September 2013 in review

I don’t know whether to start with the good news or the bad news … maybe I’ll just hide the bad news in the middle in the hope that none reads it!

The good news is that I have actually completed some of my goals for the last couple of months (and therefore you no longer have to hear about them).  These include:

• Completing my tax return … with one day in the month left to go
• Organising my annual garden prunathon … this cost a bundle, but my garden is spotless and should be a bit more maintainable this year
• Reorganising my share portfolio

MoH 10k contest enters week 3

The celebrations are continuing chez the Millionaire on Heels, as we hit our 10,000th page view on Blogger this week (after reaching the same milestone on AdSense last week).

I'm excited to see some new members joining up.

For anyone who has not entered the contest yet, it's not too late.  All you need to do is sign up to follow the site and receive RSS feeds and then email me with an improvement you’d like to see on the site – easy!  The best response received on or before midnight 15 October 2013 (AEST) will receive a $50 prize.

Case study: tax deductions

Today has been an extremely satisfying day.  I finally completed my tax return.  It’s one of my highest paydays of the year, after bonus time, and completing it is certainly the highest earning activity I do on a per hour basis.  So I don’t know why I procrastinate so much!

For me, completing my return is a six-step ritual each year:

1. First, I download e-Tax and do a trial run, based on what’s prepopulated and some estimates.  The promise of a refund then usually inspires me to complete step 2
2. Second, I sort out my paperwork for the year, which is often stacks of accumulated material organised by date – i.e., the oldest stuff is at the bottom of the stack!
3. Third, I do a full run-through of the tax return, answering all the material and identifying any documentation gaps

Tax tips, part 17: tax offsets

After you’ve dragged yourself kicking and screaming through income and deductions, the remainder of your tax return is generally a piece of cake.  There are umpteen questions, loosely grouped into offsets (T1-T11), adjustments (A1-4), credits (C1), Medicare (M1-M2), and income tests (IT1-8).

If you are entitled to an offset, it’s fantastic, as they directly reduce the amount of tax payable on your taxable income (as opposed to deductions, which only reduce taxable income).  However, I’d say 90% of these wouldn’t apply to most people, ever.  Occasionally you may be able claim for large medical expenses and whatnot.  But who does the landcare and water facility apply to?

What you can claim

The offsets, rebates, adjustments, and so on fall under the following categories:

• T1 - Spouse (without dependent child or student)
• T2 - Seniors and pensioners (includes self-funded retirees)
• T3 - Australian superannuation income stream

MoH 10k contest update

The Millionaire on Heels is celebrating today, as we hit our 10,000th page view on AdSense last night!

I do commit a fair bit of time to writing for the blog, so I’m quite chuffed that so many people actually read it.

In case you missed last week’s post, we are having a contest to celebrate.  All you need to do is sign up to follow the site and receive RSS feeds and then email me with an improvement you’d like to see on the site – easy!  The best response received on or before midnight 15 October 2013 (AEST) will receive a $50 prize.

Tax tips, part 16: advice for specific occupations

In addition to the bog-standard work-related deductions you can claim, like travel and home office expenses, you may be able to claim for expenses that are unique to your industry and occupation.

What you can claim

As noted previously, you can only claim a deduction for expenses that directly relate to your work as an employee.

The ATO publishes a number of guides for specific industries and occupations that outline some of the work-related expenses you are entitled to (and not entitled to).  Available guides include:

• Adult industry workers
• Airline employees
• Australian Defence Force members 
• Building and construction employees 
• Business professionals 
• Cleaners 
• Earthmoving plant operators 
• Education professionals 
• Electricians 
• Engineers 
• Factory workers 
• Fitness and sporting industry employees 
• Flight attendants 
• Guards and security employees 
• Hairdressers 
• Hospitality industry employees 
• IT professionals 

Book review: The Penguin Small Business Guide

The Penguin Small Business Guide
Source: Booktopia - Australia's # 1 Online Bookstore. Choose from over 4 million titles all discounted. Flat rate shipping Australia wide.

Today I’m taking a break from tax to bring you a new book review.

The Penguin Small Business Guide (the complete reference handbook for small to medium enterprises) was authored by Nicholas Humphrey, a corporate law partner at Norton Rose, the author of several bestselling books, and a regular contributor to the media.

The book aims to provide a general introduction to setting up and running a small to medium business.

Its contents include:

• Chapter 1 – The concept for your business
• Chapter 2 – The business plan
• Chapter 3 – Understanding your market
• Chapter 4 – Developing your marketing strategy

The Millionaire on Heels celebrates ... again

This week will be a major milestone for the Millionaire on Heels.  We’ll reach our 10,000th page view according to both Blogger and AdSense (both of which have different ideas of a page view!).

Compared to the mega-sites that generate 37 squizillion page views a day, of course, this is not huge.  But I continue to be amazed that people actually enjoy reading the blog.  The page views in the beginning were around 100 per month; now they're in the thousands.  The total word count in case you’re interested has now hit over 120,000 words – that’s several good-sized books’ worth.

So to celebrate this milestone and say thank you to everyone who’s registered to read the blog, I thought I’d organise another contest.  All you need to do is sign up to follow the site and receive RSS feeds and then email me with an improvement you’d like to see on the site – easy!  The best response received on or before midnight 15 October 2013 (AEST) will receive a $50 prize.

Tax tips, part 15: capital gains

A capital gain (or loss) is basically the difference between what it cost you to acquire and keep an investment asset and what you received when you disposed of it.  Selling an investment (e.g., shares, managed fund units, investment property) is the most common way you can trigger a capital gain or capital loss. Other capital gains events include managed funds’ periodic distributions of capital gains, company liquidations, and mergers and acquisitions.

Managing capital gains requires keeping a number of finicky records, a task that the MoH is truly hopeless at.  The memories of all my share purchases and sales this year keep flooding back to me every time I contemplate starting my tax return.  Each of those no doubt will require numerous searches to ascertain purchase and disposal costs from half-completed tracking registers and the original hard copy confirmation orders that I may or may not have received from my broker … Once you are ready to tackle the subject, capital gains (losses) get calculated in section 18 of your supplementary tax return.

Tax tips, part 14: property

If you earn rental income or your property is available for rent, your net rental income (loss) gets entered into section 21 of your tax return.  Many Australians choose to negatively gear their property investments; hence they record a loss over a number of years, hoping that a future capital gain will more than recover the accumulated losses.

The MoH was a direct residential property investor for about a year recently, which straddled two tax years.  It was intended to be a medium-term strategy where I upgraded to a new house and rented out my previous apartment.  My financial returns were OK, but the experience of owning residential property required far more hands on involvement that I have ever experienced with shares.  With residential property you have two constituents you will never encounter on the sharemarket: difficult and/or evil tenants and difficult and/or useless real estate agents.  

Tax tips, part 13: other deductions

Sections D11-15 of the supplementary tax return are a catchall for less-commonly used tax deductions.  It’s worth having a read through and seeing if any of these apply to you in a given year.

What you can claim

Examples of what you can claim include:

• The deductible amount of the undeducted purchase price of a foreign pension or annuity – most notably Austrian, British, Dutch, German, and Italian penions
• Personal superannuation contributions – provided that you were fully self-employed and less than 10% of the sum of your assessable income plus your reportable employer superannuation contributions plus your total reportable fringe benefits amounts is attributable to the activities that result in you being treated as an employee for the purposes of the superannuation guarantee

Upcoming September posts

Source: http://adore-vintage.blogspot.com.au

As I highlighted yesterday, I had less than a 50% success rate with my August goals.  So I’ve got some catch-up work to do in September.  In a positive light, a number of them involve spending money, and the longer I delay, the more cash there is in the MoH account!

So my goals for September will include:

• Finally completing my tax return … and receiving my long anticipated refund
• Closing out my unnecessary bank accounts (four accounts at three different banks …)
• Getting a quote for one of my planned renovation activities
• Scheduling my annual garden prunathon (I do most of the gardening myself, but once a year, I like to get a professional in to do the heavy lifting)
• Getting the packaging sorted out for my new bricks-and-mortar/online business (including the final designs, packaging samples, and label samples)
• Doing some further optimisation of my share portfolio