Quick Tips to Make Tax Time Easier

It certainly is a busy time of the year and one of the things we all need to do is ensure we complete our tax returns. It is important be organised and to help you we have put together the following ‘quick tips’.

Your Income

Here we outline 6 areas of income that may apply to you. It’s important to make sure you have complete records and if you get stuck your Accountant can help you source this information.

Payment summaries

Payment summaries show the income you have received from your employer, your super fund and government departments such as Centrelink.

Back statements

These are important as they show the amount of interest you have earned which needs to be recorded as earnings.

Buy and sell share statements

These show your share trading transactions in terms of the shares you bought and sold.

Shares, managed fund or unit trust statements

These will help your accountant determine the dividends or distributions made to you.

Income earned overseas

It’s important to show any foreign income such as investments and pensions.

The Expenses You Should Be Claiming

Work related expenses

This is an area that is often misunderstood by clients. There are a range of work related expenses you can claim and a number you can’t. Your accountant can help you work through your particular circumstances and ensure you are claiming the maximum amount for you.

Private health insurance

Make sure you have your documents detailing your private health insurance outlining your premiums and level of cover.

Records relating to education

Again, like work related expenses not all education expenses are claimable. However, make sure you have your records and receipts and your accountant will work with you to ensure you are claiming your maximum amount.

Investment property expenses

If you have an investment property there are a number of expenses you can claim including depreciation, repairs and maintenance.

Spouse’s income and expenses

If you’re in a relationship your partner’s income and expenses may need to be disclosed to ensure you are calculating your entitlements correctly.

Donations

If you have given or contributed to a charity, then make sure you have a record of those activities to determine if and how much you can claim.

Medicare Levy and Private Health Insurance

The income threshold used to calculate the private health insurance rebate and the Medicare levy surcharge have been set at the 2014 -15 levels for 3 years. This came into effect on 1 July 2015.

This may impact your individual circumstance by moving you into a higher private health insurance rebate threshold if your income increases.

We hope these quick tips help you organise your tax return for 2015/16 and remember your accountant can help you make the process easier and ensure you have a tax strategy in place.

If you would like to know more about tax and in particular your tax strategy then please contact me at rose@roseguerin.com.au

 

 

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The things you need to know before you start your business

Starting a business is an exciting time and often the culmination of many years of thinking and dreaming. However, it’s important to make sure you plan effectively before you start your business. We have outlined the things you need to be across before you start your business.

Business Plan

A business plan provides the foundation for your business. It’s the one place that encapsulates your thoughts, ideas and allows them to be tested.

It should include a summary, describes the business in detail, looks at the market you will operate within, considers the future environment and the finances.

It’s important to note that you will need a complete and accurate business plan when seeking finance for your business.

Marketing Plan

Your marketing plan allows you to clearly define your audience and how you are going to reach and engage them. Make sure you actually outline the activities you are going to undertake and measure each activity and adjust as you go.

Financing your business

It’s important to organise your finance before you start your business. There are a number of ways to secure finance and include, bank loans, using your savings, venture capital, government funding and borrowing from friends and family.

Business Structure

There are generally 3 forms of business structure. It’s important you understand each one and then determine which one is going to suit you best.

Sole Trader

As a sole trader your business doesn’t have a separate legal existence from you. This means you’ll be responsible for the liabilities of your business. The income your business makes needs to be reported on your personal income tax return.

Partnership

A partnership is where two or more people come together and start a business. They share profits and losses inline with the partnership agreement. Under this structure the partnership must lodge an income tax return.

Trust

With a trust a business is transferred to a third party. The third party has legal control and is required to to run the business for someone else. Again, like a partnership you will need to lodge a separate trust income tax return.

Company

The fourth business structure is a Company. Under this structure the company is a legal entity separate from its members which are shareholders. The directors of a company have legal and reporting obligations. The company must lodge a separate company income tax return.

It is important to plan before you start your business. If you have any questions please contact me at rose@roseguerin.com.au

 

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Here’s how to plan for winding down a medical practice

A number of my clients are medical professionals and part of our service to them is exit strategy planning. Here are some tips for successfully planning to wind down a medical practice.

Medical professionals spend the majority of their lives training for, then practicing their specialty. It makes sense to approach your practice as a going concern when such a significant amount of time and financial resources have been invested. A comprehensive exit strategy or wind down plan will help to protect your earnings and assets and create diversified sources of income for your retirement.

A key piece of advice to all medical professionals is to develop a retirement and succession plan long before you exit. This gives the financial strategies time to work and to preserve the value of your practice and ensure future revenue by recruiting and training younger professionals.

One option is to work part-time or serve as a consultant for a few years before full retirement. Doing this would allow you to maintain some income, remain professionally challenged, and evaluate and groom potential successors. After years of developing a successful practice and a sound referral base, it takes time to transition that hard work and goodwill to younger partners.

For those approaching or contemplating retirement there are a number of things to consider:

  1. Start thinking about it NOW and plan ahead;
  2. Consider winding down your work hours to part time or consulting as a transition phase;
  3. Seek professional tax, accounting and legal advice as part of preparation;
  4. Review your existing corporate structures, to ensure that they allow for flexibility for future sale or involvement of a partner or associate;
  5. Think about what you can sell, and to whom it may be sold; and
  6. Know your intentions in relation to patients and their records as part of a future plan to retirement.

Small steps now can give you peace of mind and allow you to shift your focus to the future. If you would like to discuss your exit strategy please contact me rose@roseguerin.com

 

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Tax Deduction Tips for Health Professionals

It’s true of course that no one likes paying tax but we all have to. That being said everyone should look for ways to ensure the amount of tax is at its minimum.

Medical professionals are traditionally high income earners so the use of tax deductions against their high rate of tax is an effective strategy to utilise.

So any expense incurred in producing your assessable income is a tax deduction. That is, if the cost was paid in the practice of your profession you can make the tax deduction claim.

If you work as a health professional, in a hospital, agency or private practice, some of the tax deductions you may be able to claim on your personal tax return are:

  • Medical supplies, equipment, medicines and materials (this could even be a nurse’s fob watch)
  • Professional subscriptions, accreditations, memberships and reading materials
  • Education relating to current employment or income
  • Travel outside of regular commute (keep a log)
  • Computer and office equipment (depreciation over time may need to be applied)
  • Professional Indemnity Insurances

This list of potential deductions is not an exhaustive list but may assist in lowering your taxable income and saving tax. Remember that it may not always be clear if an expense is deductible so keep your receipts!

The best advice I can give is to maintain an orderly record keeping system to allow easy review of all your expenses at tax time. You never know the tax saving you might find.

To make the most of your deductions at tax time or if you need tax advice, contact me at rose@roseguerin.com

 

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SMSF Series: An SMSF can be cost effective

I am often asked by my clients about Self Managed Superannuation Funds and how they compare to industry and retail superannuation funds. In this SMSF Series I will be exploring each individual benefit of an SMSF to help clarify the often general benefit statements available.

We know that more and more Australians are turning towards an SMSF for their superannuation investments so let us take a closer look at why and how this could possibly work for you.

An SMSF can be cost effective

  • Typically retail and industry superannuation funds charge administration fees based on a percentage of the assets within the fund. As the asset base increases so do the fees.
  • The fees charged for an SMSF are typically of a fixed nature, so there are no surprises.
  • Basically, the larger the pool of available funds, the more cost effective.

Who would this benefit?

Individuals with a large amount of available superannuation funds. Balances over $200,000 are competitive with both cheaper and more expensive large funds, provided the SMSF trustees undertake some of the administration tasks themselves. With Balances over $500,000 it is wise to opt in for a full SMSF administration service to remain competitive with the industry and retail funds.

For more information on SMSF costs, and minimum cost-effective balances please contact me rose@roseguerin.com.au

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Consider an SMSF as part of your investment lifecycle

Self Managed Super Funds continue to grow in popularity with Australians for their superannuation but whether they are the right choice for your entire working life depends on certain factors.

Traditionally people signed up to their employers Superannuation fund and that was the end of their involvement. However, as the importance of your Superannuation nest egg grows with the ageing of our population, more investors are taking more control of their retirement savings through an SMSF.

This doesn’t mean that you now set up an SMSF and then leave it in place until retirement. Factors such as your own mental agility, health and age along with available capital, investment experience and SMSF management potential are important considerations when commencing and managing your own SMSF.

SMSFs like other investments have a lifecycle and knowing when to move on from your SMSF is key.

Not all investment structures are suitable for your entire investment lifetime, so knowing when to be in or out of a certain structure can make a significant difference to your end results.

I am only too happy to answer your questions on SMSFs and your own investment lifecycle, contact me at rose@roseguerin.com.au

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Is the Age Pension part of your Retirement Income Strategy?

From 1 July 2017, the qualifying age for Age Pension will increase from 65 years to 65 years and 6 months. The qualifying age will then increase by 6 months every 2 years, reaching 67 years by 1 July 2023.

If you have reached age pension age, the age pension may help to support you in to retirement. To qualify, you must first satisfy age and residence requirements. How much you get depends on your income, assets and other circumstances.

If you are a self-funded retiree or still working, you may be able to get a part pension.

You will face a large number of decisions regarding your retirement such as how long do you want to continue working? Do you want to stay working part time? Do you want to sell your family home to downsize? Or are you ready for a tree/sea change? Do you want to claim the age pension in part or full?

Retirement Planning

A financial advisor can help you with some of those decisions and to plan a retirement strategy that will work for you and your choices.

If you do want to claim the age pension then you will need to submit an application. It is a lengthy process that will take excellent record keeping and patience as you work your way through the steps. Depending on your situation, the application contains close to 150 questions, covering everything from you basic contact information through to a person’s company and trust details if applicable.

You need an understanding of what you are entitled to as eligibility is based on age, residence, income and assets. The Social Security Act sets out the legislative base for the qualification and payment of the Age Pension.

For most people, the age pension is not something they even think about until they are ready to retire and even then it can appear as a large hurdle to negotiate when you are finally ready to relax and take things easier.

If you have any questions or would like to discuss your retirement strategy please contact me rose@roseguerin.com.au

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Consider taking a Travel Money Card on your next Overseas trip

If you’re going overseas this Christmas or in the new year it’s worth considering taking a travel money card along. They are more convenient than traditional travellers’ cheques and you should receive a better rate than if you were to use a standard credit card overseas given the usual foreign exchange fees. Let’s take a closer look.

Just like cash and credit cards, travel cards are an option for carrying your money overseas. Travel cards allow you to load money onto the card here in Australia, and convert the funds into multiple currencies so that you have the local currency ready to spend when you get to your destination. It is an ideal way of travelling to a number of countries with multiple currencies without the hassle.

Beware of the fees!

Every travel money card is different but they may charge a setup fee, replacement card fee, loading fee, reloading fee, inactivity fee, ATM fees and card closure fees.

There are however a lot of ways to reduce the fees that you will be charged when setting up or using your travel card overseas. Like credit cards, all travel cards are different but the fee reducing tips to look out for are:

  • $0 or low setup fee – this is to start your travel card account
  • $0 or flat rate loading fee if loading large amounts of currency – some cards will charge you a percentage of the load amount which could be hundreds of dollars
  • $0 or low reloading fee if you plan to keep putting money on to the travel card whilst travelling
  • Watch the inactivity fee if you plan to reuse your travel card on another overseas trip. Usually after 1 year there will be a monthly inactivity fee. Try to find a card that doesn’t charge for inactivity.

If travelling for a couple of weeks or more it is a good idea to use a travel card however, if you are only away on a short trip with a low spending budget then your debit or credit card will be a lower fee option.

If visiting more than one country you should think ahead about the smart way to use your travel card. Don’t load all of your Australian dollars into the first currency you need because you will be hit again with another set of fees when you convert to the next currency.  Convert from Australian dollars as you go.

Try to use your travel card at the point of sale to minimise ATM fees. You won’t get charged a fee when you pay for goods and services, but you will when you use an ATM. It is also worth checking if you can get cash out at the time of sale (similar to our EFTPOS system here).

Security features

Nowadays may travel money card providers will issue you with 2 cards. It is recommended that you store 1 separately as a backup in case you loose your main card. You can also get cards with smart chips and pin details associated to increase the level of security.

A major security feature of travel cards is that if lost or stolen, your maximum exposure is the amount you have on the card at the time.

Additional features

Be aware of the time it takes for funds to appear on your travel card. You may be able to BPAY additional funds on to your card while travelling but the money may not be accessible for a couple of days.  Check this with your chosen travel card provider.

See if you can choose when your Australian dollars are converted in to the chosen foreign currency. You may have the benefit of loading your Australian dollars on to the card but then waiting until a time when the conversion rate is more desirable. This is particular useful for people who load their travel cards well before they commence their trip or are travelling for an extended period of time.

Easy Budgeting

A benefit of travel cards for the budget traveller is that they allow you to plan ahead. Load your holiday spending budget on to the card, convert the funds you need in to the chosen currency so you can see how much you will have and then allocate your daily spending limit.  It is much easier to visualise your budget when you know exactly how many pounds, euros, USD or Yen you have at the time.

Choosing the right card for you may just come down to what currencies are available with the chosen card. Be wise about the fees and you should have the majority of your spending money available to you for enjoying your trip.

If you have any questions or would like to know more about smart money choices please contact me rose@roseguerin.com.au

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Spend Smart this Christmas

The official spending season for Christmas starts on 1 December and Australians are expected to spend on average around $500 for their gifts. It is all too easy to get caught up in the urgency at Christmas to buy the perfect present and exacerbated if we leave our shopping to Christmas week.

Here are the top 5 tips for keeping your Christmas spending under control so that you can avoid any New Year financial headaches

1. Don’t impulse shop

Before you even walk in to a shop, make a list of what you need and who for. Allow plenty of time to do your Christmas shopping to avoid last minute expensive purchases. Next year why not resolve to avoid the Christmas rush altogether by grabbing gifts for people as you see them throughout the year and storing them away. It’s a fact that the best time to begin Christmas shopping is the day after Christmas!

2. Work to a budget

Take a look at what you spent last year and plan your party, gift-giving and post Christmas sales shopping accordingly. It is also worth setting aside the money to pay bills and credit cards in January to start the new year off right.

3. Set a limit

An important part of budgeting is to set spending limits. If you’re having a night out or buying a gift, put a dollar limit on your spending. Why not be creative and create some handmade gifts for half of your shopping list. Family and friends should appreciate the effort you made to create a unique gift just for them.

4. Limit credit spending

Have the cash on you before you make a purchase to limit your credit spending. Paying in cash or even to lay-by your gifts helps to keep a tighter hold on where your money is being spent. If you do need to use credit, limit yourself to one card and load up the card with money you already have put aside for gift giving.

5. Avoid those store cards

The stores know that we get caught up in the spirit of Christmas and the festive season. They offer store cards that are convenient and may even offer exclusive discounts but they don’t come cheap. Interest rates can be higher than credit cards so it takes discipline to use store cards.  If you know spending is your weakness then avoid the impulse.

If you have any questions or would like to know more about budgeting and smart money choices please contact me rose@roseguerin.com.au

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Christmas is a time for giving

At Christmas time our thoughts turn to giving and for some that means donating to charities. With over 50,000 different registered charities in Australia according to Australian Charities and Not for profits Commission, deciding on your chosen charity can be difficult.

Here are some tips when choosing to support a charity this Christmas and beyond either financially or in kind.

Australians are generous with many families making a donation to a charity of their choice at Christmas as a way of assisting those who are less fortune, at a time of year when many people really do need some help.

How to choose a charity

However, with so many worthy causes requiring help, what’s the best way to know which charity to choose?

As recommended in the Choice Donation Guide, choose a charity that means something to you and/or your family. Make it a personal gift because it is truly the thought that counts.

For example, you and/or your children may love animals so why not choose a charity that looks after animals who need rescuing or rehoming.

Or if you have a family member who has suffered from an illness you may be able to donate to a charity in the health services sector that provides support to the families going through the same situation.

Non financial donations

Don’t forget that charities don’t just need financial assistance, hands on help is also something they may need.

Find something that you are interested in and offer your time to the cause. The larger national charities like the Red Cross, The Smith Family and St Vincent de Paul, all have volunteering programs you can become a part of.

Even the smaller charities could use a hand so even if your favourite charity does not have a volunteer program, it is still worth the effort of calling them to find out if they can use your skills.

The Tax Implications of Donating

Of course, it’s essential to ensure any charity you offer money or other services to is reputable. According to the Australian Securities and Investment Commission’s (ASIC’s) website, charity scams do occur.

Many charitable organisations also have deductible gift recipient (DGR) status. Any donation made to a DGR charity can be claimed as a tax deduction.

If you do make a tax deductible donation this Christmas, ensure you keep your receipts.

Remember that you can only claim gifts as a tax deduction. This means that if you have received anything in return for your donation, for example, a raffle ticket or a seat at a fundraising event, you may not be able to claim the deduction.

Lastly, if you’d like to make a large donation to a charity, talk to your financial adviser about your options and any tax implications first so that you are informed.

If you have any questions or would like to know more about smart money choices please contact me rose@roseguerin.com.au

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