Most people accept that if they run a business they’ll need an accountant, yet when it comes to their individual tax situation, they are not so keen to do the same.  Of course, you can get your tax returns done on the cheap to meet your legal obligations, but why not pay that bit extra and engage an accountant to get the best possible outcome?

Doing your own tax returns is a personal choice, usually influenced by how many income streams you have.  If you have one job and only have simple investments, preparing your own tax returns may be fairly straightforward.  However, you risk missing out on claiming deductions you may not be aware of as tax laws are complex and subject to change.  This is one good reason why you should engage an accountant in 2016.

So why should you engage an accountant in 2016?

1. You may not be making the most of your tax position

Australia has one of the most complex tax systems in the world, therefore the chances of you knowing everything you can claim for are unlikely.  This means that you may pay less tax if you engage an accountant to do your tax returns.  They can also advise you on the best way for you to make additional savings in the future.

2. You might not be keeping complete records

Let’s face it, none of us want to get into trouble with the ATO, therefore it’s essential to ensure that you are keeping all necessary paperwork and that everything is kept together.  A good accountant will be able to advise you on what records you need to keep and for how long.

3. Extra benefits

An accountant can also advise you about your personal finances.  They will get to know you and your finances well, therefore they are perfectly placed to discuss the benefits of, for example, investment properties, family trusts, capital gains tax etc.

4. Stress free lodgements

Last, but certainly not least, when you engage an accountant they will ensure that you are aware of all necessary deadlines so that you are not faced with any late lodgement penalties.  For those of you who are juggling busy work and personal lives, this will reduce stress at the end of the financial year.

The Bottom Line

If you are looking for an easy quick fix at tax time, there are plenty of options out there.  However, in order to get the most out of your claims, you need to be organized and have a good accountant on your side.  This will free you up so you can get on with attending to other important things in your life.

So, if you are looking for an accountant and want to benefit from expert advice to help minimise your tax liabilities, speak to us today.

7 simple steps to pay less tax in 2016

If you want to pay less tax in 2016, the secret is knowing what to do.  We have outlined below 7 easy ways to cut your tax bill in 2016.

As much as it’s possible to pay less tax in 2016, it is not something you can do a few weeks prior to the end of the tax year.  Reducing your tax liability takes careful planning and requires you to take action now to ensure you minimise the tax you have to pay.  This is where speaking to a professional is essential.

They will advise you as to what can or cannot be claimed and, most importantly, they can tell you when any action needs to be taken.  Here at BSN & Co we have helped many clients reduce their tax.

1. Government co-contribution:  If your total income is $35,454 per year or less, you are less than 71 years of age and you make a $1,000 after-tax contribution to your super fund, the government will contribute $500 to your fund.  The amount of government co-contribution reduces for every dollar you earn over $35,454 and ceases once your total income reaches $50,454.
2. Spouse contributions:  If your spouse is under 70 years of age and earns less than $10,800 per year, you can make a $3,000 after-tax contribution to their super fund.  This will qualify you for a tax offset of $540.
3. Salary sacrifice:  This means making a super contribution from your gross (pre-tax) salary.  Your salary sacrificed super contributions are taxed at 15% in the fund instead of at marginal rates.  At the same time, by reducing your taxable income you may move to a lower income tax bracket which will help you pay less tax in 2016.
4. Tax deductible contributions:   If you are fully self-employed, mostly self-employed or an unsupported person (no super is being paid on your behalf), you can make contributions to your super fund and claim a full tax deduction up to the cap.  This strategy may be appropriate if you have made a considerable capital gain from the sale of a property or shares because this deductible contribution to your super fund may offset this assessable gain.
5. Insurance premiums:  Some insurance premiums, such as those for income protection cover, are generally tax deductible as an expense incurred in earning your income.  This is a great way to protect yourself and your family and allow you to pay less tax in 2016.
6. Managed funds:  These distribute capital gains which you must report.  Timing of the sale of an investment will determine which year the capital gain or loss is assessed, so triggering a gain/loss before or after 30 June may make a difference to your overall tax bill.  This is why it is important, before continuing, that you consult with your tax adviser so they can best advise you on how to pay less tax in 2016.
7. Prepayments:  An individual can claim a deduction for prepaid expenditure for a period not exceeding 12 months.  The most common types of prepayments include:

• Income protection insurance
• Interest on investment loans for share portfolios and/or rental properties
• Memberships and/or subscriptions
• Rental property expenses such as insurance, rates, repairs and maintenance and strata fees

Our Tax Accountants at BSN & Co regularly advise clients who work in a range of industries.  If you need assistance with tax planning in 2016, we are offering a 20% discount off your last accountancy fee when you switch to BSN & Co.  Contact us by completing the form opposite.

“Beware of little expenses.  A small leak will sink a great ship.” — Benjamin Franklin

Why improve your finances?

Money might not be the most important thing in life, but it is closely linked to your overall happiness and quality of life.  Lack of money is a major cause of stress and frustration for many, so improve your financial outlook for 2016 with our 5 simple techniques and see what a difference it can make to your life and improve finances in 2016.

Many people struggle financially and money is an emotionally charged subject as it directly impacts upon our standard of living.  For some people, having money means having more time, freedom, less cares and worries.  They’re also able to do things that other people simply can’t afford.

Whatever emotional shape money takes on, it’s clear that our financial worlds can often be in a state of disarray.  For one reason or another, we can feel like we have no control over money.  We can feel imprisoned by debt and shackled by obligation, and often there is little or no money left over as the end of the month approaches.  Here are 5 proven ways to improve finances in 2016:

1.      Set clear financial goals

One of the best ways that you can improve finances in 2016 is to set clearly defined financial goals.  Your goals shouldn’t simply be to have or make more money; they need to be specific and measurable.  You should set your goals for the short term and the long term.

Write them down with real dollar amounts and set completion dates, then look at your income and expenses to work out how you are going to achieve them.  It’s also important to be realistic – it may seem fine now to think you’ll live on beans and toast for the next 12 months, but it’s just not going to happen!  Failure will cause disappointment, so allowing for a little ‘fun’ money so you can still enjoy yourself is a realistic and sustainable way to set goals.

2.      Create financial milestones

Set small goals you can reach whilst progressing towards your big goal.  If you want to be debt free, start with your largest debt first (perhaps your credit card debt), then celebrate when you have achieved the milestone of paying it off.  Then move on to the next debt.  This makes it easier to stay motivated because you can see your progress.  When we don’t break things down into milestones, it’s easy to become distracted, procrastinate and lose motivation.

3.      Track all expenses

We often lose sight of our spending simply because we fail to track the money going out every single day, making it easier to overspend.  Keep a spreadsheet or a notebook and write down all your expenses.  This means that every single thing you spend money on in a day must be recorded, without fail.

Commit to doing this for 90 days, then sit down and review your expenditure to identify unnecessary items.  That extra coffee here or lunch there can soon add up.  These are easy things to cut out and can make a huge difference to your finances and help improve finances in 2016.

4.      Immediately open bills

One way to improve your finances over time is to open all of your bills immediately after receiving them.  This goes hand in hand with tracking all expenses.  When you receive your bills make a note of them, the amount, when they are due, etc.  It may also be worth considering whether you can do anything to reduce them.  Could you get a better deal on your mortgage?  Could you change electricity providers and save?

5.      Prioritise debt repayments

One of the biggest obstacles to making financial headway is the overwhelming debt that most people face.  When you’re faced with growing debt, it’s hard to concentrate on anything else.  How can you expect to get ahead when all you can see is mounting debt in front of your eyes?

Start by prioritising your debts.  Choose the highest interest credit card debt that you have and double the minimum payments, if possible, until it’s paid off.  Then deal with the next highest interest credit card debt, and so on.

If your goal is to be debt free, not only do you have to make a plan for repayment, but you also have to monitor your spending habits.  Many people who receive cash in the form of a tax refund, mortgage refinancing, or an inheritance, will pay off their debt but fail to change their spending habits, eventually accumulating debt again.  If you want to live a debt free lifestyle, you need to do things like tracking your expenses and setting goals.  Take a daily money minute to monitor where you are financially and where you’re going.

If you want assistance to get your finances on track, speak to us today.  The team at BSN & Co can assist you with planning and saving your money to help improve finances in 2016.

Once you and your team identify your goals for the new year, it’s essential that you set your targets so that everyone knows exactly what they need to do to achieve business success in 2016.  You also need to regularly review performance against the targets so you can take action should the need arise.

Having clear and robust performance targets for your team ensures that everyone knows what they are responsible for; it will also give you a better chance at achieving business success in 2016.  This will drive employees to achieve results in critical areas, therefore it’s important to ensure that the targets are set correctly and are in line with your desired results.

Before introducing a new target, take the time to review it in terms of the seven questions outlined below to ensure the target will drive your business forward.

Is it specific?

A target is no good if it cannot be clearly understood.  The parameters for success must be expressed in clear terms, with no room for doubt.  If a target is left open to interpretation, it will quickly become unmanageable.  It will also lead to frustration and confusion in the work place and this will hinder your chances of business success in 2016.

Can it be measured accurately?

The target must be based on something that can be measured.  For example, if there is no data available from which to derive reports, how will managers or employees know if targets are being met?  Therefore, it’s essential to ensure that robust systems are in place to measure performance before any target is launched.

Is it fair?

To ensure engagement by employees, it’s critical that all targets set have the same chance of being achieved by everyone.  If not, you may be discriminating against a particular type of employee, so always consider the impact of a target on different groups before rolling it out.

Also consider whether the employee has the ability to have a positive impact on the results.  If they feel that they can’t make something happen, they will give up and become demotivated which will almost definitely hinder business success in 2016.

This may mean empowering your staff to achieve good results.

Is it meaningful?

It’s important that a target aligns with the core aims of the business and the individual objectives set for employees.  If not, you should question its relevance because your employees certainly will.

Is it achievable?

A target must be achievable or it will negatively affect performance reports and therefore business success in 2016.  It will also be demoralising for employees, particularly if a bonus or other incentive is linked to achievement of the target.  Equally, the target should not be too easy to achieve or it will be useless as a measure of performance.

You may want to consider a staggered reward system for employees.  Basic achievement of their targets is expected, so anything over and above that will be duly rewarded.

Can it be exceeded?

It’s important to include a “stretch” factor in a target so that there is a way to exceed its expected outcome.  Without this, you have no way of differentiating between employees who are just doing the bare minimum to hit the target and those that are going the extra distance.  The only exception to this is a target with no varying degrees of achievement.

Does it drive desirable behaviours?

Consider what effect a target will have on an individual’s behaviour and whether that is desirable or not.  A target that introduces some healthy competition is good, but not if it comes at the expense of employee relations.  For example, it wouldn’t be advisable to introduce a target that has a detrimental effect on customer service, nor one that has a negative environmental impact.

Considering these questions when designing a performance target will guarantee you don’t create a monster.  The target will be challenging but achievable, aligned with individual and business objectives, and clear to understand and measure.  The result will be employees who feel inspired and empowered to achieve success.

If you would like help to establish goals and targets to achieve business success in 2016, talk to the team at BSN & Co.  We can help you review your business, where you are now, where you want to be and how you can get there.

Many people include investments in their plan to help them achieve their financial goals and we often hear the question ‘are my investments working?’  Investments are a great way of achieving a far better return on your money than simply leaving it in the bank.  However, with better returns come greater risks.  This means that you need to keep a close eye on your investments to ensure you understand the returns you are getting.  Below we have outlined the two main sources of investment income and how to calculate your actual returns.

When you’re reviewing your investments, it’s important to remember that income comes from two main sources – capital gains and interim income.

1.    Capital gain (or loss)

This is the difference in the overall value of an investment from date of purchase to now (or the date that you sold it).  You can work it out using this formula:  (Current or sale price per unit – purchase price) x number of units) – fees and taxes

For example, let’s assume that you purchased 100 shares in Amazing Blue Widget Co. for $50 each (totalling $5,000) and then sold them for $80 each (totalling $8,000).  You had to pay fees of $10 to buy and $10 to sell plus 15% tax on the profit, which works out to: (($80 – $50) x 100) – $20 – $450 = $2,530 or a return of 50.6% on your original $5,000 investment.

2.    Interim income (dividends, interest etc)

This is the amount that you’ve received in interim payments over the life of your investment.  It’s calculated as:

(Interim % x value of investment) – taxes

You would need to work this out for each interim payment that you receive.

For example, let’s assume that you’ve held 100 ABWC shares for three years, and that they paid dividends of 3% a year.  In the first year the shares were $50 each, in the second $60 each and in the third $80 each.  Your return would be:  3% of $5,000, $6,000 and $8,000 less tax, which works out to be: $485.

Your total return

This is equal to your capital gain (or loss) plus your interim income.  You can then compare this to your original purchase price to understand what percentage gain or loss you’ve made.

For example, your purchase price of ABWC shares was $5,000; over three years you’ve made $2,530 in capital gains and $485 in interim returns (dividends) for a total of $3,015.  That’s an increase of 60.3% over three years or 20.1% a year – not bad!

You should compare your total return with your targets and life goals.  This can help you decide whether you should keep your investments or sell them.

Investments should be part of your overall financial strategy, so it’s important you seek professional advice and also make sure that you have a plan that accounts for your financial position and goals.  Speak to the team at BSN & Co – we can help you review your investments, advise you regarding the tax implications of any returns and how you can structure your investments to minimize your tax liability.  We can help answer that burning question ‘are your investments working for you’?