News and views from PSZ

Read the latest from PSZ. Stories about our own PSZ team. Profiles of our inspiring clients and how we’ve helped them succeed. Updates from the ATO as well as financial reminders, checklists and tips. Please visit again soon.

Tax, wealth, super and the 2019 federal election

If, as pollsters predict, Labor wins the federal election, there could be big changes ahead for tax and wealth planning in Australia.

We’ve had lots of questions from concerned clients about Labor’s proposed changes to tax laws, franking credits and other matters should Bill Shorten lead a federal election victory later this year.

As an individual you could be affected by:

  • Losing franking credit refunds to your self-managed super fund or yourself
  • Paying higher capital gains tax
  • Losing tax benefits from negative gearing into investment property

As a business you could be affected by:

  • Changes to the laws for loans from companies (known as Div 7A)
  • Discretionary trusts (also known as family trusts) being taxed at 30% of their income

We’re not going to recommend who you vote for, but it’s important that you have an understanding of how these tax and other changes will affect you.

For the moment, we’re recommending to our clients a “wait and see” approach before taking any specific action on any of these proposals. An election needs to be won and then legislation needs to be passed before new laws take effect.

But there may be some opportunities that open up soon to restructure your tax and wealth affairs to give you some significant tax benefits.

Over the next few months, we plan to keep you informed.

If you have any questions about this, please contact us now.

All systems go for Single Touch Payroll

Single Touch Payroll is a government initiative that will change the way you report on your payroll to the ATO – and you need to ensure your software is ready now.

Are you a small business with fewer than 20 employees? Single Touch Payroll (STP) is here – and you need to be ready.

STP is a government initiative that will change the way you report on your payroll to the ATO.

Under STP, your business will report on salary or wages, pay as you go (PAYG) withholding and superannuation directly to the ATO electronically at the same time as you pay your employees.

It’s this direct electronic connection to the ATO with every pay run that’s new and it may require your payroll systems to be upgraded. If you’re using Xero (as most of our clients are) you’re halfway there because Xero is STP compliant.

STP was introduced for businesses with 20 or more employees last year. Now STP is set to be rolled out in stages to smaller businesses with 19 or fewer employees as at 1 July 2019.

Here are three key pointers to ensure you’re STP ready:

  • Does your payroll software support STP reporting? If you’re unsure, contact us immediately and we can help you review your business accounting and payroll systems.
  • If you don’t use payroll software, you can choose an STP ready solution or request that PSZ reports through an STP ready payroll solution on your behalf.
  • If you have 1–4 employees, you can choose a low-cost STP solution. We can advise you.

If you need help in reviewing your software and payroll processes to get ready for STP, or any clarification about what’s required, we urge you to contact us now.

You can also download a more detailed STP employer guide and checklist here.

Carole Herriman, Retired Management Consultant: Client Q&A

Long-term PSZ client Carole Herriman has retired from her management consultancy but is more engaged with the community than ever.

What did you do during your working life?
I was an early recruit to computer programming and worked in Australia, Canada and the US, mostly in universities. On returning to Australia, I moved into senior roles in IT. This was followed by years in my own company undertaking strategic management consulting where most assignments had an IT component.

How did you know it was time to retire?
When I moved to the east coast more than 10 years ago, I decided the time had come. Having worked all my adult life, I was in an acceptable financial position.

As a career high achiever, has retirement had its challenges?
One tends to define oneself in terms of career, so retirement does have its challenges. After moving to Sydney, the settling in and renovating processes took about a year. Subsequently, some of the need to achieve was sublimated into coaching for executive women in information and communication technology.

You’ve moved from Perth to Sydney, yet you’re still with PSZ. Please explain.
Internet, telephone and Australia Post mean that, aside from the time difference, it makes no difference where you live.

What services has PSZ provided for you apart from the obvious tax returns?
Through PSZ I have set up an SMSF and a family trust. In addition, a business of which I am a co-director uses PSZ as our registered office and for all our accounting needs. The financial planning arm of PSZ Partners has also very efficiently reorganised my super fund shareholdings.

How do you spend your days?
My family is spread widely and I spend quite a bit of time visiting nationally and internationally. I am a member of two Sydney art galleries and often attend courses at the Art Gallery of New South Wales as well as philosophy and Spanish language courses. From time to time, I copy-edit academic papers and theses.

How have you become part of your local community?
I am a member of the Glebe Society and have undertaken a number of different roles such as organising their community talks. Locally we have a wonderful bookshop, Gleebooks, which has interesting talks and book launches.

Favourite travel destination?
For family reasons, our most frequent destination is Edinburgh. My partner and I have also taken some educational tours to Europe. Sicily won our hearts, and London and Paris are wonderful cities for a visitor.

ATO cracks down on false claims

Each year, the ATO cracks down on certain hotspots to ensure everyone is paying their fair share of tax. This year, it’s claims for “other” expenses.

This tax return season, the tax office is shining the spotlight on false work-related deductions so it’s important to ensure that any work-related expenses you are claiming are legitimate expenses in earning your income.

We can advise you on what’s claimable and what’s not. Allowable claims can include home office expenses, mobile phone and internet bills, and work equipment.

But the tax office believes many of the more than six million Australians who claim this type of deduction are over-claiming. Many people don’t understand what qualifies as a work-related expense and many others don’t keep the receipts required as evidence.

Here’s a simple way to distinguish a dodgy claim from a bona fide one. To claim work-related expenses, you must satisfy these four points:

  • You must have spent the money yourself
  • You were not reimbursed for the money spent
  • The expense must be directly related to earning your income
  • You must have a record to prove it – paper or electronic receipts are acceptable

Accounting software such as Xero makes it easy to keep track of your receipts electronically.

Remember too that if your expenses are for both work and private use you can only claim a deduction for the work-related portion.

Wondering what kind of claims don’t make the grade with the ATO?

One example is a salesman who tried to claim $5,400 worth of “secretarial” payments to his seven-year-old son who sometimes ran upstairs to the study when the phone was ringing, answered the phone and then handed it to his father.

The same man also tried to claim as deductible “stationery” a Dora the Explorer pencil case, heart and star-shaped stickers, crayons and art brushes.

You have to give him points for trying.

We’re approaching peak tax return season so we suggest you make an appointment sooner rather than later to discuss yours. Our 2018 tax return checklist will help you get prepared.

Contact us today to book in your tax return.

Garth Gilmour and Joe Jooste, Gilmour & Jooste Electrical: Client Q&A

Garth Gilmour and Joe Jooste have amped up their business to a workforce of around 30 with the help of PSZ.

You started your electrical contracting business in 2005. How did it happen?
We first worked together on a job for another electrical contractor. We subsequently helped each other out on many occasions and decided it was more practical to become partners.

You’ve grown from two partners and two apprentices in 2005 to a thriving business of around 30 staff. How have you achieved that?
We needed more staff after winning a government contract. More apprentices were employed when our original apprentices became electricians. We always have teams of electricians and apprentices working together.

Is there a particular aspect of electrical work you focus on?
We concentrate on doing maintenance for larger organisations, government bodies and local shires, and we still love doing new installations and renovations.

What’s the biggest challenge in running your business?
Coordinating people and tasks, and working with ever-changing cashflows.

How long have you been a client of PSZ?
We’ve been with PSZ since 2011 through a recommendation from a customer. When we met Carlo and listened to his suggestions we knew PSZ would be great accountants for us.

What services has PSZ provided for you apart from the obvious tax returns?
Carlo revamped our whole financial structure and has ensured we have solid systems in place. First up was a partnership agreement and then all the necessary trusts, companies and insurances along with the usual ATO dealings. Then there was the setting up of each partner’s self-managed super fund and estate planning.

What about the associated services offered through PSZ Partners?
We’ve also used Richard for insurance and Steve for finance broking.

Any key pieces of advice PSZ has given you?
Paying off our BAS account monthly helps with cashflow.

What do you like to do when you’re not working?
Garth: I enjoy spending time with my wife and two girls, get-togethers with family and friends, and boating.

Joe: Like Garth, I like to spend time with my wife and two daughters. I love a good barbecue, the beach, scuba diving and socialising with family and friends on hot summer days.

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