WSC NEWS - JUNE 2009 

This issue includes the following topics:

Warning About Year End Deductions
Top 10 Tax Tips for June 2009
MYOB Software
Time to get Budgeting
The Early Bird Catches the Worm
Accounting System Quality Check
Claiming Interest on Investment Loans
New Unfair Dismissal Laws - Commencing 1 July 2009
Beware of Email Scams
Client Corner

1. Pay all superannuation contributions by 30 June to ensure a deduction in the 2009 year.  This includes employee super guarantee obligations as well as additional super allowed under the concessional contribution caps.
2. Take advantage of the government super co-contribution.  A guaranteed return of 150% or up to $1,500 applies for taxpayers with a taxable income of less than $30,342. Click here for more details.
3. Consider taking advantage of the new Investment Allowance but only if you can afford it and need the asset(s).
4. Write-off bad debts, obsolete plant and equipment and obsolete stock prior to 30 June.
5. Pay for 2009-2010 year business-related subscriptions, union fees, income protection insurance, course fees or computer software upgrades by 30 June.
6. If you've been lucky enough to sell any shares or real estate for a capital gain during the year, consider whether there are any assets you can sell at a loss prior to 30 June, as these will reduce the assessable gain.
7. If you have kids at school and are entitled to Family Tax Benefit A (FTB A), don't forget to keep receipts so that you can claim the Education Tax Refund (ETR). Click here for more details on the ETR or here to see if your family income may be under the relevant threshold for FTB A.
8. Talk to your bank about prepaying 2009-2010 loan interest for any investment loans prior to 30 June. Obviously, not everyone can afford to do this and it does only bring forward the next year's tax deduction, but under the right circumstances it can save thousands of dollars in tax. If this interests you, contact us for more details.
9. Make sure your car log book is less than 5 years old and complies with the ATO substantiation rules. Click here for more details.
10. Keep all receipts for deductible expenses or donations. Lost receipts means lost cash from your pocket.

If you have any queries regarding what you can claim as a tax deduction, whether your business is eligible for the Investment Allowance, whether you should be purchasing vehicles or equipment now, how you should be financing them, or anything else on tax, please do not hesitate to contact Brett Woods or Matt Bell, but don't leave it until the last minute!

MYOB Software

Many of our business clients use MYOB accounting software, however, we have noticed in the past that some are using old versions.  It is important in order to ensure full compliance and efficient software functionality that businesses upgrade to the latest version which is currently Version 18 for MYOB Accounting or Accounting Plus and Version 12 for MYOB Premier.  And remember, accounting software upgrades are 100% tax deductible for all businesses.  Click here for more details re MYOB software.

If you need any assistance with your MYOB software, please do not hesitate to contact Margaret or Kim at Soft Boot Computer Partners or Kerry Andrews and her team at All Sorted Bookkeeping Solutions.  Click here for their contact details.

Time to get Budgeting

As mentioned above, at this time of the year, many businesses are focused on minimising tax prior to year end.  However, one of the most important things that business owners should be looking at in June and July each year is preparing a monthly budget for the year ahead.  This can be a daunting task but the benefits derived can be enormous.

The first step is to review the business expenses of the prior year noting any abnormal or extraordinary expenses that will not be occurring next year.  Be conservative but reasonable with expenses and their timing.  Learn from the previous year's monthly profit and loss and don't be too pedantic with trying to predict the future.  Include a line for Miscellaneous expenses for any unexpected expenses that may come up.  The amount of these will depend on the business and likelihood. 

The next step is to look at the direct cost of sales, average profit margin, and sales required to firstly breakeven and secondly, achieve the targeted monthly or annual profit.  A correctly structured budget which is measured, monitored, updated and graphed against actual results on a regular basis can really help drive the business in the right direction.

If you would like assistance with establishing your budget for the 2009/2010 income year, please do not hesitate to contact Matt Bell at WSC Caringbah on 9531-0922.

The Early Bird Catches the Worm

If you expect to be eligible for a tax refund for the 2009 income tax year and would like to receive your refund cheque as early as possible, we recommend that as soon as you have received all of your 2009 tax records, to contact our office and make an appointment to see one of our team members. 

Our turnaround time for personal and business tax returns and financials depends on various factors including the time of year we receive the information and whether all of the information is provided, but we always practice a first-in, first-served system.

To assist our clients in providing all of the information required, we have included a copy of several Information Checklists on our website which you can print, complete and send in to us with your information. Click here to obtain a copy of the relevant checklist.

Accounting System Quality Check

If you would like us to give your internal accounting ledger a quality check before closing off for the year, please contact Brett Woods or Matt Bell at WSC Caringbah. It is important not to carry any errors or problems from one year into the next. Also, sorting out any issues now, can save time later on but more importantly you will have much more accurate and meaningful financial reports to rely on for decision making.

Claiming Interest on Investment Loans

Most investors would be aware that they can claim interest on a loan to purchase a rental property.  However, there are a few rules and traps to be aware of.

Firstly, the property must be rented, or available for rental, in each income year you claim a deduction.  If you use the property for private purposes, you cannot claim interest for that period that it is used for private purposes.

If you take out a loan to purchase land on which you intend to build a rental property or to finance renovations to a property you intend to rent out, the interest on the loan will only be deductible from the time the loan is taken out.  However, if your intentions change, the deduction is disallowed.

These days, banks and other institutions offer a range of financial products which can be used to acquire rental properties or finance renovations or repairs.  Many of the financial products permit flexible repayments and redraw facilities.  As a result, a loan could be used partly to purchase a rental property and partly for private purposes.  In these situations, the interest must be apportioned between deductible and non-deductible, based on the amounts borrowed for each purpose.

Complications arise where investors have a loan facility that has a fluctuating balance due to lump sum deposits and withdrawals, where some withdrawals are for rental purposes and others for private purposes.  The fact is, every time a private withdrawal is made from a loan, the deductible percentage of the loan has to be recalculated to a lower percentage.  If this is happening on a regular basis, it can be a real nightmare to calculate the deductible amount of interest.

For example, if a loan for $500,000 was wholly for a rental property purposes, and a lump sum payment is made of $50,000 to reduce the loan to $450,000, the loan is still 100% deductible.  If a month later the owner withdraws $50,000 to purchase a private car, increasing the debt up to its original $500,000, the loan will now only be 90% deductible and 10% private.  The fact that you had previously made a $50,000 lump sum payment is irrelevant.

This means that property owners should plan ahead before making any large repayments on their rental property loans or withdrawing amounts from these loans for private purposes.  In these circumstances, it is important to contact us before making any decisions, to ensure that interest deductions are maximised and future problems are avoided.

New Unfair Dismissal Laws - Commencing 1 July 2009

Under the current Work Choices rules implemented by the previous Federal Government, employees in businesses with up to 100 workers could be dismissed without any claim for unfair dismissal. There businesses were also protected if the employee had not completed the 6 months qualifying (probationary) period or the period of probation specified in the employment agreement. These rules will change from 1 July 2009.

Under new "Fair Work Australia" rules to commence from 1 July 2009, "small businesses" will be redefined to include those with less than 15 employees. Only these employers will be entitled to the special arrangements offered including:

• A doubling of the qualifying period from 6 months to 12 months, during which time the employees cannot make a claim for unfair dismissal.
• A six-paragraph Fair Dismissal code which, if followed by the small business owner, will ensure a dismissal is not unfair.
• A summary dismissal without notice or warning is warranted in cases of fraud, theft and violence.
• For under-performing employees, the employer is required to give the employee a warning and valid reason, based on the employee's conduct or capacity to do the job, why the employee is at risk of being dismissed and a reasonable chance to rectify the problem.
• Multiple warnings are not required.
• It is desirable but not necessary for a warning to be in writing.

Click here for full details of the Fair Dismissal Code and a copy of the 'Small Business Fair Dismissal Code Checklist' which small businesses should complete at the time of dismissal.

Businesses employing 15 or more people will have a qualifying period of 6 months (or the period of probation specified in the employment agreement), within which time unfair dismissal claims cannot be lodged. Unfair dismissal claims must normally be lodged with Fair Work Australia within 7 days of dismissal.

It is highly recommended that all employers have the following items documented:     

1.  Employment Contracts that are legally compliant; 
2.  Workplace Rules and Policies, describing the behaviour that is expected of the employees; and
3.  A Disciplinary Procedure in place which has been clearly communicated to all employees

As a minimum, the employment contract and/or workplace rules and policies should refer to Terms of Employment, Codes of Conduct, Probation Periods and Performance Reviews. These documents should be drafted, or at least reviewed, by a well-qualified business solicitor and human resources expert.

For more information on these changes, call the Workplace Infoline on 1300 363 264.

Beware of Email Scams

There has been a recent surge in email scams doing the rounds indicating that they are from a bank or the Australian Taxation Office (ATO).  Do not reply or click on any links contained in these emails.  They should be deleted.  If you wish to check something with the ATO log on to www.ato.gov.au or alternately, contact us and we will advise you if any further action is required.
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Client Corner

 Ravish Designs is a family-owned business which has been operating successfully in Sydney for the last 5 years. They sell a wide range of unique hammered and oxidised sterling silver jewellery which is imported directly from the designers in Israel. The range includes earrings, necklaces, bracelets, rings and watches and all designs are 925 sterling silver some of which include sparkling gemstones, such as garnet, turquoise and onyx. These can all be viewed and purchased via the internet at www.ravishdesigns.com.au. Internet orders of over $50 will be delivered across Australia freight-free. Alternatively, you can view a selection of Ravish Designs' products at their showroom located at Suite 1, 36 Moore Avenue, West Lindfield, (entry via rear lane).

Ravish Designs' customers are inspired by the quality and uniqueness of their pieces and the fact that they are vastly different from the jewellery seen every day in the shopping centres. Ravish are incredibly proud of their high level of customer service. Click here to review testimonials from many satisfied customers.

Their website also includes some info-videos to help the web shopper visualise the products. Click here.

Ravish Designs' products are priced from around $25 to over $600, with around half the range being priced under $100.