Last minute tips to potentially decrease Tax and increase Centrelink entitlements

From: Victorian Farmers Accountants (FARMERSTAXWIZZ@bigpond.com.au)
Date: Wed Jun 21 2006 - 12:16:25 EST

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I hope this helps...
  a.. Pay your kids commercial wages based on actual hours worked;=20
  b.. If one partner works off farm, pay a "partners' salary" to the on =
farm working partner - must be per agreement and commercially based;=20
  c.. Keep a diary for your car for 12 continuous weeks to give you more =
options;=20
  d.. Prepay expenses (those in the Simplified Tax System only) such as; =
lease, rent, grain, fertiliser, fuel and repairs. Make sure the business =
you are prepaying is secure, and ask for a discount. Buying equipment, =
cattle or paying off loans are not great tax deductions;=20
  e.. Exclude June's milk received July (Simplified Tax System only);=20
  f.. Pay into superannuation as the tax rate is only 15%. Super can =
permanently save you tax. Other methods only defer tax. Superannuation =
is now more attractive then ever;=20
  g.. Farm management bonds - individuals only. But prepaying expenses =
better;=20
  h.. Defer income until after 30th June;=20
  i.. Reduce private debt first to avoid interest that isn't tax =
deductible;=20
  j.. Make sure all bills are paid by 30th June (Simplified Tax System =
only);=20
  k.. Staff superannuation must be paid by 30th June for ALL businesses =
to get a tax deduction in this financial year;=20
  l.. New (or 2nd hand) equipment - Depreciation deduction is 15% of =
cost in the first year and 30% following (Simplified Tax System only). =
Non STS businesses can claim depreciation based on the number of days =
only held in this financial year;=20
  m.. "Averaging" can be an enormous help if your incomes are a lot =
lower in the passed four years prior to this one.
Do this quick exercise to roughly estimate your profits.

                                                                         =
                                   EXAMPLE YOU!
Your overdraft began at $10,000 and is now $10,000 in the black =
          20000
You received a tax refund (not GST) =
                       (2000)
You paid PAYG instalments =
                         7000
You lived =
                                   35000
You paid loan payments of which the principal was =
               15000
You bought some more cattle =
                         5000
You replaced the 4 wheeler =
                            5000
You bought shares via milk company monthly deductions =
            5000
You maintained the house and paid life insurance =
                  5000

Cash profit must have been =
                          95000

Less Depreciation - check last years tax returns & reduce by 30% =
        20000
Add deregulation compensation (8 years total) =
                  10000

A rough guide of taxable income =
                       $85000

This is not how taxable incomes are calculated, but it will be a =
reasonable guide.

Kind regards,
MATTHEW STEWART
VICTORIAN FARMERS' ACCOUNTANTS
SHOP 4/5 COOK DR PAKENHAM VIC 3810 PHONE 59417514 FAX 59417594
IMPORTANT DISCLAIMER;
This information is general only and you should seek specific advice =
before acting on anything contained in this document.=

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<DIV><FONT face=3DArial size=3D2>I hope this helps...</FONT></DIV>
<UL>
  <LI><FONT face=3DArial size=3D2>Pay your kids commercial wages based =
on actual=20
  hours worked;</FONT>=20
  <LI><FONT face=3DArial size=3D2>If one partner works off farm, pay a =
"partners'=20
  salary" to the on farm working partner - must be per agreement and=20
  commercially based;</FONT>=20
  <LI><FONT face=3DArial size=3D2>Keep a diary for your car&nbsp;for 12 =
continuous=20
  weeks to give you more options;</FONT>=20
  <LI><FONT face=3DArial size=3D2>Prepay expenses (those in the =
Simplified Tax=20
  System only) such as; lease, rent, grain, fertiliser, fuel and =
repairs. Make=20
  sure the business you are prepaying is secure, and ask for a discount. =
Buying=20
  equipment, cattle or paying off loans are not great tax =
deductions;</FONT>=20
  <LI><FONT face=3DArial size=3D2>Exclude June's milk received July =
(Simplified Tax=20
  System only);</FONT>=20
  <LI><FONT face=3DArial size=3D2>Pay into superannuation as the tax =
rate is only=20
  15%. Super can permanently save you tax. Other methods only defer tax. =

  Superannuation is now more attractive then ever;</FONT>=20
  <LI><FONT face=3DArial size=3D2>Farm management bonds - individuals =
only. But=20
  prepaying expenses better;</FONT>=20
  <LI><FONT face=3DArial size=3D2>Defer income until after 30th =
June;</FONT>=20
  <LI><FONT face=3DArial size=3D2>Reduce private debt first to avoid =
interest that=20
  isn't tax deductible;</FONT>=20
  <LI><FONT face=3DArial size=3D2>Make sure all bills are paid by 30th =
June=20
  (Simplified Tax System only);</FONT>=20
  <LI><FONT face=3DArial size=3D2>Staff superannuation must be paid by =
30th June for=20
  ALL businesses to get a tax deduction in this financial year;</FONT>=20
  <LI><FONT face=3DArial size=3D2>New (or 2nd hand) equipment - =
Depreciation=20
  deduction is 15% of cost in the first year and 30% following =
(Simplified Tax=20
  System only). Non STS businesses can claim depreciation based on the =
number of=20
  days only held in this financial year;</FONT>=20
  <LI><FONT face=3DArial size=3D2>"Averaging" can be an enormous help if =
your=20
  incomes are a lot lower in the passed four years prior to this=20
one.</FONT></LI></UL>
<DIV align=3Dcenter><FONT face=3DArial><STRONG><U>Do this quick exercise =
to roughly=20
estimate your profits.</U></STRONG></FONT></DIV>
<DIV align=3Dleft><STRONG><U><FONT =
face=3DArial></FONT></U></STRONG>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;=20
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; =
&nbsp;&nbsp;&nbsp;=20
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; =
&nbsp;&nbsp;&nbsp;=20
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; =
&nbsp;&nbsp;&nbsp;=20
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; =
&nbsp;&nbsp;&nbsp;=20
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; =
&nbsp;&nbsp;&nbsp;=20
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; =
&nbsp;&nbsp;&nbsp;=20
&nbsp;&nbsp;&nbsp; =
<U>EXAMPLE</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=20
<U>YOU!</U></FONT></DIV>
<DIV align=3Dleft><FONT face=3DArial size=3D2>Your overdraft began at =
$10,000 and is=20
now $10,000 in the=20
black&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=20
&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; 20000</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>You received a tax refund (not=20
GST)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&=
nbsp;(2000)</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>You paid PAYG=20
instalments&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n=
bsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&=
nbsp;&nbsp;7000</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>You=20
lived&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n=
bsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&=
nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n=
bsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;35000</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>You paid loan payments of which the =
principal=20
was&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=
&nbsp;&nbsp;&nbsp;15000</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>You bought some more=20
cattle&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&=
nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n=
bsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5000</=
FONT></DIV>
<DIV><FONT face=3DArial size=3D2>You replaced the 4=20
wheeler&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&=
nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n=
bsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;5000</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>You bought shares via milk company =
monthly=20
deductions&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5000</FONT></DIV>=

<DIV><FONT face=3DArial size=3D2>You maintained the house and paid life=20
insurance&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;</U><U>5000</U></FONT>=
</DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>Cash profit must have=20
been&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;=
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&=
nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n=
bsp;95000</FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>Less Depreciation - check last years =
tax returns=20
&amp; reduce by=20
30%&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20000</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>Add deregulation compensation (8 years=20
total)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&=
nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n=
bsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;</U><U>=
10000</U></FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>A rough guide of taxable=20
income&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&=
nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n=
bsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nb=
sp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbs=
p;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp=
;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;</U><U>$85000</U></FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2><EM>This is not how taxable incomes are =
calculated,=20
but it will be a reasonable guide.</EM></FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT>&nbsp;</DIV>
<DIV><FONT face=3DArial size=3D2>Kind regards,</FONT></DIV>
<DIV><FONT face=3DArial size=3D2>MATTHEW STEWART</FONT></DIV>
<DIV><FONT face=3DArial size=3D2><STRONG>VICTORIAN FARMERS'=20
ACCOUNTANTS</STRONG></FONT></DIV>
<DIV><FONT face=3DArial size=3D2>SHOP 4/5 COOK DR PAKENHAM VIC 3810 =
PHONE 59417514=20
FAX 59417594</FONT></DIV>
<DIV><FONT face=3DArial size=3D1><STRONG>IMPORTANT =
DISCLAIMER;</STRONG></FONT></DIV>
<DIV><FONT face=3DArial size=3D1>This information is general only and =
you should=20
seek specific advice before acting on anything contained in this=20
document.</FONT></DIV></BODY></HTML>

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