EOFY 2019/2020 is Approaching！

Are you ready to save on tax claim?

Here are some top tips from BOA & Co. Small business owner when it comes to year-end tax planning:

• Check with your accountant or bookkeeper on how you are doing for the financial year. Mark it in your diary to do this in May next year!

• Prepay expenses or delay them until next year depending on your profit.

• No money to prepay?  Order stock from suppliers and ask them to invoice you before 30 June.  (Check with your accountant first.)

• For once, get large asset purchases before 30 June 2020 to get the higher $150,000 immediate write off instead of $1000 next year.

• Make Superannuation payments for deductions in 2019/20 before 26 June, or to delay deductions make them after 30 June and before 28 July.

• Consider stocktaking to get true values, and write off obsolete stock.

• Private Company Loans: Any loan extending beyond 30 June must be documented and any payment terms followed.

• Bad Debts: If you want to claim for bad debts, remember that they must be bad and written off before the end of the financial year. Bad debts cannot be claimed by taxpayers who recognise income on a cash basis.

• Make sure you are on top of the PAYG Withholding tax scales for 2019/20 Click here for more details.

• If you think you are going to pay bonuses, then write them down now and claim the deduction even if paid after 30 June.

• Prepare to record Trust distributions before 30 June.  Many small businesses use trusts as part of their overall corporate structure, and the rules on distributions have tightened.

• Over 60 and need a tax deduction in your business?  Consider putting your Super into Transition to Retirement mode and take 10 per cent pension and re-contribute for a tax deduction.

• Consider moving insurance cover into superannuation to maintain cover in hard times or make premiums more tax efficient. (See a planner as there are plenty of traps on this one.)

EOFY 2019/2020 is Approaching！

Are you ready to save on tax claim?

Here are some top tips from BOA & Co. for SMSF trustee when it comes to year-end tax planning:

• Check the contributions of all members to this SMSF and to any retail or industry funds to ensure they’re below caps as they apply across all accounts.

• Don’t forget that payment of premiums for Insurance in Super is considered contributions too!

• Make sure Minimum Pensions took to include any increase because of consolidations.

• Check that Pensions Reversionary or Binding Death Nomination is in place. If not, then restructure on July 1 to save on fees and charges.

• Pensions started in June do not need to take a minimum pension for the year.

• Those ages 55-59 and fully retired can consider taking part of their pension amounts as a lump sum.

• In-specie transfer shares from your own names to the fund. This can also be treated as concessional contributions for self-employed if you don’t have the cash to make a deductible contribution

• Consider Spouse and Co-contribution strategies for all eligible members.

• Accumulation stage: Defer tax returns as long as possible.

• Pension stage: Lodge as soon as possible to get those franking credit refunds!

EOFY 2019/2020 is Approaching！

Are you ready to save on tax claim?

Here are some top tips from BOA & Co. for Personal/Family when it comes to year-end tax planning:

• First of all, please consider Job-keeper payment as part of your income.

• Check superannuation contributions for the year to date to see what leeway you have.

• Consider personal contributions for you and/or spouse. Check here for the benefits calculator.

• Consider spouse contribution for spouse earning less than $37,000 for a tax offset of up to $540.

• Prepay margin/investment loans before 29 June.

• Prepay Income Protection insurance premiums to bring forward the tax deduction.

• Review all other rebates such as childcare expenses, dependent spouse rebate, low-income rebate and the tax offsets for mature-age workers and senior Australians.

• If you have a Capital Gain (lucky devil) then check other assets to see if you can trigger any losses to minimise gains.

• Try to defer bonuses or income until new rates apply in 2019/20 and the flood levy is gone.

• Review your own salary packaging arrangements for 2019/20 to ensure it’s within limits and correctly recorded.

• Be smarter with Term Deposits and have them mature after the end of the financial year in the future.

• Change savings accounts into the name of the lower-income spouse before the start of the new financial year.

What is an ABN

Your ABN is an 11-digit number that represents your business to the gov, other businesses and the public in Australia. Legally you are required to have an ABN if you want to start an enterprise in Australia, or if you want to register for GST (Goods and Services Tax). 

You are required to register for GST if your business has a GST turnover of $75,000 or more ($150,000 for not-for-profit businesses). 

If you don’t have to register for GST, you are still expected to have an ABN.

How to get an ABN

There are three ways to apply for an ABN in Australia. The following are the methods. 

• • Registered through the ABR, for free (Australian Business Register)
  • Through your Tax agent
  • Download the form, complete it, mail it

You have to be a business entity to apply for an ABN. There are 4 types of entities. 

• • Individual/ sole trader 
  • Partnership
  • Company
  • Trust 

11 Things to note when applying an ABN

These questions are some that you should ask yourself before you apply for your ABN. Your answer will relate to your ABN application as these are the details that you have to give to the government.

• Do you have a previously registered ABN?

In the case that you have applied for an ABN at a previous date, you must provide the details of your previous application. Use this link to see if you have an ABN already.

• Are you using the services of a tax agent? 

Tax agents are representatives that can resolve any issues with the ATO on your behalf. If you are currently being represented by a tax agent, you can provide their registration number, which is usually found on an income tax return.

• Do you have an ACN or Australian Registered Body Number?

All companies and registrable Australian businesses must register with ASIC before applying for an ABN. Once registered, ASIC will give you an ACN or an ARBN (Australian Registered Body Number). 

• The name of your business 

If you are a business organisation, you must give the legal name of your business entity, which will be shown on all official business documents and legal papers. If you’re an individual, use your own name will suffice.

• What is your TFN 

You TFN can allow quick application for an ABN online. During the application, you can give your own TFN and/or the TFN of any of your business associates. Without a TFN, your ABN application may be stalled.

• Where is your business location 

Details such as the following

• • Street address
  • Business activity details 
  • Phone and email contacts 

• What are your contact details 

You have to nominate a contact during your application to deal with all issues related to the business’s ABN, make changes and updates when required. This could be yourself, or a person who you nominate who will bear this responsibility. 

You have to give these following details for this person.

• • Name 
  • Position held
  • Mobile, phone and fax numbers (if applicable)
  • Email address 

• The details of your business associates 

Based on your entity (Sole Trader, Partnership, Company and Trust), your business associates may be Individuals or Organisations

• • If your associates are Individuals, then you must provide their 
    • Date of birth 
    • Gender 
    • Position held 
    • TFN 
    • Residential address
      
  • If they are an Organisation, then you must provide their
    • ACN or ARBN (if applicable)
    • ABN 
    • TFN or address 
    • Date of formation 

• Describe the main activity of your business 

You will be required to give out what your main income-generating activity is for your business. 

If you work in multiple locations, you may be required to give out the main business activity for each locale.

• When do you need your ABN 

You have to specify the date when you need your ABN. Typically, it should be on the date that you want to start your business. 

• Are you providing the correct information 

At the end of your application, you must declare that all the information you have provided is true and accurate. This is to ensure you can be held accountable for dishonesty. 

At BOA & Co., we pride ourselves in our ability to give you the best financial advice for your business, so that you can have the ease of mind when opening a new business venture, or when you are planning on expanding your business to the next level. Therefore, this article is dedicated to educate you on the different business structures in Australia and to see which one is most suitable for you. 

The 4 main business structures in Australia are the Sole Trader, Partnership, Company (Private/ Public), and Trust (Discretionary Trust/ Unit Trust). 

With each having their own advantages and disadvantages, and distinct characteristics, we will highlight the key features and issues of each to give you an overall understanding of each structure. 

But first, we believe that for each business it is crucial to have certain key elements, as follows. 

• You should maximise your personal asset protection 
• Minimise your tax exposure 
• Comply with all legal requirements 
• Allow new partners and investors to enter 
• Have future access to Discount Capital Gains Tax Concession 

Sole Trader 

Typically in Australia, Sole Traders are small scale business operated by its owners directly, usually by family members and close friends. 

Advantages 

• • Can have direct control over the business and all its success
  • Low costs and minimal legal requirements to start up 
  • Easy to change the business structure
  • Greater privacy
  • Easy to disband 

Disadvantage 

• • Owners have to bear full responsibility for liabilities (unlimited liabilities)
  • Owner’s personal assets may be used to pay business debts 
  • Pay tax for all profits (Business income are taxable, included in their ‘annual personal income tax return’ and taxed at marginal rates)

Partnership 

Partnerships are formed by 2 or more business ventures. Once the partnership is formed, both sides become Owners or Principles of the business. In a Partnership, it is required to have a TFN of its own, since it is considered a new entity. They also bear profits and losses together, as well as set terms and conditions for the duties each side will have to follow. Under the Business Name Act, the name of the partnership must also be registered. 

Advantages 

• • Allows combination of different skills from each side
  • Partnerships are able to receive tax advantages 
  • Usually, partnerships dissolve if one partner passes away 
  • Taxable income or loss of Partnership is shared, according to Partnership Agreement; if not, is still divided between parties 

Disadvantage

• • Unlimited liability spread between Partners, their property and assets
  • Required to lodge Income Tax Return 
  • Each Partner is responsible for other’s share of business liability

Company

Companies can be divided into private and public companies, are run by directors and owned by shareholders. They can also be listed and unlisted on the ASX (Australian Stock Exchange) 

Similar to a Partnership, companies are required to have their own TFN, the business is operated by directors and owned by shareholders. 

Advantages

• • Liabilities are limited to the Company’s assets, will not extend to the owner’s assets (within a limit)
  • All profits are taxed at a fixed rate 

Disadvantage

• • Hard to set up and costly due to compliance costs 
  • Additional legal and financial reporting obligations
  • Not for all business start-ups 

Trust (discretionary and unit trusts)

There are two types of Trusts- discretionary and unit trusts. Trusts are required to have their own TFN, and to have a Trust Deed. The purpose of a Trust Deed is to set out the powers of the Trust, making it legally binding for the parties involved and create asset protection. 

Advantages

• • Can hold properties for beneficiaries
  • Flexible in income distribution (discretionary trust only)
  • Discretionary Trust offer the greatest level of asset protection 

Disadvantages

• • Can be difficult to dismantle
  • Need to lodge a separate Tax Return for the Trust 
  • Beneficiaries pay Personal Income Tax on their income from the Trust 

Should you have any questions about setting up your own business, feel free to contact us. 

If you’re an up and rising entrepreneur looking to start your own business, but have no idea where to start, then this article is for you.

To start, you have to understand what company structures there are, and see which one best applies to you.

Companies in Australia acts as a separate legal entity from its owners. This means that companies have the same legal rights as a person would, such as being able to incur debts, have its legal responsibilities and can be taken to court. As the owner of your company, you are the director for the company’s management and operations. On the other hand, as a shareholder, you are only financially tied to the business.

Business.gov.au has a ‘Help me decide’ tool which you can learn more about which company structure applies to you best. Click here to access it.

There are 2 main types of companies you can choose- Private and Public companies.

Private companies are mainly proprietary companies, such as having an owner or have a trade name. Public companies can be classified as NFP (not-for-profit) or charitable organisation, registrable Australian body, or special purpose company.

Regardless of the type of company that you operate in, your company must be registered with ASIC (Australian Securities and Investment Commision), and you must complete the following 5 steps in order to complete your registration.

1. Choose a name for yourself

Your company name is an integral part of your business. Not only does originality and creativity matters when choosing a name for you company, the name should also reflect the company’s legal status, ensure that it does not breach ASIC’s naming conventions and has not been taken by another financial body in Australia.

If you’re a privately owned company, then your company name should include “Pty Ltd” to show the status of your company as a proprietary company. You should also take care in not naming your company with words such as ‘Bank’, ‘Trust’, ‘Royal’, ‘Incorporated’ without proper government approval, as these breach ASIC’s naming conventions for companies. However, you are allowed to trade under a different business name after you have registered your company’s name. For example, ABC Party Pty Ltd can trade and sign under as ‘ABC Party’ for their business.

2. Choose your company rules (constitutions or replaceable rules from Corporations Act)

There are two types of company rules- Replaceable Rules and Constitutions.

Replaceable rules are a basic set of rules, from the Corporations Act, which guides you on how you can manage your own company. These rules are a guideline for all Australian company which they have to follow.

On the other hand, Constitutions are a set of rules that you form for your company, but also has to be based on and according to the Corporations Act, and has to be kept in company records. With Constitutions, you can tailor your company rules based on the needs of your company, while you only need to follow the rules if you choose Replaceable Rules.

3. Officeholders/ Crucial members of the company

All companies will have to have an appointed secretary, director, and shareholders, which forms the members of the company. Each of your nominated member will have to sign a written consent to show they accept and understand the obligations of their position, which holds them accountable to the company and their compliance to the Corporations Act.

Some examples of common obligations for companies are ensuring that company details are up-to-date, maintaining company records and details on register, pay their lodgement fees and annual fees as required.

4. Share structure

Share allocation to shareholders is also crucial to the company. How many shares per shareholder, what class of shares they will be issued, these are some questions that you will have to think through. Normally, companies will offer ordinary shares to the members of the company, but they must not disclose any information to them.

5. Nominate a principal place of business

Companies will require to have a primary place of conducting business in the form of a registered office. If your registered office does not belong to your company, for example if your registered office is your accountant’s office, you are required to get a written consent from them to use their address for your company.

– Registering with ASIC

Register via the Australian Government Business Registration Service

One you have done the above 5 processes, you can begin lodging your application to register with ASIC via 3 following ways.

• the Australian Government Business Registration Service.
• Use private service provider through your accountant or solicitor
• Lodge a paper form directly with ASIC

Once you’ve completed your registration form, given out all required information, signed and paid for the lodgement fees, you will receive an Australian Company Number (ACN).

• After you have registered

Once ASIC has approved on your registration, they will send you a certificate of registration and a corporate key. The corporate key is a unique number that represents your company, and you are required to create an account online and make sure the details of your company are accurate.

As the owner of a registered Australian company, you have to make sure that your company’s name is on display when conducting business and is open to the public. You also required to show the ABN and ACN of the company on all documents that are published by the company.