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Managing your retirement funds effectively often raises a few questions. One of which is, can you have both a Self Managed Super Fund (SMSF) and an Industry Super Fund?
The answer is yes, you can have both an SMSF and an industry super fund, meaning could enjoy the benefits of both. But, operating both may involve additional costs that could outweigh the benefits.
Balancing your superannuation and deciding whether or not to have both an SMSF and an industry super fund can influence your financial stability in the future. For detailed advice tailored to your financial goals, we encourage you to contact us.
Superannuation, or “super” as it’s commonly referred to, is essentially a long-term savings plan designed to provide individuals with a source of income in their retirement years. It’s a scheme that supports employees throughout Australia to accumulate savings while they’re still working, which are then used to generate income to fund retirement.
There are a wide variety of superannuation fund types and each varies in their structure, degree of control, costs, and associated risks. Hence, the question of having one or both becomes pivotal in your retirement planning.
A key aspect of superannuation is that it’s compulsory. Employers are legally obligated to make contributions to their employees’ super accounts based on a percentage of an employee’s ordinary time earnings.
This percentage is regulated by the ATO and can change over time, adjusted with inflation and rising interest rates. The current superannuation guarantee rate, as of the latest change in July 2023 is 11% and is expected to rise to 12% by July 2025.
As well as the compulsory payments by employers, Australians can also choose to make voluntary contributions to boost their super savings.
An SMSF is a private superannuation fund that you manage yourself. It’s regulated by the ATO, and as a fund, it offers the highest level of control over your retirement savings.
With an SMSF, you’re the trustee, making all the investment decisions and bearing the responsibility of complying with the relevant laws. It’s a more hands-on approach that allows for a wider range of investment options.
According to the ATO, there were 603,432 SMSFs managed by Australians as of 2022.
On the other end of the spectrum are Industry Super Funds. These are funds originally established by industry bodies for their employees but are now typically open to anyone.
They’re managed by professionals, regulated by APRA, and are generally characterised by lower fees due to their not-for-profit nature. Industry Super Funds offer less control than SMSFs but provide simplicity, ease of management, and a hands-off approach to your retirement savings.
In Australia, there’s no legislation preventing you from operating both an SMSF and an industry super fund at the same time, meaning you can enjoy the benefits of both and diversify your savings. But, there can be additional costs associated with separate sets of fees.
Despite this, there are several scenarios where having both an SMSF and an industry super fund could be beneficial.
By having both an SMSF and an Industry Super Fund, you’re not putting all your eggs in one basket. Diversification can help spread the risk and potentially increase the chances of steady growth in your retirement savings.
If you hold certain assets in your SMSF that aren’t permitted in industry funds – like property or artwork – you might choose to maintain an SMSF for this purpose, while also benefiting from the simplicity and ease of an Industry Super Fund for the rest of your super.
You might want to maintain an Industry Super Fund because of certain insurance coverages that are less expensive or otherwise unattainable through an SMSF.
For those nearing retirement, having both funds can make it easier to transition from the accumulation phase to the pension phase. You can start drawing a pension from one fund while still contributing to the other.
Based on the most recent super fund statistics and data from the ATO, it’s clear that the superannuation landscape in Australia is diverse, with a considerable number of Australians holding accounts in more than one super fund.
Historically, many Australians ended up with multiple super accounts by default, as they changed jobs and their new employers contributed to different funds.
However, with increased awareness about the potential downside of multiple super accounts – such as duplicated fees and insurance premiums – there has been a concerted effort by both the government and individuals to consolidate super accounts.
Because of bodies like Moneysmart, the trend for the average Australian is now leaning towards maintaining a single super fund account. This simplifies the management of retirement savings and helps to keep a lid on fees and other costs. But, this isn’t to say that having multiple accounts, such as an SMSF and an Industry Super Fund, isn’t a beneficial move for certain individuals.
It all depends on personal circumstances, financial goals, and retirement planning strategies.
Despite the trend towards consolidation, some Australians still opt for multiple super funds. For example, they may choose to keep their Industry Super Fund while also operating an SMSF. The reasons for doing so often include:
So while the trend is leaning towards single super fund accounts, having multiple super accounts, including both an SMSF and an Industry Super Fund, could be a strategic choice for some Australians. Though, the decision should be based on individual financial circumstances, retirement goals, and personal preferences.
Operating multiple super funds, such as an SMSF and an Industry Super Fund, comes with its own set of implications. It’s critical to understand these before making the decision to maintain more than one account.
Managing multiple super funds means managing multiple sets of fees. These fees can include administration fees, investment fees, and insurance premiums, all of which can eat into your retirement savings over time. Moreover, SMSFs come with their own unique costs, such as auditing fees, ATO supervisory levies, and potential advice fees.
Whether or not it’s worth operating multiple super funds depends on your financial situation and goals. The Australian Securities & Investments Commission (ASIC)’s Moneysmart has a comprehensive Superannuation Calculator that can help you assess the impact of fees on your super balance.
But for tailored advice to your own situation, an accountant or financial advisor with experience setting up SMSFs and managing SMSFs can give you more specific insight.
Both SMSFs and Industry Super Funds have their unique advantages and disadvantages, and understanding these can help you make an informed decision about your super strategy.
Deciding between having one super fund or multiple, including both an SMSF and an Industry Super Fund, isn’t an easy choice. There are several factors to consider, and it’s often recommended to seek professional advice before making up your mind.
Our SMSF accountant team at New Wave Accountants & Business Advisory has extensive experience advising on these considerations and more. We believe that the decision should be made based on a comprehensive understanding of your personal circumstances, preferences, and financial goals.
Actively managing your super fund(s) is key to ensuring that you’re on track to meet your retirement goals. Whether you have one super fund or multiple, keeping track of your investment performance, fees, and insurance premiums can help you optimise your retirement savings.
At New Wave Accountants & Business Advisory, we offer a range of services tailored to help you effectively manage your super fund. From SMSF setup and compliance to strategic advice on your superannuation strategy, we’re here to provide the support you need.
If you have more questions or need further advice, don’t hesitate to reach out and contact us. Let us help you balance your superannuation strategy and secure your financial future.
At New Wave Accountants & Business Advisory, we offer a range of services tailored to help you effectively manage your super fund. From SMSF setup and compliance to strategic advice on your superannuation strategy, we’re here to provide the support you need.
If you have more questions or need further advice, don’t hesitate to reach out and contact us. Let us help you balance your superannuation strategy and secure your financial future.
Is online selling a hobby or a business? When you start asking yourself this question, there’s usually no straightforward answer. Many online businesses begin as hobbies, and at some time, you’ll be able to claim it’s either. An accountant can help you identify the distinctions between a commercial business and a hobby, so you know you’re filing the correct papers.
This questionnaire compiled by the Australian Taxation Office (ATO) helps you determine whether your online selling is more of a business than a hobby:
If you responded “yes” to most of these questions, you’re likely running a business, and your incomes are taxable.
You’ll almost certainly need to apply for an Australian Business Number (ABN). An ABN allows you to conduct your internet business like a company and is sometimes needed by law. Aside from that, you’ll need one to register for most Australian website names.
We’ll go through some of the advantages of having an ABN for your business and when it could be helpful.
When you’re registered for GST, one obvious benefit is the opportunity to claim GST back on purchases made in Australia, including Amazon seller fees. And you need an ABN to register for GST. To maximise the advantages of claiming GST tax credits, apply for an ABN.
There are business costs that you may claim as tax deductions while setting up and managing your firm. To claim business expenditures when filing your next tax return, you must obtain an ABN. If you don’t have an ABN, you won’t be able to claim legal business deductions such as motor vehicle expenditures, travel expenses, operational expenses or any applicable capital expenses.
The Australian Domain Name Authority manages domain names that end in .com.au, .org.au and .au in Australia (auDA). Most often known as country code Top Level Domains (ccTLDs), these domains require an ABN before you can purchase them. On the other hand, other domains, such as .com and .org, do not require an ABN and can be acquired by just about anybody.
Selling online, more often than not, is a business. The ATO has begun to data match numerous online marketplaces against information in people’s tax returns in the past years to ensure all relevant revenue is disclosed.
New Wave Accounting is an accounting firm in the Gold Coast dedicated to helping small businesses keep their books and financial figures in check. Make sense of your business numbers by getting in touch with us today!
As a business owner, you need to be mindful of your spending to stay afloat and avoid debt. Creating and adhering to a budget is key to effective money management.
Budgeting helps you understand where your money is coming from, where it’s going, and how much you have to spare. It’s an effective tool for helping you reach your financial goals. Here are some of the major benefits of budgeting for your business.
Budgeting enables you to set financial goals and objectives for your business and to measure your progress in achieving them. It provides a benchmark for measuring your performance against your goals and helps you stay on track financially.
Budgeting helps you track your spending and identify areas where you may be overspending. It helps you identify ways to cut costs and maximise your resources.
Budgeting helps you make more informed decisions regarding the allocation of funds. Having a budget in place allows you to see how much you have to spend in each area and how it affects your overall financial picture. This makes it easier to decide where to allocate resources and make decisions that align with your financial goals.
Budgeting helps you improve cash flow by managing your income and expenses better. By tracking your spending and income, you can identify areas where you may be overspending and make adjustments to ensure that you are making the most of your resources.
Budgeting helps you monitor your progress towards your financial goals. By monitoring your spending and income, you can identify areas where you may fall behind and make adjustments to ensure that you meet your goals.
A well-constructed budget can help you track expenses, allocate resources, and plan for the future. Here are some steps to help you create an effective budget for your business.
Before you begin creating your budget, it is important to understand your current financial situation. Look at your balance sheet, income statement, and cash flow statements to get an idea of how much money you have coming in and going out. This will help you get a better understanding of your expenses and help you develop a realistic budget.
Once you understand your financial situation, it is time to set your goals. Think about what you want to achieve in terms of revenue, profits, and expenses. Setting goals gives you a clear direction for your budget and will help you focus your spending.
With all your goals in place, it is time to start tracking your expenses. Make sure you track all your expenses, both large and small. Tracking expenses will help you identify areas where you can cut costs and help you stay on track with your budget.
With all the information available, it is time to create a budget. When creating your budget, make sure you are setting realistic goals based on your financial situation. Also, take into account your goals when creating the budget.
Once you have created your budget, it is important to monitor it regularly. Make sure you are checking in on your budget at least once a month to make sure you are staying on track. This will help you identify areas where you can make changes and help you stay on track with your budget.
Budgeting is an important tool for any business owner to utilise. By creating and following a budget, business owners can ensure that their business is operating financially responsibly and can avoid overspending. Additionally, budgeting can help business owners track their progress and performance over time.
Creating a budget for your business can be a lot of effort, but by working with a business accountant, you can make it easier! New Wave Accounting provides accountants in the Gold Coast area for businesses that need one. We make sure to handle the nitty gritty details of finances and accounting so you can focus on growing your business. Contact us at New Wave Accounting to learn more about our services.
You only have a few weeks left to file your taxes for 2022. Ensure you have your income and deduction records to get the most money back from the Australian Taxation Office (ATO). Here are the key focus areas the ATO will be looking at:
The records you need to keep for your expenses usually come in the form of a receipt from the supplier. Your receipt must include the supplier’s name, the amount of the expense you are claiming, the date of the receipt or document, the date the expense was paid, and what the purchase was for, such as if you are claiming a work-related expense.
If you cannot provide documentation for a cash payment to a supplier, you will not be able to claim a deduction. However, the ATO may still allow the deduction if the evidence shows that the individual spent the money and is entitled to claim the deduction. This evidence could be a bank or credit card statement that shows the payment was made, to whom, and for how much.
To claim work-related expenses, you must have spent the money yourself and not been reimbursed, the expense must be directly related to earning your income, and you must have a record to prove it. To claim work-related expenses, you must have spent the money yourself and not been reimbursed, the expense must be directly related to earning your income, and you must have a record to prove it.
You can only claim expenses that are related to work. For example, if you work from home three days a week and travel to work two days a week, you can only calculate your phone bill for the calls you made for work.
You need to calculate your capital gain or loss whenever you dispose of a crypto-asset, NFT (non-fungible token), shares or property. The capital gain or loss is the difference between what you paid for the asset and what you sold it for.
Remember, you can’t offset your capital losses against your income and wages. The ATO takes its data collection process very seriously, so any unfair deductions or claims can be penalised heavily.
Keep track of all the income you receive from your rental properties, including insurance payouts, retained rental bond money, and even short-term rentals. As all your rental property deductions are entered manually, avoiding complications or discrepancies is important. If you need help, seek a professional to avoid delays or problems with your refund.
This is just a small list of deductions that are common for individuals in Australia. We have written about different tax deductions for individuals before; if you want to read more about what you can claim as a business owner or a high-income earner, you can read them here.
If you still have questions about your tax refund and other individual income tax deductions, plenty of tax accountants and specialists around the country can help you.New Wave Accounting provides end-to-end accounting and bookkeeping services. We are tax accountants on the Gold Coast, working for various industries and creating tailored solutions for every client. We understand how individuals and businesses need reliable accounting and bookkeeping services, and so we’re here to help. Call us at (07) 55041999 to schedule an appointment today!
Beauty industry companies are becoming more and more popular due to their fast-growing market. It’s quite a diverse industry that’s actually a combination of a couple of different market segments, including cosmetology, aesthetic medicine, and hairdressing. But that doesn’t mean that the beauty industry doesn’t need proper accounting and bookkeeping services. In fact, they need it as much as any other business.
If a business owner runs a beauty industry company, then they actually have to maintain not only the accounting and bookkeeping, but also complex accounting, especially when it comes to taxation. Let’s look at how accounting principles work for beauty industry companies.
Beauty Industry companies, just like any other company, need to maintain certain documentation. These records will differ in number depending on the company’s size, the nature of the business, and the number of taxation issues a business owner is facing.
For example, if a business owner is doing small-scale business, such as a hairdresser, they will need to maintain records of the following:
Cash Register Receipts
These records should include cash register receipts, bank deposit amounts, and checks used to pay for expenses.
Bank Deposit Slips –
The slips must be kept for one year after the end of the year in which the deposit was made. The slips must be kept for one year after the end of the year in which the deposit was made.
Inventory Records –
These records should include what is in inventory, receipts, and sales of products and services.
Check Register –
This record should include information on checks written and payments made.
Credit Card Register –
Any credit card transactions must be recorded in a register.
Credit Card Receipts –
For credit card purchases, receipts are required so that records are accurate and may be audited.
Tax Records –
Tax records for beauty industry companies include sales tax and payroll tax records.
Beauty industry companies are taxed the same as any other company. They are taxed on their revenue and must fill out a business activity statement (BAS) each year.
Depending on a business owner’s income levels (both for themselves and for the employees), they will have to complete a tax return.
It is essential for business owners to be aware of their obligations and responsibilities so that they don’t do anything illegal.
Organising the accounting and bookkeeping for a beauty industry company requires not only keeping the records, but also performing the accounting itself. When it comes to accounting, it is always a good idea to use a software. An accounting software will not only make the process of bookkeeping and accounting easier, but it will also prevent mistakes and keep records in an organised manner.
Organising the bookkeeping is also essential. Whether a business owner is running a small-scale or a large-scale company, they need to properly organise their bookkeeping. Organising the bookkeeping means being able to quickly spot any issues. It’s always best to use a software which is meant for bookkeeping organisations. For example, Xero is a software that enables business owners to organise their bookkeeping while providing them with the ability to properly monitor the financial health of their businesses.
The key to any successful business is understanding how it needs to be managed. The accounting and bookkeeping is no different. Running a business is a huge responsibility, but it can be accomplished. Accounting and bookkeeping are the cornerstones of running a successful business, and so, business owners need to understand how to do it properly.
New Wave Accounting provides end-to-end accounting and bookkeeping services to help you reach your goals. Whether you’re in the beauty industry, eCommerce, medical, or even financial, our Gold Coast accountants will work with you to help you grow your business. Get in touch with us today to book a consultation with us.
Every venture has strategies and business practices that are sure to help boost its sales and clients in the long run. While not all of it may work 100% of the time, it is still advisable to have a couple of them so that you will have a clear trajectory of where your business is heading.
That being said, no company may ever get far without implementing some of the best accounting practices in the industry.
Overlooking them may spell trouble for your numbers as a whole, after all.
In such a case, you may need to take note of the examples below.
No matter how you look at it, most people in the accounting business are taught how to do the basics right. It is mainly because starting off with these may be the easiest way to ensure that you will be able to effectively transform your company into a success.
As a result, you must make sure that you will be able to:
Just because you have enough experience on your side doesn’t mean that you will be able to rely on that alone.
When it comes to managing the company’s finances, you must always make sure that you will consult a professional accountant who will be able to guide you through the journey.
Basically, there is no shame in doing that.
A professional accountant will know the best practices that you should execute and the ones that you should steer clear of. With this, you will be able to create a solid foundation for your business to thrive.
In today’s digital world, there is no denying that it is quite useful to follow the latest trends when it comes to streamlining your business operations, especially when it comes to accounting solutions.
With cloud-based solutions, you will have the chance to:
In the end, your business will save time and money on unnecessary expenses and expenditures.
At the end of the day, every company, big or small, has to take certain risks as a whole. It is a proven method in helping them grow and expand further, even if they are unsure if it will actually work or not.
For instance, there are a lot of people who are in the business of business loans because of the potential it has, especially if they pick their clients well.
In this case, they will have a better chance of getting approved, even if they have a bad credit score or a low income.
Overall, these are just some of the best accounting practices that every venture must implement if they want to be successful. The best part about these is that they are easy to remember and simple to implement, making it one way for you to run the company more efficiently.
After all, learning new things is what every entrepreneur needs to do in order to grow their companies into the leaders of their industries.
With all of that being said, if you are looking for the best accountants on the Gold Coast, look no further than our experts here at New Wave Accounting & Business Advisory. We provide end-to-end accounting and bookkeeping services that help scale and grow businesses. Call us today and let us help you crunch the numbers with our well-established accounting practices.
The Tax-Free Threshold (sometimes referred to as the Lowest Personal Income Tax Rate) is a term that applies to Australian taxes and refers to the amount you can earn before you will be taxed. Understanding what the tax-free threshold for Australia is important if you want to make sense of the income tax system.
Australians are able to earn an income up to a certain amount before tax becomes payable. This is called the tax-free threshold, and the amount is $18,200. It means that Australians have a limit by which they can earn money each year before they start paying tax on any income above this amount. If you are an Australian resident with a tax file number, the tax-free threshold could be beneficial to you.
To claim the tax-free threshold in Australia, you must:
If you are a non-resident for tax purposes, you will not be able to access the tax-free threshold. This includes Australian citizens based overseas for more than six months in any given year.
Generally, you can only claim the tax-free threshold from one job. If your total income from all sources is less than $18,200, you can claim the exemption from each source.
However, if you earn more than $18,200 for the year, you may need to fill out a withholding declaration form and inform one of your employers that you will no longer claim the tax-free threshold from your income.
If you claim the tax-free threshold from more than one employer, your second income source and any other sources of income beyond will be taxed at a higher rate.
If you don’t claim the tax-free threshold at all for a financial year, then you may have to pay income tax on all your income. For example, if you earned $18,200 in Australia in a financial year and claimed the tax-free threshold, and then you earned $19,000 in a later year and did not claim the exemption, the extra $1,000 will be taxed at the top rate of tax.
If you want to calculate how the tax-free threshold will affect your pay, simply aim to work out your gross earnings first. Then, work out how much of your income will be exempt from income tax, and deduct that amount from your gross earnings. You will then be left with your take-home pay.
The tax-free threshold is a critical aspect of the Australian income tax system. If you are earning an income in Australia, you may be able to claim the tax-free threshold, meaning you don’t have to pay tax on all of your earnings.
Let a reliable accountant in Gold Coast help you here at New Wave. We provide end-to-end accounting and bookkeeping services. Contact us!
When it comes to allowances, they are treated as separate identified payments made to employees to cover various expenses while they’re working. It can include a variety of things from travel expenses, meal allowances, and the like. Regardless, different allowances need to be understood, all because they have special treatment in the eyes of the Australian Taxation Office
That said, today, let’s delve deeper into travel allowance and living away from home allowance, outlining what each is and their differences from each other:
Travel allowance is money paid to an employee to cover costs they incur while they’re travelling while they’re at work. It can include airfares, rental cars, accommodation, costs for meals and incidentals. The tax treatment of this allowance depends on the length of the trip.
If it’s local travel, that is, the employee’s travel is entirely within the employee’s home base of work or within a fifty-kilometre radius of their home base of work, then the living away from home allowance does not apply.
If the travel doesn’t fall under this criteria, then the living away from home allowance applies.
Living away from home allowance is an allowance paid to an employee to cover the extra costs they incur while they’re travelling on a work-related business. The rule of thumb is that the employee must be away from their home base of work for a period longer than a normal day’s work. It includes any overnight travel, accommodation, and meals.
The treatment and taxation of this allowance depend on the length of the travel. If the employee is away from their home base for less than a week, then it attracts a flat deduction. If the employee is away for longer than a week, it is a taxable allowance.
If the employee is away on a short-term trip and they are required to sleep away from home, then they can claim a deduction for the expenses associated with that travel as well.
When it comes to tax deductions and treatment, the rule of thumb is that travel allowance is tax-deductible when the employee is away for less than a week, whereas living away from home is taxable when the employee is away for longer than a week.
If you’re an employer and you want to claim a deduction for travel allowance or living away from home allowance, you need to ensure you have the relevant evidence to back the claim up. If you’re an employee who is getting a travel allowance or living away from home allowance, then when you send your tax return to the ATO, you need to ensure that you state how many days you were away from home and for how long along with the rates that were paid to you.
When you’re working and travelling, it’s important that you’re able to get the right deductions and treatment for your travel allowance. This will help you get more money back when you send in your tax return. By keeping a record of your travels and how much you are paid for each, you’ll be better prepared to claim your entitlements when the time comes!New Wave Accounting offers end-to-end accounting and bookkeeping services to help businesses grow. If you are looking for an accountant on Gold Coast to help you out, work with us today!
Congratulations to our Senior Bookkeeper, Brittny Henderson (nee Porter) for being shortlisted for Bookkeeper of the Year in the 2022 Accountants Daily Australian Accounting Awards! This award recognises outstanding Australian bookkeepers who operate in a contemporary environment and have responded to market challenges with innovation.
As a bookkeeper and a leader, Brittny is extremely deserving of this recognition. Her excellent communication skills and the personalised touch she provides each client is admired and appreciated by her colleagues and clients alike. Brittny’s passion for eCommerce has seen her extend her skills and knowledge in this domain and allowed her to offer a highly sought-after eCommerce specialisation in her services. Brittny is known for harnessing the latest technologies and software platforms to achieve better results. She has a high level of knowledge around Shopify, Paypal, Merchant Platforms and tried and tested integrations like A2X, which empowers her clients and gives them clarity and confidence to make informed business decisions.
The Australian Accounting Awards is the premier event in showcasing the depth of talent in the nation’s accounting professionals and businesses, recognising their success and their passion for the sector.
The finalist list, which was announced on Tuesday, 26 April, features over 290 high-achieving professionals across 34 submission-based categories.
Reaching the finalists stage is regarded as an incredible achievement across the Australian accounting industry, showcasing the depth of dedication and commitment each individual and business brings to advancing the industry.
Accountants Daily editor Philip King said: “The Accountants Daily Australian Accounting Awards night is renowned as the premier event each year when the profession recognises and celebrates those right at the top of their game.
“This year it is especially poignant as the first face-to-face awards night since the onset of COVID. It offers the whole industry a chance to come together and mark its exceptional contributions to the national wellbeing through the trials of the pandemic and testing natural disasters.
“Under such difficult circumstances, to be shortlisted from among the hundreds of high-quality entries is a mark of high achievement, one that echoes throughout the profession.”
Winners will be announced at the Awards Gala in June later this year.
Congratulations Brittny and Goodluck!
To learn more about our bookkeeping services, contact Brittny on 07 5504 1999
Do you run a business in Australia? If so, you already know just how complicated the process of running a payroll can be. The structure is complicated and can vary depending on the industry that you work in, as well as the number of employees. Here’s a simple rundown to help you understand Australian payroll.
The payroll structure in Australia is a fairly straightforward one. It’s split into different components in order to ensure that the money is paid out in the most appropriate manner. Simply put, the full amount of tax that you need to pay is already calculated when you take into account your tax bracket when you first input your taxes for the year. Your tax bracket is calculated based on the total amount of pay that you will likely earn in the year. This number is used to calculate the amount of tax that you need to pay per paycheck.
Your employer will then take the amount of tax that they owe and pay it to the Australian Tax Office (ATO) on your behalf. This is done on a monthly basis regardless of whether or not you are paid monthly. This is how your tax bracket is determined.
To claim work-related expenses, you must have spent the money yourself and not been reimbursed, the expense must be directly related to earning your income, and you must have a record to prove it. To claim work-related expenses, you must have spent the money yourself and not been reimbursed, the expense must be directly related to earning your income, and you must have a record to prove it.
You can only claim expenses that are related to work. For example, if you work from home three days a week and travel to work two days a week, you can only calculate your phone bill for the calls you made for work.
There are three components that make up an Australian employee’s pay: The PAYG (Pay As You Go) component, the Superannuation component, and the Fringe Benefits Tax component.
PAYG (Pay As You Go) –
The first component is the PAYG component. The PAYG component is basically your tax that is withheld from your wages. This method is used to determine how much tax you will pay during the year and is what makes up your tax bracket.
Superannuation –
The next component is the superannuation component. Superannuation is paid to employees as a way to help prepare them for retirement. Superannuation is not mandatory, but many people choose to pay into a fund due to government incentives.
Fringe Benefits Tax (FBT)-
The Fringe Benefits Tax component is how you go about claiming the money that you spent on your employer through fringe benefits. There are special tax laws that allow you to retain these benefits, and the money that you spend on them is tax-free, but only if you claim it.
The main tax that you will be most concerned with is the income tax in Australia. There are two different income taxes in Australia: personal income tax and corporate income tax.
The personal income tax is the money that you pay on your personal wage and salary income. This is calculated at a rate of 19% on your income between $18,201 and $45,000, at 32.5% between $45,001 and $120,000, and at 37% on anything above $120,000.
These tax rates are subject to change every year, so be sure to look out for them. Please take note that the above rates do not include the Medicare levy of 2%.
Corporate income tax is charged on the company profits. This means that not all businesses have to pay income tax. Those who do not have to pay income tax are referred to as government companies or government exempt entities, including banks, Australian state and territory governments, and some charitable organisations.
If you are a resident of Australia, you are taxed at your resident rate. If you are not a resident of Australia, you are taxed at your deemed rate, which is your worldwide income tax rate.
If you are a company that employs workers in Australia, you will have to pay your earned income on a PAYG basis. You can also claim a salary expenses amount that is the lower of either the salary that you pay your employee or the salary that the employee actually earns.
Australian Payroll is a fairly simple process that requires you to be a little more in tune with the tax code than most other countries. Being aware of the tax bracket that you fall into ensures that you’re paying the proper amount of tax. This way, you can use the tax code to your advantage to make sure that you’re saving as much money as possible.
New Wave Accounting provides end-to-end accounting and bookkeeping services to help you reach your goals. We make it possible for businesses to run their companies like a well-oiled machine. If you’re ever in need of an accountant in Gold Coast to help you get on top of your tax obligations, we are the ones to call. Get in touch with us today to book a consultation with our accountants.
At the end of the day, and by the end of this book, you will have an understanding of how and why you should invest in minimising your tax and making the most of your business.
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