Leenane Templeton – Newcastle Business Accountants, Business Advisors & Financial Planners

Author: Harlan Marriott

  • Margin Scheme for Calculating Your Property’s GST

    Margin Scheme for Calculating Your Property’s GST

    When selling property registered for GST, the margin scheme can be used as an alternative way to work out the GST payable on a concessional basis.

    Where the scheme is applied, GST is paid for one-eleventh of the margin of the sale rather than one-eleventh of the sale price. The margin scheme calculates GST on the increase in value since 1 July 2000, if the property was acquired before 1 July 2000; or the difference between the purchase price and the sale price, if the property was acquired after 1 July 2000.

    The eligibility requirements for the scheme include the following:

    • you are registered for GST (or required to be registered for GST)
    • you are selling property in the course of your enterprise and GST applies to the sale
    • the property is acquired before 1 July 2000, or
    • the property is acquired after 1 July 2000

    and the person who sold them the property met one of the following:

    • was not registered or required to be registered for GST
    • sold them the property using the margin scheme
    • sold the property to them as part of a GST-free going concern
    • sold the property to them as GST-free farmland

    The scheme is not applicable if you are selling the property that you:

    • purchased as a taxable sale and the GST on the sale was not calculated under the margin scheme
    • inherited from a person who could not use the margin scheme
    • obtained from a member of the same GST group who cannot use the margin scheme
    • obtained, as a participant in a GST joint venture, from the joint venture operator who cannot use the margin scheme

    Those intending to use the margin scheme must have a written agreement between the purchaser and the seller that states the sale has been made under the margin scheme. The agreement must be included on or prior to settlement to access the scheme.

    When calculating the margin or when the supply is ineligible for the scheme, errors can be made. Margin prices should not include stamp duty, costs for developing the property or legal fees. In some situations, an approved valuation method to assess the market value of the property may be required as specific rules apply. Those who wish to use the margin scheme as an alternative way to determine the GST payable should seek professional financial advice.

    For more information on GST calculation for property, contact us at Leenane Templeton on 02 4926 2300

  • ATO Crackdown on Rental Property Tax Claims

    ATO Crackdown on Rental Property Tax Claims

    The ATO is targeting those who rent out their property for a few weeks during the year but claim a full year’s worth of rental property tax deductions.

    The tax office will be paying close attention to rental property owners, especially those who own a holiday home, who incorrectly claim for initial repairs to recently acquired rental properties.

    Last year, the ATO sent out letters across Australia reminding people to only claim deductions that they are entitled to for the periods that their rental property was rented out or genuinely available for rent.

    While the majority of taxpayers who received those letters reduced their claims, a key concern that remains is people making claims for expenses when a property is not genuinely available for rent.

    With the ATO taking a more broad approach in monitoring rental property tax deductions, now may be the perfect opportunity for holiday home investors to review the rules surrounding holiday home tax deductions to ensure that they can address any risks or issues in a timely manner.

    Areas where rental property owners are incorrectly claiming rental property tax deductions include:

    • Claiming excessive deductions
    • Partners splitting income and deductions
    • Repairs or maintenance claims
    • Claiming for interest deductions

    Homeowners should be aware that it is not just holiday homes that are under focus by the ATO. The office will also commence addressing rental property owners who incorrectly claim deductions as well.

    A common mistake that has risen among rental property owners is claiming for deductions for initial repairs to rectify damage, defects or deterioration that existed at the time of purchasing the property.

    Taxpayers are not entitled to claim a deduction for any repairs made to their rental property for issues that existed when they purchased it, even if the repairs were carried out to make the property suitable for rent.

    Instead, the cost of these repairs is used to work out any profit or capital gain, when the property is sold.

    For more information on rental property tax claims, contact us at Leenane Templeton on 02 4926 2300

  • What to consider before signing a contract

    What to consider before signing a contract

    The mention of contracts elicits fear in the minds of many who are overwhelmed by the numerous hurdles involved in signing a contract.

    A contract is a formal agreement, either verbal or written that is enforceable by law. For the purposes of business, written contracts are the preferred method, and with them come a number of considerations to ensure that you are entering into a mutually agreeable arrangement.

    There is a natural tendency to skip over details within a contract, particularly when the content is lengthy and filled with jargon. However, it is vital that you understand the terms so as not to land yourself in hot water in the event of a breach.

    Here are some guidelines to follow prior to entering into a contractual agreement:

    Read the document in its entirety

    All parties to the agreement should be familiar with its contents. Ensure you are in agreeance with all clauses. If not, seek advice.

    Take your time

    Contracts involve important decisions and significant time should be spent reviewing the contract before signing. Do not be or feel pressured to signing a contract before you are ready, and make sure you understand the consequences of non-compliance for both parties.

    Enter into negotiations

    Where a party does not agree with a clause within a contract, it is their right to negotiate. It is important that you propose changes that satisfy both parties in order for them to be considered.

    Seek legal advice

    Legal advice is readily available in order to help parties comprehend the specialised language that can be present in contracts. It is important that you remain aware of what it is you are signing at all times.

    Signing a contract on the business’ behalf

    Separate yourself from the business and signing a contract as a representative. You should clearly state, both verbally and through writing that you are acting on the business’s behalf. This assists in the avoidance of personal liability.

    For more helpful business advice on signing a contract, contact us at Leenane Templeton on 02 4926 2300

  • Insurance Inside Superannuation

    Insurance Inside Superannuation

    It’s important that you speak with your advisor before deciding whether or not to place your insurance inside superannuation and to check any changes to the rules.  As a brief summary here’s a few pros and cons as to whether you should place insurance inside superannuation or not.

    PROS

    • Insurance inside superannuation is cheaper because of bulk buying power of funds.
    • No medical examinations are required to take out basic cover.
    • Super policies often include total and permanent disablement (TPD) and Income Protection.
    • It is tax effective since the premiums are paid out of contributions made by your employer or from personal contributions that generate either a direct tax deduction (for the self-employed) or are paid from pre-tax income, in the case of salary sacrifice contributions.
    • Premiums can be deducted from super contributions.

    CONS

    • Cover could be less than you want or need.
    • Trauma insurance is not available through your fund.
    • Premiums paid from super contributions mean less money available to invest.
    • Most income protection policies inside super provide for only 2 years’ worth of income protection.
    • You have to be severely disabled to get a payment with TPD.
    • There can be delays in life insurance benefits being paid since these initially go to the fund, which then distributes them to the beneficiaries.  Often a lengthy and frustrating process.
    • Unless you have the option of making a binding beneficiary nomination, you can’t be certain your life insurance payout will go to the people you want it to.
    • Beneficiaries who are not financial dependents will be liable to pay tax on the amount whereas the same benefit paid from a policy held outside super is tax-free no matter who receives it.

    It’s always better to have some life insurance rather than none, but it’s wise to know exactly what your insurance will or won’t pay and in what circumstances.  Ask your super fund about the details of your insurance inside superannuation and remember there is nothing to stop you from taking out cover both through your super and independently if that better meets your needs.

  • Content Marketing Tips & Tricks

    Content Marketing Tips & Tricks

    If you want to establish a brand that creates an affinity, propels engagement and has a point of difference for your customers, then content marketing may be what you are looking for.

    Content marketing is all about providing valuable information to your customers and potential customers so that they can familiarize themselves with the services and products you offer. It’s not always about selling, but providing useful information and educating your customers on what you have to offer and how you’re different from competitors.

    Your content marketing strategy requires a multifaceted approach for your brand to reach your targeted audience. Here are some tips and tricks for effective content marketing that will assist you establish a reputable business while at the same time attracting potential customers.

    Know your audience

    You should be very clear on who your intended audience is. What are their needs? What problems do they face? What are the solutions and products you can offer in order to solve their problems? When putting up this list, think of the questions they may have and compile answers to such questions.

    Re-purpose your content

    You probably have plenty of relevant content ideas within your business. But don’t forget that your small business creates content every day it’s just that you probably don’t notice it. The memos you send around every day, emails to customers questions, the technical paper you wrote in the morning and the notes from the meeting you had at lunch time all have valuable information that may be re-purposed and shared.

    Brainstorm with your team (and customers) a list of topics or themes you can write around, or look at what’s going on in the news that’s relevant to your business. Additionally, you can hire a writer to write an eBook or white paper for example. You can also distribute online press releases about any new products or services.  The same content you write may also be ideal to use in video or audio.

    Use SEO

    By employing the principles of SEO in your online content, you will be better found by both people and search engines. A small business can use the services of SEO experts to optimize their articles around the keywords and search phrases that are related to what they do. Additionally, you can come up with your own keywords and write content rich, original articles for yourself. Be careful though not to overuse keywords as Google does not take it kindly besides there’s more to SEO these days than just keywords.

    Plan how often you intend to publish content

    It’s important to plan out your calendar showing when you intend to publish content. For clients I use a spreadsheet with article subjects and themes on one side, the distribution channels and the distribution date for the article. This can be done a month earlier or even a year. However, just because you have a calendar does not mean you cannot change it. You can make changes anytime you like to fit in your schedule.

    Content marketing takes time so it’s important to produce content that your readers will want to keep reading. It should neither be too long nor too short.  I usually aim for an average of just over 500 words.

    Publish your content on different channels

    After you have written your content, publish it in various channels. For example, you can publish it as a blog post, webinars, audio, video (See my video “why video marketing…”), keynotes, or on social networks sites and traditional media. This ensures that you are maximizing your exposure and are reaching more people on different levels. Some people don’t want to read so they would be better off watching a video or listening to an audio of the same content.

    Social Media Distribution Tools

    There are plenty of tools to help auto publish your content according to the dates you need. I often use Hoot Suite or Buffer, however I also feel that it’s important to find the right mix of ‘automatic’ article distribution and relating to something going on in the media right now.

    Content marketing increases our online credibility, authenticity and personality and takes your marketing to another level. If you are small business struggling to keep its head high in this tough economy, in search of affordable ways to grow, or seeking to get better online exposure, quality content is vital.

    Speak to Harlan Marriott at Leenane Templeton about your business marketing.