Personal Income Tax Rate Changes To Get Excited About

There has been some exciting changes to the personal income tax rates thanks to the new Federal Budget that has been handed down.  However, there is certainly some confusion around what the tax cuts actually mean and who is effected by them.

Essentially, there are three “tax brackets” that have changed, and these changes have been backdated to 1st July 2020.

  • The 19% rate applies to income between $18,200 – $45,000
  • The 32.5% rate applies to income between $45,001 – $120,000
  • The 37% rate applies to income between $120,001 – $180,000

The Budget was applied on 6th October 2020, so when you do your 2021 income tax return, you will benefit from the excess tax you have been paid between 1st July and 6th October 2020 as a larger refund (or reduction in the amount that is payable).  So let’s put into practice these changes for the exciting personal income tax rates so you can see where the benefits lie…

FOR EXAMPLE

Oliver earns $44,000 per year;

  • Under the old tax rate, he would pay $5,847 (excl Medicare Levy)
  • Under the new tax rate, he would pay $4,902 (excl Medicare Levy)

Taylor earns $79,000 per year;

  • Under the old tax rate, he would pay $17,222 (excl Medicare Levy)
  • Under the new tax rate, he would pay $16,142 (excl Medicare Levy)

WHAT IS THE MEDICARE LEVY?

The Medicare Levy helps fund some of the costs of  Australia’s public health system, known as Medicare.  The Medicare levy is 2% of your taxable income, in addition to the tax you pay on your taxable income.  It is possible for there to be a reduction or exemption from paying the Medicare Levy, depending on your and your spouse’s circumstances.  You need to consider your eligibility for a reduction or an exemption separately.  Have a look at the Medicare Levy calculator to work out your Medicare levy.

LOW INCOME TAX OFFSET

As an added bonus, there has also been some changes to the Low Income Tax Offset and the Low and Middle Income Tax Offset, see below:

  • The Low Income Tax Offset has also increased to $700 per year for incomes under $37,500 and then reduces
  • The Low and Middle Income Tax Offset has been retained for another year and is $1,080 for taxable incomes between $48,001 – $90,000.  A further $255 for taxable incomes of less than $37,000

If you would like more information on any of the Federal Budget that was handed down earlier this year, get in touch with our team and we would be happy to go through these changes with you.

 

Amanda Wilkens – Director

CPA

Self-Education

It’s February and so in keeping with the ‘Back to School’ theme I thought I would revisit the opportunities that are available for self-education and professional development.

Whether you are supported by your employer or not you may be able to claim a tax deduction for self-education expenses if they relate to your current work activities.  You cannot claim the costs however if it is for the purpose of new employment or to open up a new income earning occupation. Some of the costs that you can claim are:

  • COMPUTER + STATIONARY CONSUMABLES EG. PAPER, PRINTER CARTRIDGES
  • COURSE FEES [IF PAID BY YOU]
  • PURCHASE OF EQUIPMENT, OR IF THE COST IS OVER $300, DEPRECIATION OF EQUIPMENT
  • INTERNET USAGE
  • STUDENT UNION FEES
  • TEXTBOOKS
  • TRAVEL; BETWEEN HOME + THE PLACE OF EDUCATION + BETWEEN WORK + THE PLACE OF EDUCATION

Likewise, there are also opportunities to claim the cost of professional development.  If you are in an occupation that requires a certain number of certified professional development hours, the costs of attending relevant seminars and conferences can be quite high, however if they are relevant to your employment they can be claimed as a tax deduction.  If you are a business paying this cost for your employees this is a claimable business expense.

Aside from the bonus of a tax deduction, it is a great idea to keep up to date with ideas, techniques and changes in the law no matter what industry you are in.  Maintaining your knowledge is both good for your self esteem and enhances your chances of maintaining your employability.

If you are thinking of taking on additional study and are unsure about how this will affect your tax or your business, just call our office and one of our qualified team will be happy to help you.

 

Amanda Wilkens – Director

CPA

Financial Plans Are COOL

IT IS PRETTY COOL TO HAVE AN ACTUAL FINANCIAL PLAN AND NOT JUST ‘ONE IN YOUR HEAD’

Whilst seeing a client, our discussion often turns to managing personal cash flow.  Some people are happy just living from pay-to-pay and don’t give much consideration to plans for the medium or long term.  Others haven’t really given the idea any thought but think it will all be “OK”.  However, more and more people are thinking about this, but don’t know where to start.

Financial management and retirement planning help people determine their personal saving targets, what they can afford to spend, and how best to arrange their financial affairs.  Retirement planning can quantify how much you need to have saved to retire.  When you are years away from retirement and your personal finances are ever-changing, this can seem like a challenging concept, but it is important to remember that a financial plan is a process, not a product.  It is something that requires discipline to start and at least annual maintenance and review.

A financial plan should include:

  • INVESTMENT PLANNING;
  • INSURANCE + RISK MANAGEMENT;
  • FINANCIAL MANAGEMENT;
  • RETIREMENT PLANNING;
  • TAX PLANNING; +
  • ESTATE PLANNING + LEGAL ASPECTS

Most people insure against at least some of the risks of financial loss due to death, medical issues and damage to property.  You could look at a well-structured and maintained financial plan as insuring against financial difficulty later in life.

Estate planning may also be an overlooked financial planning exercise.  The thing about estate planning is that it should go beyond simply preparing a will just to check off a box and say that it is done.  In a financial planning context, it is important to consider things like who your beneficiaries will be, joint asset ownership, income tax liabilities.  In the same way a married couple may plan for retirement together, it is important to consider what might happen if one spouse or the other died prematurely.  This may be as much a financial planning exercise as an estate law one.

Our financial planners – Samantha Butcher and Helen Yau can get you started on this journey and will assist and advise along the way.  Why don’t you call and make an appointment today, it’s that easy!

 

Amanda Wilkens – Director

B.Comm CPA

Ivy Recruitment Partners

Ivy Recruitment Partners is a niche boutique recruitment consultancy specialising in financial planning recruitment for boutique to medium sized financial planning firms across Melbourne and Kim Eveleigh is the powerhouse behind it all.

 

How did Ivy Recruitment Partners come to life?

I owned another recruitment agency for nine years and after returning from maternity leave with my third child, my then business partner and I decided it was time to go our separate ways.  This is when I met Mandy from Canny Group who assisted through the sales process (she was amazing!).  When we settled I sold my shares, established Ivy Recruitment Partners and I haven’t looked back!

How long has Ivy Recruitment Partners been up and running for?

Seven amazing months!  As part of the sale I was able to take my clients with me and I anticipated just working on those roles.  However it has absolutely taken off and completely surpassed any of my expectations that I previously had.

What do you love about your job?

The relationships most of all!  I have amazing relationships with my clients and due to this they always give me repeat business which is incredible.  Some of my clients are like friends now.  Because of the relationships I have built, I get many referrals which means I regularly get new financial planning businesses contacting me off the back of my existing relationships.

I love dealing with candidates.  There are some candidates that I placed many years ago in junior roles who have worked their way up and are now my clients!

I also wouldn’t be a recruiter if I didn’t enjoy the satisfaction of making placements – it’s not only the thrill of placing a great candidate (particularly the junior candidates when you hear them squeal with delight that they’ve been offered their dream role), but also the praise the client gives when you’ve secured them their ideal candidate and how pleased they are that they’re been provided a great service.

It’s a pretty lucrative career as well.  If you love it… you do it well.

Is your job exciting or do you just look at peoples resumes all day?

It has its highs and lows.  One day you have multiple roles on with candidates going out to interviews and making placements and it’s so motivating!  Then the next day, you might have a candidate withdraw or another agency fills the role you are working on (as there are a few businesses that use several agencies for one role), or it could be that something else happens and the placement you thought you were to to make just simply doesn’t happen.  That’s when you turn it up a notch and go into overdrive to fill the roles for your clients.

You certainly do look at a lot of resumes, but having been in recruitment for 13 years now, it’s second nature and I can easily pick a top candidate out of 50 applications through quick screening.

What’s planned for the future of Ivy Recruitment Partners?

At the moment, I absolutely love having the flexibility and freedom of working for myself around the kids as life is busy with three!  However, I have so much business coming through, much more so than I had anticipated, that I might need to look at bringing on another consultant sooner rather than later.  Ideally, I’d like to continue as I am until my littlest reaches kinder and hopefully I am able to do that.  At that point, I’ll be back talk to Mandy about how to build the business and put a plan into place.

How do I get into contact or find our more about Ivy Recruitment Partners?

You can e-mail me directly at kim@ivyrecruitmentpartners.com.au.

I am always on LinkedIn as well so that’s another good way to make contact!

 

Kim Eveleigh – Director

Ivy Recruitment Partners

We Bring Home an International Award

The PANALITIX conference is a premier annual even where accountants from across the globe converge to learn on accounting best practice from industry influencers, thought leaders, technology and solution providers as well as international outstanding accounting firms.

Directors, Amanda Wilkens and Krystine Canny-Smith and Manager Helen Yau travelled across the globe to San Diego in November to take part in the conference.  Not only bringing back extra suitcases and excess baggage, they also managed to bring home the Best in Team Development Annual Award for 2018 from 12 awards.

The ‘Best in Team Development’ category aims to reward those who strive to create an amiable work environment for their team, while consequently providing continuous team development and engagement, resulting in business growth.

http://atthepac.com/thepac-awards/

How To Set New Year Resolutions and Stick To Them

So 1st January you have your list of resolutions and you are completely committed… 2nd January you are distracted with ‘life’ and by 7th January they are in the ‘too hard, stinks of effort’ basket if you haven’t forgotten about them already.

Well this year is going to be different and this is how;

1. Think of the top 3 things you want to change in your life – business or personal.  Any more than this and it gets too complicated and overwhelming and this is where the failure rate creeps in.

2. Think about the length of time you need to achieve each goal and diarise the date that they each need to be completed by. Be realistic here but it must be within the year.

3. Contact the people or business that will help you achieve your 3 goals.  If it is getting your Will done, call your lawyer and make the appointment.  If it is getting fit, call a Personal trainer.  If it is starting a new business or expanding, call your Accountant.  If it is making more time to see your parents or friends get on the phone now and just do it!

4. Decide on the reward you will give yourself when these are completed.

It is likely that you can’t do all this alone so don’t be afraid to delegate to the experts who can help you.

Business goals are no different to personal goals in terms of the way you should ‘attack’ them.  You must be methodical and committed otherwise you are wasting your time, money and that of those that are prepared to help you.

We have many clients who say at the beginning of the year that they want to ‘increase their income’ or ‘decrease their costs’.  These are sweeping statements and we can help you do this, but first we will help you determine what the figure is and what and how they can be achieved.  It takes time and thought to plan this.

 

In 2019 we will be holding our popular ‘One Day Plan sessions’ each month commencing in March in our new premises at the Federal Mill.

These whole day sessions are designed to establish what your goals are and we work with you to determine the path you will take to achieve them.  So it doesn’t just have to be at New Year that you can make resolutions!

The dates for these sessions will be released in our February Newsletter and are open to existing clients or new.

 

Amanda Wilkens – Director

B.Comm CPA

5 steps to help you understand if your business if performing

It is important to understand if your business is actually profitable or not.  It is easy to be trapped into thinking you are making money whilst there are lots of transactions both in and out and you get caught up in the day to day operations of your small business.

Visibility is one of the keys to managing profitability and making sure that your business growth is sustainable.  What I mean by that is, that it is easy as a small business owner to lose track of the true performance as the business grows and activity increases.

  1. You must maintain good and accurate records of your daily transactions.  It doesn’t matter if these are recorded manually or by a software package, it is essential that you understand what you are looking at.  If your profits vary from say month to month, you should be able to spot the reason and have clarity around how you are performing and why.  Properly constructed financial reports are a must!
  2. Targets and forecasts are an invaluable tool to measure your performance against.  Preparing a budget for both income and expenditure and then comparing actual transactions against the budgeted figures will give you a guide on how you are travelling and will make any ’overspending’ or any unexpected costs standout.
  3. You should know and understand how each product line or service is performing.  Don’t let the high performing areas of your business cover up the under performers.
  4. It is important to manage working capital.  If your business is not generating enough profit it will run out of cash.
  5. Many small businesses have good growth opportunities and it takes skill to manage this.  Having a clear financial plan will help guide you and ensure that you are not making economic commitments that can’t be supported.

If you would like to discuss how to set up your financial reporting or understand the information contained in financial statements, budgets or plans we would be happy to help.

Should you require further information, please get in touch with our team.

 

Amanda Wilkens – Director

B.Comm CPA