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GMB Partners

GMB PARTNERS

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MAY BUDGET 2015

Article: 6  15 May, 2015
Small business has been given some breaks in this years budget which may stimulate the majority of us into action.

Another year, another budget.

Right from the onset, I need to stress that some, if not all, the tax breaks announced will only benefit small business.

But what is a small business?

In a nutshell, a small business for the purpose of the budget, is a company, sole trader or any unincorporated business that has an aggregated annual turnover of less than $2 million.
PLEASE NOTE: The annual turnover relates to gross not net.

Here we go:

(i) Company tax rate has dropped from 30 per cent to 28.5 per cent (FSB).

(ii) Individual taxpayers and unincorporated businesses will receive a 5 per cent discount on income, tax payable up to a max of $1000 (FSB).

E.g.: tax payable $5000
therefore $5000 x 5 % = ( 250)
tax payable now = $4750

(iii) Immediate tax deduction for assets up to the value of $20,000 which are installed ready for use (FSB).
PLEASE NOTE: The asset must cost less than $20,000.
This will apply from 7:30pm (AEST) 12th May 2015 and 30th June 2017.

(iv) Depreciation pools can be immediately deducted if the balance is less than $20,000 (including existing pools) (FSB).
PLEASE NOTE: This will only be available up until the 30th June 2017.

(v) Professional expenses associated with starting a small business will be immediately deductable. This measure will only apply for the 2015 – 2016 income year.

(vi) The government will allow small businesses with an aggregated annual turnover of less than $2 million to change legal structure without attracting a CGT liability at that point. This will extend the existing CGT rollover relief for individuals who incorporate to all other entity type changes.
PLEASE NOTE: From the 2016 – 2017 year.

FSB = For Small Business.

 

WILLS

Article: 5  28 November, 2014
There is impending new legislation in Victoria in relation to peoples rights under wills.

With impending new legislation in Victoria regarding wills and if given Royal Assent will dramatically impact on the rights of : - adult children
- former spouses
- domestic partners

The new law if passed will however not impinge on the rights of - widows (widowers)
- minors
- disabled children

Victoria at the moment has the most liberal legislation when it comes to wills, but if the above is enacted it will make it the most restrictive.

"At present ,former spouses and domestic partners can make claims even though there may have been a property settlement. If the amendments are passed, they will be prevented from making a claim."(*)
There are a couple f exceptions.

"Another significant measure is that written agreements, such as property settlements, will be enforceable."(*)

(*) From an article by Castlecorp 3 October 2014

 

What does Tax look like now after the election ?

Article: 4  15 October, 2013
Thanks to the recent elections new tax laws and changes that were being considered by the outgoing party have now either been amended or scraped. These changes are detailed further in the main text of the article.

Self Education Expenses: There will be no $2000 cap on self education expenses. The cost of self education was to be capped at $2000.

FBT and cars: The statutory formula method for car running costs will remain in place. This will reduce the amount of paper work and the need to prepare more returns for the tax office.

Company Tax Rates: The company tax rate will be cut from 30 cents in the dollar to 28.5 cents in the dollar from 1 July 2015.

GST: No changes to the GST rate until the next election.

Carbon Tax: This will be abolished.

Car accelerated depreciation: The accelerated depreciation for motor vehicles for small will be removed.

Instant asset write-off: The small business instant asset write-off which stands at $5000 will cease.

Superannuation Guarantee: The rate will increase from 9% to 12% but will be delayed by 2 years.

 

Low Interest Car Finance

Article: 3  11 September, 2013
Is low interest car finance being offered by car dealers real?

In today's new car market we are constantly seeing finance deals being offered at low interest rates some at an unbelievable rate of 0%.
But whats happening behind the scenes for the dealer to be able to offer such a low rate.
There is no doubt that the interest rate being advertised is legitimate. The only way that such a finance rate can be offered is that it is being subsided by the dealer out of its profit margin.
But how does it all work!
Assume you purchase a car for $40000 with a dealer offered finance rate of 1%. The term of the contract will be over 48 months with a NIL residual.
Once the deal has been crunched the dealer now must pay an amount to the finance company to make the whole deal work. This amount comes out of the cars profit margin. This is why the purchase price can not usually be negotiated down as the dealer still needs to retain his or hers profit margin.
What should be asked is how cheap can we buy this same car if we ignored the low finance rate and shopped the rate on the open market.
This is the only way that we can tell whether the deal is a bonus or not.
The old maxim that "there is no such thing as a free lunch" applies to these low rate finance deals.

We would welcome the opportunity to further answer any queries you may may still have. Just email us.

 

Changes to CAR Fringe Benefits

Article: 2  20 August, 2013
The Federal Government has put forward massive changes to the way cars are treated for Fringe Benefit Tax purposes.

First and foremost the changes if and when given royal assent will only apply to contracts entered into after 16 July 2013.

The idea behind these changes is to ensure that only actual business usage be claimed. In other words if the car is used 90% for business than that's what the FBT will be calculated on and similarly if the car is only used for say 20%. The higher the private usage the higher the tax.

What the above will require is the maintaining of a detailed log book for the statutory period of 12 weeks for vehicles purchased after the 16 July 2013 this implies the signing of the contract so in effect if a contract was entered into prior the above date and the car has not been delivered the date on the contract stands.

As all cars will now be assessed under the actual cost or operating method it will be essential to keep all documentary evidence as regards the cost of operating that vehicle. This applies to the whole of the financial year.

The reform will not apply to : Employees and Sole Traders
Certain uses of Taxis, Panel Vans and Utes.

 

Simpler Depreciation Rules

Article: 1  02 August, 2013
Assets costing Less than $6500 can be written off. Additional deduction of up to $5000 on motor vehicles purchased by small business.

The small business instant asset write-off threshold has increased from $1000 to $6500 allowing small businesses to immediately write-off most new depreciating assets costing less than $6500.

Where the asset costs more than $6500 it will now be added to the general small business pool and deducted at a single rate of 30%.

Small businesses that purchase a vehicle can now also claim an additional deduction of up to $5000 in the income year it was purchased. This deduction is that allowed above any depreciation charge.

Need to know more than give us a call.

 

GMB Partners    758 High Street, Thornbury, Vic 3078    phone: 03 9480 0388    email: info@gmbpartners.com.au

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