Take advantage of the Federal Government’s Small Business Tax Incentive

Small businesses around Australia are taking advantage of the Federal Government’s Small Business Tax Incentive. If you operate a small business, you can immediately deduct the business portion of most assets that cost less than $20,000 each if they were purchased before 30thJune 2019 and your business turnover is less than $10 million.

 

This deduction can be used for each asset that costs less than $20,000, whether purchased new or second-hand. You claim an immediate deduction for the business portion of each asset through your tax return, in the year the asset was first used or installed ready for use.

 

Business assets include all fixtures and fittings on your practice premise, equipment, motor vehicle and other items, a full list is available on the ATO website.

 

How does it work? 

 

Say you need to purchase a medical equipment for your practice. You purchase the equipment from the supplier, finance approved and paid in full before 30th June 2019, even if the item is not installed and delivered before EOFY. At the end of the financial year you can then claim 100% of the cost of this asset as a part of your depreciation expenses. Ultimately this reduces company profits by the same amount and therefore, reduces total tax owed at the end of the financial year.

The $20,000 threshold applies from 12 May 2015 to 30 June 2019 and reduces to $1,000 on 1 July 2019.

How to budget your way to financial freedom

Talk to wealthy people and you will find most have one thing in common – they know how to manage their money. And that means having a budget. Boring, right? It might sound tedious, but the reality is you won’t get ahead without spending less than you earn.

Here’s our guide to budgeting so you can take charge and change your financial future.

Take stock

You won’t know where you can save if you don’t know what you’re spending. While it can be confronting, the first step to better budgeting is to find out where all your money goes.

Start by reviewing your past three months’ income and expenses. Categorise your costs into fixed essentials (mortgage, rent, insurances, phone), variable essentials (groceries, petrol, haircuts), unplanned essentials (new brakes, dental surgery) and nice-to-haves (Netflix, fashion, holidays).

You can use a traditional spreadsheet or a free budgeting app, such as Track My Spend, designed by ASIC.

Don’t fret if you find you don’t have enough income to cover your expenses. Better to discover this now than to keep heading in the wrong direction. If you’re spending more than you earn, or not saving enough, it’s time to make some changes.

Adjust spending

Time to decide where to cut back, keeping in mind even small changes can make a big difference. That take-away coffee before work tallies to about $850 a year. Starting with the nice-to-haves, decide what you can go without. Whether it’s eating out less, shying away from shoe sales or cancelling your wine subscription, sacrifices must be made! Your essentials also offer big saving opportunities. Budget less for groceries, shop around for a cheaper phone plan and talk to me about a mortgage review. There are plenty of costs you can adjust so don’t put it off and don’t make excuses!

Allocate funds

Once you know your essential costs, budget for those first. There’s no point splurging on a night out if you don’t have enough money to pay your electricity bill. If tempted to spend before you save, open separate savings accounts where you can allocate funds for bills and savings.

Add up the annual cost of your bills, such as insurances, electricity and rates, and divide the total by 12. Set up a monthly funds transfer for that amount so when bills are due, you have money on hand to pay them. You can then work out how much you need for weekly expenses, such as petrol and groceries, and even that daily coffee.

Now you know your essentials budget, set aside some savings. If you’re not sure how much to put away, start small and build to bigger amounts as you learn to live within your budget. A good savings goal is 20 per cent of your take-home pay. Once you’ve allocated funds for bills, weekly living and savings, the rest is yours to spend as you please. Just remember there’s a difference between desire and need, so try and save as much as you can. Remember, this is the bucket that rewards you down the track.

Stay on track

Everyone thinks about and manages money differently, so it’s important to find what works for you. The main thing is that you stay on track. It might take several months to notice a difference, but if you’re spending less than you earn, you’re heading in the right direction. Remember, budgeting needs to be part of your lifestyle not instead of it, so find ways to treat yourself from time to time without undoing your hard work.

RBA NO CHANGE

The RBA has decided to leave the official cash rate unchanged at 1.5% for the 28th consecutive time and I’d like to share some thoughts on why the Reserve Bank of Australia has made this decision.

Following its February meeting, the RBA said the case for the next rate move to be a decrease was now almost equal to the case for an increase and that it would continue to watch the economy closely for signs around its key objectives of decreasing unemployment and increasing inflation. It will also be watching property markets, particularly in Sydney and Melbourne, very closely as prices continue to fall.

With lenders continuing to review rates independently of the RBA, it is important to review your lending options regularly to ensure they remain the most suitable for your situation. There may be different rates available from our wide panel of lenders and I’m always available to ensure you have the right financial solution for your current and future circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch.