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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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Bookkeeping – End of Financial year final pay falls in new financial year

Bookkeeping – End of Financial year final pay falls in new financial year

Bookkeeping – End of Financial year final pay falls in new financial year

Client questionJust a quick question. 

We have an employee being paid fortnightly.

Next payment to be made 07/07/2017.  This includes the week 26/6 to 30/6/2017. Does any of this have to be put through in EOFY for 2016/2017?  Or will it be first payment for New year on new tax table?

Solution Payroll is taken as  a cash payment in the accounts – ie WHEN it is paid.

Regardless of what period it covers – it is WHEN it is paid.

So not included in previous tax year.

You can finish your payroll YE17 year, prepare the Payment Summaries – check you include in Gross Payments, any NEW payroll types/categories if you created any during the year.

Then roll forward to new payroll year, and you can process the 7/7/17 payroll that covers end of June days and some of July days.

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

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 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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Business Tax Tips – 14 End of Financial Year 2017 tips to PREPARE for 30 June! Time to ACT NOW!

Business Tax Tips – 14 End of Financial Year 2016 tips to PREPARE for 30 June! Time to ACT NOW!

14 End of Financial Year 2016 tips to PREPARE for 30 June! Time to ACT NOW!

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

1. Consider the ideal timing for asset sales

If you are thinking of selling a profitable asset this financial year, but are likely to earn a lower income in the next year, it may be worth postponing the sale until after 30 June; however, if you expect an income windfall or higher from 1 July, it may be worth bringing the sale forward. As always, your decisions depends on your expectations for future asset prices, so don’t postpone a sale for tax purposes if you are expecting your investment to fall in value! Ask your Tax advisor.

2. Delay sales invoicing if in profit

Most businesses are taxed on income when it is invoiced (accrual). Some small businesses may be taxed only when income is received (cash basis). Income from construction contracts is generally taxed when progress payments are invoiced or received. If you are making a good profit (which is good if you want to sell) and want to reduce business tax, it may help to delay invoicing the June work until July, after 30 June – talk to your tax advisor for your situation.

3. Accounts receivable – write off by 30 June

If you have clients that have closed or all manner of collection has failed – sometimes it is best to move on and write off. Keep looking for better clients!

4. Spouse and family wages

Paying family must be reasonable and legitimate for work performed.

5. Super liabilities

Employer and/or self-employed superannuation contributions must be paid to, and received by, the super fund before 30 June and must be within the contributions cap ($35,000 for individuals aged 49 or over on 30 June 2016, otherwise $30,000)

6. Depreciation – Accelerated Write off – up to $20,000

The accelerated depreciation write-off for assets up to $20,000 acquired by small businesses was announced in the May 2015 budget and is available to June 30, 2017. The write off threshold was previously $1,000 and the concession only applies to businesses in 2016/17 with an aggregate annual turnover of less than $2 million. As a boost for small businesses, the Government will extend access to a number of small business tax concessions by increasing the annual turnover eligibility threshold from $2m to $10m. These measures will apply from July 1, 2016.

7. Pre-pay income protection premiums 

If you are a self-employed director or self-employed, income protection insurance provides peace of mind about the security of your income in the event you are unable to work due to illness or injury. Premiums for this insurance are generally tax deductible; prepaying your annual premium prior to 30 June will allow you to claim a full year of cover in advance as a tax deduction.

8. Get a super top up from the government

If you earn $35,454 – $51,021 pa, of which at least 10% is from employment or a business, and make a personal after-tax super contribution, you could qualify for a Government co-contribution of up to $500. 

9. Boost your partner’s super and reduce your tax

If you have a spouse who earns less than $10,800 pa, consider making an after-tax super contribution on their behalf, and you could receive a tax offset of up to $540.

10. Use super to manage capital gains tax

If you make a capital gain on the sale of an asset this financial year and earn less than 10% of your income from eligible employment, you may be able to claim a tax deduction for a contribution to superannuation, which could reduce or offset your capital gain. You will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test (2017 now abolished), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement decision).

11. Make tax deductible super contributions

If you earn less than 10% of your income from eligible employment (eg you are self-employed or not employed), you are generally able to claim a tax deduction for personal contributions to superannuation. As with super, you will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement). If you claim a deduction for it, the contribution you make will be taxed at 15% in your super fund, so your tax saving will be the difference between your marginal rate and 15% – which could be up to 34%.

12. Review your portfolio

Review your portfolio and consider a strategic re-allocation of your investments. Consider portfolio allocations – is your portfolio heavily over- or underweight in specific industry sectors or stocks? Are you continuing to carry stocks that have exceeded your price targets or continue to under-perform – this may be an opportunity to re-balance. If you have an SMSF, now is the time to ensure your fund is invested in line with your documented investment strategy – your auditor will be confirming this after 1 July.

13. Offset capital gains with capital losses 

Generally, if you have incurred capital losses on your investments, you are able to offset these capital losses against any capital gains you have made. You can also use losses you have carried forward from previous years. Remember, income losses can only be offset against income; capital losses can only be offset against capital gains.

14. Best tip of all

Get advice specific to your business and situation that considers your personal position – both go together!

If you need a referral, call me – 0407 361 596 – plan NOW don’t delay!

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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Xero – Handling Overpayments in Xero

Xero – Handling Overpayments in Xero

Handling Overpayments in Xero

From the Xero blog, here is how to handle overpayments in Xero and resolve them –

Overpayments can be challenging at times, or even forgotten. There are some easy ways to handle overpayments within Xero.

Let’s take a look at a few ways we can record an overpayment and apply this to an invoice/bill or refund it directly. In Xero, the term “invoice” relates to a sale, and a “bill” relates to a purchase. I’ve only referred to invoices below, but these processes relate to both.

To Record (handle) an Overpayment, you can either:

  • Simply enter the amount paid directly onto the invoice, and if the amount exceeds your invoice total, Xero will automatically calculate an Overpayment transaction.
  • Create an Overpayment Receive Money / Spend Money transaction in your bank account
  • During reconciliation, create an Overpayment Receive Money / Spend Money transaction

Allocate or Refund an Overpayment (Resolve the overpayment)

Once the Overpayment transaction has been entered into Xero, a cash refund can be recorded or you can allocate the overpaid amount to an invoice for the same Contact in Xero.

  • The Allocate option will appear in the Overpayment Options drop down menu while viewing your Overpayment transaction.
  • If a contact has a new invoice you created Xero will ask if you wish to allocate the overpaid amount against this invoice.
  • You can record Cash Refunds on the Overpayment directly and then reconcile them with your Bank Statement line.

(XERO) have some great Help Centre pages that step through Overpayments in Xero. You can check them out here, and call us for help!

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

***BEFORE you BUYAsk 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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Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Here are some timely reminders from J T Ripton at smallbizdaily.com

Accounting is often one of the toughest jobs for small business owners, especially those who don’t have a lot of experience or a strong background in bookkeeping. Following a few simple tips throughout the year can make it much easier to track expenses and file taxes when the time comes.

1. Plan Ahead

The first step is to look ahead at the potential needs for your company and plan for these expenses. For example, if you know that you will need to replace expensive equipment in the near future, make sure to set aside funds every month to cover the costs. Other major expenses that may arise include office supplies, inventory, maintenance, and repairs. You can also set aside money each month to cover the annual taxes, so you won’t stress about the amount you need to pay when April 15 arrives.

2. Use Reliable Software

Business bookkeeping software has come a long way over the past decade, and some programs make it much simpler to input expenses and cash flow. MYOB, Reckon and Xero allow you to keep everything you need in one place for easy recovery as needed. From tracking the status of unpaid invoices, to creating customized invoices, to tracking billable hours and budget spent, online accounting software is a great way to save time and money. Some programs like Dropbox and  Google Drive also offer cloud access to your files, which means that you can pull up information from anywhere instead of having to go to the office to find a document or receipt.

3. Separate Business and Personal

If you use your business credit card to pay for a personal expense, make sure to track that and separate it as soon as possible. It is much easier to separate expenses if you use separate accounts to pay for them, but you may accidentally use your business card for a non-company purchase. Business costs are tax deductible, so make it easier on yourself by separating them every time you make a purchase.

4. Schedule Yourself

When it comes to bookkeeping, it might seem easier to just put it off until the end of the year. However, this is going to result in a big headache when you are trying to track down receipts and invoices that may be months old. Schedule time each week or each month to work on your books and stay as current as possible. It may be tempting to skip this every so often, but when you can stick to the schedule, it will be much easier to stay on top of the finances without feeling so stressed.

5. Review Invoices

Be sure to keep close track of your invoices, since some (clients) are notorious for paying bills late. You can probably use your accounting software to run a monthly report and determine what invoices are still outstanding. This gives you the flexibility to send reminders and follow up on outstanding bills before too much time passes. It is also smart to keep a close eye on your cash flow statement, so you can avoid the dreaded insufficient funds message on a payment.

6. Call in a Pro

For some things, it is definitely worth the investment to bring in an expert. You may rely on a financial advisor who specializes in your industry, or you might just need an accountant who can pay your taxes and payroll. You can even use a student intern who is working on an accounting degree if the budget is tight.

7. Track Expenses

Most experts discourage business owners from using cash to pay for any business expense, since it can be very difficult to track. When you use a credit card or debit card, you can view the transactions right away and make sure that all items are true business expenses to avoid issues with write-offs and taxes.

Accurate bookkeeping is an important part of business ownership, so it is crucial to stay on top of the expenses and invoices to prevent problems. If you have questions about bookkeeping, you can always rely on an expert, but once you have your system down, it should be much easier to keep track of the money coming in and out of your company each day.

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

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