Questions 2024 tax planning from our clients

Here are some of the hot 2024 tax planning questions we have received this year about tax and 2024 tax planning. Please let us know if we can help you in any way.

What are the changes in Australian tax rates for the year 2024?

In 2024, the Australian Government will implement legislated tax cuts to ease the cost of living for taxpayers. Starting from July 1, 2024, these cuts will lower the 19% tax rate to 16% and the 32.5% tax rate to 30%, affecting all 13.6 million Australian taxpayers.

What are the key strategies for effective tax minimization?

Effective tax planning involves understanding and meeting compliance requirements while employing strategies to reduce tax liabilities. Geoff can advise individual taxpayers and businesses in various structures, such as sole traders, partnerships, trusts, and small companies, on operating efficiently for tax purposes. Choosing the right structure , tax planning it all helps in wealth creation.

Are Australian retirees required to pay capital gains tax?

Yes, retirees in Australia must pay capital gains tax (CGT). There is no exemption based on age that frees seniors from the obligation to pay CGT. The Australian Taxation Office (ATO) considers capital gains as part of an individual’s total taxable income, regardless of their age. Note that no contributions can be utilised without meeting the tests post-age 65.

How can high-income earners in Australia reduce their taxes?

High-income earners in Australia can employ several strategies to lower their annual tax bills. These include making contributions to superannuation, using trusts, engaging in debt recycling, claiming franking credits, utilizing negative gearing, and accounting for depreciation. Additionally, participating in employee share schemes can be an effective form of remuneration that may offer tax advantages.

When does the end of Temporary Reductions and Event-Based Reporting?

The temporary reduction in superannuation minimum drawdown rates is concluding, and SMSFs must now adhere to event-based reporting requirements.

What is the Contribution Cap 2024?

The concessional contribution cap is set at $27,500 for the fiscal year, while the non-concessional cap stands at $110,000. These are going to increase to $30,000 concessional in 2025. Looks at brought forward provisions may apply if you have less than $500k in super in the year you are considering contributing.

5 Startup Mindset Shifts You Must Make as you launch your New Business.

Starting out. Grab that winning mindset from day one to conquer challenges and thrive in the competitive business world.

Starting a new business is an exhilarating experience requiring a unique mindset.
Business owners are like modern-day supermen/women, equipped with the determination and courage to face any challenge head-on. The excitement of embarking on a new small business venture is unparalleled, as the possibilities are endless, and the potential for success is immense.

Get the right startup mindset from day one!

With the right startup mindset, you as a small business owner, can conquer any obstacle that comes your way. When starting out in a new business, having the right mindset is crucial for success.
It is important to approach every task with a positive attitude and unwavering belief in oneself. A business owner must be confident to take risks and make bold decisions, even in the face of uncertainty.
This mindset of fearlessness and optimism sets entrepreneurs apart from the rest and fuels their drive to succeed.

The mindset of a business owner starting out in a new venture is akin to that of a superhero. Like Superman, they possess extraordinary powers to overcome challenges and achieve greatness.
Don’t be afraid to step out of your comfort zone and push the boundaries of what is possible. Their unwavering determination and resilience will enable you to navigate the ups and downs of business.
Starting out in a new business requires a mindset that embraces failure as a stepping stone towards success. Every setback becomes an opportunity to learn and grow, allowing business owners to improve their strategies and approaches continuously. With this mindset, entrepreneurs can turn obstacles into stepping stones towards achieving their goals.

Most people assume starting a successful business requires a great idea and a substantial cash injection. Both are correct, but to truly make your dreams a reality, the truth is your transition to being a business owner begins with a new mindset.
.

If you really want to be a successful business owner, you need to shift how you think about yourself, the world, and your business!

So, where do you get started to get your startup mindset mojo?

Here are some of the most valuable mindset shifts you should make before you begin your small business journey

1. Embrace The “Growth” Startup Mindset

If you’re thinking of starting your own company, do yourself a favor and read the book Mindset by Dr. Carol Dweck. Dr. Dweck has inspired countless business leaders and entrepreneurs because she teaches what it means to abandon the “fixed” mindset.

Premiership winning Coach at Collingwood, Craig Mc Crae, recommended it, and so do I. It helps keep you in the mindset zone.

Most of us have a “fixed” mindset. This is the belief that there’s a limit to your skills, what you can do, and what you can achieve at any given time. While that might seem like a humble position, it can be detrimental. Why it place limitations on you and your company from day one?

Shifting to a “growth” mindset means embracing the belief that you can improve anything, including your company, skills, and future, whenever you choose.

Focusing on constant growth ensures you’ll always work to make your business bigger and better.

2. Stop Prioritizing Quantity Over Quality

We’ve all heard that quality matters more than quantity, but many of us are still hardwired to seek out volume instead of value.

Prioritising quality over quantity means using your resources and people as effectively as possible to generate the best results. In the same way, prioritising quality over quantity as a business owner means you’re more cautious about which projects you take on and which clients you work with.

This can save you from making expensive mistakes. Don’t take on a contract or a sale if it leaves you potentially out of pocket to get work in the door.

3. Learn to Value Yourself

You may find that being a business owner brings a fair share of impostor syndrome. This is the belief that you’ve come to a place where you don’t deserve to be.

Without delay you need to remove that thought if you want to thrive.

Above all ,everyone feels this way occasionally, but never undervalue yourself,

You need to understand what your value is and be confident in yourself.

As can be seen take the time to regularly remind yourself what you’re good at and what you’ve accomplished so far. Tell yourself you deserve to be where you are and act like a small business champion.

4. Commit to Being a Lifelong Learner

There will always be new trends and technology to understand. Learn, embrace and grow you and the productivity of your business.

You need to be willing to keep up with the changes. Committing to a mindset of lifelong learning can help with that.

If you cultivate a constant curiosity and development attitude, you’ll be more likely to seek ways to improve your business. Being a lifelong learner makes you more agile, adaptable, and willing to evolve as your business grows.

A learning startup mindset requires shifting from seeing failure as an opportunity to learn. Take your mistakes as the lessons they are and use them to help you grow.

5. Have the tools and the fan club to support you

Confidence in yourself is a big mindset tool. With this in mind, your Mindset is best when you have the tools and people behind you to make it a success when you launch. This includes people who will provide direction, support, encouragement, and objectivity.

Without delay the tools are in the form of your documented plan, the 90-day launch and the financial targets to hit need to be implemented.

The most compelling evidence is that mindset medicine helps keep you focused.

Start Shifting Your Startup Mindset

Without a doubt any great business owner will tell you passion and money will only get you so far.

Take your, mindset, attitude and mental framework to keep pushing forward and achieving your goals. Shifting your mindset in the five ways mentioned above will prepare you to thrive.
Business owners possess the superhuman qualities of determination, fearlessness, and resilience. With the right mindset, you can overcome any challenge that comes their way and achieve phenomenal success. So gear up, put on your entrepreneurial cape, and embrace the adventure of starting your own business!

The downsizer contribution is an after-tax contribution. Therefore when it hits your SMSF or super fund, no tax is payable on the way in. It also means upon retirement, and it can be paid as a benefit. A benefit that is returned tax-free when you withdraw the funds from your SMSF

Legislation passed

Last week parliament passed legislation, resulting in the downsizer contribution to allow house owners over the age of 55 to access this strategy. The lowering to age 55 is expected date for the enactment would be later this year (2022)

Downsizer contributions help you to increase your super balance. The downsized strategy a great way to catch up on lost retirement savings and grow your retirement nest.

Do you qualify to meet the downsized contribution strategy?

Per the ATO there are some of the eligibility criteria you must satisfy are:
• The home must be in Australia, have been owned by you or your spouse for at least ten years, and the disposal must be exempt or partially exempt from capital gains tax (CGT).
• You have not previously made a downsizer contribution to your super from selling another home or from the part sale of your home.
• Before (or at the same time) making your contribution, you must provide your fund with the ‘Downsizer contributions into super form.’

The downsizer contribution strategy can work for many who meet the downsizer criteria. It means your investments can grow in a protected environment at a low or upon retirement in the pension phase with no tax environment. This, together with other strategies, can form part of your retirement strategies.

Talk to Geoff, who specialises in SMSF advice and small business exit strategies to help businesses transition from business to enjoyment by unlocking their wealth from large family homes and businesses.

The Federal Budget 2022

Here is our quick summary of the Federal Budget handed down on Tuesday. The Budget focused on keeping business and the economy going during uncertain times. It would be also be drafted with a focus on the following Federal Elellection due soon. Media reports indicate that if there is a change of Government, the ALP will publish a newly revised budget in July or August this year, which may not result in all initiatives etc., being fulfilled or modified.

Here are the critical points that we believe will impact our clients:
• 120 % tax deductions for small and medium business spending on Training and new technology
• No further extending the temporary full expensing of equipment investments
• $1.3 billion to businesses to fund apprenticeships
• ATO will be allocated more money to chase tax cheats
• PAYG system to better match a business trading result
• TPAR reporting changes to make it easier for businesses to report
• Super pension drawdown rates halved till the start of July 2023
• As previously announced before the Budget, the work-related COVID 19 test expenses incurred by individuals will be tax-deductible.

Small Business Full Expensing is finishing up!

The full expensing instant tax deduction has not been extended, meaning businesses will have to install or use the new equipment by June 30, 2023, to claim full expensing provisions.

In replacing full expensing, we have a New Technology & Training Tax Break

The new temporary tax break is for businesses that invest in either new technology or employee training and skills development.

Employee Training
As of Tuesday night, for every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction,

Technology incentive

As of Tuesday night, every hundred dollars small businesses spend on digital technologies — such as cloud computing, e-invoicing, cyber security and web design — results in 120% tax deduction.
Limited to Investments of up to $100,000 per year will be supported by this new measure; however, if you are spending more, please see us as the existing immediate write off provisions still apply till 2023

How it works in real life, reducing the cost of Training or technology!

For example, Smith Co Pty Ltd has engaged an RTA business in Australia to provide Training staff to its employees online. The total cost of Training was $10,000. Smith & Co Pty Ltd will be able to claim 120% (i.e. $12,000, as a tax deduction concerning these expenses)

The True Cost of the Training from a cash point of view

Cost of training $10,000, payable now when you buy it
Claim tax deduction of $12,000 (still to be clarified – 2023 year )?
Real cash tax-saving @ company tax rate $ 3120
Net cost of training $6,880

A reminder that Loss carryback rules still apply for the next two years

Loss carryback provides a refundable tax offset that eligible corporate entities can claim:
• after the end of their 2020–21, 2021–22 and 2022–23 income years
• in their 2020–21, 2021–22 and 2022–23 company tax returns.
Eligible Companies can obtain the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it could deduct the loss in the earlier year using the loss year tax rate. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt you owe us.
Loss carry back tax offset – Australian Taxation Office. https://www.ato.gov.au/Business/Loss-carry-back-tax-offset/?=redirected_losscarryback

Fuel costs temporary relief

Petrol and diesel excise will be reduced by half for six months, saving 22 cents for next six months. Hoping this is passed on to the small business at the petrol bowser

Tax Bonus when you lodge your 2022 return

Low Middle-income tax offset (LMITO) — in 2022 can put up to another $1,500 against your tax refund once you’ve done a tax return in 2022

Draw down rates for Self Funded Retiree Pensions – 50% reduction till June 2023

Insolvency – Worrells Liquidation observations

Despite the last 2 years being a rocky road for small businesses in Australia, liquidations and actions by the ATO have been very low. Yesterday I attended the Worrells Solvency seminar on the current state of play. Here is a quick summary:

• The ATO has been quiet over the last 2 years about debt recovery, but soon the sleeping giant will awake!
• Jobkeeper forced many taxpayers  to get their lodgments up to date, so the ATO is aware of who owes what,
• ATO debt is sitting at $61 billion outstanding. That’s a lot to collect expected that $20 Billion might never get collected
• ATO has been kind regarding payment plans, but now it is likely that things will tighten up.
• Last 2 years, there has been a drop off insolvency appointments, but soon the ATO will start,
• The prediction is that corporate insolvency appointments will rise with higher interest rates, lack of supply and labour, and more excellent ATO activity.
• Directors changes in terms of appointment and debt

Small Business needs to start managing their debt. To avoid becoming personally liable for ATO Debt in an insolvency situation, make sure you ensure that all returns are lodged on time or within three months of the date of lodgment.

If you need advice on how to manage your debt, please call us, and we can assist you in exploring your options

Like Real Estate, then listen to our client Sue

and her podcast Real Estate Right

The podcast is designed to educate, inform and better prepare the public with expert information about how to maximise their real estate transactions and dealings

PODCAST! – go to her website or search on Spotify etc

https://www.podbean.com/ew/pb-uupcs-11d0846

TOP EXPERTS TALK ABOUT HOW TO BUY, SELL, RENT AND INVEST… RIGHT!

New date for online “Freedom Discovery Workshop.”

Join us as we explore what business freedom means to you and your business

New date Monday, April 4^th 7:30 pm online – rsvp admin@gartly advisory.com.au

https://www.eventbrite.com.au/e/276167834427