Now you can use these tools to ascertain your complete Cash Flow position (whether or not after all costs , income, assets and liabilities you have a positive or negative cash flow). Knowing this information is vital to better management of your money.

Being able to develop and manage a Budget on an ongoing basis has always been an important aspect of gaining better control of our financial affairs. Unfortunately, completing this task on a regular basis has always been difficult, time consuming and at best ad-hoc. There have never been any readily available tools to help with this process.

So we take great pleasure in advising that you can now access and use new Budgeting, Superannuation and Tax tools right here on our website.

To start using them simply click on the 'Calculators' or 'Financial Tools' button in the menu bar.

The real beauty of these tools is that you can begin using them to develop your budget or test some Super strategies, leave the site, and when you return to the site the information you entered previously is there waiting for you. Of course, you need to Register so the system knows which information is yours, just like Internet Banking.

While these tools are great for all existing clients and staff, they are also useful for family members to utilise. It is never too early for children and young adults to gain a better understanding of their financial position or to improve their financial literacy.

 

Tax payers should double check their recently lodged FBT returns in advance of future compliance review.

The ATO has indicated that the 2011 compliance program will include a review of Fringe Benefits in four (4) particular areas.

They are:-

• Failing to identify taxable benefits, particularly motor vehicles.
• Failing to value correctly those benefits
• Failing to lodge returns, and
• Taking advantage of grey areas in the law

In particular, the ATO intends to focus on luxury car purchases and the grey area of dual cab utilities, when private use has not been appropriately recognised.

Since Fringe benefits Tax is an expensive alternative to income tax and GST, it is worth reviewing the basis of all calculations, declarations, log books and basic documentation.

Whilst there might be an exemption for private use of a dual cab utility, if the declaration is not signed by the relevant employee(s), then the exemption will not apply.

In circumstances where a certificate or a declaration is required, it is a relatively simple test for an auditor to deny an exemption, yet it is also relatively simple to get it right. Quite an expensive cost for not meeting the requirements.

A review of Fringe Benefits Tax returns or obligations is worthwhile before starting on the 2011 tax return obligations.

A fundamental weakness in Australia's superannuation system is the glaring gap between the super savings of men and women.

The recently released ABS Survey of Income and Housing shows that the average super balance for men was $71,645 in 2009-10 against $40,475 for women. And the average balance at retirement was $198,000 for men against $112,600 for women.



However, the gender gap is somewhat narrower than a few years ago. ABS figures indicate that the average balance for men in 2003-04 was $56,400 compared with $23,900 for women.



The reasons for the difference in retirement savings are only too clear.



Women have lower average salaries than men, often interrupt their careers to raise children, and their finances can be particularly hard hit by marriage breakdown. And on average, women retire at a younger age than men - yet have longer life expectancies.



Indeed, a powerful argument can be mounted for why women need more super savings than men - not much less.



It is crucial to keep reinforcing the message that women should take every opportunity to maximise their retirement savings. For instance, ASIC's personal finance site MoneySmart is currently urging women to become more informed about superannuation.



MoneySmart focuses on such basics as making salary-sacrificed contributions, making after-tax or non-concessional contributions (with eligible low-income earners receiving Government co-contributions) and simply tracking down lost super.



Some financial planners suggest that women intending to take a break from the workforce try to increase their salary-sacrificed contributions in order to build up extra savings before leaving their jobs. And some working spouses make spouse contributions into their wives' super accounts to help boost the balances during any time out of the workforce.

By Robin Bowerman

Smart Investing

Principal & Head of Retail, Vanguard Investments Australia

10th October 2011

The 2011/2012 Federal Budget was a ‘nip and tuck’ Budget. Along with the summary below is a more detailed consideration of the budget points in the MGR Accountants' Budget report.

Many of the changes were either because of or justified by the need to improve the workforce participation rate to counter the declining unemployment rate from the current level of 5% to 4.5% by June 2013.  Others were simply to fulfil the promise of bringing the budget into surplus.

Some changes were more than cosmetic with a temporary flood and cyclone reconstruction levy set to apply in the 2011/2012 income year to those who earn over $50,000 (adding $1.725bn to Government revenues over 5 years).  FBT changes will add an additional $970m over 5 years.  And, a few tucks will be made to the tax system with the phasing out of the dependent spouse tax offset and removing the ability for minors to access the low income tax offset on unearned income in order to restrict income splitting.

Some areas of interest to business remained unchanged: the company tax rate reductions announced in the previous Budget remain intact as do some of the small business initiatives.  Some extra revenue has been gained by delaying the start of some broader (mostly green) reforms and infrastructure projects, and holding indexation at current levels for family payments.

In the superannuation area, reforms to the excess contributions tax regime may provide some relief (but not this year).

Some of the detail, such as the $5,000 write-off for small business to purchase a car (replacing the entrepreneurs tax offset), and the FBT changes were announced/leaked ahead of the budget.  So, there were few surprises in this budget.

The elephant in the room was the carbon emissions trading scheme, or the lack of it.  There is no detail beyond funding for an advertising campaign.  This means that when the final shape of the emissions trading scheme is known, the Government will need to release an updated set of figures.

Key Budget points include:

• FBT – statutory formula for valuing car fringe benefits to change to a single statutory rate of 20%
• Flood and cyclone reconstruction levy introduced in 2011/2012 income year on income above $50,000
• Income splitting targeted – low income tax offset removed for minors on unearned income
• Reforms to excess contributions tax from 1 July 2011
• Reduction in GDP adjustment factor for PAYG instalment taxpayers
• Some companies will be required to report annually on payments made to contractors in the building and construction industry from 1 July 2012.  The cleaning industry has also been flagged as a possible compulsory reporting industry.
• As planned, company tax rate will reduce to 29% for small business in 2012/2013

Yesterday the Federal Government announced it would impose a flood levy to help cover the cost of repairs to damage caused by Queensland's recent floods. People earning a $50,000 taxable income will incur a 0.5% levy on anything above $50,000, increasing to 1.0% for taxable income above $100,000. The Government has promised the levy will not increase, nor will it last any longer than the 2011 2012 tax year. Additional repair funds will come from spending cuts.

Anyone who received the Australian Government Disaster Recovery Payment will not be required to pay the levy which otherwise will be deducted via the normal PAYG installment system. More details on this will be available once the levy is enacted in legislation.

A scan of today's press shows opinion on the need for a levy is divided.

Pitcher Partners have developed a 4–5 page snapshot of issues surrounding flood relief for businesses and individuals. The paper covers some of the items already posted about on mgr.com.au but also covers tax deductions for donations and consideration of employer assistance to employees.

This is useful, but relatively high-level information and we would recommend you consult with your accountant on any areas where you require assistance.

More information on flood grants. This time from Rural Finance who have fact sheets on Victorian Flood Grants.

By now you'll have seen there are a number of grant options available to you. MGR Accountants is able to assist you work out which grant/s are most applicable and how to apply for them.

As a gesture of assistance to those impaced by recent natural disasters, ESS BIZTOOLS have prepared additional papers on the government grants that will become available to affected businesses. These can be download at www.essbiztools.com.au. If not already a subscriber you will need to create a free account to login and access the downloads.

The Victorian list covers:

• 140–310 — Clean Up & Restoration — VIC – Primary Producers – Grant
• 140–311 — Clean Up & Restoration — VIC – Primary Producers – Loan
• 140–312 — Clean Up & Restoration — VIC – Small Business – Grant
• 140–313 — Clean Up & Restoration — VIC – Small Business – Loan

The Age has just reported that flood clean-up grants will rise from $15,000 to $25,000 and apply retrospectively to the September and December 2010 floods. Read the full article on The Age.

The CPA Disaster Recovery Toolkit for Business will help you and your accountant identify and prioritise actions to take if your business has been impacted by recent flooding. It includes information on assessment, record rebuilding, future protection and winding up a business should that sadly prove necessary for you.