Attention My Fellow OZB Sole Traders

LDG on 13/12/2020 - 01:09
Last edited 13/12/2020 - 06:04 by 1 other user

Hey my fellow oz bargainers that are also sole traders (or have knowledge of)… lend me your ears.

The best way to save money is not spend it in the first place and by far my biggest annual bill is my tax, so each year I try to minimise tax to the maximum but legitimately. I am totally committed to fully minimise my tax - but underline legitmate.

Its been pretty straightforward until this year - just do my straightforward business expesenses and then maximise my super contributions. But I have been eligible for early access to super and now my super fund says I can only get a deduction less than $5k this 21FY (and also last FY but too late to do anything about that).

So my question is, I have somewhere between $10-$20k that im now lost what to do with.

  1. I have found multiple accountants to be pretty passive and unhelpful - usually I come up with the idea and they tell me how to make it work. Is there some "expert" service that I would find useful?

  2. Im trying to think of the biggest expese that would give my business value, its probably a car. Do you have any other ideas for great deductions or links I can research about this kind of thing.

  3. Who has gone from sole trader to company (or even a trust) - I would love to pick your brain.

Cheers in advance…

Education & Work

Comments

  • branners on 13/12/2020 - 07:27

    I can't advise on being a sole trader but in my experience, the best advice in that area comes from a Super advisor.
    Funds will have people with whom you can sit down and I have found the advice to be truly independent.
    They take a snapshot of your situation and how far forward to can plan, and offer advice. And it's usually either no-cost or low-cost.

  • mskeggs on 13/12/2020 - 08:52
    +2

    Do you mean you withdrew money from super under the COVID provisions, and now wish to contribute this back to super but the find is saying you have a reduced concessional limit?
    That doesn't sound correct, but I stand to be corrected. Maybe a call to the ATO might clarify.

    • WreckTangle on 13/12/2020 - 09:17

      Yip, they’ll look on this favourably…

    • whooah1979 on 13/12/2020 - 09:30

      Go with another fund if the current doesn't want the 💵 .

      Better yet start an SMSF and be in control of your own 💲.

      • Wystri Warrick on 13/12/2020 - 17:27

        Hey whooah1979, I've been wanting to look into SMSF for some time, but I've just been short on time - uni and work.
        Would you have, know of any resources to get me started, and any tips?

        • Indomietable on 13/12/2020 - 21:30
          +1

          If you are short on time SMSF is the least thing you need to do. Also not worth the effort if you have less than 600k . You better use your resources to focus on growing your business, talk to your clients etc, than worry about optimising side items like this.

    • LDG on 15/12/2020 - 11:39

      This is the situation that applies to me - https://www.ato.gov.au/forms/notice-of-intent-to-claim-or-va…

      I have called both the ATO and my super fund… both have been pretty unhelpful but I have a call scheduled with my accountant today and hope to have it better explained to me. After reading it again today - I am seeing perhaps that they are saying I have withdrawn part of the contributions I have made and thats why I can't deduct it. If this is the case it wouldn't apply to future contributions (ie from now on)…

  • [Deactivated] on 13/12/2020 - 09:39
    -1

    This business does not sound profitable

  • spal on 13/12/2020 - 09:40
    +1

    I am a bit confused. You ask for ideas for minimising tax, and mentioned superannuation, and cars. You will need to probably need to expand on each element, maybe explain with examples.

    There are a few very helpful members here who might be able to assist.

    Superannuation could be transition to retirement pension, where you contribute, pay tax at 15% and take it out again as pension.

    Car car be immediate write-off, which would give you a higher expense in the year of purchase itself. But you will need to ask your accountant if you have sufficient nexus to your business, any private use is not deductible, might also trigger fringe benefits liability too.

    But these are just very hypothetical suggestion, without knowing any further details. However, looks like you are tax savvy, so these vague ideas might just be enough for you to do your own research.

    • LDG on 15/12/2020 - 11:52

      Cheers… im in my 30s so still very much in accumulation phase.

      In a nutshell I would normally maximise my contributions to super to enjoy the tax benefits but this FY it looks like I may be very limited in the benefit I can receive through super contributions. Therefore I am considering alternatives that would benefit my business but wouldn't necessarily be considered in a normal year when I could make larger personal contributions.

      I do my best to understand the rules and concepts but come from a very different world - so find it quite difficult - firstly to find / learn of strategies that may apply to my situation and secondly to know how to apply them.

      The trust idea comes from the fact that my partner will be on maternity leave for a year or so from mid-next year and on half her usual income and understand that I can split my income between us through a trust.

      • spal on 08/01/2021 - 14:38

        Regarding the trust, speak with someone who knows these matters. Yes, in case of any earning generated by a business run by a family (discretionary) trust, you make get tax advantage by giving part of the income as distribution to a lower taxed adult member of the family. However, if the business income is generated from personal exertion of a single person, then PSI rules would kick in. Then the income maybe taxed differently. Government has been over a period of time removed most of the tax advantages of having a family trust. There are other advantages of having a trust, like asset protection. Especially if you run a business, the business creditors would have access to any assets owned by you. But assets held behind a trust will be protected from creditor action. There is a complex area. I suggest do some further research and then speak with a professional. You would get best quality advice if you have done your research. You would also be able to separate from quality v rubbish advice.

  • daft009 on 31/12/2020 - 22:18

    Car, or equipment are usually the best ones.
    Try and think of things that will make you more productive/efficient in your business

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