3 ways foreigners can invest in Australia

 

Australia has been a robust economy and having proven its resilience to the global economic downturn of 2008 and beyond it is only natural for investors world over to want to invest in our economy. Below are 3 of the many ways people can invest:

1. Loan the funds to a business and receive interest payments for the amount lent. This is ideal if the owners of the business are known to you and you trust them. The advantage of lending in this fashion is that a maximum tax of 10% is withheld from the interest before its paid to you and that is taken to be final tax under the Australian Taxation System.
2. Buy shares in the Australian company you want to invest in. Buying shares in a company (no matter how small or big your shareholding is) gives you (partial) ownership of the company. If your return (dividend) are paid out to you out of taxed profits (franked dividends) then no additional tax is payable by you as the Australian Taxation System considers the 30% tax paid by the company as final for non-residents.
3. Invest directly under your name in properties, etc. It may be more time-consuming and may get complex managing your investments directly in Australia, but there is no reason you cant invest directly in Australia under your name. The taxation implication of this is that even though you may be a non-resident for tax purposes, you still would have to pay the Australian Tax Office your share of tax as a non-resident on all Australian Sourced income at rates determined under the Australian Taxation System.

 

The importance of getting your situation specific advice cannot be emphasised enough so do make sure you consult with taxation professionals in both your country and in Australia to understand the implications of investing in Australia both in terms of risk and reward.

BY SURESH RAJANI

Suresh Rajani is the Business Leader at TAX FIRST (An accounting and business advisory firm)

www.taxfirst.com.au

 

 

 

 

 

Is your business structure right for you?

There is no such thing as "one business structure fits all or even similar businesses" and getting the business structure wrong can cost you in the long run.

Don't simply register a company and think that it is the best structure for you because everyone else is using it and you are in a hurry or to save a few dollars at the start.

There are four main types of business structures used by small and medium sized businesses in Australia and in most cases using them in a combination may work in your favour in the long run. These four are:

1. Company
2. Trust
3. Sole Trader
4. Partnership

Below are the the features/differences of the four structures:

COMPANY

• Regulation: Heavily by ASIC
• Profit distribution/ Tax effectiveness: Not flexible
• Taxation: Company tax rate
• Liability: Limited

TRUST

• Regulation: Minimal
• Profit distribution/ Tax effectiveness: Flexible
• Taxation: At beneficiary level
• Liability: Limited to trust assets

SOLE TRADER/PARTNERSHIP

• Regulation: Minimal
• Profit distribution/ Tax effectiveness: Not flexible
• Taxation: At individual's (or partner's) marginal rate
• Liability: Unlimited

Your business is probably going to be your biggest source of income so give the business structure some thought and just don't rush into it.

BY SURESH RAJANI

Suresh Rajani is the Business Leader at TAX FIRST (An accounting and business advisory firm)

www.taxfirst.com.au

 

 

7 things business owners are getting caught out on

Being a business owner may be rewarding but owning a business comes with the responsibility of making sure that the business complies with various tax office and other obligations. Below are the 7 things business' are  getting caught out on:

1. Minimum wages. The current minimum wage is $640.90 per week ($16.87 per hour) and paying employees below that either intentionally or unintentionally can result in penalties.
2. Annual Leave. All employees (except for casual employees) are entitled to annual leave. Full-time and part-time employees get 4 weeks of annual leave, based on their ordinary hours of work. The leave accumulates gradually during the year and any unused annual leave will roll over from year to year.
3. Superannuation payment. Almost all employees in Australia are entitled to a superannuation contribution, paid by their employer into a super fund. It doesn’t matter if the employee is full time, part time or casual (depending on income and hours). Even some contractors may be entitled to super contributions. Australia’s superannuation law is strict with regards to paying by the due date (28 days after end of every quarter). Even if you’re late by one day, you can be penalised.
4. Fringe Benefit Tax (FBT) on motor vehicles. If you operate your business as a company or trust, you can claim a full deduction for expenses you incur in running a motor vehicle that your company or trust leases or owns. If you, or other company or trust employees (or their associates), use the vehicle for private purposes, you may have to pay fringe benefits tax (FBT).
5. Goods taken for private use. It is a common practice in businesses such as bakers, greengrocers, convenience stores and restaurants – but business owners need to realise that accounting for goods taken out of stock for private use has tax consequences. Goods taken out of stock by a business operator for private use have to be included in the business' income.
6. Putting aside money for income tax. Unless you plan ahead for tax, it can be difficult to pay tax bills when they fall due. So it's worth making this a priority for your business. As you become more established the Australian Taxation Office (ATO) might also require you to make quarterly pay as you go (PAYG) tax instalments.
7. Getting involved in cash economy. Businesses that deliberately hide income to avoid paying the right amount of tax or superannuation are part of what is generally called the cash economy. The ATO can issue default assessments when you cannot substantiate your income or lifestyle. 

BY SURESH RAJANI

Suresh Rajani is the Business Leader at TAX FIRST (An accounting and business advisory firm)

 

 www.taxfirst.com.au

 

 

 

 

 

Why businesses should stop providing customer service

Most of us would have received service ranging from exceptional to downright outrageous when buying big ticket items such as homes to buying everyday products and services. Poor service may be an outcome of many different things but a major problem seems to be term itself "Customer Service."

One things most business owners tell their staff is that they should service their customers well and the staff seem to take that literally. When someone walks into their store, the staff ask themselves the question "Does this look like a person who is likely to buy today and/or from us?" If yes, then they provide good service and if the person seems to be the kind that is just looking for information, then the chances of them getting proper information or service diminish as he is not likely to be a "customer" in the eyes of the staff.

In this day and age when competition is fierce in most industries and amongst most businesses and when almost all businesses claim that their prices are the lowest, one thing that can make any business stand out is providing outstanding service to one and all who walk in your stores or contact you in anyway.

Business owners and staff out there, stop providing customer service and start providing people service. Sooner or later the word about your exceptional service will get out there and your business is likely to be rewarded for that. And yes by that I mean financially too.

BY SURESH RAJANI

Suresh Rajani is the Business Leader at TAX FIRST (An accounting and business advisory firm)

 

 www.taxfirst.com.au

 

 

 

 

 

Budget 2014/15 Snapshot

On  13 May 2014, the Treasurer handed down the 2014-15  Federal Budget. Below are some of the measures of immediate relevance:

 

INDIVIDUALS AND FAMILIES

1. From 1 July 2015, you will have to pay a $7 “patient contribution” fee each time you visit your GP.
2. People who earn more than $180,000 a year are going to pay the 2% debt levy for the next three years, starting 1 July 2014.
3. Pension age to be increased to 70 by 1 July 2035.
4. From 1 July next year $5 prescription fee will apply to any prescription subsidised by the government’s Pharmaceutical Benefits Scheme.

 

 

BUSINESS  

1. The government will introduce a wage subsidy of $10,000 over 2 years from July to encourage businesses to hire people over 50.
2. Company tax rate to be cut by 1.5% to 28.5% from 1 July 2015.

 

BY SURESH RAJANI

Suresh Rajani is the Business Leader at TAX FIRST  

 www.taxfirst.com.au