A common question we receive from our clients is whether buying a new car will provide them with any tax benefits. The tax impact of a new motor vehicle depends on who buys the car, whether they are GST registered, the intending business use of the car and the purchaser’s income levels.
Many clients are interested to know how much their business is worth and what they could sell it for. These people have worked hard on their business, labouring for many hours to build up the income of the business. Many of these clients are surprised and dismayed to learn that their business has very little value in terms of the sale of goodwill (i.e. the value of the business’ reputation, client list and brand as opposed to physical items like plant & equipment and stock). The reason is the value of the business is the client themselves and once the client is removed the business is worthless.
It still amazes us how many people open a business without seeking out appropriate professional advice from their accountant. As important as it is to have a detailed business plan and cash flow budget, it is equally important to consider the correct structure to operate the business from. Although it is possible to change structures, this can be administratively messy and may have tax implications.
A question on everyone’s lips from now until the 30 June is ‘How can I save tax?’
There are a few options for businesses to consider, though everyone’s personal circumstances are different and you absolutely must speak to your Accountant to see if these options are right for your business.
Contributing money into super can be a great way to minimise your tax liability for the year. It also offers you the opportunity to boost your retirement savings and put your funds in the lowest taxed environment. However there are many traps and issues that need to be considered.
The 31st March has come and gone and for many businesses this signifies the need to complete and lodge a fringe benefits tax (FBT) return and pay FBT on the private use of certain payments paid or provided to their staff. With the FBT rate increasing from 47% to 49% for the 2016 and 2017 FBT years, for many small businesses it is crucial to minimise the FBT payable. Care must be taken as the ATO is stepping up compliance and audit reviews based on the FBT lodgements. Here are a few areas and tips to help you at this busy time of the year.