MCA Accountants Pty Ltd

Tax Tip: Minors and Penalty Rates - Minors pay higher income tax on "unearned" income (dividends, interest, trust distributions, etc), than adults - but there is an exemption for this where the minor is in full time occupation on June 30. If a minor with said unearned income is thinking of taking up work, the timing may make a difference

Tax Tip: Non Commercial Losses - Business start-ups, micro business, farms, etc that run at a loss may not actually provide a tax benefit to you due to "non-commercial loss" rules. Having a turnover of less than $20k can see you having to defer the loss until later years when you make a profit

Asset Protection Tip: Understand your structure - Asset protection structures can only be effective if you understand them enough to follow them. There's no point paying a fancy accountant to set up 2 companies, 3 trusts, and a superfund if you don't understand it - inevitably you put the wrong thing in the wrong entity and undo all your good work (and costs). A good accountant will never get tired or explaining your circumstances to you

Tax Tip: Ordinary Time Earnings - It is important to understand the different between "ordinary time earnings" and "wages" - particularly if you are an employer. Overtime for example does not fall under OTE, but performance bonuses do It matters for a few reasons, one of which is superannuation. Employers are only liable to pay super on OTE - not total wages

Tax Tip: Overseas Income - Australian residents are liable for tax on all income earned WORLDWIDE. There are limited exceptions, but if you head overseas for a year or two to travel and work, expect to pay tax on that income in Australia (as well as overseas) You should receive a rebate of the tax paid overseas to ensure you aren't "double taxed", but this obviously has other implications (such as your HECS debt)

Asset Protection Tip: ATO debts can become personal - Did you know that some ATO liabilities can look-through your asset protection structure and become a personal liability? PAYGW is the main one, and unpaid super can become a personal liability also. On PAYGW - you can't "choose" to pay PAYGW and not GST if you make a partial payment, the ATO allocate as per their policies (which is PAYGW last). It pays to keep your ATO payments up to date

Tax Tip: Pay Tax To Get Tax Back - We occasionally get queries from contractors early in their business careers around how much tax they will get back. It's a tough one to answer, but it depends on how much tax you have paid Occasionally misunderstood is the concept that you can only get a tax refund if the amount of tax you paid during the year is more than what is due on your taxable income Where a contractor pays no tax during the year, it's really difficult (read: impossible) for them to have anything other than a payable come year end. Salary and wage earners commonly get refunds because they have had tax taken from every pay, and once they factor in deductions at year end they tax taken out during the year was too much If you're a contractor, you should ensure that you put a percent of your income aside each week to cover you for that end of year tax bill

Free Calculator: PAYG Instalment Variation Calculator - When you want to vary your PAYG Instalment (the income tax figure), you have to fill out both the estimated tax for the year and the varied instalment – the problem is the ATO will change your instalment figure based on a formula. This spreadsheet will give you the figure you need to get the result you want https://ed.gr/ddqgc

Tax Tip: Paying Super On Time and Right - Superannuation is only tax deductible if paid on-time (28 days after the quarter end), and super must be paid via a "clearing house" these days also. The ATO has complete visibility over how much super you should be paying, and can tell very easily who is and who isn't complying

Asset Protection Tip: Bankruptcy claw-back - Under our bankruptcy rules asset transfers and transactions as far back as 4 years can be un-done. 4 years!! This could be years before you even started looking like being in financial difficulty. There's not much you can do to avoid this, other than getting your structure right as soon as you can. The sooner you start, the sooner that 4 year period ends