How to Stay Ahead of Your Tax Obligations
Yishu Sharma • June 4, 2025
1. Use the “Multiple Bank Accounts”
We recommend using three main bank accounts for your business:
- Main Operating Account – for day-to-day expenses and receiving income
- GST Tax Account – strictly for GST and BAS lodgement obligations
- Wages & Super Account – for payroll, PAYG, and super contributions
2. Set Aside GST From Every Sale
1. If you’re registered for GST or have payroll obligations, it's important to set aside a portion of every sale to cover these liabilities.
2. Transfer a suitable percentage of each sale into your tax-related accounts. The percentage may vary based on your specific business needs and structure, but creating a buffer helps ensure you’re prepared for quarterly lodgements, unexpected tax liabilities, and timing issues.
3. Open separate tax accounts with your bank to prevent accidental spending of tax funds.
3. Plan for Wages, super and PAYG Withholding
Even if you’re a sole trader or a small team, it’s critical to allocate a portion of each sale towards employee wages and entitlements.
This should cover:
· Salaries and wages
· PAYG withholding
· Superannuation
· Workcover obligations
4. Track Your Expenses Weekly
Use accounting software like Xero, or MYOB to:
· Reconcile bank transactions as you go to avoid wrong accounted transactions
· Track income and expenses in real time
· Match payroll and GST accounts regularly
Tip: Set weekly reminders to transfer GST and wages portions, don’t wait until end of quarter.
5. Stay BAS and Tax Ready
Every quarter, you’ll need to lodge a Business Activity Statement (BAS). It includes:
· GST collected
· PAYG withholding
· Any PAYG instalments due
Having your tax and wage accounts pre-funded makes BAS lodgement smooth and stress-free, by having the money already sitting in your tax accounts, it becomes much easier to make arrangements for BAS payments without cash flow pressure.
Conclusion
Success isn’t just about increasing sales; it’s also about managing those sales with discipline. By setting aside appropriate amounts regularly into dedicated accounts, you'll foster a habit of tax preparedness and business stability. This allows you to focus on growth without the stress of last-minute tax shortfalls.
If you're unsure how much to set aside, or how your GST and PAYG are calculated, get in touch with our accounting team and we can tailor a plan based on your business cash flow and help automate your processes.
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Buying your first home can be a daunting process, but one of my key tips would be to make yourself aware of the government incentives that are available. These include: First Home Guarantee The First Home Guarantee enables first home buyers to buy or build their new home with a 5% minimum deposit of the property value and borrow up to 95% from your lender. Housing Australia will provide a guarantee to the lender, up to 15% of the property value. 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Eligibility Criteria To be eligible: - You must be at least 18 years of age at settlement date or at the time construction of the home is finished. - At least one applicant (you or other part owner/s) must live in the home for at least 12 months, within 12 months of settlement or completion of construction. There are exceptions to this requirement for Australian Defence Force members and there are limited circumstances where this requirement may be varied. You will not be eligible, if you and/or your spouse: - Have already received the FHOG. - Have owned another residential property in Australia prior to 1 July 2000 - Have lived in a home that either of you owned, on or after 1 July 2000 for more than 6 months There are some exceptions to these requirements, and a checklist for eligibility is available here: https://www.sro.vic.gov.au/first-home-owner/will-i-be-eligible-first-home-owner-grant#1 Land Transfer (Stamp Duty) Exemption or Concession Stamp duty is payable when you buy a home or property, or on the transfer of property. The amount you pay will depend on the dutiable value of the property, how the property is used, whether you are a foreign purchaser and if you are eligible for any exemptions or concession. The duty exemption or concession is available in addition to the FHOG, for those purchasing their first home and principal place of residence, which can be previously owned /established or new. If your new home is valued up to $600,000, you may be eligible for a duty exemption, where you will pay no stamp duty on the purchase. If your new home is valued between $600,001 to $750,000, you may be entitled the duty concession, where you will receive a reduction of stamp duty payable. The value of the property (dutiable value) is usually the contract price, however if the price you pay for the property is less than the market value, the dutiable value will be the market value. To be eligible for the exemption or concession: - Your contract of sale must be dated on or after 1 July 2017. If your contract date is prior to this date, you may be eligible for the concession only. - All the purchasers of the property must meet the same eligibility criteria as the FHOG. - You or your spouse must not have already received the exemption or concession. 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More information about these temporary benefits can be found here: https://www.sro.vic.gov.au/first-home-owner/exemption-concession-reduction More information for First Home Buyers For more information, visit https://www.sro.vic.gov.au/first-home-owner
It is common for businesses to make mistakes when it comes to goods and services tax (GST). As a result of those mistakes, businesses may underpay by claiming credits to which they are not entitled, or they may overpay the ATO. It is important to understand some discrepancies that may arise whilst you, as a businessperson, are reconciling your accounts. Below are some common mistakes to be aware of: 1. Not every business expense includes GST. The following purchases won’t have GST attached: - Bank fees & interest payments - Most basic food items and medical supplies - Council & Water rates - Most motor vehicle registration fees - Stamp duty - ASIC fees - Land Tax - Donations You are attempting to recoup unpaid GST if you claim credits on these expenses. Always check whether a supplier invoice includes GST before you claim a credit. 2. Claiming GST twice It is common to report the same income or expense twice. Below are some examples when this may occur: - Financed purchases: a business buys an asset (e.g., a vehicle), and claims the full GST credit up front, then later claims GST on each finance payment. Finance repayments do not include GST as this has been accounted for with the purchase of the asset. - Duplicated sales entries: a business accidentally records the same sale twice and pays double the GST it collected. These errors overstate your GST and cause the business to either pay more to the ATO than it owes or to claiming a larger refund than the business is owed. 3. Mixing Business and personal expenses - Claiming GST on personal purchases: GST credits apply only to business expenses. - Not splitting business and personal use: if you buy a laptop and use it 50% for personal use, you can only claim the 50% of GST used for business purposes. Most businesses should have a drawings / loan to director account in their software to account for personal expenditure from the business. 4. Claiming GST credits on non-registered suppliers & contractors When a business claims GST credits, it is crucial to confirm that the supplier or contractor they have paid is correctly registered for GST. - Use of the ABN lookup website ( https://abr.business.gov.au ) can confirm whether the supplier or contractor is registered for GST. - If they are registered, GST credits can be claimed on the expense. - If they are not registered, then there is no GST included in the total price and the expense must be recorded as a ‘GST-Free’ expense. How to maintain GST compliance? - Ensure your accounting software is properly configured for GST (refer to prior GTP blog articles that outline GST codes), and although an account may be GST inclusive, some transactions will need to be manually changed to GST free in line with expenses that do not attract GST. - Keep valid tax invoices for purchases (even attach these to their corresponding transactions in your software) - Separate business and personal expenditure - Reconcile GST accounts regularly - Ask for help when needed (contact your accountant) Get in touch with your Accountant for any queries.
Earlier this year Labor’s Division 296 tax bill (the $3.0m super tax) was abandoned in Parliament as the Government did not have the numbers in the Senate to get it through. However, with Labor’s strong election result and now only needing the support of the Greens, you can guarantee this legislation will be reintroduced to Parliament at the first opportunity. There has been plenty of articles written about this tax. Unfortunately, it is common for important information to be excluded from many of these articles. Most articles concentrate on the fact the tax applies to earnings on a taxpayer’s portion of superannuation savings above $3.0m. However, the $3.0m threshold is not the real issue – the main issue is the definition of “earnings”. Earnings for the purposes of the Division 296 legislation are effectively defined as “movement in member balance” after taking into account after-tax contributions and withdrawals. For members of Self-Managed Super Funds (SMSFs), this means the tax will apply on movements in asset values, including direct property, Australian shares and overseas equities. Therefore, Division 296 tax will apply on profits your SMSF has not made and may never make! You are effectively paying tax on a hypothetical profit! The majority of taxpayers with superannuation savings above $3.0m are prepared to pay a higher rate of tax, but only on ACTUAL earnings , not on possible earnings! At the time of writing the legislation has not yet been re-introduced to Parliament, however it is likely the first assessment date will be on 30 June 2026. This is what we currently know: · The tax will be levied in an individual taxpayer’s name, not the Super Fund. It is understood provisions will exist for the member to apply to their Super Fund to release fund to pay Division 296. · Any negative movements in your member balance will not attract a cash refund of tax previously paid, they can only be used against future Division 296 gains. · The Government has remained steadfast the $3.0m threshold will not be indexed. This means more taxpayers will be subject to the tax over time. · If you are not able to satisfy a Condition of Release (eg are under age 65 and cannot satisfy a retirement condition), you will have no ability to withdraw assets from your Super Fund to reduce your member balance. What should you do now? It is best to do nothing for now – any premature sale or withdrawal of assets in an SMSF could lock in taxable gains as well as eroding your superannuation savings without the ability to re-contribute. It is best to wait until actual legislation has been tabled, so we know what we are dealing with.
Budgeting is an important part of business planning. A well-designed budget helps leaders manage finances, allocate resources and stay on track to achieve business goals. Here are 6 practical tips to help create a budget that works for your business. 1. Set Clear Goals Define financial goals for the upcoming period. Whether it's increasing revenue, reducing costs, or expanding operations, clear objectives guide all budgeting decisions. For example, a business aiming to increase sales by 15% in the next year, might budget for targeted online advertisements and promotions which drive traffic to the website. The budget would be quite different for a business aiming to cut costs by 5% in the coming 6 months. 2. Track Income and Expenses Detailed records of the business's income and expenses help identify spending patterns and cost cutting opportunities which are taken into account in the next budget cycle. These records help leaders analyse and identify patterns in revenue and expenses to develop intelligent assumptions on what may happen in the future. 3. Be Realistic (Even Conservative) When creating the budget, be realistic about revenue projections and expense estimates. Overestimating income or underestimating expenses can lead to budget shortfalls and financial difficulties. It can also be helpful to make budgets with different scenarios based on, for example, ‘aggressive’, ‘conservative’ and ‘expected’ assumptions. In any case, always err on the conservative side. 4. Prioritise Essential Expenses Identify the business's essential expenses, such as rent, utilities, and payroll, and prioritise them in the budget. This ensures they’ll be covered even if revenue is lower than expected. For example, we’d expect a manufacturing company to prioritise essential expenses such as raw materials and production costs over the website upgrade, company offsite and internal newsletter. 5. Plan for Contingencies Include a contingency fund in the budget to cover unexpected expenses or revenue shortfalls. Having a buffer avoids financial difficulties if things don’t go as planned. For example, a contingency fund can help a services business deal with a sudden increase in project scope, so they can hire additional staff to deliver the project on time. 6. Review and Adjust Regularly Review the budget regularly and adjust as needed. As the business grows and market conditions change, the budget should evolve to reflect these changes. Most well-run businesses will review the budget at least monthly. A budget helps leaders commit to certain forecasts and optimise business performance as things change. We suggest you follow these guidelines when preparing your next budget!
Most of us have work-related expenses, and knowing exactly what you can claim can make a noticeable difference to your refund. Travel & vehicle expenses: beyond the daily commute If you use your own car for work, say driving between job sites or to client meetings, you may be able to claim travel expenses . Just keep in mind that your daily commute from home to work isn’t deductible. There are two ways to claim: Cents per kilometre: claim 88 cents per km (2024–25) for up to 5,000 work-related kilometres. This includes fuel, maintenance and depreciation. Just document how you calculated the distance. Logbook method : for claims over 5,000 km or actual costs, keep a 12-week logbook to track business use. You can then claim a portion of car expenses like fuel, rego, insurance, and repairs. Working from home: rules for claiming home office deductions With more Aussies working from home, claiming home office expenses has become standard. Since March 2023, the ATO requires you to keep a record of your actual work-from-home hours, your calendar or timesheet will do! There are two ways to claim: Fixed rate method (70c/hour) : covers energy costs, internet, mobile phone use, stationery, and computer consumables. You can’t claim these separately. Actual cost method : claim a work-related portion of your additional expenses if you have detailed records. You can also claim depreciation on big-ticket office expenses like a desk or monitor (even if using the fixed rate method). Just note: rent, mortgage interest or council rates usually aren’t deductible if you’re an employee. Uniforms, protective gear & laundry: dressing for success Wearing a compulsory uniform with a logo, occupation-specific clothing (like scrubs or chef whites), or protective gear (like high-vis or steel-capped boots)? You can claim the cost to buy and clean them , including dry cleaning. Everyday clothes, even if only worn for work, aren’t deductible. Tools and equipment: big vs small This covers everything from your laptop to a tradie’s toolbox. The rule of thumb: Under $300 : Claim the full cost in the year you buy it, great for items like keyboards, headsets, or work bags. Over $300 : Claim depreciation over its effective life, based on how much you use it for work. This applies to bigger purchases like laptops or tools. Check the ATO’s depreciation and capital allowances tool . Self-education: investing in your career Courses that directly relate to your current income-earning job can be deductible , think a designer doing an advanced Adobe course. Astronomy while working in retail? Probably not. Eligible deductions include: course fees (excluding HECS/HELP) textbooks and stationery internet and phone usage depreciation on computer equipment. Mobile phone & internet: the work/life divide Using your personal phone or home internet for work? You can only claim the portion you use for work. So, if 50% of your internet usage is work-related , you can claim 50% of the cost. Keep a logbook or a diary for a typical month to estimate your work percentage. Overlooked opportunities: don’t miss these tax deductions! Beyond the common work-related expenses, there are other deductions that often get missed: Tax agent fees : yep, the fees you pay to a registered tax agent to prepare your previous year’s tax return are deductible. Investment property expenses: If you own a rental, you can claim certain expenses to reduce your taxable income. They fall into three categories: claim now: loan interest, council rates, repairs, insurance, and management fees claim over time: capital works, borrowing costs, and assets over $300 (via depreciation) not claimable: personal expenses, travel expenses or second-hand assets bought after May 2017. Some pre-rental expenses, like loan interest, may be claimable if your intent was to rent the property. Union fees, membership fees ®gistrations : any fees paid to a professional association or trade union are claimable. Income protection insurance : if you pay premiums for income protection insurance that covers lost income (not life or trauma insurance), you can claim them. Just not if your super fund pays for it. Cost of managing tax affairs : this includes things like tax preparation software or even travel costs to see your tax agent. Gifts & charitable donations : if you’ve donated $2 or more to a registered charity (a Deductible Gift Recipient or DGR), make sure you claim it and have your receipt. Work Hard, Claim Smart Knowing what work-related expenses, you can claim helps you get back more at tax time. Whether it’s driving between job sites, using your home internet for work, or buying tools or uniforms, every deductible expense adds up. Just remember, you need to keep good records and make sure the expenses are directly related to earning your income. With the right approach, you can claim what you're entitled to and avoid missing out on valuable deductions.
