We recently had a discussion with one of our clients who had just bought an investment unit about the benefits of obtaining the QS report and they were reluctant to pay for the report.  However, they did obtain the report and have been able to make claims for depreciation and the building allowance of $ 5,786, saving over $ 2.000 in tax in the first year.

Tenants of commercial properties take note that if you pay for the fitout of your tenancy you are entitled to claim the depreciation/building allowances for the fitout.

But Beware!

The Tax Man doesn’t have such a generous view in relation to the costs incurred by business on these types of activities.  The rules and regulations are a minefield.

Firstly – the gifts.

These costs include hampers, a bottle of wine or whisky, gift vouchers and other items bought and given.  If the item is given to an employee, the cost is deductible, with no Fringe Benefits Tax (FBT) as long as the cost is less than $ 300.00.  This means that $ 299.99 is okay, but $ 300.00 is not.

If the item is given to a customer/client/supplier then the cost is deductible irrespective of the amount.

Secondly – Gifts which are deemed to be entertainment.

These costs include tickets  to the theatre, a show, a live sporting event, movie tickets, a holiday airline ticket or entry ticket to an amusement centre.

If these types of gifts are given to employees, the cost is deductible but FBT is payable on the amount if it is $ 300.00 or more.

If these types of gifts are given to a customer/client/supplier then the cost is NOT deductible and there is no FBT.

Thirdly – Entertainment costs

These are the costs of the party itself, whether it is a dinner, a harbour cruise, or any other function with food and drink.

Where these costs are incurred for employees and their family, the treatment depends upon whether the Actual Method of 50/50 Method is applied to entertainment expenses for the year for FBT purposes.

The Actual Method means that every entertainment expense has to be detailed as to who attended and the costs split based on the number of employees and associates and other people present.  The costs relating to employees are subject to FBT and are not deductible, the costs relating to non-employees are not deductible.

The 50/50 Method is simply all entertainment for the year is added up and 50% is treated as subject to FBT and deductible and the other 50% is not deductible.

Please note that this is a summary only – the rules are complicated and differ for each type of cost.  You should obtain expert advice to ensure that the costs are treated correctly.

2. What’s the point?

3, No secondary goal

4. Where’s the newsletter?

5. Keep it clean

6. All show, no go

7. Is it mobile-ready?

8. Plan for ads

9. No integrated blog

10. Inconsistent branding

1. pay 9% contributions for all employees (including commissions, shift-loadings and allowances but not overtime pay)

There is no requirement to pay superannuation contributions if an employee earns less than $ 450 for the month or are under 18 years of age or over 70 years of age.

The calculation is capped on a quarterly basis if the employee earns more than $ 43,820 for the quarter.

2. The superationuation contributions MUST be made within 28 days of the end of each quarter.

3. Superannuation guarantee contributions are also required to be paid for any individual contractors who would be considered employees due to the nature of their work and relationship with the business where the contract is wholly or principally for their labour irrespective of the fact that they may quote an ABN.

Under new ATO rules, all closely held trusts must lodge a TFN Report with the ATO advising the Tax File Numbers of all beneficiaries including those under the age of 18.

Consequently, it will be necessary for the 2011 tax year to apply for Tax File Numbers for all children who receive trust distributions.

We at Barrington’s strive to stay at the forefront of changing technology and are now actively promoting Cloud Accounting and specifically Xero Accounting.

Cloud Accounting removes the requirement to buy traditional accounting software.  Instead you set up and maintain your accounting records through the internet for a small monthly fee.  Because the information is on the internet it is available real-time to us and to you.

No more backing up files and emailing them to our office, or having to save onto a USB stick and send/deliver to our office.  Instead, you let us know that the information is ready for us and we can log on using our secure access codes and undertake our work for you.

This is also useful if you have any queries about entries as we are able to log on immediately and either help or fix the issue.

Whilst this is true in relation to the following:

1. Use of bucket companies to receive trust distributions (effective 2010 financial year),
2. Use or minors to receive trust distributions (effective 2012 financial year),
3. Distributions of different types of income to different beneficiaries (effective 2011 financial year),

there are still significant advantages to the existing structures.  Namely:

1. Asset protection,
2. Ability to access the discount rules for Capital Gains,
3. Maxmising superannuation contributions.

There are other factors which come into the review process which may impact the relevance of a particular structure.  For example, we recently reviewed the structure for a business where the proprietor is seeking to wind down the business over the next few years and wanted to reduce the number of entities and maximise the superannuation base for retirement.

In another case we have met with two business partners seeking to establish a new business and wanting advice on the best structure for the business and also for wealth accumulation for each partner and their families.  Both partners advised that they want to get the structure right at the beginning rather than set up a structure that could cost them a lot in the future when the business may be sold.

As you know, Barrington Business Professionals caters primarily to the business community in assisting with financial, accounting, business and taxation advice.  So we wanted to do something that reflected making a sustainable difference and we wanted to spread the net wide.  As well, we wanted not to be locked into a specific cause but rather have enormous flexibility in our giving.

That’s one reason why we’ve partnered with a really interesting organisation called B1G1.  Through B1G1, 100% of our giving goes to our chosen causes.  Initially we’re supporting a program that provides goats to families in Kenya.  By supporting this program we helpg give a sustainable income to these families for the rest of their lives.  The goats provide milk, create income from dairy products, they can be bred and sold, and they are easy to care for.

We will be contributing to this project in the first instance based on the number of new clients we take on each month.  To this end we have contributed 3 goats in the month of March and we aim to make a lifetime difference to 50 families over the course of a year.  You can help us to meet this goal by referring your family and friends who are in business and who you think could benefit from using our services.  Imagine that – an accounting firm giving goats!  We hope you find it inspiring (and different) too