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Fuel tax credit rate

Changes made to the Fuel Tax Credit system (FTC) on 1 July have to potential to significantly impact FTC entitlements for many SMEs.

Businesses that have a fleet of more than one vehicle will need to familiarise themselves with the changes to avoid paying too much tax.

The biggest change is that fuel used in off-road activities, such as forklifts will become entitled to the full credit rate.  Before 1 July such vehicles only qualified for a half credit rate.

The other major change involves the taxation of gaseous fuels (LNG, LPG and CNG).  These fuels that are supplied for use in non-transport activities were previously not subjected to tax.  The carbon tax now applies to these fuels.  They will now only receive a partial exemption from tax on gaseous fuels.

Users of non-transport gaseous fuels may be able to recover some of the carbon tax placed on the fuel if their business is classified within an industry or use that is exempt from the clean energy measures.

The following table summarises the impact of the changes for the fuel tax credit update.

Fuel type 2012/13 2013/14 2014/15
Petrol (cents per litre) 5.52 5.796 6.096
Diesel and other

liquid fuels (cpl)

6.21 6.521 6.858
LPG (cpl) 3.68 3.864 4.068

(cents per kg)

6.67 7.004 7.366

Posted on 18 October '12, under Business. No Comments.

Tax refunds

The tax office reports that 5.5 million individuals had lodged their 2011-12 tax returns by early this month, and more than 4.2 million refunds totaling $9.76 billion had been paid.

The attraction of a decent refund can be a powerful motivation for millions of taxpayers to file their returns as soon as possible. And, of course, many taxpayers simply want to get the task quickly out of the way.

To date, the average refund is $2324 – enough to buy some decent electronic equipment or new summer fashions. Needless to say, struggling retailers would welcome the spending of your refund in their shops.

Posted on 2 October '12, under Business. No Comments.

Running an effective home office Part 2

Invest in a fast Internet connection if you’re working from home full-time. Once you get used to fast service and being constantly connected to the Internet, it makes email communication and finding information much easier.

When you work from home, area you’ll quickly deal with is which expenses are deductible as business expenses and which are not.

Most normal business expenses that you would incur whether or not you were working from home: postage, office supplies, advertising, wages are all treated the same way as any other business. You can deduct those expenses as part of your regular deductions for the cost of doing business.

However, you have an additional tax savings option on your home office if you qualify, the home office deduction, enabling you to deduct a portion of the cost of your house or apartment used exclusively for business. Be careful! There are many things to consider before taking a home office deduction, including the fact that it is closely examined by the tax office.

Posted on 12 September '12, under Business. No Comments.

Running an effective home office Part 1

For those who have a home office, the flexibility and extra time spent with the family are the most rewarding aspect.  It is also much more cost effective than renting or owning a business premises.  There are a few potential issues that come with operating out of your house; here are key points to a few main ones.

Now days much communication with customers is done electronically, but what about those times where a face to face meeting is necessary?   If you cannot arrange a meeting at the customer’s place of business, you must arrange your space to look professional and efficient.

Ideally, your office needs to be separately from your family surroundings. If possible, have a separate entrance or at least a path to your office that doesn’t go through the kids’ playroom or the kitchen.  If this is unavoidable always make sure your home is as clean and tidy as possible, a dirty house is a real turn off for potential clients.

If you need to, meet customers somewhere else, look for “neutral” locations, such as meeting them in a cafe. If you have an ongoing need, see if you can “sublet” or “rent” a meeting space or conference room on an hourly basis. “Executive suite” services — short-term office rentals — often offer hourly rentals as well secretarial services.

A separate business line or mobile is essential if you’re doing business from your home on an ongoing basis. Once your toddler answers a call from your most important client, you’ll see the necessity of a separate line for incoming business calls. If you want to be listed in the Yellow Pages or “business” section of the phone book, many local phone companies require you to have a “business” line.

Posted on 12 September '12, under Business. No Comments.

Family business dividend rules

A decision by the ATO to clam down on dividen access share arrangements is is adding to the pressure the ATO is currently putting on family businesses.  The tax office has started paying more attention to family groups within the last couple of months, which means those SME’s have had to spend more time on paperwork.

Although use of dividend access share arrangement is not widespread, it can be used by family business to distribute dividends where a particular ownership structure is impeding the flow.

One solution to the problem of complex ownership structures could be some modification of some tax consolidation rules.  These allow for a group of companies to be treated as one payee for tax purposes.  If they have one share holding parent company, transactions within that group are ignored.

Posted on 10 September '12, under Business. No Comments.

What Public Relations experts know

1.  Establish a company blog

Having a corporate blog is a definite plus for companies of all sizes. A blog is an effective tool for small companies because it gives them a global stage from which to tell their brand story, add value and connect with customers and partners; large companies can benefit from a blog for the same reasons but more importantly because it can help an organisation to appear more ‘human’ with posts written by employees and, preferably, senior executives including the CEO.

2.  Be open

People appreciate openness and a sense of transparency from company leaders. Earlier this year PR firm Edelman * released its annual Trust Barometer, a global survey that gauges the public’s trust in government, business and the media. One damning statistic from the survey was that only 35 per cent of New Zealanders and Australians found CEOs credible as a company spokesperson. Being open and transparent at all times in your communications is one way to win back the trust of people – if you personally have made a mistake or the company has mis-stepped along the way, say so. Be open to your foibles as much as your strengths when the situation requires it and people will respect you (and your brand) all the more for it.

3.  Tell stories

Stories. We humans love ‘em. We’re hardwired to tell (and listen to) stories, it’s in our DNA. If companies in Australia and NZ want to improve their levels of communication and engagement with stakeholders, they could do worse than to develop and tell authentic stories that move people to action rather than bore them to tears.

4.  Use your own voice

Too many senior company executives rely on the crutch of jargon’. Their words – whether spoken or written – are impenetrable to the point that people – customers, employees, journalists – switch off.

Use your own voice, speak to people as you would at a barbecue rather than how you would to your executive board. Don’t try and emulate other CEOs who baffle people with impenetrable language designed not to communicate but to impress. You won’t get your message across and you will lose standing as a leader.

Posted on 10 September '12, under Business. No Comments.

Lost super is lost money for young Australians

A report has found a large amount of the younger generation have lost superannuation accounts.

More than 60 per cent of Australians under the age of 40 may have lost or forgotten about money in super funds.  This figure is much higher than for those aged between 40 and 59 who are more likely to keep track of their super.

According to the report 54.5 per cent of those with lost super found the process to recover their money too difficult and/or time consuming. This could be due to an attitude of complacency amongst the young towards super.

Figures released by the Government announced recently that overall Australians are getting the message about super.  The figures show a 14 per cent fall to $17.4 billion from the previously reported total of $20.2 billion.

Lost member accounts have also recently improved, from 5 million to 3.6 million – a reduction of 28 per cent.

It is not just young people who are losing super accounts though, the report also found that 39.3 per cent of respondents under the age of 50 might not know if they had any unclaimed super.  This same group had no plans to chase up their lost super either.

While most younger Australians are probably not thinking about making plans for their retirement yet, experts advise that super will probably be the second biggest investment these young people will have.

Rolling all funds together now may make a big impact on their super investments down the track, and may mean a significant difference to their quality of life in the future.”

The report confirmed that there many lack enthusiasm for their retirement planning across all generation, and underlined the fact that most people underestimate how much super they will need to continue to live comfortable after retirement.

There are many avenues that will help individuals track down their lost super, and roll it into one fund, or even create a SMSF, which can be very beneficial, especially for investors or trustees.

Posted on 28 August '12, under Business. No Comments.

SMSF must pay full interest amount

In regards to related party loans, Self-managed super funds (SMSF) must pay the full interest amount,  despite  the rate charged or risk having the expense treated as a contribution.

If the below market rates of interest could be charged on related party loans to SMSFs it’s just that the agreed rate of interest had to be paid.  For example, the related party loan is at 6 per cent, the trustee must pay 6 per cent interest.

In other superannuation news the Federal Government has enacted the regulation allowing certain excess contributions to be refunded to fund members.

Under the new rules announced in the 2012 budget a breach of the concessional contributions caps of up to $10,000 may be refunded to eligible individuals.

Posted on 20 August '12, under Business. No Comments.

Domestic market ripe for investment

One benefit of global economic uncertainly is the impact on the local real estate market, which is  now a much more attractive investment.

The Australia property market is slowing down, especially in rural locations, which were seen as overly expensive twelve months ago.

However the strength of the Australian dollar will keep many international investors away, so local investors can reap the benefits.

Although there is no end to the current financial uncertainty, many real estate analysts believe the property market is only experiencing a temporary low.

Posted on 3 August '12, under Business. No Comments.

Tax traps for boat owners

With the current economic uncertainty and the high price of fuel, many boat owners may consider hiring or chartering out their boats for part of the year as a way to reduce the costs of what can be an expensive recreational activity.

However, while creating a sideline business and claiming tax deductions for boat expenses is attractive, owners won’t be able to claim deductions if they fail to qualify as a bona fide business under the Australian Taxation Office (ATO) rules governing boat charter.

In order to claim deductions for boat expenses, you need to tick all the boxes required by the ATO. The tax office has well-defined rules for determining whether or not a boat owner is carrying on a bona fide business. These include the prospect for profit, the availability of the boat for hire, and repetition and regularity of conduct.

If you need further information, please contact our office.

Posted on 3 August '12, under Business. No Comments.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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