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Your 9 Point Checklist for Paying Less Tax This Year (And Why This Checklist Will Be Useless to You in a Few Weeks’ Time)

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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 down 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 1300 574 108 or email us on info@middlewise.com.au to make a time to meet and discuss your tax planning options.

The Most Common Mistake Business Owners Make When Structuring Their Business

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As a business owner, there are plenty of things you need to manage, and two of the most important of these are assets and risks.

In other words, building your wealth and protecting your wealth.

There’s no point building a lot of wealth if behind the scenes you have things structured in a way that means someone could take your assets away from you.
 
Sadly, many business owners are in precisely this predicament, without knowing it!

Following are some crucial concepts that, if you as a business owner don’t understand them and put protective measures in place, your family home (and all personal assets of you and your family) are at risk of being lost if someone decided to take legal action against your business.

Consider these facts...
  • Your business faces unpredictable risks through interaction with employees, customers/clients and creditors.
  • This means there is potential to be sued by a variety of parties. Where there are agreements in place, sometimes disagreements later result. This is life. It makes sense to accept that, and plan and protect yourself, rather than hope it never happens. 
  • Litigation, sadly, is increasing each year, largely driven by lawyers offering ‘no win, no fee’ services. 
  • This encourages people to take legal action. They have nothing to lose, after all. 
  • This means you need to ‘build a wall’ between your business risks and your personal assets otherwise you risk losing it all. 
  • This ‘wall’ protects you and your family from losing assets such as your house or personal investments, if your business was to be sued. 
  • The wall is created by strategic use of companies and trusts, and also deciding who within a married couple, for example, should and should not be a Director of each company. This is a key point. One seemingly simple mistake in this area can cost a family their house. 
  • The standard type of will puts your family’s assets at risk, because if the person who dies holds the family’s personal assets in their name, ownership of these assets will revert to the person who through their Directorships in the business, is at a much higher risk of being sued.
This presents significant risk.

So what can you do about it?

If you haven’t looked at your asset protection structure in the past 12 months, you need to make that a priority.

Then this should be reviewed annually.


Why? 

As your life changes, your asset protection strategies—your ‘wall’—needs to be checked that it is still appropriate.

As part of this process we also ensure your wills and estate planning are in order. Remember, the standard type of will can bring down your wall.

In addition to wills, there are other important documents to have in order such as an enduring power of attorney. This is a legal document that can give someone else—the person you choose—the power to make personal or financial decisions on your behalf

You see, it is far more common for someone to become incapacitated through accident or trauma such as stroke, than it is to suddenly die. If this happens to you, you may not be able to communicate your wishes and make decisions when you need to. 

The consequences of this are dire and tragic. 

It’s all about choices and about ensuring you protect your family and your assets. Without sound asset protection and effective wills and estate planning in place, the legacy you have been working so hard to build may not end up in the hands of the people you intend.

The potential distressing nature of this type of scenario is why we feel so passionate about asset protection and estate planning... because it’s all about protecting the families we serve.

If you’re anything like our many other clients who have these structures in place, we think you’ll find the costs of ‘building these walls’, so to speak, relatively minor compared to the protection they give you and your family.

Your next step... Call us on 1 300 574 108 or email us to make a time to meet and discuss your options. We’ll then outline the costs so you know exactly what lies ahead.

Get a life… and a mortgage

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Client Alert! May 2014

Get a life… and a mortgage


Do you enjoy a good bottle of wine? How about that unmistakeable new car smell, holidays or eating out?  

Of course you do! We do too. In this article we’ll go through what you have to do to buy a home and still ENJOY all that life has to offer.  

Understand all the costs

It may seem like common sense but the principal cost of the property is not all that you need to consider before buying. There are legal costs, inspections, reports… and that’s before you’ve even thought about moving in! Then you have removalists, repairs, maintenance, the list goes on. Take some time and work out how much this could cost you. Most of these costs can be added to your mortgage, you just need to know what you’re in for. Bear in mind that interest rates may rise so you don’t want to push yourself to the brink and hope for interest rates to ease or remain stable.

For once, Inflation is a good thing

For the vast majority of us, a mortgage is a marathon, not a sprint. When you’re in it for the long term, inflation is going to help you out, here’s how. A decade ago the average home loan was in the vicinity of $190,000, at the same time the Australian Bureau of Statistics shows the average income was just over $39,000. Last year the average wage was more than $74,000 so play that out over 10-20 years and your mortgage starts to look a lot more manageable.

Understand your end goal

Before jumping in, make a personal financial plan for yourself and the property. List all of the improvements you would like to make and the estimated costs, as well as other personal life expenses you would like or can foresee i.e. holidays, cars, your kid’s education etc. Then prioritise them according to your goals. Remember it’s just a plan, it doesn’t need to be perfect and it definitely shouldn’t be rigid. With a well laid plan, you should be able to roll with the punches.

Control Freak

If you want to understand what your repayments will be then think about locking in a fixed rate loan. At the time of writing, interest rates are pretty low so this could be an excellent option but just remember, in the next round of rate cuts or rises you’ll either be fist pumping or lamenting your decision… be prepared either way.

Doing Deals

Applying for a new loan or refinancing an old one can be a great time to review ALL of your providers. Pull out your bills from the last quarter and start making some phone calls. There’s always a better deal out there for Credit cards, phone bills, insurance… it could be WELL worth your while to spend an afternoon firing off emails and making calls. Remember, to consider your credit rating as the guidelines changed in March 2014 – http://middlewiseaccounting.practicepl.us/blog/protect-your-reputation-manage-your-credit-rating-march-2014.

Do the math & know what you can claim

Understand all of the features and perks of your loan, there could be good deals with credit cards or offset accounts which could save you money on interest. Make sure you do the math all the way through though, as loans with offsets usually have higher interest rates, so just make sure the benefits outweigh the costs. Also, check with your local government before you dive in, there are often grants or other subsidies available. Once you’re all set up make sure you are leveraging the perks of your loans and your credit card loyalty programs to save money, and still enjoy all of life’s luxuries.

Contact us TODAY for a FREE home loan review and comparison report with the latest rates available for you. 

Middlewise Accounting

Ph: 1300 574 108

Email: info@middlewsie.com.au



What does FREEDOM mean to you? We ask you take a minute or two and ask yourself – What does FREEDOM mean to ME?

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Do you think you’ll have enough super to live out your life with absolute financial freedom? Doing what you want, when you want, how you want, as much as you want. 

For most, their retirement savings rarely see them through to age 85! But yours can, with Freedom Planning!

So what is Freedom Planning?

Freedom Planning is a one page plan for your future – how much $ you will need, an estimate of how much $ you’ll have, and how to help you get to what $ you’ll need to ensure you have a beautiful financial future!

How does Freedom Planning work?

It starts with a free, 30 minute coffee and chat with us. Together we will create your one page plan and identify your Freedom Gap – how much $ you need to get, to achieve financial freedom.

Once we’ve identified your Freedom Gap we can help you to start eliminating that gap with 5 key strategies:

1. Using a Protected Share Investment

Imagine buying shares with no downside risk! Receive all your dividends and capital growth without losing anything if your shares go down in value. Not only do protected share investments help boost your wealth but they can also be tax effective!

2. Using a SMSF

A popular option for investors seeking flexibility and greater control of their superannuation.

We can help you get started with an SMSF and the purchase of an income producing residential property using a borrowing strategy. So not only do you boost your wealth but it makes it last, and you can enjoy the many other advantages of retiring using a SMSF.

3. Debt Optimisation

Sometimes referred to as “Debt Recycling”, Debt Optimisation is an adaptable financial strategy that creates wealth over time and improves your debt structure, by reducing your “bad debt”, increasing your “good debt” and building an investment portfolio.  All adapted to suit your goals and time horizons.

4. Tax Planning

With effective tax planning every year in the months of March and April, you can legally reduce your tax and boost your wealth. We’ll discuss which tax planning strategies will work for you, how and when to get started with them.

5. Increase your Business Value

Using our new Business “On Track” Plan we can set out a 5 year projection of your business value, and an action plan on how you can increase your business value. Then meet with you every month/quarter to review the plan and ensure you’re always on track in boosting the value of your business.

We want you to have a Better Financial Future with Ultimate Freedom! Do YOU?

Don’t delay. Call and book your FREE 30 minute coffee and chat. The sooner you get started with the right advice, the sooner you will grow your assets to have a beautiful financial future!

This article is provided as general information only and does not consider your client’s specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of a client's specific circumstances. © 2013 Middlewise Pty Ltd


How much for a Comfortable Lifestyle? Tips for your Financial Future

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Consider these numbers around superannuation and your future:

For a comfortable lifestyle, a couple will require about a $510,000 super balance at the start of retirement.

A single retiree will require about a $430,000 super balance at the start of retirement.

How are you tracking?

And what does it take to end up with a super balance of that size, if relying solely on the 9.25% compulsory superannuation contributions?

Assuming 30 years of 9.25% contributions, a wage earner on $50,000 per annum is likely to have a super balance at retirement of $220,000.

Someone earning twice that amount, $100,000, will still only end up with $435,000.

That's what we call 'a very material gap' between the required super balance and the likely super balance.

And what that really means, is a HUGE DIFFERENCE in lifestyle for the retiree.

For a couple on a single wage of about $100,000, this gap will be $75,000 and their likely super balance will be about 85% of the required balance.

Clearly, there are three options:

  1. Increase their contribution rate above 9.25% for the couple's working life (say about 30 years); or
  2. The couple significantly downsizes their retirement lifestyle expectations; or
  3. The couple will have to extend their working life. 

A useful reference for planning your level of retirement savings

To know whether your retirement savings will give you a comfortable or a modest standard of living, refer to the ASFA Retirement Standard.

This benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years. It is updated quarterly to reflect inflation, and provides detailed budgets of what singles and couples would need to spend to support their chosen lifestyle.

You'll see on that page that the ASFA Retirement Standard describes a 'Modest retirement lifestyle' as, "Better than the Age Pension, but still only able to afford fairly basic activities."

It describes a 'Comfortable retirement lifestyle' as "Enabling an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel."

ASFA calculates that a couple living in QLD would need to receive $56,163 per year for comfortable lifestyle, and $32,463 per year for a modest lifestyle.

Although many of us have been brought up to see 'being modest' as a good thing, this certainly doesn't apply to your retirement lifestyle!

How to get your super (and likely retirement lifestyle) on track...

To us, your superannuation is one aspect of your LifePlan. Superannuation is great, and you should take advantage of the tax advantages it offers.

Contact us to make a time to meet with us to discuss what's involved in us documenting for you a clear LifePlan.

Your LifePlan will cover not just building your wealth, but also protecting your assets, managing your cash flow, tracking your expenditure and making sure that in 10 years’ time, you are where you want to be financially and lifestyle-wise.

Every client we have developed a LifePlan for has loved it. They tell us it gives them comfort and clarity to know they have a clear, achievable, documented plan, developed by a team that not only considers investment and financial planning aspects, but also taxation and accounting aspects. That's the benefit of working with MIDDLEWISE ACCOUNTING, because we address 'the big picture' of your financial life, which is something that neither an accountant nor a financial planner can do in isolation.

The quality of your lifestyle in retirement is too precious to leave it to chance, and as you can see above, relying solely on compulsory superannuation is a recipe for a meagre lifestyle in retirement.

FREE LifePlan Consultation – Book NOW!

To assist you to get your Super on track, contact us TODAY on 1300 574 108 for a FREE 30 minute consultation. We can clearly show you, using our exclusive LifePlan Gap Analysis, your “big picture” and set out an action plan to help you on your way to achieving your retirement lifestyle!

Don’t delay. The sooner you get started with the right advice, the sooner you will grow your assets to have a beautiful financial future!

Notes on the amounts and figures quoted in this article: These comments are based upon the recently released June 2013 quarter figures Retirement Standard of ASFA.  The likely super balance is determined assuming the current tax treatment of super is unchanged, that the contributions have been made to a taxed super fund and that the super investors are home owners who are entitled in part to the Age Pension.  The above is not financial advice.  Any super investor should consult with a licensed financial adviser before making any investment decisions.

This article is provided as general information only and does not consider your client’s specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of a client's specific circumstances. © 2013 Middlewise  Pty Ltd

on’t delay. The sooner you get started with the right advice, the sooner you will grow your assets to have a beautiful financial future! sets to have a beautiful financial future!


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