[AMA] I'm an Accountant

bemybubble on 20/05/2016 - 15:30
Last edited 20/05/2016 - 15:31

Howdy OzB Community,

Starting to slow down come EOFY and thought it might be a good idea to do an AMA. I am a professional accountant in public practice for over 7 years.

Must do a disclaimer though that none of my responses are to be taken as advice and you should seek your own professional advice to best suit your own needs and I won't respond to personal situations.

Have seen a lot in the last 7 years, I do not have all the answers but my experience and development is furthered by your questions!

Introduce Yourself

closed Comments

  • nocure on 20/05/2016 - 15:34
    +1

    Can you actually "crunch" numbers?

    • bemybubble on 20/05/2016 - 15:40

      Ha! Believe it or not I actually can. Even to this day my solar powered calculator comes in handy…though I won't go as far as to use an abacus

      • [Deactivated] on 20/05/2016 - 18:59

        My accountant is old and he can cruch the numbers like you wouldn't believe.

        • bemybubble on 20/05/2016 - 19:30
          +2

          Do you even crunch bro?

        • [Deactivated] on 20/05/2016 - 19:45
          +2

          @bemybubble: eat brunch? Yes several of them in fact.

          It's hard to maintain this plump figure.

      • Hirolol on 20/05/2016 - 19:42

        do you carry a solar powered calculator in your back pocket for instant number crunching?

  • inherentchoice on 20/05/2016 - 15:45
    +3

    How can I find a good, local accountant that will genuinely help me without charging too much?

    • bemybubble on 20/05/2016 - 15:54
      +9

      Good question and there isn't really a simple answer.

      An accountant is like any other professional, you need to have a rapport as you must feel comfortable with the person you are dealing with. That's the most important thing, more important than the fee IMO.

      Shop around, but don't use ozbargain mentality (I know right, pending neg vote on that). The reason why is accountants are like anything else, you get what you pay for.

      My suggestion is if it is a small task you can always use airtasker. For larger things then it's just a matter of hunting around until you find someone you like.

      • inherentchoice on 20/05/2016 - 16:52

        Will most of them give me a free meeting before I sign up? I've never had to use one until now.

        • bemybubble on 20/05/2016 - 16:56

          They should. But I wouldn't be surprised either if some didn't. It's best to ask before you arrange an appointment.

    • Janko on 20/05/2016 - 22:04
      +1

      Word of mouth, however anyone's who any good can't take on more clients.

      You could also try flyingsolo.com.au where a lot of accountants answer questions and find someone who you click with, however many seem very new to the field.

      • bemybubble on 21/05/2016 - 10:02

        We haven't taken on board clients or advertised for 15 years. So will take that as a compliment :)

        • gkc135 on 21/05/2016 - 12:37
          +1

          It is a compliment, but you also raise/confirm a valid point - word of mouth is how you should find your professionals.

        • Janko on 21/05/2016 - 16:57

          @gkc135: Unfortunately I gave my parents a recommendation to a large regional accountancy firm I knew the founder from - in the end I had to report them to the ICAA, 52 counts of malpractice and incompetence ranging from mixing up debits/credits to double billing to charging for training junior staff (yes they actually wrote that on the itemised bill) to blatant ex-GST advertising. Even the ICAA couldn't ignore this one.

        • gkc135 on 22/05/2016 - 09:55
          +2

          @Janko:

          You did the right thing. The professional bodies take these things very seriously. They are fantastic regulators.

          In the end though your example should be the exception to the rule. bemybubble's firm not advertising is quite common and that is testament to their client satisfaction levels.

        • Janko on 22/05/2016 - 11:34

          @gkc135: Yes, indeed my example shows that one should be cautious recommending a company just by knowing an owner, rather than having actually used them.

  • ProjectZero on 20/05/2016 - 15:47
    +3

    Will you do my taxes for free?

  • STRAPIFY Watch Strap on 20/05/2016 - 15:51
    +1

    What are your thoughts on Novated Leases for someone that doesn't use a car for business purposes? Do they actually offer any tax savings?

    • bemybubble on 20/05/2016 - 15:56
      +1

      Novated Leases can be useful, moreso for those on a high tax bracket. They can offer savings in most instances i've come across. That being said if a person has the cash for a car then that is forever a better alternative in my view.

      • STRAPIFY Watch Strap on 20/05/2016 - 16:50

        Does the car have to be used for business purpose? Or is that an assumption that is built into a Novated Lease?

        My previous accountant stated that the car needs to be used for business in order to receive any benefit from a novated lease.

        • bemybubble on 20/05/2016 - 17:23
          +4

          Novated lease can be done using the operating cost (i.e. business use percentage) or statutory method (flat rate).

          Not sure where your accountant was going with that but based on what your saying that is not true.

        • mskeggs on 20/05/2016 - 18:20

          @bemybubble:
          Both methods assume some business use. If the car isn't driven for business it doesn't work is probably what the other accountant means.

        • bemybubble on 20/05/2016 - 19:31
          +2

          @mskeggs:

          Statutory method doesn't assume business use.

        • Alfonso on 21/05/2016 - 08:49

          @bemybubble:

          correct, employers get pinged by FBT for offering you this benefit. This a tax to the employer for offering you a non cash benefit in lieu of salary and wages.

          Statutory method is based on a set "business use" percentage. So regardless of whether you use it predominantly for work or not, it gives you a set rate that you use to calculate the FBT (the cost that you have to cover). Hence the higher the FBT you have to pay the less benefit you will get from novated lease.

          (method is used if you use the car more for private then business)

          Operating method is the useful one, which accurately calculates your business and private use (logbook or 12 weeks register). Obviously if you use it predominantly for business purposes, you would rather using this method.

          (there are current ways to benefit hugely from using the operating method, I'll leave it up to your accountant to figure this out for you)

        • bemybubble on 21/05/2016 - 10:04
          +1

          @Alfonso:

          Cheers alfonso you're correct

          It's worth noting that a novated lease you do not own the vehicle. A misconception where people still try and claim business usage in their own returns where as a matter of fact they can't

          Further more I am yet to find an employer who will do the admin of the operating cost method (even if they outsource it)

        • gkc135 on 21/05/2016 - 12:49

          The statutory formula method and high annual km was how folks obtained a tax advantage in the past, but the Gillard government changed the tiers a few years ago. In most circumstances these days, a novated lease is actually disadvantageous tax-wise. I've not seen the operating cost method used - and even if you could somehow convince your employer to do the work required for this method, the key points are that employee travel between home and work is regarded as private and any private use is taxed at the highest marginal tax rate. So it is difficult to come out in front these days.

          Keep in mind that you can claim a deduction for work related use of your privately purchased vehicle (other than travelling between home and work) if you keep the appropriate records.

          Edit: "the Gillard government changed the tiers a few years ago"…. actually incorrect. They changed the multipliers in the higher tiers…. point being… more fringe benefits tax. A lot more.

  • Peace Maker on 20/05/2016 - 15:51

    Do you have a general pro tip for improving people's overall financial position long term? (e.g. put a little extra in super each pay etc)

    • bemybubble on 20/05/2016 - 16:03
      +24

      In my opinion the key to minimising tax an improving peoples well being is to create wealth. Find an asset you are comfortable with and invest in it.

      Because of the above statement I am not a believer in super unless you have access. Why? Because I don't believe someone who is under preservation age and is looking to create wealth should lock their money away until such a time as to then being able to access it. I'm pretty sure a lot of people with mortgages could work that dollar harder outside super than inside. I literally have $0 in super and couldn't be happier knowing that i've used that money to reduce debt.

      That being said super is an excellent choice in 2 instances. 1 - if you live week to week and will end up with nothing at the end of your working life unless you do so. Or 2 - if you have access and using it as a tax minimisation vehicle.

      • Peace Maker on 20/05/2016 - 16:08
        +16

        Good advice. Thanks. Eneloops are assets right?

      • neil on 20/05/2016 - 16:22
        +3

        Isn't the first $30K of Super annually voluntarily contributed only taxed at 15% thus making it essentially return your tax rate (Let's say 30) - 15%. So essentially you would have to find an investment that is post tax better than 15% P.A. + whatever the super returns annually (mine returned 10.8%)?

        Sure, it gets locked away but what investments are there that can produce those returns?

        • GameChanger on 20/05/2016 - 16:34

          You're betting on your health and safety.

          Unless you're 60+ there is no point heavily putting money into super, especially one you have no control over. If you use a self managed super fund, then it might be worthwhile.

        • neil on 20/05/2016 - 16:41
          +2

          @GameChanger:

          You do have a control, you can switch super. My super (Australian Super) has made 10% P.A. on average since its inception in 1985.

          Retirement is when you will have no income thus when you will be deriving income from your investments/savings.

          I'm not advocating putting into Super or not but it's hard to argue over the numbers in the long term.

        • GameChanger on 20/05/2016 - 16:46

          @neil: And there is the problem- long term.

          You can achieve the same returns through your own investing and have the money when you need. Whats the point of having millions in super if you have poor health.

          Super is a scam in some aspects, especially for people who have the business smarts in investing and control of their money.

        • neil on 20/05/2016 - 16:51
          +2

          @GameChanger:

          And what can someone invest in that produces annual post tax returns of 15% + whatever the super goes up (let's say 10%)?

        • bemybubble on 20/05/2016 - 16:53
          +10

          neil I suppose the bigger picture is this:

          Super is the notion that we accumulate wealth so we have something to provide for our , it includes money in the bank, your own home and other investments (yes including 'super'). Unfortunately it has been marketed so well that everyone will only recognise super as a vehicle with limited access.

          So with that in mind take my situation for instance:

          I have property, that is my asset of choice. I want to continue to grow my property portfolio. This is effectively my super, with one key difference.

          If my wife and I decide to have children and she doesn't want to go to work, then I just simply sell off some assets.

          If I find myself in some financial trouble and require funds then it's simple, I sell.

          If I decide I want to move closer to the beach because it will improve the quality of my life, I sell.

          If I put money into super to minimise tax in my instance, sure I would have had a tax deduction at the time and possibly made some money in my fund, but I would not be able to access it to suit the above listed circumstances. And for what really…? We have a saying in our practice. Live for tomorrow, but not at the expense of today…

        • GameChanger on 20/05/2016 - 16:55

          @neil: Well they're opportunities that yield returns better than that, of course its not available to the every day Joe.

          Looking purely at the return aspect is pointless, find me a 65+ year old that can enjoy life to the fullest.

        • neil on 20/05/2016 - 17:12
          +2

          @bemybubble:

          Yeah good points. Locking money away without having access to it worries me in case something changes.

        • mskeggs on 20/05/2016 - 18:42
          +3

          @neil:
          I don't agree at all with the OP's approach. There is no alternative to investing "some" of your wealth for access over the retirement age except GameChanger's plan to die early or relying on the age pension. So if you agree you need to invest something for later, then the question becomes what investment gives the best returns after tax. Super is a very tax effective structure for everybody on higher incomes, to the point that you could have $100,000 more from the tax savings alone over the years until retirement.
          There is no reason not to "work that dollar hard" within super. You can invest in property etc. or virtually any other asset, all very tax effectively.

          And if you are ever in severe financial distress it is possible to access super early.

          So the question becomes how much is sensible to save for retirement. OP suggests he wants to have all his investments outside super, but is it really likely or sensible to spend all of your savings for an example like having some time off to have a kid? I say no, and those savings you are earmarking for retirement will grow much quicker in Super's low tax environment.

          The one possible exception is extreme property speculation where one becomes very heavily indebted so that the only way to afford the interest payments is to negative gear them against a high personal tax rate. But that is such a risky investment strategy should house prices (and rents!) fall by even a little such an investor would be wiped out.

        • bemybubble on 21/05/2016 - 08:27
          +2

          @mskeggs:

          At the end of the day if my quality of life is jeopardised what use is money in super if I can't live life? I'm not saying that people should be extravegent, but people's needs (not wants) change all the time. Sure you can access super in financial hardship or sickness but the hell you have to go through to do it is ludicrous and emotionally draining in what I've seen.

          As I said in the above reply to the original comm not there are instances however where super is very useful. But you'll find anyone who is young (under preservation age) and wants to create wealth with the idea that it will provide for quality of life not just for the future but for today will share the same view.

        • gkc135 on 21/05/2016 - 13:16
          +2

          @bemybubble:

          Wow, what an interesting take. Do not use super. And posted after the budget announcements severely handicapping how much we can get into the super system later in life.

          Allow me to dissent, with all due respect for your opinion.

          The preservation ago of most people here would be 60. Pick an amount of accumulated wealth you would like to have achieved at age 60 and imagine working twice as hard to achieve it. That's the direction you're headed if you wish to accumulate wealth for retirement and you don't utilise the super system.

          Here's an example of why. Imagine you are 44 and you purchase an investment property for your retirement. You sell it at age 64, having achieved $500,000 in capital growth. If you bought that property jointly with your wife, you are looking at a minimum $73,394 capital gains tax at today's rates (owned jointly and ZERO other income). If you educated yourself on how to utilise the superannuation system to achieve the same thing, you could be looking at $0 tax. Literally $0. It's not for everyone - you need a larger deposit to borrow inside a super fund and the borrowing costs are higher. But if you can achieve it, would you rather pay $73,384 or $0 in my hypothetical scenario?

          What a can of worms.

        • bemybubble on 21/05/2016 - 14:21

          I think we can agree to disagree in this instance gkc. But appreciate the debate on the issue

        • bargainhunter6969 on 21/05/2016 - 17:14

          @bemybubble: Super can be a great tax benefit saving and really needs to be considered by all.
          The only risk to be aware of is legislative risk. I agree with gkc135.
          It's hard to not recommend super given current rules.

        • bemybubble on 21/05/2016 - 17:41
          +1

          @bargainhunter6969:

          Can agree that it deserves attention. But I don't believe in waiting for a pot of gold at the end. Bird in the hand, worth more than two in the bush I suppose is how I see that type of vehicle.

          I'm just trying to break down the ideology of super the way people traditionally see it. As super a bigger picture. That's all.

          I suppose what grinds my gears is this. On one hand we have people struggling to buy their first home and these same people I have seen first hand have come to me putting money into super to reduce tax. No logic what so ever

      • MustacheFire on 20/05/2016 - 19:01

        How do you have $0 in super? I was under the impression it is compulsory

        • bemybubble on 20/05/2016 - 19:55

          In business for myself

      • TopCat on 20/05/2016 - 22:47

        I have $33k in super (obviously goes up over time). I have an owner-occupied apartment, and I have bought an off-the-plan investment property. I will soon want to buy a home. What steps can I take to move the $33k of super into an alternative asset?

        • bemybubble on 21/05/2016 - 08:14
          +1

          If you have your super in an industry fund for example and you're wanting to choose your own type of asset you would need to setup an SMSF. You wouldn't be able to access still though without meeting a condition of realise

      • hashtagbargain on 21/05/2016 - 00:59

        Thanks for the insight. Could you please explain option 2? That is, how does one get access to ones super and what are the ways of using it as a tax minimisation vehicle?

        • bemybubble on 21/05/2016 - 08:17

          Access to super is by meeting a condition of release. More commonly preservation age which varies depending on the year you are born.

          People contribute into super through means of salary sacrifice or personal deductible contributions which in effect reduces taxable income in the individual name to have the super fund pay tax instead (at 15%)

        • hashtagbargain on 21/05/2016 - 09:49

          @bemybubble: what are the ways to access super before preservation age? I don't want to wait 40 years to use it!

        • bemybubble on 21/05/2016 - 09:54

          @hashtagbargain:

          Illness or financial hardship. And believe me you really have to have hit rock bottom to get it.

        • bargainhunter6969 on 21/05/2016 - 17:16

          @hashtagbargain: Super is for '40 years time'. You can work it now, just can't get a current benefit from it.
          That is why it is so tax effective.

      • harkoliar on 21/05/2016 - 19:02

        Sorry slightly off topic, please always be careful where to invest your super.

        I just read this article and freaks me out how unregulated some things are in the financial industry

        http://www.smh.com.au/business/banking-and-finance/how-finan…

  • tassieeagle on 20/05/2016 - 15:56
    -3
    1. Has anyone ever tried to pay you in eneloops?
    2. Can I claim my eneloops as a deduction as a student? And for that matter can I claim internet, text books etc as a deduction as a student?
    3. Where can I buy decently priced eneloops now that dick Smith has shut down? Please note I do not have access to Masters

    Thanks!

    • bemybubble on 20/05/2016 - 16:13
      +4

      1 - No. But i've been paid in fruit n vege before
      2 - Education expenses can only be deducted in connection to your income earning activity. I.e. i'm working as an accountant and want to do my masters in tax. Then this would be the 'nexus' needed to link the deduction. If I was working as a retail assistant and studying my masters in tax. Then no deduction can be claimed.
      3 - Really cool website that has them all the time. www.ozbargain.com.au you should check it out ;)

      • tassieeagle on 20/05/2016 - 17:34

        Thanks mate, especially for answer 2

      • WillKillfor5Cents on 22/05/2016 - 12:24

        hi, so if I am in finance and I am planning to complete the CFA out of my own pocket, can I claim it as a tax deductible expense against my salary?

  • turkz1 on 20/05/2016 - 15:56

    Can you post a flat rate deal for ozbargainers? I'd love to have an accountant that charges right and makes every tax dollar count.

    • bemybubble on 20/05/2016 - 15:59
      +3

      Unfortunately not turkz1

  • 17731773 on 20/05/2016 - 15:56

    I work as a casual can I claim parking costs of my vehicle it is between 6 - $10 a day?

    • bemybubble on 20/05/2016 - 16:07
      +3

      In essence claiming parking is in the same park as claiming travel to and from work. In most instances you cannot and is deemed private in nature. That being said there are other circumstances that you can claim parking i.e. going to different job sites that are not your usual place of work.

      More info below:

      https://www.ato.gov.au/Individuals/Income-and-deductions/In-…

      • 17731773 on 21/05/2016 - 06:45

        Thanks for that, I had heard conflicting arguments and this is clear. Cheers.

      • p3t0r on 22/05/2016 - 06:04

        For this, I've heard that too claim this, you need to travel to your workplace first, then to another site. Is this right?

        • bemybubble on 22/05/2016 - 08:40

          That could be a possibility.

          Another possibility is that any small business that turns over less than 10 mil are exempt from car parking fringe benefits. An employee could salary sacrifice parking which would overcome the issue.

  • geek001 on 20/05/2016 - 15:59
    +1

    Got any accountant jokes?

    • bemybubble on 20/05/2016 - 16:04
      +20

      What did one accountant say to the other?

      Nothing. Because we're boring as S*** :P

      • dasher86 on 20/05/2016 - 17:02
        +20

        3 accountants at an interview. GM asks what is 1+1 two accountants say 2, one says anything you want it to be. S/He was hired on the spot.

    • Ryanek on 20/05/2016 - 16:04
      +10

      An accountant is someone who solves a problem you didn’t know you had in a way you don’t understand.

    • StewBalls on 20/05/2016 - 20:56
      +2

      Did you hear about the constipated accountant?

      He had to work it out with a pencil…

      • max2million on 20/05/2016 - 21:13
        +5

        Oh, the one who couldn't budget?

  • Dennis3003 on 20/05/2016 - 16:19

    What roles and responsibilities do you have at your current employer?

    • bemybubble on 20/05/2016 - 16:24
      +3

      Currently I have a senior role and share responsiblity for my staff and pretty well all clients. I assist clients with their short and long term goals, assist with financial advice, prep financials and tax returns etc. Sometimes even counselling!

      It is a family business with myself long term looking to take over the practice.

      • GameChanger on 20/05/2016 - 16:27

        Are you family?

        If not I would start looking for other options, when it comes to money people change their minds!

        • humdingaling on 20/05/2016 - 16:40
          +6

          "family" business..kapish

        • tre180 on 20/05/2016 - 16:44
          +8

          @humdingaling: Just when I thought I was out… they pull me back in

  • good grape on 20/05/2016 - 16:23
    +1

    potential tax return items on owner occupied property?

    • bemybubble on 20/05/2016 - 16:32

      Potential claims have a home office are use of light and power. Currently the ATO have a rate of 45 cents per hour. Phone usage depending if you have a home office, internet etc.

      • good grape on 20/05/2016 - 17:14

        don't have a home office, so…nothing in it for me? :(

        • bemybubble on 20/05/2016 - 17:16

          Unfortunately not.

      • yoba on 20/05/2016 - 18:44
        1. I'm working from home from time to time. Is there any chance for me to claim part of my utilities? Mortgage repayments (lol, just in case)?
        2. which requirements should be met for a home office?
        • bemybubble on 20/05/2016 - 19:39
          +1

          See my post above about the ATO rate. Mortgage repayments you are really opening up a tin of worms in my view as if it is your primary residence the ATO could expose it to CGT and you'll lose your exemption.

          The only requirement for a home office is that you do some work from home. i.e. you may be a restaurant manager and do payroll and rosters from home. As long as you keep a 12 week log you're fine

      • jlapr1 on 20/05/2016 - 21:59
        +1

        Hi, firstly thanks for your time and effort. My question is can you claim work related study use of a home office? In my case I'm doing an apprenticeship and use my home office as a technical library and to do theoretical assessments needed to complete my apprenticeship. Can this sort of use be claimed?

        • bemybubble on 21/05/2016 - 07:32

          Once again cannot comment on personal circumstances. But home office encompasses anything to do with income generating. For example. I did and accounting post grad which required study from home. In turn I claim home office use as it satisfied the nexus test. Also claimed travel to and from the Uni

      • Peanut money on 21/05/2016 - 09:37

        Any CGT implications?

        • bemybubble on 21/05/2016 - 09:40

          Not on the 45 cents per hour

  • retiredfeline on 20/05/2016 - 16:24

    Do you find that a large proportion of your clients aren't aware of all the deductions they could make? What is the most worthwhile deduction that is commonly overlooked?

    • bemybubble on 20/05/2016 - 17:03
      +2

      All the time. Motor vehicle to phone usage to home office to even professional development.

      Also theres the common myth that if you underclaim you will 'fly beneath the radar'. Hate to break it to you, once you lodge a tax return your immedietly on the radar :P

  • robbyjones on 20/05/2016 - 16:39

    I seem to pick pretty poor tax accountants. The last time I did my tax (4 years ago) I had stuff going on and therefore relied on the accountant to correctly submit (after I sorted all of the stuff he needed) my tax only to get a fine from the tax department for not paying the extra medicare levy even though he did so on my husbands return. The tax accountant refused to pay the fine or even look at it again. Therefore I have put tax returns in the too hard basket and haven't done once since. So I need a decent accountant you don't happen to be in Sydney do you?

    • GameChanger on 20/05/2016 - 16:42
      +1

      The onus is on the tax payer to make sure the return is correct.

      A good accountant would pay the fine, seems you went to those dodgy "tax accountants" that are in the shopping centers.

      • robbyjones on 20/05/2016 - 16:45

        Yeah I know the onus is on me but I paid for a service that in my mind wasn't provided. No, not from shopping centre, some dodgy place in Parramatta that we picked out of the phone book (I actually wasn't there by hubby did both, at the time I just went with it). Hence why I would like to go by referral rather than throw a dart at it.

        • GameChanger on 20/05/2016 - 16:48
          +1

          That accountant must be dumb to make such a mistake.

          I wouldn't take that bad experience as a reflection of all accountants.

          Mind you if your return is simple, most firms don't want your business as its not valuable $$$.

        • bargainhunter6969 on 21/05/2016 - 17:25
          +1

          @GameChanger: One warning. If you are charged based on any part of your refund or commission etc then go somewhere else. It will only end in tears for you.

        • GameChanger on 21/05/2016 - 17:31
          +1

          @bargainhunter6969: I never heard of such payments, these must be the dodgiest accountants around.

    • bemybubble on 20/05/2016 - 17:16

      I feel for you robby. Don't give up, you don't necessarily need to see one in sydney. We do peoples work all over Australia (and the world for that matter). Unfortunately I cannot help you. But i've noticed airtasker has quite a few good heads in that space. Maybe it's because people review them and they are publicaly scrutinised?

      • robbyjones on 20/05/2016 - 18:59

        I'll take a look. Thanks for the tip.

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