Am I taxed on an Insurance Payout?

Australia has had its fair share of disasters over the last few years – drought, bushfires and floods – that have ramped up the volume of insurance claims. Most people would assume that if and when they need to claim on their insurance, the insurance payout covers the damage and is not income assessed for tax purposes – but this is not always the case.

Insurance payouts for damaged or destroyed personal items are generally not taxed. For example, any insurance payout you receive for your family home won’t necessarily be taxed. But, the rules are different if you have used your home to produce an income, for example, you have used part of your home as a home business or you have rented out part of your home.

The rules are also different if the item is a personal asset costing more than $10,000 or if the asset is a collectible that cost more than $500.

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Business Budget Measures

The 2021-2022 Federal Budget has been announced on 11 May 2021, with a few welcoming measures for small businesses. Here are two main measures that would benefit your business once it becomes law.

Temporary full expensing extension

Businesses with an aggregated turnover of less than $5 billion will be able to continue to fully expense the cost of new depreciable assets and the cost of improvements to existing eligible assets in the first year of use.

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Fringe Benefits Tax – what you need to know

Fringe Benefit Tax (FBT) is a tax paid by employers who provide certain benefits to employees and their associates. The main type of benefits provided are entertainment (including meals and tickets to events) and providing an employee the use of a car for private use. 

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7 Ways to improve your Xero File

When running a business, business owners are always looking for ways to minimise their time spent on administrative tasks. That’s where Xero comes into play as they have a lot of powerful features that business owners can use to improve their efficiency in running their books so they can focus on generating more profits.

Below are 7 features Xero offers to improve your efficiency:

Cloud access

With Xero available on the Cloud, you will be able to access your Xero file any time, anywhere as long as you have a laptop or smart phone with internet access. You can run your business on the go and are no longer stuck at your office work desk.

Bank feeds

Automatic bank feeds allow your bank to send through bank transactions to your Xero file directly. It happens behind the scenes daily – you wouldn’t even notice it! This vastly improves the timeliness of reconciling business transactions, not to mention more accuracy (less typo!) in the data recorded in Xero.

Bank rules

With automatic bank feeds, many business owners will be able to reconcile their bank transactions daily, providing them with an up to date overview of how well their businesses are travelling. Generally, some transactions are repetitive, such as monthly subscription fees, or certain types of income (e.g. Shopify payments paid via Paypal for example). As these transactions will always be reconciled to certain accounts, you can set up bank rules so Xero can suggest the rules to you as long as the criteria is met. This again will save considerable amount of time for business owners – instead of manually typing in the details during reconciliation, a bank rule can be applied which helps pre-fill certain fields, all you need to do is to click “OK” and that’s it!

Tracking categories

For businesses who have multiple streams of income, setting up tracking categories allows them to see the profitability of each stream of their business, and they can tailor different strategies to improve each business stream.

Online File storage – Hubdoc

Hubdoc is the online file storage that is available to any Xero standard subscriptions. It allows business owners to upload their a photo or copy of their bills onto the platform, where Hubdoc will analyze and “read” the bills and convert them into a draft bill for you to process and publish in Xero. Once they are published to Xero, depending on your preference, you can then reconcile each bill against a bank transaction straight away. This is a huge time saver for those who have a lot of bills to process, and improves the accuracy by reducing the amount of typing required.

Dashboard customization

Because every business is different in terms of their needs Xero allows business owners to customize their dashboards so they can see what they want to see. A few items you can add on the dashboard are main business bank accounts, invoices owed to you, bills you need to pay and watchlist of accounts that are important for you to monitor.

Payroll access

You can also manage your payroll through Xero and comply to the ATO’s Single Touch Payroll requirements. With a few clicks you can setup a new employee, process and file a payrun with the ATO. It also provides your employees with a Payroll portal where they can login, record when they work on a timesheet, update their personal details, request and apply for leave and view their payslips.

Need help with your Xero? We provide one-on-one Xero training to tailor suit your needs, we also offer ongoing assistance to answer any day-to-day Xero questions you may have.

The third wave of the Stimulus Package – JobKeeper payment

Today our Prime Minister and Treasurer announced a third wave of their Stimulus package – the Jobkeeper payment, to assist both businesses and employers to get through the Coronavirus pandemic.

Let’s break it down based on whether you are a business owner (an employer) or employee.

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