6 quick tips to get your finances into shape this year!

Here are my 6 tips to getting your finances into shape for 2013.

Make sure you read them all, as one of these tips could save you, or even make you, thousands:


1. Pay off your Credit Cards 

With exhorbitant interest rates charged on credit cards, this is a priority. A great way to manage paying off the balance is to divide the total amount outstanding by 12 and commit to paying this each month. You will also need to stop using the credit card and switch to a debit card. If its too tempting having the flashy gold, platinum or brightly coloured card calling out to you in your wallet, then 'hide' it in your top draw or even the freezer to avoid purchasing things you can't really afford. I love the freezer idea as you have time to think whether its really an emergency purchase whilst the card thaws out!

2. Make extra repayments on your Mortgage

Commit to paying off an extra $50 or $100 (or whatever amount you can manage) a week off your mortgage. This will reduce the loan term significantly and also save you thousands in interest. If you can't afford the extra $50 or $100 than with the recent decreases in interest rates, make sure you maintain the same repayments to reduce your loan term and interest costs.

3. Sort out your Super

Do you have 10 super accounts and possibly thousands in lost super accounts? In Australia, there are approximately 5.8 million lost super accounts worth $18.8 billion. Click here to search the ATO database for your lost super accounts. Compare your super funds to see how the funds are performing and consolidate to save on fees and paperwork. For more information about how to judge a super funds performance and consolidating super accounts, check out ASIC's guide here.

4. Create an additional Income Stream

Its a new year, so now is a great time to pursue a passion, skill or idea and make some additional money. With the unemployment rate creeping up and media announcements about layoffs occurring on a daily basis, having an additional income stream can be a great way to getting your finances in shape. You never know where a hobby might take you. A lot of successful businesses have started off on the kitchen table, in the garage or home office as a "side project".

5. Invest in your Education

Research shows that over their lifetime, Uni Graduates are likely to earn $1 million more than people who didn't finish high school. Increase your level of employment or earning capacity by studying. It is never too late to start! If cost is a factor, than see if your employer can subsidise any of this, check what government grants are available, or if it relates to your existing employment you could possibly claim the education costs as tax deductions. Click here for more information about the Skills for All South Australians government initiative which provides free courses for eligible people.

6. Lodge outstanding Tax Returns  

I saw many clients last year that had put off lodging their tax returns for quite a few years. Most of them ended up with substantial tax refunds. If you think you may owe the tax office money, have lost paperwork, or just want the maximum refund, then see a quality and affordable accountant to get the maximum refund possible. Why not use your tax refund to pay off a credit card or some of your mortgage too!

ATO announces help for bushfire affected people and businesses

The ATO has announced help for individuals and businesses that have been affected by the recent bushfires across Australia.

The tax support includes access to extensions for lodgment and payment of forms usually due around this time or in the coming months.

The ATO has also stated that if you have been affected by a natural disaster and are not ready to deal with any documentation received by the ATO, you should get in contact with them and they will make arrangements with you.

Click on Dealing with disasters to read a full summary of the ATO's tax support available and also National Bushfires - January 2013.

Baby Bonus vs Paid Parental Leave: making the right choice

With the baby bonus payment decreasing from July 2013 onwards, I thought I'd explore the government payments available for parents with new babies. I hope I can empower any mothers, fathers or expecting parents to make the choices that will best benefit their finances and take advantage and maximise the government payments available.

The Baby Bonus changes will affect parents who have already had their first baby and are having a further baby due after 1 July 2013. The payment for subsequent babies will now be $3,000. It will remain at $3,000 until 1st July 2015, when it will be indexed with CPI.

There are a few eligibility tests to claiming the baby bonus. The main one that is worth noting is that the bonus is payable if the family's estimated taxable income is $75,000 or less in the six months AFTER your child is born or enters your care. Its important to note that the threshold is your taxable income. This means that its your assessable income (what your gross income is on the payslips) minus any tax deductions. If you're close to the threshold, its always great to be maximising all tax deductions legally possible. A quality Accountant should be able to assist with this.

Its also important to note here that families CANNOT claim both the Baby Bonus and the Parental Leave Pay. It is either one or the other, or in some cases, it might be neither.

The recent cuts to the Baby Bonus payment DO NOT affect the Parental Leave Pay. There are actually increases to the Parental Leave Pay in the form of Dad and Partner Pay from January 2013. I have blogged about this recently.

Parental Leave Pay is payments of up to 18 weeks of paid leave at the National Minimum Wage of $606.50 per week, which equates to $10,917 before tax (you will be taxed at your marginal tax rates). There are a few tests to satisfy eligibility for the Parental Leave Pay.

Importantly, the income test is that you have to have an individual adjusted taxable income of $150,000 or less in the financial year before the date of birth, adoption or claim (whichever is earlier). As stated already, its the taxable income that determines eligibility, so if your salary is on or near this amount, its definitely worth seeing an Accountant to make sure you are maximising all your possible tax deductions to decrease your taxable income. .

Another tip to helping your family swiftly claim any family government payments is that you generally need to have all your tax returns lodged and up to date. If you're due to welcome baby soon and you or your partner have a few years of tax returns outstanding, now's the time to get moving on these. Centrelink generally won't let you claim the Childcare Rebate or Benefits unless all your tax returns for both yourself and your partner have been lodged.

Finally, the following info sheet from the Australian Government can help you when choosing between the Baby Bonus and the Parental Leave Pay. It also contains info about the 'work test' - another extremely important test to qualify for the Parental Leave Pay. I encourage you to check it out.

Should I do my own tax? Helping you decide to DIY.

I get asked from time to time whether its worth going to see an Accountant to do your tax.

It seems that the number of people lodging their tax returns on etax is growing, but I'm a bit concerned that people aren't claiming as much as they could. Some people may be incorrectly lodging tax returns, which can lead to the stress of audits.

Lets look a bit closer at some of the issues to help you decide whether or not to do your own tax.

Firstly, if your situation is really straight forward and your employer pays for everything and anything you might need for work (lucky you!), then you might not need to see an Accountant. BUT, if you answer YES to any of the below, then there are lots of areas where the assistance of an Accountant will help you get the maximum refund.

* Did you use your motor vehicle to travel anywhere else other than to and from your normal workplace? This could include such travel as seeing suppliers, clients, offsite training and meetings. Even if you don't have a logbook, you may be able to still make a claim for this type of travel.

* Did you travel interstate for work? The ATO has reasonable daily travel allowances which allow you to claim certain amounts without receipts!

* Do you have to wear a uniform or protective clothing? You can actually claim your laundry expenses of 50 cents per wash or $1 per wash up to $150.

* Do you do work related study? If you do, there are a variety of expenses to claim, such as the cost of the fees, printing, laptop, internet, parking, travel... the list could go on...

* Did you spend over $300 on a work-related equipment? This could include a laptop, ipad, tools. These can all be claimed if you use them for work, but there are special rules in claiming them.

* Do you work from home, use the internet at home for work, use a mobile phone for work, use your laptop for work? If so, you could be able to claim on all of these within the ATO guidelines.

There are many other areas where an Accountant can be of assistance. These are some of the areas where I generally find value in helping out Tax File Number (TFN) workers in maximising their deductions. There are strict rules which apply for claiming the above types of work expenses, so if you answered yes to any of the questions it would be worthwhile seeing an Accountant.

If you are an investor of some sort, whether that be shares, property or other types of investments or have business interests, than I highly encourage you to see Accountant to make sure you are maximising the claims and also lodging them correctly!

I would also recommend going with an Accountant that has been recommended by someone else and that is affordable - or an Accountant who actively blogs so you know they know their 'stuff' :)

I offer a fixed fee for my tax returns, with a standard individual tax return costing $99 (which is tax deductible on your next tax return). I'm certainly confident that all my clients are more than $99 better off after lodging their tax return through myself than if they were to have done their tax themselves.

If you do think you can manage doing it yourself, than I would highly recommend using the pre-fill option of etax rather than lodging by paper. Also, if you are lodging your own tax return you have until the 31st October 2012! If you use an Accountant, you generally get until the 31st March 2013 (but you need to contact them before the 31st October 2012 to get the extension)!!

Are your contractors really employees? A summary of the ATO guidelines recently released

The Australian Tax Office (ATO) recently released information helping businesses to determine if workers are employees or contractors. The ATO is cracking down on businesses using contractors to try 'to illegally lower their labour costs by avoiding their pay as you go (PAYG) withholding and super obligations for the worker'.

Penalties, interest and charges may apply for employers if the ATO finds that workers are engaged as contractors when they are really employees. The ATO also suggests "dobbing in" other businesses that may be treating employees as contractors.


Examining the working arrangement is key. Just because the worker has an ABN or business name, its the industry 'norm', is only needed for short-term or irregular work, have specialist qualifications or skills DOES NOT mean that the worker is actually a contractor, according to the ATO.
The ATO sets out typical aspects of a contractor working arrangement to include:

• they run their own business and provides services to your business,
• they can sub-contract/delegate or pay someone else to do their work,
• they are paid for a result achieved based on the quote provided,
• they provide all or most of the equipment, tools and other assets required to complete the work and they do not receive an allowance
• they take on commercial risks and are legally responsible for their work and liable for the cost of rectifying and defect in their work,
• the have freedom in the way the work is done subject to specific terms in any contract or agreement,
• the worker is operating their own business independently to your business and they are free to take on additional work.

If the worker is a contractor, the business also won't have Fringe Benefits Tax (FBT) obligations. Additionally, they may avoid other obligations such as occupational health and safety requirements, payroll tax, wages, conditions and leave entitlements.

Typical aspects of an employee working arrangement include:

• they work in your business and are a part of your business,
• they cannot sub-contract/delegate or pay someone else to do the work,
• they are paid for the time worked, price per item of activity or a commission,
• your business provides an allowance or their equipment, tools and other assets required to complete the work,
• they take no commercial risks and your business is legally responsible for the work performed by the worker and liable for the cost of rectifying any defect in the work,
• they are subject to control over their work and your business has the right to direct the way in which the worker performs,
• they are not operating independently from your business.

Below is a link to an ATO decision tool to help you determine whether your workers should be classified as employees or contractors.

http://www.ato.gov.au/content/00095062.htm?alias=employeecontractor

If you are after more specific advice, I recommend getting in touch with an accountant who understands these issues and is willing to discuss them with you.

A case study of 2 small business owners: which one are you?

Most entrepreneurs go into small business with dreams of a better life for themselves and their families, but the reality can often be far from this. Below I examine two real small family businesses with turnovers less than $1 million. Which one are you more like?

Mr and Mrs Burnt-out

They are a husband and wife team. They offer a fantastic product and service. They work 14 hour days, 7 days a week. They can't remember the last time they took a holiday. You can see the tiredness in their eyes. They do everything themselves in the business. They do the front-end, the marketing, the administration and the delivery of the product and service. The business revolves around them. They also do all the book work. They struggle to invoice out on time. They don't follow up debtors. Because they are running around doing everything and anything, their service standards and core business product is not as good as it used to be. Some of their loyal customers are becoming disillusioned. They are surviving week by week. They are burnt out from working in their business all the time, there is tension between the couple and one of them is having health problems.

Mr and Mrs Balanced

Another husband and wife team. They also offer a fantastic product and service. They work hard, but only work on weekends when necessary. The wife works part-time in the business. They recently went away to the snow for a week-long holiday. They are also going away to Europe next month for business and a holiday. Their business runs smoothly when they go away. They have clear systems in place. They do not do all the work themselves. They have key employees and also contract out the work that they are not good at, and choose to focus on the areas within the business that they excel at. Although cash flow is still tight, they are growing and know exactly where the business is at. They have an appropriate debtor management system in place. The quality of the product and service has remained consistent and they are attracting new clients and retaining existing clients. They have a business plan and budget which they monitor and review. The owners are now focused on working more on their business rather than in the business.

Do either of these scenarios sound like yours?

I don't want you to be too down on yourself if your business is more like Mr and Mrs Burn-outs. You're certainly not alone. There are many businesses that operate like this. Owners may feel like they have to do everything for a variety of reasons: there's not enough money to employ someone, no-one else can do the work as good as them, they want to keep control of everything... the list could go on.

But when you're working 7 days a week, at what cost does this come to you and your family? Your health, your time and your wellbeing? Is this really what you wanted when you first went into business?

I know from experience that my bookkeeping and accounting services have been worth every cent to businesses like Mr and Mrs Balanced. I like to think I'm helping them not just in dollar terms, but with their emotional wellbeing too - providing them with piece of mind that someone competent is assisting with an integral part of their business.

Smart business owners realise that their business is much more productive when they focus on their areas of strength, and they get others involved to provide assistance in areas of weakness. This then in turn produces far greater growth and success for their business and enables them to live a fulfilling life outside of their business.

Paid Parental Leave just for Dads - starting 2013!

Most people know about the Australian Government's 18 weeks paid parental leave scheme, but did you know that fathers and same sex partners can take two weeks pay at the minimum wage for babies born after 1 January 2013?

'Dad and Partner Pay' can be taken from 3 months before the birth or adoption of your child, and up to 12 months afterwards. It can be taken in addition to the mother taking 18 weeks paid parental leave.

I read this with glee when I first found out. I'm due with my third child in early January and I'll definitely need all the help I can get.

Whilst the 2 weeks parental pay is at minimum wage, it's definitely encouraging to see that the government is supportive in enabling fathers to be able to bond with their newborn (and give the new mother a break too)! The Family Assistance Office is in charge of administering this once-off payment, with the minimum weekly wage currently set at $606 per week before tax.

As expected, there are some conditions attached for the father to receive the 2 weeks paid parental leave. Eligibility includes full-time, part-time, casual, contract, seasonal and self-employed workers, as long as they are on unpaid leave and do not work during the two week period (excluding housework of course!). The father must have earned less than $150,000 in the previous financial year and have worked more than one day in a week in ten of the thirteen months before the birth or adoption of the child or at least 330 hours.

Having a child can put financial pressure on household budgets, so its definitely a good idea to plan and be prepared and know about all the entitlements you can access. If you run your own business or can control your wage to some extent, make sure you are aware of the thresholds that entitlements cut off at, and consider structuring finances in such a way to maximise entitlements, if at all possible.

So it looks like I won't be eating spicy curries, drinking castor oil or raspberry leaf tea, or partaking in any other midwives tales about bringing on birth. At least not until after the 31st December, to make sure my husband gets the 2 weeks parental leave!