Tag: Income Tax

PAYGW TAX VARIATION

We have all heard about businesses varying their PAYG instalments on their Activity Statement if their business and investment income for the current year is expected to be less than anticitpated. However, the opportunity also exists for salary and wage earners to vary downwards the amount of PAYG tax deducted by their employer each pay cycle. The main purpose of varying the rate or amount of PAYG withholding is to ensure that the amounts withheld during the income year better align with your year-end tax liability if you are a taxpayer who has significant deductible expenses throughout the year which may be the case for:  

  • Property owners who are hightly negatively geared; and
  • Taxpayers, such as salespeople, who have large travel expenses and other costs. 
By having less PAYG deducted, you are improving your cash flow. Rather than having to wait until year end to receive a sizeable tax refund, the refund is effectively flowing through to you in each pay cycle. You then have control over this money earlier than you otherwise would and can use it to invest or discharge your everyday expenses etc. If you think you may fall into this category of having large deductible expenses, then you should complete a PAYG withholding variation form which is availbale on the ATO website. http://www.ato.gove.au or consult your tax advisor. 

WARNING 
Before employing this strategy, be aware if the deductions you anticiapated having during the year do not materialise, or indeed, your untaxed income (such as rent, interest, dividends etc.) is higher than you anticipated for the year, you may end up with a tax bill when you lodge your return. 

Immediate Deduction for SBE Start-up Expenses

IMMEDIATE DEDUCTION FOR SBE START-UP EXPENSES

This allows taxpayers who are not in business or are a Small Business Entity (SBE) (turnover of less that $10 million) to immediately deduct certain expenses relating to the proposed structure or operation of a business. The expenses must relate to a business that is proposed to be carried on, including certain Government fees and charges and costs associated with raising capital, where these expenses would otherwise be deductible over five years. Eligible expenses generally fall into two categories:

  • Expenditure on advice or services relating to the structure or operation of the proposed business.
  • Payments to Australian Government agencies.

Allowing SBE’s to deduct their start-up expenditure in the year it is incurred provides them with a cash-flow benefit. The deductions are brought forward rather than spread out over a number of years. Cash-flow is one of the main killers of start-up businesses.

TAX TIP
Given that the threshold increase is backdated to 1 July 2016, if your business incurred these expenses but failed to claim them in full in the 2016/2017 tax return, you may wish to amend that return.

Subscribers – for the full article on all SBE Opportunities please log-in to your Members Area, July/August Newsletter, page 17.
Not a Subscriber? Call us on 0755264933 and we can set you up!