Skip to main content

Liability limited by a scheme approved under Professional Standards Legislation

Hunter Partners are Accountants Tax Agents and Financial Planners

Hunter Partners are Accountants, Tax Agents and Financial Planners at 569 Ross River Road Kirwan Townsville, call us on 07 4723 1223

Hunter Partners provide articles with information about business tax

$150,000 instant asset write-off until 30 June 2020

instant asset write-off

If your business is in relatively good shape and have been contemplating an asset purchase, now is the time. Not only will you be helping the Australian economy get back on its feet, you’ll be doing your business a favour by taking advantage of the instant asset write-off threshold of $150,000.

All News Articles

 Hunter Partners have published News articles on this site for your information

 

Alternative dispute resolution process available from ATO

Alternative dispute resolution

Alternative dispute resolution process available from ATO. Alternative dispute resolution (ADR) is not only used to resolve substantive disputes, and can be used to clarify or limit issues, and remove barriers created by relationship issues between you and the ATO.

Salary Sacrifice will help get the most from your salary

Salary Sacrifice arrangement
                                                       Salary Sacrifice will help get the most from your salary and wages while minimising your tax at the same time. Considering Salary Package Benefits
a salary packaging or salary sacrifice arrangement may be the way to go. While superannuation is one of the first things that pop up when talking about salary sacrifice, there are many other more interesting possibilities. Depending on your industry and what your employer will allow, it is possible to package a range of things including education or study payments, car repayments, general living expenses or even entertainment expense.
Essentially, a salary sacrifice arrangement (sometimes also referred to as total remuneration packaging) is a formal agreement between an employer and employee whereby the employee agrees to receive a lower amount of pay each payday in return for the employer providing them with benefits of a similar value to the reduction in pay.
You may be thinking why it would be advantageous to receive less pay, the answer lies in the pre-tax and post-tax salary amounts. The amount that ends up in the bank every payday is your post-tax salary, that is the amount that you get after the tax is taken out. When you enter into salary sacrifice arrangements you may be able to pay for certain things from your pre-tax salary, which means your money goes further and you end up paying less tax.

Example

Ian receives a monthly pay of $1,000 before tax (pre-tax), say he pays 30% tax on the pay, that would mean his post-tax pay (the amount he receives in the bank) is $700 and $300 is withheld in tax. Ian has to pay for a course of study related to his work costing $200 each month, if he uses his after-tax pay to pay for the course he would only have $500 left. However, if his employer allows him to salary package the course of study and pay for it using his pre-tax salary, the scenario would be as follows:

Salary and wages before tax $1,000
Salary sacrifice amounts -$200
Salary and wages after salary sacrifice $800
Tax at 30% -$240
Post-tax salary (the amount received in the bank) $560

Therefore, as can be seen in this simple example, Ian would get $60 more per pay cycle just by taking advantage of a salary sacrifice arrangement.

If you think salary sacrifice may benefit you, note there are some requirements for it to be effective including:

  • the arrangement should be entered into before the work is performed (ie salary and wages, entitlements, bonuses etc that accrued before the arrangement was entered into cannot be a part of an effective salary sacrifice arrangement);
  • the arrangement should be in writing between you and your employer (but may be verbal in some instances);
  • there should be no access to the sacrificed salary (ie the sacrificed salary must be permanently forgone for the period of the arrangement).

Once the requirements are satisfied, there are no restrictions on the types of benefits that can be sacrificed, the most important thing is that the benefits form part of your remuneration, replacing what would otherwise be paid as salary. Probably the most common types of salary sacrifice arrangements would relate to superannuation and costs of study. However, depending on the industry and employer there may be many other types of benefits that could be included.

Salary Sacrifice, want more money in your pocket?

If you want to get more out of your wages and would like to find out how to structure and negotiate and effective salary sacrifice arrangement based on your unique situation, we have the expertise to help. Contact us today.

Hunter Partners are Accountants, Tax Agents and Financial Planners. We can assist you with all aspect of your accounting, tax and financial planning requirements, call Hunter Partners on (07) 4723-1223.

Tax avoidance schemes, ATO warning to steer clear

tax avoidance

To many individuals, the difference between tax planning and tax avoidance is not immediately obvious, while the ATO considers the former to be a legal way to arrange your affairs to minimise the tax you pay, the latter could land you in legal hot water.

Taxable Payments Annual Report, ATO reminds you to lodge

Taxable Payments Annual Report
Taxable Payments Annual Report (TPAR) was designed to supress, if not outright eliminate the “black economy” by requiring businesses providing various services to lodge a report containing details of payments made to contractors or subcontractors.

Unable to obtain payment from a debtor, get deduction for bad debt

Unable to obtain payment from a debtor

Writing Off Bad DebtUnable to obtain payment from a debtor, get deduction for bad debt, so don’t panic. Depending on the accounting method used by your business, you may be able to claim a tax deduction for the unpaid amount. April 2021 has become a closely observed month with many of the government’s COVID-19 economic supports coming away. As with the wind down of any stimulus, there’ll be inevitable business casualties, perhaps not immediately, but many economists predict that there’ll be many business failures in the coming months. If you find your business in the unenviable position of being unable to obtain payment from a debtor, don’t panic, depending on the accounting method used by your business, you may be able to claim a tax deduction for the unpaid amount.

As the government’s COVID-19 economic supports and stimulus winds down, there is no doubt that some businesses may experience debts that cannot be recovered from customers or other debtors. This unrecoverable debt is commonly known as a “bad debt” and you may be able to claim a tax deduction for the unrecoverable amount depending on the accounting method used.

If you account for your income on an accruals basis, that is, you include all income earned for work done during the income year even if you haven’t yet received the payment by the end of the income year, you may be able to claim a tax deduction for a bad debt.

In order to claim a deduction for a bad debt, you must have included the amount in your assessable income either in the current year tax return or an earlier income year. You will also need to determine that the debt is genuinely bad, rather than merely doubtful, at the time your write it off. Whether or not the debt is genuinely bad depends on the circumstances of each case, with the guiding principle being how unlikely the debt can be recovered through reasonable and/or commercial attempts.

According to the ATO, this does not always mean you need to have commenced formal proceedings to recover the debt. Evidence of communications seeking to obtain payment of debt, including reminder notices and attempts to contact the debtor by phone/mail/email may be sufficient in certain circumstances.

The next step in claiming a bad debt deduction is to write-off the debt as bad. This usually means that you have to record the decision in writing to write-off the debt before the end of the income year in which you intend to claim a deduction. However, the ATO notes that the removal of debt from a customer’s account along with a note indicating that it was a bad debt expense may be sufficient.

In instances where you have dealt with the bad debt in other ways, for example, waived or forgiven the debt, extinguished the liability in another way, or sold the debt, the debt is no longer is existence and you cannot write it off as a bad debt.

Companies that want to deduct bad debts will have the additional hurdle of satisfying the continuity of ownership test (COT). Those that do not satisfy the COT may still deduct a bad debt is you satisfy the same business test or the similar business test. Other special rules also exist trusts including trusts that have made a family trust election.

There may also be GST consequences for businesses when writing-off bad debts. For example, where the business accounts for GST on a non-cash basis, a decreasing adjustment can be claimed where you’ve made the taxable sale and have paid the GST to the ATO and have subsequently not received the payment. However, the debt will need to have been written off as bad and has been overdue for 12 months or more.

Businesses that account for income on cash basis will not be able to claim a deduction for bad debts. This is because these businesses only include an amount in their assessable income when it is received, therefore, bad debts will have no income tax consequences.

Unable to obtain payment from a debtor, get deduction for bad debts?

If non-payment from customers or debtors is getting your business down, we can help you sort out the bad debts from the others and help you get a tax deduction or a GST adjustment when the time comes. Call us today for expert advice.

Hunter Partners are Accountants, Tax Agents and Financial Planners. We can assist you with all aspect of your accounting, tax and financial planning requirements, call Hunter Partners on (07) 4723-1223.