Category Archives: Investor

Your 9 Point Checklist for Paying Less Tax This Year

(And Why This Checklist Will Be Useless to You in a Few Weeks’ Time)

Time is running out.

If you want to take a few simple preventative measures to minimise or defer how much tax you will pay for this Financial Year, you need to do two things:

1. Read the following 9 point checklist, then
2. Call or email us as soon as possible so we can make a time to sit do with you to assess which of these preventative measures can be done for you in your circumstances.

Depending on your situation, this tax planning process could save you many thousands of dollars. That’s cash in your bank account, rather than the Tax Office’s.

After all, why pay one more dollar in tax than you have to?

I’m sure you have better uses for your money, such as investing in your future or just investing in the here and now and rewarding yourself with a little ‘lifestyle indulgence’.

Now … to the checklist. Tick each item you think is relevant to you:

❑ Review debtors
: Your income tax is payable on any invoices you’ve issued, even if you haven’t been paid. Don’t pay tax on any invoice you know won’t ever get paid. Review the list of those who owe you money and write off those ‘bad debts’ now.

❑ Review your stock levels: 
The value of your closing stock directly affects your business profit, the higher your stock value the higher your profit and tax. Review and identify any obsolete or old stock and scrap it or re-value it to its correct value. Individual items of stock can be valued at cost, market value, or replacement value.

❑ Review your business assets
: Write off any obsolete asset and claim its remaining book value now. There are also new ways assets can be depreciated, called pooling, that will increase the depreciation expense. This isn’t suitable for all business, but it is worthwhile reviewing.

❑ Defer income — A simple tip that can defer a lot of tax for you
: If your cashflow allows, you may consider deferring some of your invoices until July. If the income was not invoiced this financial year, it can’t be taxed this financial year. Before taking this option we recommend having a budget to manage these months income and expenses. We can help you with that.

❑ Review your invoices issued
: If you have invoiced someone in advance for services you will provide in the next financial year, then you may not have earned that income in this tax year. That income may belong in the year you provide the service. Again, this is something we can work out with you when we meet for tax planning.

❑ Pay the June quarter superannuation
: Superannuation if paid on time is deductible when paid. Since you have to pay the 9.5% superannuation by 28 July, bring it forward a month and pay it now and claim the deduction now. Why wait a whole year to reduce your tax?

❑ Using all of your superannuation cap: If maximising your superannuation is part of your retirement plan, then don’t forget to contribute as much as you can into your super fund. We can guide you as to how much you can contribute. It’s a missed opportunity not to do this each year.

❑ Employee bonuses
: Bonuses to employees are deductible when the business has committed to paying them and it is not subject to any discretion. So finalise and sign off on the bonuses to be paid and reduce this year’s tax.

❑ Capital Gains Tax (CGT)
: Minimising your capital gains tax is often about timing. Ensure the asset has been owned for at least 12 months. If you already have a capital gain, are there any investments making a loss you can sell? Do you qualify for any capital gain rollover relief concessions? (Again, we can guide you here.) CGT is a whole topic on its own, and the potential savings are so great, it is definitely an area in which you should seek our guidance.

If you ticked any of the above items, then we need to talk. And soon.

Call us now on 03 9880 9300 or email us on office@epagroup.com.au to make a time to meet and discuss your tax planning options.

Most people will quite literally earn millions of dollars in their lifetime. Yet many people struggle financially and live from one pay period to the next.

With the ageing population and many Baby Boomers now continuing to work—at least on a part-time basis—past the traditional retirement age, people are working more years than ever. Even if a person works only 40 years, at average earnings, that’s a lot of money.

It is said, “Money talks”, but for many, all it ever says is, “Hello, and Good-bye”.

Have you ever found that the month lasts longer than the money? Or have you ever got your tax return and looked at all the money you have earned over the past 12 months and then thought, “Where has it all gone?”

You’re not alone. And the good news is, now there’s a simple solution.

There’s a great quote from Charles Dickens’ book David Copperfield where the character Mr. Micawber says to Copperfield, “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

This is so true, regardless of the income level.

Yet keeping track of what you spend your money on, for many, is too hard, too laborious. The benefits of doing so are obvious to anyone, yet the discipline to keep all your receipts, enter the information into a program like Quicken Personal or MS Money (or just to write it into a paper ledger), and keep that going consistently over time is beyond most of us.

Well … and here’s the good news … what if a piece of software could track and categorise what you spent your money on, but it involved very little effort by you?

Imagine the clarity you’d get if you knew exactly how much you have spent and what percentage of your income is going on the various areas including mortgage/rent, vehicles, groceries, schooling/education, eating out, entertaining, mobile phones and internet, medical and pharmaceutical, and so on.

For most people, it would be a real eye opener.

It is said that knowledge equals power.

That is very true when it comes to your personal finances.

Once you can objectively see exactly how your lifestyle and your habits—that is, you—are spending your money each year, and month-to-month as you go, you then have the power to make decisions on where you can change your spending (and saving!) habits.

In this information age and electronic era, many of us use credit cards, debit cards and EFT when buying things. We have now reached a point for the first time in history where more money is exchanged electronically than through cash transactions.

That’s a lot of transactions. And it’s a lot of data.

This data is available to be analysed on a societal basis, industry basis, business basis and … a personal basis.

And that’s where a brilliant tool comes into play: Xero Cashbook

Here’s how it works …

Xero Cashbook is online software. It’s the non-tax-tracking version of the Xero software used by businesses.

It analyses and categorises all your electronic transactions to give you a snapshot of your complete financial position in an instant. This also organises a view of all your bank accounts and credit card accounts in one place. Very handy.

This is precisely what a lot of people have been waiting for: An easy way to track and control your finances.

Xero Cashbook categorises your spending and saving, so you can tell whether your money is being used for essentials or you’re splashing out on other things.

If you are concerned about security, Xero protects your financial data with 128-bit SSL encryption, the same as online banking. Your data is well protected.

You can also invite people you trust, such as your spouse, accountant or other financial advisor, to access your Xero reports for free. This means that as your advisors we can see the true picture of your finances and spending habits, and help you stay on track.

This allows us to help you plan ahead and make the most of your money.

You will never before have felt so in control of your personal finances.

Being web-based, rather than being stuck on one computer like traditional software, you can access Xero from home, work and even on your smartphone such as an iPhone and Android device.

If you’d like us to step you through getting set up with Xero Cashbook, or their Xero equivalent for Business, or both, get in touch and we’ll hand hold you through the process. It’s not difficult, and once your bank accounts are set up, it happens automatically from there.

The way we see it, the more clients we help keep track of their finances in such an easy way, the more clients who will prosper and find financial happiness instead of financial misery, to paraphrase Dickens’ Mr. Micawber.

Your next step … Call us on (03) 9880 9300 or email us on office@epagroup.com.au to make a time to meet and discuss your options. We’ll then outline the costs so you know exactly what lies ahead.

It’s time to stop saying “good-bye” to so much of your money each year!