Tax minimisation fundamentals for small business - video replay

June 27, 2024
45
minutes to read
by
Justin Bohlmann
Table of Contents

► Book a free call to discuss your small business tax needs: https://calendly.com/laura-thriday/15min

[00:00:00] **Laura Elkaslassy:** Let's jump on into it. So what we're going to be talking about is tax minimization, but the fundamentals, because we could spend days and days and days talking about things and you really don't need to know the ins and outs. And I'll tell you why. Because Thriday has you covered. All right, let's get started.

[00:00:20] **Laura Elkaslassy:** What we're going, what I want to talk to you about is really what is the importance of actually managing your taxes effectively? What are some of the common issues and questions that we get and how technology actually simplifies tax management? So let's start with the importance of managing tax effectively.

[00:00:37] **Laura Elkaslassy:** And again, I want you to know that if it feels really overwhelming, a lot of what Thriday does takes that away and does it for you. So why is it important? We all know taxes are important, but why is it important to you as the business owner? The first is it actually helps you maximize savings. So effective tax management helps you to legally minimize your tax liability.

[00:00:58] **Laura Elkaslassy:** And that means that you can apply deductions, allowances, and things that allow you to retain your income so that you have more money in your pocket and that you can invest or spend as you see fit. The other reason that it's so important to manage your taxes Is that it means that you avoid penalties.

[00:01:17] **Laura Elkaslassy:** No one wants to pay the ATO any more money than what is necessary. The other reason is it actually allows you to financial plan. And what does that actually mean? Cause a lot of the time I know the people that I speak to really feel like taxes is separate, unknown, scary thing that sits to the side of business.

[00:01:35] **Laura Elkaslassy:** But when you know your tax position, which Thriday does. In an instant, it allows you to make future decisions. So whether you can invest in something, if you could borrow it in any stage, if that's something that's necessary, what you could pay yourself. The other thing is it actually supports your business growth by knowing your tax position.

[00:01:56] **Laura Elkaslassy:** You can be really clear about what cash is yours. And as you know, we have an inbuilt profit first, um, allocations and bank accounts, which we'll talk more about. So it helps you with your cashflow. And most people tend to think that taxes and cashflow don't go together, but they can, especially when you have the right tools at your disposal.

[00:02:14] **Laura Elkaslassy:** And the last and probably most important thing when it comes to managing your taxes effectively, it's your own peace of mind. I know that tax can be super stressful, especially when you're not sure what you need to have, whether there's this looming 30th day. The June deadline and you're like, Oh, we don't want you to feel that way.

[00:02:32] **Laura Elkaslassy:** And there's actually no need for it if you are prepared. And if you're using the right tools and you have the knowledge, because knowledge is power, then you can have peace of mind when it comes to taxes and you can focus on your personal and professional goals. So let's jump.

[00:02:48] **Justin Bohlmann:** No one wants the shock.

[00:02:50] **Laura Elkaslassy:** Oh, not at all.

[00:02:51] **Laura Elkaslassy:** And I bet you hear that a lot, Justin, in terms of the book shock, when you talk to people.

[00:02:55] **Justin Bohlmann:** Well, Bill shock and I've got tax returns dating back three years. What do I do?

[00:03:02] **Laura Elkaslassy:** Yeah, well, we can answer both of those questions. Uh, and we'll get to that when we talk about the different areas of that and when you know, your actual tax position.

[00:03:11] **Laura Elkaslassy:** So love that bill shock. And what do I do? I'm so far behind. And that is one of the common tax issues that you've ignored it for so long, or it's so overwhelming when you haven't had the right support that you just leave it. Well, good news is, is that it can get up to date really, really quickly and we can get them lodged and it can no longer be a problem for you.

[00:03:33] **Laura Elkaslassy:** The other thing that comes to the common tax issues that I find is deductible expenses. So if I say deductible expenses, Justin, what do you think?

[00:03:42] **Justin Bohlmann:** I think, um, like what expenses can I deduct? Um, how much is that expense, like how much is the deduction on that expense actually going to save me on my tax?

[00:03:51] **Justin Bohlmann:** Or, um. You know, once it's deducted, like, how do I, um, keep an audit trail of that? Because another fear is being audited by the tax office, right? And I actually get asked the question quite a bit. So, because my transactions are in Thriday, does that mean I still need to save receipts? And absolutely, it still means you need to save receipts because that's the proof of what you purchased, where you purchased it, not just the proof that you've spent the money, right?

[00:04:21] **Justin Bohlmann:** So, yeah, deductions important.

[00:04:24] **Laura Elkaslassy:** Yeah. And another word for it is, especially when we're talking about business is expenses. And I know that when I talk to our customers, they're like, well, is the deduction different to an expense? And there are some expenses that are not deductible. Like if you're paying for any fines or penalties.

[00:04:40] **Laura Elkaslassy:** You can't actually deduct that from your, um, income, but knowing what you can actually claim is really important. And we actually have, um, a checklist coming out that might help with that.

[00:04:52] **Justin Bohlmann:** Well, sorry, Laura, just jump in. And Thriday has a lot of that built in, right? So we, as you, as you spend money from Thriday and as you save those receipts, we'll show you how to do that in a minute.

[00:05:04] **Justin Bohlmann:** Um, If you're not already aware, but, um, we have the built in, um, chart of accounts, built in categories, et cetera. And we also enrich the merchant detail of where you purchase that item from. So say you go to Bunnings, you take a snap of the receipt. We automatically OCR or scan that data into Thriday. We can see whether that merchant's registered for GST or not, and apply that GST.

[00:05:28] **Justin Bohlmann:** All of the stuff that you would have to think about. Outside of Thriday, if you're doing it on your own, it's kind of been thought about it for you. So it's literally a matter of just spending your money from your Thriday expense account, uh, or with your Thriday Visa debit card and then saving those receipts to Thriday.

[00:05:44] **Justin Bohlmann:** And then we'll get into the nitty gritty of it.

[00:05:46] **Laura Elkaslassy:** Yeah, we'll definitely get into that in a minute. But a lot of these issues that I'm talking about are already solved. So the other thing is uncertainty of reporting income. There may be Business income and if you're using as Justin said the bank accounts within Thriday Then you have nothing to even think about because it will do it for you But let's say you get other income Then we also have a way that you can get that income into Thriday so that you know What your tax estimate is but it's often that uncertainty around well, what can I claim?

[00:06:16] **Laura Elkaslassy:** Um what income is, you know necessary to my tax return but isn't necessarily a business income And so, um, we'll go into how we'll do that in a minute. The other is managing assets and liabilities. And I know when I say assets and liabilities, people go, Oh my gosh, what is that? Lots of accountant talk. We will break that down for you.

[00:06:37] **Laura Elkaslassy:** And then of course the record keeping and documentation. That seems to be a big worry for people. And Thriday makes that super easy and we'll show you how in a minute. And then understanding the tax laws and regulations. You don't need to do that because Thriday has all of this programmed into it. There are accounting standards and there are regulations and they are rules.

[00:06:59] **Laura Elkaslassy:** And I know Justin, you like to say something about this. So I'll let you jump in.

[00:07:02] **Justin Bohlmann:** Yeah, absolutely. Um, rules could be programmed, right? And that's what Thriday has basically done. And it's how you account like how traditional accountants practice management software works, right? It's just that they make you do the work to then feed them the data that then they can apply the rules to.

[00:07:18] **Justin Bohlmann:** So we've done the same thing, but it just comes out of the box with the rules already built in. So you don't have to think about the rules. It's as simple as income in expenses out, saving your receipts, and then it's all programmed and done for you.

[00:07:31] **Laura Elkaslassy:** Awesome. Doesn't that sound like heaven? It does to me.

[00:07:34] **Laura Elkaslassy:** And then the last thing is the deductions and tax credits and that sort of stuff. If you have everything in the right place, this will happen automatically for you. So these common issues are no longer issues and really technology and ThriDay is what will simplify your tax management. Now before we get into the nitty gritty, I just want to spend one moment to say hi because I'm new to ThriDay.

[00:07:55] **Laura Elkaslassy:** I'm very excited to be here. I'm the head of accounting and tax and. Very excited to be on the journey to make, um, small businesses lives easy by eliminating financial admin. Uh, I've been in the finance industry for more than 15 years. I won't tell you the exact number of years because it's scary. And my mission is to help the small business owners understand their financial health, optimize profits and develop effective financial systems.

[00:08:20] **Laura Elkaslassy:** So. Really happy to be here. I'm going to start now with the income side. So, And again, we will show you in Thriday what this looks like and what I might do is I might stop sharing My screen so that Justin you can share Um Thriday whilst I talk through some some different elements and the first being that um We often have business income, but then we might have salary outside of our work.

[00:08:47] **Laura Elkaslassy:** We might have rental income or investments and other income streams. And this forms part of the income that you need to show on your tax return. And there's also a difference between taxable and non taxable income. Before I jump into that, I'd love for Justin to talk you through how easy it is to get income in to Thriday.

[00:09:08] **Laura Elkaslassy:** Yeah,

[00:09:08] **Justin Bohlmann:** so, um, as Laura said, there's multiple ways to bring income into Thriday, and it's important that all income is accounted for. Within Thriday to to make your tax calculation as accurate as it possibly can be right to give you that peace of mind and that control. So obviously we've got the bank account.

[00:09:26] **Justin Bohlmann:** So as money comes in and money goes out, those transactions all count towards your income and your expenses. So that. Data exists. The other, uh, way we can do it is if you go to the tax section and go into manage balances, any income, say you spent cash or you spent some money out of your personal bank account on a business expense because you didn't have your Thriday card or whatever the time, um, you can then add manual balances, right?

[00:09:54] **Justin Bohlmann:** It's really important. You keep these manual balances, um, up to date with the income and expenses that sit outside of Thriday. So your tax is up to date. Um, the other thing when you first, um, join Thriday, or if you've got, if, if you've got a side hustle, um, in your tax profile, you can actually set, um, how much money you're going to earn outside of Thriday.

[00:10:18] **Justin Bohlmann:** So say you earn 50 grand in a job, um, you would put that amount in here and you would save that. And then especially with Thriday being for sole traders at the moment, that money. Obviously all accounts towards your tax and you only do one tax, uh, return for your sole trader revenue and your, um, salary revenue.

[00:10:39] **Justin Bohlmann:** So, uh, that's all included in here. And what it does is it brings you above or below the tax free threshold in Thriday and then put you into whatever tax bracket you're meant to be in. So we can display your tax to you correctly to give you the control that you need.

[00:10:59] **Laura Elkaslassy:** We've got a question there from Mohamed about how income that is from a joint investment, so income from a rental property in two names, how would you put that in?

[00:11:09] **Justin Bohlmann:** Great question. So we do have the concept as well of, um, business use percentage, but in this case, that's all for business use. So if it was in joint names, I might lean on you a little bit, Laura, but my understanding would be Your portion of the income come into your ThriDay account and be recorded against your sort of tax profile, and you would pay tax on your portion of that revenue, and then your partner would have to do the same elsewhere.

[00:11:39] **Laura Elkaslassy:** Correct. And if it's not coming into the ThriDay account, you can actually put that income in the Manage Balances section once you know what it is to get that up to date tax estimate.

[00:11:50] **Justin Bohlmann:** Exactly. So tax managed balances. We could add a balance for income. Um, we could say it's for rent received and we could say it's 500 bucks.

[00:12:03] **Justin Bohlmann:** Uh, and then for the chart of account, we could go, um, other business income, right? Because it's, um, an investment. Would that be correct, Laura?

[00:12:15] **Laura Elkaslassy:** Yeah, for this, it would go to other business income and when, you know, I was, if I was to look at this, I would be like, what is this? Can see it's rent received and it's easy to then allocate in your tax return.

[00:12:26] **Justin Bohlmann:** And then if you wanted to save a, um, file to this related to that transaction, you could, um, and then we go save. And then in real time, uh, your tax position would have been updated and changed according to the income that you just received.

[00:12:43] **Laura Elkaslassy:** Absolutely. So that was a really great question. Um, and a lot of, uh, online tools don't allow for this.

[00:12:49] **Laura Elkaslassy:** So this is really great that if you have other income, that it does go into your Thriday account. I do just want to talk quickly about taxable versus non taxable income, uh, because there's, you know, other things that may, you may receive, but don't need to go on your tax return. And I know that people get a bit worried about whether they're doing the right thing or not.

[00:13:09] **Laura Elkaslassy:** So taxable income is really anything that is wages, interest from savings, rental income, business income. But when it comes to things like Gifts or inheritance that you might receive, or let's say you've got an insurance payout, or you have a hobby on the side. That's not actually a business and you receive a small amount of income.

[00:13:28] **Laura Elkaslassy:** None of that is actually taxable. So it doesn't have to go into your Thriday account or be on your tax return. The other thing that, uh, a lot of businesses tend to look for a grants and generally grants are taxable except where indicated. So make sure. If you're applying for a grant and you're successful in getting that grant that you read whether it's something that needs to go in your tax return.

[00:13:52] **Laura Elkaslassy:** So things like the COVID business support payments, that's not taxable. So it doesn't need to go into your tax return, any natural disaster grants. or, you know, particular improvement grants that are out there, they may not need to go into your tax return. So it's important to have a look at that, because I know that the customers that I work with, a lot of them are in search of grants, and some need to go on your tax return, and some do not.

[00:14:18] **Laura Elkaslassy:** So therefore, that will depend whether or not that goes into your Thriday account.

[00:14:23] **Justin Bohlmann:** What I'm showing you here, sorry, Laura, just while you're on that is, uh, the chart of accounts. So you can actually, we'll, we'll assign the category in the chart of accounts out of a box for a transaction, but you can actually manipulate this if you want to and edit it.

[00:14:38] **Justin Bohlmann:** So in the example that, um, And just said, should I record self employed program income into Thriday? Uh, yes, you absolutely should if you wanted to include it against your tax. Um, but if you, if that was salary income or if you'd already paid tax on that in some way, shape or form, you would have it as other business income tax exempt, right?

[00:14:58] **Justin Bohlmann:** Um, to make sure that you're not double up. Doubling up on that, um, tax payable, right? And that your records are accurate.

[00:15:08] **Laura Elkaslassy:** Absolutely. And really from a running the business perspective, because whilst tax is really important, you need to be empowered to run your business. It is, and this will answer, um, Ahmed's question around, can you put non taxable income into Thriday, which I know you've just answered.

[00:15:23] **Laura Elkaslassy:** Justin with the tax exempt part. The answer is yes you can and it is important from a business perspective to just like a reporting perspective from a cash flow ins and outs. So the more information you put in in terms of what's coming in to you as income and what's going out as expenses is really important.

[00:15:42] **Justin Bohlmann:** Exactly and you'll see that here in the cash flow module. Um, and you'll also see it referenced, um, in your income and expenses and the cash flow module is really great just to get a reference. Is my, how is my business performing month over month? Um, red is obviously expenses and green is obviously income.

[00:15:57] **Justin Bohlmann:** Um, and, you know, if those lines are sort of moving up a little bit, or at least they're at a position where the red is, you know, Uh, lower than the green, you know you're on the right track.

[00:16:07] **Laura Elkaslassy:** Absolutely. And so, when it comes to doing your tax, and you know, you can put this information into Thriday as we've spoken about, there are relevant documents that should go with anything that you're putting in.

[00:16:19] **Laura Elkaslassy:** So, um, with the employment income, we've got that section in the tax profile, so that looks after that. But things like investment statements, rental income records, potential other income that you receive, there'll be some sort of documentation. So as Justin showed you, um, where it says to upload, I highly recommend you put it in there because it means that if you're getting help from, you know, Thriday accounting or even an external accountant, then all of the information is easily accessible and it makes it way more relaxing for you when it comes to accurate tax reporting and knowing what you're doing.

[00:16:54] **Laura Elkaslassy:** Where you stand and not having to run all over the place and get out your cardboard box with all of your receipts.

[00:17:01] **Justin Bohlmann:** Yeah. Imagine this, the tax man comes knocking on the door and says, I want to do an audit on your business and you go, absolutely not a problem because all of your receipts have been saved.

[00:17:11] **Justin Bohlmann:** All of those statements have been saved. All of your transactions exist in one place. You have the full audit trail. You have all of your tax and everything up to date. It's absolutely nothing to worry about because it's all there. All right.

[00:17:26] **Laura Elkaslassy:** Absolutely. And so let's switch to expenses now. So we've spoken about the income and the income piece is super important.

[00:17:33] **Laura Elkaslassy:** Expenses are just as important. And so as Justin said, with the Thriday bank accounts, if you're spending out of there, it will automatically be captured and allocated to the correct expense. for you and feel free to jump in and show that if you'd like to, Justin.

[00:17:50] **Justin Bohlmann:** Exactly. So, uh, when you sign up to Thriday, the first account you get has the Visa debit card attached to it.

[00:17:55] **Justin Bohlmann:** And if you're using that to make all of your expenses, then, uh, you'll see them as transactions, obviously, like any other bank account, um, with this sort of negative number here. Um, and then you save the receipts, you know, super easily. All of this functionality exists on the app as well. Um, so you can add receipts via, um, You know, if they're digital, you can upload them here, but you can email them to your unique Thriday receipt email inbox, or you can take a photo of it.

[00:18:23] **Justin Bohlmann:** And then what we do is we scan those receipts in, right? So you don't have to categorize them. You don't have to, um. Assign a chart of accounts. You don't even have to do any of the data entry. So we scan all of these details in. And like I said before, we pull in the ABN and the merchant details to know if they're GST registered, to know whether you should be paying GST or not on that expense or claiming it if you're GST registered.

[00:18:47] **Justin Bohlmann:** Um, and that'll automatically link to an existing transaction. So you don't have to think about that. And that this, I think, in my mind, this is the ultimate legal way to minimise your expenses, is to save as many business expense receipts as you possibly can. Um, there's no better way to minimise your tax than this.

[00:19:10] **Laura Elkaslassy:** And whilst we're talking about deductions and expenses and all of the things like that, I want to talk about different deductions that you can claim so that if you're not putting it in your Thriday account and it applies to you, then you can consider what you should be putting in. So there's car, transport and travel deductions and That can be quite a gray area in terms of what's personal use and or not.

[00:19:34] **Laura Elkaslassy:** And so, um, that's actually probably a great feature that you might want to show Justin in terms of business use percentage.

[00:19:41] **Justin Bohlmann:** Um, and so if we go into a transaction and say I paid, this was a ditty trip for, um, business use, um, Then I want to view all of the details and you'll see here that automatically it comes out as business use.

[00:19:59] **Justin Bohlmann:** Just given that Thriday is meant to be for your business expenses. Um, but if I decided that, um, I wanted to drop a friend off on the way and they were going to pay for half the trip, but they were going to give me the cash later, I could just say this was 50 percent business use, right? Um, Or, you know, if I went to the servo, bought some fuel, but bought a coffee and some food at the same time, I could say 80 percent of that receipt or that transaction was for business use.

[00:20:28] **Laura Elkaslassy:** Yeah. And it's really important to consider that, especially when it comes to what is personal use and what is business use and things around travel and cars and that sort of stuff. Because a lot of sole traders use their personal private car. for business use. And so having the opportunity to be able to, you know, and after you've spoken to an accountant, let's say we can actually work out on average, what is the business percentage?

[00:20:52] **Laura Elkaslassy:** You can then put this in the rules there and it will work for you.

[00:20:55] **Justin Bohlmann:** Yeah. And we've got a few questions, Laura. How long does it, how long does Thriday keep receipts for? Uh, and what if I left Thriday? I won't. Uh, do I get to keep the receipt somehow? So, uh, Thriday, it keeps the receipts indefinitely and you can export those receipts or save them whenever you like.

[00:21:12] **Justin Bohlmann:** So absolutely no problem there. Uh, withdrawals that are not expenses. So personal expenditure. So what you can do there is update the chart of account, um, to, uh, owner withdrawal, right? Which is this and That takes, uh, that solves that problem. And this is smart enough that if you update this, uh, a couple of times, the system will remember that those kinds of transactions are owners withdrawals, and it will start to automatically apply that chart of account to those kinds of transactions.

[00:21:45] **Justin Bohlmann:** Right? Um, so there's sort of the machine learning and the AI and everything in the background, helping you to. Um, eliminate even more financial admin, um, and not having to think about it.

[00:21:57] **Laura Elkaslassy:** Absolutely. And just to talk about the owner withdrawal for a minute so that you can understand how that actually works, any sort of owner withdrawal as a sole trader is already tax exempt.

[00:22:07] **Laura Elkaslassy:** It's not something that we need to allocate because we work out what your profit is and that goes onto your personal income. So when you choose these things, you don't have to worry about, Oh, do I need to change anything or is there a place where I. Make it tax exempt. It's all done for you. You just need to say what it is in the chart of accounts.

[00:22:26] **Justin Bohlmann:** Yeah, and you know, 99 times out of 100, that chart of account, you would never have to change because it sort of understands what the transaction was and it applies it for you automatically, right? Which saves a hell of a lot of time. Um, one more question here, um, while we're on the, um, Income expense topic is I have a question regarding phone bills and other similar utilities not paid from the expense account.

[00:22:52] **Justin Bohlmann:** So yeah,

[00:22:52] **Laura Elkaslassy:** go

[00:22:54] **Justin Bohlmann:** ahead. So technically how you would run that is with the business use percentage, right? Um, you wouldn't because you do it as a manual balance. So you're going to tax, you would go into manage balances and you would add a balance. As an expense, um, for the utility. So it could be just other business expenses, right?

[00:23:15] **Justin Bohlmann:** Um, or it could be, uh, you could choose a detailed one if you like, but it won't change the actual tax calculation. Um,

[00:23:22] **Laura Elkaslassy:** so you change it to

[00:23:25] **Justin Bohlmann:** those utilities. Um, and then you just put the amount that you spent and then attach that document. So there's a record of it, right? And then it's a business expense, um, proportionate to whatever you might have paid proportionate to whether it was.

[00:23:39] **Justin Bohlmann:** Uh, business or personal because you just put the actual amount that you spent, uh, for the business.

[00:23:46] **Laura Elkaslassy:** Absolutely. And one of the areas that the ATO are actually looking at is the, um, phone working from home expenses and that sort of thing. And so one thing to note if you're going to be adding manual balances is if you're going to be claiming the actual cost of your phone and working from home stuff, you can't then go and claim the 67 cents.

[00:24:08] **Laura Elkaslassy:** Per hour working from home allowance. It's one or the other so Um, I would say put it all in Thriday so that it's in the one spot rather than claiming the work from home allowance If you if it's really unclear Um as to whether your phone or anything that relates to working from home Can be claimed then you can leave it out and you can go for that 67 cents Working from home as long as you can have a timesheet or justify that it's a legitimate thing because this is an area of focus The other areas to sort of know about when it comes to claiming, uh, deductions or expenses is, um, tools and computers and items used for work.

[00:24:49] **Laura Elkaslassy:** And we'll circle back to those because they also fall under the assets and liabilities. But things like, Clothes and items that you might wear to work if you have branding on it and it's legitimately what you need to wear Um working from home expenses. We've touched it on Education training and seminars.

[00:25:06] **Laura Elkaslassy:** So the key here is if you are going to be claiming Education seminars and that sort of thing. The ATO will look at this and it does need to be linked to income that you're bringing in. So for example, if I was a dental nurse and I needed to go and do some training, uh, to better my skills, then that could be claimed because I am being paid as a dental nurse.

[00:25:32] **Laura Elkaslassy:** But if I go and just do some personal development, the ATO don't see that as impacting your income. So just something to consider there. The other things are memberships, accreditations, fees, and commissions that relate directly to your work. They can be claimed. Some meals can be claimed, and we do need to be careful there.

[00:25:52] **Laura Elkaslassy:** It is better to have it in there and err on the side of caution when it comes to the meals as long as they're legitimately because you're traveling away or whatever. Gifts and donations are also deductions, um, which a lot of people tend to forget. So if you are going to be doing gifts and donations, whether it's this financial year or next, make sure you spend it from your Thriday account so that that can be captured.

[00:26:18] **Laura Elkaslassy:** And then there's also investments, super and insurance, their deductions as well. And don't forget that the cost of managing your tax affairs So, the Thriday subscription is a tax deduction. Working with a tax agent is a tax deduction and all goes to your, um, taxable income and reducing that. So, let me just check the, I see we've got some questions.

[00:26:43] **Laura Elkaslassy:** Ahmed, we'll come back to depreciating assets because that's the next thing that we're going to talk about. Um, I can see Justin, you've replied to Dan's question and Rocky's question. Am I able to claim? An invoice for a course that is billed for this year, yet it will be paid early next year. So if it's got GST on it, you can only claim the GST component when you pay it.

[00:27:08] **Laura Elkaslassy:** But for tax, most taxes done on accrual. So if you have that invoice, you can put that in there and it can be claimed this financial year. But if you're going to claim it this financial year, do not claim it in the next financial year. Otherwise it'll double up and our gifts to family members say overseas included.

[00:27:26] **Laura Elkaslassy:** No. So family member, um, gifts. That is a whole separate thing. And it's your personal decision to do that. When I say gifts or donations is in relation to those that are registered charities. able to claim those sort of things. So that should answer those questions. Um, and now what I will do whilst we're explaining the next thing is I'll drop, um, some ATO, a link to the ATO guides per industry, because they actually do a pretty good job as to what you can claim for your industry.

[00:27:56] **Laura Elkaslassy:** If you want some light reading. So do that after this webinar. Um, the next part, and I will just go back to sharing my screen. So that got a bit of a prompt. Can you see that? Just making sure you can see that. Yeah, got it. The next thing that we want to look at is actually assets and liabilities. So this is coming back to one of the questions in the chat.

[00:28:18] **Laura Elkaslassy:** What is an actual asset and what is a liability? So first thing is, and I'll drop this in the chat as well. Thriday has done an amazing blog on the guide to assets and liabilities for small business. So again, some light reading for you separate to this. But assets are really things that you have in your business.

[00:28:37] **Laura Elkaslassy:** Yeah. Um, that impacts your finances. So things like cash in the bank. Physical assets like laptops or property or tools or vehicles. Irreceivables, so invoices that you've sent out to your clients or customers and are waiting to be paid. They all are considered an asset. It's money that is yours, that is, um, you know, part of your financial health.

[00:29:01] **Laura Elkaslassy:** Liabilities on the other hand are loans or bills that you need to pay. Um, so let's say Again, that, that rookie question, which I actually love, it's not a rookie question. If you have an invoice that you need to pay that forms part of your liability. And once it's paid, it's an expense. Um, and things like taxes and DST that are owing to the ATO form part of those liabilities.

[00:29:25] **Laura Elkaslassy:** So, um, Justin, did you want to share your screen to show us the assets and liabilities register?

[00:29:33] **Justin Bohlmann:** Absolutely.

[00:29:35] **Laura Elkaslassy:** And while that's happening, I'll talk a little bit more about, okay. Well, we'll show you as part of the demonstration how you can handle your liabilities and interest deductions. Um, but I also want to talk about depreciation and the instant asset write off, but I'll do that after we've shown you what it looks like in Thriday.

[00:29:54] **Justin Bohlmann:** Yeah, so, um, assets and liabilities in Thriday is super simple. Um, you go to tax, you go to manage assets and liabilities, and add an asset or liability. In this case, we'll add, um, an asset, uh, asset, and let's just say it's a laptop. Um, let's say it's a good one. Um, and then the business use percentage for that laptop.

[00:30:20] **Justin Bohlmann:** Um, let's say it's 50 percent because we use it, um, for work and for play. Uh, is it financed? No, we just bought it outright. Um, did we purchase it with a trade in? No, we just bought a new one. Let's say we purchased it, um, at the beginning of the month and the start that it was. The same date that we purchased it is just applicable.

[00:30:43] **Justin Bohlmann:** Um, so this account is registered for GST. So yes, it is. And yes, GST was paid on it. So that's the case. Um, and then original cost inclusive of GST, let's say it was a really good laptop. So we spent three grand on it. Um, automatically catch calculates the GST, and then we add that as an asset. And now you've got that laptop automatically, uh, claiming your deductions for depreciation without you having to think about it.

[00:31:13] **Laura Elkaslassy:** And let's just talk about depreciation for a second, because this is an area that can be quite confusing, but, um, and it ties into the instant asset write off as well. So at the moment, uh, the instant asset write off is before Parliament. So, they've been talking in the budget about a 20, 000. Instant asset write off, which means if you spend something on whether it's a vehicle, laptop, or anything that is an asset that is 20, 000 or less, it can be fully written off as an expense.

[00:31:45] **Laura Elkaslassy:** If you have something that's over that limit, then you can claim up to that 20, 000 immediately as the instant asset write off, and the rest is depreciated. Until this becomes legal and passed in Parliament, it has reverted back to the 1, 000 instant asset amount, which means only 1, 000. can be anything 1, 000 or less can be instantly written off.

[00:32:08] **Laura Elkaslassy:** We do think that it will be passed and it'll be backdated and it will be for this financial year, but I just want to at least let you know that this is happening and then depreciate. If there isn't an instant asset write off amount of this high amount, then there is depreciation, which Most of the time small businesses have this pooled and what this means is you buy the asset It goes into a pool.

[00:32:30] **Laura Elkaslassy:** So whatever you have bought other asset wise Um gets added together and I can see that you've got um the car for yow, which is pooled which basically says that Um, let's say you've got fifty thousand dollars and then another ten thousand dollars So you've got sixty thousand dollars in your pool and then depreciation is done on that so if it's a new asset fifteen percent comes off and then Each year after that, it's 30%.

[00:32:53] **Laura Elkaslassy:** And these percentages change each financial year. And I know it sounds really complicated, but it's done for you in Thriday when it, whether it's, you know, you want to pull it or it is something that's an instant right off. So, um, and that gets done each year and that percentage that is depreciated becomes an expense, which reduces your taxable income.

[00:33:18] **Laura Elkaslassy:** So, um, that's how you would enter the, um, assets into this Assets and Liability Register. Also in the Tax Profile, Justin, if you don't mind going there for a second, there is, um, you can say whether or not, if you scroll down a bit, you want auto depreciation to happen. If you go up slightly, yep, there. So if you're not sure, you can say no and just manually put it in as Justin has showed you.

[00:33:43] **Laura Elkaslassy:** If you, um, don't feel that you're all over it, if you make sure you turn the auto depreciation on, we will make sure that if there's an instant asset write off, that will be dealt with appropriately, or if it needs to be depreciated under simple or small business pooling, that will be done for you. So that's magical and I love it.

[00:34:06] **Laura Elkaslassy:** Now from the liabilities perspective, um, a liability could be that you've bought an asset, but there's a loan attached to it. So do you want to walk us through that?

[00:34:17] **Justin Bohlmann:** Yep. So same process at an asset or a liability, which is liability and it's a business loan, and we're going to call this, uh, loan for office.

[00:34:28] **Justin Bohlmann:** upgrade. Um, uh, and then the starting balance of the loan is say we did, let's say we did this a while ago, seven and a half, 75 grand. And the start date was back in December and the business use percentage is a hundred percent on this one. So add that as a liability and we're done.

[00:35:02] **Laura Elkaslassy:** Yep. Does it for you. Um, and when you're adding an asset, If we go back to that laptop for a second, um, Justin.

[00:35:10] **Justin Bohlmann:** Oh, the laptop.

[00:35:11] **Laura Elkaslassy:** Yeah, the laptop for a second.

[00:35:16] **Laura Elkaslassy:** You can change this here and if you scroll down you can say that the asset is financed. And so you can say yes. And, um, it will then do what it needs to do as well from a liability perspective. Um, the other thing is, is let's say you haven't spent it from your Thriday account, uh, through the manage balances area, you can actually add these assets, um, and liabilities as well.

[00:35:40] **Laura Elkaslassy:** So. Liability, business loan, top loan.

[00:35:59] **Laura Elkaslassy:** And I will just say with the description, be as descriptive as possible, because if you are going to ever be asked questions by the ATO, you can just say, look at this, and they can understand what you're doing. So yeah, so it's as easy as that when it comes to the Assets and Liabilities Register in Thriday.

[00:36:19] **Laura Elkaslassy:** And the thing to note as well is that any interest on a loan can be claimed as a deduction in your tax. So you have the amount that you pay and that's normally made up of the what you're paying the bank back with plus an interest component. So that interest component can be saved, uh sorry, can be allocated as an expense as well.

[00:36:40] **Laura Elkaslassy:** So a lot of people don't realize that. So just a little tip there. And then, um, Justin, I'd love you to, we've obviously showed how easy it is and the third sort of part of what we were talking about is how does technology actually make this easier when it comes to tax management and I think from what you've shown us, it speaks volumes, but what are the things that you like to tell people, um, that reduces their stress levels, gives them peace of mind and makes their tax a breeze?

[00:37:07] **Justin Bohlmann:** Yeah, so our philosophy is automation with control, right? So rather than take money off you and give it to the ATO, um, because you're expected to pay tax at the end of the year, we would prefer to show you how much tax it is that you owe through these calculations and then give you the tools to set that money aside, right?

[00:37:32] **Justin Bohlmann:** And some of those tools are as your income comes in, your expenses go out, your taxes automatically. Calculated. So you know how much tax you should have saved at any given point in time. Right? And then from your accounts, you can have multiple accounts. So in this particular case, this account has, you know, I think all 10 accounts set up.

[00:37:53] **Justin Bohlmann:** Uh, one of these accounts could be a tax account. And then, uh, You can set up, um, another one would be a revenue account. Let's like this one, you set up an allocation to automatically send 15%, which is a good rule of thumb to your tax account. And let's just say in this case, it was tax 15%. And we want to do it immediately every time income comes into this account.

[00:38:20] **Justin Bohlmann:** And the purpose is, uh, for tax to And then we go confirm and that's it. Every time money comes into your account. Now, 15 percent is saved in a separate account for tax. And all you need to think about is once a month or so, just come in, make sure the amount of money in that tax account is pretty close to what To the actual amount estimated for tax.

[00:38:43] **Justin Bohlmann:** If there's, uh, more tax owing, you can transfer a little bit more into that tax account. If there's less tax owing, you can take a little bit of money out of that tax account, but basically automation with full control. And let me give you an example of where that matters, right? Um, we've got a customer who we did a great, um, call with not that long ago.

[00:39:02] **Justin Bohlmann:** Who's a Milner, right? She makes hats. All of her revenue comes in spring, but before spring. She's received a lot of deposits for the hats that she's going to sell and she needs to buy the materials for those hats She knows that come the end of spring, she's going to have enough money to pay her tax bill.

[00:39:23] **Justin Bohlmann:** She also knows that pre spring, she's going to need some of the money that would be in that tax pool to buy the stuff that she needs to make the hats to be able to get the final payment on those hats. Right? So in her case, If we were just to take out the, uh, you know, say 40 percent of tax and give that straight to the ATO, she wouldn't have enough money to do what she needed to do.

[00:39:43] **Justin Bohlmann:** So she has full control of her finances and knows exactly how to use them. And she doesn't have any bill shock at the end. She knows how much money she's going to get and she knows how much tax she needs to pay. So automation with control. That's the key.

[00:39:58] **Laura Elkaslassy:** Absolutely. And it's the empowerment of knowing at any time how much tax you owe and then that, you know, having the percentage set aside or even manually sending yourself the money so that in the tax account so that it's sitting there will mean that you never have to worry.

[00:40:13] **Laura Elkaslassy:** And to answer your question, Mohammed, I see that you've asked, how about major fluctuating incomes from month to month? Can one leave paying tax? until the end of the year. So the first thing is, is you don't have to pay anything until it falls due. So, uh, once your tax return is done, if you're in a payable position, that is when you would need to pay your tax.

[00:40:33] **Laura Elkaslassy:** What may happen, and I think this is something that we need to sort of be clear about, is that if you are in a payable position, the ATO goes, Oh, This is what we're expecting you to earn next year. And then they put a PAYGI installment. So that's a pay as you go income installment amount each quarter that you may need to pay.

[00:40:53] **Laura Elkaslassy:** And effectively what that is, is they've calculated based on what your last tax return payable amount was, divide that by four quarters and a little increase because they expect you to earn more money. This is what you'll have to pay each quarter. And that's not something that you can opt out of. And so it's important for you to know that.

[00:41:11] **Laura Elkaslassy:** But if you, uh, you can vary things down with the tax agent and then pay in the last quarter, the, the thing here with doing that is that it can mean that you get a surprise bill or you don't have enough money that's in that account. So using what Justin just showed in relation to allocating the amount to a tax account will mean that no matter what happens, you have the money in your bank account.

[00:41:34] **Laura Elkaslassy:** So, Yes, you can leave it until the end of the financial year unless the ATO puts you into this system of theirs and you would know if you're in it because you'd get a letter that states You've got this amount payable for this quarter. Um, and, and that's, you can again, talk to myself or a tax agent and ask questions around that.

[00:41:55] **Laura Elkaslassy:** If you have questions specifically, which actually leads me to, do you want to be ready to make tax time, relax time? And that's our key sort of effort here is to make your life easier. I have opened up my calendar for free 15 minute calls. So if you have any questions that are specific to your situation that hasn't been answered on this webinar, please just book into my calendar.

[00:42:20] **Laura Elkaslassy:** Very happy to spend that time with you and answer those questions. And if you are wanting to switch to Thriday because you're not already here and you've seen how easy that is, we also have a switching service, which starts with jumping on a call with me to understand what you need to do and make a decision.

[00:42:41] **Laura Elkaslassy:** So, feel free to jump on that. The last thing that I wanted to let you know about is that as I have joined as the head of Tax and Accounting, we now have the opportunity as a tax agent to help you with that. with your BAS and tax lodgements and that will be live very soon. Um, there is the automated function where if you feel really super comfortable with your own uh, information that's in there, that it's accurate, you can auto lodge that with the ATO and that's um, pretty much hands off and you're in full control of that.

[00:43:13] **Laura Elkaslassy:** All the assisted option where you get to talk to me and the tax team around, you know, what's happening in your business. If things are accurate, get some feedback and also get those lodgements done. So we will be sending out further information about that soon, but I'm super excited to actually be able to work and extend that Thriday automation and help when it comes to that.

[00:43:35] **Laura Elkaslassy:** Yes, it is. The tax return is coming this year. So once the financial year ends, okay. We will be able to lodge your tax return from the end of july and i'll tell you why at the end of july Because there are pre fills that the ATO needs to wait for so that is if you have salary and wages They have until the 14th of july your employer to submit this information to the ATO Interest from banks private health insurance any sort of crypto or shares That all gets reported to the ATO and forms part of your tax return And if you don't wait for that, it can either be inaccurate or i'm going to ask you a million questions And who wants a million questions?

[00:44:14] **Laura Elkaslassy:** So the pre fills actually allow Uh, me to make your life easier and launch that tax return as well. So we'll keep you posted about that. I'm very, very excited. Awesome. That's everything from my end, Justin. Did you have anything that you wanted to say or are there other questions? If so, Chuck them in the chat.

[00:44:36] **Justin Bohlmann:** Yeah. Any questions? Happy to answer anything. Awesome.

[00:44:40] **Laura Elkaslassy:** So yes, tax returns coming this year. So exciting. The accountant's excited. Excited about

[00:44:47] **Justin Bohlmann:** tax, said no one ever except Laura.

[00:44:52] **Laura Elkaslassy:** You will be, you will be when you switch to Thriday and use Thriday and all of that.

[00:44:57] **Justin Bohlmann:** If it makes my life easier, I'm happy.

[00:44:59] **Laura Elkaslassy:** Oh, totally.

[00:45:01] **Laura Elkaslassy:** Awesome. Well, it looks like there's no more questions in the chat. So again, as always, feel free to Um, there is a direct email as well. Accounting at Thriday. com. au. There you go. Chucked it in the chat. You can send your questions there. If you're a Thriday customer, really happy to help. Um, and yeah, Alice is always at your disposal too.

[00:45:24] **Laura Elkaslassy:** She's amazing help. And thank you, Justin and Alice for joining me.

[00:45:28] **Justin Bohlmann:** Thank you, Laura. And if there's anything else you want to learn about, um, regarding finance or anything like that, just let us know. We are going to be doing a lot more webinars. So happy to help in any way we can.

[00:45:39] **Laura Elkaslassy:** Thanks everyone. Have a brilliant day and enjoy the tax period.

[00:45:45] **Laura Elkaslassy:** That's to come

[00:45:47] **Justin Bohlmann:** on you guys. Bye.

DISCLAIMER: Team Thrive Pty Ltd ABN 15 637 676 496 (Thriday) is an authorised representative (No.1297601) of Regional Australia Bank ABN 21 087 650 360 AFSL 241167 (Regional Australia Bank). Regional Australia Bank is the issuer of the transaction account and debit card available through Thriday. Any information provided by Thriday is general in nature and does not take into account your personal situation. You should consider whether Thriday is appropriate for you. Team Thrive No 2 Pty Ltd ABN 26 677 263 606 (Thriday Accounting) is a Registered Tax Agent (No.26262416).

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