The ATO estimates that incorrect reporting of rental property income and expenses is costing around $1 billion each year in forgone tax
revenue. A big part of the problem is how taxpayers are claiming interest on their investment property loans.
We’ve seen an uptick in ATO activity focussing on refinanced or redrawn loans. This activity is a result of a major
data matching program of residential property loan data from financial institutions from 2021-22 to 2025-26. This data is being matched
to what taxpayers have claimed on their tax returns. Those with anomalies can expect contact from the ATO to explain the discrepancy.
If you have an investment property loan and redraw on the loan for a different purpose to the original borrowing, the loan account becomes a
mixed purpose account. Interest accruing on mixed purpose accounts need to be apportioned between each of the different purposes the money
was used for.
On the other hand, if the redrawn funds are used to produce investment income, then the interest on this portion of the loan should be
deductible.
For example, if you have redrawn on the loan to pay for a private holiday, or pay down personal debt, then the interest relating to this
portion of the loan balance is not deductible. Not only will the interest expenses need to be apportioned into deductible and non-deductible
parts, but repayments will normally need to be apportioned too.
Withdrawals from an offset account are treated as savings rather than a new borrowing. If you have a loan account and an interest offset
account is attached to this account that reduces the interest payable on the loan, withdrawing funds from the offset account will typically
increase the amount of interest accruing on the loan, but won’t change the deductible percentage of the interest expenses.
That is, when you withdraw funds from the offset account this is really a withdrawal of savings and won’t impact on the extent to which
interest accruing on the loan account is deductible.
If you have a home loan that was used to acquire your private home and you have funds sitting in an offset account, withdrawing those funds
to pay the deposit on a rental property won’t enable you to claim any of the interest accruing on the home loan.
However, if you redraw funds from the home loan to acquire a rental property then interest accruing on this portion of the loan should
be deductible. The tax treatment always depends on how the arrangement is structured.
Think you might have a problem? Contact us and we can investigate the issue before the ATO contact you.
In the past week or so, we’ve seen share markets fall on the back of growing concerns about the spread of the coronavirus. At times of heightened market volatility, it’s easy to fear how your superannuation and other investments might be affected, but it’s important to understand the nature of market movements before making any sudden decisions.
Cashflow is the pain point for many small businesses. It can single-handedly make or break your business even if you’re generally running a
profitable business.
Learn the need-to-knows to improve your cashflow.
With the start of the Fringe Benefits Tax year looming on 1 April, businesses are being urged to review their Fringe Benefits Tax (FBT) position.
Many newlyweds start married life struggling from heavy debts from their big day. But with a proper financial plan, a walk down the aisle can also be a stroll in the park.
In an increasingly digital world, the value of money can be a difficult concept for children to grasp. Here are some tips for helping your kids and grandkids become wealthy and wise.
IT ALL ADDS UP – That's what the theme was for Xero Roadshow 2020. Hayley Brass was the Xero’s acting MC for today’s Xero Roadshow at Narre Warren. Hayley started the morning by remembering all the small businesses that were affected by the tragic bush fires and floods in early January. This was a great choice to star the morning.
If someone were to ask you what your business is worth, would you be able to reply with a realistic figure? Surprisingly, you wouldn’t be alone if you didn’t know the answer to this very important question.
Join Shannon and the SMART Team at the first 90 minute Lunch & Learn Workshop for 2020!
It doesn't matter if you're a retailer, tradie, health practitioner or one of a thousand other businesses. The tools remain the same. We're
all about getting you on track to help you understand your business, make realistic goals and to be better positioned to reach your business
goals.
Treat finding an accountant like speed dating. Life is busy, you need your accounts looked after and you don’t have time to wade through all the possible suitors.
There is plenty of advice out there about why you should save for your future, but little that explains exactly how
Most businesses are based, either consciously or subconsciously, on the Greek philosopher Plato’s statement indicating that necessity is the mother of invention. You identify a need and then invent a product or process to fill that need.
Your child’s education is an important investment in their future. But getting it right takes careful planning, which means you need a true understanding of the costs involved.
Automate processes to save time
Look at current processes you could change to save you time or money. One way could be changing from manual systems to automatic ones to
free up time for more important tasks.
Conduct customer research to identify new ideas
Ask your customers about what new products or services they would like to see added to your range. Brainstorm ideas with your staff, along
with which new markets to target. This article has some advice on how you can unlock innovative ideas.
Create a video channel to increase your profile
If you want to get your goods or services out there in front of a worldwide audience, think about creating a YouTube channel for your
business. This is a great way to demonstrate products or share tips with your customers. For example, if you have a background in carpentry
and a small business that makes wooden furniture, display some of your products on YouTube to gain a following.
Growing your business means more cash for you now plus a higher sale price in the future when you decide to eventually sell your business.
Over the coming months, we plan to send out to you 4 articles full of ideas to help you grow your business.
New Year’s Eve is famous for the New Year’s Resolutions people make to better themselves in the coming year. The most common New
Year’s Resolution is eat healthy and exercise regularly .
But what about your business and your personal finances? Why not start off 2020 with a very achievable and measurable resolution that
will greatly impact not just yourself, but your family’s long-term security.
Session # 11 - 3 Essential Tools for Business Success
By attending this event you’ll learn the three most powerful tools for business success and how to use them, including:
Our final Lunch and Learn for 2019, this session puts the wheels in motion to ensure your 2020 is spent being results focussed, productive and more aligned with your business goals than ever before.
Ask experts what they rate as one of the top qualities of a successful small business, and they’ll no doubt answer agility. So, here are some top tips to help you remain agile, especially during growth periods.
With Christmas just around the corner, here are 5 tips to help plan ahead and avoid a financial hangover on New Year's Day.
From 1 July 2020, new rules will come into effect to ensure that an employee’s salary sacrifice contributions cannot be used to reduce the amount of superannuation guarantee (SG) paid by the employer.
The festive season is fast approaching and with it comes the temptation to eat, drink, and make merry, hopefully on the company’s dime. After all, you’ve worked hard and put in long hours to achieve your goals. It’s only right that you get to reward your clients as well as your staff and their families, maybe even yourself.
Legislation that passed through Parliament last month prevents taxpayers from claiming a deduction for expenses incurred for holding vacant land. The amendments are not only retrospective but go beyond purely vacant land.
Do you understand what it takes to keep your online customers coming back for more? Whatever your answer, the following five strategies are designed to ensure you deliver a brand experience that surpasses your customers’ expectations and guarantees their loyalty.
Session # 10 - Organisational Review - How many hats are you wearing in your business and what can you do about it?
Most small business owners understand only too well that there are always too many things that need to be done yesterday. Being
under-resourced, both from a time and a staffing perspective, is a continual challenge.
Setting a clear organisational structure ensures that everyone understands their responsibilities to the business. It also helps you
identify where you may need to outsource to ensure the cogs keep moving.
Becoming a parent brings a world of joy into your life, but it can also put a strain on your household finances. So if you’re planning to take time off work to look after your little one, make sure you’re financially prepared.
Do you know how much your business is worth? Whether you’re thinking of selling or just plain curious, it’s interesting to note that owners are prone to overestimating the market value of their business.
Retiring earlier and living longer: why every woman needs the right financial strategy to make sure their savings will last their distance
Women in Australia can look forward to long and healthy lives, with the average female life expectancy now higher than 84. What’s more, women tend to leave the workforce earlier than men, at an average age of 52 which means many women end up spending more than 30 years in retirement.
Ease the financial impact and be ready for your new situation
Going through a separation or divorce raises a lot of questions
One of these relates to money. Given you’re likely to have many other issues to consider, it’s important to focus on finances as early as possible. The sooner you sort out your financial situation, the easier it will be to adjust to your new circumstances.
At SMART Business Solutions our people are our business so holding onto our employees for the long term is critical to the success of our business. Recruiting and onboarding new employees is a costly and time-consuming process for any business which is why you ideally want to hold onto great staff when you find them.
Session # 9 - Xero Update - Get all the latest news, tips and traps to get the most out of Xero
You already know how fantastic Xero is for streamlining your accounting and bookkeeping. But did you know that there are a stack of new
features that have only very recently been released that will make your software work even harder for you? Like Xero's investment in
artificial intelligence, fixed price tasks, workflow assistance and more.
Being your own boss can be rewarding, but it’s also incredibly challenging. That’s why it’s important to future-proof your hard work by taking steps today that will prepare your business for tomorrow
Being your own boss can be rewarding, but it’s also incredibly challenging. That’s why it’s important to future-proof your hard work by taking steps today that will prepare your business for tomorrow.
These are the 10 hats – aka departments – in EVERY business. These are as follows along with a brief description of the accompanying role:
It’s impossible to know what’s on the horizon, but with the right personal insurance, at least you can be financially prepared against life’s curve balls. So how do you know which types of cover are right for you? Here are some personal insurance basics to get you started on the road to financial protection.
This article follows on from last week’s blog which dealt with Key Performance Indicators – why they are vital and how to implement them, to in a sense, take the pulse of your organisation and so determine where adjustments must be made, and wins leveraged to ensure lasting results.
What gets measured gets managed. What does this quote mean to you? Have you ever worked tirelessly on a campaign without realising the desired result? And when it’s over, you’re still unsure regarding its impact on your profit margin? Or whether it was it worth your investment in terms of the time-frustration-stress input?
Session # 8- How to build a marketing plan that can be regularly implemented
Our Lunch Learn Program combines two of life's essentials; food and knowledge. And what better way to combine the two than with a 2 course
catered lunch alongside like-minded business owners who are keen to learn & network. A more casual alternative to formal training and
seminars, the best lunch and learns become an integral part of company culture - and a tasty perk that everyone looks forward to.
In the face of increasing competition, it can be tempting to think that the only way to maintain your organisation’s market share and win new customers is by lowering your prices. However, such a strategy is rarely effective in the long-term. Instead, it can end up undermining your business, so it’s wise to use it cautiously.
Contributing shares to your SMSF
What you need to know
Many investors have a personal share portfolio. When it
comes to your SMSF, did you know that you can contribute more than simply cash?
You are also able to contribute listed shares.
We all know the feeling – there’s a major purchase we want to make, but we’re worried it will break the bank. Whether it’s a luxury car or a hard-earned holiday, that extra expense seems just out of reach.
Session # 7 - Cashflow Management - How to plan for a healthy cashflow
Our Lunch Learn Program combines two of life's essentials; food and knowledge. And what better way to combine the two than with a 2 course
catered lunch alongside like-minded business owners who are keen to learn & network. A more casual alternative to formal training and
seminars, the best lunch and learns become an integral part of company culture - and a tasty perk that everyone looks forward to.
There is plenty of advice out there about why you should save for your future, but little that explains exactly how.
One of the problems when discussing wealth creation and retirement planning is that it usually involves words rather than numbers. People say they want to ‘build a retirement nest egg’ or ‘make sure I have enough to live comfortably’ or ‘pay for my kids to go through private school’, but rarely are accurate numbers attached to those wishes.
If you’re thinking of setting up a self-managed super fund (SMSF), there are lots of things you need to consider first. That’s why it’s important to understand exactly what’s involved so you can decide whether an SMSF is the best option for your super.
There has been a lot in the news lately regarding self-managed super funds (SMSF’s) from the Royal Commission into financial planning, and the banks tightening up on lending to SMSF’s some may wonder if it is all still worth it or a viable option. Yes absolutely! However, some of these changes are there to protect members of super funds because a SMSF may not be the most appropriate for everyone.
Session # 5 - How to determine your critical KPI's and improve them for success
Our Lunch Learn Program combines two of life's essentials; food and knowledge. And what better way to combine the two than with a 2 course
catered lunch alongside like-minded business owners who are keen to learn & network. A more casual alternative to formal training and
seminars, the best lunch and learns become an integral part of company culture - and a tasty perk that everyone looks forward to.
Tax planning is more than just a financial necessity—it's a strategic advantage for businesses of all sizes. By proactively managing your tax strategy, you can significantly reduce your liabilities, enhance cash flow, and ensure full compliance with ever-evolving tax regulations.
