) will be a part of a larger business strategy for your operations as a whole.

What is a business exit strategy?

An exit strategy is a clear plan outlining the steps you’ll take when it’s time to release your business ownership. Unlike being forced to sell due to declining sales or a spiralling market, an exit strategy lets you sell the business on your terms. Ideally, for the right amount of money.

Your exit strategy has a range of variables that need to be taken into account. Personal finances, existing employees, retention of control over your business, tax implications, and profits and losses are all components that have to be considered.

Is an exit strategy all about selling?

Whilst selling a business is the most common component of an exit strategy, it’s not the only reason you might have one. An exit strategy can also outline how you plan to relinquish business ownership through:

Arranging a buyout from management or partners.
Family succession planning.
Sale of shares.
Making an Initial Public Offering (IPO).

You might also use an exit strategy to outline how you’ll release the control you have over the business, but not the ownership .

Do I “need” an exit strategy?

You only need an exit strategy if you want to control your business's future — which is essentially every business owner! In fact, selling or passing on your business on your own terms through a succession plan can help you make 50 – 100% more compared to taking a passive approach!

A “passive approach” means you don’t have a clear plan in place and are content to let circumstances govern the outcome of your business. Most business owners adopting a passive approach are optimistic that they’ll simply receive an amazing offer for their business at the right time.

This is rarely the case. When it does happen, the offer usually isn’t amazing, but a lack of succession planning means the business owner is forced to accept the offer anyway! Instead, your health, age, market changes, and customer demands determine when, how, and for how much your business will be passed on. There’s a lot left to chance…

How can Ascent Accountants help here?

Great question! We help businesses across Perth with strategic business plans, which include a comprehensive exit strategy. Contact us to talk about this in more detail — we’d love to help you with a quality succession plan to secure your business’s future.

Ways you can reduce going into debt over Christmas

Wed, 14 Dec 2022 07:03:15 GMT

December comes with a lot of financial expectations. Sometimes it feels like the gift-giving is never ending — just when you feel like you’ve got everyone sorted, you remember your neighbour, work colleague, or child’s teacher. Plus, there’s the expenditure that comes with preparing Christmas meals for different events you’re hosting or attending, or the extra decorations you buy every season.

As much as we all try to be generous during this time, it’s important not to lose sight of our financial limitations. To minimise stress and the financial fallout that can carry through to 2023, managing expectations this December is super important. Specifically, gift-giving expectations. If you can navigate that successfully with friends and family, you’ll create a more relaxing festive season for everyone.

1. Have a conversation.

If you have regular people you always buy for (e.g. friends and family), set expectations with them with a casual conversation. It could be as simple as, “hey, can we make the limit $50 this year instead of $100?”. Or, perhaps together as a family, you’ll decide to buy for immediate members only, not the entire extended tribe. As much as we love our far-off relatives, for the majority, it’s simply not viable to buy for 10, 15, or 20 family members!

You can also do secret Santa with your family or friendship circle so you only have to buy for one person each.

2. Cut out the “nice-to-gives”.

If this time of year has you in a financial bind, cut out the “nice-to-gives” that you’d like to give a gift to, but it probably won’t matter if you don’t. This includes people in your lifestyle peripherals, like your son’s teacher, your local butcher, your child’s friend’s mum, and so on. There’s always next year, and you can still give these people a heartfelt card!

3. Don’t spend money you don’t have.

Seems obvious, right? Yet, a lot of people massively overspend in November and December and go into debt. Depending on how severely you’re “in the red”, this debt can follow you well into the new year and even lead to personal loans to pay off owed money.

Put plainly, if you don't have the cash for it, don't buy it. Avoid relying on credit cards — while these are great for emergencies, they can be crippling when mismanaged or used as an everyday card.

4. Think outside the box.

While it's lovely to have nice things and give nice things, your financial well-being is worth so much more than “something nice”. This season, think outside the box when it comes to giving gifts. Instead of a wrapped present, you could gift a home-cooked meal or quality time.

5. Don’t overspend on holidays.

If you’re heading away for the Christmas break, it’s easy to get lost in the atmosphere of a vacation. Our money suddenly doesn’t feel like our money, and there’s a big “you’ve earnt this!” message at play. While you most certainly have earnt a vacation, don’t commit to an expensive holiday. Whether you’re going interstate to see family, down south with friends, or overseas somewhere, you should still track finances.

We also advise you to plan ahead so you know roughly what you’ll be spending each day, and on what.

Clear as mud?

We offer much more than handy Christmas-saving tips. Contact us for bookkeeping services, tax accounting, and more.

Taxes, staff presents, Christmas parties, and minor benefits

Wed, 14 Dec 2022 07:03:10 GMT

With 2022 coming to a close, many businesses will send off the year with Christmas celebrations and gift-giving. Whilst the spirit of generosity is high during this time, these festivities are affected by tax. Do you know the possible FBT (Fringe Benefits Tax) and income tax implications of providing parties and gifts to staff and clients?

Below, we break down everything you need to know about tax this holiday season…

Calculating Christmas expenditure.

Under the FBT Act, employers have the freedom to choose how they calculate their Christmas entertainment expenditure. Popular calculation methods include the 'actual method' and the '50/50 method' — and there’s also the minor benefit exemption to consider with those as well.

The minor benefit exemption.

The minor benefit exemption is an exemption from FBT for most benefits, such as gifts of less than $300 (a $299 gift may be exempt!) given to employees or their family members. Benefits provided around the same time (such as drinks and gifts) are not added together when applying this threshold.

The actual method.

Using this method, entertainment costs are divided between employees, their families, and non-employees (including clients and suppliers). Expenditure on employees is tax deductible and can be liable to FBT. On the other hand, any expenditure on non-employees isn't liable to FBT and therefore isn't valid for any tax deductions.

The 50/50 method.

This method is the more popular choice due to its simple calculation. Here, 50% of the total expenses are subject to FBT and 50% is tax deductible. Just remember that employees' food and drink is not exempt from FBT, even if the event is held on the employer's premises. Similarly, the minor benefit exemption and the general taxi travel exemption don’t apply.

Gift-giving — where does my gift fit in?

As an employer, any Christmas gifts you give to employees or their families fall into one of two categories: entertainment and non-entertainment. For many people, this can be a bit of a “grey area”. As a guide, gifts that are not considered entertainment include things like jewellery, alcohol, or flowers. Gifts that are considered entertainment include event tickets or airline tickets.

Gifts to suppliers, clients and other non-employee work associates — whether the gifts are entertainment or not — are not FBT liable and not tax deductible.

Contextual examples.

To put this information into context, let's look at two examples that you might actually be looking at this December.

Scenario: Christmas party.

You’re an employer hosting a Christmas party for your employees and their spouses. Altogether 40 guests attend. The cost of food and drink is $200 per person, and no other provisions were supplied.

Using the actual method: for 40 guests, no FBT is payable, but, the event expenses aren't tax deductible. Using the 50/50 method: the expenditure is $8,000, so $4,000 is liable to FBT and tax deductible.

Scenario: giving a gift that is considered entertainment.

Gifts to employees are tax deductible and are liable to FBT, unless the 'less than $300' minor benefit exemption is applicable.

Scenario: giving a gift that isn’t considered entertainment.

Gifts are liable to FBT, unless the 'less than $300' minor benefit exemption is applicable, and are tax deductible.

Need advice this Christmas?

For more information, contact Ascent Accounting . As a local accounting firm Perth businesses can rely on, we provide tailored tax accounting, bookkeeping, and more. Tell us about your work Christmas party and intended gifts so we can ensure all the tax is organised correctly.

Things to be aware of when claiming uniform/protective clothing & laundry on your tax returns

Mon, 14 Nov 2022 05:55:56 GMT

It’s that time of year again when individuals and business owners start to complete their tax returns for the previous tax year. This is also the time the Australian Tax Office (ATO) begins to issue warnings about infringements they will be paying particular attention to.

This year, the microscope is falling on clothing and laundry claims. As in previous years, these investigations are based on an ever-increasing number of bloated claims. With six million taxpayers claiming more than $1.8 billion for clothing and laundry expenses during the 2016/17 tax year, it’s no wonder the ATO is starting to crack down on the practice. While ATO is not suggesting that all six million claims were submitted fraudulently, there is clearly an issue with people understanding what can and can’t be claimed for.

So, what can be claimed?

Some taxpayers think they can claim $150 per year for laundry expenses without having to provide proof or receipts. However, ATO assistant commissioner Kath Anderson explained the $150 limit is only there to reduce the recordkeeping burden — it’s not an automatic entitlement for everyone. She went on to stress that while you don’t need receipts for the $150, you do need to have spent the money on work-related clothing.

There is also an issue with employees claiming for conventional clothing, such as suits. Ms Anderson stated that these items cannot be claimed for, even if your employer stipulates that you wear the items for work. The only items which can be claimed for are occupation-specific clothing items that are only worn for work. A good example would be high-visibility clothing or a company-branded polo shirt which you are unlikely to wear anywhere other than work. A suit, however, is likely to be worn outside the office also.

When it comes to laundry, taxpayers can claim up to $150 per year for washing and drying work-specific clothing at a rate of $1 per load if the load contains only work clothing. If work-related items are mixed with other types of clothing the rate falls to 0.50c per load.

The ATO is watching

If possible, you should always keep your laundry and workwear receipts. The ATO is using new sophisticated machine learning technology to scrutinise tax returns and identify fraudulent claims. This includes comparing your tax data and claims against others in similar occupations. If you’re claiming more than the average person in your industry, you’ll be flagged and an investigation will be carried out. If you have your receipts, that investigation is going to go a lot smoother for you!

Want more advice and tax support?

For more information on what you can and can’t claim, as well as tax and tax planning, contact us today .

Ways to save money & spend less as living costs rise

Mon, 14 Nov 2022 05:40:32 GMT

Feeling the pinch from ever-increasing living costs? You’re not alone. Many West Aussies are looking for ways to spend less and save more without totally giving up the lifestyles they love. Rising fuel prices, household bills, and mortgage repayments are making that tricky, especially seeing as wage increases don’t seem to be climbing anywhere near the same rate.

If your family budget is taking a hit, here are three easy habits you can explore to save more and spend less.

Review your mortgage.

Home loan repayments represent about 30% of a household's expenses, so let’s start here. Now more than ever, it pays to explore different options that can help you better manage your mortgage commitments. For starters, you can negotiate a better interest rate with your existing bank. Banks hate losing clients — especially when there’s a mortgage in play — so they’re usually pretty receptive to discussing your repayments.

At Ascent Accountants, we can also arrange free Loan Health Checkup through our associate, Justy Jenson from JF Services Pty Ltd. Justy can compare your current interest rates, and if your rate is not competitive, he’ll advocate for a better rate on your behalf. In doing so, he can provide options that better suit your financial needs and discuss debt consolidation to reduce monthly commitments. Get in touch and we’d be happy to set this up for you, or we can send you a Health Checklist.

Choose preloved.

Long gone are the days when secondhand wares, fashion, and furniture were reserved for those in need. Australia is enjoying a massive thrifting movement, and if you’re not in on it, now is the time to join. Gumtree, Facebook Marketplace, secondhand markets, preloved boutiques, and thrift stores make purchasing secondhand items easier than ever.

Aside from the fact that buying secondhand will save you a substantial amount of money, you’ll also be contributing to massive waste reduction and helping keep goods out of landfill. If you’ve never really investigated this as an option before, you’ll be pleasantly surprised at what you can find.

Put your kitchen to work.

Did you know Australians spend an average of $41.50 on delivery and takeout options every week? If that sounds low to you, then you really need to action this step.

A pretty easy way to manage your spending is by using your kitchen more for delicious homecooked meals. UberEats and Deliveroo are luxurious you can probably do without for a time, so consider deleting these off your phone to remove temptation. There are heaps of budget-friendly family meal recipes online that’ll go much further than takeout will. And, the leftovers mean you won’t need to buy lunch at work.

How can Ascent Accountants help here?

Great question! We work with trusted financial advisors who can help you organise your finances so you can maximise your savings and spend less. Contact us to talk about this in more detail — we’d love to help set you up with a reliable financial advisor that we can personally vouch for.

Support for retirees through Senior Health Care Card changes

Mon, 14 Nov 2022 05:19:31 GMT

Legislation to increase the income test thresholds for the Commonwealth Seniors Health Card has now been passed by Parliament. This legislation is set to help thousands of seniors access affordable medications and substantial discounts on State Government services.

What’s new

Increased cut-offs.

The change increases the cut-off limits to access the card to $90,000 a year for singles and a combined $144,000 for couples. Those figures will be indexed each year, commencing in September 2023. The Association of Independent Retirees (AIR) welcomed the change, saying the ability to access the card will support many seniors, particularly those feeling weighed down by increasing living costs.

"Income for self-funded retirees doesn't necessarily rise in line with inflation like those on a full or partpension. The savings on prescription drugs alone will save some of them hundreds of dollars a year," AIR’s National Deputy President Margaret Walsh said.

Affordable medications & State Government services discounts.

For seniors with a CSHC or Pensioner Concession Card, PBSlisted drugs which would normally cost $42.50 per prescription are capped at $6.80 per script. There is· also an annual safety net of $244.80 a year — a massive saving. Additionally, if the limit is reached, prescriptions are free for the rest of the calendar year.

When combined with the State's WA Seniors Card, WA residents will enjoy most of the benefits received by age pensioners. That includes lofty discounts on local government charges, water supply charges and other State Government services. According to an estimation from the AIR, in some cases, the combined discounts could be worth up to $7,000 a year.

Don’t miss out!

The card is not automatically issued…

Independent Financial Planner, Emily van Kampen, said that retirees could miss out simply because they won't be aware of their entitlement to get the card in the first place. This is even more true for wealthy seniors. “There's just an assumption by wealthy retirees that they're not entitled to anything from the Government when, in fact, they might be," Ms van Kampen said. "Confusion over what's regarded as assessable income is a big part of it because many think the assessment is based on cashflow when it isn't."

Calculating eligibility.

Centrelink uses a combination of taxable income and deemed income on certain investments to calculate income eligibility for the card. What most people don’t realise is that any money taken out of a taxed super scheme — whether as a regular payment or a lump-sum withdrawal — does not count towards the annual limit. Gross employment income, foreign income, net rental receipts, assessable capital gains and grossed-up share dividends are all part of the annual figure.

Centrelink's deeming system is applied to some money in super, but only to the funds held in an account-based pension. If seniors have money retained in superannuation accumulation accounts, this will be ignored.

Figures to remember.

For singles, the first $56,400 of the money in ABPs is deemed to be earning 0.25% a year and the balance at 2.25% a year. For couples, the combined lower amount of $93,600 attracts the 0.25% rate with the remainder at 2.25%.

A single who has the maximum amount of $1. 7 million in an ABP would have deemed income on the amount of $37,122. That leaves $52,878 to be earned from other investments and employment income before losing access to the CSHC. A couple with a maximum amount of $3.4m in ABPs would have deemed income of $74,628 a year, leaving them with a combined $69,372 a year.

Applying for your Senior Health Care Card.

The easiest and fastest way to apply for your Senior Health Care Card is online through Services Australia . You can also download an 18-page claim form (from the same website), which you can print, fill in, and post. At this stage, online applications require each individual to claim, but the paper version includes a combined claim form for couples.

Each individual also needs a myGov account linked to a personal Centrelink account.

Don’t have a myGov account?

Setting one up might seem complicated, but it’s actually quite easy (if not a little tedious). If following these steps feels overwhelming, we suggest enlisting the help of a friend or family member.

If your myGov account is not already set up, go to my.gov.au and follow the steps to open an account.
Once established, myGov will ask you to link any relevant services — this is where you can add Centrelink.
You have two options to link Centrelink to your myGov account. The easiest way is to obtain a linking code by calling 13 23 07 and selecting option "1''. Alternatively, you can visit a physical Centrelink office with identity documents such as your passport, driver's license or Medicare Card.
Using a smartphone, download the myGovlD app and establish your identity using documents including things passport, driver's license or Medicare Card.
Once everything is linked, click, “make a claim" and then "get started" on the concession cards menu. Depending on how you answer the questions, you may have to upload scanned copies of documents to support your claim.
If your claim is successful, your card will be quickly available in your phone's digital wallet via the Centrelink Express Plus App. A hard copy version will be posted to you as well.

Clear as mud?

Let’s talk about it in more detail. If you’d like to get the full scoop on Senior Health Care Card entitlements for yourself or on behalf of a parent (and how this affects tax), contact us .

Four investments to consider when starting to invest for children

Mon, 14 Nov 2022 05:09:11 GMT

Last month, we talked about how to invest on behalf of your children . If you’ve read through this, you already know that setting up investments for your children can give them a financial head start when they reach adulthood. As they get older, you can educate them on sensible spending habits and wise investment decisions so they can eventually continue investing on their own as an adult, if they want to.

A good thing to remember is that children have time on their side when it comes to compounding returns. The earlier you start investing for children, the higher the return on investment will be by the time they reach 18. Today, we’re following up with four practical and relatively straightforward investments you can consider for them.

Open a junior savings account

Opening a savings account for your child is one of the simplest ways to encourage age-appropriate investing and saving. Kids can save part of their pocket money and take ownership of growing a nice pocket of cash.

Like all investment strategies, nothing is easy. For junior savings accounts, children can face strict conditions around deposits and withdrawals to earn a decent rate of interest. With today's low rates, it's hard to find a junior savings account paying over 2.5%. Even so, an account like this is worth discussing with your bank. Note that these accounts can’t be set up online as they must be verified and approved in person by an adult.

Use investment bonds

An investment bond (also called an insurance bond) is kind of like a superfund in that it’s a separate structure with its own set of rules. Investment bonds have a flat tax rate of 30%. This means that all income and capital gains made within the bond are taxed at 30%. So, this is advantageous if both parents' marginal tax rates are above 30%.

Investment bonds are also a "tax paid" investment. This means all income and capital gains are taxed within the bond, which is great because when it comes to lodging your tax return, there’s nothing you need to declare. Why? It’s all been accounted for inside the bond, which provides a streamlined experience.

When you hold investment bonds for the long-term (we’re talking 10+ years), your investment becomes 100% CGT free. This is a massive benefit for those looking to invest over a long period of time.

We’ve packed investment bonds in a nutshell here, but they certainly have their complications and complexities. If you understand investment bonds — or have the time to understand them — this can be a great investment strategy. If not, it’s probably not the right one for your family.

Directly held shares.

Children can't buy shares, but parents can buy shares in trust for minors, which is a lot simpler than it sounds. Through a major broker like CommSec, you can open an online trading account where you act as a trustee for your child. When they turn 18, the shares can be transferred into an account that’s in their name. A benefit of doing it this way is that Capital Gains Tax shouldn't apply as the child has been the beneficial owner from the beginning.

The downside? Unless you invest regularly to build a diverse portfolio of shares, the investment of your child's small portfolio will hinge on the futures of one or two companies. You want to avoid putting all your eggs in one basket.

Exchange traded funds.

Did you know you can invest in ETFs as a trustee for your child? Using this strategy, your money is spread across a variety of underlying investments, making it a low-risk option. You can diversify further by investing in several ETFs, each with a focus on different markets. A benefit of this is that fees on ETFs are very low; often below 0.5%. This means more of the investment goes towards your child’s nest egg.

When it comes to investing, invest in professional support.

Like all big decisions — especially financial decisions for your children — there’s a lot to consider. So, here are four points we think you should mull over with support from an industry professional:

How long do you plan to invest for?
What do you want to invest in?
What investment strategy will be most effective for your family?
What will be the tax consequences (if any) of your chosen strategy?

We’re ready to talk when you are.

We’re ready to talk when you are.

Contact us to learn more about investment options you can make on behalf of your child and the tax implications for each.

What to know about business trademarks & intellectual property

Thu, 13 Oct 2022 22:00:00 GMT

In the ultra-connected world we live in, the Intellectual Property (IP) of businesses is increasingly at risk. With ever-increasing accessibility, trademark, patent, and copyright infringements in general are on the rise. This comes from the work of malicious individuals or organisations, but also through innocent breaches of IP — which can have equally devastating consequences.

In Australia, interest in protecting ideas through IP rights is increasing. A 2020 report by IP Australia stated that 75 622 trade mark applications were received in Australia — a figure that has been steadily growing since the year 2000.

In all business models, it’s wise and strategic to protect your IP and your ideas. Trademarking your goods or services may be the best option for you. Below, we’re addressing some commonly asked questions about trademarks to help you make an informed decision on whether they’re right for your business.

Firstly, what is a trademark?

Let’s go back to the beginning. A trademark is used to uniquely identify a product or service and distinguish it from the offerings of competing traders. This can take many forms, including:

• A symbol or a number.

• A letter, phrase, or word (in a particular font).

• A sound (such as a musical jingle).

• A shape, picture, or logo (most commonly trademarked).

• An aspect of product packaging.

By registering a trademark, you have the exclusive right to sell the product or service. You can also authorise others to use and sell it. Additionally, a trademark legally covers you if someone tries to replicate the above aspects of your goods and services — whether they do it on purpose or accidentally.

How do trademarks differ from copyrights, designs, and patents?

Intellectual Property (IP) includes all inventions, literary and artistic works, designs, symbols, names, and images that are used to trade. There are many ways of protecting this. Let’s look at the simple case of a pen:

• A trademark application may be for the name of the pen or the type of packaging used to distinguish it from other pens.

• A patent for the pen might be for a particular type of pen with a new way to store its ink.

• Industrial design protection may be sought for the pen’s new type of grip.

A copyright application? That’s different again… This is sought to protect the IP of published or performed material. A copyright grants “the exclusive right to print, publish, perform, film, or record literary, artistic, or musical material or to authorize others to do so.”

How long does a trademark last?

Unlike what many people assume, a trademark does not apply for life. It must be renewed every 10 years to retain the exclusive rights to sell the product or service in question.

A trademark registration can be renewed up to 12 months before the renewal date is due and no longer than six months after (in the latter case, extra fees will apply). Before renewing, you must demonstrate that you have actively used the trademark. If you can’t, the exclusive rights to use it may be rescinded by the Australian government.

Do businesses need trademarks by law?

No, there is no requirement for a business to register any trademarks. However, if you want to protect the unique aspects of your business’s goods and services, you should consider trademarks.

For instance, say you have a registered business name and also registered the domain name of a product. Simply registering does not prevent another business from using very similar details as you for a competing (or identical) product, logo, or service. To prevent this and take legal action if it occurs, you’d need to trademark it in advance.

What’s the difference between registered & unregistered trademarks?

An unregistered trademark is free to use but with restrictions. For example, if someone has registered the same trademark, they can take legal action against you. Using the ® trademark symbol in this instance is an offence, but you can use TM to designate an unregistered trademark.

With a registered trademark, you’re legally allowed to use the ® symbol and nobody else is allowed to use the same trademark. If they do, you can pursue legal action against them. A registered trademark will provide you with more legal protection.

Are trademarks internationally binding?

No; any trademark registered in Australia covers only Australia. For international recognition, you can apply for an international trademark (as long as nobody has registered the trade mark that you want in another country). This will protect you from overseas businesses using the names or other features of your goods and services.

Conversely, if you registered your trademark overseas, but not in Australia, you’re able to use ® to designate this, as long as you state the country of registration near the symbol.

How do I apply for a trademark in Australia?

You can apply online through IP Australia. Detailed steps can be found here. As a quick guide, here are some points to note:

• Applications take around 3 – 4 months to assess.

• There is a cost to applying which will be either $250 or $330 depending on how you proceed with your application.

• Mistakes in applications for trademarks are common. If you make a mistake and need to restart your application after it’s been lodged, any fees you’ve paid will not be reimbursed.

If your application meets all of the requirements, it will be registered. You will receive a written notification and it will appear in the Australian Trademark Search Database.

A case study: the Ugg Boots trademark story.

For Australians, there should be no greater warning about the dangers of not trademarking a product than the story of Ugg Boots. These sheepskin shoes and boots have been made for decades by a family-run business called Luda Production, and we affectionately know them as “Ugg Boots.” However, the trademark for Ugg Boots is held by the American sheepskin company Deckers Outdoor Corporation, which they’ve registered in over 130 countries…

Consequently, the company challenged the use of the name by Luda Production and any other companies around the world using it. This happened even though the name was used in Australia for decades before the trademark application was lodged! This led to court action with major headaches (not to mention costs) that could have been avoided if Luda Production had initially registered Ugg Boots as a trademark.

So, the lesson to all Australian businesses is to register trademarks that protect the unique characteristics (including the names) of their goods and services — before another company does.

Need a hand?

As always, please contact our office should you have any queries regarding the above information. We’re always happy to help.

How to invest on behalf of your children

Thu, 13 Oct 2022 22:00:00 GMT

As a parent, there’s an almost supernatural maternal desire to nurture and protect your children as you raise them. In doing all we can for our children, we also have a deep-rooted instinct to help them succeed in life. A part of this comes down to being financially secure and self-sufficient, which leaves a lot of parents wondering how to invest on behalf of their children.

There are lots of ways you can tackle this, and each strategy has its own set of pros and cons. But, before we get into it, this article assumes you’re financially secure yourself and have the means to invest on behalf of your children. Remember, investing always carries some level of risk, so it should be considered a “luxury”, not a way to quickly create a financial source for your child.

Now that that’s out of the way, let’s explore the do’s and don’ts of investing on behalf of your child.

1. Investing in the right name.

Don’t invest in your child’s name.

If you’ve never done this before, it’s tempting to just invest in your child’s name, but just because you can, doesn’t mean you should. Typically, it is not a good idea to hold investments directly in the name of a child under the age of 18, unless it is just a little bit of cash in a savings account. This is simply because of tax. In Australia, they can only earn $416 per financial year tax-free and if they exceed this, hefty tax rates as high as 66% may incur.

These tax rates for minors exist to stop wealthy people from holding assets in their children's names to avoid tax. However, certain income sources are exempt from these high tax rates. This includes income generated from the proceeds of an inheritance and earned income, or if the child has a disability. It is also very hard (almost impossible!) to buy growth assets, like shares, directly in the name of a minor.

Do invest in your own name.

The straightest path is simply investing in your own name and then gifting the assets later. This strategy is most effective when you (or your spouse) have a low marginal tax rate or low taxable income. This is because any investment earnings will be taxed in the name of the owner.

Using this method, an adult is subject to the standard marginal tax rates, as opposed to minor tax rates. Also, you can invest in basically anything.

There is a downside… When you gift the asset to your child the ownership changes, you’ll trigger a capital gains tax (CGT) event. This means that without proper tax planning, you could end up with a big tax big upon gifting the asset to your child. The tax will be bigger if you’ve been investing over an extensive period. There are ways to mitigate the tax liability, which is something you can discuss with us at Ascent Accountants.

2. Informal trusts.

Investing through an informal trust is similar to investing in your own name. But, instead of owning the asset in your name, you own the asset in your name "as trustee for" the child. There are several online broker accounts and managed funds that will allow you to own assets under an informal trust, which makes your investment options with this strategy very flexible.

Just remember that if the asset that you’re investing in produces income, the income will still be taxed in the parent's name at their marginal tax rate. So, it’s a good idea to invest via an informal trust in the name of the parent with the lowest taxable income.

In any case, when the child turns 18, you can transfer the ownership of the shares to the child and not trigger a CGT event (like we mentioned in point two). Instead, the child will inherit the original cost base. This is possible because — according to the ATO — under an informal trust, the beneficial owner is the child as the assets have been owned "as trustee for".

3. Investment/insurance bonds.

When you hold investment bonds for the long-term (we’re talking 10+ years), your investment becomes 100% CGT free. This is a massive benefit for those looking to invest over a long period of time.

4. Discretionary family trust.

This one is a big jargon-y, so hold onto your hats (and if you want to discuss it more, you can always call us!). Of all the structures we’ve talked about so far, a discretionary family trust is the most flexible from a tax and investment perspective. For example, you can invest in any asset class you like via the trust and investment returns are distributed at the trustee's discretion.

Speaking of trustees, when you set up a family trust, you act as trustee. This could be yourself as an individual trustee or as a director of a corporate trustee. The assets are owned by you as trustee for the family trust.

Each financial year, income and capital gains are distributed to the beneficiaries of the trust, at the trustee's discretion (that’s a pretty powerful position!). This gives you the ability to distribute income differently each year depending on your family members' marginal tax rates. See? We told you it was flexible. You could do it in a single year, over multiple years or even set them up a regular income stream from the trust. Beneficiaries usually include any family member (e.g. your children) or companies and other trusts run by family members.

So, why doesn’t everyone use this structure? Family trusts can be expensive to setup and operate. As such, we don’t recommend this strategy unless you have some serious assets to invest — like, a minimum of $100,000 before you even consider it.

5. Superannuation.

Superannuation is a common investment option and generally the most tax effective structure. Investing as a superfund has its own tax rate of 15%, which is typically a lot lower than the average person's marginal tax rate.

Like all these strategies, there’s always a downside (or more than one), and for superannuation, there’s a pretty big one. Your child must meet a condition of release before they can access the funds. Typically, this has always been retirement, and the maximum preservation age for retirement is currently 60. That’s a pretty long time away for your child…

Under the first home super saver scheme, you can make voluntary contributions to super of up to $15,000 per financial year and $30,000 in total and use those contributions as a deposit on your first home. How’s that relevant? Well, if you intend to help your child purchase their first house (which is a reason many parents start investing on behalf of their children), this strategy can help you do that.

You can also use this strategy to help set them up for the long-term, for example, having a comfortable retirement. If you invested $10,000 in a superfund for a 15-year-old child, and earn 6% p.a. on the money (after fees and taxes), then by the time your child reaches age 60 that $10,000 could be worth $148,000.

Whilst many people can make this strategy work, it’s certainly one where you’re in it for the long haul, and for some people, this is off-putting. For example, you may never see the fruits of your investments or know if it was successful. The extensive time period leaves a lot that’s subject to change — for example, tax laws are always evolving and this could impact your investment. Even so, it’s worth exploring if you’re feeling like this could be the right option for you.

When it comes to investing, invest in professional support.

Like all big decisions — especially financial decisions — there’s a lot to consider. So, here are four points we think you should mull over.

1. How long do you plan to invest for?

2. What do you want to invest in?

3. What investment strategy will be most effective for your family?

4. What will be the tax consequences of your chosen strategy?

We’re ready to talk when you are. Contact us to learn more about investment options and the tax implications for each.

Financial spring cleaning

Thu, 13 Oct 2022 22:00:00 GMT

Spring is making itself at home. Whilst many people are literally dusting away the winter cobwebs, we reckon it’s also the ideal time for a financial spring clean. Take stock, minimise spending where you can and convert that excess spending into your bottom line. Here’s how (it’s really quite simple).

Smooth out the big stuff.

In a “top to bottom” approach — just like a household clean — start with the big jobs. Review your home loan interest rates, insurances premium, and regular bills first. Initiate “bill smoothing” — this is when you average out your utility bills and prepare them weekly or monthly. This means you pay as you go, in small amounts, instead of having to fork out a lump sum on a due date. Most utility companies offer bill smoothing now — you can ask them about it individually.

Tackle the small stuff.

With the big stuff looking spick and span, it’s easier to see what small jobs need to be done. This comes down to patterns of spending and looking at luxury items (e.g. streaming services, eating out, shopping sprees) that can be minimised to save money.

Tracking your spending is a good place to start. You’ll quickly be able to see patterns of behaviour, learn a lot from them, a with a bit of determination and willpower, change them. Once you’ve pinpointed some excessive spending, ask yourself, do I still need this? Have my circumstances changed? Is this something that you actually get any benefit or joy from? Often, making lots of small changes results in huge savings!

You can also check out our article from last month with more practical savings tips.

How can Ascent Accountants help here?

Great question! We work with trusted financial advisors who can help you with a thorough financial spring clean so you can maximise your savings. Contact us to talk about this in more detail — we’d love to help set you up with a reliable financial advisor that we can personally vouch for.

Steps to saving for your first home

Thu, 13 Oct 2022 22:00:00 GMT

For the first time in a long time, there may be an opportunity for first home buyers to enter the market with relative ease. Cooling property prices come down to recent aggressive rate hikes by the reserve bank. And although the words “aggressive” and “rate hikes” don’t sound pleasant, many first home buyers are jumping for joy. Even so, it’s important to stay informed and know the steps to saving for a first home.

1. Know what entitlements are up for grabs & utilise them.

First Home Guarantee Scheme.

If you don’t already know, the Federal Government just launched the First Home Guarantee scheme in July 2022. This scheme aims to support eligible first home buyers to buy a home with a deposit as little as 5%. With the standard sitting at 20%, this is obviously a huge opportunity to break into the market. You also don’t need to pay lenders' mortgage insurance — which could save you up to $15,612 for a property purchase of $450,000.

WA Stamp Duty Waiver First Home Buyers.

Add to this the savings in the WA stamp duty waiver for first home buyers for properties $430,000 and less, and a reduced rate for homes up to $530,000. If you pay $450,000 for your first home, the stamp duty cost would be $3,838, which is a saving of $11,552 on the duty of $15,390 that other buyers would pay.

First Home Super Saver.

Established in 2017, the First Home Super Saver (FHSS) allows you to save up to $15,000 a year for your first home inside your superfund, using pre-tax dollars. Let’s say you earn $80,000 in annual income, salary sacrificing up to $288 a week into the FHSS could result in a tax saving of up to $2925 per annum. Just make sure you read up on the fine print when it’s time to withdraw funds.

$10,000 First Home Buyers Grant.

Shall we keep going? In addition, a one-off payment in the form of a first home buyers grant of $10,000 will help cover upfront costs and boost your 5% deposit. There are also several banks offering a $2,000 (or thereabouts) incentive to cover bank fees and government charges, so make sure you explore different banks for your home loan.

2. Establish a savings plan.

From the time you start working, you should establish a solid financial footing by starting a regular savings plan equivalent to monthly rent. If you still live at home, a good way to do this is to pay your parents “rent”, which they then put away for you as a deposit for your home loan. Before long, you’ll have that 5% deposit — or ideally, even more. Remember, the higher your deposit, the less your mortgage and interest will cost you.

A record of squirrelling savings into a savings account also proves to the bank that you’re capable of managing regular repayments — this will assist you in securing a loan. For example, the bank will want to see a minimum savings pattern of 5%, saved over three to six months. Stability in employment and residential history is also helpful. In the present environment, banks are required to “test” lending capacity based on a higher interest rate of 8%. Demonstrating strong saving habits and avoiding the traps of buy-now-pay-later services will go a long way to securing the right loan.

When the time comes to start exploring properties, you should seek the advice and services of a mortgage broker. They can assess your borrowing capacity based on your income and savings.

3. Put the plan into motion.

Let’s say you’ve got a borrowing capacity of $400,000. Together with your various savings and entitlements, you can set your plan in motion knowing you’ve taken all the right steps in securing your first home.

Rope in as many professionals as possible so you have a clear picture of how each aspect of purchasing a home (and saving for one) works. Mortgage brokers, real estate agents, financial advisors, accountants, and your bank should all be consulted at one point.

More advice on saving for your first home.

We’d love to help you financially prepare for getting into your own home. With a well-connected network of financial experts, we can also refer you to other professionals that can set you up for first home buyer success. So, start the conversation here .

Urgent Action Required: Director ID Numbers

Wed, 14 Sep 2022 22:00:00 GMT

In Australia, you need a Director Identification Number (DIN) if you're a director of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation. Previously, you could set up your DIN when you had already set up your businesses, but now, this must be done before you set up a company.

So, why the urgency? It wasn’t a clickbait title: existing Directors must have a Director's ID number before 30th November, otherwise, they will be fined by ASIC.

This can be quite a confusing process, so we’ve laid out the steps you need to take below.

Go to Australia Business Registry Services and ensure you understand what the Director Identification Number (DIN) is, who needs to apply for it and how to apply.
On the same ABRS website, click the “Apply now” button.

3. If you haven’t already done so, set up your myGovID. This is an app you can download for free to your smartphone — it is not the same as myGov. This step needs to be completed before you can apply for the DIN. Instructions on how to set up myGovID can be found here .

4.Gather your required proof of identity documents. You will need:

a. your tax file number (TFN)

b. your residential address as held by the ATO

c. information from two documents to verify your identity , including:

i. bank account details — Ascent recommends this form of ID.

ii. an ATO notice of assessment — Ascent recommends this form of ID.

iii. super account details

iv. a dividend statement

v. a Centrelink payment summary

vi. PAYG payment summary.

5. Under “Step 3” click on the “Apply now with myGovID” button.

6. If you are not able to apply for a myGovID, you can verify your identity by calling the Australian Taxation Office (13 62 50) or lodging a paper form (we can provide you with a copy of the form). We recommend trying to apply using the online option as this is the fastest and easiest way to apply.

7. After selecting “Apply now with myGovID”, you’ll be taken to the myGovID login page. On this page, insert your myGovID email in the box at the bottom of the page. Select “Login”, and a four-digit number will appear on the page.

8. On your smartphone, open the myGovID app and log in with your password. A white screen will then appear in the app asking for the four-digit code from the webpage in step 7 above. Enter this and select login.

9. When the above steps have been completed successfully, the webpage will automatically redirect you to the “Proof of record ownership” page, this is step one in the DIN application process.

10. Agree to the terms and conditions of use and select the “next” button at the bottom of the screen.

11. If your ID has been successfully verified, you will be taken to step two, “Your details” which will automatically be confirmed by the Australian Taxation Office, as below. If these details are correct, select the “next” button in blue at the bottom of the screen.

12. You will now need to “Confirm it is your record” at step three of the application process using one of the 6 forms of identification listed at point 4 (c). We recommend using your Notice of assessment and your bank account details as the easiest forms of ID to obtain.

13. Select the box that corresponds to the form of ID you will be using. This will open additional boxes that will need to be completed for each form of ID. You only need to complete two (2) of the six available options. We have displayed each of these below so you are aware of what information you will require.

14. After you have completed the required information for your two forms of identity, select the “I agree to verifying and linking my record*” check box and select “submit” at the bottom of the page.

15. If successful you will be taken to the “Proof of record ownership” and the ATO will confirm that your information has been verified. If the details for identification are incorrect, you will be notified and will not proceed to this screen. You will be given three attempts to enter the correct information before you are locked out of the application process for one hour.

16. Select “continue” and you will be taken to the DIN application form. Here you will need to select the two checkboxes to confirm that you are, or intend to be within the next 12 months, an eligible officer and that you satisfy the criteria to become a director of a company. Select “next” at the bottom of the page once you have ticked the required boxes.

17. Step two will display your details as per the Australian Taxation Office, please review and ensure no changes are required. If not, complete all personal information as required below. When all of the information is complete, select “next” at the bottom of the page.

18. Review the information and declarations you have entered. If all is correct, check the box that reads “I declare that the information given on this form is true and correct”. Then, select “submit” at the bottom of the page.

19. You will now receive your Director ID number. This number will not be posted to you. It is your responsibility to retain a copy of this number. Please print, write down and/or save this page for future reference as this number will be required to be provided to ASIC.

20. Now that you have your DIN, you’re required to notify ASIC.

a. If we are your registered office, please provide us with your DIN so we can notify ASIC of your DIN and attach it to all of your corporate entities on your behalf.

b. If we are not your registered office, it is your responsibility to notify ASIC of your DIN and attach it to all of your corporate entities. Monetary fines and potential company deregistration are proposed should the DIN not be provided to ASIC within the relevant time frames.

Need a hand?

As always, please contact our office should you have any queries in regard to the above information.

A step-by-step guide to managing a deceased estate.

Wed, 14 Sep 2022 22:00:00 GMT

Losing a loved one is a difficult time. Aside from the emotional stress and grief this causes, it can be even more overwhelming if you’re responsible for their organising financial affairs.

If you find yourself in the position of Executor — particularly for the first time — working out where to start can be very daunting. We suggest tackling tasks in a logical, organised, and chronological order. It’s the easiest way to ensure nothing slips through the cracks and that a methodical approach is used across every aspect of the Executor role.

So, here’s our guide to managing deceased estates.

1. Get a Grant of Probate.

Issued by the Supreme Court, a Grant of Probate is a document that confirms that a will is valid and gives the Executor authority to act. The Probate ensures the Executor has the right to deal with certain assets, such as real estate and bank accounts.

Once the Probate is granted, you can redeem and collect assets, as well as pay debts and liabilities. You can also wait for the expiry of the six-month limitation period for family provision claims against the estate, and defend the will against a challenge if needed.

2. Notify service providers & payees.

The deceased individual likely has a range of service providers. This might include bank accounts, mobile plans, a driver’s license, gas and water providers, debts, superannuation funds, and much more. Start by making a list of all known providers, and do some research to ensure there aren’t any hidden away. For example, everyone has a power provider, but there might also be smaller payees such as a magazine subscription or sponsor child payments.

Notify each service provider of the person’s passing and work with the provider through the cancellation process. For banks, ensure you have a copy of the will or grant of probate. This allows the banks to release funds for funeral and estate expenses, and helps you, the Executor, open an "estate of the late" account.

Depending on time constraints, some people like to do the next step before this one.

3. Arrange the funeral.

Part of your role as Executor is to make funeral arrangements and follow any directions specified in the will. These decisions will cover things like whether the body is to be buried or cremated and where the funeral will be held. There is also the nuance of the funeral service to consider, and what family, friends, and/or co-workers you should notify about the service.

The Funeral Director of the selected funeral home will assist you in a lot of these areas (such as music options, body preparation and casket options, catering, floral arrangements, and so on), however, it’s up to you to make the final decisions — aligning with will specifications where they occur. The Funeral Director will also provide a full service including notice of death, notice of funeral and apply for the Death Certificate.

4. Engage professional support.

The insight and guidance of experts will provide peace of mind as you manage what can be an emotionally draining process. We suggest reaching out to estate planning professionals, such as a legal practitioner, as well as accountants and financial advisers.

Legal practitioners will guide you through applying for probate, legal documents, or notifying beneficiaries. At Ascent Accountants, we assist with the tax implications of disposing of assets to beneficiaries, applying for an estate tax file number, or preparing a tax return for the estate. Our financial adviser partners provide support with registry transfers, insurance payouts, and superannuation payments.

All of these tasks are difficult to manage without the proper expertise and resources. Even small mistakes can be costly later, so it’s important to get it done correctly the first time — and, a professional will also be able to orchestrate it all very efficiently.

About that professional support…

Our friendly and compassionate Ascent Accountants team will work with you and make the tax part of your Executor role as smooth as possible. This includes tax implications of disposing of assets to beneficiaries, applying for an estate tax file number, preparing a tax return for the estate, and more.

Spend less & save more with these three steps.

Wed, 14 Sep 2022 22:00:00 GMT

With home loan interest rates increasing, it’s important to be careful with your spending habits. For example, if you’ve borrowed $500,000 to purchase your home, you might need an additional $470 a month by early next year — or even as soon as December.

If you were one of the borrowers who homed in on a mid-pandemic deal, you’re in even more trouble. For example, say you signed up for a two-year, 1.99% deal in 2020 for a $750,000 mortgage. At the moment, your repayments are sitting at about $2,770 a month. When your fixed fee rate ends (very soon), you could be dealt a 5.99% “deal”, which bumps your monthly repayments to $4,491 a month! Most people stretch themselves thin when it comes to mortgages, so that extra $1,723 is basically going to be impossible to find.

So, aside from the obvious step of reviewing lenders and getting a better interest rate, here are three steps to spending less and saving more.

Three steps to spending less.

1. Track spending & expenses.

It’s impossible to start spending less without knowing what you’re currently spending. So, map out where your money is going. Start small and simply write down your spending every day for one week — if you get paid fortnightly, you might like to do this over a two-week period instead. For most people, this includes bills, food, entertainment, subscriptions, petrol, and so on.

An Excel spreadsheet is probably the easiest way to manage this information. You can also colour-code different spending categories, such as bills, entertainment, food, and so on. A simple way to input your transactions is by referencing your banking app (or through a hardcopy statement).

Tracking over a longer period gives you a more realistic picture, so we suggest doing this for at least eight weeks.

2. Review spending habits.

With a good backlog of spending data behind you, it’s time to review the data. At the end of your tracking period, look at your recorded transactions to see where your money is going. You’ll probably be surprised at how the small things add up. You might also discover hidden costs, such as account fees or subscriptions you don't use anymore, or mistaken transactions.

Look at all your transactions and define what your "needs" are — essential items you need to live. This is probably food and living bills (power, water, gas), insurances, rent or mortgage payments, childcare costs, petrol, and so on. The ones left over are "wants". These are things you could cut back on or live without for a while — Netflix, regular UberEATS, HelloFresh, casual sports sessions, and more.

3. Change spending habits.

Like we said before, small things add up. So, making lots (and lots and lots) of small adjustments in your spending will make a big difference and help you avoid overspending. Ultimately, the goal is to minimise needs, eliminate unnecessary wants, and cut back on the ones you still want to splurge on a little, so you can put as much as possible into savings (and your mortgage).

Start by working out how much your needs cost you each month. Ask yourself, “can I get this cheaper somewhere else?”. You might discover that you’re buying petrol on an expensive petrol day, or that swapping to a different internet provider can save you $20 each month. Taking time to compare insurance providers often pays off too.

Anything left over can be spread across your wants or put into savings. So, when considering your wants, take a look at what can be reduced here. For example, you might discover that Binge is $5 cheaper per month than Netflix. You could decide that Friday nights are reserved for takeout, and commit to cooking budget-friendly meals at home the other six nights. You might even be able to transfer petrol from a need to a want, and start taking the bus three days a week.

Like you did with needs, review your wants and ask yourself, “can I get this cheaper somewhere else?”. Another one to ask here is: “can I cut back in another area and spend it on this instead?”. We suggest cutting out superficial spending completely, at least for a small period. When it comes to clothes, salon days, beauty treatments, your regular long-mac topped up, golf weekends, or adding to your wine collection, ask yourself: Do I need this right now? And no cheating (because we know the answer is “no”).

How can Ascent Account help here?

Great question! We work with trusted financial advisors who can support you in minimising your spending so you can maximise your mortgage repayments. Contact us to talk about this in more detail — we’d love to help set you up with a reliable financial advisor that we can personally vouch for.

Strategies to preserve your super capital in times of negative returns

Wed, 14 Sep 2022 22:00:00 GMT

To some, it’s no surprise that investment markets are volatile at the moment — and there’s no relief in sight. As a result, it’s time to shift your mindset from expecting the highest returns to simply preserving capital. Preserving capital in unpredictable times gives investors the best possible platform from which to enjoy the eventual market bounce-backs.

So, what are strategies you can turn to do this?

Choose quality over hype.

In the past five to 10 years of sustained high returns, an emphasis on quality hasn’t been pushed. This was because confidence drove demand and speculation, even in asset classes of questionable value.

However, when markets dropped in 2020 thanks to COVID-19, assets with valuations that were driven by hype, were dumped in a rush to quality. For the first time in a long time, we saw what happens when confidence is shaken and investors commit to quality like never before. Now, we’re seeing this pattern again. In fact, we’ll continue to see it in the coming year. Where hyped served investors well in the past, it’s time to rely on understandable, transparent, value-adding assets.

Don’t set and forget.

Say goodbye to passive investing — now’s the time to get involved with some hands-on investing. We’re not saying passive investing doesn’t have a place in the right portfolios because it certainly does, but setting and forgetting is less reliable in the current market. Now is the time to be more selective, and take an active approach to identifying assets likely to provide some relief. Ongoing analysis and response to fast-changing market conditions will give you the best chance of capital preservation.

Diversify!

Concentrated risk is a big no-no. This gives you the worst chance of capital preservation — even in good market conditions! Portfolios focused on only a few companies, single asset classes or geographic areas, leave you exposed to all types of risk. Diversifying across investment classes and styles and geographic zones will allow you to put all your eggs in different baskets. This strategic spread gives you the best chance at relief in some areas by offsetting pain in others. All-in-all, it’s a more comfortable ride with a better prospect of capital preservation.

Remember, cash is king.

Are you drawing an income from your portfolio? The worst time to be selling down assets is when the market is depressed… This locks in losses and gives you no chance of benefitting from the eventual up-swing.

We suggest keeping enough cash on hand to fund regular income drawdowns, replenished either from dividends, rent or interest payments. Ideally, you’re looking at one year's income requirement (at least), but depending on your risk profile, it could be more. Keeping enough cash to fund short-term needs will give your portfolio a better chance of managing through the highs and lows of market behaviour.

More advice on preserving your capital.

Sometimes, a set-and-forget approach is all you need. Now is not that time. If you would like more information on preserving and protecting your income capital, we’re happy to provide you with some advice and connect you with investment professionals and advisors. So, start the conversation here .

How to deal with late super guarantee payments

Sun, 14 Aug 2022 22:00:00 GMT

The Super Guarantee Charge (SGC) applies If when you fail to pay an employee's minimum superannuation guarantee amount on time and to the right fund. The SGC is a penalty — it’s more than the super you would have otherwise paid to the employee's fund and is not tax deductible. You must also lodge an SGC statement to the Australian Taxation Office.

If you find yourself in a position where you must pay SCG, here’s what you need to know.

What is the SGC made of?

The SCG is made up of:

The super guarantee shortfall. This includes super calculated on salary and wages (including overtime), as well as any choice liability, based on the shortfall and capped at $500.
Nominal interest of 10% per annum (accrues from the start of the relevant quarter).
An administration fee of $20 per employee, per quarter.

Working out your SCG and lodging your SCG statement.

You’re responsible for calculating the SGC you owe and lodging the associated statement. There are three ways to do this:

Option 1: The SCG Calculator in Online Services.

Use the SGC Calculator in Online Services for business or Online Services for individuals (whichever applies to you). The statement will also calculate your liability.

Using this method, the SGC calculator will ask you a series of questions to help work out if you need to pay the SGC for your employees and how much you need to pay. At the end, the calculator will electronically lodge your SGC statement with the ATO. This is, in our opinion, the simplest way to handle your SCG statement.

Option 2: The Statement Spreadsheet in Online Services.

Complete the SGC Statement Spreadsheet (downloadable from this page) and lodge using Online Services for business or Online Services for individuals. The spreadsheet will work out the nominal interest component but not the super guarantee shortfall.

Make sure to complete a separate spreadsheet for each quarter (you can attach up to six spreadsheets), refer to the first tab of the spreadsheet for completion instructions, and use the .xls format when you save the spreadsheet.

To send the spreadsheet to the ATO, open the Secure Mail function. Select New Message, select Topic — Superannuation, select Subject — Lodge SGC statement.

Option 3: Mailing a printed PDF.

Use the SCG statement and calculator tool to generate a PDF version of your statement. Then, print this and mail it to the ATO. Use the super guarantee charge statement and calculator tool to work out if you need to pay the SGC for your employees and how much you need to pay.

If you are a WPN holder without an ABN, enter 70707070707 into the ABN section to complete the SGC statement. Include a cover note quoting your WPN as a reference when you mail the signed and completed statement. Mail the completed statement to: Australian Taxation Office, PO Box 3578, ALBURY NSW 2640.

Note that we don't recommend this option — there’s a higher chance for mistakes, it might get lost in the post, and even when things go smoothly, it just takes much longer to process. Opt for one of the online options if you can.

Paying the SGC.

To pay your super guarantee charge, you need a payment reference number (PRN). If you have an SGC-related notice or payment slip from the ATO, for the same ABN or WPN, you can use the same PRN that is on it to pay the ATO.

In Online Services for business and Online Services for individuals, the PRN can be found at the print option on the SGC lodgment summary screen, the accounts summary screen, or payment screens for BPAY or “other payment” methods. If you need a new PRN, phone 1800 815 886 during business hours. Make sure you have your ABN or WPN and contact details with you when you call.

When you have your PRN, you can pay the ATO the SGC using these options.

SGC payment & lodgement dates.

The due date for payment of the SGC and lodging the statement is one calendar month after the super guarantee due date. Sometimes, the due date falls on a weekend or public holiday. When this happens, you must make the payment and lodge the SGC statement on the next business day.

Quarter 1 goes from 1 July – 30 September. The Super Guarantee Payment due date is 28 October. If you miss this deadline, the SGC and statement are due on 28 November.
Quarter 2 goes from 1 October – 31 December. The Super Guarantee Payment due date is 28 January. If you miss this deadline, the SGC and statement are due on 28 February.
Quarter 3 goes from 1 January – 31 March. The Super Guarantee Payment due date is 28 April. If you miss this deadline, the SGC and statement are due on 28 May.
Quarter 4 goes from 1 April – 30 June. The Super Guarantee Payment due date is 28 July. If you miss this deadline, the SGC and statement are due on 28 August.

What happens when you don’t pay the SCG.

The ATO takes SGC payments very seriously, and especially prioritises the collection of unpaid SGC debts. While they’ll initially collaborate with you to address outstanding debts, they’ll quickly take stronger action  — which can include additional  penalties — if their efforts or communications are ignored.

If an employee reports you for unpaid super, the ATO will start an investigation on their behalf. If they discover — or even suspect — you haven't met your obligations (whether intentional or not) they’ll inform all your affected employees and any former employees of a superannuation guarantee shortfall.

In any case, it’s important to pay your staff the super they owe on time, to the right fund. If you don’t, sort out your SCG as soon as possible to avoid further penalties.

Need a hand?

If you’ve been contacted by the ATO about an SGC and aren’t sure how to handle it, contact us . Our friendly Accountants will help you ensure your SCG payments are made correctly and promptly, and show you how to avoid making the same oversights in the future.

MyLeave: construction industry long service leave scheme.

Sun, 14 Aug 2022 22:00:00 GMT

Employees in the construction industry have access to a portable long service leave Scheme, funded by a compulsory levy on employers. Because the Scheme is “portable”, employees can take their long service leave benefits with them as they move from one workplace to another, accruing leave over the lifetime of their construction industry career.

If you’re an employer with workers in the construction industry, you may be required by law to register in this Scheme, as established under the Construction Industry Portable Paid Long Service Leave Act 1985 (referred to as “the Act”). If you are required by law — defined by the Act — to register for the Scheme and do not, penalties apply.

How do you know if you need to register for the Scheme?

Ask yourself these key questions:

Are you an employer or labour hire agency that employs workers in the construction industry?
Do you employ workers under a contract of service or apprenticeship in a classification of work referred to in this list of industrial instruments ?
Do you employ individual subcontractors hired for labour, paid by the day or hour?

If you answered “yes” to one or more, it’s important you know your obligations to contribute to the Construction Industry Long Service Leave Scheme. If you’re not sure whether you need to register for the Scheme, you can contact MyLeave who will advise you on the right option.

Registering for the Scheme.

Employers must register with MyLeave and are required to pay long service leave contributions to MyLeave every three months. This levy covers the cost of administering the Scheme and the payment of long service leave to construction industry employees.

Failure to register and pay contributions can result in fines and surcharges being applied to amounts owed. To register, complete and submit an  Employer Registration Application with MyLeave. Once processed and accepted, you’ll receive a Registration Certificate confirming registration.

What happens if you don’t register?

As defined by the Act, registration is compulsory by law. Failure to do so and pay contributions can result in fines and surcharges being applied to amounts owed.

How compulsory payments work.

Once you’re in the Scheme, you’ll receive a Return every three months that covers the previous three-monthly period. The periods end in March, June, September and December each year. This Return must be completed and submitted with payment to MyLeave within 15 days after the end of each period.

The form must include:

The names of employees during the three-monthly period in the construction industry.
Details of days worked in the construction industry.
The amount paid as ordinary pay to employees.

More on ordinary pay.

This is where it gets tricky. The ordinary pay for reportable Service Days will vary depending on if the worker is entitled to paid leave or not…

For workers entitled to paid leave, ordinary pay means the rate of pay to which the person is entitled for leave (other than long service leave) to which the person is entitled. Ordinary pay does not include annual leave loading but does include other amounts such as rental allowance, utility allowance, living away from home allowance etc, if these allowances are due to a worker when on paid leave.

When a worker is not entitled to paid leave (other than long service leave), their ordinary pay is the rate of pay to which they’re entitled for ordinary hours of work. For example, the ordinary rate for casuals will include casual loading, other applicable allowances, and may include weekend work.

If you’re not sure whether your employee is actually an employee or a contractor (as defined by MyLeave for MyLeave purposes), see these guidelines .

Need help?

If you're unsure whether you need to make payments to MyLeave for your workers, or if you need help setting it up and making payments, c ontact us .

Electric cars and the FBT exemption.

Sun, 14 Aug 2022 22:00:00 GMT

Recently, the Electric Car Discount Bill was formally introduced to Parliament. The Bill ensures vehicle owners opting for eligible cars with zero or low emissions are rewarded with an exemption from Fringe Benefits Tax (FBT).

Zero or low emission vehicles include battery electric vehicles, hydrogen fuel cell electric vehicles, and plug-in hybrid electric vehicles. However, petrol-hybrid vehicles without a plug are not eligible.

What you need to know about electric cars and the FBT exemption.

Eligibility.

To qualify for the exemption, eligible vehicles are to be first held or used after 1 July 2022. And yes — if you ordered before this date but received delivery after, you will still be eligible. A second-hand electric car may qualify for the exemption, as long as it was purchased new on or after 1 July 2022. The exemption is already in effect and will apply retrospectively from this date.

The total car value (including delivery fees, accessories, and options) must be below the Luxury Car Tax (LCT) threshold for fuel-efficient vehicles: $84,916 for 2022/23.

The exemption also applies to cars under salary packaging arrangements, including those procured under a novated lease.

What’s not covered.

The exemption does not cover vehicles other than cars, as defined for FBT purposes. For example, vehicles designed to carry one tonne or more, or nine passengers or more, will not qualify for the exemption.

As we mentioned before, petrol-hybrid vehicles without a plug are not eligible, and luxury electric cars also do not qualify.

Tax benefits with electric car salary packaging.

Aside from the obvious performance, efficiency, and environmental benefits, there are also tax benefits to packaging an electric vehicle (as opposed to buying one outright or on a payment plan).

As an example, you’ll enjoy an estimated saving of over $2,000 for a $50,000 model, such as the Nissan Leaf, when purchased without novated leasing. However, that same $50,000 car will have savings of up to $9,000 a year with salary packaging. Savings are expected to be even higher for more expensive vehicle models (just remember that luxury vehicles are not eligible).

Thanks to this new Bill, you can now salary package an electric or plug-in hybrid vehicle on a novated lease arrangement and save the 47% Fringe Benefits Tax. Like all salary sacrificing packages, any payments associated with your novated lease are deducted from your pre-tax income — saving you even more at tax time — and you don’t pay any GST on your electric car’s purchase price.

How can Ascent Account help here?

Great question! We’re not a novated leasing company, but we do partner with Fleet Network to help our clients enjoy a quality car through salary packaging. Fleet Network is full bottle on the new FTB exemptions for electric cars, and have kept us informed throughout the Government’s movements here so we can continue offering our clients relevant information.

If you’re interested in salary packaging, we can facilitate this in communications with your employer (assuming they’re approved for salary packages) and Fleet Network.

Contact us to talk about this in more detail — we’d love to help set you up with an environmentally-friendly electric vehicle and save on tax at the same time.

Why you need to keep a travel diary (and how to do it)

Sun, 14 Aug 2022 22:00:00 GMT

If you travel for business or work and are away from your usual residence for six or more consecutive nights, you need to keep a travel diary and substantiate your expenses. And no, we don’t mean a sentimental diary detailing your tourism adventures…

When we hear the phrase “travel diary”, it is easy to picture an aspiring writer trekking through Europe. Whilst that’s a nice idea, we’re talking about something much more practical — a truly useful tool. Keeping a travel diary for business can provide you with much-needed guidance when apportioning trip expenses.

Do you really need a travel diary?

Short answer? Yes. Here’s the long answer: let’s say you’ve flown internationally for six nights to attend a work conference and to secure a contract with an international client. After the convention, you’re treated by your client to many expeditions, meals and invaluable connections (lucky you!). Some nights, you’re by yourself and enjoy soaking up the local atmosphere.

Upon your return, the whole trip becomes a blur, but the next day you must report back all business expenses… Without a travel diary, you’ve completely lost track of your expenses and only have a few ambiguous receipts. A travel diary is a saving grace that removes any guesswork, and saves you time when it comes to reporting what you did.

Of course, not all business trips warrant a travel diary. If trips are less than six nights and predominantly for business, then keeping track of personal expenses may not be necessary. However, if using a travel diary brings ease of mind, there is no harm in using one, no matter how small the trip.

How to use a travel diary.

Choose how you best write on the go — a physical or digital diary. You might even manage by simply taking notes on your phone. You can also download a Travel Diary sheet with all the fields you need — we have one we give our Ascent Accounting clients.

At the end of each day — or at each instance if you prefer — write down:

The date.
A description of each activity.
The total cost (if applicable) and currency used.
Details of who supplied the goods and services.
The start and end times of the activity so the duration is clear.
The location of the activity, for example, the name and suburb of a restaurant (not just “Sydney” or “Thailand”).
If you have a receipt, keep this, too.

Once you return from your trip, you can then apportion the business expenses based on the percentage calculated on time. For example, if only half of the trip was for business, then you’d apportion half of the cost to business.

More advice on travel diaries.

If you would like more information on travel diaries or apportioning business expenses, contact Ascent Accounting — we’re experts in business planning Perth-wide. We would be more than happy to provide you with some business advice. Start the conversation here .

Why you should use an accountant

Thu, 14 Jul 2022 22:00:00 GMT

The countdown to tax time is on. For many, that means handling your taxes yourself. But, is that the best way to go about it? Obviously, we don’t think so! Using a registered Tax Agent — like our clever team at Ascent Accounting — has many benefits, including the possibility of saving you significant dollars.

1. Pays for itself.

You can complete your tax return for free by doing it on your own, but did you know using a Tax Agent essentially pays for itself? All fees paid to a Tax Agent are tax-deductible in the following year, so you’ll only be out of pocket for that initial year. So, if it’s the professional accounting costs that are putting you off, rest assured that you aren’t out of pocket in the end.

2. Fighting the good fight.

If the ATO ever flags your tax return as suspicious or audits you, your Tax Agent is on your side. They’ll investigate on your behalf and help you navigate the challenges the ATO throws your way, minimising any penalties in the process. It’s extremely difficult and stressful to handle an ATO audit on your own, so this is a huge benefit when it comes to using a Tax Agent.

3. Leave the stress behind.

Tax time can be a very stressful and time-consuming time for many people. This is even more true if you find managing finances difficult in general, haven’t kept your finances organised throughout the year, or usually have complex tax returns.

A Tax Agent is the best remedy for those tax time headaches. We take the stress out of orchestrating your tax return because we know the right questions to ask, what the ATO is looking for, and how to maximise your refund. We can alert you if something isn’t quite right, and help you fix it ASAP to keep you compliant with tax laws and minimise the risk of ATO penalties.

4. Improved financial outcomes.

Using a Tax Agent is the easiest way to ensure your tax refund is maximised. Our eagle-eyes never miss a thing, so if there’s an opportunity to increase your refund, we’ll find it. For the people that have to pay during tax time, we’ll ensure this dollar amount is as low as possible. Either way, your financial outcomes are the best they can be!

Let’s chat about your tax return.

We’d love to explore how one of our Tax Agents could support you with your personal or business tax return this year. Our goal is the make the process as smooth as possible, keep you compliant, and maximise your refund at the same time. Get in touch with our expert team of registered Tax Agents today!

Super: the rules you need to play & win

Thu, 14 Jul 2022 22:00:00 GMT

If we look at life as a big “game”, there are a set of rules we live by. On the top tier, these might be legalities and laws, but there are also social rules and unspoken rules we live by every day. There are rules for your workplace, your family life, your finances — everything has rules. Including your super.

Knowing the rules of superannuation can be the difference between budget senior living and the luxurious lifestyle you’ve long dreamed of. So, how can you know the rules for super inside-out, and use them to your advantage to “win” at retirement time?

Know what you’re playing for.

First, let’s think of super as a “game”. To end up on top, you need to know how to play — and what you’re playing for. The “prize”, as it were, is tax-free income to help you thrive in your golden years. When you eventually transition to a pension, the income you draw from super is tax-free (generally after the age of 60). This is the case even if you're earning income from other assets, such as shares or property.

New to the game? Here are the basic rules.

As an employee, your employer puts 10.5% of your annual salary to super. This is standard and done for you — it’s not something you opt-in for. However, you do have choices when it comes to how it's invested. If you’ve never made a decision as to where your super goes, you’ll be sitting in a default “balanced” fund. For some people, this is a great arrangement. Others might be thinking, “perhaps I can afford to take more of a risk here in hopes for more reward” — the old “go big or go home” adage.

If you’re not sure, completing a Risk Profile will help you make a wise and calculated choice — changing up your super is never something to do on a whim. However, as a good rule of thumb, you can take more risks the further you are from retirement. If something goes wrong, you’ve got plenty of time to make amends. On the upper hand, if it goes right, you can exponentially increase that retirement fund!

Rules for advanced players.

Maybe not advanced, but certainly familiar. If you’ve been working for some time, you might have heard rumblings about “salary sacrificing”. Perhaps you have friends or family that boast about how great it’s been for them, or maybe you’ve heard your colleagues chatting about it.

Say you earn $100,000 a year. On the last $10,000 of salary you earn, you’ll pay $3,450 in tax and keep $6,550. However, if you salary sacrifice that money to super, it’ll only be taxed $1,500 and $8,500 will go to your super. Instead of giving almost $2,000 to the government, it’s now working for your retirement!

Another one to watch is "personal deductible contributions". Personal deductible contributions work similarly, but instead of going through your employer, you contribute the money directly to super and get a tax deduction for it.

These rules are increasingly important for those over 50, or approaching retirement. Both rules center on the government giving tax incentives for people to contribute extra to super for their retirement.

Teamwork makes the dream work.

Sometimes, a team-based strategy is very advantageous — after all, two heads are better than one. You and your significant other can couple-up to do a little (legal) accounting magic and make one plus one equal three. For instance, if you and your partner are in different income tax brackets, salary sacrifice could yield more for you together, as opposed to two individuals salary scarifying independently.

There’s also “spouse contribution splitting”, which allows one spouse to move the previous year’s contributions from their account to their spouse’s account. This helps maximise the $1.7 million limit for each of you and prevents one partner retiring with $2.4 million in super, while the other is sitting on $1 million. If this happens, combined, $700,000 of your joint super would still be taxed. If there is an age difference between you, spouse splitting can also help you maximise the government age pension.

A play-by-play of the rules with Ascent.

If you’ve never thought to learn the rules of super, we don’t blame you. The Australian super system is very efficient and designed to automate a lot of different areas, so for many people, there’s no reason to explore it. However, if you’d like to have more control of your super, there are heaps of benefits you can unlock that maximise your retirement fund.

However, that manual control comes with significant knowledge and management time, and that’s where we come in. Whatever stage of your working life you’re in, we can help you understand the rules of the game, and work with you on the perfect game plan. Let’s start maximising your super .

How salary sacrificing into super works

Thu, 14 Jul 2022 22:00:00 GMT

An easy way to grow your super without changing your lifestyle is by salary sacrificing into it. This means you ask your employer to put some of your before-tax income directly into your super fund — this also reduces your taxable income. The amount you contribute to your super through salary sacrificing is in addition to the Super Guarantee contributions your employer must be making — it’s not a substitute for it.

Two benefits to sacrificing into super.

1. Build your super faster.

Quite simply, the more money you put into your super, the faster your super balance builds, and the more you’ll have at retirement. The earlier you start this process, the more you’ll reap the benefits of compound interest.

2. Pay less income tax.

When you salary sacrifice, the money that is designated to your super comes out before you get taxed. This means your taxable income is reduced, and as a result, so are the taxes you pay on it. You may be able to reduce what you pay in income tax for the financial year. In case you were wondering, if you earn under $250,000 a year, you’ll only pay 15% tax on contributions made through a salary sacrifice arrangement. If you earn over $250,000 a year, that doubles to 30%.

How much to contribute.

You can make up to $27,500 of concessional contributions to your super each year without incurring extra tax. You can contribute more if you want to, however, you’ll be charged extra tax if you do. Aside from those two points, the amount you salary sacrifice to your super is really up to you.

Get advice.

We can advise you on the optimal amount to contribute, based on your income and lifestyle, and put you in touch with a financial advisor if needed. Contact us to talk about this in more detail — we’d love to set you up for salary sacrifice success.

What you need to know about the Taxable Payments Annual Report

Thu, 14 Jul 2022 22:00:00 GMT

If your businesses made payments to contractors and subcontractors during the financial year, these payments must be reported in your Taxable Payments Annual Report (TPAR). The Report must be made by August 28 each year, so now’s the perfect time to get up to speed on what this actually means for your business.

What you need to report.

Contractors and subcontractors for this Report fall into a number of categories. You must report the following:

Building and construction services.
Cleaning services.
Courier services.
Road freight services.
IT services.
Security, investigation, and surveillance services.

The information supplied must include the total payment amount if an invoice you receive from a contractor includes labour and materials.

To help you track payments here, the ATO has a free reporting worksheet you can use. Simply download the PDF online and enter the details of payments to contractors for services. This sheet does not need to be submitted to the ATO — it’s for internal purposes only. However, you’ll need to refer back to it when it’s time to submit your TPAR.

What you don’t need to report.

Some payments aren’t required to be submitted in your TPAR. This includes:

Payments for materials only.
Incidental labour.
Unpaid invoices after 30 June (only report payments you made on or before 30 June each year).
Workers engaged under a labour-hire or on-hire arrangement.
Pay as you go (PAYG) withholding payments (don’t report payments to employees. Report these payments through the PAYG withholding annual report or Single Touch Payroll).
Payments to foreign residents for work performed in Australia. These are generally subject to PAYG foreign resident withholding. However, if the payments aren’t subject to PAYG withholding, then you need to report them in a TPAR.
Foreign residents for work performed overseas.
Contractors who do not provide an ABN — in this case, you may need to withhold an amount from the payment for that supply under the PAYG withholding arrangements
Payments in consolidated groups.
Payments for private and domestic projects.

How to lodge your TPAR.

Your Report can be lodged directly to the ATO online through specific software. Sole traders and businesses can use business software if its  SBR-enabled software , or your business can create a TPAR data file to the required  TPAR specifications . Simply lodge through Online services for business using the file transfer function.

If you do not have business software, use online services for business . To use this service, you need an ABN and a secure credential myGovID and Relationship Authorisation Manager (RAM). Select Lodgments then Taxable Payments Annual Reporting.

You can also use:

online services for individuals and sole traders . Select Tax, Lodgments and then Taxable Payments Annual Report.
Your tax or Business activity statements (BAS) agent.
Paper form .

We can help you with your TPAR.

If you need guidance, get in touch with us before August 28, and Ascent Accounting can help lodge your business’s TPAR. Start the conversation here .

Get ready for these important SG and tax changes

Tue, 14 Jun 2022 22:00:00 GMT

Tax time is almost here, and surprise-surprise, the ATO is implementing a few changes from July 1. There are four changes we’re going to discuss (as well as some other tax tips) — read on to see if you’ll be affected.

1. Super guarantee changes

From 1 July 2022, employees can be eligible for super guarantee (SG), regardless of how much they earn. A few months ago, we talked about this briefly when the initial decision was made to scrap the $450 per month eligibility threshold for when SG is paid. Now, it’s finally coming into action. You also only need to pay super for workers under 18 when they work more than 30 hours in a week.

Additionally, the SG rate will increase from 10% to 10.5% on 1 July 2022. You'll need to use the new rate to calculate super on payments you make to employees on or after 1 July. This has to happen even if some, or all, of the pay period is for work done before 1 July. Make a note that this is legislated to happen again, with the SG rate increasing to 12% by 2025.

So, what’s the takeaway? Make sure you update your payroll and accounting systems so that you continue to pay the right amount of super for your employees.

2. Company tax rate changes

The company tax rate is now 25% for business profits in a company structure. From the 2021–22 income year, companies that are base rate entities must apply the 25% company tax rate. You might be aware that the rate was 27.5% from the 2017–18 to 2019–20 income years, and 26% in the 2020–21 income year.

Not sure if you’re a base rate entity? A company is a base rate entity for an income year if the company’s aggregated turnover for that income year is less than the aggregated turnover threshold for that income year. And, 80% or less of their assessable income in that income year is base rate entity passive income. This replaces the requirement to be carrying on a business from the 2017–18 income year onwards.

3. Temporary full expensing changes

Temporary full expensing has been extended to 30 June 2023. You probably remember that in 2020, the Australian Government introduced tax incentives to support Australian business owners as they navigated the impacts of COVID-19. Perhaps you’re one of them! One of the temporary tax incentives was temporary full expensing. This incentive has now been extended for eligible businesses until 30 June 2023. These rules allow the cost of new or second-hand assets (for eligible entities) to be written off in full, in the year they are installed and ready for use. There is no limit on the cost of these assets (previously, the cap was $150,000).

4. COVID tests as tax deduction changes

You can claim a deduction in 2021–22 for costs you incurred as a result of COVID-19 test expenses. This applies when you used the test to determine whether you could attend work, but does not apply if you had to quarantine and could still work from home. The test can be any test in the Australian Register of Therapeutic Goods, such as a polymerase chain reaction (PCR) test or rapid antigen (RAT) test.

To claim a deduction, you must have a receipt to show that you incurred the cost (if your employer reimbursed you for the cost, you cannot claim a tax deduction). You also need records (e.g. an email) to show you were required to take the test for work purposes. You can also claim a deduction for the test if you required the test to undertake travel away from your home overnight for work purposes.

Make sure you only claim the work-related portion of your expense on COVID-19 tests. For example, if you buy a multipack of COVID-19 tests and use some for other family members, you can only claim the portion of the expense you used for a work-related purpose.

If you were required to travel or pay for parking to undertake the test, you can’t claim these expenses.

And don’t forget this stuff…

Everyone needs to remember that before 30th June 2022:

Your 2021 tax return needs to be lodged. If your 2021 tax return is not lodged by the 30th June 2022, you not only will get fined by the ATO but you will be required to pay back any Family Tax Benefit and Child Care Rebate Entitlements.

If you’re making super contributions as a tax deduction for the financial year, your superfund must have received and cleared the money to get the tax deduction. Most funds are saying they need to receive the money contributed before 23rd June to ensure it clears in time.

Employers must pay staff super to get the tax deduction in the current financial year. Super paid after the 30th June will be deductible in the next financial year.

Businesses should look at options in June of prepaying expenses or deferring income to help reduce the current year’s profits.

If you have a Family Trust all trustee resolutions must be in place.

Let’s chat about changes.

Not sure how these changes affect you? Let’s talk about it. Clients can contact Ascent Accountants for any tax planning discussion in June, especially if you have Capital Gains or business profits are higher. Planning before 30th June is essential — nothing can be changed afterwards. Contact us to get started, and discover how we can support you this tax season.

Offset Accounts or Term Deposit/Savings Accounts?

Tue, 14 Jun 2022 22:00:00 GMT

If you have a mortgage, you’ve no doubt dreamt of a way you could pay it off sooner and with less interest. Your dreams might be heading straight to lottery wins, but there’s a far more accessible way.

You might be familiar with the term “offset account”, or perhaps you’re just looking into it for the first time. Having an offset account may help you to pay off your home loan faster and save you thousands of dollars in repayments. So, how exactly do they work? Are they worth it? Shouldn’t you just put any extra cash you have into a savings account? Let’s take a look at the benefits of each.

What is an offset account?

Overview.

An offset account is an account linked to your home loan. Whatever lucky bank you’ve chosen to do your mortgage through, your offset account will be with them also. It operates like a transaction or savings account and offsets its balance against the balance of your home loan. So, you'll only be charged interest on the difference.

Benefits.

Offset accounts save you interest, rather than earn it. All you need to do is deposit your regular income and any savings you have into your offset account. Then, you just use it like your normal everyday account, but you could pay off your home loan ahead of its term, saving thousands of dollars at the same time.

Let's say your home loan interest rate is 2.75% and you've got $50,000 in savings. In an offset account, that money is saving you $1,375 per year. If you had that same amount in a high-interest account, earning 1.35%, you'd only gain $675 per year.

Full disclosure — these accounts sometimes come with higher costs, so it’s important to ask your bank for specifics and manage it carefully to get out ahead in the long run.

What is a savings account?

Overview.

A savings account holds any money that you don’t need or want to spend right away. This can be used as a safety net for emergencies (such as unexpected medical bills, car expenses), or just long-term goals like a holiday or a fancy new TV.

Benefits.

Your money stays safe and earns interest on your balance, so you can earn a small income passively just by practising regular saving. They help you stay financially secure by ensuring there is a “cushion fund” available when you need it, and assist with reaching long-term financial goals.

They won’t do anything for your home loan though…

What is a term deposit?

Overview.

With a term deposit, you lock away an amount of money for an agreed length of time (the “term”). Your money is inaccessible until the allotted time is up.

Benefits.

No, you can’t access your own money. But, in return, you’ll get a guaranteed rate of interest for the term you select. You’ll have peace of mind and know exactly what the return on your money will be. Plus, should interest rates move lower, you’ll still be locked in at the same rate of interest. It’s also a good way to engage in “forced” saving, and particularly helpful for spenders and impulse buyers who struggle to save. Again, a term deposit won’t affect your home loan.

Need help deciding which account type is right for you?

For some, the answer is obvious, for others, more thought needs to be considered. If you would like to talk to someone about your account needs and mortgage, we can put you in touch with Daniel Morcombe. Daniel is a trusted Financial Planner that Ascent Accountants is associated with — to chat with him, contact us to get his details.

Invest like Warren Buffet

Tue, 14 Jun 2022 22:00:00 GMT

Stock market got you stressed? We don’t blame you. With so much uncertainty and conflicting advice, the idea of investing sometimes isn’t very appealing. But, there is one man who seems to have the hang of it. Self-made billionaire Warren Buffet says we actually shouldn’t be too concerned about stock market fluctuations. We just have to be comfortable with them.

The Berkshire Hathaway Chief Executive addressed the company’s shareholders in 2020 and stated, "You've got to be prepared when you buy a stock to have it go down 50% or more and be comfortable with it, as long as you’re comfortable with the holding.”

And he must know what he’s talking about. At 91 years old, Buffet is worth $US109.2 billion and earned the title “The Greatest Investor in the World”. The title rings true when you consider that, of the world’s top 10 billionaires (at the time of writing, Buffet is number 5), Buffet is the only one to have continued to gain wealth in 2022 (according to Bloomberg Billionaires Index).

So, what can we learn from Buffet?

1. Think ahead.

Way ahead. When Buffet buys stocks, he’s making a long-term commitment. You need patience and the knowledge that the investment will likely be a very slow burn.

2. Stick with what you know.

Buffet has famously instructed, “never invest in a business you cannot understand”. We think that seems like good advice. When you don’t understand the business you’re investing in, you’re essentially going in blind and taking an unnecessary risk. Stay within your circle of competence, and if you want to branch out, don’t step outside the circle. Bring your new investment opportunity into it.

3. Go with the good ones.

When Buffet looks at the stock market, he sees companies, not stocks. He chooses the “good” ones — companies with a strong, sustainable, long-term business model. Do your research and opt for companies less likely to succumb to the usual market pressures their competitors might fall to.

4. Educate yourself.

Always keep learning. Even at 91, Buffet preaches the importance of ongoing education and being a “lifelong learner”. When it comes to investments and the stock market, read (and read and read — Buffet once said he reads 500 pages a week!), research, meet with financial advisors and successful investors, and keep up with stock changes. The more you know, the more likely you are to succeed.

Plan ahead.

We can’t put you in touch with Warren Buffet, but we can link you with some incredibly clever financial advisors who can guide you on sound investments. Contact us to talk about this in more detail — we’d love to set you up for stock market success.

The importance of keeping wills updated.

Tue, 14 Jun 2022 22:00:00 GMT

A Will is perhaps one of the most important and life-changing documents you will sign. This legal document outlines how your assets will be distributed, and any conditions attached to that distribution, when you die. It can also include any funeral wishes you have, financially provide for others through trusts, and give some or all of your estate to your designated charities.

But, are all Wills created equal? Actually, no. The more thorough your Will is, and the more planning you do now, the more secure your Will will be.

Wondering what happens if you don’t have a will?

Before we jump in, here’s a summary of why you even need a Will. If you die and don’t have a Will in place, your estate will be distributed using a formula outside your family’s control. Your assets may be distributed in a way you didn’t want, and even your children’s new guardianship (if under 18) could be affected.

1. Choose the right executor.

So, the first step is to choose the right executor. Your executor is the person named, by you, in a will to carry out your wishes after you die. It’s a huge role that involves much coordinating and organising. This includes collecting your assets, paying any outstanding debts, and distributing the property as set out in the will.

An executor does not need to have any special qualifications and is almost always a trusted family member or friend. However, they must be over the age of 18 and be responsible and diligent in carrying out the Will’s instructions.

2. Review often.

This doesn’t even need to be every year, but at least every few years you should ensure your Will is up-to-date. As life goes on, you’ll probably like to adjust your will accordingly. You might want to update your funeral wishes or add or remove certain assets. For example, let’s say you initially wanted to leave your car to a loved one, but ended up selling it to someone else before you die. You’d need to amend this in the Will.

You might also like to add new people, or even remove people if you no longer wish to include them.

3. Action immediate changes.

Aside from reviewing your Will every few years, some circumstances must be reflected in your Will as soon as possible. This will help avoid considerable stress and uncertainty for your family once you pass away. For example, if you get married or divorced, or have plans to do so, marriage and divorce in Western Australia can revoke a Will if special clauses are not included. If you have a child and wish to add them as a beneficiary, this must also be stated in your Will.

Got it. What now?

While you’re thinking about who your executor should be, definitely contact a trusted lawyer to draw a Will up with you. Avoid online Will kits — these are okay, but often aren’t as concrete as one written by a professional lawyer. If you don’t know who to turn to, we can point you to someone next time you’re in. Talk to us today!

What to ask when planning to retire

Sat, 14 May 2022 23:00:03 GMT

From the time we enter the workforce to the time we retire, one of the “background” goals is to accumulate enough wealth for a comfortable retirement. We all have planned — as well as unexpected — financial commitments along the way, such as education, medical, holidays, and a mortgage, but we’re still striving for that retirement nest egg at the same time.

Whatever career path you’ve taken, the adjustment to retirement is a huge mental and emotional undertaking. In switching gears to enjoy your golden years, here are five things you can ask to make the transition easier.

1. Have you officially retired?

To fully access your super, you have to meet a few conditions based around your retirement and age. Firstly, you must have reached your preservation age (the age you can access your super), which depends on when you were born. For example, if you were born between July 1, 1963 and June 30, 1964, your preservation age is 59.

If you are under 60 years old, you also need to have stopped work, with no intention of returning to work. Aged 60 to 64? You only need to have stopped working.

If you’d like to use your super as a pension but haven’t retired, you can still do so if you have reached your preservation age. This is called "transition to retirement income stream". Although this is an option, we usually advise against it (except for in exceptional circumstances) as this stream doesn't provide the same tax concessions as an accountbased retirement pension.

Once you meet the required conditions, you need to notify your superfund or SMSF that you’ve met the conditions and want to access your super. This must be done in writing. Your designated superfund will likely have an obvious way you can start this process, such as through their website.

2. Do you have enough?

The dollar amount you need to feel secure and live comfortably in retirement is different for everyone. This is deeply personal, and depends on your goals, desired lifestyle, budget, regular bills, mortgage (if you have one), investments, and more.

Knowing how much super you have, and how long it will last, is extremely important. This will largely influence your day-to-day living and how you spend your savings. A financial adviser can help you review your budgets and cashflow needs, as well as cut down spending where possible. We strongly suggest meeting with one if you’re considering retirement, or doing it as soon as possible once you have formally retired.

3. Have you reviewed your investment strategy?

Once you move into retirement territory, your investment goals and risk-level will move as well. You may need to reassess your investments and make adjustments, all whilst considering any tax implications and capital gains.

If you have a SMSF, evaluate whether there are enough liquid assets, cash, and cashflow to meet its costs and pay your super pension each year. Fund income — including capital gains — while the SMSF is paying retirement pensions, may be wholly or partially exempt from tax. However, these concessions depend on several factors, such as whether some fund members are still in the accumulation phase and others in the pension phase. As such specialist tax advice surrounding your SMSF should be sought to ensure your fund is optimally structured.

4. Have you considered your retirement benefits?

It’s a good idea to review and update (if necessary) your SMSF trust deed, because this impacts how your benefits can be paid to you. A part of this involves determining how much of your super balance will be used to start a pension. This amount is limited by your transfer balance cap — if you’ve never had a retirement phase pension before, the cap will be $1.7 million.

Amounts that exceed your transfer balance cap remain in your super, held in an accumulation account. However, investment income from amounts held in this account are not exempt from tax.

5. Have you reviewed your estate planning?

Before you start your pension, estate planning should be considered, especially if you want to make your pension reversionary. This means it automatically goes to your spouse on your death. If you have existing binding death benefit nominations, these need to be reviewed to ensure they’re still accurate.

Want to go deeper?

If you’re edging closer to retirement, there’s a lot you need to think about — way more than we’ve covered here today. We’d love to support you and make the transition to this existing new chapter of life a little easier. Contact us to get started.

A few interesting facts about retirement

Sat, 14 May 2022 23:00:03 GMT

Given the financial demands of everyday life, planning your retirement may be a relatively low priority. You may also think that you have plenty of time to plan. But, before you put off planning for your retirement any longer, here are some key facts you should consider.

Four facts about retirement.

Your retirement could last 30 years or more.

A male currently aged 65 has a future life expectancy of 19 years — for females currently aged 65, it’s 22 years (Australian Bureau of Statistics, November 2013). But, these are just the averages and they are steadily increasing. As these trends continue, your retirement could stretch to three decades, or maybe even longer.

You shouldn’t rely on the age pension.

The full single rate age pension only provides around 25% of average weekly male earnings. What’s more, qualifying for the age pension may become more difficult in the future, given our population is ageing.

You shouldn’t rely on an inheritance.

Your parents may end up spending all their savings and may need to downsize their home to help make ends meet. So, if you’re relying on an inheritance to fund your retirement, you could be disappointed.

You might not have enough super.

With some of your money going into super through compulsory employer contributions, you’re off to a good start. But, assume that those employer compulsory contributions will mean you have enough super to get you through your retirement and you could be in for a nasty surprise. Australia has a shortfall in super of close to $1 trillion (Rice Warner Actuaries, ‘Longevity Savings Gap’, Sep 2012), which means many Australians don’t have enough super to fund their retirement.

Start planning now.

Thankfully, with a bit of preparation, it’s possible to plan for a long and comfortable retirement. Strategies like salary sacrificing into super, making lump sum contributions or using a transition to retirement strategy, are smart strategies to consider to boost your super, and some of them have tax benefits.

It’s also possible to use your super to start a pension that pays you a regular income. Some pensions even guarantee to pay you an income for the rest of your life, negating the risk of outliving your savings.

Talk to a retirement planning expert.

The best way to see how your retirement savings are currently tracking, and find out what you could do now to increase your super for retirement, is to speak to a financial adviser. They can help you set realistic goals and put a plan in place to achieve them.

If you would like to talk to someone about your retirement we can put you in touch with Daniel Morcombe. Daniel is a trusted Financial Planner that Ascent Accountants is associated with — to chat with him, contact us to get his details.

How to protect the family home when starting a business

Sat, 14 May 2022 23:00:03 GMT

When a person starts a business, the focus is strongly on creating that business and doing whatever it takes (within reason) to make it work. And, fair enough — there’s a lot to think about. From initial business plans to branding, marketing, budgeting, hiring staff, taxes, and so much more, a new business venture is expected to take up considerable time.

In most cases, people are pretty confident when launching a business. After all, it’s such a huge undertaking, you would have to be self-assured to go ahead with it. We commonly hear the phrase, “I never thought my business would fail”, but sadly, sometimes this is the case.

What’s more, in the excitement and stress of the launch, sometimes, little consideration is given to what will happen if the business venture doesn’t work out.

When it doesn’t work…

When a business venture fails, an immediate thought will be about your income, and how you’ll provide for your family whilst sheltering them from financial hardship. Keeping the family home is a particular concern.

The good news is, you can take some initial steps before the launch of your business to protect your family to some degree, without incurring a lot of costs.

Avoid a partnership business structure to protect the non-business partner’s half interest in the family home and other assets.
When using a corporate structure, only the businessperson should be a director of the company. That way, the non-director’s half interest in the family home and other assets are protected. For example, the non-director partner is not exposed to liability from personal guarantees and Director Penalty Notices from the ATO.
Holding the family home as Tenants in Common rather than as Joint Tenants (we have a good article on the differences here). The reason for this is if the non-director partner should die, the half interest in the house will be dealt with by the non-director’s will. This contrasts with the house being held as Joint Tenants, in which case the non-director’s half interest in the house will automatically pass to the director upon death — leaving the entire house exposed to the director’s personal guarantees and the ATO Director's penalty liability.
Have the business person only use their share of the equity in the family home to support business borrowings.
Ensure future family home purchases are in the name of the non-director spouse where possible. Or, look at changing the ownership of the family home.

Plan ahead.

If total business failure occurs, the financial pressure on the family is reduced if the non-business partner’s assets remain intact. For the businessperson as an individual, the aim is to have a go, doing everything for the business to succeed. For that same businessperson considering their family, the strategy is to not have all eggs in one basket.

Contact us to talk about this in more detail — we’d love to help you set your business up for success, as well as safeguard against the worst.

Four reasons you need a business succession plan

Sat, 14 May 2022 23:00:03 GMT

As a small business owner, do you have a succession plan in place for your company? If the answer is “no”, you could be in trouble later down the track. Here are four reasons why it’s crucial to have a succession plan in place for your business.

Consider this…

1. A succession plan defines your options.

If selling your business is your succession plan, you may need to think again. Many small business owners struggle to find an external party willing to purchase their company. This is especially true if you work in a saturated market, or your business isn’t doing so well come sale-time. Instead, you could look to a trusted family member or internal successor (such as a Manager) to take over your business when the time comes.

2. Your successor needs to be prepared.

Your successor will need time, sometimes up to five years, to learn how every aspect of the business works. This is especially true if they’ve never owned a business before, or have but are moving into completely new territory. For example, transitioning from owning a cafe to owning a plumbing business. Your successor needs to gain the expertise and skills they will need to effectively run the business, as well as ample time to establish relationships with customers, suppliers, and existing employees.

3. Your business needs to be prepared.

As well as your successor being ready, your business needs to be ready too. From a financial perspective, you need time to optimise the sale value of your business. This involves ensuring that your company has been profitable, and has solid, attractive growth prospects.

Another important factor to consider is that the business needs to be able to operate without you in it. This seems obvious on paper, but it’s an enormous factor many people don’t consider, or aren’t even aware of. When your processes, sales, and employees wholly rely on you for day-to-day tasks and operations, the business is likely to fail once you sell it. Not sure if this describes your company or not? If you go on holiday and come back to find your business is a total train wreck, this is a good indicator that your business won’t do so well without you in it.

If you’re unsure how to transition from a reliant leadership model to a “leaderless” structure, we strongly recommend the book The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations. If reading really isn’t your thing, you can get personalised advice from an advisor instead. Or both!

4. A succession plan is also an emergency contingency.

Should the worst happen and you suddenly become seriously ill or die, a succession plan ensures the continued smooth running of normal day-to-day operations. If the business does need to be sold, you will have put the company in a better situation when it comes to the sale value.

Having a succession plan in place now, can also reduce any conflicts or contesting of your Will following your death; giving both you and your family members peace of mind.

What should you do next?

Professional advice is critical when it comes to implementing a succession plan, given the complex nature of both the financial and legal requirements. Ascent Accountants provide small business advice Perth businesses can rely on.

With the skills and expertise to assist their clients with the planning and implementation of a succession plan, Ascent Accountants can provide you and your family with security for the future. What more could you ask for? Talk to us today!

The difference between an ATO Tax Account and Integrated Tax Account

Fri, 15 Apr 2022 01:00:03 GMT

The difference between an ATO Tax Account and Integrated Tax Account

As you may already know, the ATO offers different accounts for their clients. Two in particular are often confused with one another — an ATO Tax Account and an Integrated Client Account. As an accounting firm, we’re here to clear the air, and clearly explain the differences in each.

What does ICA stand for ATO?

Integrated Client Account.

An Integrated Client Account (ICA) is an account for taxes other than income tax, such as GST and PAYG. The ICA account is also called the activity statement or integrated client account, depending on the system you're using with the ATO. If you click on the activity statement account link, you will see a statement of account.

ATO Tax Account.

An ATO Tax Account (ATOTA) deals with the preparations of tax returns and tax payments.

An ATO Tax Account

What is it?

Tax accounting is a niche type of accounting that deals with the preparations of tax returns and tax payments. Tax accounting is used by individuals and businesses and is done through the ATO, using an Income Tax Account (ITA).

Accessing your ATOTA.

You can access your ITA online through myGov , once your myGov account is linked with the ATO. It’s the easiest way to check your outstanding balance (if any) and see when your payment is due.

An Integrated Client Account

What is it?

An Integrated Client Account (ICA) is an account for taxes other than income tax. It also shows your business’s lodgment behaviour, such as a payment history to the ATO and any outstanding debts. One of the reasons the ATO needs this to help lenders, and business owners, make informed and fair lending decisions.

You’ll also need this if you have non-salary income, pay GST, and/or employ staff and pay pay-as-you-go withholding. The full list includes:

goods and services tax (GST)
goods and services tax instalments
pay as you go income tax withholding (PAYGW)
pay as you go income tax instalments (PAYGI)
fringe benefits tax (FBT) instalments
luxury car tax (LCT)
wine equalisation tax (WET)
fuel tax credit (FTC)
deferred company instalments
franking deficit tax and over franking tax for 2003 and future income years
petroleum rent resource tax (PRRT)
sales tax credits

Want to go deeper?

Seeing as we’re edging closer to tax time, it’s only fitting that you’d want to know more about your ICA and ITA. We can explain the differences and applications in more detail when you engage one of our services. Contact us to get started .

Can your business pay for life after work?

Fri, 15 Apr 2022 01:00:03 GMT

As a business owner, your business is your super. It’s a scary thought for some, because you’re essentially allowing your market, customers, clients, and operations to determine your retirement lifestyle. As the market ebbs and flows or you begin to contemplate selling your business, you might be asking, “can this really support me once I retire?”.

This has become an even more pressing question in recent times. The pandemic, and even the recent sky-high petrol prices, have taken a toll on many business professionals.

Business owners often solely focus on, well, running their business — which isn’t a bad thing! It deserves your full attention, but this often means that passive income streams are an afterthought, or don’t exist at all. Many business owners sell their business leading into retirement, and discover it isn’t the price they’d long hoped for, leaving them in the lurch.

Picture this…

You own a café in Subiaco — a bustling inner-city suburb rife with other business owners looking for their coffee fix, as well as their customers, and your usual patrons. Business is good — or was. Now, COVID has the vast majority of your customer-base working-from-home. Your staff are often close contacts or sick themselves, and you find yourself dusting a lot more than usual. You might even need to close your doors for good.

This is the reality thousands of business owners face. Not just café holders, but professionals across a huge number of sectors. The main takeaway? Relying on the market to determine your fate is incredibly risky.

Make a change.

As accountants, we’ve seen the toll the above story can have on individuals and their families. Although it’s tempting to pour everything into your business to build it up and make it more profitable, this often isn’t the right way forward.

It’s vital that you establish capital outside your primary income stream and take steps towards concrete wealth planning. This minimises risk, boosts retirement certainty, and means you can sell your business on your terms — not because you’ve been strong-armed by a dwindling market.

Make regularly contributions to a designated savings or investment vehicle; even a small amount will make a difference in the end. You should also establish an investment portfolio using a risk-averse structure that’s shielded from commercial trading risk as much as possible. The goal is to keep all your eggs out of one basket and avoid your entire retirement plan resting on the sale of your business.

There is no doubt that you need to maximise the value of your business by improving systems and procedures to lessen the reliance of the business on you, the owner. But, don’t make your business your only asset for retirement.

Let’s talk

There’s no one-size-fit-all approach the wealth planning. The best way to work out the path forward for you, your business, and your circumstances is to sit down with a professional. We can put you in touch with a trusted financial planner, and offer our advice as well.

When you’re ready, contact us .

Fun ways you can save money

Fri, 15 Apr 2022 01:00:03 GMT

Yes, making the lifestyle change from over-spender to obsessive-saver really can be fun. Today, we’re diving into the world of money-saving challenges. They’re a great way you can feel in control of your savings and actually enjoy the process because every time you save, you’re “beating a challenge”. That’s pretty satisfying.

These ones come from Cristina Brown, who describes herself as a Savings-Challenger Designer. She’s the author and founder of Happy Savings Co, and says money-saving challenges personally helped her build significant savings when other methods hadn’t been right for her. Cristina says, “Saving money doesn’t have to be a chore. Happy Savings Co is all about providing fun and creative savings challenges to help you save more money to achieve your financial goals!”

Count us in!

Step one: review.

Before you jump into the challenges, you have to review your budget and expenses. This will determine which challenges you can take on, because challenges have set difficulty levels.

Step two: assign.

Assign a goal to your challenge to help you stay motivated and on task. This is essentially determining what you’re saving for — an emergency fund, a new car, or even that fancy suit you’ve had your eye on.

Step three: choose.

The Happy Saving Co website has heaps of challenges to choose from, but we’ll lay out our favourites for you.

Keep the change challenge.

Difficulty: easy

Let’s start super simple. Keep the change is a great challenge for hesitant savers or even young children. It uses a passive savings strategy, which means there’s very little effort on your part. Here’s the deal: for a designated amount of time (could be one month, could be one year), you put aside every $1 coin and $5 note you receive from cash transactions. If the time-period isn’t appealing to you, you can do this same challenge with a financial goal. For example, challenge won when you get to $300, however long it might take.

Seeing as we don’t use a lot of cash these days, it’s a relaxed way to break into the savings lifestyle because you won’t need to do it very often. Or, you can get into the habit of using cash more, and leave your card at home to make overspending through card transactions impossible.

The 52-week challenge.

Difficulty: easy

This is a fun accumulative challenge where you up the savings by $1 each week, depositing the assigned money into a designated savings account. So in week one, you’ll transfer $1, week two is $2, and so on until week 52 — you guessed it, $52.

At the end of the year, you’ll enjoy $1378. That’s enough for a good emergency stash or a large purchase.

Weather Wednesdays challenge.

Difficulty: Moderate

If you’re already a confident saver with a steady cash flow, this challenge offers big savings. The catch? It’s pretty unpredictable.

Every Wednesday for one year, you have to deposit money into your savings based on the day’s temperature. If it’s 20 degrees, that’s a $20 transfer. We suggest starting in winter so it’s more manageable, and you can prepare for the hot Perth summer. The good news is, you’ll probably never have to make a transfer larger than $40.

100 envelopes challenge.

Difficulty: hard

This challenge is a little more difficult. First, number envelopes (or scraps of paper) from one to 100 and shuffle them. Draw one randomly every day (ipso facto, the challenge goes for 100 days) — the number you draw determines the amount of cash you must transfer into your savings account that day.

It’s difficult because you could draw high numbers consecutively, so we suggest only using this one if you have a good cash flow. If you’re up to it, you’ll save $5050 in just 100 days!

No spend challenge.

Difficulty: almost impossible

The title says it all. You commit to only spending money on essentials over a certain period. This is significantly harder than it sounds, so we suggest starting off with a two-week period, and making it longer depending on your success. This challenge is also very subjective — what you determine as essential, your partner may say is a splurge.

Usually though, you’ll cut back on nonessential pantry items (no more treats), stay away from shopping trips, and avoid simple pleasures like eating out, UberEATS, or recreational stops like the cinema.

Are you up for the challenge?

These saving challenges are highly effective and engaging — a great way to save whether you’re a high-income earner or low one. If you’d like some savings tips from an accountant that aren’t challenge-based, we’re ready when you are! Contact us to explore personalised ways you can save.

Why your SMSF assets need to be in the right name

Fri, 15 Apr 2022 01:00:03 GMT

If you know you have superfund assets in the wrong name (or think you might), today’s blog article is just for you. It sounds obvious, but this simple mistake or oversight could have some pretty devastating consequences, and we want to help you nip them in the bud.

The issue.

In case you didn’t already know, SMSFs have compliance obligations, encompassing eight core trustee covenants. For example, this includes a requirement that trustees keep fund money and assets separate from personal assets.

If a covenant is breached, the trustees risk being sued… Now you’re starting to see why the name thing is so important, right? Additionally, the assets in your SMSF are protected from your creditors. However, that protection only works if SMSF trustees ensure the accounts and investments of the fund are held in the correct name. The main areas you need to watch out for in terms of name correctness are property purchases with your SMSF, share purchases, crypto currency purchases and bank accounts of your SMSF.

Long story short…

If the fund has individual trustees, purchase contracts and assets must be held in the name of all the individual trustees as trustees for the superfund. Where a company is used, the assets must be held in the name of the company as trustee for the superfund.

A word on changing titles.

Incorrect names often appear with SMSF details due to an unregistered name change, which is usually an innocent oversight. If you need to change a trustee, you have to ensure the fund's bank accounts and investments are updated as well. When an asset is acquired by the SMSF, the documentation must note the change of ownership and record the change of name or title.

Changing the asset title can be overlooked where the SMSF has individual trustees. A common misunderstanding is where an asset is held personally, and the individuals are also trustees of the SMSF, that no further action is required. This isn’t the case — trustees must ensure contracts and transfer documents are completed. These must clearly show the change in ownership to the SMSF.

Need name help?

A number of people setup share accounts incorrectly in their own names, and not correctly in SMSF. If you even have the smallest niggling doubt, get advice from a professional. They’ll help you understand the correct wording of your SMSF structure and ensure all documentation is filled in correctly. Talk to us about your SMSF, and if necessary, we can connect you to trusted legal professionals at the same time.

4 tips to save for your child’s future

Mon, 14 Mar 2022 23:05:18 GMT

Your child’s education is one of the biggest developmental, emotional, social, and financial investments you can make in your child’s future. We can only speak on the financial side, and boy does it come at a price. According to Futurity Investment Group , a Perth-based education beginning in 2022, from Kindy to Year 12, is $76,229 for a public school? If you think that’s high, private school fees for the same period average out to $215,554…

The cost of education can be startling and seem like an uphill battle. For many families, schooling puts a real financial strain on the budget, but it’s made a little easier with these five tips.

Start early

It might seem obvious, but the sooner you start saving, the more you’ll reap the benefits later. Sooner is better, but it’s never too late. Even if your baby isn’t a baby anymore, any spare dollars that you can tuck away will help support your child later.

The most practical way to do this is with a savings plan, as opposed to ad-hoc saving when you can. You could do this with a planned budget and automated savings account, a diversified investment portfolio, an education bond (more on that later) or all three.

Offset your home loan

Like many families, you might find yourself trying to cough up school fees at a time when you also have a hefty mortgage. Our advice? Park education funds into an offset account so both expenses benefit. Just know that this may not pay returns in the long-term and requires disciplined saving. For example, you might be tempted to dip into the funds for other expenses like car services, home repairs, or even a holiday. Staying diligent with saving is best for your offset account (and for you).

Education bonds

Education bonds are designed for you to tax-effectively save and invest to accumulate the funding for education-purposed objectives. They have been a popular strategy for some time, with $1.1 billion invested through education bond investment giants Futurity Investment and Australian Unity . It’s essentially a regimented savings plan that makes it easy for parents to tuck away extra dollars on a regular basis.

The main drawcard is an education bond’s tax benefits. If you're on a marginal tax rate higher than 34.5%, you can benefit from a lower tax environment within the fund because it’s taxed on its investment earnings at 30%. Plus, all investment growth is automatically reinvested, adding to the ever-chased compounding benefits of the lower-taxed environment.

If we’re honest, the downside is its flexibility (although some claim to be flexible). Generally speaking, you must hold the bond for 10 years or more and the payments are fixed. For some, the inflexibility isn’t actually an issue. However, it does mean parents can be “locked in” to a savings approach that doesn’t allow for lifestyle changes, such as the preference for a public versus private school. Anyway, the benefits tend to outweigh the downsides, so it’s worth a look in to see if it’s right for you.

Seek advice

Our last tip points you to our doors — seek advice. Your child’s education is pretty important, and one of the biggest investments you’ll ever make. It’s worth sitting down with someone to help you organise your finances in a way that optimally supports saving for your child’s academic future. We're ready to talk.

Will the superannuation changes on 1st July affect you?

Mon, 14 Mar 2022 23:05:18 GMT

Recently, a suite of superannuation changes were passed by both houses of Parliament. As of February, some are already in effect, but we expect to see many significant changes come into play from July 1. The changes will affect a range of Australians — mainly low-income earners, first-home buyers, working seniors, and downsizers.

Low-income earners

From July 1, employees ages 18 or over will be entitled to compulsory superannuation contributions, regardless of their income. Currently, the income minimum for super is $450 per month, whereby the employer must pay 10% of the pre-tax income amount into a super fund. In July, this will increase to 10.5% and the $450 minimum will be removed — we expect many Aussie workers to be seeing super for the first time.

First homebuyers

As of July 1, the First Home Super Saver Scheme will be expanded — first homebuyers will be able to accrue a deposit of up to $50,000 with little tax influences. This currently sits at $30,000, so the $20,000 increase is predicted to make a huge impact. The revamped Scheme allows first homebuyers to deposit up to $15,000 a year into a superfund, specifically to use for a new home. There are two ways you can do this:

• With the after-tax non-concessional contributions.

• By making voluntary tax-deductible contributions to your super.

Most people doing this will only pay a 15% super contribution tax on the investment amount, instead of the normal marginal tax rate of 34.5%.

Working seniors

We’re pleased to tell you that the rules around the work test are changing from July 1. Currently, anyone aged 67 – 75 must work 40 hours over a 30-day period to be eligible to contribute to super. As of July, only people who wish to make a tax-deductible concessional contribution to super will need to satisfy the work test.

You can make non-concessional contributions of up to $110,000 a year without satisfying the work test. Similarly, those up to the age of 75 will be able to make use of the “bring-forward rule” which allows them to deposit an additional two years of contributions. There are no changes for individuals over 75-years-old. If this is you, your only option is to make use of the super downsizer concession — let’s take a look at it.

Super downsizers

The super downsizer is a oneoff single contribution of up to $300,000 per person — there is no upper age limit. There are a few conditions:

This contribution must come from the profits of the sale of your home.
The home must be considered your “primary dwelling”, and you must have lived there for at least 10 years.
Your contribution must be made within 90 days of settlement and doesn't count towards any of the contribution caps.

The super downsizer isn’t a new system, but the big change from July 1 is that the minimum age is being lowered by five years. As of July, you can make use of the super downsizer rule from age 60 (currently set to 65).

Let’s talk

As your local tax experts, Ascent Accountants are happy to chat through any of the upcoming changes with you in more detail. Next time you need support with your accounting or finances, let’s go over the proposed July 1 changes as well.

When you’re ready, contact us .

What to include in your vehicle logbook

Mon, 14 Mar 2022 23:05:18 GMT

If you use a vehicle for work, a logbook is designed to assist you in substantiating your business usage of that vehicle so you can comply with one of two tax assessment acts. These are, the Income Tax Assessment Act (for individuals and partnerships) and the Fringe Benefits Tax Assessment Act (for Companies and Trusts). By completing a motor vehicle logbook, you’ll establish a sound base for calculating the business use of your motor vehicle in order to claim all the deductions that you are entitled to.

In your logbook, you must record four elements for each business-related journey:

1. The journey date.

2. The odometer reading at the start and end of the journey.

3. The kilometres travelled.

4. The purpose of the journey.

Starting at the beginning of the financial year, you’ll record all these details of your logbook. You aren’t required to do this for the entire year, just 12 consecutive weeks — ideally through July, August and September. This timeframe is used to determine a realistic average vehicle use throughout the year.

At the end of the 12-week period, add up your total business kilometres and record this figure on the last page of the logbook. At the end of the financial year, you’ll return the logbook to your tax accountant, along with any other related documentation they require. For example, claims for individuals and partnerships also require relevant receipts and car records.

Get your logbook here

At Ascent, we help Perth business owners manage and navigate business expenses, tax forms, business growth strategies, payroll, and heaps more — including motor vehicle logbooks. When you do business with us, we help your business do well. Talk to us about vehicle logbooks and we’ll get you sorted in time for the new financial year coming up in July.

Tips to invest in the volatile share market

Mon, 14 Mar 2022 23:05:17 GMT

Investing is a big commitment at the best of times. Now, with everything that’s going on in the world, we seem to be in the worst of times. Despite a potentially volatile share market, we wanted to let you know that it’s still safe to invest — if you’re wise, careful, and discerning.

This is a time for patience and discipline. It’s also a good opportunity to educate yourself on market ebbs and flows, and remember that short-term falls (albeit painful) are often a trade-off for long-term gains. To support you as you start, or continue, to invest in an unpredictable market, here are five tips to keep handy.

1. Normalise volatility.

Yes, the market is volatile, but it’s not the first time this has happened. It certainly won’t be the last. Market unpredictability and volatility is always lurking, even in the most profitable market periods. Consider the oil embargos during the 1970s, the 1990s Gulf Wars, and of course, the Global Financial Crisis of 2008 — just to name a few. Each moment involved double-digit corrections and was followed by recoveries the following year.

During these periods, it’s important to limit risk-taking and “wait it out”. Volatility is usually short-term, so you won’t be waiting long.

2. Diversify your portfolio.

We’ve said it before, and we’ll keep saying it. Don’t put all your eggs in one basket — especially in the volatile market. A well-designed portfolio won’t be affected when one portion of it drops off because the others should be thriving — or at least breaking even. Given the current market conditions, you might like to reevaluate your portfolio and reorganise it to achieve a good balance. A lag in one area should be offset by the others. That’s the power of a diverse portfolio.

3. Don’t sell down.

We know it’s tempting, but selling down often isn’t the best choice. This generates a loss that otherwise only existed on paper. Once you’re out, you might not be able to generate any gains when the market bounces back. As people wait for the “right time” to buy back in, they usually only do once it’s booming again, resulting in a loss… Long story short, selling at the bottom and buying at the top isn’t a strategy for success.

4. Invest regularly.

We know it’s tempting, but selling down often isn’t the best choice. This generates a loss that otherwise only existed on As the price of growth assets fall, there’s a unique opportunity to pick up quality assets at an affordable price. We already know that predicting the top and bottom of the market is basically impossible (we can give it a good estimate but never know for sure), so it’s wise to stick to a regular investment plan that buys quality assets on a regular basis. That way, you’re averaging your purchase price. During market corrections, your average purchase price will be lowered which helps maintain your financial plan through various market changes and behaviours. . Once you’re out, you might not be able to generate any gains when the market bounces back. As people wait for the “right time” to buy back in, they usually only do once it’s booming again, resulting in a loss… Long story short, selling at the bottom and buying at the top isn’t a strategy for success.

5. Maintain a cash reserve.

If you rely on short-term cash requirements, make sure you keep an appropriate cash reserve. This is even more true if you draw an income from your portfolio. It’s tempting to be fully invested in favourable market conditions, but this might mean you need to sell down your capital at low points to fund essential short-term needs. Ideally, that’s a position you don’t want to be in. We suggest keeping at least one year’s income in cash to meet living expenses.

Avoid hype — seek advice

Just because a particular voice is the loudest, doesn’t mean it’s the right one. The media, in particular, love to hype up headlines about stock market pitfalls and corrections, but are usually one-sided. How often do you see headlines about bounce backs and gains? If you want quality, personalised advice that’s right for your circumstances, turn to a professional. If you need help preparing your portfolio for a volatile market, we’re ready to support you by providing appropriate tax advice and planning. We can also refer you to knowledgeable and trusted financial planners regarding your investment options.

Six tips for buying property in a SMSF

Mon, 14 Feb 2022 08:13:43 GMT

In 2017, Ready to Retire conducted a study on Australian retirement. They discovered that the average Australian worker has around $200,000 less than they will need to live comfortably when they leave the workforce. What’s more, a mere 22% of Australian workers believe they will have enough superannuation funds upon retirement to live the lifestyle they’ve long dreamed of. That’s scarily low.

However, what we’ve learned from this, is that we can make strategic investment decisions to help support a healthy financial retirement. One of these options includes investing in property with your super. Although most people know they can use super to buy a property, the details on how exactly to do this remain a little unclear, leaving many Australians to throw this option in the “too-hard basket”.

Let’s lay it out

Like all our work at Ascent Accountants, we’re here to make things easier for you. Today, we’re going to lay out six details to consider when deciding whether investing in property with your SMSF is the right move for you, your lifestyle, and your retirement goals.

1. Borrow money to purchase property in superannuation.

If you don’t have enough to buy the investment property you want, that’s okay. Since 2008, superannuation held in a SMSF can be used to borrow money for property purchase — up to 70% of the property’s value.

Upon completion of the loan repayment, the property’s ownership can be legally transferred to the SMSF. There are a couple of catches, but all things considered, we think they’re pretty reasonable and achievable:

To purchase the property and to obtain the loan, you must setup a Bare Trust and a Custodian company which the superfund is the legal owners of.
If you have 30% of the purchase price in your SMSF, the property can be used as security by the bank and you can take out a “limited resource loan”. The SMSF then makes the loan repayments.
If there is a default on the loan, your other assets in the SMSF are generally protected from the standard debt recovery and bankruptcy proceedings. The lender only has recourse to the property itself.

2. Keep a liquidity buffer.

If you’re buying property in superannuation, make sure you keep a liquidity buffer of cash and/or shares. Before lending to you, banks check to ensure you have this buffer in place (it should be at least 10% of the value that you’re intending to borrow).

This protocol is actually designed to protect you — because superannuation is key to retirement, the government carefully regulates what can and can’t be done with it. They don’t want people risking their superannuation on poor investments.

3. Use the rental income to repay your loan.

If you purchase a property with your SMSF, you can’t live in it until you retire. This is to ensure people are actually using their SMSF to invest. As such, the property you buy can be rented out and generate a passive income for you. Most people purchase an investment property and use this income to repay the loan, which is what we suggest, too.

Some people choose not to live in the house ever, but rent it out for a period and then sell it for a profit (hopefully) upon retirement.

4. Buy a rentable property.

Building on the last point, it’s important to do your research and purchase a rentable property that’s projected to make a profitable return. Consider public transport, amenities, recreational facilities, medical centres and schools, and so on, as well as the average rental rates in the local area.

You’ll also need to shop around for the best loan, engage professional real estate agents who know the area, and take the time to compare viable properties.

5. Enjoy tax efficiencies

One of the attractions of Superannuation is its tax efficiency, which extends to property purchases within superannuation. For example:

No capital gains tax after retirement.
If you’re sacrificing salary payments, loan repayments are effectively tax deductible.
The maximum rate of tax on income after expenses and any capital gains after selling your property is capped at 15%. Standard investors can pay up to 46.5%.

6. Seek professional advice

As buying a property with your super is quite complex, one of the easiest ways to mitigate risk is by seeking professional advice. It’s absolutely crucial that you understand all the risk, are equipped with the right resources, and have the information you need to make an informed decision.

Remember, this could impact your retirement negatively as well as positively (we hope the latter!), so it’s not a decision to make lightly. We can guide you here, and help you make the best possible decisions for your future. When you’re ready, let’s chat .

Difference between Joint Tenants and Tenants in Common

Mon, 14 Feb 2022 08:13:40 GMT

Join Tenants and Tenants in Common. You’d be forgiven for thinking these terms are interchangeable — most people do — but they’re actually very different approaches for buying property. Although both refer to two or more people owning the same property, each arrangement has its own distinguishing factors.

Joint Tenants

Fair’s fair — an equal split.

Under a Joint Tenants arrangement, all owners of a property own an equal share of the property. For example, when there are three joint tenants, each own a third of the property. When there are four, each owns 25% of the property, and so on. When a Join Tenant property is sold, the profits (or losses) are split equally between each of the owners. Joint Tenancy can be used by anyone, but it’s is a popular arrangement for couples.

One of the benefits of Joint Tenancy is “Right of Survivorship”. If one of the owners passes away during a Joint Tenancy, this Right means the deceased partner’s share of the property automatically passes (again, split equally) to the other tenants. If there were only two parties, then the remaining party will now own 100% of the property.

Like all good real estate arrangements, Joint Tenancy isn’t without it’s complications. The major downside is that if one owner wants to leave the Joint Tenancy, the entire property must be sold in order to break the agreement.

Tenants in Common

Equal-schmequal.

Under a Tenants in Common arrangement, owners can own different percentages of a property. For example, in a parent-child agreement, the parents may own 75% of the property, while the child owns 25%. Unlike Joint Tenancy, it's also possible to purchase and sell the percentages at different times. In our parent-child scenario, this means the child who owns 25% might choose to sell their share to a sibling down the track, without everyone having the sell the entire property to break the agreement.

When a Tenants in Common property is sold, the profits (or losses) are divided according to the ownership percentage of the agreement. The owner with 75% would receive 75% of the proceeds or losses from the sale, and so on.

Unlike Joint Tenancy, a Tenants in Common agreement has no Right of Survivorship. If a tenant passes away, instead of their share being automatically allocated to the remaining tenants, the deceased estate and will determines the outcomes of the deceased shared.

Although it’s easy for one partner to sell their share when it’s time for them to move on, one of the downsides of this that any partner can sell their share to whoever they like — whenever they like — and other partners have no say in this.

So, which is better?

Both agreements have benefits and downsides, so it really depends on your preferences and circumstances. It’s best to talk to the other potential tenants involved and work out which is the most beneficial for all parties. If you need an outside perspective with no bias, we can help as well .

What happens when you don’t pay staff super on time

Mon, 14 Feb 2022 08:13:39 GMT

Australian residents who are employed, aged 18 years old or over, and earn $450 or more (before tax) per month are eligible to receive Superannuation Guarantee (SG) contributions from their employer.

So, what happens if you don’t pay that super on time? You must lodge the superannuation guarantee charge (SGC) statement and pay the SGC to the Australian Tax Office. The SGC is more than the super you would have originally paid to the employee's fund and is not tax deductible. In other words, you’ll be left out of pocket as a penalty for leaving your staff in the lurch with their entitled super payments.

Write these dates down!

Payments must be made at least four times a year (minimum quarterly), but can be made more frequently if desired. For example, you might like to do this fortnightly or monthly. If you do, ensure you pay your total super guarantee (SG) contribution for the quarter by the due date.

Payments apply from the day employees start working for you, and payment due dates occur quarterly:

For the period 1 July – 30 September, the due date is 28 October.
For the period 1 October – 31 December, the due date is 28 January.
For the period 1 January – 31 March, the due date is 28 April.
For the period 1 April – 30 June, the due date is 28 July.

When a super due date falls on a weekend or public holiday, you can make the payment on the next business day.

One final thing…

When payments are late or paid to the wrong super account, the business owner/s and director/s are held personally responsible and liable for the fault. So, hypothetically, even if your business manager or in-house accountant is to blame, the penalty will be directed to you.

Don’t leave it (unless you leave it with us)

It’s important to ensure you employees are paid the super they’re entitled to, in the correct account, on time. As we’ve just explored, there are penalties for late payments, so it’s pretty important to get it right the first time. Rather than leave it to the last minute, you can leave it with Ascent Accountants instead.

It’s one less thing you need to think about. When you’re ready, contact us .

When you can and can’t use the GST Margin Scheme

Mon, 14 Feb 2022 08:13:36 GMT

Did you sell a property as part of your business? Working out the GST you need to pay on it can be tricky. One way you can do this is through Margin Scheme — using this method may also reduce the amount of GST you need to pay.

When you can use the Margin Scheme

To be eligible to use the Margin Scheme, you must:

Be registered for GST at the time of sale.
Ensure the sale of your property is a taxable supply.
Not have paid GST when you originally purchased the property.

You may also meet the margin scheme eligibility requirements if the previous owner used the Scheme in their sale to you when you purchased the property. If you choose to use the Scheme, both the seller (you) and the purchaser must have a written agreement confirming the use of the Margin Scheme before settlement. Most contracts include a tick box indicating if the sale is subject to the Margin Scheme, so this part should be easy to remember.

When you can’t use the Margin Scheme

Sometimes, your eligibility for the Margin Scheme is dependent on the previous owner’s eligibility for it. In most cases, if the previous owner of the property wasn't eligible to use the Margin Scheme, you won't be able to use it either. Let’s look at a hypothetical (but common) scenario:

Steve sells a commercial property to Gemma as a fully taxable sale. Gemma isn't eligible to apply the margin scheme to a subsequent sale.

On 30 March 2020, Gemma sells the property to Linda; Linda can't apply the Margin Scheme because Gemma was ineligible. If the sale from Gemma to Linda had occurred before the 2008 amendments, Linda would have been eligible to use the Scheme.

We’re sorry to tell you the “can’ts” don’t stop with previous owner eligibility…

You also can’t use the margin scheme:

If you purchased the property as fully taxable and the Margin Scheme wasn't used.
If you weren’t registered or required to be registered for GST at the time of sale.
For sales on or after 17 March 2005, if you:

- Purchased the property as fully taxable and the Scheme wasn't used.

- Inherited the property from a person who wasn't eligible to use the Scheme.

- Obtained the property from a fellow member of a GST group who wasn't eligible and they purchased it from an entity that wasn't a member of the GST group.

- Were a participant in a GST joint venture and obtained the property from the joint venture operator who purchased the property through an ineligible sale.

if you're selling property originally purchased, or entered into a contract to purchase, on or after 9 December 2008 and the:

- Entity you bought the property from wasn't eligible.

- Property was purchased as part of a going concern.

- Property was purchased as GST-free farmland.

- Property was purchased from an associate for no consideration (no payment).

So, what now?

You can use the Australian Tax Office’s GST property decision tool to check your eligibility and help with calculating the GST. If you're not still sure about your eligibility (and with so many “ifs, ands, or buts”, we don’t blame you!), you can apply for a private ruling . And, if you need help preparing your business finances for a sale or calculating the GST you owe, we’re ready to support you. .

Interest deductions on loans for vacant land

Sat, 15 Jan 2022 01:00:04 GMT

Before July 2019, loans on vacant land were an incredibly viable way of entering the property market. The interest was considered deductible, so overall, the cost of holding vacant land was less. However, in July 2019 a new regulation meant that this wasn't the case anymore. Here's how the law has changed, and how it might force you to make some changes.

You can't claim interest until the structure is complete

Previously, you may have been able to hold on to your plot of vacant land, deducting any interest gained on the loan as a tax deductible expense. Now that the legislation has changed, that interest is only deductible once something has been built on the land. Holding on to vacant land with the intention of keeping it vacant is no longer a feasible solution, as it's become more expensive to hold the land.

In order to avoid the consequences of the law change, you'll need to get a structure down on the land faster. Not only does this mean that you'll be able to make the interest deductible sooner, but by having something built you can also have the building bringing in revenue sooner (i.e., by way of rental income).

When the rules won’t apply to you

It’s important to note that the deductibility of holding costs (i.e., interest expense) on vacant land will continue to be available in the following circumstances — there are other circumstances as well, but these are the main ones:

The land is held by a corporate tax entity.
The land is used in carrying on a business by you and/or your affiliates.
The land is leased by you to another entity, who is carrying on a primary production business.

This applies for existing properties too

If you own vacant land and have continued deducting interest from any loans you might have used to get it, the July change means that deductible interest on loans taken out before is now non-deductible. This means that if you purchased vacant land some time ago and it is still vacant with nothing built on it, your interest will be non-deductible until there is something there.

In these cases, building something on the land will lower your tax burden, and get the revenue flowing sooner. There is an initial cost of getting a building started, but in the long run, it’s the best way to profit.

Need more advice?

If you need advice on the changes to vacant land loan interest, Ascent Accountants have the best tax planning Perth has to offer. Our expert team has years of experience and can guide you on an ideal way forward, either when dealing with this change in the law or any changes that could come in the future. Please get in touch — we’d love to help.

The importance of employment agreements

Sat, 15 Jan 2022 01:00:04 GMT

An employment agreement, sometimes called an employment contract, is a contract between an employee and employer that outlines employee roles and responsibilities. This agreement can be written or verbal, but we suggest utilising a written version so you have something clearly outlined you can refer back to later, if needed. This also reduces the chances of miscommunication or misunderstanding about the role from either party.

Do you really need one?

Legally, no you don’t. But, many savvy business owners would say this agreement is crucial (although sometimes overlooked by smaller businesses). This document clearly defines your employee’s duties, helping them understand their tasks. As the employer, it also gives you a framework for determining how they’re performing in their role.

What to include

Employment contracts should be tailored to suit the circumstances of your business, as well as the uniqueness of the role. For example, an employment contract for an entry-level intern will be different than one for your company’s manager. Although the content of the agreement will vary, there are six main areas that you should consider.

1. Essential details of employment.

This might include expected work hours, leave entitlements, start dates, and salary. You can also incorporate the employee’s line-manager, where they should work from (is this a remote role, in-office role, or a hybrid?), details on superannuation, and so on.

2. Duties and responsibilities of the employee.

This section can be quite long as it covers specific day-to-day duties, but may also include compliance with company policies, ongoing training expectations for hard and soft skills, how to care for business property, and more. Basically, anything the employee is expected to do will be covered here.

3. Restrictions and prohibitions applicable to the employee’s employment.

Here, you’ll cover any specific boundaries. For example, no drinking alcohol within business hours or driving the company car without written permission from a manager. Employee’s often include something about communicating with similar businesses here (e.g., never sharing private company information with a competitor).

4. Protection of the employers’ commercial interests.

Building on the last point, it’s important to include information relating to an employee’s obligation not to disclose business information during employment and after termination to other businesses. This encompasses information of your company’s structure, marketing strategies, intellectual property, confidential information and so on.

5. Arrangements on how to end the employment relationship.

If the employment doesn’t work out, this section is designed to protect the employer through terms and conditions regarding employee termination. This includes grounds for dismissal, notice of termination, and payment in lieu of notice.

6. Employee’s post-termination obligations.

Again, this may cover items such as not disclosing commercial information to a competitor or new employer after termination. However, you can’t restrain your former-employee from working for a competitor or starting their own business in the same marketplace.

Something to remember

Your employee agreement must abide by national workplace standards and legal minimum entitlements. These are set out in the 11 National Employment Standards (NES), awards, enterprise agreements or other registered agreements that may apply.

Some employers believe they’ve found a loophole in workplace fairness by not providing employee contracts, but this isn’t the case. In Australia, all employees are protected by the NES, regardless of whether they’ve signed a contract.

Do it right the first time

Making your employee’s pay, conditions, and role clear from the start can help protect your business in the long-term. If you’ve never created an employment contract before, the Government has a useful tool here. Even after you’ve created it, it’s strongly recommended you have it looked over by a professional who can advise you of any inconsistencies or legal downfalls. When you’re ready, we’re ready to support you.

Managing underperforming staff members

Sat, 15 Jan 2022 01:00:04 GMT

When you’re running a business, it can be disheartening when you notice an employee isn’t pulling their weight. Not to mention frustrating, and time-consuming, especially if it means you have to pick up the slack. So, what can you do about it?

Take a step back

Before you do anything, take a step back and consider the why. Rather than go in guns-blazing, considering why your employee is underperforming will help you determine how to handle the situation. The best way to do this is of course to engage a gentle conversation with the employee — there’s no need to go in on the attack.

Explain what you’ve been observing, using some key examples, facts and statistics if you have them, and give them the opportunity to share their perspective, rather than accusing them. Then, explain how their behaviour and underperformance is impacting the business and the rest of your team.

Even if it isn’t immediately obvious, there’s always a reason for underperformance. So, during your chat, you’ll probably run in to one of these four common scenarios.

1. Your employee genuinely doesn’t understand their role.

A simple breakdown in communication can have some pretty major impacts when left to fester. If you failed to provide an employment contract upfront that outlines the employee’s duties (or did but it’s very vague), they can hardly be blamed for not knowing what’s expected of them.

2. Your employee knows what to do, but feels unequipped to do it.

This scenario is probably equally as frustrating for your employee as it is for you. Usually, they want to complete the task at hand, but do it wrong or take a long time because they don’t have the right skills or resources to do it effectively.

3. Your employee isn’t passionate about their role and feels unmotivated.

Perhaps the trickiest underperformance scenario to overcome — this might include a shift in department, more training, or a new project. If an alignment of interest can’t be reached, they might simply be a poor fit for your workplace and need to move on.

4. Your employee may have external pressures or stresses you aren’t aware of that are affecting their work.

This one tends to blindside employers because the issues can be private or embarrassing for the employee. It could be that your employee is enduring external pressures or stresses that are affecting their career. For example, financial hardship, relationship difficulties, the death of a loved one, or family illness.

Prepare to perform

With the initial discovery conversation out of the way, it’s time to determine the next steps for supporting your employee as you manage their underperformance. Create a plan that outlines measureable actions and realistic goals — in a reasonable timeframe. Ask what resources and support the employee needs to accomplish the goals, and give them time to adjust to their new or different duties. Involve them in the process so that they feel empowered, as opposed to micro-managed (even if that’s what you feel like you have to do) or patronised.

It’s also important that they understand there will be consequences if underperformance continues. You are running a business, after all. These consequences are up to you — it might be reduced work hours, a demotion, or termination.

At the end of this meeting, the goal is to ensure that your employee:

Has a clear understanding of what’s required of them.
Has a documented plan for improving their performance.
Is aware that they’re performance is being monitored.
Is aware of the consequences if their performance doesn’t improve.

Helpful resources

This Managing Underperformance Checklist will help you easily tick off the steps to management. Additionally, this Meeting Plan will ensure nothing is overlooked as you meet to discuss the next steps with your employee. Finally, to ensure you don’t accidentally engage in unfair dismissal or similar areas, it’s a good idea to reach out to Fair Work for advice.

Employee pay and fair work conditions

Sat, 15 Jan 2022 01:00:02 GMT

In Australia, we’re lucky enough to have a work system that prioritises human rights, fair pay, and reasonable working conditions. But, what exactly are they? If you’ve never written an employment contract before, you might not be sure about your legal obligations here.

Let’s talk about pay

You’ve no doubt heard the term, “minimum wage”. This is a baseline amount you must pay your employee, as the bare minimum. Australia’s national minimum wage is determined by the Fair Work Commission using the Fair Work Act 2009 and Awards , and is reviewed annually to align with inflation. As of July 2021, it sits at $20.33 per hour or $772.60 per 38-hour week (before tax).

However, this isn’t the be-all-and-end-all. Determining minimum wage can feel complicated because it also depends on age, work capacity (fulltime, part-time, or casual), and sometimes the nature of the role as well.

Getting support

To determine your employee’s minimum wage, we suggest using the Pay and Conditions Tool calculator , as well as talking to a financial professional who can provide personalised advise for your business. Additionally, Fair Work provides a free phone service where you can call and discuss minimum pays and conditions and requirements.

More than the minimum

Of course, you can pay your staff more than the minimum if you feel their skills, training, expertise, and experience warrants additional amounts. You could just pick a number, but if you’d like to be more measured, Payscale is a helpful tool.

With Payscale, you can determine the median pay for a specific job, based on the city you’re in (for example, jobs in Melbroune and Sydney generally have higher pays than in Perth) and the employee’s qualifications and years of experience. This will help you make a more informed decision when it comes to base pay, as well as pay rises. Note that to use Payscale, you will need to create an account with them (don’t worry, it’s free!).

Let’s talk about conditions

Fair work conditions are essentially a set of rules employers must follow regarding the physical surroundings of a workplace, bully and harassment responses, how often staff have to have a break, and much more. These rules appear in different places such as an award, the National Employment Standards (NES) ,  registered agreement  or an employment contract. There’s a collated list on the Fair Work website ( see the full list here ).

When a new employee starts with you, you’re legally obligated to provide them with a copy of the Fair Work Information Statement . This is a nationally-recognised document that provides new employees with information about their conditions of employment.

Getting support

The Workplace Basics quiz will share information on common employee entitlements, such as flexible working arrangements and different types of employment. Once complete, you’ll enjoy feedback and links to additional resources that will help you run a safe and fair workplace. Like minimum pay, Fair Work provides a free phone service where you can call and discuss minimum work conditions and requirements.

Let's be fair

Fair Work has everything you need to know about hourly pay and annual salaries. When you’re ready to set up your new employee’s fair pay the right way, we’re ready to help .

Setting financial business goals for 2022

Wed, 15 Dec 2021 22:00:05 GMT

If you’re here, you already know that staying on top of your finances is an integral part of being a small business owner. You probably just need a little insight on the most effective, efficient way to do that — great, we’re here to help.

The end of the year provides a great opportunity to sit back, set goals and prep your business for a better year ahead. With COVID-19 still lingering around, businesses need to be more prepared than ever for the uncertainties of 2022, particularly with WA borders set to open again. Here are some of the things that can help you do just that.

1. Review your budget

Developing an annual budget for your small business is an extremely important first step in helping you manage your finances effectively all year round. Budgets help guide your business decisions ahead of time, as well as determine any plans for expansion. When looking over your businesses finances, check your cashflow, and be realistic about what you need to do going forward to better your small business.

2. Go paper-free

One way to help you stay organised and stay on top of your small business’ finances is to go paper-free. This makes it easier to track when payments are due by you, or owed to you. Digital automation here allows for consistent, predictable bill payments to help with budgeting and prevent overdues. It also streamlines organising, filing, replying to, and tracking emails. Not to mention, it’s much better for the environment.

3. Get in the habit of financial forecasting

Study market trends to help forecast your financial position and business plan accordingly. Using up-to-date knowledge, from reputable sources, of what’s going on in your industry will help you gauge a clearer picture of where your small business is heading as well as any impending challenges. This enables you to amend any obvious flaws and forge a better strategy for the growth of your small business.

4. Manage debt

You really want to avoid carrying debts over year-to-year. The start of the new year can be a great time to sit down and, strategise and figure out the best way to tackle and make some strong, consistent debt repayments.

5. Get savings savvy

A backup savings plan is a must, especially in the context of what we have experienced over the past two pandemic-years. Having a good savings plan for your small business helps protect you should anything go wrong. While you budget for the new year, be sure to factor in what you need to do to have enough savings to cover any potential business losses.

6. When in doubt, seek help

As a business owner, you’ve got a lot on your plate. Finance planning and management is one of the easiest and most affordable things you can outsource. And of course, professional finance assistance is the best way to help support your small business finances.

Instead of procrastinating, spending too much time on the job, worrying about it or making mistakes, hire a professional who knows what they’re doing, and actually enjoys it. Here at Ascent, we specialise in small, medium and family owned/operated businesses. If you want some extra help or advice to help nail your business finance in the new year, please get in contact — we’d love to help.

Things just got personal

Looking to clean up your personal finances? We can help you budget, plan, and implement some smart-spending strategies to help boost your personal finances. Together, we’ll work with you to set realistic goals so you can enjoy the things you want to, without leaving a huge dent in your week-to-week paycheck. Sound good? Call us .

Christmas parties and fringe benefits tax

Wed, 15 Dec 2021 22:00:05 GMT

It’s the end of the year — another unpredictable COVID 19 year at that — so it’s no surprise you would like to thank your team for all their hard work with a Christmas party. Whether it’s a small work-do or a major corporate event, you’re probably wondering how the fringe benefits tax (FBT) comes into play here.

There is no separate FBT category for Christmas parties, and you may encounter different circumstances when throwing these exciting wind-up events for your workplace. For example, fringe benefits provided by you, an associate, or under an arrangement with a third party to any current, past and future employees (and their spouses and children), may attract FBT.

Implications for taxpaying companies

If you’re not a tax-exempt organisation and don’t use the 50-50 split method for meal entertainment, FBT implications might arise from a corporate Christmas party. Let’s take a look at some of the circumstances.

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 at your business premises and consumed by current employees. The costs associated with Christmas parties held off your business premises (for example, a restaurant or winery) incur a taxable fringe benefit for employees and their associates (when we say “associates”, we’re talking about their families, namely their spouse and children), unless the benefits are exempt minor benefits.

If you invite new employees who will be joining you in the coming year, but haven’t formally started yet, this doesn’t apply to them. The property benefit exemption is only available for employees and doesn’t extend to their associates who might be joining you for the festivities.

Exempt benefits — minor benefits

The provision of a Christmas party to an employee 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.

Gifts provided to employees at a Christmas party

Handing out Christmas gifts to your team might be a minor benefit that is an exempt benefit where the value of the gift is less than $300. Each benefit needs to be individually considered to determine if it’s less than $300 in value. If the Christmas party and the gift are less than $300 in value and the other conditions of a minor benefit are met, they will both be exempt benefits.

Tax deductibility of a Christmas party

The cost of providing a Christmas party is income tax deductible only to the extent that it is subject to FBT. Any costs that are exempt from FBT (that is, exempt minor benefits and exempt property benefits) cannot be claimed as an income tax deduction. If you invite clients or customers to your Christmas party, the costs of entertaining them are not subject to FBT or income tax deductible.

Taxpaying case studies that put things in perspective

1. A small renovation business throws a party in its showroom (its business premises), on a working day, before Christmas. The company provides food, beer and wine.

If only current employees attend, there are no FBT implications as it is an exempt property benefit. If current employees and their associates attend at a cost of $180 per head:

there are no FBT implications for employees, as it is an exempt property benefit, and the minor benefit exemption could also apply.

there are no FBT implications for associates as the minor benefit exemption applies.

If the current employees, their associates, and some clients attend at a cost of $365 per head:

there are no FBT implications for employees as it is an exempt property benefit.

a taxable fringe benefit will arise for associates as the value is more than $300.

there is no FBT payable and no income tax deduction for clients.

2. A medium-sized manufacturing company holds its Christmas function at a restaurant (not its business premises), on a working day, before Christmas and provides food, drinks and entertainment.

If only current employees attend at a cost of $195 per head, there are no FBT implications as it is an exempt property benefit. Where current employees and their associates attend at a cost of $180 per head, there are no FBT implications as the minor benefits exemption applies. If the current employees, their associates, and some clients attend at a cost of $365 per head:

a taxable fringe benefit will arise for employees and their associates.

there are no FBT implications for employees as it is an exempt property benefit.

for clients, there is no FBT payable and the cost of providing the entertainment is not income tax deductible.

Implications for tax-exempt companies

If you are a tax-exempt body, the following explanations may help you determine your FBT implications that come from throwing a Christmas party.

Gifts provided to employees at a Christmas party

A Christmas gift provided to an employee that meets the conditions of the minor benefits exemption rule and is less than $300 will not attract any FBT.

Christmas party held on business premises

The exempt property benefits (property benefits provided on your business premises) would not apply as the tax-exempt body entertainment provisions would apply. The minor benefits exemption rule is unlikely to apply to any staff Christmas party provided by a tax-exempt body, except in very limited circumstances.

For tax-exempt body entertainment fringe benefits, the minor benefit exemption is only available where the provision of entertainment is incidental to the provision of entertainment to outsiders, and does not consist of a meal other than light refreshments. It also applies when a function is held on your business premises solely as a means of recognising the special achievements of your employee within their role.

Christmas party held off business premises

The minor benefits exemption rule is unlikely to apply to any staff Christmas party provided by a tax-exempt body, unless very limited circumstances apply.

Still confused?

Don’t let slip-ups with your end-of-year celebrations put a dampener on the Christmas spirit. The friendly (and very merry) team at Ascent Accountants can help you ensure you understand how FTP might affect your festivities, so you can celebrate stress-free. Contact us now so you can be prepared.

Personal finance tips for 2022

Wed, 15 Dec 2021 22:00:05 GMT

Can you believe that 2021 is creeping up on us so quickly? The date is the same every year, and we always seem to be caught out by it. This year has been a challenging time for everyone, so doing all you can to set yourself up for success next year is a must.

Personal finance planning may not be the most exciting task to you (we, on the other hand, love it), but setting good habits and goals now can make a massive difference later. Going into the new year, consider making some of these personal finance tips your New Year’s Resolutions.

1. Assess where you are at

It may be tempting to just jump right in to get the setting of your personal finance goals done and dusted. But, to make the most out of the process and set the most effective plan, you really need to take the time to sit back and assess where you’re at now.

Have a look at your savings, debts, and investments. Really look at your personal finances. Yes, it can be pretty confronting and stressful, but this knowledge will help you to set realistic, achievable and positive goals for yourself in 2022.

2. Set a budget and stick to it

Setting a budget is easy. Sticking to it? You might have your work cut out for you. When setting personal finance goals, budgets are such an important step, but an often neglected one.

When setting yours, the most important thing is to make sure that they are realistic and achievable. Don’t set yourself up for failure by setting difficult, stressful and unattainable goals. Some things to always consider are housing, food, utilities, other regular expenses, as well as dedicated spending money.

3. Double down on debt

Debt can be a real burden and can put a significant strain on your finances. You need to consider your debts and their repayments when it comes to your budget — it pays to make paying them off a priority. Most debt accrues interest, so you’re losing money the longer it sits there.

4. Prep for emergencies

If the last two years have taught us anything, it’s that you never know what’s around the corner. We know it sounds a bit morbid, but the old “plan for the worst, hope for the best” is a great mantra when it comes to financial planning. With each pay, try and set aside some of your earnings for emergency fund and create a nice cushion. The last thing you want to be worrying about in the middle of a crisis is your personal finances.

5. Review your investments

Unless you’re a finance expert, you probably aren’t making the best returns from your investments as you could be. To boost your personal finances, it pays to educate yourself as much as possible, or to get professional help in order to make the most of what you have. If you’re already investing, make the absolute most out of what you already have, and ditch what’s leaving you in the red.

6. Get money motivated

With the Christmas break, most people have a little more time on their hands. Use this period to plan, budget, and establish your goals. Think about what you really want and how you can get there. It could be a designer bag, a car or a house deposit. No matter your goal, it’s an exciting step to start making positive changes to get you closer to what you want.

7. Shop smart

We’re not turning up our noses at hard work and elbow grease, but sometimes it pays to work smarter, not harder. Before you go and make crazy cuts to your personal finance budget, it’s smarter to sit back and reassess. This way, you can make clever changes rather than harsh restrictions.

For example, switch to cheaper brands for things you don’t really care about. Make coffees at home rather than go out, buy in bulk, shop second-hand, or use coupons and vouchers. There are so many minor changes that mean you do not have to sacrifice the parts of your lifestyle that you value most.

Things just got personal

Is your business providing workplace entertainment?

Wed, 15 Dec 2021 22:00:04 GMT

As an employer, you’ve probably treated your employees to food, drink, gifts, or recreational activities from time to time. It’s a nice way to make your staff feel appreciated and valued, whilst boosting team morale. Whatever the context or reason for festivities (farewells, promotions, birthdays, Christmas, sales targets reached, product launches, and so on), there’s a couple of things you should know about when it comes to workplace entertainment.

When we talk about “providing entertainment”, there’s a couple of elements this extends to. Firstly, supplying entertainment through food, drink or recreation. Recreation is quite broad and could encompass hiring arcade games for the office, tickets to a music event, or treating your team to a round of mini-golf offsite. Entertainment costs also include accommodation and travel expenses, for example, if you hire a mini-bus to take your team to mini-golf.

What you need to know

If you provide events for your staff, you will need to know whether the events will be classified as entertainment and require you to pay fringe benefits tax (FBT). There are six steps involved in this process.

1. Determine whether food, drink or recreation is entertainment.

You need to consider four factors — why, what, when, and where. Each is a little ambiguous, and none of the factors on their own will determine if the food and drink provided is entertainment, but the first two questions for consideration are the most important. Read them in detail here .

2. Consider exempt benefits.

If you provide only exempt benefits, you will not have to pay FBT. Some minor benefits may be exempt from FBT; to determine whether the minor benefits exemption applies, you must determine whether the taxable value of the benefit is less than $300. If the taxable value is $300 or more, the FBT won’t apply. If it’s less than $300, you must determine whether it is unreasonable to treat the minor benefit as a fringe benefit. See ATO’s guide on how to do this .

3. Calculate the entertainment’s taxable value

The taxable value of food, drink or recreation, and any associated accommodation or travel, is the actual amount you pay for the benefit of the employee. There are three methods you can use to place a value on entertainment.

The first is the Actual Method, then there’s the 50-50 Split Method, and finally the 12-Week Method ( read up on them here ). When considering which one to use, think about:

who you are entertaining (client, employees, or associates).
how often you provide entertainment.
which method provides the lowest FBT liability.
the administrative costs of each method.

4. Reduce the payable FBT

Yes, it’s possible to reduce your FBT. In some cases, you can bring it right down to 0 and pay nothing. One of the easiest ways to do this is by providing employee benefits that are tax-deductible. This includes seminars related to the employees-role, such as training, lectures, educational courses, and more. Employee contributions are also a way to reduce FBT, as well as providing cash bonuses.

5. Keep records

You must keep clear records on entertainment provided throughout the year so that the taxable value of the fringe benefit can be calculated. You should record:

where and when the entertainment was provided.

who received the entertainment.

how much the entertainment cost.

the kind of entertainment provided (food, drink, recreation, travel, accommodation, etc.) — be specific.

6. Report on employees’ payment summaries

Have you provided fringe benefits with a total taxable value of more than $2,000 to an employee in an FBT year? You must report the grossed-up taxable value of the fringe benefits on the employee's payment summary for the corresponding income year (1 July to 30 June).

Recreation must be reported on your employee's payment summary. However, some fringe benefits are excluded from the reporting requirements. Even though they’re excluded, you still need to pay FBT on them:

entertainment with food and drink and any benefits that came with it, such as accommodation.

hiring entertainment, such as a corporate box.

Gear up for a good time

We like to party as much as the next guy. As accountants, we never get caught out by tricky FBTs or entertainment pitfalls, and we’d love to share our insider knowledge with you. Get in touch , and we’ll tell you everything you need to know so you can have a great time without worrying about the numbers.

Manage mortgage stress

Mon, 15 Nov 2021 00:30:04 GMT

Most homeowners experience mortgage stress as some point. This has always been the case, but with house prices rising across the nation, it’s more common than ever. Plus, with the Federal Government’s attractive stimulus packages and record-low interest rates, people are taking out bigger-than-normal home loans.

Facts & figures

According to the Australian Bureau of Statistics, the average new home loan is just over $578,000 — almost six times larger than the average national annual income of $99,000. In other words, people are biting off more than they can chew. This is leaving one-in-five homeowners with a high debt leverage ratio, which is a huge figure. Think about it: 20% of people you know — and perhaps yourself — who are homeowners are exposed to financial stress due to their home loan. And mortgage payments are just one expense — there’s daily living costs, petrol, leisure and hobbies, bills, groceries, insurances, and so much more.

You should enjoy owning your own home, not be burdened by its repayments. Thankfully, whether it’s the initial shock of making mortgage payments or financial hardship down the track, there are ways to manage the debt (and the stress that comes with it). We’re going to share four mortgage stress management strategies with you.

Mortgage stress management strategies

1. Buy responsibly.

That seems obvious, but practically, we mean ensuring that your home loan commitments represent no more than 28 percent of the household income. Anything higher is likely to stretch you financially.

2. Make extra repayments where you can.

Make the most of your low rates — which can change — and get ahead on your repayments when you can. According to Reserve Bank of Australia Governor, Phillip Lowe, low rates will only continue until 2024. So, as a general rule, you should factor in an interest rate of 5 percent, and make repayments as if this was your usual rate (because one day, it might be!). We realise that not everyone has the luxury of making additional repayments, but if the opportunity to do this comes up, at least look into it.

3. Get the best deal.

It pays to shop around. Obviously, not all interest rates are equal, and it’s well worth the hassle of switching banks if it means it’s saving you thousands of dollars in interest down the track. The Can-Star and Finder websites provide comparisons for you, so really, shopping around is just a few clicks away; there’s no reason not to compare.

Once you find a winner, you may even be able to negotiate a lower rate — especially if it’s with the bank you’re already with. You should also talk to your bank about tailored fixed and variable portions of your mortgage to you can enjoy more certainty on your repayments.

4. Build a cash reserve.

A strong cash reserve in an offset account could reduce the amount of interest you pay. This will help you pay off your mortgage faster and acts as a good buffer for future rate rises.

Seek advice

Whether you’re buying you first home or your fifth, always seek professional advice from a trusted financial adviser. A home loan is likely the biggest financial investment you’ll ever make, so talking to someone who knows the area intimately is an absolute must. We’ll help you put your mind at ease with guidance and quality insights on the right moves for you when it comes to avoiding mortgage stress.

Director’s new ID requirements

Mon, 15 Nov 2021 00:30:04 GMT

As a company Director, you’ve got a lot on your plate. Unfortunately, we’re here to add one more thing to it (sorry). But, don’t worry, it’s actually pretty easy…

As of 31st October 2021, how company Directors (across all company types and industries) need to be registered with ASIC is changing. Now, you’ll need a Director Identification Number (DIN), which you can apply and register for through Australian Business Registry Services.

What’s the DIN for?

Good question. The DIN has been introduced for three main reasons.

Prevent the use of false of fraudulent Director identities.
Make it easier for external administrators and regulators to trace Directors’ relationships with companies over time.
Identify and eliminate Director involvement in unlawful activities, such as illegal phoenixing activities.

As a Director, you only need to apply for a DIN once. Then, it’s yours forever — even if you change your name, Directorship, move overseas, or step away from a Director position entirely.

Write these dates down…

The DIN registration process is open as of 1st November 2021. Significant penalties apply for failing to obtain, misuse or falsifying a DIN. However, you have until 30th November 2022 to register. That’s 12 months, so you can breathe a little sigh of relief (just don’t forget to do it before that date).

If you appoint new company Directors between now and the 4th April 2022, you’ll need to register within 28 days of your appointment, but after 5th April 2022, you must apply before your appointment as a Director. We strongly recommend that you obtain your Director ID before being added as a director, to avoid penalties.

Start now

If you don’t want to write any dates down, you can get started right now.

Simply apply online through the Australian Business Registry Services website . You’ll need to sign in with your myGovID and prove who you are with some Australian identity documents. You’ll also need to answer some questions about your Australian Taxation Office records, which could include details about your PAYG payment summary, bank account, superannuation, and so on.

Once you get onto the Australian Business Registry Services website , you’ll be walked through the process step-by-step.

Need a hand?

We might be able to help. If Ascent Accountants is currently the registered office for your company, we’ll be in touch with you personally to discuss your DIN registration. If Ascent is not currently your registered office, it’s your responsibility to obtain the DIN. ASIC will be updated when you receive your DIN. Unfortunately, as much as we’d love to assist you, we cannot obtain or updated this at ASIC for you if we are not the registered office.

Transition-to-retirement pensions & strategies

Mon, 15 Nov 2021 00:30:02 GMT

There’s a lot to think about when it’s time to plan for retirement. This is a huge life change that will massively impact (hopefully, for the better!) your lifestyle, living habits, relationships, as well as your mental and physical health. There’s no “one way” to transition into retirement, but there is one question all pre-retirees need to consider: are you financially ready?

When you ask yourself this question, it’s important to know that superannuation can play an important role here. That’s why today’s article is about transition-to-retirement (TTR) pensions — a valuable tool in the right circumstances.

More on TTRs

TTR pensions provide financial support to people moving from fulltime work to retirement by “topping up” your income from your super savings. For example, supplementing your income as you slowly reduce your work hours or days over a longer period, heading towards retirement. A TTR can be difficult to navigate without professional insight because there seems to be a lot of “ifs, ands, or buts” that come along with the pension. Let’s look at a few of them:

A minimum payment of four percent of the opening pension account balance must be taken each year (reduced by half for this financial year due to COVID-19). The maximum payment is 10 percent a year — the pension must be paid in cash, but no lump sum benefits apply.

Payments that don’t comply may become Early Access Payments, with penalties and additional taxes.

If you’re 60-years-old or over, TTR pensions are exempt from personal income tax. If you’re under 60, the taxable portion of your payment is taxed at your marginal tax rate (reduced by a 15 percent tax offset).

If you’re under 65-years-old and haven’t retired yet, your TTR pension payments don’t count towards your transfer balance cap. In other words, there’s no limit on the amount you can hold in a TTR pension.

TTR pensions retirement planning strategies

In the event of your passing, the first two strategies below (quarantine tax-free contributions and the recontribution strategy) are useful in minimising tax payable by adult children on any death benefits they may receive. They also provide some protection against any future policy changes to the taxation treatment of pensions.

Quarantine tax-free contributions.

If you have a SMSF, you can have more than one pension account within that SMSF. This means that, while no accumulation fund is present, any tax-free contributions made to the fund can be isolated and placed into a new tax-free pension.

Recontribution strategy.

Withdrawn pension amounts are traditionally recontributed back into the SMSF as a tax-free non-concessional contribution. A TTR pension can be started to secure the tax-free status. Just ensure that any amounts you add don’t exceed your contribution caps.

Equalisation of member accounts.

Using TTR pensions to equalise member accounts can be useful if you’re close to — or over — $1.7 million, while your spouse has a lesser balance. Moving amounts from one spouse to another provides increased tax efficiency in the fund, and maximises the use of both pension transfer balance caps on retirement. It also allows greater amounts to be retained in the superannuation account in the event of a spouse’s death.

Plan ahead with Ascent

Planning for retirement is a huge task — one you shouldn’t have to do alone. Together, we’ll explore your superannuation to set you up for success in your golden years. And, with the most effective TTR strategy, we’ll ensure everything is set up in the most beneficial way for your family, too.

Closing down a self-managed superfund

Fri, 12 Nov 2021 03:14:58 GMT

In recent years, there’s been a surge in seniors looking to close down their self-managed super funds (SMSF). The overarching reason is that a SMSF takes a lot of work. Even when they’re set up with the best intentions, the time commitment required can becomes stressful and burdensome — sometimes, it takes years to realise that. If you’re looking for an exit, we’ve laid out the simplest way to safely and efficiently close your SMSF.

Before we jump in, it’s best to start planning the closure as soon as possible. It’ll work in your favour if you do this early in the financial year. That way, you won’t feel rushed throughout the process and will have ample time to prepare, as well as tie up any loose ends.

1. Allocate a place for your money.

The first step takes a “begin with the end in mind” approach. When you close your SMSF, you’ll need to reallocate your funds in a new managed super so you can access them. So, decide where your money will go. As there are a lot of options available, we suggest getting financial advice so you can make an informed decision. Not all funds will be suitable for you, but a financial adviser will be able to suggest a couple of great options to choose from.

2. Determine where fund assets will go.

You’ll either want to distribute or liquidate your fund assets. Some funds will allow you to transfer listed assets from your old fund to your new one (another reason why we suggest seeking financial advice). Just be prepared to give the sell down some thought if the fund contains illiquid investments — such as delisted shares.

3. Have an accountant organise the shutdown.

Your chosen accountant will draft rollover benefit statements and organise the shutdown on your behalf. Additionally, you won’t miss any important requirements when it comes to tax matters, such as GST, PAYG, tax return audits, and so on.

Ascent can help with the process of shutting you SMSF down, completing forms and updating the Tax Office. If you require financial advice we can refer you to advisors to help.

Chronic overspender? Here’s how to break the habit.

Thu, 14 Oct 2021 22:00:05 GMT

In an affluent country like Australia, and in the age of instate-gratification, it’s pretty safe to say we’ve all had the urge to splurge. Sometimes, it genuinely is a once-off splurge — sometimes, it snowballs into regular, chronic overspending. And debt. When non-essentials start to make your pockets lighter than they should be, it’s important to start implementing some financial goals and guidelines for yourself. Here are five simple strategies you can engage to help break the habit and build the bank account.

1. Play the waiting game.

When you start to feel that “I want it now” itch, wait a day or two. Brad Klontz, a financial psychologist, says this time is about reflection and planning. “Can I afford this?”, “Where am I going to put it?”, “How am I going to feel about this purchase tomorrow?” and more are all questions you should be asking yourself. According to Klontz, the pause helps calm the emotional-response the brain so generously gives us when we see something we like, and activate rational-response.

Wait at least 48 hours and then think again.

2. Swap cards for cash.

Credit cards can give, and they can take. Depending on how you spend, you could end up in serious debt, so good credit practices are an absolute must — for everyone, but especially for speedy-spenders. Swapping your credit card for cash at times you know you usually spend too much is a good way to avoid this entirely. If you’re heading to a night out, get out the cash you think you’ll need and leave the card at home. You’ll get into excellent habits of controlled, disciplined spending.

When you do have to rely on a credit card, pay it off at the first opportunity to avoid fees. For big purchases (like flights or furniture), consider a card with a zero percent introductory annual percentage rate.

3. Use click and collect.

Click and collect is a real wallet-saver. Not only can you see exactly what costs you’ll incur by shopping online (where the total comes up as you shop, not suddenly revealed to you at the checkout), you’re not tempted to buy more when you collect your goods in the parking lot or collection desk. Click and collect grew immensely over the pandemic, and even as restrictions have eased, many people still prefer to shop this way.

4. Give yourself an allowance.

If you don’t already have a budget mapped out, do one. Then, build a splurge allowance into it. This concept has always existed, but really took off in the financial advisory book The Barefoot Investor (worth a read if you like saving money). Whether you do $50 a week or 10% of your paycheck, a clear, outlined splurge allowance is a good way to control impulse spending. If overtime you stray from the budget, it’s a good idea to talk to a professional financial advisor.

5. Have an accountability partner.

Whether this is a professional accountant or a family member who just loves budgeting, it’s good to have someone hold you accountable. They can help you dissect your reasoning for a purchase because you’re forced to explain why you bought something and unpack your spending habits in detail. Often, just hearing these said aloud are enough for you to highlight bad habits you may not have noticed before.

Let’s do this

Need help with budgeting and general accounting? Contact us — as registered accountants, we can provide advice and guidance on everyday spending.

9 rental property tips for homeowners

Thu, 14 Oct 2021 22:00:05 GMT

Owning a rental property can be an excellent investment — if you do it right. There are a number of tax mistakes we regularly see at tax time each year. Avoiding them will save you time and money, so here’s nine tips that’ll keep you on track.

1. Allocate expenses and income for co-owned properties.

If you co-own a rental property, you must declare rental income and claim expenses according to your legal ownership of the property. As joint owners, your legal interest will be an equal split, and as tenants in common you may have different ownership interests.

2. Make your property rentable.

If your rental is currently empty, you can still claim deductions. However, your property must be genuinely available for rent. This means you have to show a clear intent to rent the property, such as:

Listing the property on rental sites.

Ensuring the rent of that listing is fair and aligned with similar properties in the area.

Ensuring the property is liveable (clean, maintained, safe).

This is to avoid people using their rental property as a holiday home (or other purpose), but saying it’s a rental just to claim the relent tax benefits.

3. Understand repairs and improvements.

Ongoing repairs for wear and tear can be claimed in full in the same year you incurred the expense. For example, repairing the hot water system or part of a damaged roof can be deducted immediately. Initial repairs for damage that existed when the property was purchased, such as replacing broken light fittings and repairing damaged floorboards, are not immediately deductible. But, a deduction may be claimed over a number of years as a capital works deduction.

Replacing an entire structure — like the whole roof when only part of it was damaged — or renovating a bathroom is classified as an improvement and not immediately deductible. These are building costs which you can claim at 2.5% each year for 40 years from the date of completion. If you completely replace a damaged item that is detachable from the house and it costs more than $300 (e.g, replacing the entire hot water system) the cost must be depreciated over a number of years.

4. Get construction costs right.

On top of improvements and repairs, you can claim certain building costs, including extensions, alterations and structural improvements as capital works deductions. As a general rule, you can claim a capital works deduction at 2.5% of the construction cost for 40 years from the date the construction was completed.

If your property was previously owned by someone else, and they claimed capital works deductions, they should provide you with the details needed to correctly calculate the deduction you're entitled to claim. If you can't obtain those details from the previous owner, engage a professional who can estimate previous construction costs.

5. Understand borrowing expenses & purchase costs.

Borrowing expenses include loan establishment fees, title search fees, and costs of preparing and filing mortgage documents. If these expenses are over $100, the deduction is spread over five years. If they are $100 or less, you can claim the full amount in the same income year you incurred the expense.

You can't claim any deductions for the costs of buying your property. These include conveyancing fees and stamp duty (for properties outside the ACl). If you sell your property, these costs are then used when working out whether you need to pay capital gains tax.

6. Understand how to claim interest on your loan.

You can claim interest as a deduction if you take out a loan for your rental property. If you use some of the loan money for personal use such as buying a boat or going on a holiday, you can't claim the interest on that part of the loan. You can only claim the part of the interest that relates to the rental property.

7. Ensure you claim correctly if you rent below market rate.

If your rental property is rented out below market rate (for example, many people rent their property to family and friends at a cheaper rate), you can only claim a deduction for that period up to the amount of rent you received. You can't claim deductions when your family or friends stay free of charge, or for periods of personal use.

8. Keep accurate records.

You must have evidence of your income and expenses so you can claim everything you are entitled to. Capital gains tax may apply when you sell your rental property. In fact, you should keep records over the period you own the property and for five years from the date you sell the property.

9. Get capital gain right when you sell.

When you sell your rental property, you may make a capital gain or a capital loss. This is the difference between what it cost you to buy and improve the property, and what you receive when you sell it. But, your costs don’t include amounts already claimed as a deduction against rental income earned from the property, including depreciation and capital works.

If you make a capital gain, you will need to include the gain in your tax return for that income year. If you make a capital loss, you can carry the loss forward and deduct it from capital gains in later years.

We’ve got even more insights for you

To hear them, let’s chat. We’ll go deeper into how owning a rental property can be used in your tax return and answer any questions you might have. Contact us to get started.

Is a self-managed superannuation fund the right option for you?

Thu, 14 Oct 2021 22:00:05 GMT

Ensuring there's enough money in the bank to enjoy a comfortable retirement is something everyone wants. A self-managed superfund (SMSF) is one pathway you can take to achieve this. A SMSF could be the right option if you want to have control over the level of contributions you make to your fund, and what investments your fund makes.

There are, however, several important factors to examine if you’re considering this type of superannuation to ensure you get it right from the beginning.

1. Can you make contributions to your SMSF as an employee?

Unless your employer gives you the right to choose your own superannuation fund, you won’t be able to have your employer’s compulsory contributions paid directly into your SMSF.

2. Do you have enough money to make a SMSF beneficial?

To be cost-effective for members of a SMSF, a balance of between $200,000 to $250,000 is required. You need to make sure the returns you’re earning will cover the costs of running a SMSF, plus provide an investment return. By making significant contributions for the first couple of years, a SMSF can still be cost-effective for members if you don’t currently have this amount.

3. Do you have an accountant or financial planner?

A SMSF is a big commitment and can last well past your retirement (if you plan for your fund to provide you with a pension). Plus, administering am SMSF takes significant knowledge, and the reporting, monitoring and investment requirements can be demanding. It is generally best left to a professional with the skills and tax expertise to run the fund on your behalf.

4. Do you have a plan on what the fund will invest in?

There are certain restrictions on what a SMSF can invest in. The main purpose for investing through a SMSF is to maximise retirement savings for the members. You need to make sure the investment strategy you follow considers the risk profile of the members.

5. Are you aware of ATO requirements in running a SMSF?

The ATO publishes various publications on what is required by trustees to run a SMSF. You need to be mindful of these requirements to ensure that you’re operating a compliant SMSF.

Sounds good. Now what?

So, you’ve decided a SMSF is the right choice for you and your family. Great, but who are the SMSF accountants Perth residents can rely on?

Ascent Accountants.

Due to the complex regulations and reporting requirements for SMSFs, it's crucial to have experienced staff. Staff at Ascent Accountants are continually undergoing training in this specialised field — your fund will meet all Australian Taxation Office administration and reporting requirements. To put it simply, we have the skills and expertise to assist you in setting up and administering a self-managed superannuation fund. What more could you ask for?

Changes for paying super to employees

Thu, 14 Oct 2021 22:00:04 GMT

In the 2020 – 21 federal Budget, the Government announced the Super Reforms — Your Future, Your Super (YFYS) — measure. This is one of the most significant changes to the way the superannuation system works and has been designed to help protect the retirement savings of working Australians.

The measure has four key elements:

A new YourSuper comparison tool for individuals to be able to compare key data on MySuper products.

From 1 November 2021, where new employees do not choose a super fund, most employers will have to check with the ATO if their employee has an existing super account (known as a “stapled super fund”) to pay the employee's super guarantee into (more on this further down).

A change to the duties of trustees of superannuation funds to act in the best financial interest of their members.

A new super fund underperformance assessment to be conducted by APRA and published on our website.

The measures commence on 1 July 2021, except for Schedule 1 (the single default account or “stapled super fund” measure) which commences on 1 November 2021.

Important info for employers

As a result of YFYS, every time a person starts a new job, their employer has to offer them two superannuation options. Either having their compulsory superannuation guarantee contributions deposited into the employer’s default super fund, or in an alternative fund of the employee’s choosing.

From November 2021, the legislation ensures that unless an employee chooses otherwise, their active super account — or the first fund they join when they start work — will follow them throughout their working life, no matter the job or the industry they are working in or if the fund is a poor-performing fund. In other words, the employee has one fund for life.

In the legislation, this is called “member stapling”, and its purpose is to prevent a person having multiple super funds. Multiple funds have multiple fees and unnecessarily reduce retirement savings. This is the important part — it’s an employer’s responsibility to search and check with the ATO if their new employee has a “stapled” super fund and ensure that future SG contributions are paid into it.

Want to know more?

As an employer, it’s hard to stay on top of the Government’s constantly evolving legislations and legalities. We can help you straighten things out and get a clear picture of your responsibilities to your employees. Contact us to get started.

Finalising Single Touch Payroll at the end of the year

Tue, 14 Sep 2021 22:00:04 GMT

As you already know, Single Touch Payroll (STP) streamlines the way you report your employee's tax and super information to the ATO. Final STP declarations were originally due by July 14, but the ATO extended this date to July 28. Even so, many business owners still haven’t finalised their statements — perhaps you’ve already received a reminder notice from the ATO to do this. If this is you, you must do this as soon as possible so your employees can access their information to complete their tax return — they can’t do their returns without it.

Number of employees

20 or more employees

If you have 20 or more employees, you should be reporting closely held payees each pay day, along with arms-length employees. A closely held payee is an individual directly related to the entity. For example: family members of a family business, directors or shareholders of a company, or beneficiaries of a trust. The finalisation due date for closely held payees is 30 September each year. An arms-length employee is everyone else.

19 or fewer employees

If you only have closely held payees, the due date for end-of-year STP finalisation will be the payee's income tax return due date . If you employ closely held payees and arms-length employees, the due date for end-of-year STP finalisation for closely held payees is 30 September. All other employees are due July 14 (now July 28).

A final declaration

You finalise your STP data is by making a finalisation declaration. In this declaration, you provide a finalisation indicator for an employee (including directors, contractors, etc.) as par

lodged by 14 July (or as soon as possible), and indicates that you have fully reported for the financial year for each employee.

It’s important that you make this declaration so that your employees can use accurate information for their income tax return and avoid penalties for not completing their returns.

What you should tell employees

Let staff know they’ll no longer receive a payment summary (now called an “income statement”) from you. Instead, they can access their year-to-date and end-of-year income statement through myGov.

You should also tell them to wait until their income statement is showing as “tax ready” before lodging their tax return. Finally, ask them to check and update their personal details (if necessary) with you and the ATO. Incorrect details may prevent them from seeing their STP information on myGov.

A helping hand

Finalising STP at the end of the financial year is mandatory. If you’re confused about the process or have put this in the “too-hard basket”, reach out to us . Our registered Accountants and tax experts will help you get your finalisation declaration sorted ASAP.

ATO Online Business Services

Tue, 14 Sep 2021 22:00:04 GMT

The ATO’s online services make managing business reporting and transactions for your business much easier. Easily and quickly accessible, you can utilise these secure services when it’s convenient for you. Even if you have a registered tax or BAS agent assisting you with business tax and superannuation, you can still access the ATO’s online services (in fact, it’s recommended that you do).

At your fingertips

You can use online services for most of your business interactions with the ATO.

· View, prepare, lodge and revise activity statements and taxable payments.

· Create payment plans.

· View statements of account and find your payment reference number (PRN).

· Manage your accounts and update your tax registration details (for example, add or cancel a role).

· View your Single Touch Payroll reports.

· Register for goods and services tax (GST) and pay as you go (PAYG) withholding.

· Access secure ATO mail.

·Access the Small Business Superannuation Clearing House .

· View and print tax returns and income tax history.

If you have multiple businesses, you can seamlessly switch between them with a single login.

Accessing online services

These services can be accessed from your computer or mobile for easy on-the-go management, through your private myGovID . This is different to a myGov account. myGovID is an app which lets you prove who you are when logging in to a range of government online services. You’ll also need a Relationship Authorisation Manager (RAM). RAM is an authorisation service that allows you to act on behalf of a business online once you've linked your business with your myGovID.

Commercial properties: should you buy or rent?

Tue, 14 Sep 2021 22:00:03 GMT

Physically expanding your Perth small business from your home or shared office to your own dedicated space indicates significant company growth — great job! While this is an exciting step in your business’s progression, for some small business owners, it’s fraught with indecision. Choosing between buying and renting a commercial space can be daunting and confusing, especially when weighing up complicated financial obligations and business projections.

To help clarify both options, here are some pros and cons of renting and buying commercial property.

Buying

Maximum control

Buying gives you significantly more control over how you want your space to look and feel. The nuance of your space says a lot about your business, so it’s pretty important to optimise the space in line with your branding, industry, services, and work culture. You can also implement added security and functionality that’s unique to your everyday operations. Renovating is much easier when you own the property, and you won’t have to restore the property to its original state if you decide to sell later (like you’d have to if you were renting).

Profit through property sale

As the property market increases, the property’s value can produce a significant yield This gives you a viable selling option during times of financial stress or crisis. Alternatively, if business is booming, you can move to an even bigger premises and rent out old property to another business, providing another income stream.

Renting

Renting means less commitment

As most growing business owners will attest, the demands on office space can change wildly, growing or decreasing with industry and consumer trends. Unlike buying, where you’re stuck with the property until you sell, renting is more flexible and you don’t need to commit to a lifetime lease. However, some landlords insist on long-term leases that may not be suitable, so it’s vital to negotiate your contract to make this option work for you.

Save money in the short-term

Despite the need for additional space, buying a property isn’t always financially viable for small business owners. Commercial leasing allows you to budget payments, so you won’t need stressful business loans and considerable liability. Your small business accountant will help you manage savings and cash flow, and advise what option is best for you.

Don’t make the decision on your own

Make sure you choose the right tax structure

If you’re buying, choosing the correct tax structure to buy the property is important. Otherwise, you could end up with trouble at tax time. For example, whether the property will it be bought in your own name, in the business name, as a family trust, or a Self-Managed Super Fund. You’ll also need to consider cashflow, asset protection, and the tax consequences in each option. Ascent Accountants can help in selecting the most appropriate tax structure to buy the premises through.

Let’s talk about it

Deciding between renting or buying commercial real estate can be tough. We’ll go over the pros and cons of each in more detail with you, with a fine-tooth comb. Our Perth Small Business Advisers consider your long-term goals and use forecasting to better gauge how buying or renting a property can fit into your plans. Contact our small business Perth-based advisers to receive the support you need.

Setting up Online Business Services with the ATO

Tue, 14 Sep 2021 22:00:02 GMT

We touched on it briefly here, but the ATO’s Online Business Services can be accessed from your computer or mobile for easy on-the-go management, through your private myGovID . Different to your myGov account, myGovID is an app where you can prove who you are when logging in to a range of government online services.

You’ll also need a Relationship Authorisation Manager (RAM). RAM is an authorisation service that allows you to act on behalf of a business online once you've linked your business with your myGovID.

Your myGovID

Initial setup

To set up your myGovID, you’ll need a smartphone, a personal email address (never use a shared or work email address), and you must be 15-years-old or over. Your myGovID is unique to you and contains confidential information about your business — it should never be shared.

The first step is downloading the myGovID app to your smart device from the App Store or Google Play . Then, launch the app and follow the setup directions. These include entering standard information like your name, birthdate, and some identifying documents.

Indentity Strength

It’s important to note that you’ll need to set an Identify Strength. The level you choose will determine what you have access to within myGovID. There are three levels — Basic, Standard, and Strong. The level you set also determines which identifying documents you’ll need to provide.

· A Basic myGovID allows access to limited participating government online services.

· A Standard myGovID allows access to most participating government online services. You’ll need two Australian identity documents, which can be: Driver’s licence or learner’s permit, passport (no more than three years

expired), birth certificate, visa (using your foreign passport), citizenship certificate, ImmiCard, and/or Medicare card.

· A Strong myGovID allows access to all participating government online services. You’ll need these Australian identity documents: Passport (no more than three years expired), birth certificate or citizenship certificate, and driver’s licence (including learner’s permit) or Medicare card. You also need to verify your photo with a face verification check. This one-off scan confirms that you’re a real person and the right person, when compared to your passport photo.

If you’re having trouble verifying your identity, you can find help here. Where your name doesn’t match across your identity documents, you may be able to verify this using a change of name certificate (Tasmania, South Australia, Northern Territory and the Australian Capital Territory only) or marriage certificate .

Your Relationship Authorisation Manager

To access online services on behalf of your business, you still need to link your myGovID to your Australian Business Number (ABN) through Relationship Authorisation Manager (RAM). This initially needs to be done by the authority of the business, but once set up, that person can grant RAM permissions to others in the company.

Linking your ABN

For five or fewer ABNs:

· Phone 1300 287 539 and select option 3.

· You’ll need to provide personal details to complete a proof of identity check.

· Checks will be completed to confirm your association to the business.

· Once confirmed, you’ll receive an email with an authorisation code and summary of the authorisation request.

· Log in to RAM using your myGovID to accept the request and complete the link.

To link more than five ABNs, complete the Assistance to link bulk ABNs form. Once submitted, a representative from RAM will contact you for a proof of identity check.

Once confirmed, you can grant authorised users access to use online services on behalf of the business. The individuals will need their own myGovIDs in order to be given permissions.

Claiming cents-per-hour for your home office

Sun, 15 Aug 2021 01:00:11 GMT

Thanks to a number of lockdowns, many people had to work from home for the first time. Whether you have a fancy home office setup, or just work from your spare room in your pajamas, the way you complete your tax return will be affected. Part of this involved claiming cents-per-hour for the amount of time you worked from home. There are two ways you can do this — the Fixed Rate Method, and the Shortcut Method.

Fixed Rate Method

Eligibility

If you’re eligible and have kept the right records, you can use the Fixed Rate Method to work out your deduction for working from home expenses. To be eligible, you must:

· Incur additional running expenses as a result of working from home (e.g. working from home costs you money).

· Have a dedicated work area, such as a home office that you use when you work from home.

· Records that show the work-related portion of expenses not covered by the fixed rate per hour.

· Records of the number of hours spent working at home for the whole income year.

Claiming

You can claim the fixed rate of 52 cents for each hour you worked from home. The rate includes the additional running expenses you incur for:

· The decline in value of home office furniture and furnishings — for example, a desk.

· Electricity and gas for heating, cooling and lighting.

· Cleaning your home office.

You can also claim the work-related portion of the following expenses, which are not covered by the 52 cents per hour rate, if you incur these expenses as a result of working from home:

· Phone, data and internet expenses, including the decline in value of the handset.

· Computer consumables and stationery — such as printer ink.

· Decline in value of depreciating assets other than home office furniture and furnishings used for work purposes — such as, computers and laptops.

You must use these things for work, not just have them at home. For example, if you may have a home landline and never use it for work, you wouldn’t be able to claim the expenses for this as a deduction. You can calculate your work from home deduction using the ATO’s Home Office Expenses Calculator .

Recordkeeping

Like everything with the ATO, you must keep records that show the work-related portion of your working-from-home expenses. These are:

· A record of the number of actual hours you work from home during the income year, or a diary for a representative four-week period to show your usual pattern of working at home.

· Receipts or other written evidence that shows the amount spent on expenses and depreciating assets you purchase.

· Phone accounts identifying your work-related calls and private calls to work out your percentage of work-related use for a four-week representative period.

· A diary that shows work-related internet use, and the percentage of the year you use your depreciating assets exclusively for work.

More on the four-week diary

The four-week diary is an extremely important tool for claiming your working-from-home expenses. If you record your hours worked from home during a four-week representative period, you can use it across the rest of the income year to work out the total number of hours you worked from home. However, if your work pattern changes you need to create a new record.

If you don't have a representative four-week period of your hours worked from home or your work-related use of your phone, internet and depreciating assets because they vary throughout the income year, you will need to keep records for the entire income year.

It’s best to plan ahead — use the myDeductions tool in the ATO app to keep track of your expenses and receipts throughout the year. This saves you scrambling through papers and receipts when it comes to tax time, as the majority of your records are sitting neatly within the app.

Shortcut Method

Because of COVID, the ATO introduced a shortcut method for working-from-home at a rate 0f 80 cents-per-hour. This goes from 1 ^st March 2020 to 30 ^th June 2021. If claiming this method, you cannot claim other expenses like internet usage or phone usage.

We’re ready

With the tax deadline looming, the pressures of accurately claiming can become a little much. We’re ready to help you work out your working-from-home expenses. Contact us to get started.

Setting up an individual myGov account

Sun, 15 Aug 2021 01:00:11 GMT

For individuals and sole traders, streamlining your tax tasks and communications with the ATO can significantly enhance your overall experience. We strongly recommend setting up a myGov account and linking it to the ATO, alongside other key Australian Government services.

Getting started

Create an account

Begin by visiting my.gov.au and creating a myGov account. Sign up using an exclusive email address to ensure security. Adding your Australian mobile number is advised, facilitating the receipt of security codes for login verification.

If you opt out of adding your mobile number, you must set up either the myGovID app or the myGov Code Generator app to establish a secure connection with the ATO.

Sign in

You can sign in to your myGov account using the following options:

· myGovID app.

· SMS codes with your myGov username and password.

· myGov code generator app with your myGov username and password.

This option is only recommended if you don’t have an Australian mobile number or have limited mobile reception or are travelling overseas.

If you want to change how you sign-in to myGov, go to Account settings, select Sign in options and follow the prompts.

Link Government services

Choose the government services you wish to link, such as the ATO, Centrelink, or Medicare. Prioritise linking the ATO, a crucial step for all Australian taxpayers. Before initiating the linkage process, gather the necessary information and ensure you're not using 'Answer a secret question' as your myGov sign-in method to avoid unlinking from the ATO later on.

To link to the ATO:

Sign in to your myGov account.
Navigate to the Services tab on the myGov home page.
Under "Link a service," select Australian Taxation Office.
Respond to personalised questions related to your tax record.

Most people can link online in a matter of minutes. If you can't, select the option “Use a linking code” and then phone the ATO to get a unique linking code. Once you've created your myGov account and linked to the ATO, you can download the ATO app to use their online services from a secure browser, anywhere in the world.

If you prefer watching a step-by-step guide, we've got you covered! Below is a helpful video that walks you through the process of setting up your individual myGov account. Whether you prefer reading or watching, we've made it easy for you to get started with myGov.

Troubleshooting

When you can't login to myGov

If you’ve forgotten your password, have permanently left Australia, or no longer have access to your device that receives security codes, you won’t be able to login.

· If you forget your password, you can reset it with here.

If no longer have access to your device for receiving security codes, or have left Australia, you can find help here .

Need help?

Contact Ascent for assistance with the ATO’s online services. Our accountants can discuss your options and the importance of setting up your myGov account. If you’re having problems setting up your account, it’s best to call the myGov help desk directly on 13 23 07.

Claiming deductions on charitable payments

Sun, 15 Aug 2021 01:00:11 GMT

If you’ve been charitable over the last financial year, your tax return could be positively affected. However, there are four reasons why a donation or gift may not be deductible. Do you know what they are?

1. You didn’t give to a “Deductible Gift Recipient”.

Not all charities and nonprofit organisations are deemed a “Deductible Gift Recipient” (DGR) by the ATO. This includes online crowd-funded initiatives and international charities. If you’ve been generous to a foreign charity, unfortunately, your donation isn’t tax deductible. Tax-deductible donations only apply to a DNR, and to be a DNR, a charity must be registered as one in Australia.

2. You gained a benefit from donating.

If you receive, or expect to receive, some kind of benefit from your donation, that donation is not tax-deductible. This could be a cash prize or “gift” from a raffle. For example, many West Australian’s attempt to claim donations for the annual MSWA Mega Home Lottery, but these aren’t tax deductible.

3. You don’t have proof that you donated.

This one seems pretty obvious — the ATO requires proof that you’ve done what you claim you’ve done, down to the dollar amount. You must keep records of donations, such as a physical or digital receipt.

However, there is an exemption this rule. If you made one or more donations of $2 or more to bucket collections (also known as street collections — these target the general public, often seen in shopping centres) run by an approved organisation, you can claim a tax deduction of up to $10 for the total of those contributions without a receipt.

4. You're claiming for future donations.

Some people try to claim for donations outlined in their will, or for workplace giving that has reduced the amount of tax paid in each pay period. Again, these aren’t tax-deductible.

Looking for a loophole?

If you’ve been generous in the last financial year and are now realising you won’t see any of that back, you’re probably feeling pretty disappointed. While there aren’t any loopholes, we can review your deductions, chat through how your giving affects your tax, and help you maximise your return. Talk to us to get started.

myGov & the ATO for individuals

Sun, 15 Aug 2021 01:00:09 GMT

myGov is a government initiative that enables you to access a range of government services online, securely. Services include Centrelink, Medicare, My Health Record, and the ATO. However, the services you link through your myGov account are up to you — so, is it worth linking the ATO? We think so, and here’s why.

Access

You can easily and safely access your tax information online, wherever you are — all you need is an internet connection. Your tax information is secure and only accessible to you. In the majority of cases, you can also easily update your information and circumstances online — no more waiting in queues or being put on hold.

Communication

Your myGov account comes with an inbox — letters and notifications, from all linked services, come to this one place, rather than in the post. This is a pretty crucial change because the tax office is phasing out correspondence, like Notice of Assessments and Instalment Activity Statements, by mail. With myGov, it’s easy to receive updates and important notices all aspects of your tax. This is to help you manage your tax and super affairs in one place, making record keeping easier and more secure.

Simple tax lodgement

Because myGov is government-run — like the ATO — tax returns are streamlined with an online program called myTax. With myTax, much of the information is accurately prefilled for you. This includes information from your employers, banks, government agencies, health funds, and other third-parties, saving you significant time.

Lodging online with myTax is the quick, easy, safe and secure way for you to prepare and lodge your own tax return. However, many individuals choose to use an Accountant to assist with the lodgement, to ensure you’re maximising your return.

Don’t wait, or you could be penalised

Moving forward, the ATO with only communicate through myGov, so we strongly recommend setting up your myGov account and linking the ATO. To avoid late lodgment or payment penalties, you need to get setup ASAP.

Benefits of Cloud-Based Software for Business

Wed, 14 Jul 2021 16:15:02 GMT

Cloud-based software makes running a business easier and more affordable by streamlining everyday operations and processes. However, before you even start considering which software is suitable for your industry, business, operations, and team, take a look at the basics and benefits.

The basics

Cloud software delivers software services through the Internet (like Xero), as opposed to software delivered through your device (like Microsoft Excel). This includes tools and applications for data tracking and storage, networking, project management, and more.

The benefits

1. Flexible

Many business software tools can grow with your business. You can start with basic functionality, and as your business evolves and expands, your software can too. It’s no different with cloud-based software. These softwares are also flexible in that they’re constantly updating and improving.

2. Cost-effective

This is definitely one of the most significant advantages of cloud software. Cloud software uses remote servers, so there’s no need for in-house storage equipment (you can go from ten physical filing cabinets to unlimited digital cloud storage) and application requirements. Additionally, cloud-based services typically use a pay-per-use basis, which means they’re cheaper to use and you only pay for what you need.

3. Accessible

Cloud software is accessible anywhere. As long as your electronic device is connected to the web, you have access to the information stored on your cloud-based software — and it doesn’t have to be the same device every time. Say your laptop breaks and you need to borrow a colleague’s, or you’re working abroad from an Internet Café — your data, work, and applications are available from any device with an Internet connection.

4. Multi-User

Multiple-users can access your cloud-based software (with your permission) so you can get addition support. For example, your Accountant or Bookkeeper can be granted access to streamline your financial systems — they can make transparent updates directly to your database without the need for lengthy phone calls or email trails.

Wondering which software is right for you?

With so many cloud-based software options available to business owners, there question isn’t, “should I use it?”, but “which one should I use?”. We can help .

Reducing the Tax on a Capital Gain

Mon, 12 Jul 2021 06:17:03 GMT

Even the most proficient real estate experts couldn’t have predicted WA’s property market boom over the past 12 months. Coming after a lengthy lull, many homeowners quickly sold their properties at a brag-worthy profit. However, if you’ve made money selling a property (or shares), the Capital Gains Tax (CGT) might be an issue…

CGT explained

If you sell a capital asset, usually real estate or shares, you’ll make a capital gain or a capital loss. This is the difference between what it cost you to buy the asset and what you receive when you sell it. In other words, buy price – sell price = your capital gain or loss.

When you make a gain, it’s added to your income (under Other Income). As tax is not withheld for capital gains, this may significantly increase the tax you need to pay.

Reducing your CGT

With the possibility of your payable tax substantially increasing, you’ll probably look for ways to reduce the CGT. There are two ways you can do this.

Balance your capital gain with a capital loss.

As we’ve covered, capital losses occur when you sell an item for less than you paid for it. It can be any asset (not necessarily the same type of asset), and can stay in your ATO records to be used against a future capital gain. For example, many people intentionally sell shares at a loss just to offset their capital gain (trickier than it sounds — but we can help if needed) because it’s more cost-effective in the long run. Who would’ve thought a financial loss could come in handy?

Reduce your overall taxable income through tax deductions.

The easiest way to do this is by making a personal concessional superannuation contribution. With the annual contribution cap rising to $27,500 by July 1 (previously $25,000), there’s more scope for reducing your CGT this way. You can also reduce your taxable income by prepaying up to 12-months of business expenses in the financial year.

Reducing tax payments is kind of our thing

Every year, we help hundreds of individuals and business owners reduce their tax — including the Capital Gains Tax. Talk to us if you’d like our experienced team to explore reducing yours.

Stress-Free Tax Preparation

Mon, 12 Jul 2021 06:16:30 GMT

If you’re stressed about tax, you’re not alone. Tax pressures get to a lot of small business owner, especially those with considerable deductible items and those affected by complicated taxation rules. Despite anticipating this stress (it occurs the same time each year) many business owners struggle to prepare for tax time in advance, leaving things to the last stress-inducing minute.

By taking three simple steps year-round, you can significantly reduce tax pressures and enjoy stress-free prep.

1. Note key taxation dates

Lodging dates and reporting times for businesses are different every year, as well as between business and personal accounts. Being aware of any specific dates is your first step to managing your preparation stress. Purchase a financial diary, record key dates, and set reminders for these dates weeks in advance. This will allow you to make an appointment with key accounting personnel so you can stay on top of things.

2. Manage staff workloads and leave

Don’t let external commitments and staff shortages exacerbate your stress during taxation time. Depending on the tax demands for your business, you may need to restrict staff leave and planned events to ensure maximum staff are available to cover the workload. Your time is crucial too; avoid conferences, training, and significant product or service launches and sales during this period.

3. Keep up-to-date all year round

When recordkeeping is behind schedule, your stress will rise as you try to make up for lost time, spending hours fixing weeks — even months — of neglected bookkeeping. Setting aside a small amount of time each week (for either yourself or an employee), or outsourcing your bookkeeping is the best way to stay on top of your accounting.

Don’t go it alone

Small business accountants and tax professionals exist for a good reason; they can complete your tax in a fraction of the time that you can… Usually with better, more accurate results. Without the work on your shoulders, you can put your time and effort into other areas of the business, and survive the tax lead up without stress and pressure on your schedule. Talk to us to learn more.

Cryptocurrency and the ATO

Mon, 12 Jul 2021 04:40:48 GMT

Cryptocurrency? Confusing. Tax time? Also confusing. Together, that’s a recipe for one huge headache. It’s no wonder so many individuals are confused when it comes to cryptocurrency at tax…

Let’s address those misconceptions

The world of cryptocurrency has a lot of benefits. And misconceptions. The biggest one is that cryptocurrencies are outside government control (think about it; if that were true, cryptocurrency wouldn’t even be legal). Here’s the truth:

There’s no escaping the taxman — you still have to pay tax on crypto-transactions.
There are no tax benefits for using cryptocurrency. Tax treatments on crypto profits are the same as profits gained through any asset sale.
Although there are over 4,500 types of cryptocurrencies, the ATO doesn’t distinguish one type from another or treat any type preferentially.

The ATO is ready

This financial year, up to 600,000 Australian cryptocurrency traders will have their details handed over to the ATO. This includes basic details like names, addresses, emails, birthdate, phone numbers, and even social media accounts, as well as more comprehensive info on bank statements and transactions. Seem invasive? There’s a good reason for it.

Cracking down on crypto

The data gathered by the ATO will be used to identify taxpayers who failed to report a disposal of cryptocurrency in their income tax return. Anyone who fails to disclose cryptocurrency transactions and pay the correct tax will face penalties, and possibly fines, from the ATO. The kicker? Any fines acquired can’t be paid with cryptocurrency.

Don’t panic. Call Ascent.

If you deal in cryptocurrencies and worry you might have an ATO target on your back, talk to us . We’ll explain the cryptocurrency-tax relationship in more detail, ensure you’re paying the correct tax, and help you avoid costly penalties.

Your Tax Year Checklist

Tue, 15 Jun 2021 08:39:44 GMT

With so much to organise before End of Financial Year, June is a busy time for businesses across Australia. From absolute essentials to areas we strongly recommend, the below list may be helpful as a reminder of what you’ll need to do in the next few weeks.

Tax year checklist

June 30 — final private use / FBT calculations for BAS return.
June 30 — bank reconciliations in your database.
July 14 — Finalise STP declarations.
July 28 — superannuation reconciliations to ensure the correct amount has been paid.
Preparing payment annual reports for payment made to contractors for businesses in building and construction industry.
Wages reconciliations.
Bookkeeping.
Business performance reviews.
Planning and goal setting for the next financial year.
Bonus agreements for tax minimisation based on financial targets. 
2021/2022 budgets for your business (to ensure business goals are put in place so actuals can be analysed).

Don’t forget…

Superannuation is deductible for businesses when paid, so to get the deduction this year, staff super should be paid and cleared by the superfund before June 30.

Seem like a lot?

Well, it is. To top it all off, even minor mistakes can cost you greatly — in terms of time, resources, and finances — down the track. That’s why many choose to reach out for additional assistance to better manage time constraints and ensure everything has been done correctly. It’s a small investment that gives you peace-of-mind and more time so you can focus on other things.

If you’d like an extra pair of hands doing the grunt work, or even an extra set of eyes to look over where you’re at, contact us .

Making Tax Deductible Super Contributions

Tue, 15 Jun 2021 01:53:27 GMT

As of 2017, people under the age of 75 are able to claim an income tax deduction for personal superannuation contributions. The Australian taxation and superannuation systems provide notable benefits and concessions to people who contribute to their own super while they’re working. You must make tax deductible super contributions before June 30.

Contributions limits

Contributions limits, also known as “contributions caps”, limit the tax concessions you can claim — if you contribute too much, you might have to pay extra tax and an additional charge. The cap amount depends on your age, salary, and contributions.

Before-tax (concessional) contributions including employee contributions are capped at $25,000 per annum. This will change from July 1, 2021, to $27,500 per annum.
The tax payable on concessional contributions depends on your taxable income.
People with a taxable income (including super) of more than $250,000 a year or more pay 30%.
After-tax contributions: Non-Concessional tax is payable on amounts up to $100,000 a year (or $300,000 over three years). Your total super balance must be less than $1.6 million. From July 1, 2021, this Non-Concessional cap increases to $110,000 (or $330,000 over three years).

How to contribute

If you want to boost your super, contributions can be done as an individual tax deductible super contribution or by salary sacrificing through your workplace (keeping your individual cap in mind).

Individual tax-deductible contributions

You are eligible to claim a deduction for personal super contributions if you meet the age restrictions, have given your fund a Notice of intent to claim or vary a deduction for personal contributions form (NAT 71121), and your fund has validated your notice of intent form and sent you an acknowledgement. You also need to ensure contributions to your fund was not a:

Commonwealth public sector super scheme in which you have a defined benefit.
Constitutionally protected fund (CPF) or other untaxed fund that would not include your contribution in its assessable income.
Super fund that notified us before the start of the income year that they elected to either treat all member contributions to the super fund as non-deductible or defined benefit interest within the fund as non-deductible.

Salary sacrificing

When you could ask your employer to pay some of your usual salary directly into your super account, instead of your bank account, this is salary sacrificing. Money paid into your super account by your employer is taxed at 15% — much lower than the usual rate.

For example, let’s say you earn $60,000 per year and your employer puts in 9.5% super ($5,700 per year). You decide you’d like to boost your super by salary sacrificing, and ask your employer to also pay a portion of your salary into your super rather than your bank account. Instead of the 34.5% tax you normally pay (income tax plus Medicare levy), this part of your income is only taxed at 15%.

With a contribution cap of 25,000/pa — remember, $5,700 has already been paid by your employer in this scenario — you can salary sacrifice up to $19,300 more per year at the 15% tax rate.

Two heads are better than one

With new restrictions and changes coming in every year, it can be difficult to make tax deductible super contributions without a professional guiding you. We can help — contact us today to get started, explore your options, and get more for your super.

How Individual Tax Rates Work

Tue, 15 Jun 2021 01:38:50 GMT

The amount of income tax and the tax rate you pay depends on how much you earn as well as your circumstances. In simple terms, the more you earn, the higher your rate of tax. As the rates change year-to-year, it’s helpful to take a look at the upcoming period so you know what to expect. In particular, new changes to the Medicare levy threshold and low and middle income offset may affect you.

Rates from June 2021 – June 2022

*The above rates do not include the Medicare levy of 2%

Medicare levy threshold and rates

Your Medicare levy is reduced if your taxable income is below a certain threshold; in some cases, you may not have to pay the levy at all. As of the 2021 income year, the Medicare levy low-income threshold is increasing for singles, families, seniors, and pensioners.

Singles — from $22,801 to $23,226.
Families — from $38,474 to $39,167. For each dependent child or student, the family threshold will be increased by an additional $3,597 (previously $3,533).
Single seniors and pensioners — from $36,056 to $36,705.
Family seniors and pensioners — from $50,191 to $51,094.

Retaining the low and middle income offset

A tax offset is a financial benefit from the Government that reduces the amount of tax you pay on your taxable income. Although it was due to be removed from July 1 this year, the Government will be retaining the low and middle income tax offset (LMITO) for one more income year, making it available for the 2022 income year.

You don't need to complete separate form or section in your tax return to get this tax offset — the ATO works out the amounts on your behalf when you lodge your tax return (if you’re eligible). As always, in order to benefit from this offset you need to be an Australian resident for income tax purposes, pay tax on your taxable income, and that income needs to be below certain income thresholds.

Talk to us

Our team of tax experts are ready to strip back the complications what come with tax returns and help you complete yours, stress-free. From submitting your 2020 – 2021 tax to strategic tax planning for the next financial year (and plenty of other accounting services), we can help .

Superannuation Changes from the Latest Budget

Tue, 15 Jun 2021 01:26:59 GMT

Even if you’re on top of your super, it can be hard to keep up with evolving requirements and changes. When you hear about one, understanding how it could affect you is another matter entirely. Let’s consider four upcoming superannuation changes from the latest budget and how they could impact you.

The work test

The Government has announced it will allow individuals aged 67 – 74 to make or receive non-concessional contributions and salary sacrifice contributions without meeting the work test. This is subject to existing contribution caps, and these same individuals will still have to meet the work test to make personal deductible contributions.

Nevertheless, this is a huge win for older Australians. Removing work test requirements gives these individuals more flexibility when it comes to saving for their retirement. This is expected to come into effect prior to July 2022.

The $450/month super threshold

The existing $450/month minimum income threshold will be removed. Under the current threshold, employees do not have to be paid Superannuation Guarantee (SG) contributions by their employer. This is expected to come into effect prior to July 2022.

Age limits for downsizer contributions

Downsizer contributions allow eligible individuals to make a one-off contribution (after tax) to their super — up to $300,000 — following the disposal of an eligible dwelling. At the moment, downsizer contributions can be made by eligible individuals from 65 years of age. The Government is reducing this 60 years of age. Again, this is expected to come into effect prior to July 2022.

The First Home Super Saver scheme

Homeowner schemes and grants are always a hot topic, particularly in Perth where the housing market is becoming increasingly tough. The latest update relates to the First Home Super Saver Scheme. The Government is increasing the maximum amount from $30,000 to $50,000 — a huge jump which is designed to help first home buyers secure a deposit sooner. You guessed it — this is expected to come into effect prior to July 2022.

Need more insight?

We’re happy to oblige and know super inside-and-out. Contact us to discuss any of these changes in more detail. If you need a hand organising your super or tapping into any eligible benefits, we can help with that too.

How to never miss another BAS or IAS statement

Thu, 13 May 2021 08:40:00 GMT

The Australian Taxation Office (ATO) are increasingly opting for electronic methods for the delivery of correspondence, including Business Activity Statements (BAS) and Instalment Activity Statements (IAS).

This means that taxpayers who have historically relied on receiving a notice in the mail to remind them to prepare their BAS or make payment in relation to their IAS are getting hit with Failure to Lodge on Time penalties and General Interest Charges.

If this applies to you, please refer to the below steps to ensure you have the correct logins setup in order to receive an email notification when your next BAS or IAS has been issued by the ATO.

Individuals will need a myGov account linked to the ATO, this can be setup by following the below steps:

Create an account by selecting “Create a myGov account” here > https://my.gov.au/LoginServices/main/login?execution=e2s1

1. Select “I Agree” to the terms of use

2. Enter your email address and then select “next"

3. A code will be emailed to the address entered above

4. Enter the code in the box on the screen and select “next”

5. Enter your mobile number and select “next"

6. Create a password, and re-enter the password to confirm and then select “next”

7. Create your secret questions. This can be done by choosing a question from a prefilled list or select “write my own question” and create your own. Ensure the answers to the questions are easy for you to remember. You will need a total of three secret questions

8. You can now use your myGov account by selecting “continue to myGov”

After you have successfully created your myGov account, you will need to LINK it to the ATO. To do this:

1. Log in to your myGov account

2. Select the “services tab” on the myGov home page

3. Under the heading “link a service” select “Australian Taxation Office”

4. Select the option “questions specific to you” to create a link to your record by answering two questions specific to you

5. Enter your “tax file number, given name, family name and date of birth” in the fields provided

6. Read the Terms and conditions, tick the box “I agree to the terms and conditions of use” and select “next”

7. You will then need to complete the details for two “questions specific to you”

The options for the “questions specific to you” are:

1. Bank account (BSB and account number) that a tax refund has been paid into or that has received interest in the last two years

2. Gross income disclosed on a PAYG Payment Summary issued to you in the past two years.

3. Taxable income disclosed on a Centrelink Payment Summary issued to you in the past two years.

4. Date of issue and reference number from a Notice of Assessment (NOA) issued to you in past five years.

5. Member account number and superfund ABN from a superannuation account statement issued to you in the past five years.

6. Investment reference number from a dividend statement issued to you in the past two years.

Businesses (including sole traders) and Self-Managed Super Funds (SMSF) will need access to the “business portal”, this can be setup by following the below steps:

Setup your myGovID. For this, you will need to download the myGovID app from the app store or google play. You will also need a personal email address and two of the following forms of identification:

- Driver’s licence including learner's permit

- Passport (not more than three years expired)

- Birth certificate

- Visa (using your foreign passport)

- Citizenship certificate

- ImmiCard

- Medicare card – once you verify one of the documents above in the app, you’ll have the option to add your Medicare card.

- Link your MyGovID to a business using Relationship Authorisation Manager (RAM). This is done by a principal authority or primary person, being either the sole trader, or, a trustee, director or partner listed as an associate of the company ABN on the Australian Business Register (ABR), and following these steps (for five or fewer ABNs, if you have more than 5 to link, you will need to complete the “Assistance to link bulk ABNs” form)

To complete the “Assistance to link bulk ABNs”:

1. Phone 1300 287 539 and select option 3
2. you’ll need to provide personal details to complete a proof of identity check
3. checks will be completed to confirm your association to the business
4. Once confirmed, you’ll receive an email with an authorisation code and summary of the authorisation request
5. Log in to RAM using your myGovID to accept the request and complete the link.

Should you have any queries or require any assistance in relation to the above Government Agencies, please do not hesitate to contact our office.

Building a cash reserve in tricky times

Thu, 13 May 2021 08:31:01 GMT

It’s been a turbulent year, and we don’t know exactly when things will fully settle. And if we have learned anything in the past year, it’s that having a decent cash reserve is super important just in case any curveballs are thrown your way.

Having cash reserves in your business not only provides you reassurance that you’re going to stay afloat, but it can also give you wiggle room to adapt, as well as providing simple peace of mind.

But how do you create this cash reserve if money is already tight? It’s not easy, that’s for sure. But there are certainly things you can do to make it happen.

1. Shift any extra money you have into your cash reserve

If you have any money left over, perhaps from government grants from Covid, be sure to pop that away. Also with so many restrictions, this could mean that some of your usual business expenses have been cut – for example travel expenses. Money that you have saved because of these kinds of cuts are a great start.

2. Preserve cash where possible

If you’re looking to boost your cash reserves, looking though your expenses and seeing what can be reduced is a great start. It can be a difficult and laborious task to go through all of your expenses, but you’d be surprised at what may pop up. Things like getting rid of subscription services you’ve long forgotten about, or even downgrading the ones you still use can be a good start.

3. Take advantage of assistance programs

Currently, there are plenty of Government Assistance programs to help assist your business during times of crisis like the Covid-19 Pandemic. Be sure to pay close attention to loan repayment terms and don’t sign up for things that your business won’t be able to pay back. This being said, there are definitely programs worth looking into, pending eligibility, that can be very helpful.

Financial institutions, corporations and loan providers also have been providing different ways to support small businesses. Do your research and you might be pleasantly surprised by what you can find.

This money can help cover your expenses and hopefully there will be some surplus to pop away into your cash reserve.

4. Discuss with your suppliers

Negotiating payments with your suppliers is also always an option. Chat to your suppliers and find out if there are any ways you can extend payment deadlines without harming your overall relationship with them. There may be some kind of arrangements which can save you money without costing them. Even slightly extended payment terms will help your cashflow, stopping you from dipping into your cash reserves.

5. Treat it like a fixed expense

As a business owner, you would have plenty of fixed expenses that are automatically taken into account eg. bills. Treat contributions into your cash reserve like this.

Create an automatic transfer and set aside a set amount every single month. This is a great way to force savings and force your cash reserve to grow.

6. Set boundaries

Once you start to build a cash reserve, it can be all too tempting to access it. So before you start to build momentum, set yourself some rules and limits for when you are allowed to dip in. This way whenever you’re tempted, you have some stops in place.

All in all…

It’s so important to build up your cash reserves in case of an emergency. Give your business (and yourself!) the safety net and reassurance you deserve in such tricky times.

Why you shouldn’t neglect your bookkeeping

Thu, 13 May 2021 08:21:41 GMT

Bookkeeping is a really important part of running a business. Without good bookkeeping, you are really setting yourself off on the wrong foot. However, it can be a time consuming and tedious task for business owners, especially the ones who find bookkeeping and accounting is not of interest and is not their strong suit. Because of this, it can be easy for business owners to put the bookkeeping on the backburner or procrastinate on getting it done. But this trap can lead to some sticky situations.

Good bookkeeping can save your businesses from making major mistakes and help it become more profitable.

Here are some signs that your business bookkeeping needs a little more love.

Missed opportunities

Information is power and is such an important part of owning a business. You need to be as clued up as possible about the inner workings of your business, which includes knowing about things like how the business is performing, your financial state, accounts requiring reconciliation, and so on. Without having all this information, you aren’t able to make smart and educated decisions for your business.

If you do not have access to things like a cashflow forecast it can be really hard to know whether you can afford to hire new employees or buy much needed equipment. There are very high levels of risk that come with making decisions when you’re misinformed about your business or don’t have all the information.

Having a good system and using good accounting software can give you access to information about your business in real time, allowing you to make well informed business decisions.

Cashflow problems

Bookkeeping is so important when it comes to tracking your receivables. You need to know where and when money is coming into your business and going out.

This can help when it comes to knowing who has received an invoice, who has an outstanding invoice, and when they are paying. It can also help when it comes to knowing when you need to chase up any unpaid invoices.

Some customers may not need to know when they are required to pay until they receive an invoice, and others may not pay until you chase them up. Either way, you want to be on top of things and be proactive as possible. Following up unpaid accounts can quickly spiral out of control and cost your business a lot of money if you do not have a handle on it.

If you are neglecting your bookkeeping, this can also lead you into problems with paying off debts or paying your suppliers. This can really damage the relationships you have built and may cause problems later on.

Who is required to pay?

GST is super important and it plays a vital role in our society to help fund, build and support our communities.

You need to register for GST if you run a business or enterprise that has an annual turnover of $75,000 or more. If your business is a not for profit then that annual turnover moves up to being $150,000 before you are required to register and pay GST.

One other special case if you’re a taxi or rideshare driver. If this is the case, then you are required to register and pay GST regardless of your total annual income.

Payroll mess ups

Your staff are the people that keep our business going – you really do not want to be letting them down when it comes to paying them correctly and on time.

A big part of bookkeeping is keeping track of payroll. If this is not done correctly, the flow-on effect can lead to a lot of problems for your business. Problems include failure to collect the correct taxes, overpaying employees who may not report being overpaid, or you could even have to rush payments to employees.

Mistakes such as these can have a big impact on your business. Not only will it strain your relationship with your staff, but it could also open you up to fines from the government for failing to pay the correct taxes and superannuation.

Money borrowing problems

At some point, it’s very possible that your business will need financing from a bank or financial institution. In order to get a loan from one of these places, you are required to provide up to date records to show how your business is performing. Without these accurate records, banks may not trust you, making it far more difficult for you to find the right line of credit for your business. If they do provide you with a loan without these, it may be under unfavourable conditions.

Neglecting your bookkeeping can also make it easy to miss repayments or force you to make late payments. This can damage your credit score, making it harder again to raise money for your business. It’s a bit of a vicious cycle.

If you decide to look to raise money from investors, they will also ask for detailed financial records. Lacking this data could cause you to lose their interest and could damage your professional reputation.

Extra costs

Not having accurate and up to date record keeping could cost your business in extra accounting fees because of the extra work involved. You also may incur Tax Office late fees for late lodgement of forms and returns.

Bookkeeping is such an important part of any business. It affects so many different aspects which can either make your business easier or harder to run. Do yourself a favour and give your bookkeeping some extra love, even if that means outsourcing. Everyone, including yourself, will thank you for it! If you want to discuss this further or enquire about your bookkeeping service, please contact 08 6336 6200

Let’s Talk About GST

Thu, 13 May 2021 08:16:20 GMT

We are all familiar with GST – but how much do you actually know and understand about our Goods and Services Tax? Let’s break it down!

Overview

The Goods and Services Tax is a broad tax of 10% that is applied to most goods, services and other items sold or consumed in Australia.

How does it work?

Businesses take 10% of the cost of their goods and services, and pay this revenue to the Australian Taxation Office.

The government then takes this money and distributes it to the different states and territories to help pay for public services and infrastructures such as hospitals, roads and public schools.

Who is required to pay?

GST is super important and it plays a vital role in our society to help fund, build and support our communities.

One other special case if you’re a taxi or rideshare driver. If this is the case, then you are required to register and pay GST regardless of your total annual income.

How do I register GST?

You need to register your business for GST though the ATO (Australian Taxation Office). When you do this, you will need to advise the start state of the registration and whether you will be reporting on a cash or accrual basis.

Reporting on a cash basis means that your GST will be reported when cash goes in and out of a bank account

Accrual basis means your GST is reported based on invoice dates, rather than when cash is coming in and out of your bank account.

Your accountant or bookkeeper will be able to advise you on the best method of reporting your GST.

Once you have successfully registered your business for GST with the ATO, you will need to provide your reports of your sales and expenses in a document called a ‘Business Activity Statement’ (also known as a BAS).

GST credits is the GST that you have generated as a business expense to create your goods and services. They are called ‘Input Tax Credits’. The ATO will then allow you to claim back the GST credits you have incurred as part of your expenses to provide your goods or service.

Claiming GST Credits

To claim GST credits, you will need to have your business registered for GST.

You are able to claim these GST credits when:

- You intend to use your purchase solely or partly for your business, and the purchase does not relate to making input-taxed supplies.

- The purchase price included GST

- You provide or are liable to provide payment for the item you purchased

- You have a tax invoice from your supplier (for purchases more than A$82.50).

If you want to know more, please speak to one of our accounts at Ascent Accountants on 08 6336 6200

Using your super to buy your first home

Wed, 14 Apr 2021 08:51:45 GMT

Are you a first home buyer scrambling to find a way to afford your dream home?

Well thousands of Australians are missing out on an easy way to save for their first home!

The First Home Buyers Super Saver Scheme was introduced in 2018 to reduce pressure on housing affordability, and it allows buyers to use their superannuation as a way to save for a home deposit. The popularity of this scheme has been quite low, with barely over 15% of first home buyers using this scheme to access money for a deposit last year.

The First Home Buyers Super Saver Scheme allows first home buyers to access their super systems tax breaks while effectively earning interest at a government-set rate at 3.1% per year. Most high-interest banks will only pay 0.5%, which makes saving via the scheme a much better deal.

Basically, you can make voluntary concessional (before-tax) and voluntary non-concessional (after-tax) contributions into your super fund to save for your first home.

Because the interest rate is higher, you will accumulate positive income, far more than you would if you left your savings in your regular accounts. You are then able to release those funds as well as well as the extra that had built up thanks to the high interest rates and put that towards your first home deposit.

By using pre-tax income, the earnings rate can be more than six times higher than you would normally get in the bank.

The First Home Buyers Super Saver Scheme is only available to eligible first home buyers. Eligibility relies on two main factors. You either live in the premises you are buying or intend to as soon as practicable. Or you intend to live in the property for at least six months within the first 12 months you own it after it is practical to move in.

The First Home Buyers Super Saver Scheme is also assessed on an individual basis, therefore couples can have access to the scheme individually for the same property Even if one person is not eligible, the other can still access theirs.

Concessional contributions tend to be more attractive as they are tax deductible. For example, you could arrange to salary sacrifice some of your pre-tax income into your super for the purpose of taking the money out again when you’re ready to buy your home. You also could deposit money into super before the end of the financial year so that you can claim a personal tax deduction for the contribution.

One of the biggest things to keep your eye out for and ensure before you start embarking in this scheme, is that your specific super fund participates in the First Home Buyers Super Saver Scheme in the first place.

You are restricted to investing up to $15,000 per year, with a maximum lifetime sum of $30,000. These contributions must also be under the usual super contribution cap limits.

For concessional contributions, this currently sits at $25,000 a year (which includes your employee’s required 9.5% compulsory payments). For non-concessional contributions, this currently sits at $100,000 a year.

The main difference is that while a concessional contribution is tax-deductible, at least 15% in tax will be deducted. A $10,000 concessional contribution ends up as $8,500 in your account.

If your contribution is not concessional and no tax deduction is claimed, no contributions tax is applied, a $10,000 contribution stays that amount in your account.

Generally, the concessional contribution ends up being better in the long term as you will pay less tax collectively and could potentially boost your personal tax return. Either way, only voluntary contributions count for the First Home Buyers Super Saver Scheme (ie. employer super guarantee amounts cannot be released under the scheme)

You will only be able to access the First Home Buyers Super Saver Scheme money once you are actually ready to buy your home. You will need to access the money before you sign the contract or within 28 days after. If for some reason you access the money but don’t proceed, you will need to return it to your super fund in order to avoid FHSS tax being applied.

While you will not avoid being taxed once you access the money from your First Home Buyers Super Saver Scheme, the amount you are taxed is considerably less than normal rates, including a 30% tax offset.

For more information on the First Home Buyers Super Saver Scheme, please contact us!

Phone: 08 6336 6200

Email: info@ascentwa.com.au

What to consider before buying a business

Wed, 14 Apr 2021 08:47:33 GMT

Are you considering buying a business?

Before you take the big leap and sign the paperwork, there are a few things that are well worth considering.

Starting a new business can seem too daunting as you will very potentially go without income for a while – so buying an already established business can seem very tempting. But rather than diving right in, think carefully as buying a new business can go belly up easily if not thought out well enough.

Here are some things well worth considering so that you can ensure your business purchase is a smart one.

One: What is the reason for the sale?

Finding out the reason for a business sale is easier said than done – but when possible, try to do your research into why a business is being sold. It could be harmless, such as retirement or separation. But sometimes it can be an indication of underlying issues such as the business heading in a bad direction. This information can not only help make your decision to purchase more educated, but also, should you go ahead, give you a better idea from the get go of what needs working on as soon as possible.

Two: What are you buying?

At the end of the day, you’re not buying the business, you’re buying the businesses trade and assets.

It’s important to establish exactly what assets you’re buying and how much you need to pay, and then deciding whether or not they are actually worth it.

Three: Has there been a restraint of trade?

This is a pretty basic one, but you would be surprised by how many purchasers try to save money on professional advice before buying a business. Without this professional advice, you might be blindsided by obvious and extremely problematic issues.

An example of this is a Restraint of Trade. This is a clause that is often in an employee’s contract that after the termination of employment, they are not allowed to perform similar work or accept future employment in competition with the current employer for a certain period of time after the termination.

This is always something worth checking.

Four: Do your due diligence

Be sure that you do a thorough review of the business and don’t get tricked into accepting limited information. At the end of the day, you’re the one with money on the line so you can make these fair and necessary calls.

This digging can potentially cost you, but in the scheme of things, it won’t cost as much as you think and could end up saving you big time. Something like hiring an accountant to run the numbers and assess the business can be extremely valuable, so try to not be turned off by the initial up front costs. You can also use their services to prepare a simple cashflow forecast, highlighting your peak cash needs. This way you have a better understanding of the working capital needed to continue running the business.

Five: Consider the staff

Getting good and reliable staff can be one of the toughest challenges when running a business. When there is a change of ownership in a business, it is quite common for staff to walk. This is unfortunately unavoidable and is all part and parcel of the process – and is something you do need to keep in mind and be prepared for when making any decisions about buying and managing a business.

Six: Don’t forget about real estate

If you are buying a business that has a premise, it’s important to establish whether or not that land or lot is owned or leased. Especially if the space is leased, there are extra things to then consider. How much longer is left on the lease? Are the current premises actually suitable? How’s the location? Does any maintenance need to be done? Ensure you do your due diligence, not just about the running of the business but about it’s associated premises!

Seven: Get to know the key relationships

Continuing or building a successful business can mean that you either need to establish or continue relationships with so many areas of people such as staff, suppliers and customers. You will need to quickly establish the important relationships that are worth investing in to ensure the ongoing success of any business you purchase.

Eight: So how much should you pay?

Unfortunately, accurately valuating businesses, especially small businesses, can be a very difficult task. This is usually due to the heavy involvement of the owner. Often taking away the business owner means taking away the business too. It’s sadly very common for people to pay massive sums for a small business, only to end up being much worse off financially.

When it comes to purchasing a business, it’s often just dependant on how much money the buyer has to spend. There is no simple and clean-cut answer and negotiation will always be a huge factor.

Downsizing your home to boost your super

Wed, 14 Apr 2021 01:22:06 GMT

Perth is currently undergoing a property boom – with a predicted 15 year high ahead for both rentals and sale properties across the region.

If you’re looking to retire, or perhaps already have, you might be sitting there and wondering how you can harness this boom within your own home to better your retirement fund.

As part of the 2018 Federal Government package of reforms to reduce the pressure of housing affordability, it was announced that proceeds from people who are downsizing their home for retirement could be contributed into super.

If you are 65 or older and meet the other requirements to be eligible, you are able to choose to make a downsizer contribution into your super fund. This contribution can be up to $300,000.

If you have a partner, both spouses can make the most of this downsizer contribution opportunity. This means that a sum of up to $600,000 per person can be contributed.

This can feel like a bit to wrap your head around, so here are some of the most basic elements broken down for you.

Am I eligible?

Other than needing to be 65 years of age or older, there are other requirements including having to make the downsizer contribution into your super fund within 90 days of receiving the funds from the sale. You also must have owned your home for 10 years or more before the sale takes place. And lastly, one of the main eligibility elements is that it must be a property. It can’t be a caravan, houseboat or mobile home.

Can I make multiple contributions?

You are able to make multiple contributions into your [CCS1] super fund if they are all from a single sale of your family home. As long as the total of the contributions is $300,000 or less per person, and is not the total sale value of the home.

What are the benefits of taking advantage of this scheme?

Unlocking the capital that your family home holds, and putting those funds directly into super could really give your superannuation fund a massive boost.

Contributions up to $300,000, or even $600,000 if you’re in a couple, have the potential to give you an annual $30,000 in tax free retirement income.

In addition, the downsizer contribution does not count towards your contribution caps.

Does this have an effect on my age pension?

This may all be sounding too good to be true – and that’s because there are some downsides. For example, in social security terms, a downsizer contribution can significantly reduce age pension payments, as superannuation is assessed as a financial asset. The value of a family home is otherwise exempt.

Does this have an effect on my aged care?

Your aged care plans are something that also needs to be considered when thinking about making any downsizer contribution to your superannuation fund. Having more money sitting in your super can affect how much you are required to pay yourself.

Our final thoughts….

If you’re unsure, always chat to a professional to ensure you achieve the best financial outcome for your retirement.

Expenses & Your Self-Managed Super Fund

administrator@heliummarketing.agency (Helium Marketing) — Wed, 14 Apr 2021 01:11:12 GMT

Retirement is pretty much every Aussie’s end goal, but it can also be a daunting idea because of the lack of regular income. Luckily the government has implemented measures to encourage people to plan for their eventual retirement. The biggest way they have done this is through compulsory contributions to retirement savings into Superannuation over an individual’s working life.

While plenty of people chose to go with specific Super Funds, you are also able to self-manage if you would prefer. Self-Managed Super Funds can be great for many reasons, such as flexibility, control, effective tax management, accountability and a wider range of investment choices.

Self-Managed Super Funds can be tempting, but the claiming of expenses on them can be tricky business. There are so many things you need to ask yourself. What is an allowable expense of the fund? What is actually tax deductible?

Any costs or expenses must be allowable under the Superannuation law & fund deed, and Self-Managed Super Fund operations and investment strategy.

The biggest question you will need to ask yourself is – do the costs and expenses relate to the provision of retirement benefits?

All Self-Managed Super Fund expenses will need to be recorded and reported in your fund’s financial statements. Any fund expenses that are paid by members where no claim for reimbursement is made will also need to be recorded as an expense in the fund.

Typical expenses that can be claimed as tax deductions in a Self-Managed Super Fund would generally include:

Operating expenses

Include items like accounting, taxation, audit and actuarial fees.

Statutory fees

Include The annual Australian Taxation Office supervisory levy as well as the Australian Securities and Investments Commission’s annual fees.

Investment Expenses

These would include items such as ongoing management fees, bank fees, interest for limited resource borrowings, property insurance and other rental property expenses. You can also potentially claim financial advice when it relates to a mix of investments from the Self-Managed Super Fund and is not a new plan or strategy. You will need to keep in mind that other investment costs such as brokerage fees are not tax deductible (but instead for part of the asset cost base for capital gains tax purposes).

Legal expenses

These kinds of expenses can be a bit more tricky to navigate. Legal advice may be deductible or capital in nature, depending on the type of advice and services provided.

Trust Deed Updates

These can be made tax deductible only if the update is to ensure that the Self-Managed Super Fund complies with the changes to the superannuation legislation. Other changes will be considered a capital cost.

Member insurance

Certain member insurances can be paid by the Self-Managed Super Fund and then claimed as a tax deduction. These include life and disability cover.

Extra investments

People will often try to claim extra investment expenses such as laptops, subscriptions, and seminars. Be careful with these as the expenses can only be claimed if they directly relate to the running of your Self-Managed Super Fund. Unlike personal tax claims, you can’t have partial personal use and part tax deductible claims in the Self-Managed Super Fund.

Try to avoid falling into the trap of trying to claim everything you can as an expense for your Self-Managed Super Fund because the funds are audited. Ask yourself these questions

- Does this expense relate to the operation of my Self-Managed Super Fund?

- Is it TRULY an expense of my Self-Managed Super Fund?

- Is it for the sole purpose of my Self-Managed Super Fund?

- Is the expense tax deductible or a capital cost?

If you are in doubt, please feel free to contact us. We would love to help!

Phone: 08 6336 6200

Email: info@ascentwa.com.au

Accountant, bookkeeper and tax agent – what’s the difference?

Fri, 12 Mar 2021 03:14:56 GMT

Accountant, Bookkeeper and Tax Agent: What's difference?

As a small business owner, you're expected to understand all aspects of your business, even those outside your expertise or interest. One area that often poses a challenge is accounting.

In the world of finance, several roles are essential for managing a small business. The most common roles you will encounter are bookkeepers, accountants, and tax agents.

These three terms are often used interchangeably, but they each provide different services and play unique, valuable roles within your business.

Understanding the differences between an accountant, bookkeeper, and tax agent is crucial so you can enlist the right help when needed.

Accountants

Accountants usually assist in preparing financial statements that reflect your business's performance. They are often responsible for collecting, recording, analysing, and visualising a business's financial operations. Depending on the size and scale of your business, accountants can take on varying levels of responsibility.

An accountant interprets financial information to help with decision-making processes. This can mean providing annual information or actively keeping you updated with real-time data. Accountants are also often able to provide financial advice.

Bookkeepers

A bookkeeper maintains your business's account records. They help small businesses by recording financial transactions in account books or accounting software packages. Bookkeepers can be internal but are more often outsourced to professional services.

A bookkeeper's responsibilities include:

Verifying recorded transactions and reporting any irregularities
Keeping financial records
Maintaining and balancing accounts
Monitoring cash flow and lines of credit
Producing financial statements, budgets, and expenditure reports
Preparing invoices, bank deposits, and purchase orders
Reconciling accounts against monthly bank statements

Tax agents

Tax agents differ significantly from the above professions. Tax agents are specialised professionals who have studied law and tax and meet the requirements set out in the Tax Agent Services Regulations (TASR). They must also be registered by the Tax Practitioners Board (TPB). With these qualifications, a tax agent can provide tax services to the public and businesses.

Often, accountants are also tax agents, but this is not always the case.

Some roles of a tax agent include:

Representing your business in dealings with the Commissioner of Taxation in relation to taxation law disputes, audits, or reviews
Advising on liabilities, obligations, or entitlements your business needs to comply with under taxation law

Accountants, bookkeepers, and tax agents are distinct professions with separate tasks and responsibilities. As a small business owner, while these services aren't always necessary, they can significantly ease your workload. They help avoid costly mistakes and add real value to your business.

Finance management can be a tricky part of small business ownership, so enlisting the help of professionals can be a lifesaver.

How to save time for your small business

Fri, 12 Mar 2021 03:10:34 GMT

Time is the most valuable thing we have. And small business owners understand this more than anyone. With so much on your plate, too often it feels like there are not enough hours in the day.

We can’t help you find more than 24 hours in a day, but we can give you some of our favourite tips to help you save some more time in your business (and hopefully your sanity too!)

Digitalise tax filing

Taxes can be an absolute chore and filing them can be very time-consuming. This is especially true if you are processing everything manually. It can also mean more room for error. If your taxes are spread out across different systems, spreadsheets, physical documents, and receipts, it can be very tricky to compile them all.

There are plenty of digital systems, like MYOB and Xero, that helps keep everything together in one place. These programs will automatically be up to date with the latest tax regulations, so that is another thing off your plate that can save you time. You are also able to easily see all your accounts and complete your taxes in one place.

Not only is this a massive time saver, but also reduces errors.

Digitalise supplier bills and employee expense submissions

Reducing manual data entry is such a simple and effective way to save time. If you have to deal with a lot of supplier bills within your business, the odds are that this then means a whole heap of time manually entering this data.

There are plenty of options for this to be digitalised. Software is often capable of automatically pulling information and data from emails and PDF’s. This is a massive time saver.

Employee expenses is another component. Streamlining and digitalising this can also save a lot of time.

Digitalising employee expenses also makes it easier for them to hand in their receipts, as they can directly upload them. This helps avoid late submissions, as well as human error.

Automate data collection and capture

In case you couldn’t tell, automation and digitalising your accounting is one of our favourite ways to save time!

You can save even more time by automating tasks such as financial document collection and data entry. There are so many accounting practices that can quite easily be automated which allows you to be able to spend your time analysing the data and working on your business, rather than chasing and inputting data.

Approve transactions quickly

You guessed it, approve transactions quickly with automation.

Bank reconciliation can be such a pain and a common, constant hassle which all business owners will face. This is another element that can be streamlined and automated.

Certain software is able to learn and approve transaction matches based on bank rules you have applied. This helps free up time manually approving transactions.

Invoicing and payment reminders

Late payments can be a real issue and can delay and faulter cashflow.

No small business can avoid the hassle of having to follow up clients that constantly pay late. This process can be extremely frustrating and time-consuming.

Luckily, this is also something that can be automated. This means you don’t have to personally follow up with clients, as automatic reminders will be sent out. A time (and sanity) saver!

Streamline Payroll

Streamlining payrolls can help save your employees and yourself heaps of time. Automated systems can calculate the amount of leave used, employee’s pay, taxes withheld and superannuation, all at the press of a button.

Time-saving can be a real game-changer. It’s 2021, and you shouldn’t be wasting your time on manual and mundane tasks that can all be streamlined and automated. Make the most of the available software programs so you can re-focus your time on the tasks you enjoy doing in your business. Give yourself the time to work on your business, not in it!

Income Tax

Fri, 12 Mar 2021 03:03:06 GMT

Income tax is something we all deal with, but how much do you actually understand about the Australian Income Tax System? Let’s break it down.

In theory, a good tax system aims to raise the revenue that’s needed to finance government activities without having to impose unnecessary costs on the economy.

39% of Australian tax revenue comes from Personal Income Tax. This is the highest percentage of any other tax types, including GST, state and local taxes and company tax. Exactly where this money goes and how much of it varies year to year, but some larger examples are health, social security and welfare, and education.

Income tax consists of three main sectors:

1. Personal earnings
2. Business earning
3. Capital gains

Income tax is what is applied to an individual’s taxable income and is then paid on all forms of income.

Income that can be taxed includes:

- Employment
- Pensions and annuities
- Most government payments
- Investments
- Capital gains
- Income from trusts, partnerships or business
- Foreign revenue

Income that is not taxable:

- Lottery winnings and other prizes
- Small gifts or birthday presents
- Some government payments
- Child support
- The tax-free portion of your redundancy payment
- Government super co-contributions

Australia’s tax system is considered progressive as it aims to tax higher income earners more. The more you earn, the more you get taxed.

In a financial year, you can earn up to $18,200 and not have to pay tax, which is known as the ‘tax free threshold’. Anything after this amount, income tax rates will begin.

Income that is not taxable:

Income Threshold: $0 - $18,200
Rate: 0%
Tax payable on this income: NIL

Income Threshold: $18,201 - $45,000
Rate: 19%
Tax payable on this income: 19c for each $1 over $18,200

Income Threshold: $45,001 – $120,000
Rate: 32.5%
Tax payable on this income: $5,092 plus 32.5c for each $1 over $45,000

Income Threshold: $120,001 – $180,000
Rate: 37%
Tax payable on this income: $29,467 plus 37c for each $1 over $120,000

Income Threshold: $180,001 and over
Rate: 45%
Tax payable on this income: $51,667 plus 45c for each $1 over $180,000

*The above rates do not include the 2% Medicare Levy

The lowest rate you can contribute is 19% and the highest is 47%. Most Australians sit in the middle bracket.

For the most part, personal income tax is paid by your employer. They will generally subtract the required amount of tax out of an employee’s pay before it is even received, and then remits that amount to the ATO.

Temporary residents are also required to pay taxes on income earned in Australia, however they do so at a different rate to residents.

It is possible to reduce the amount of tax you pay. This is through tax deductions.

Some common tax deductions include:

- Work related expenses
- Self education expenses
- Charitable donations
- The cost of managing your tax (eg accounting fees)

There is also something called ‘tax offsets’, which can also be known as ‘tax rebates’. This directly reduces the amount of tax you’re required to pay.

Common tax offsets include:

- Low income and middle-income earners
- Taxpayers with an invalid relative
- Pensioners and seniors
- The taxable portion of a superannuation income stream

Taxes are so important. Without taxes, the government wouldn’t have the money they need to provide necessary services.

Instant asset write-off

Fri, 12 Mar 2021 02:54:21 GMT

The instant asset write off allows eligible Australian businesses to immediately claim deductions for certain costs relating to depreciating assets.

Depreciating assets are a type of asset that has a limited effective life and can reasonably be expected to decline in value over the time that it is being used. Common business examples include things like computers, electric tools, and cars.

The Federal Budget 2020-21 introduced temporary measures due to COVID-19, updating the instant asset write off that was previously in place.

For assets already used or installed between Marth 12th 2020 until June 30th 2021, and purchased by December 31st 2020, the instant asset write-off threshold amount for each asset is $150,000 (up from $30,000). Eligibility extends to businesses with the accumulated turnover of less than $500,000,000 (up from $50,000,000).

And from 7:30pm on October 6th 2020 until June 30th 2022, this has been updated further to allow for temporary full expensing allowed for certain deductions. This includes the business portion of the cost of new eligible depreciating assets for businesses with an aggregated turnover of under $5 billion for corporate tax entities that satisfy the alternative testing. It also affects the business portion of the cost of eligible second hand assets for businesses with an aggregated turnover of under $50,000,000. And lastly, the balance of a small business pool at the end of each income year in this period for businesses with an aggregated turnover of under $10,000,000.

Your eligibility

Eligibility for the Instant Asset Write Off on an asset depends of these certain things:
- Your aggregated turnover (the total ordinary income of your business and that for any associated businesses)
- The date on which you purchased the asset
- When the asset was first installed ready for use, or actually used
- The cost of the asset being less than the current or relevant threshold

You are not eligible for the instant asset write off on an asset if your aggregated turnover is more than $500,000,000. And if the temporary full expensing applies to a particular asset, you do not need to apply the instant asset write off.

Thresholds

The thresholds have changed over the years so it is important to reference the most up to date information to see what applies and does not apply.

Instant asset write off thresholds for small businesses that apply the simplified depreciation rules are as follows: (*sourced from www.ato.gov.au):

* You must have purchased the asset on or after 7.30pm (AEST) on 12 May 2015.

There are also several exclusions and limitations to the instant asset write off. These include, but are not limited to, car limits applied to the cost of passenger vehicles and a small list of other assets including things that will be expected to be leased out for more than 50% of the time and capital works.

What next?

Before deciding to make any large purchases for your small business, chatting to your tax agent or accountant will help a lot. Especially when it comes to assessing how an asset will benefit your business and how the purchase could impact your cash flow or finances in the short term.

If you do decide to take advantage of the instant asset write off, you should make this decision based on the needs of your business and that align with your business plans and goals.

Profits VS Profitability

Fri, 12 Feb 2021 03:37:57 GMT

You don’t need to be an accountant to understand that there are two basic ways for your business to increase its profits. You either increase revenue or you reduce costs. The best and most effective way to increase profit is to do both. However, it is all too easy to just focus on trying to bring in as much revenue as possible and forget the importance of cutting down costs as well.

If you just focus on profits alone, it can be pretty deceiving

Calculating profits is a pretty easy process. You simply add up total revenue and subtract total costs. Whatever you are left with is your profit.

However, you need to be careful when using profit had a measure of business success. For example, if business 1 spends $900,000 to sell $1 million in products, they generate $100,00 in profits. Business 2 spends $400,000 to generate $500,00, and therefore also generates $100,000 in profits. Technically the two businesses generate the same amount if profit, but are not equally profitable.

The more a business spends to generate a designated profit, the more vulnerable is then is to minor cost shifts and changes. This can mean a business can quite quickly be put at risk. For example, if business 1 has to pay $200,000 in business insurance costs each year and then these costs increase by 10%. That increases their overall insurance costs by $20,000, therefore reducing their profits to $80,000. Busines 2 spends $100,000 in business insurance costs. The 10% increase cuts into their bottom line by just $10,000 and profits drop to $90,000. Business 2 is now making $10,000 more than business 1.

Profit margins can be a bit more realistic

It’s important for businesses to not only track profit, but also profit margins. Profits are measured in dollars, while profit margins are measured as a percentage or ratio. Specifically, the ratio between net income (profit) and sales.

Using the same business examples as before, business 1 has $100,000 in net revenue and generates $1 million in total sales, so their profit margin is 100,000/1,000,000,000 (which is 10%). Business 2 also generates $100,000 in net revenue, but their total sales are $500,000, making the profit margin 100,000/500,0000 (which is 20%). The two businesses have the same amount of profit, but business 2 is twice as profitable as business 1.

But how do you increase profit margin?

Because the profit margin more accurately showcases the longer-term profitability of a business, as well as its vulnerability to sudden increases in fixed costs (such as insurance, office expenses and taxes), it’s important to track profit margins and implement strategies that will help keep it as high as possible.

There are pretty much two ways to increase a businesses profit margin.

1. Firstly, you can increase the prices you charge for your products and/or services, But this must be done only after careful analysis if the potential impact that those increased prices may have on consumer behaviours and total sales

2. The second, and usually much safer approach is to control costs

Cutting costs is pretty important

A small decrease in costs can really improve your profit margin more than a comparable increase in total sales.

Again, using the same examples before. Business 1 in the above scenario spends $900,000 to generate $1 million in sales, giving them a profit of $100,000 and a profit margin of 10%. If the business increases sales by $50,000 by doing something like increasing their pricing or customer base, but then does not decrease their costs, their profits increase to $150,000. Their profit margin then increases to 150,000/950,000 (15%).

Instead, if they kept sales constant but reduced cost by the same amount ($50,000), profits once again move to $150,000, but the profit margin further increases to 150,000/900,000 (16.7%).

Cutting costs has made this business more profitable, and less vulnerable, than just increasing sales. It’s also generally an easier and less risky way of doing things.

So in conclusion….

No single strategy is definitely going to increase your businesses profitability or prospects of long-term success. The most successful businesses take their time and carefully analyse consumer behaviours and competitors to determine the best price to charge for products/services. On top of this, they also research a range of fixed cost-cutting strategies. Combining the two main strategies is your best bet at increasing your businesses profitability and longevity.

Small business accounting: our top tips

Fri, 12 Feb 2021 03:30:23 GMT

For plenty, if not most of small business owners, managing finances is the scariest and most daunting part of owning a business. If you don’t know how to keep your finances in order, you can get yourself into some tricky situations.

Money management doesn’t come easily or naturally to most, but they are skills that can be learned.

We have compiled a few of our favourite tips to help you better manage your small business finances yourself.

Keep accurate records

When you are starting a business, you need to learn how to do accounting and record-keeping – it’s pretty unavoidable. Most of your day-to-day expenses and outgoings can easily be tracked online through your credit cards and banking records. With this in mind, it’s also important to keep all of this information in one place so that it’s organised and you can view everything at a glance if ever needed.

It is common for business owners to invest in software that makes it much easier to do bookkeeping for small businesses. There is plenty of software available that allows you to track money flow and have invoicing features. Trust us – our accountant will thank you come tax time when everything is well organised and in one place!

Open a business bank account

When you own a small business, especially in the beginning, it can be easy to mix up your personal and professional finances. The results of this can be pretty messy. One of the first steps that we recommend when starting a new small business, is opening up a bank account under your business’s name.

Keeping all your personal and professional finances as separate as possible makes the tracking of cashflow so much easier and more accurate. It will also help you a lot come tax time.

Keep all your receipts

You may think that keeping receipts nowadays is pretty redundant as practically every purchase is tracked electronically or online. However, we still recommend that you keep them on file as they often contain dates and expense details that can be very helpful for future reference.

When keeping your receipts, be sure to also keep them organised and categorised so that when they are needed, they are easily found. This will especially help you (and your accountant) come tax time so you can claim accurate deductions.

It is also a good way for you to see where most of your money is going so you can adjust going forward if needed.

Be accurate

For a lot, if not most of new small business owners, invoicing can be a pretty foreign concept. However, it is important to record specific details about different transactions. They also help to prompt clients to make payments on time. They also help you keep track of your clients who never pay on time, allowing you to take action if necessary.

Some of our top invoicing tips is to never add to an invoice when it’s finalised, and never create multiple versions of the same invoice. Doing these things creates a lot of confusion and can be problematic when referencing later down the track.

Create profit and loss statements

Profit and loss statements are very helpful and can give you a good snapshot of the financial health that your business is in. It basically summarises the expenses, costs and revenues your business incurs during specific days. It can also reveal information about your business and its ability to generate profit.

As a small business owner, there is a whole bunch of things you can do to make your accounting processes more effective and easier to handle.

If you want further information on the above, or any more tips for your small business accounting, please get in contact. Phone: 08 6336 6200 or email: info@ascentwa.com.au

Using your mistakes to your advantage

Fri, 12 Feb 2021 03:25:24 GMT

Whether you have been managing your business for years or you’re only just getting started, money management can be tricky business, no matter how savvy and clued-up you are about it. Making mistakes is understandable and unavoidable, but it’s not all doom and gloom. Learning to use your mistakes to gain insight and learn more about your business can be a great way to make the absolute most of a bad situation.

Undercapitalisation and cash flow

It can be challenging to have enough operating capital, regardless of whether you have a small or large business. Even if you have been comfortably operating with plenty of cashflow, all it can take is one client with high billables who don’t pay on time, and you can be in hot water pretty quickly. Avoid the risk of undercapitalisation by being more conservative with your project estimates. A good rule of thumb for small businesses is estimating what you think your costs will be and then double it. It’s better to be safe than sorry.

Putting all your eggs in one basket

If you are finding that your business is undercapitalised, what you may be seeing is that your client base isn’t really diverse enough. This may mean you’re putting too many eggs in one basket if too much of your businesses income is dependent on a single client paying on time. To avoid this issue in the future, try to diversify your client base and attract new clients. Also consider introducing projects and milestones and intermittent invoicing into your operations too, that way you don’t have to wait as long for cashflow.

Losing track of the numbers

Poor accounting practices is also another common mistake. Inaccuracies can mean that you don’t truly understand how much a job or project really costs. You are also at risk of overestimating cash flow which comes with its own set of issues. There can also be legal ramifications if you reported inaccurate income or didn’t pay enough taxes. Once you manage to realise your mistake, it’s pretty easy to figure out for yourself that maybe you haven’t been paying close enough attention to the numbers, If you don’t have the time or the know how to do things properly and above board, this can mean that it’s time to outsource and hire a professional to help you out.

Expanding too quickly

As your business grows, it can be very tempting to start expanding as soon as it appears that you are able. Suddenly you feel like you can finally upgrade your computers, hire new staff or invest in a new workspace. But whatever you’re tempted to do, expanding as soon as you can afford it can be a real recipe for disaster. Expansions often mean an increase in your overhead costs, which dilutes your available cash flow. This isn’t automatically an issue, especially if you can guarantee consistency of cashflow. But if it does not, you could find it hard to cover all your new expenses. Avoid the risk of doing this by making conservative forecasts and delaying expansions until it is absolutely necessary.

Pricing too low

Financial mistakes can always be made, even if your systems and processes are sound. One example of how this can happen is by pricing your products too low. Unless you’re at a Kmart level of size and success, it’s generally safer to sell fewer units at a higher price than to sell more at a lower price. High prices protect your margins, as well as has the ability to enhance your brand. Even just a 5 to 10 percent increase in prices can help make a decent difference to the bottom line. Find ways to differentiate your company that don’t have to involve lower pricing (or at least not entirely).

Financial mistakes are pretty unavoidable, even for the experts. But it’s how you bounce back and what you learn from them that matters.

Ways you can improve your budgeting and forecasting

Fri, 12 Feb 2021 03:21:04 GMT

As a business owner, budgeting and forecasting are both extremely important elements that can help you accurately plan for your business’s future. With the right strategy and processes, you can really set yourself up to meet your business finance goals.

Here are some of our top tips on how you can improve your business’s budgeting and forecasting.

Keep it flexible

Keeping your budgeting and forecasting flexible is extremely important as having it rigid can be very restricting. Things are constantly changing, and you need to be able to factor in these changes and how they will affect your business and budget. If you continue to make budget calls based on old data, you can end up making faulty and costly decisions for your business. Building flexibility into your budgeting and forecasting helps allow for more accuracy and an overall better result for your business.

Rolling forecasts and budgets

Instead of basing your forecasts and budgets on data that is out of date, you can update them to be based on present results. With this process, budget forecasting is done quarterly, rather than for the whole year. Rolling forecasts allow you to better align and adapt your budgets while also improving the accuracy of your future projections.

Budget to your plan

Setting your plan and then setting your budget around it is a great way to go. Budgeting to your plan means that your spending decisions will be based on actual and current revenue, rather than opportunities and extra revenue that such spending may or may not lead to. Instead of simply spending and then dealing with it later, budgeting to your plan forces you to deal with the potential impact expenditures will have on the business. Implementing this strategy of handling your budget can be really helpful in addressing opportunities that were not a part of the original budget.

Communication

Because forecasting and budgeting impacts all aspects of your business, you want to be sure to keep an open line of communication with all departments throughout the process. This helps minimise issues and ensures alignment between your business’s operational and organisational strategies.

Get everyone involved

Budgeting and forecasting is a team effort. Getting everyone involved means that all departments have their needs heard and understood. As well as your finance team, having people with direct knowledge and understanding of various departments can give you the data that you need to make accurate predictions and set more realistic budgets.

Be clear about your goals

The purpose of forecasting is to help predict your business’s financial future. Forecasting helps with making decisions and understanding the impact of these decisions before you actually implement them. If you do not set clear goals, then your ability to make accurate forecasts is diminished. You want your forecasts to be as factual based as possible, and to do this, you need a clear objective so that you are able to collect the right data.

Track everything

Everything needs to be accounted for while forecasting and budgeting, from potential buyouts of your competitors, to simply your office supplies. Be sure to not underestimate the importance of seemingly minor details and their ability to impact your business. Keep an eye out on market trends, client behaviours, and what your competitors are up to. All of these elements can be very useful and important data to consider when making you your business’s forecasts and budgets.

Profit and cash flows

It is a good idea to have profit targets and cashflow targets because the two bottom line measures are very different and they require different kinds of attention to control them. If you’re not keeping track of these two important metrics of your business, your budget can’t really be accurate and useful. To keep your company from missing out on its financial goals, set realistic targets for both your cash flow and profit flow.

Don’t rely on Excel

Don’t rely on Excel or other spreadsheet software for your budgets and forecasting. Planning software can really help you go a long way in making processes easier and less time-consuming. Cloud-based systems are now very popular and a standard for all areas of finance, not just bookkeeping services. When correctly implemented, they allow for more flexibility, as well as better security and cost savings compared to manual options. They allow you to generate predictions and budgets quickly and with minimal errors.

As a business owner, improving your budgeting and forecasting systems can make a massive and positive impact on your business. For more advice on how you can improve your own business finance budgeting and forecasting, get in contact today. Phone: 08 6336 6200 or email: info@ascentwa.com.au