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YML Insight June 2015
From Your Trusted Accountant
What does the $20,000 small business immediate deduction in the recent budget really mean?
Since the 2015 budget announcement, we’ve received many questions about theimmediate write-off of assets less than $20,000 for small business (effective from 7.30pm on 12 May 2015 until 30 June 2017). To help you understand how this will work, we’ve outlined some key points to start from. Remember, YML Group can always offer assistance, tips, and tricks to best manage your small business.
The $20,000 immediate deduction means:
1. You need to be ‘in business’ with an annual turnover of less than $2 million to
qualify for this concession.
2. You can you claim the deduction on as many assets as you have purchased,
provided they are under $20,000 each.
3. Any assets valued at $20,000 or more will be added to the small business simplified
depreciation pool (“the pool”) and depreciated at 15% in the 1st year, and 30% each
year thereafter. As soon as the balance in “the pool” is less than $20,000, you can
claim an immediate deduction at the end of the year between 12 May 2015 and 30
4. All new and second hand assets are eligible for this concession. There are some
exceptions on certain assets, as listed below:
a. Horticultural plants
b. Capital works – subject to their own ‘capital works’ depreciation rules
c. Assets allocated to a low-value pool or software development pool
d. Primary production assets
e. Assets leased out to another party on a depreciating asset lease
5. If you are registered for GST, the GST exclusive amount is taken to be the cost of
the asset. If you are not registered for GST, then the GST inclusive amount is taken
to be the cost of the asset.
Last but not least:
This is a tax deduction for the business, not a tax refund. You will get a tax deduction for the expenditure on the asset; this should reduce the amount of tax payable, at your marginal tax rate. You won’t get back the $20,000 – you just save having to pay tax on that amount.
If you have any questions, please don’t hesitate to call our accountants at YML Group.
From Your Finance Specialist
As a business owner, what’s the best way to secure a loan?
Running a business, big or small, can be a complex undertaking. Juggling expectations, financial commitments, service standards, and a range of other constantly shifting priorities leaves many business owners with little time to attend to the smaller details. Like, loan conditions, for example. If you have an existing business loan you should check the interest rate on the loan.The best way to secure your loan is to borrow against your property at residential loan rates, which can be 1.5% cheaper than business loan rates. Your current loan, even though it may be secured by your property, may actually be at business loan rates.
At YML Group, we provide assistance in all aspects of securing or renegotiating financing or loans. We can arrange your business finance at home loan rates, save you money and help with your cash flow.
To learn more about how we can assist you with your business financing arrangements, call us for an appointment today.
From Your Financial Adviser
What do I need to consider when putting my Estate Plan in place?
Discussing the harsher realities of life such as an Estate Plan can be difficult. Many people avoid this topic and don’t have a current plan in place. Unfortunately, not having a plan can be devastating to family, and an incorrectly set-up plan can be very costly (taxed unnecessarily).
You need to plan your estate to ensure your assets are inherited, with as little tax impact as possible, by the people you want to receive them.
Your estate should be governed by your Will, which should be up-to-date, and correctly reflect your wishes. Even if you don’t have many assets, having a Will can save your beneficiaries, family and friends a lot of trouble and heartache.
Your Will needs to:
* Be drawn up by a reputable solicitor with your or your financial adviser’s input.·
* Appoint a Legal Representative or Executor who accepts the responsibility.
* Detail your assets and personal affects accurately – this makes it easier to
* Offer clear instructions for how you wish the assets/property/valuables
* Include your funeral arrangements – leaving instruction makes it easier for your
family to deal with.
* Consider organ donation – if that is what you wish to do.
* Be kept in a safe place but easily found if needed.
Superannuation death benefits may not be part of your Will
Unless you specifically chose to have your superannuation death benefits dealt with by your Legal Representative (therefore your Will), they will be administered by the trustees of your superannuation fund.
To avoid any confusion and complications you should consider giving a binding or non-lapsing death nomination to the trustee of your superannuation fund.
Power of Attorney
Another important element to your estate plan is to have a power of attorney in place. This legal document appoints another person to make legal and/or medical decisions on your behalf. It is particularly useful should something happen, such as a bad accident, where you are temporarily or permanently unable to sign documents.
Do you need a Testamentary Trust?
You most likely do if you have minor children or other dependants. This is a trust created in a person’s Will, which is activated upon the death of that person. Instead of assets passing directly from one person to another, the assets are passed to the Testamentary Trust and then administered by the designated trustee – usually a family member, a trustee company, accountant or solicitor.
Estate planning can be complex and it’s recommended you seek professional advice and assistance of both a financial adviser (who understands the intricacies of superannuation) and a solicitor experienced in such matters.
From Your Business Partner
How can I support quality, service, and performance in my small business?
If you don’t make the rules, people will make their own!
It’s truly surprising how many businesses that evolve from sole traders or micro businesses continue to grow solely on the back of the hard work of the principal. Many small business owners spend so much time working in their business, they leave themselves no time to work on their business. This means they do not find time to establish the quality, service and performance standards they require from others for continued success and growth in the business.
Most staff not only need, but also want, a guiding hand. Employees want to perform at an acceptable level and exceed expectations when possible; both for themselves and their employer. Failure by an employer to provide this guidance mean that staff may create their own standards, which are unlikely to align with those of the employer or the needs of the business and its clients.
It is essential that all businesses provide the right structure and processes to support defined quality, service and performance standards. Getting this right should:
* Provide the basis for a happier work force;
* Translate to better service to clients and therefore more success financially; and
* Position the business to manage resulting growth.
By clearly defining positions within the organisation and incorporating the roles, responsibilities and performance standards, the business Structure will not only support the existing business, but also provide a road map for operating a much larger entity as the business grows.
Quality processes support the business structure by clearly defining performance standards for each role.
Together, we call this our Performance Management System.
YML Group can work with you to create a performance management system tailored to your needs by focusing on the financial and non-financial activities within your business. We identify key business drivers and roadblocks, aligning your business strategy with both short and long term activities. We develop structured activity processes, providing you with control, and direction to achieve your strategy. Our monitoring processes ensure that results are achieved and plans are realigned as needed.