Estate Planning & Testamentary Trusts

The property and assets belonging to a person who has died are called their deceased estate. This may include real estate, money in bank accounts, shares, and personal possessions.

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Due diligence costs may be deductible

When you are buying a business you may incur various initial expenses before the transaction is actually completed. These costs include legal fees to draft a contract or expenses to carry out a due diligence audit of the acquiring business and other incidental costs. The due diligence audit will assist you to gain a greater understanding about the business’s prospective earning capabilities, the position and competency of management, who the company primarily deals with in regards to customers and suppliers, what assets and liabilities they have, as well as their financial position.

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Eligible Tax Offsets for 2014/2015

Allowable deductions reduce taxable income; whereas, tax offsets directly reduce the amount of tax payable on your taxable income. They provide greater benefit. Often, tax offsets referred to as rebates. In general, tax offsets can reduce your tax payable to zero but on their own they can’t get you a refund.

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Business Obligations when hiring a new worker

It is an exciting time when new workers join your business. Meanwhile, it is crucial to determine if they are an employee or contractor before entering into an agreement or contract. Your business will need to keep records to support your decision on whether your worker is an employee or contractor and the factors you relied on. You may face penalties and charges if you incorrectly treat an employee as a contractor and don’t meet your obligations.

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Capital works deductions and CGT

You can deduct certain expenses associated with your rental property. You can claim a deduction for the cost of advertising for tenants, rates and taxes, insurance etc. in the income year these expenses incurred. Other expenses are claimed over a number of years, such as the decline in value of carpet, furniture and appliances, and certain construction expenditure.

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Franchising Pros and Cons

There are many aspects to consider when buying into a franchise. What business structure is most suitable for your business? What are the tax consequences when you commence, run or terminate a franchise? When and where to get legal advice?

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Substantiating work related deductions

The ATO has strict rules requiring you to substantiate work-related deductions. Generally you must have written evidence to prove your claims if the total claims exceed $300. The records must prove the total amount, not just the amount over $300. The documentation must be in English unless the expense was incurred outside Australia.  It could be a document from the supplier of the goods or services, a tax invoice, or a receipt.

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Importance of an ABN

The Australian Business Number (ABN) was introduced on 1 July 2000 to enable businesses in Australia to deal with a range of government departments and agencies using a single identification number. The ABN is a public number which does not replace your tax file number.

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Understanding claimable tax deductions

As an Australian resident for tax purposes you are liable to pay an income tax on your taxable income which is calculated by subtracting allowable deductions from assessable income. The greater the deductions that you can claim, the smaller will be the taxable income and, consequently, you pay less tax. Understanding what deductions are allowed is crucial to minimise your tax liability.

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Important things to consider when buying a business

When you consider buying a business, there are many important issues to bear in mind. The entity could be bought through acquiring the assets of the business or part of the ownership interests (i.e. units) in the business. Undertaking a due diligence audit will assist you to examine the business’s financial performance, tax and legal compliance of the business. Also, it would be beneficial to decide whether to buy the business assets or the units if the vendor is willing to sell either way.

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