The Value Add – May 2014
Today marks the 3rd birthday for Value Beyond! We would like to thank everyone we have been able to help during this time, and we are looking forward to the next year ahead.
The last few weeks have shown that the upcoming federal budget may hold some tough measures, likely to affect most taxpayers.
Of course, as most of the proposed measures are currently just speculation, we will have to wait until budget night (Tuesday May 13) to find out all the details and how it will affect each of us.
As always, Value Beyond will have the budget update in your inbox in the morning after to outline what impacts the Budget may hold, and how it can be managed.
Ian Wood will also be on ABC612 with Stephen Austin on Wednesday 14th May to discuss the details.
Tax planning for 30 June 2014 has already started to appear on the radar for quite a few people. One of the keys to knowing your options is to be knowledgeable about your finances, including your tax.
In this edition we will explore what financial knowledge means, and also cover what records need to be kept in order to achieve this.
What Is Your Financial Roadblock?
Everybody’s relationship with money is different, and so is the journey to wealth creation.
If you aren’t in the financial position you would have hoped to be, or would like to be, what is holding you back?
Not enough money seems like the obvious answer for most of us!
Aside from the lack of financial wealth, there are two other factors which could be holding you back:
1. Time
2. Knowledge
Time
When we talk about a lack of time, or needing to find more time, quite often this is about streamlining what we do so it is more efficient with our time.
We all have our strengths and weaknesses, and it is typically our weaknesses that take up our time unnecessarily because we are inefficient at them or don’t enjoy them.
How to fix this?
One option is to try and improve your weaknesses, and make them “less weak”. However, you need to ask yourself whether this is an efficient use of your time?
What if you put that time and effort into your strengths instead, and sought advice and assistance from experts in the areas of your weaknesses? Would you multiply your efforts and results more by doing this?
After all, if you are capable of doing everything yourself and don’t seek assistance from experts in their specialist areas, then why does anyone need your expertise and help in your areas of expertise?
Knowledge
Obtaining information is fairly easy these days with the abundance of resources able to be found without leaving your desk. The internet has allowed us to access knowledge on just about any area from a multitude of sources, all at our fingertips.
But how do you decipher your way through the mountain of information, and separate fact from fiction and hype?
It is a matter of taking a balanced approach, using some common sense and following your intuition.
Does an offer sound too good to be true? Then it most probably is.
Is an offer including free bonuses really free, or are there charges hidden in the price or ongoing fees and charges that aren’t properly explained?
Financial Knowledge and Wisdom
So you figure out how to free up your time and make the most of it, and you know where to find additional knowledge to help strengthen your efforts and results.
What is the next step?
Action.
Time and knowledge is wasted if it is not put into action. It doesn’t have to be big action, even the smallest change now can be the start of something big.
If you need any advice or a hand to point you in the right direction, contact us to let us help you through your roadblock.
Record keeping – What You Need To Know
Record keeping is at the very heart of being able to run a successful business or keeping a track of your investments and wealth.
Aside from being a legal requirement to keep records (generally 5 years for tax, 7 years for Corporations Act purposes), without good records you won’t even know whether you are making money or not.
Good record keeping also allows you to keep a track of your cash flow, and monitor the performance of your business or investments.
But what exactly do you need to keep records on?
Broadly, you should keep records in these main categories:
- any payments you have received
- any expenses related to payments you received
- when you have acquired or disposed of an asset (for example, shares or a rental property)
- any tax deductible gifts or donations
- any medical expenses
If you run a business, these records should also include valid tax invoices so that you can claim back any GST you may be entitled to.
How do you keep these records?
Documents can be either kept in paper, or may be stored electronically.
In either case, they must be in English, or in a form that can be readily accessed and used to work the correct amount of tax you are liable to pay.
If the documents are kept electronically, they must be a true and clear reproduction of the original paper records, and capable of being retrieved and read at all times.
You don’t have to keep original paper records once they have been imaged onto a electronic storage device.
Records can also be collated in a variety of formats. These can include cash books, spreadsheets, or commercial accounting packages.
Why keep records?
The Australian Taxation Office requires that you keep records to enable your tax liability to be able to be worked out.
This requires records of:
- sales and expense invoices
- sales and expense receipts
- cash register tapes
- credit card statements
- bank deposit books and cheque butts
- bank account statements
You may also need to keep the following specific tax records:
- motor vehicle details, including log book or business usage records
- debtor and creditor lists
- stocktakes
- depreciating assets
- CGT assets
For individuals, the records that must be kept include details of:
- Salary, wages and allowances
- Income from interest, dividends, managed funds or rental properties
- Car expenses
- Travel expenses
- Clothing, uniform, dry-cleaning, laundry and sun protection
- Self-Education expenses
- Other work-related expenses
- Rental expenses