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In the midst of the festive excitement that’s already building around us, it’s fair enough if you need a gentle reminder not only to stay on top of recent AND upcoming tax obligations, but also remain vigilant (and smart) with the rest of your business’s financial matters.
Things like managing business cash flow – which could fluctuate over the Christmas/New Year period –or ensuring outstanding bills are paid before vendors close their doors for a week or two are critical, especially at this time of year. And by making a few strategic plans, not only can your business navigate holidays happily but sail into 2024 in a solid financial position.
With that in mind, we’ve put together some helpful financial tips designed to help you manage your business right through this festive season and into the new year:
It’s the perfect time to recognise and celebrate your team's hard work. Although Christmas parties can sometimes be difficult to organise, find a way to foster a sense of camaraderie that can extend beyond the holidays, bringing your team together and rewarding hard work is only going to contribute to your business's success.
With limited exceptions, December isn't business as usual for anyone. The festive season can impact your cash flow, up or down, regardless of the kind of business you run or industry you operate in. Develop a short-term cash flow forecast that coversDecember to February and update it weekly to identify potential short falls early. This allows you to implement strategies and make changes before they’re needed.
Keep the looming BAS return in late February on your radar for a smoother financial transition. You’ll be lodging in December and there’s no doubt that amidst the merriment, you’ll find it worthwhile staying vigilant about your tax obligations. It’s important you integrate them into your cash flow forecast (those short-term ones from above), especially with the Australian Taxation Office pulling in the reins on tax debt.
Vigilant management of debtors is essential for maintaining your business's financial health. Review your payment terms, consider offering discounts for early payments or even penalties for late ones and if existing clients are lagging, consider how gentle reminders might help gather those payments.
Evaluate client relationships and determine if applying discounts or penalties is an option, and of course, aligns with your business goals. The new year is a great time to revisit conversations with existing clients and take the opportunity to reassess payment terms. If your terms currently span 30 days (and you’re finding cash flow difficult to manage) consider shortening them to 14 days. There are always options, be creative and open with your clients and they’re likely to reciprocate out of respect!
Chat with your suppliers regarding potential payment term extensions or even discuss early payment discounts. This can alleviate cash flow strains as well as almost any other method – allowing you to hang on to money longer, or save some at the outset. As usual, the goal here is to improve your overall financial position.
Now you’ve got your short-term cash flow forecast, it’s time to think in a similar way, but go beyond the festive season. Look to adopt practices that support continuous positive cash flow:
Granted, none of the above is brand-new thinking, but sometimes we as business owners could use a reminder on building and fostering good financial habits. And although we’ve taken aim at a short time-period here, these are tips you can build into your year-round financial strategy to ensure good, sustained cash flow.
If you’d like tailored advice on arming your business with the tools for financial success – festive season or not – the Attune team can help. Our team is perfectly placed to help you put the right structure in place that enables your business to thrive. Give the Attune team a call on 1300 866 113 or send us an email to start the conversation today.
Investing in property comes with its own set of financial responsibilities, and understanding the various taxes associated with investment properties is crucial for a successful and financially sound journey. At Attune Advisory we believe in empowering you with knowledge to help you make informed decisions on your own, alongside offering you tailored advice when you need it.
With that in mind we thought we’d explore the four types of taxes relating to investment property that you need to be well-versed in: stamp duty tax, land tax, income tax, and capital gains tax.
What is Stamp Duty? Stamp duty, also known as transfer duty, is a tax imposed when the ownership of an investment property is transferred from the seller to the buyer. Unfortunately, the Australian Tax Office (ATO) does not permit claiming stamp duty as a tax deduction.
Calculating Stamp Duty: A Case Study Let's consider Jenna, who purchases a $330,000 investment property in New South Wales. The stamp duty scale is tiered based on property value. In Jenna's case, she calculates her stamp duty to be $10,185. However, being a first-time buyer, she qualifies fora total stamp duty exemption under the First Home Buyer Assistance Scheme.
Factors Influencing Stamp Duty:
It's important to note that stamp duty is applicable to all transfers of title, including those between family members or ownership structures.
Unlike stamp duty, land taxis an ongoing annual payment based on the unimproved value of the land you own. The unimproved value excludes buildings, paths, landscaping, and fences. There are some extras to consider when it comes to land tax, which are usually well documented on your state’s government website – here’s the link for NSW: https://www.revenue.nsw.gov.au/taxes-duties-levies-royalties/land-tax
Calculating Land Tax: To start with, we suggest discussing your position with the Attune team to ensure tax calculations (of any kind) are calculated correctly. Having said that, let’s continue with New South Wales as an example of location for this purpose. The above website offers a tool to help you start the calculation process, which can be found here: https://www.apps09.revenue.nsw.gov.au/erevenue/calculators/landtax.php
Important Note: The Northern Territory is the exception, as it does not require property investors to pay land tax.
Income generated from your investment property is subject to income tax. Combining this with your other sources of income, such as salary and other investments, is essential for accurate assessment in your annual tax return. And, once again, we advise you speak with your Attune team member for the right guidance so you can be completely confident in your tax position.
Tax Deductions for Investors: Investors can claim various deductions, including immediately deductible rental expenses and those claimable over several years, such as depreciation (again, we’ll be able to help with your deductions and their eligibility).
Key Consideration: You cannot claim tax deductions for expenses like stamp duty, loan repayments, and costs paid by your tenant.
If you plan to sell your investment property, you may be liable to pay capital gains tax on the profit made from the sale.
Exemptions and Concessions: Fortunately, the Australian Tax Office provides exemptions and concessions, such as the MainResidence (MR) exemption, the 6-year rule, the six-month rule, and the 50% CGT discount. Each of these rules has their own criteria to be met that we can walk you through when the time comes to consider selling an investment property.
Paying tax on investment property is inevitable, but being well-informed about these tax types allows you to account for them and potentially take advantage of exemptions and deductions. Seeking tailored, professional advice from the team at Attune Advisory can result in significant savings or at the very least, accuracy in accounting when it comes to your liability and tax position. Whether you're a first-time buyer or an experienced investor, understanding the tax landscape is crucial for financial success, which is ultimately the reason we invest in property at all!
While every effort has been made to ensure accuracy in the above at the time of writing, this guide is intended as an overview, not exhaustive advice. As usual with any tax matter, we strongly suggest you seek professional advice for legal, tax, or investment issues specific to your circumstances from the Attune Advisory team.
If you’d like to discuss your property investment position or are planning for the future with property investment, contact us today for strategic and tailored advice that fits your needs. Call the team on 1800 866 113 or send us an email to start the conversation – you won’t regret it!
With that in mind, here we will explore some of the many advantages of self-managed superannuation. First however, we’ll remind you that the team at Attune Advisory have the knowledge and experience to guide you through every stage of your own SMSF journey with tailored, strategic advice to help you secure your financial future.
Ok, let’s get started…
One of the standout advantages of an SMSF is the level of control it provides over your retirement savings. Unlike industry or retail superannuation funds, where your investments are managed by external professionals, an SMSF allows you to make investment decisions that align with your financial goals. With your SMSF, you can invest in a variety of assets, including property, shares, fixed income, and more.This control empowers you to tailor your investments to suit your risk tolerance and preferences.
Diversification is a key principle of sound financial planning. SMSFs offer a unique advantage in this regard. You have the freedom to diversify your investments across a wide range of asset classes, spreading risk and potentially increasing your returns.Whether you prefer growth assets like stocks and real estate or more conservative options such as term deposits or government bonds, an SMSF allows you to create a well-balanced and diversified portfolio.
Another significant advantage of SMSFs is the potential for tax savings. The tax rate for SMSFs is generally lower compared to personal income tax rates. This can result insignificant savings on capital gains tax (CGT) and income tax, allowing your investments to grow more efficiently. Additionally, SMSFs can be used to implement strategic tax planning, contributing to long-term financial security.
SMSFs are an excellent tool for estate planning. With an SMSF, you have greater control over how your superannuation benefits are distributed upon your passing. You can establish binding death benefit nominations, ensuring your assets go to the intended beneficiaries. This level of control is especially important if you have unique family dynamics or wish to provide for loved ones with specific needs.
SMSFs offer flexibility that can be tailored to your specific retirement goals. You can choose when to start your pension, how much you withdraw, and whether you take lump sum payments or regular income. This flexibility allows you to structure your retirement income in the most tax-effective way, ensuring that your retirement years are comfortable and enjoyable.
While setting up and running an SMSF does incur costs, it can often be more cost-effective, particularly for those with larger superannuation balances. The fees associated with retail or industry superannuation funds can eat into your retirement savings over time. With an SMSF, you have more control over where and how your money is spent, potentially resulting in cost savings in the long run.
Your SMSF allows you to create a personalised investment strategy. You can adjust your investments based on your changing circumstances and financial goals. Whether you are planning for your first home, your children's education, or funding your dream retirement, you have the flexibility to align your investments according to your life-stage.
With an SMSF, you can access your financial information in real-time. This transparency allows you to stay informed about your investments' performance and make adjustments as necessary. You're not in the dark, wondering how your superannuation is being managed, and you have complete visibility and control over your fund's transactions and investments.
To conclude, self-managed superannuation funds offer an array of advantages that make them a compelling choice if you’re seeking to secure your financial future. Greater control, investment diversification, tax efficiency, and flexibility in retirement planning are just a few of the benefits that make SMSFs an attractive option.
If you're interested in exploring the advantages of self-managed superannuation for yourself, it's crucial to seek professional guidance. At Attune Advisory, our team of experts specialises in helping you navigate the complexities of SMSFs.With personalised advice and tailored strategies, we can help you make the most of your self-managed superannuation fund.
Take control of your financial future with an SMSF – contact Attune Advisory today on 1300 866 113 to discuss how to get started. Your retirement goals are within reach, and an SMSF could be the key to achieving them.
Navigating the intricate landscape of tax legislation, particularly when it involves theCapital Gains Tax (CGT), can be a perplexing journey for many small business owners. The CGT realm may seem like a labyrinth of rules and regulations, that can leave you with uncertainties about potential exemptions and how to optimise your tax position.
With that in mind, we’ll aim to shed light on the 15-year exemption for small business CGT and demonstrate why your best nextstep might be to chat to the team at Attune Advisory to delve deeper into your specific circumstances and how they might fit into the exemption.
Capital Gains Tax, often abbreviated as CGT, is the tax levied on the profit generated from the sale of a capital asset, whether it be property, shares, or even your own business. Navigating the complexities of CGT, especially when selling a business, can be a daunting task, given the numerous regulations set out by the Australian Tax Office (ATO)– this is where we can help ...
Start by picturing a scenario where your business could be exempt from this tax. That's where the15-year exemption for small business CGT comes into play. This provision was established to offer long-standing small businesses a reprieve when they sell their assets after an extended period.
To qualify for the 15-year exemption, certain criteria must be met:
It's vital to understand the nuances of each criterion. For instance, the "active asset" requirement means the asset must have been actively used in your business operations and not merely held for speculative purposes. This distinction adds complexity to the eligibility which we can help clear up for you if you’re in this position.
Beyond the obvious benefit of not paying CGT, the 15-year exemption can offer other financial advantages:
The 15-year exemption for small business CGT offers significant relief to long-standing businesses in Australia. Business owners can make informed decisions about their assets by understanding this provision and its benefits. Keep in mind that every business's situation is unique, and what applies to one may not apply to another.
Speak with an expert.Our dedicated team can provide clarity about your eligibility or offer guidance on various tax-related concerns. We're here to alleviate the stress of navigating the financial maze – in this instance the 15-year CGT exemption. Don't hesitate to book an appointment via email or give us a call on 1300 866 113.
