Case Studies

Advanced Superannuation Strategies

We met with a new client that operated a professional practice as a sole trader that generated a significant amount of income and as a result a large tax bill.  The client had a self-managed superannuation fund with a modest amount invested.  The business was run from premises owned by our client.

Our client originally came to us as his previous accountant was slow to respond to his queries and didn't appear to be proactive.  Prior to our meeting, he accepted the fact that he had to pay a lot of tax because he earned a significant income.  After meeting with us, we showed him that if he made better use of his Self-Managed Superannuation Fund, we could significantly reduce his tax.
Our strategy involved selling his business premises to his Self-Managed Superannuation Fund which effectively diverted approximately $50,000 of rent from a very high income earner taxed at 46.5% to a low tax paying entity which is being taxed at 15%.  This alone saved our client approximately $15,750 in tax.  We engaged a lawyer that specialises in this area to carry out the transfer who enabled the client to transfer the property with minimal stamp duty and capital gains tax consequences.

The superannuation fund used its existing cash resources as a deposit for the property and borrowed the additional money required from a bank.  We setup all the required structures and legal agreements required to ensure the super fund complied with all the relevant legislation and borrowing requirements.

In addition to the significant tax savings, the transfer of the property provided our client with increased asset protection, a steady source of income once he retires and the proceeds from the sale of the business premises were used to pay off his non tax deductible home loan.

Our managing director, John Previti, is a Chartered Accountant SMSF Specialist and can assist you to take control of your superannuation and setup strategies to maximise your income in retirement.

Maximising rental property refunds

When preparing tax returns with rental properties, it is important the tax preparer knows all the claims available to property investors.  All our staff attend regular training and know exactly which claims are available to property investors.

We met with a new client that had purchased a rental property in the Perth CBD 4 years prior.  While preparing the tax return for the current year, we noticed the previous accountant didn't claim depreciation for the building or the fixtures and fittings.  As a result, we arranged for our client to have a depreciation report prepared by a quantity surveyor from the date of purchase.

We used this depreciation report to amend the prior three years tax returns to correctly claim the depreciation that the previous tax preparer missed.  Due to the corrections, our client received an additional refund of over $11,000 plus the ATO paid them interest of over $1,000 due to the corrections.  The ATO paying you interest, that is a great result.

We are passionate about property investments and can assist our clients with a wide range of property related tax matters such as assisting with small property developments, minimising capital gains tax, setting up the correct structure to purchase property and using your superannuation to purchase a negatively geared property.

Improve your business cash flow

We have a long term client that runs a successful family business, however recently ran into some cash flow issues.  When looking at this issue, we reviewed their personal cash flow requirements and ways to improve the business cash flow.

The first thing we identified with the business was that as the business was growing, the amount of their debtors increased by a larger proportion.  This resulted in the business requiring a larger amount of working capital to keep the doors open, which was funded out of the owner's salary.  We identified the reasons for the large increase and suggested they address these issues.  A procedure was also established to help collect payments from clients in a timely manner.

As the business grew, the gross profit percentage for the business reduced.  The business generated more income however the profit remained unchanged due to the reduction in the gross profit percentage.  To correct this problem, we recommended our client increase their prices by 5% and work to be more efficient with their materials.  We expect this small change in price to result in $30,000 increase in profit.  For a small family business, this is a significant increase in profit.

To enable us to quickly identify these issues, we have specialised software that will prepare a business health check after we enter some key financial data.  We then use this information to assist the clients to improve their business profits and cash flow.  Ask about our free business health check for potential new clients.