Trauma Cover – A Case Study – November 2012

Trauma Cover – A Case Study – November 2012

Nathan Tiberi – KSR Wealth Management

Michael is 41 year old Carpenter, and is married with 2 children. He has been running his own business for the past 15 years. In July 2012, Michael was diagnosed with Testicular Cancer. Michael was required to undergo Chemotherapy the following week, and has been unable to return to work since the diagnosis due to treatment.

Michael and his family have had a lot of emotional stress in their lives since Michael’s diagnosis, however due to the fact that Michael had Income Protection & Trauma Insurance, they have not had financial stress to deal with also. Michael’s Trauma Insurance policy paid him $130,000 on diagnosis of the condition. This allowed Michael to receive a payment before he had commenced his Chemotherapy treatment, which he used to pay down some of his mortgage and put the rest of the money in the bank for a ‘rainy day’.

FBT and your Christmas party planning – November 2012

FBT and your Christmas party planning – November 2012

End of year Christmas celebrations are a chance to get everyone together for some fun as well as thanking the team for a job well done. Business owners may have the option to unlock the bar fridge for employees, but should make sure they are not the ones stuck with the tax hangover.

As with any benefit that a business provides to staff that is outside the safe definition of “salary”, the question of whether it is a (taxable) fringe benefit or not will need to be addressed.

But it’s not like the taxman doesn’t know how to have fun — the Tax Office may be prudent, but there’s still some wriggle room in the tax rules to let your hair down. Christmas-time entertainment up to the value of $300 for each employee may be exempt from FBT. This may also be the case where an employee’s spouse attends.

Should you transfer your business premises into your SMSF? – November 2012

Should you transfer your business premises into your SMSF? – November 2012

There can be some solid reasons to consider having the ownership of your business premises in the name of your self-managed superannuation fund (SMSF). To start with, if your business is travelling along steadily, it will provide a steady source of rental income for the SMSF and capital growth. It may also provide a level of stability for you as a business owner by not having a third-party landlord. There are additional advantages that, depending on a business owner’s circumstances, may make transferring commercial property into an SMSF a tempting option.

One of the primary reasons for making such a change is tax. As the asset, which is the business premises, will be held by a superannuation fund, tax on income and capital gains will generally be less than the business would have been liable for. For an SMSF, earnings (which includes rental income) are taxed at 15%. For the business, rent or lease expenses are deductible for the business taxpayer, which pays tax at a rate of 30% (if a corporate). The end result is that the people behind these two entities — the SMSF and the business finish up overall saving 15 cents in the dollar of tax paid.