Tax Advice and Planning - Aston Accountants

45 day rule – what does it mean to you?

When you purchase shares in the share market, the companies that you have shares in may declare a dividend. In most cases, the dividend amount comes with a franking credit, which is a rebate that shareholders get for the tax paid by the company. The amount of franking credit that you can claim is shown on the dividend statements that are issued to you.

You will then declare the amounts shown on the dividend statements on your tax return, where the franking credits will be taken into account when calculating your income tax liability.

But do you know that there are instances you may not be eligible to claim all the franking credits you have received?

Who are you?

In life we play different roles which gives us different names. You can be a parent at home, a child of your parents, a customer at the shops, or, if you run a business, a business owner. But do you know the correct name to call yourself when you run a business?

Very often we get business owners ringing saying they are the director of their company, when in fact they may not even own a company to start with. Understanding what structure your business is in is very important to avoid confusion down the track. Below is a brief description of each business structure and how you can call yourself when speaking to your suppliers or customers.

Sole traders

If you run your business as a sole trader, you will have an ABN for yourself, and your business is run under this ABN. You do not hold a separate entity and therefore cannot call yourself a company director.

In this case, you can call yourself a business owner, or a sole trader.

Partnerships

A partnership involves two or more people (up to 20, with some exceptions) going into business together with a view to making a profit.

If you are running a business under a partnership with others, then (to put it simply) you are the business owner of the partnership.

Companies

A company is a separate legal entity that consists of directors and shareholders. A company director is someone who makes decisions on behalf of the company, whereas shareholders hold shares for the company and is eligible to receive any dividends declared by the company.

If you run your business under a company, and you are the director of the company, then you can legally call yourself a director when speaking to your suppliers or customers.

Trusts

A trust is a structure where a trustee carries out the business on behalf of the trust’s members (or beneficiaries). A trust is not a separate legal entity. You can have individuals or companies acting as trustee(s) of your trust, and individuals, companies or trusts to be a beneficiary of your trust.

If you run your business through a trust, you are the business owner of your business.

Wrapping up…

Only directors of a company can legally call themselves a director, if you run your business in any other format, you can call yourself a business owner.

If you are confused about what structure your business is in, we suggest going through your business documents eg bank statements for your business bank account which will contain the details of the account holder. Otherwise, if we run your books and prepare your tax return, give us a call.

in News / Running A Business / Starting a New Business / Tax Advice and Planning by Emily Yip

Maximize your tax deduction – Businesses

In this article we explore how businesses that have turnover less than $10 million can maximise their deductions to save on tax for 2018 year and other issues they need to be aware of – deadlines, things to do etc in the coming few weeks. We will touch on employee superannuation payments, $20,000 asset write off etc

This article will apply to businesses running as sole traders, companies, trusts and partnerships.

Increase your Superannuation before 30 June 2018

From 1 July 2017, all eligible Australians under the age of 75, including employees, are able to claim a personal tax deduction for extra superannuation contributions deposited to their superannuation fund before 30 June 2018 – providing you don’t exceed the superannuation cap of $25,000 and satisfy the work test if you are aged between 65 to 75.

So if your employer has contributed less than $25,000 into superannuation for you, or you are self-employed and have made no contributions so far this year, now is the time to consider topping up your superannuation fund.

Superannuation contributions that you claim as a personal tax deduction pay 15% tax which is collected and paid by your superannuation fund. This can be lower than your personal rate of tax.

Your Superannuation fund will be able to give you details of how to make the extra contribution but remember it MUST be received by the super fund by 30 June 2018 so it’s a good idea to do it a few days early just to make sure it gets there on time. Also you will need to complete some paperwork and submit it to your Superannuation fund in order for them to be tax deductible.

in News / Personal Tax Returns / Self Managed Super Funds / Tax Advice and Planning by Emily Yip

GST & Properties – new changes for the purchaser

If you are thinking of buying a newly established residential property, or a subdivided property, you may need to remit GST on the purchase directly to the ATO. The following article provides a quick guide to this new legislation, and what to do if you are affected.