Ditch your paper receipts, there’s an app for that

Save time • Save money • Save space • Increase accuracy

At Vivid Chartered Accountants, we aim to live by our vision of making our clients’ lives better. We know that you’d rather be getting on with business than coding receipts or sorting through paperwork.

By now, you’ll have heard us rave on about Xero – Beautiful accounting software for beautiful people. But have you heard about the award-winning Receipt Bank?

Receipt Bank, using what can only be described as black magic, extracts and uploads all the data you would otherwise have to manually enter into Xero. No more carpal tunnel syndrome from all that data entry – save that for tweeting about how much you love your accounting software.

Instead, using the Receipt Bank iPhone or Android app, take a picture of your receipt, and let Receipt bank do the rest.  

Since you already know how to take the perfect selfie, taking pictures of receipts is a breeze - no selfie stick required! But instead of having a picture of yourself that will be the envy of all of your friends, Receipt Bank will have found the receipt’s supplier, date, receipt number, amount spent, GST, and more.

Receipt Bank can do the same for supplier invoices too – once the data has been extracted, these can be exported directly to the Purchases tab in Xero, ready for you to approve and schedule for payment.

Save time– cut down on data entry and sorting through paper records

Taking a photo of your receipts as you get them will remove the dreaded weekly or monthly sit-down in front of your computer to reconcile your accounts. Receipt Bank will become a better friend than your favourite contact on Snapchat.

Receipt Bank doesn’t stop there, it can implement different rules for each supplier, so once you’ve set up the rules you want, such as the payment terms and method, you can trust Receipt Bank export the data automatically and accurately.

Save money – capture every expense to maximise your claimable expenses

These little purchases can add up, and when filing a receipt is easier than instragramming your lunch, there’s no need for you to miss a thing. By the time you’re back in the office and logged on to Xero, Receipt Bank should have extracted all the data you need to code your purchase. #nofilter

Save space – your receipts are linked to the bank expense, and archived in accordance with the ATO’s requirements

Possibly the best feature of Receipt Bank for those who love the environment or those who hate paperwork, is that Receipt Bank uploads an electronic copy of the receipt which is compliant with the ATO standards. Receipt Bank will keep each receipt archived for 7 years, so you can throw that receipt in the recycling bin. It’s your own personal Pinterest of sweet tax receipts.

Xero and Receipt Bank are like really good Facebook friends, constantly tagging each other in status updates. If Receipt Bank finds a purchase in Xero that matches, it will let you know.

The receipt is automatically exported and attached right alongside the purchase, so there’s no flicking back and forth between records.

If you want to hear someone rave about Receipt Bank non-stop, call Tamara, our practice manager. If you want to learn more, and try out the software to see just how much it will benefit your business, contact our office.

Our office will be closed from 12pm on Thursday the 24th of December and will re-open on Monday the 4th of January.  We will also be closed on the afternoon of Friday the 18th of December for our Christmas party. We wish you all a safe and happy festive season.

Myths about Work Christmas Parties

Myths

•       Your secret Santa gift is always funny
•          It is a good idea to tell your boss how you feel after a few drinks
•          Your work Christmas party is always tax deductible

Whatever you want to call it - Christmas, the holidays, the silly season or Festivus, it is fast approaching! So before you have a few drinks and get to the “feats of strength” and the “airing of grievances” we thought we’d share a few basics on the tax treatment of Christmas parties.

  

Hopefully this will keep more money in your pocket for festivities with less of it taken by the Christmas Grinch/ATO.

•          Work Christmas Parties are only tax deductible to the extent that Fringe Benefits Tax (FBT) applies.
•           With the FBT rate currently at 49% this can add a significant additional cost to your function!

So when does FBT not apply?

The costs (e.g. food and drink) of Christmas Parties are exempt from FBT if they are provided:

•           on a working day, and
•           on your business premises, and
•           consumed by current employees

If the above doesn’t apply (e.g. if you have your Christmas party off-site) the cost may still be exempt from FBT as a minor benefit provided the cost is less than $300 per employee

What if spouses attend?

The costs of spouses attending the Christmas party (whether on premises or off) is not exempt from FBT unless it is a minor benefit at a value of less than $300.

What if clients attend?

The costs of entertaining clients are not subject to FBT and are not income tax deductible.

What about staff gifts?

Gifts that are less than $300 per an employee and not entertainment (e.g. hampers) are tax deductible and no FBT will apply!

Gifts that are entertainment (e.g. movie, sport or theatre tickets) are generally not tax deductible although FBT will not apply if the cost is less than $300.

Bottom Line

The tax treatment of Christmas Parties and staff gifts can be complicated! They are often not deductible (not that there’s anything wrong with that) and sometimes FBT can apply.  If you would like to know more, or get some advice as to the best way to structure your Christmas festivities for tax please contact myself or any of the helpful team at Vivid Chartered Accountants on 02 6171 6000.

The team at Vivid wish you all a happy Christmas and we hope you enjoy your Christmas Parties – regardless of the tax treatment! 

We will be putting our feet up over the Christmas break and our office will be closed from 12pm on Thursday the 24^th of December and will re-open on Monday the 4^th of January.  We will also be closed on the afternoon of Friday the 18^th of December for our own Christmas party.

Xero - Beautiful accounting software for beautiful people (you)

Smart small business owners all over the world are rushing to make the switch from traditional accounting desktop software to Cloud Based Solutions. As accountants and business advisers we are loving this change and the potential it offers our clients!

So why are we so excited about what most people consider the world’s driest topic - accountancy software?

The answer: Innovation.

Xero, a cloud based accounting solution has not only changed the way you look after your financial records, but the way you connect with your customers, suppliers, and advisors. So there’s a lot to be excited about!

Gone are the days of:

• sitting down for hours of data entry, as you or your bookkeeper, enter each and every receipt and bank statement line
• managing your debtors as almost a full time job 
• looking at old historical data to try work out why your cash flow was so bad

Xero allows you to keep track of your finances on a real time basis! This means you can log in anywhere, at any time, and know what your business’s financial position is, how it is performing, who owes you money, and when upcoming payments are due.

Doesn’t that sound great?!

Xero has decided the way of the future is to utilise cloud technology and an innovative approach to business and as a result have produced amazing software with hundreds of time saving features and efficiencies built in.

Xero removes time-consuming data entry by automatically downloading your Bank statements into Xero on a daily basis. Recurring transactions are memorised, and you can set up rules to take the boring and time consuming work out of bookkeeping.

Xero reduces the time it takes to create professional Quotes and Invoices, as well as allowing you to copy invoices and create recurring invoices, which can be emailed directly to your customers. No more invoices getting lost in the mail! Get paid easier with Invoice Reminders, which automatically prompt customers when an invoice is overdue.

Processing Payroll is a breeze in Xero! Staff have access to an Employee Portal where they can access their payslips and request leave. Auto Super in Xero allows you to pay Super with a click of a button, whilst being compliant with the ATO’s new SuperStream rules.

Track your Inventory, schedule upcoming Payments to manage cash flow, and take care of your Reporting requirements.

There are so many great features in Xero that it is really hard to find a favourite. From an accountant’s point of view, the ability to access the same, live file as our clients has been invaluable. Our advice is no longer based off past figures, but instead we can provide proactive real-time advice and services.

If you would like to more about Xero and how it could benefit your business, please contact our office.

NEGATIVE GEARING

“I pay too much tax, I need more deductions”

“I need a negatively geared property to reduce my tax”.

Two common sayings I often hear in relation to negative gearing - do they make sense though?

Surprisingly, many people do not quite understand how negative gearing work – but think they do.

WHAT IS NEGATIVE GEARING?

Negative gearing (in relation to property specifically) is when the rental income earned is less than the allowable tax deductions associated with the property.

For example:

• Rental Income: 24,000
• Interest: (20,000)
• Land Tax: (6,000)
• Other Costs: (8,000)
• LOSS: (10,000)

The above property is negatively geared to the tune of $10,000 per annum.

COMMON MISCONCEPTION: YOU GET BACK $10,000 FROM THE ATO

Unfortunately not. The loss of $10,000 sits in your income tax return and reduces your taxable income. If you have income from other sources, you will save tax at your marginal tax rate. For example if you have a salary of $100,000 your marginal tax rate will be 39% including Medicare Levy; in this case you will receive a tax refund of $3,900.

ANOTHER COMMON MISCONCEPTION: NEGATIVE GEARING MAKES YOU MONEY

This one needs some further explanation.

In the example above, you have LOST $6,100 in year one (after receiving back your ATO refund). This is what it has cost you to hold the property. If you didn’t hold the property, you would theoretically still have that $6,100 sitting in your bank account (perhaps even earning you a little bit of interest!).

The second year may be similar, as will the third, fourth etc. You are literally losing money every year….

• Year 1: ($6,100) loss
• Year 2: ($6,100) loss
• Year 3: ($6,100) loss
• Year 4: ($6,100) loss
• Year 5: ($6,100) loss

TOTAL LOSSES OVER FIVE YEARS = $30,500

So why would you want to hold an asset that loses you money every single year???

CAPITAL GROWTH!

The ONLY reason you would want to hold this asset would be if the VALUE of the property was increasing enough over time to cover your losses. 

If the property above was purchased for $400,000 and sold after 5 years for $440,000 on face value you “made” $40,000, hooray!

However, once you take into account the money you have lost each year on the negative gearing, agent fees and potentially capital gains tax on the sale you may really have not made much more than a very basic rate of return. And don’t forget inflation!

SO IS NEGATIVE GEARING RUBBISH??

Certainly not!

Negative gearing is a concept that has been used by some to greatly enhance their wealth position and property portfolio. If the circumstances are right, it can be a brilliant tool to assist you in growing your net asset position.

You just need to understand how it works, have good real estate agents to provide you with quality advice surrounding properties (in particular their growth prospects and ways to enhance rental yield) and a good accountant to assist you with the taxation side of things.

Good luck and happy investing.