Australia’s current tax deduction system has been a hotly debated issue in recent months. There have been strong opposing views, with one side claiming that the current system is severely flawed, due to the sheer amount of fraudulent and petty claims occurring. However, many are claiming that the current system should be kept in place, and stating the problem as being with the public not being educated enough when claiming work-related expenses.

Joanne Dunne, director at Accounting firm PwC is strongly in the corner of a reform of the current system, stating that the current tax deduction system is “out of control”. Dunne has claimed that the current system is inefficient, due to “silly expense claims” that are burdening the ATO’s resources. Dunne also stated that the time spent on these trivial claims should be allocated to “more important” work, and also claims that the cost of investigating these false claims outweighs the costs recovered. The proposition of a simple yearly $1000 blanket deduction for each taxpayer has been discussed, with the view of simplifying the system and nullifying any incorrect claims made.

This has proven to be an unpopular recommendation for some; with Ram Pandey from the ATO expressing disapproval of this idea. Pandey has defended the current system, explaining that the actual problem lies with the public’s misunderstanding of what should be claimed. He argued that a complete overhaul of the system would not be practical, and that it should undergo some gradual tweaking and enhancement instead.

We found this debate quite interesting; we believe that any changes in the tax system are definitely worth keeping an eye on for any small business owner. Our taxation accountants are also very knowledgeable in this area, if you’re looking for some specific advice or simply want to speak with an accountant about your tax planning options, call us today to schedule an appointment on (07) 3367-0852.

Post Contributor:
Andrés Pascoe

An interesting tax avoidance scam has been uncovered recently, involving thousands of tradesmen around Australia and hardware chain Bunnings Warehouse. Because of the amount of cash transactions that occur in the trade industry, a large number of these service providers have been able to circumvent the tax system.

Large amounts of contract workers in Australia have been able to beat the system by replacing their own ABN number with Bunnings ABN number on invoices, making the transactions untraceable to their actual recipients. This has created a black economy of sorts for tradesmen as a result of the large amount of unaccounted for payments. Paul Drum, a member of the government’s national tax liaison group has responded to this issue, proposing that the Government implements a system “to make sure we can verify ABNs on a real-time basis”. This new system would ensure that all contractor transactions are accounted for in real time, eliminating the possibility of contractors escaping tax payments and ensuring the Government does not lose out on hundreds of millions of dollars.

Understanding Your Tax Obligations

If there is a chance that you are not fully aware of all of your tax obligations, there are a range of online guides that can help you. The ATO website has a comprehensive guide to what payments need to be reported each year, including details about businesses in building and construction. We recommend giving the website a look by clicking here, as it is a valuable resource designed to help you make sure that you are fulfilling your tax obligations. As always, you are welcome to contact one of our taxation experts on (07) 3367-0852 if there are any further questions you had regarding your tax planning options. We would love to hear from you!

Post Contributor:
Andrés Pascoe

Usually, January 1 is the common new year celebration. We get together with our friends and family to say goodbye to the year that was and welcome the new year with excitement. It’s a chance to set personal goals to improve ourselves in hope that the coming year is greater than the last.

As accountants, we have a second New Year’s celebration on June 30. Traditionally we complete our performance reviews, we detail our work achievements from the previous year, document our career goals for the current year and our 5 year plan. It is the time of the year we focus on our careers and how we personally want to see them advance in the coming year/s.

After all of this, we head to our local watering hole and celebrate all that we have achieved and aim to achieve. It’s never hard to find an excuse for celebration, but Financial New Year is certainly never an occasion we miss.
At this time of year it is quite common to find our clients thinking about how they can improve their business, their income, their investments, particularly after completing the reports for the previous year and seeing results which they wish were better. June 30 seems to be the time of year for people to reassess the financial aspect of their lives. It’s something many of us think about but not necessarily seek assistance with.

We, as Business Advisors, find that this is a great time to put plans into action, make adjustments to current business activities and if necessary, convert to Xero from other accounting software systems. A five year plan is great for business too, as it gives us as business owners, direction and something to aim towards. At the end of all our hard work the income is great, but achieving business goals to encourage growth is a great feeling and form of motivation. It’s just another way to receive more self-satisfaction for something that absorbs so much of our time, making it all worth while.

From all of us here at Rush Associates, we wish you a Prosperous New Financial Year FULL of Achievements and Growth!!!

As a business owner, one question which we continually ask ourselves is, ‘How can I make more money?’ It’s such a broad question… How about we rephrase it to ‘How can I more efficiently use my time to maximize value?’

If you think back over your day, where you spent your time, can you say that it was effective and efficient? For example, are you a Plumber, but kept yourself chained to the office desk for the day to catch up on your bookkeeping because your BAS is due next week? Is that effective? A Plumbers’ hourly charge out rate might be $60/hr. If we multiply that by five hours of bookkeeping that was done, it has cost the business $300 in revenue. Would you believe me if I said there was a more efficient way to utilize the plumbers time? Let’s send the plumber out to site, charging $60 an hour, revenue is then $300 for the five hours. The builder engages a bookkeeper at $40 per hour, (but it takes them 2.5 hours to do what it took the plumber 5 hours to struggle through) costing the business $100. The net effect of this transaction is revenue of $200, much better than losing the plumbers time at the desk.

You may then think, ‘yep, good point, but I do my bookkeeping at night time or on the weekends’, which is a common practice in small business. However, most of the time, our weekends come and go and very rarely do we get all our items crossed off our ‘To Do’ list. We are then forced into a situation of having to do it in a hurry or at the last minute, cutting into our productive time or chargeable time.

The other downside is that, as accountants, we regularly spend time correcting ledgers simply because the person inputting the data is doing the best they can without having expertise in the field. Traditionally, this costs the business money in higher accountancy fees as time is spent correcting ledgers and sometimes, amending lodged activity statements etc.
Perhaps, whilst the initial reaction to employing or engaging a bookkeeper may seem like an unnecessary cost and sometimes maybe even a luxury, if you think about how you manage your books as a business owner, it may actually be a time saver, and as we’ve said before, time is money. A bookkeeper (considering you engage a good one) will ensure your books are up to date, can provide you with reports on a regular basis to help make financial decisions, ensure that all data is correct and ready for the accountant at the necessary time and take away the worry of another item on your ‘To Do’ list.

Another advantage which is of significant value, is your down time and your time with family. Working five or six days a week and quoting and paperwork during off-site or out of hours time can have an affect on your family and, not to mention, your sanity. Finding work/life balance is crucial in our super hectic lives. So we challenge you to consider how and where you spend your time, can it be spent more effectively, do you need to be relieved of one aspect of your business – and if you answer yes, then we can help. Whilst we are accountants, we do offer bookkeeping services at very competitive rates and would love to be a helping hand in your business. Just food for thought….