It is not uncommon for business owners to use or take goods from their business for private use, but did you know that you must make an allowance for these goods taken in your annual financial statements and tax return?

To avoid having to keep detailed records, each year the Australian Taxation Office (ATO) issue a Taxation Determination (TD) setting out an acceptable dollar value of goods taken from trading stock for own use by business owners (or their associates).

The TD is only relevant for certain industries and for businesses operating as a sole trader or partnership.  Of course you can always use a lesser amount than referred to in the TD, but you need to be able to justify the lower amount to the Commissioner of Taxation.

You can find the TD for 2014/15 here.

The purpose of including these amounts is to record income in lieu of the sales value you have forgone, note that a GST adjustment will need to be made also…

The TD is not applicable to businesses operating as a company or trust, in these cases the business owner will need to consider the application of Fringe Benefits Tax (FBT).

If you need help applying these measure, contact me for assistance.

Regards

As an accountant I probably shouldn’t admit to sometimes having trouble remembering numbers…but I am human and as such…it happens (not often…but sometimes)!

At any given time I have a multitude of numbers running around my brain – right now I’m thinking of dates and job quotes and client details and counting days…add to that the everyday numbers everyone deals with from passwords and login details to dollars and cents and everything in between – it’s a wonder I haven’t gone mad!

One of the numbers I have had the most difficulty remembering is my Australian Business Number (ABN)…I’ve got it under control now, but it took me a few months before I was able to roll it off my tongue when asked.

The beauty of the ABN though…is that you don’t need to remember, because you can look it up at anytime, as long as you’ve got an internet connection.

If you ever forget your ABN, or you need to confirm the ABN of another entity, head to www.abr.business.gov.au where you can search by name (you can even search by number if you’ve got the ABN and you want to confirm the name of the holder – it works both ways!)

Take a look and save it in your “favorites”, I promise you won’t be disappointed!

Regards

A few weeks ago I wrote about Private Health Insurance – Understanding the Rebate, today I’m going to take that a step in a slightly different direction and chat about income for Medicare Levy Surcharge (MLS) purposes.

Essentially, if you are an individual taxpayer without appropriate Private Health Insurance and with income exceeding the threshold for MLS purposes – you will be charged the Medicare Levy Surcharge (MLS) upon lodgement of your income tax return.

When determining if you are required to pay the MLS, the Australian Taxation Office (ATO) take into consideration your “income” for this purpose, which is not simply your taxable income – rather it includes other amounts that impact on your taxable income, such as:

• taxable income
• reportable fringe benefits
• total net investment losses
• reportable superannuation contributions
• a share of net income of a trust on which the trustee must pay tax (ie: not included in your taxable income)
• exempt foreign employment income

At this time of year, nearing the end of the financial year, there is plenty of advertising from health insurance companies relating to this exact topic – how to avoid the MLS – you should take this opportunity to review your income for MLS purposes and determine whether a private health insurance policy is suitable for your circumstances.

In reviewing your situation, I realise that some of the terms above might be foreign to you, if you are unsure if they apply to you, I recommend you ask your accountant!

Regards

You all know how I love an acronym…but what is the CPI?

CPI is the acronym for Consumer Price Index, which is a measure of changes in the price level of a basket of goods and services consumed or purchased by households.

Basically, the Australian Bureau of Statistics (ABS) collects data each quarter on prices in each of the eight State or Territory Capital Cities.  This data consists of prices on a fixed set of items and determines if their cost has increased or decreased.  The result is the CPI.

CPI should not be confused with the term “Inflation” – while many use these interchangeably, inflation refers to the increase in overall prices as opposed to the select basket that is used for CPI.

The CPI is often applied to lease agreements, franchise arrangements and other contracts or set fees, as a way for the vendor (or seller) to protect the dollar value of their services.  The CPI is also used by the Government when considering changes to welfare payments.

You can see the current CPI by visiting www.rba.gov.au or you can view historical figures at www.abs.gov.au

Regards