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Business Tax Tips –GST Error Correction – How to put it right

Business Tax Tips –GST Error Correction – How to put it right

Business Tax Tips –GST Error Correction – How to put it right

On the Australian Tax Office (ATO) website has information on what to do when you find you have a GST error correction to make – and how to put it right in a way that is easier than revising a prior statement, as well as you can save penalties (see!… the ATO is really NOT your business enemy!)

Correcting GST Errors –

If you make a mistake (that fits the definition of a GST error) when reporting GST on an activity statement, you can correct that error on a later activity statement if you meet certain conditions.

The benefit of correcting a GST error on a later activity statement is that you will not be liable for any penalties or general interest charge (GIC) for that error.

Generally, it is easier to correct a GST error on a later activity statement than to revise an earlier activity statement. Revising an earlier activity statement that contains an error can incur penalties or GIC.

Here are a series of links about correcting GST errors –

o    options for correcting an error

o    definition of a GST error

o    types of GST errors

o    correcting credit errors

o    correcting debit errors

o    how to make corrections on a later activity statement

o    when a credit or debit error cannot be corrected on a later activity statement

o    what is not a GST error

o    example of correcting GST errors on a later activity statement

o    record keeping

o    more information.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Business Finance 101 – Current Ratio – What is it and what does it show?

Current Ratio – What is it and what does it show?

Business Finance 101 – Current Ratio – What is it and what does it show?

There are several financial ratios including the current ratio which shows the proportion of current assets to current liabilities. The current ratio is known an indicator of a company’s liquidity. Put in another way, it shows when there is a large amount of current assets in relationship to a small amount of current liabilities there is some assurance that the obligations coming due will be paid.
As an example if a company’s current assets are $500,000 and its current liabilities are $250,000 the current ratio is 2:1. If the current assets are $600,000 and the current liabilities are $500,000 the current ratio is 1.2 : 1. Clearly a larger current ratio is better than a smaller ratio in comparison to current liability. Generally, a current ratio that is less than 1:1 indicates insolvency, and the preference is at least 2:1, or over 2.
When benchmarking a company, or comparing your own, it is wise to compare a company’s current ratio to those in the same industry. It is also worth keeping a close look at the trend of the current ratio for a given company over time. Is the current ratio improving over time, or is it deteriorating?
The composition of the current assets is also an important factor. If the current assets are predominantly in cash, marketable securities, and accounts receivable, that is more valuable than having the majority of the current assets in slow-moving inventory.

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!


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MYOB / Quickbooks – Tax Tables for 2017 – 2018?

MYOB / Quickbooks – Tax Tables for 2017 - 2018?

MYOB / Quickbooks – Tax Tables for 2017 – 2018?

 

The new tax tables for 2017-2018, have been released. The new tax tables include the removal of the temporary budget repair levy, the increase in Medicare levy low-income threshold, as well as the annual indexation of HELP/SSL/TSL and SFSS.
So employees earning between $394 and $520 per week will be affected, all employees with student loans, as well as those on higher incomes.

tax rates 2016-2017

Last tax year, 16-17 they mainly changed in the level $37,001 – $$87,000 (was up to $80,000) range. The past tax year levels are –

 

tax rates 2016-2017

Does your MYOB software have out of date tax tables, or you know you need them by experience every year. (To find what you have, click Set Up then General Payroll Information. In about the middle is the table date at the start of that tax year it applies to).

Tax tables become out of date nearly each year as tax rates and/or Medicare and HECS thresholds can be changed by the Tax Office (ATO). MYOB only supply new tax tables via full software annual subscription. You can no-longer buy the  latest tax tables separately as many years ago. Users must upgrade to a new version or take out Cover under their support program to receive the latest tables or ‘pay2myob.bin’ file for earlier versions (MYOB) to keep payroll compliant. (If you want assistance to upgrade to the latest MYOB call Paul – 0407 361 596 or email us – info@accountkeepingplus.com.au).

The special MYOB tax file (eg ‘pay2myob.bin’) has been specially formatted so that it disallows any manual edit. Additionally, each version is formatted specially, so you can’t use a tax file formatted for MYOB Version 19 with say Version 16. For the Mac version (AccountEdge®) the tax table file is called “MYOB Tax Tables” or in v9 to 9.6 has a “.tax” extension. Everything else though is the same and all the comments here apply equally to the Mac version.

Note third-party tax tables cannot be used in MYOB 2011 onwards – you MUST have subscription or upgrade. Contact us to discuss your needs, or assistance with upgrades and get our extra BONUSES no obligation. 0407 361 596.

There is a Solution up to MYOB v19.13 and Account Edge 15.5 Third party updated tax tables available for $80 provide a substitute, have been tested by ourselves and work with many prior versions. They are for those who want to continue to use their current versions of MYOB® without the need to upgrade. Note that there is nothing in your license agreement that prevents you using 3rd party tax tables.

Installation is simple. The tables are supplied with easy to follow video and instructions and instantly downloaded after secure credit card  payment in most instances, or will be emailed to you. You also receive a PDF copy of the applicable Aust Tax Office Weekly Tax Table for you to check the accuracy of the calculations. After-sales email support is available for any installation or setup issues you may encounter. If you would like Account Keeping Plus to install for you, we can do by remote desktop – Teamviewer (free software). For $50+GST. Call or email for instructions.

Note NO changes are made to the software. The only changes made are to the tax rates in your company data file that the software calls upon to calculate PAYG Withholding in a pay, when processing payroll. The changes made are not permanent and can be reversed by reloading the tax tables from your current tax table file, simply moving a file in the software folder

These third-party tables are available, which Account Keeping Plus have tested in the software and tested against the ATO tables and work perfectly for us and our clients. To get more details and purchase for your MYOB – click the grey box to the right – “Tax Tables” or CLICK HERE

ATO Tax Tables – PDF’s

For the latest tax tables to download the PDF and keep a copy, or use the Tax Withheld Calculator online all from here.

Need help? Not sure? Call for FREE 30min advice / Strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Business Finance 101 – What is Equity?

Business Finance 101 – What is Equity?

Business Finance 101 – What is Equity?

I am asked at times – what is equity? If we deduct Liabilities from the Assets of the Business (at cost value), we are left with Equity. These are listed in the Balance Sheet financial statement. Another way is –

ASSETS – LIABILITIES = EQUITY

Equity is also sometimes used to refer to as ownership of shares in a company.

In a company Balance Sheet it is the amount of money contributed by the owners/share/stock-holders PLUS the Retained Earnings (Profit/Loss of past years).

Also note – because assets like plant and equipment are entered at their COST amount (less GST) the MARKET value of the asset is not represented, unless an adjustment is made (by journal) to reflect change of value (and increase or decrease of asset value are then balanced in a special sale or cost of sale asset account). Hence the Company Market Value may not be the true Market Value, unless the adjustment has been made.

Equity can be called Owner’s Equity – for Sole Proprietors, or Shareholder/Stockholder Equity for a company (usually with more than one director).

Owner’s Equity may consist of several accounts –

1.     Capital

2.     Drawings and

3.     Current Year Net Income/Earnings

Shareholder Equity may consist of accounts such as –

1.   Paid-In Capital

  • Preferred Stock
  • Common Stock
  • Paid-In Capital in Excess of Par Value
  • Treasury Stock (stock re-purchased from shareholders)

2.   Retained Earnings/Net Income 

3.   Less Treasury Stock

Equity is also used in several important ratios that help determine financial health of the business, such as Debt to Equity and Return on Equity.

Need help? Not sure?

Call for FREE 30min advice / strategy session today! 0407 361 596

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!


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Business Tax Tips – Small Business Tax Breaks To Help Your Business – 2017-18 Budget

Business Tax Tips – Small Business Tax Breaks To Help Your Business – 2017-18 Budget

Small Business Tax Breaks To Help Your Business – 2017-18 Budget

There are (still proposed) small business tax breaks to help your business soon to be finalised. From the ATO website, here are details of proposed changes to tax and superannuation legislation and policy, and how the ATO proposes to administer the changes. From the ATO website –

Budget 2017–18

The Government handed down the 2017–18 Budget on 9 May 2017, with several proposed changes to tax and superannuation laws. Below is a list of the announced measures. You can access the Budget papers here: budget.gov.au

The Treasury Laws Amendment (Enterprise Tax Plan) Bill 2016External Link has been passed by both houses, but is not yet law. The proposed Bill will do the following:

In the 2016–17 Budget, the Government announced that it intended to progressively reduce the corporate tax rate from 30 per cent to 25 per cent. These changes were outlined in the Enterprise Tax Plan 2016 Bill. Amendments were made to this Bill by the Senate on 31 March 2017. The amendments were accepted by the Government and received Royal Assent on 19 May 2017.

Treasury Laws Amendment (Enterprise Tax Plan No. 2) Bill 2017 was introduced to the House of Representatives on 11 May 2017 to increase the scope of which corporate entities would be eligible for the lower corporate tax rate in future years.

The corporate tax rate is reduced from 28.5% to 27.5% for the 2016–17 income year for small business entities. The aggregated turnover threshold to qualify as a small business has been increased from $2 million to $10 million.

In 2017–18 the threshold increases from $10 million to $25 million and in 2018–19 to $50 million. From 2017–18, corporate entities eligible for the lower tax rate will be known as base rate entities, i.e. the small business definition will remain at $10 million from 2017–18 onwards while the base rate entity threshold will continue to rise. Click for more info.

In the 2016-17 Budget, the Government announced an increase to the small business entity turnover threshold from $2 million to $10 million. From 1 July 2016, business with a turnover of less than $10 million will be able to access a range of concessions which are currently only available to business entities with a turnover of less than $2 million.

The current $2 million turnover threshold will be retained for access to the small business capital gains tax concessions.

Access to the unincorporated small business tax discount will be limited to entities with turnover less than $5 million.

We will accept tax returns as lodged during the period up until the outcome of the proposed amendment is known. Once the outcome of the proposed amendment is known taxpayers will need to review their positions back to their 2016-17 income year.

For what to do if the law is enacted or if it is not, click here

In the 2016–17 Budget, the Government announced an increase to the tax discount for unincorporated small businesses incrementally over 10 years from 5 per cent to 16 per cent.

From 1 July 2016, the tax discount will increase to 8 per cent, remain constant at 8 per cent for eight years, then increase to 10 per cent in 2024–25, 13 per cent in 2025–26 and reach a new permanent discount of 16 per cent in 2026–27.

The increases will coincide with staggered cuts in the corporate tax rate for certain entities to 25 per cent. The current cap of $1,000 per individual for each income year will be retained.

The tax discount applies to the income tax payable on the business income received from an unincorporated small business entity. The discount is provided by way of a small business income tax offset which you claim in your individual tax return.

From 1 July 2016, the discount will be extended to individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $5 million.

Administrative treatment

The ATO will accept all tax returns as lodged during the period up until the law change is passed by Parliament.

What to do if the law is passed or not, click here.

For a list of all the Measures, click here.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Reckon/Quickbooks – Year End Business Tax Planning – Support to prepare the books/accounts well!

Reckon/Quickbooks – Year End Business Tax Planning – Support to prepare the books/accounts well!

Reckon/Quickbooks – Year End Business Tax Planning – Support to prepare the books/accounts well!

There are plenty of resources to assist you in preparing better books for your accountant, but more importantly for you to have an accurate set of books to UNDERSTAND and gain INSIGHT to MANAGE your business BETTER! Your books and accounts are a treasure-trove of information that tell you about the health of your business and what areas you can work on to improve your business financial results!

Here is End of Financial Year (EOFY) in a simple A B C D!

A.    Time to plan for a good finish for EOFY and here are 14 tips to get started and prepare for 30 June.

B.     Reckon EOFY Guide for small businessdownload the free guide.

C.     A great tool is this calendar where you can select the date to see key compliance tasks and actions that need to be taken (by rival MYOB but a GREAT tool!) – click this image – 

https://www.myob.com/au/small-business/end-of-financial-year

D. Reckon have some other great tips from their blog

1) 2017 is an even bigger year for small business

Based on a recent study by the Council of Small Business Organisations of Australia, small businesses provide half of Australia’s private sector jobs. Australia’s new budget became official on May 9 of this year. It exemplifies Australia’s commitment to supporting small business’ efforts and your contributions to Australia’s economy and its workforce. It aims to decrease small business’ tax burdens and reduce ‘red tape’ complexities. It includes, among other things, a trial run of simplified business activity statements.

It also simplifies the process of reporting GST information. Small businesses will no longer have to report separately on export sales, GST-free sales, capital purchases and non-capital purchases.

In the interest of making Australian businesses able to compete more internationally, the government is also working on a 10-year plan to reduce all corporate businesses taxes to 25%. Australia is also investing lots of dollars into improving its infrastructure, increasing the skills of Australia’s workforce and making utilities more affordable. This, too, should benefit all Australians.

2) What constitutes a small business?

The biggest change in this year’s budget is in the small business turnover threshold limit. Where it used to be $2 million,  it is now $10 million. Many more businesses will be able to access small business concessions this year, including the lower business tax rate of 27.5%. This tax discount will also apply to “sole traders, partnerships and other unincorporated businesses with an annual turnover of less than $5 million.”

Other benefits to qualified businesses include credits and subsidies for government trained interns as well as the hiring of job-ready seekers and those with barriers to employment.

Note: capital gains tax concessions are still limited to a $2 million turnover and unincorporated small business tax discounts are limited to a $5 million turnover. The unincorporated small business tax discount is also being increased to 8 per cent, up to $1,000. Businesses must qualify by meeting turnover and CGT concession eligibility tests.

Also note: in an effort to prevent businesses from diverting income to make the $2 million turnover mark, the law specifies that turnover “needs to be calculated from the ‘aggregated’ amounts . . . of every ‘connected’ or ‘affiliated’ business.”

3) Other tax-time-bewares

As always, be organised, be diligent, be thorough, be legal – and be on time. Keep records of everything (the legal requirement is 5 years); don’t throw out business related receipts and do periodically update expense and account records. A compliant accounting and tax software program is highly recommended for use at tax time and throughout the year. Consider linking your business accounts to your accounting software.

Be sure to include all income (even personal, such as rent collected on personal property investments). Don’t try to claim expenses that aren’t business related – if they’re partially for business, make sure they’re properly pro-rated. For those in the courier and cleaning industries (and others who do cash business) – in the interest of a level competitive playing field and other goals listed above, cash records will be thoroughly vetted.

Be aware of regulations related to personal loans from your business. Read up on Division 7a if you have, or plan to, engage your business in a personal loan.

4) Deductions can be fun . . . as long as they’re legal

Here are a few, among many others. Use your trusted tax software to guide you: operating supplies and expenses, home office supplies and expenses, bad debts (must be written off by June 30), business travel (including non-commuting auto expenses), advertising and sponsorships (time to support your favourite local little league team), charitable contributions, pre-paid expenses (such as insurance premiums, rents and professional subscriptions), super contributions and fringe benefits, bonuses (must be reported to employees in writing by June 30), depreciable assets, equipment and office maintenance, business related education and training, union dues, freighting services, websites & domains, uniforms & protective gear. Ping Pong tables, Xboxes, pedicures and art work– yes, if they qualify.

How’s that sandwich going? Ready for pizza yet? Also tax deductible.

5) A few other really important things to know . . .

  • . . . about SUPERSTREAM: It is the law. Super contributions must be paid electronically and in a single, standardized format “so it can be transmitted consistently across the super system  – between employers, funds, service providers and the ATO. It’s linked to the payment by a unique payment reference number.” Super concessional contribution caps for employees under age 49 have increased from $25,000 to $30,000.
  • . . . about PAYG REPORTING: STP is still optional, but recommended, for small businesses.
  • . . . about FOREIGN WORKERS: Australia’s temporary work visas will herewith be limited to those who fulfill critical skills  shortages. Employers will have to pay a levy that will be earmarked into its new Australian skills development fund, in the interest of training Australians in areas of needed skills.
  • . . . about STOCKS: Stocks can now be valued at year-end cost, market selling value, replacement or obsolete stock value.

Need help? Not sure? Call for FREE 30min advice / strategy session today! 0407 361 596 Aust

***BEFORE you BUY Ask us for a competitive software price BELOW retail – no obligation!

You also get FREE 30 min to assist in setting up your company in the software, and FREE ongoing email or phone support – no-one offers as much!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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MYOB – Year End Business Tax Planning – Support to prepare the books/accounts well! MYOB Account Right

Support to prepare the books/accounts well! MYOB Account Right

Support to prepare the books/accounts well! MYOB Account Right

MYOB have a huge amount of resources to assist you in better books for your accountant, but more importantly for you to have an accurate set of books to UNDERSTAND and gain INSIGHT to MANAGE your business BETTER! Your books and accounts are a treasure-trove of information that tell you about the health of your business and what areas you can work on to improve your business financial results!

EOFY – End of Financial Year key dates

A great tool is this calendar where you can select the date to see key compliance tasks and actions that need to be taken – click this image – 

MYOB Key dates 2017

MYOB Account Right

There are End-of-year procedures that need to be carried out to prepare your company file for the coming year. By reconciling and completing the year in your company file, you are effectively bringing the company file up to date.

These include any adjustments you need to make to your company file so that it agrees with your accountant’s final records before you start a new year.

Your payroll, invoices, purchases statement reconciliations as well as finally your inventory should be counted, valued and, where necessary, adjusted in your company file.

The MYOB End of Period page is where you begin. The resources include end of Month, Financial and Payroll Year things that you should do. Overall it’s about checking the accounting records to ensure they are complete, accurate and reconciled to key support documents such as bank and credit card statements.

Other helpful Links

MYOB Essentials

For users of MYOB Essentials, see the end of year video on what to do. You can also find  FAQs and The Help Centre there.

http://help.myob.com.au/teachme/webcasts/essentials/index2.htm

Software Upgrades

You will be able to download the current update directly from Updates within the MYOB Account Right software in many versions, or from this page.

Want help with upgrading? – do you need to talk about what is available without obligation or any pressure? Then call Paul! 0407 361 596

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right! Email info@accountkeepingplus.com.au or call 0407 361 596 Australia