The more serious news in this year’s Federal Government budget, as far as small business goes, is the 1% company tax cuts…what company tax cuts?! Amid all the political finger-pointing, it is the small businesses of Australia who are playing a substantial role in driving the economic miracle, and these small businesses miss out.

Of course, if your business is not a company, this won’t have much impact, and you (along with many other Australian taxpayers) will be able to benefit from the tripling of the tax-free threshold from $6000 to $18,200. This means an extra $2,053 for someone with a taxable income of $50,000.

Also in small business budget news, small business’s ability to shift losses back to earlier, more profitable years may be a help for some struggling businesses. I wonder if this is really just a band-aid – it’s nice to blame tax for underperforming businesses, but what happens once the tax benefits of losses have been used up?

The ‘honey pot’ item, otherwise known as the Schoolkids Bonus, is probably a good idea. The Education Tax Refund was way too complicated, and if you were serious about substantiating your claim, it was a pain in the proverbial to keep the necessary documentation.

My concern is that the Schoolkids Bonus is as misdirected as the Baby Bonus – surely by now every family has enough flat screen TV’s! I wonder what this bonus will be spent on…

Possibly the most publicised feature of this year’s Budget was…cue drum roll…the surplus!

This dreaded surplus has been a political football for so long (and continues to be!); it is no surprise that the final result is a battered and bruised apology for a surplus. In light of the previous year’s result (a $44 billion dollar blowout!), this can’t be taken seriously.

Whether or not a budget surplus occurs, we need to remember that this is just a budget. We’ll have the opportunity this time next year to come up with a brand-new set of numbers for political and economic commentators to discuss ad nauseum…and our lives will go on, largely unaffected.

Do you think the Budget is far too over-publicised?

You can always rely on legislators around the world to try and squeeze every last drop out of taxation that they possibly can – and this is true everywhere, anytime. If you’re feeling sorry for yourself and your tax bill, spare a thought this quarter for those throughout history who have been stung with weird and wonderful taxes.

• Ancient Egyptians had to deal with a cooking oil tax – and to make matters worse, they had to buy this taxed cooking oil from the Pharaoh’s monopoly!
• Skip forward to the Renaissance in England, and the English government invented a few different taxes, one of which was on playing cards and dice in the early 18^th century. We could see where they were coming from by discouraging gambling…but this tax was not removed until 1960!
• Early English builders had it tough…in 1696, the government implemented a window tax, where they would tax houses on the number of windows they had. This of course led to some very dark houses and health problems – the tax was removed in 1851.
• At the same time, England had a tax on bricks…the builders avoided this one by simply using bigger bricks! Unfortunately, the government eventually caught on to this strategy.
• These English builders must have spent a fair amount of time figuring out tax evasion tactics. In 1712 England placed a tax on printed wallpaper…and how did the builders get around that? Hanging plain wallpaper and then painting patterns on the walls.

While these taxes might all be ancient history now, there are still some very weird taxes floating around America – our taxation system is a piece of cake compared to theirs! Not to mention that taxes are vastly different from state to state…

• In Chicago, soft drink bought in a bottle is taxed at 3%, but soft drink from a dispenser is taxed at 9%.
• In California, fresh fruit purchased in a vending machine is subject to a 33% tax rate (and is it just me who fails to see the point of buying fresh fruit in a vending machine?!).
• In Tennessee, drug dealers are required to anonymously pay taxes on any illegal substances they sell – lucky for them.
• In Maine, there is a special tax for blueberries.
• In New Mexico, people over 100 years are tax-exempt…but only if they can take care of themselves. Guess they’re too hard to chase for tax evasion anyway!

So when you come to do your tax planning (and you really should!), just be thankful that you have to deal with a much easier tax system…and that your accountant helps you through it all!

Continue reading Wealth By Design:

Financial Freedom – what is it and how do you get it?

Could Coffee Be Good For You?

Coffee can do many things for the body – but recent studies have shown that when consumed in moderation, coffee actually has major health benefits. It’s true, coffee can be good for you!

Research by the Harvard Medical School and the Mayo Clinic has found that caffeine:

• Protects against type 2 diabetes
• Doesn’t increase your risk of hypertension later in life
• Has anti-cancer properties (especially in those with liver cancer)
• Helps prevent symptomatic gallstone disease
• Protects men in particular against Parkinson’s disease
• Has a high antioxidant content

However, depending on your metabolism, two or more cups a day may be too much for you. High consumption of coffee can raise your cholesterol levels, as well as causing restlessness, anxiety, irritability and sleeplessness (but that’s in the four to seven cups a day range!).

As the saying goes – everything in moderation. Adding copious amounts of sugar or milk to your coffee will add fat and calories to your diet. And obviously, drinking too much coffee might turn you into the crazy stereotype mentioned above!

Keep this all in mind next time you visit High Street Finance Centre…because in the next few weeks, we’ll be adding a brand new, state-of-the-art coffee machine to our facilities! Our team are also busy learning how to make the perfect cappuccino at TAFE.

So next time you come in and sit down to chat about your finances, let’s do it over coffee.

Now if only there were health benefits to the biscuits and cakes we’ll serve as well…

Continue reading Wealth By Design:

Weird and Wonderful Taxes – you think you’ve got it bad?

Financial Freedom – what is it and how do you get it?

So the question is: what does financial freedom mean for you? If you talk to financial planners (as I often do), most would agree that people tend to overestimate the amount they need to achieve financial freedom. With some expert guidance, it is possible for the amount needed to be calculated with a reasonable degree of accuracy. An appropriate plan can then be developed to achieve that end result.

However, the real benefit of this process is the peace of mind that you gain by knowing how much money you need, and having a workable plan to get there.

Defining what financial freedom means to you removes the stress of not knowing where you are heading, and having some vision of the end result provides motivation when times are tough. Of course, having your definition in writing (somewhere you can often refer back to!) is key to maintaining your focus.

If you want to define where you want to be financially, you need to clarify the difference between happiness and wealth – a fine balance. I am not saying that wealthy people are not happy, some people just need more wealth to be happy than others!

So, what makes you happy? What do you enjoy doing? You need to understand the activities, possessions, relationships and passions that resonate with you – because financial freedom will be having sufficient wealth to enjoy these things as often as you desire.

Clearly, to be able to do that you need a certain amount of wealth, and this is how you should be defining financial freedom – sufficient wealth to enable you to enjoy your heart’s desires. Once you know the end result, you need to come up with a definite plan to achieve this result (and don’t forget, the timeframe you want to do this in is a big consideration).

You will more than likely need some expert assistance to make sure your plan is viable and to help you keep on track. You also need to ensure that your plan is written in language you can understand – like our new High Street Finance Centre LifePlan service – see here. Don’t be afraid to ask for help – it’s a lot less painful to learn from mistakes that other people have made, and the time you save in achieving your goal will be well worth the investment.

Now is always the right time to start moving in the right direction – and the first step is to define what financial freedom means for you and start taking giant steps to achieve it.

Continue reading Wealth By Design:

Could Coffee Be Good For You?

Weird and Wonderful Taxes – you think you’ve got it bad?

Welcome to April’s Wealth By Design.

In this edition…

Financial Freedom – what is it and how do you get it?

Could Coffee Be Good For You?

Weird and Wonderful Taxes – you think you’ve got it bad?

Click on the links above to browse the articles.

We hope you enjoy this edition…for more financial, accounting and tax insights, why not follow us on Twitter@JandTaccounting?