MGI Perth

Carbon tax: What does it mean for you?

The Federal Government announced its plan in relation to the implementation of a proposed carbon tax. Below is a snapshot of the plan.

Carbon Price

A carbon price has been set at $23 per tonne for the year beginning 1 July 2012. It will increase at the rate of 2.5 percent (in real terms) until 1 July 2015 when Australia becomes part of a full carbon trading system. The carbon price at this time will be set by the market.

Implications

• The tax will apply to approximately 500 high polluting companies
• As a result of the tax, it is expected that business costs (particularly electricity) will increase. The government anticipates that businesses will need to increase prices to cover these costs
• The government expect the average household will be approximately $9.90 per week worse-off before any compensation, as a result of the plan
• Fuel for light commercial vehicles will be exempt from the tax

Click here to read more to find out about government assistance being offered to businesses and individuals

Change to the fuel tax credit for heavy road vehicles

From 1 July 2011, the fuel tax credit rate for heavy vehicles that use fuel such as diesel or petrol and travel on public roads is 15.043 cents per litre. This change is due to an increase in the road user charge.

The ATO considers a heavy vehicle to have a gross vehicle mass (GVM) greater than 4.5 tonne. Diesel vehicles acquired before 1 July 2006 can equal 4.5 GVM tonne.

For more information, please contact Janet Coniglio on 08 9463 2463 or email janet.coniglio@mgiperth.com.au to discuss your claim.

Why choose debtor finance for your business?

Does your business need a boost in cash flow? Have you outgrown your bank finance? Experiencing difficulties in meeting payments on time?

If your business needs an immediate boost in cash flow, or your existing cash flow facility no longer supports your business objectives, seeking assistance with us could make a big difference.

Perhaps you have a business that seeks to take advantage of growth opportunities or are looking at expansion. It’s likely the limitations of a traditional bank overdraft are holding you back.

A flexible debtor finance solution can change that quickly. Facilities are based on your outstanding debtors – you are simply provided rapid access to money that is already owed to you. Best of all the facility expands automatically as your business grows. You can relax knowing your business is funding itself.

What are the advantages of a boosted cash flow?

There are many good reasons to choose a debtor finance solution, including:

• Growth – increase your sales and profit
• Flexibility
• Strong purchasing power
• No property assets needed as security
• No need for costly settlement discounts
• Funding for new acquisitions/start ups
• Replacing or reducing your overdraft
• Management/partnership buyouts
• Payment of statutory debts.

Will debtor finance suit your business?

Debtor finance suits growing businesses with turnovers from $500,000 to $50million. Businesses that provide their products or services to other businesses on credit terms, including:

• Temporary labour hire
• Manufacturers
• Wholesalers
• Business services
• Transport companies.

How does it work?

Click here to read more.

Six ways to protect your assets

1. Assets held in your name may be at risk from creditors

People in business should consider the wisdom of owning assets in their own name. Title to the family home ideally is in the name of their spouse only. It is important that the spouse isn’t connected to the business activities or required to provide personal guarantees. Additionally, there should be a clear link between the purchase of the home and the not-at-risk spouse. Mortgage repayments paid from the same account that their salary or investment income is received into provides a protection against a trustee in bankruptcy.

2. The use of trusts and companies offer protection

Owning assets in either a company or trust with a company as trustee can provide a high level of protection. A trust provides us with access to the capital gains tax (CGT) concessions and allows us to stream particular income types to different beneficiaries in a tax-effective manner. Companies are useful where we wish to cap the tax payable on the income at 30%. Selling the shares in a company gives us the access to the CGT concessions and owning the shares in a trust gives us flexibility with dividend distributions. Company losses are limited to funds contributed by shareholders.

3. Superannuation is generally safe from creditors

Superannuation is not only a tax-effective investment vehicle; it is also safe from creditors in most situations. Where it can be demonstrated that the contributions made are a long term deliberate strategy rather than a last minute attempt to defeat creditors, superannuation funds are safe. The amount is unlimited and can be accessed safely when allowable if done as a lump sum rather than pension.

4. Take security over loans to entities

Funds owed to you by a company or trust should be secured by some form of document that ranks you ahead of unsecured creditors. The form the security taken will in large part depend on whether a bank has already taken security over some or all of the assets of the entity. Ranking yourself ahead of unsecured creditors provides you with more control in tough times. Creditors are more likely to listen to and work with you as you endeavour to work though those times.  

5. Minimise granting of personal guarantees wherever possible

Even when times are good, the granting of personal guarantees should be avoided wherever possible. Personal guarantees may make it difficult for you to feel comfortable passing a business to the next generation if holders of the guarantees are unwilling to let them go. Effectively you remain responsible for the business operations and may not wish to fully relinquish control on that basis.

6. Separate passive investments from business operations

Passive investment assets should not be held in the same trust or company that operates an “at-risk” business. Ideally, cash flow in excess of working capital requirements are extracted from the operating entity and invested in a passive investment vehicle with no linkage to the operating entity. This may require the payment of additional income tax.  The accumulation of assets in a relatively risk-free environment should be attractive to most of us.

To discuss your asset protection options please contact Alex Davis, Senior Manager Estate Planning and Asset Protection on 08 9463 2463 or at alex.davis@mgiperth.com.au.