Chesterton Accounting

March Newsletter

Welcome to our March monthly newsletter!

The ATO have released a publication on starting a self-managed super fund (SMSF). This publication explains the following:

  • What is an SMSF
  • Choosing a structure
  • Outline of your obligations
  • Registering your SMSF
  • Getting professional advice

https://www.ato.gov.au/Forms/Lifecycle-publications-to-help-you-navigate-your-SMSF/

We recommend reading this publication if you are considering an SMSF or have recently established one. If you would like more information or would like to discuss your options, then please contact our office for an appointment.

 

 

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Monthly tax tip:

A superannuation fund pays a set rate of 15% income tax on taxable income earned. Making personal super contributions (before-tax) can save money and make a great tax deduction if you personally pay more than 15% tax on your income. The contribution caps for this financial year are $27,500 per member for before-tax contributions (tax-deductible) and $110,000 per member for after-tax contributions. If you operate an SMSF then you have greater control of what you invest in. You can choose to invest in assets using your SMSF instead of investing in your personal name to save even more tax on the income earned. An example of a great tax strategy for a small business owner paying more than 15% tax is listed below. If you are interested in learning more about SMSF’s or investing in super, then please contact our office. We also recommend discussing your investments and strategy with a financial adviser before investing in anything new.

Example – Kevin Smith runs a successful business in a company entity and pays an annual salary to himself. The commercial offices that the company leases have just come up for sale and he would like to purchase them but is considering which entity will own the property. Table below shows three different scenarios.

 

  Scenario 1 – Kevin purchases the offices Scenario 2 – the company purchases the offices Scenario 3 – the superfund purchases the offices
Individual – Kevin Smith Annual salary = $100,000.
Purchases commercial property, leases to company, and earns net rent of $26,000.
Taxable income is $126,000.
Income tax = $31,687.
Tax rate is 25.15%.
Annual salary = $100,000.
Income tax = $22,967.
Tax rate is 22.97%.
Annual salary = $100,000.
Income tax = $22,967.
Tax rate is 22.97%.
Company – Smith & Co. Pty Ltd Annual profits = $200,000.
Lease deductions = $36,000
Taxable income is $164,000
Company tax = $42,640
Tax rate is 26%.
Annual profits = $200,000.
Property deductions = $10,000
Taxable income is $190,000
Company tax = $49,400
Tax rate is 26%.
Annual profits = $200,000.
Lease deductions = $36,000
Taxable income is $164,000
Company tax = $42,640
Tax rate is 26%.
SMSF – Smith Superfund N/A – not established under this scenario. N/A – not established under this scenario. Net rental income = $26,000
Income tax = $3,900
Tax rate is 15%.
       
Total tax liability $74,327 $72,367 $69,507

The clear winner is scenario three which shows a total tax savings of $4,820 annually. This comes up to a total saving of $96,400 over a twenty-year period. Kevin can also choose to make extra before-tax contributions to save even more tax as he personally pays 7-8% more of tax on income than the superfund entity.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

 

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Important Dates!

21 March:

  • Lodge and pay February 2022 monthly business/instalment activity statement

 

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February Newsletter

Welcome to our February monthly newsletter!

The borders have been opened and now the virus is continuing to spread, and many employers are wondering what it is they are meant to pay their staff who are affected or are ordered to isolate/work from home. The below table outlines the requirements as set by FairWork Australia.

Situation Employer requirement
Employee is isolating at home and working from their home office. Employer must pay their standard rate for the hours worked.
Employee has tested positive, and they are isolating at home. Employer must pay any personal/carers (sick) leave available during the isolation period.
Employee is a close contact, and they are isolating at home. The employee is NOT entitled to sick leave however can come to an agreement with their employer to be covered by annual/unpaid leave.
Employee is a close contact, and they have been isolating at home and then test positive. The employee IS entitled to sick leave from the day they test positive or become unwell.
Employer has requested that an employee take a test when it’s not required by Government regulation. The employee IS entitled to be tested during work hours and be paid for the time taken.
Employee chooses to take a test or is required to by Government regulation. The employee is NOT entitled to be paid for the time taken.

 

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Monthly tax tip:

Many workplaces are supplying protective items for COVID-19 such as face masks and sanitiser which is of course deductible to the business, but what about individuals that must supply their own protective items? We hope you have all been keeping receipts for these purchases as they may be deductible. Taxpayers will be entitled to a tax deduction for the cost of these items if their employer has not supplied them, they must use them because they are in close contact with others and they aren’t able to work from home. E.g. A retail employee working in a café who is not supplied a face mask by their employer but is supplied with hand sanitiser can claim the costs of a face mask but cannot claim a deduction for their own hand sanitiser purchases. An IT worker who is working from home during the pandemic cannot claim the cost of a face mask as it would be used during personal time only. We always recommend keeping receipts if unsure on deductibility and then having a conversation with us about it at tax time.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

 

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Hello, February! – Writer and Illustrator

 

Important Dates!

21 February:

  • Lodge and pay December 2021 monthly business/instalment activity statement for businesses that are covered by the lodgement concession*
  • Lodge and pay January 2022 monthly business/instalment activity statement

28 February:

  •  Lodge and pay SMSF annual return for new registrants for the 2021 financial year
  •  Lodge and pay quarter ending 31 December 2021 activity statement
  •  Lodge and pay quarter ending 31 December 2021 superannuation guarantee charge statement if the contributions were not paid on time*

*There is a lodgement concession for small business clients with up to $10 million turnover – lodgement of December 2021 monthly activity statement will be due 21 February
*Superannuation guarantee charge is not tax deductible

 

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Office 2, 192 Haly Street Kingaroy QLD 4610
PO Box 650 Kingaroy QLD 4610

07 4179 0106
www.chestertonaccounting.com
admin@chestertonaccounting.com

January Newsletter

Welcome to our January monthly newsletter!

Happy New Year! We hope you all had a great Christmas with your families. The Chesterton Accounting Team will be back next week on Monday, the 10th of January at 8.30am.
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Monthly tax tip:

Vaccinations have been a hot topic lately and we have been answering a number of questions surrounding deductibility as there is a lot of confusion with this expense. Vaccinations are considered a private expense and therefore cannot be claimed as a tax deduction (even if it’s required by your employer/industry). Vaccination incentives are becoming popular among employers and would be treated for tax purposes as following:

Cash Payments:
If a cash payment is received for getting a vaccine then it should be treated as a bonus which should be included in the employees’ payslip with the appropriate tax withholding applied.

Non-cash Benefits:
If an employee receives a benefit for getting a vaccine (e.g. gift certificate, tickets, vouchers) then they would not need to declare that as income on their tax return however it may be treated as a reportable fringe benefit. Fringe benefits tax would not be payable as long as the benefit is offered and available to all employees.

Paid Leave:
Paid leave can be provided to employees to be able to get a vaccine and possibly also to recover from any side effects. This would be treated as usual paid leave and tax would be withheld from the payment.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

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Important Dates!

10 January:
  •       Chesterton Accounting office will be open again!
21 January:
  •       Lodge and pay December 2021 monthly business/instalment activity statement*
28 January:
  •       Make super guarantee contributions for quarter ending 31 December 2021 to funds by this date
*There is a lodgement concession for small business clients with up to $10 million turnover – lodgement of December 2021 monthly activity statement will be due 21 February

December Newsletter

Welcome to our December monthly newsletter!

The Chesterton Accounting team are taking a two week break this year and will be closing our doors on Thursday, the 23rd of December at 3pm and opening up again on Monday, the 10th of January at 8.30am. We would love to thank all of our loyal clients for their support this year and can’t wait to see what next year holds for our South Burnett businesses.

 

 

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Closed for holidays by Silvia Sánchez on Dribbble

 

Monthly tax tip:

It’s that time of year again to talk about the tax implications of Christmas gifts given to employees and clients/customers. If you are hoping to provide gifts to your staff this year then the best tax outcome is to give non-entertainment based gifts that cost less than $300 per employee as the full cost will be tax deductible with GST credits able to be claimed and no fringe benefits tax liability. Entertainment based gifts are generally not tax deductible and no GST credits can be claimed. Similar rules apply for gifts given to clients, contractors or suppliers. Please see examples below.

Non-entertainment-based gifts – hampers, wine, gift vouchers, flowers, jewellery, etc.
Claim tax deduction/GST credits? Yes, for both employees and clients
Fringe benefits tax liability? Only if spending more than $300 per employee

Entertainment-based gifts – movie tickets, tickets to sporting event, travel costs for a holiday/vacation
Claim tax deduction/GST credits? Clients – no. Employees – no tax deduction unless FBT applies (FBT applies once the gift is over $300 per employee)
Fringe benefits tax liability? Only if spending more than $300 per employee

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

 

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Important Dates!

21 December:

  •       Lodge and pay November 2021 monthly business/instalment activity statement

23 December:

  •       Chesterton Accounting office will close for two weeks – please ensure any forms for lodgement are sent to our office before 3pm to ensure they are lodged before we close

 

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November Newsletter

Welcome to our November monthly newsletter!

The end of the calendar year is nearing and of course that means Christmas and the holidays are right around the corner! If you are an employer than now is the time to start considering staff parties, bonuses, gifts and most importantly – time off. Although an end of year bonus or physical gift might be the usual way to reward hard-working staff, many employees are considering their work life balance after the COVID-19 lockdowns. Employees are choosing flexibility and family time rather than a pay increase – so why not consider gifting staff with extra paid leave days to use at their discretion.

 

Waiting For The Holidays GIFs - Get the best GIF on GIPHY

 

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Monthly tax tip:

Staff bonuses are a lump sum payment provided to staff that are usually performance/target-based or are seasonal. All bonuses should be listed in payroll and taxed based on each employees tax obligations. If you instead provide a “cash” bonus to your staff then it cannot be claimed as a tax deduction. Another thing to consider is superannuation as certain bonus payments should accrue super such as performance based or a Christmas bonus. If the bonus relates to something that isn’t considered ordinary time earnings such as a bonus to reward the staff member for overtime provided then it wouldn’t accrue super. Please contact our office should you require assistance with payroll.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you

 

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Important Dates!

21 November:

  •       Lodge and pay October 2021 monthly business/instalment activity statement

25 November:

  • Lodge and pay quarter ending 30 September 2021 activity statement

28 November:

  • Lodge and pay quarter ending 30 September 2021 superannuation guarantee charge statement if the contributions were not paid on time*

*Superannuation guarantee charge is not tax deductible

 

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October Newsletter

Welcome to our October monthly newsletter!

If you are an employer or intend to be then you should know about the new super choice rules which will start from 1 November 2021. Current rules allow an employee to choose whether their super is paid into their own super account or an account their employer creates for them however individuals are now holding multiple super accounts and paying extra account fees hence the new rules which should stop the creation of multiple super accounts. If you hire a new employee after the 1st of November then you need to ask them for their super account details to pay their super into, but if they do not provide them then you will need to obtain their stapled super fund details which can be found through ATO online services in “Employee Super Accounts” or you can ask us for assistance.

 

 

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Monthly tax tip:

Staff expenses and amenities are often a point of confusion for business owners when it comes to deductibility – so let’s look at what can actually be claimed and what is often accidentally claimed. Amenities for staff can include toiletries and hygiene expenses, water, food and drinks. These expenses are deductible but only to the extent that staff are using these items to continue their work activity. For example, toilet paper, handwash, tea, coffee and biscuits used by employees in an office throughout a working day are all deductible for the employer. Light refreshments can also be deductible if staff are eating them to continue work, e.g. snacks provided to staff for morning tea or sandwiches purchased in the evening for staff that are working overtime hours and continuing work after the meal has been eaten. If the food and drink is consumed outside of work hours when staff are no longer being paid then it is generally non-deductible and viewed as entertainment, e.g. drinks at the pub after work. This can be a very confusing area when working out the deductibility of expenses for staff and not only income tax needs to be considered but so too does fringe benefits tax and GST.

If you would like to schedule a consultation with us then please jump onto our website where you can see our availabilities and book a time that suits you.

 

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Important Dates!

21 October:

  •       Lodge and pay September 2021 monthly business/instalment activity statement
  •       Pay annual PAYG instalment notice

28 October:

  • Lodge and pay quarter ending 30 September 2021 activity statement if lodging by paper
  • Make super guarantee contributions for quarter ending 30 September 2021 to funds by this date
  • Pay quarter ending 30 September 2021 instalment notice. Lodge the notice only if you vary the instalment amount
  • Lodge and pay annual activity statement for TFN withholding for closely held trusts where a trustee withheld amounts from payments to beneficiaries during 2021 financial year

31 October:

  • Final date to sign up with a tax agent to receive the lodgement concession for the 2021 tax return
  • Lodge 2021 tax return if lodging without a tax agent by this date
  • Lodge PAYG withholding annual report no ABN withholding

 

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