[AMA] I'm an Accountant

bemybubble on 20/05/2016 - 15:30
Last edited 20/05/2016 - 15:31

Howdy OzB Community,

Starting to slow down come EOFY and thought it might be a good idea to do an AMA. I am a professional accountant in public practice for over 7 years.

Must do a disclaimer though that none of my responses are to be taken as advice and you should seek your own professional advice to best suit your own needs and I won't respond to personal situations.

Have seen a lot in the last 7 years, I do not have all the answers but my experience and development is furthered by your questions!

Introduce Yourself

closed Comments

  • [Deactivated] on 20/05/2016 - 20:54
    +1

    Is there any possible way for a man not to get screwed financially in divorce?
    Apart from not getting married that is

    • bemybubble on 20/05/2016 - 20:55
      +2

      Not really. Family law trumps commercial every time. Nothing escapes the gaze of family law!

      • Thazza on 20/05/2016 - 22:33

        Pre-nups!

        But that's going onto the side of legal advice now :)

        • Drifta on 21/05/2016 - 00:28
          +1

          i thought pre-nups are not available in Australia and its only a US thing?

    • No ONE on 21/05/2016 - 14:43

      Yes pre-nup as suggested by thazza

  • JetBombat on 20/05/2016 - 21:35

    What do you think about umbrella companies?

  • Terra Australis on 20/05/2016 - 21:45

    How feasible are offshore tax havens? Do you know if those 800 leaked Australian companies from the Panama Papers ever got in trouble?

    • bemybubble on 21/05/2016 - 07:57

      I know the ATO are investigating them. As to how feasible to be honest I don't know enough about them (or care) as offshoring leads to tax avoidance schemes in majority of cases. Plenty more legit ways to reduce tax and not paint a cross air on youraelf

  • Janko on 20/05/2016 - 21:47

    Do you really have to use blank ink, as stated, on a tax return? I always seem to get away with blue.

    • Chrotzo on 20/05/2016 - 22:47
      +1

      Pretty sure he s doing it on his tax software not on paper

    • bemybubble on 21/05/2016 - 07:46

      I get away with any colour ha

  • Thenarrator on 20/05/2016 - 22:26

    how much salary or profit equivalent do you make for yourself

  • quaddie on 20/05/2016 - 23:08

    If someone was considering settling down with a partner and didn't want to get (profanity) over if it didn't work out, what strategies do they have to protect their assets (both current and future)?

    • bemybubble on 21/05/2016 - 00:10

      I'm not a family lawyer so I cannot help with this. From what I understand though in my travels is that once an individual starts contributing or there are kids involved then your in the thick of it.

      I had a client once own a house and his gf wanted to move in. He drew up a lease to protect himself to demonstrate that it was purely commercial arrangement. I think things like that can work for you but once again, I'm not a family lawyer…

      • quaddie on 21/05/2016 - 00:13

        Thank you

  • nikey2k27 on 20/05/2016 - 23:14

    I own share need to claim TAX back on them as I have no other income at the moment other than dole payment . What paperwork do I need to fill out with the tax office? (dividend tax back)

    • bemybubble on 21/05/2016 - 00:07

      There is actually a form on its own you can fill out to claim back any franking credits. Not in the office so not sure off the top of my head but I'm sure trusty Google will assist…!

  • ShortyX on 20/05/2016 - 23:16

    As an alternative, you could try http://ask.crowehorwath.com.au

  • barginsarelife on 20/05/2016 - 23:22

    Did u do accounting in high school? If so did u get High scores in exams/tests?

    • bemybubble on 21/05/2016 - 00:08

      Did accounting and economics. They were by far my strongest subjects. Debits and credits made sense to me. Think of it as the same as every action has a reaction. That's basic accounting to be honest in a nutshell!

  • Dameitra on 20/05/2016 - 23:49

    Quick question . I'm fairly new to the whole tax scene… I know basic math that I learnt in school and from looking at the tax slab, this is what I kinda understood.

    Upto 20k (non taxable threshold) you get all your taxed money back. between 20k and say the next slab is 35k you pay 25 cents per dollar , 35k to 50k you pay 35 cents per dollar and so on .
    Assuming I earn 45k I get everything I pay In tax upto 20 k back and the rest is charged as per the slab yeah ?

    Sorry for the dumb question.

    • BartholemewH on 21/05/2016 - 08:56

      If you are salary and wage you would not generally have had tax withheld for the first $18200, so there isn't anything to 'get back', but you are correct that you would only pay tax on the amount above this less allowable deductions.

    • competecarrot on 21/05/2016 - 09:09

      Use this calculator to estimate total tax paid: https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=ST…

      By the way, it's called a bracket, not slab

      • Baysew on 21/05/2016 - 13:03
        +1

        Perhaps they are operating in the beer economy?

  • mrjames on 21/05/2016 - 00:15
    +2

    I've been dabbing a little bit in day trading, as a result I have many capital gains events. Whats the best way to record these for later on when I'm doing my tax return?

    • bemybubble on 21/05/2016 - 07:47

      Use a spreadsheet. Easiest way to calc. Ato has some great examples too

      • shk on 21/05/2016 - 18:18

        If mrjames was involved in many transactions (as implied) and implementing a business/trading plan with the view to earn income, wouldn't this characterise the shares/products as being trading stock, and exempting it from CGT? Just a thought…

        • bemybubble on 21/05/2016 - 18:28

          He would clearly need to demonstrate he is in the business of share trading. Commercial quantities. Read up on this not too long ago and believe me there is quite the criteria to prove you're in the business of trading…

          Edit: and yes. Having a plan is one of those criterion

  • OkayFray on 21/05/2016 - 00:35

    Hi! Thanks for the AMA :)
    Two questions:
    1) I'm interested in learning some basic financial skills in my own time. Are there a handful of books that you'd consider absolutely essential (or have helped you greatly) for the basics of personal accounting?
    2) If you, hypothetically, had to pass on your best financial advice to your children, what would it be?

    • bemybubble on 21/05/2016 - 07:49
      +1

      For basic accounting to be honest the ATO have really done well in their material. YouTube videos and information has become very easy to read. That would be my starting point

      Best financial advice to children is the same I give my adults. Create wealth. Ask yourself why you get up in the morning to work and what for.

      • OkayFray on 21/05/2016 - 09:52

        Thanks!

  • 00 on 21/05/2016 - 03:58

    Do you think the International Financial Reporting Standards encourage wastage? That a company is financially better off investing in new equipment than maintaining existing.
    Do the rules also encourage a transient workforce, employing temporary contract workers, rather than investing in long term salary employees.

    • bemybubble on 21/05/2016 - 07:52

      Not sure how the IFS encourages purchasing of new equipment but I do cringe when clients outlay big money on capital…

      At the moment ATO are cracking down on contractors who are really employees. It used to be that they would let it slide providing employers paid all obligations as if they were actually employees I.e work cver and super. But now they are being forced to switch to salary and wage. But I wouldn't say that's as a result of IFS rules…

  • GLO on 21/05/2016 - 04:40
    +1

    Hi Bemybubble,

    I have a registered business for the last 18 years and the last 10 have virtually been dormant.

    I keep it in case my wife wants to start something up like a small business.

    My transactions are less than 5 per year and the general ledger would be less than half a Page.

    Is it still worth having an accountant prepare and submit my company return?

    The company has an accumulated loss which could be used to offset any profits if we actively start operating again.

    Keen to hear your thoughts?

    • bemybubble on 21/05/2016 - 07:55

      Good question and I'm pretty sure you have to use a tax agent to lodge any company trust or superfund return. I'd be questioning if the losses are worth it? You're already paying your $256 in asic fees plus accounting fees each year.

      Personally I'm a believer that once a business ceases you bury it and move one. Stops potential future litigation from skeletons you may not know you have..

      • Janko on 22/05/2016 - 12:47
        +1

        Tax agents aren't indeed required for company tax returns.

        I'd suggest that it's beneficial for small companies, startups etc become empowered to do their own accounting and tax returns so they make good decisions day to day and keep a good pulse on their company, as they would unlikely be able to afford regular consulting with the accountant during the year.

  • Mysterious on 21/05/2016 - 06:16

    I study IT but might want to do some basic payroll, bookkeeping work outside of uni. Plan on finishing a total of 4 to 8 accounting electives. Do you think I stand a chance?

    • bemybubble on 21/05/2016 - 07:55

      Heaps of work in the bookkeeping realm so yes I do!

  • adamvlad on 21/05/2016 - 08:01

    First of all, it's nice to meet you!
    I have a question regarding deductions for a work conference. I am self employed and want to attend a conference which is essential to my work. If I only attend the conference and the accommodation on site for the duration of the conference is it 100% deductable?
    What then happens if I add a 3 day holiday to the end of the conference?
    Many thanks in advance!!

    • bemybubble on 21/05/2016 - 08:09
      +1

      Sorry once again I can't comment on personal circumstances so I will share my own example.

      I had a 5 day accounting conference and I spent 7 days in the location with my wife. I pro-rated accom costs and flights for anything business related and excluding my wife's portion and only claimed food for the days I was there at the conference

      https://www.ato.gov.au/Business/Income-and-deductions-for-bu…

  • coastcoast1 on 21/05/2016 - 08:48

    Hi, thanks for your time.
    Just wondering how much tax foreign residents pay on australian dividends and capital gains made on shares?

  • adamvlad on 21/05/2016 - 08:50

    Thanks bemybubble. I've just had a quick look at the ATO's Table and it looks as though I can claim a lot more than I thought. Many thanks.

    • bemybubble on 21/05/2016 - 09:50

      Always the case and glad I could help

      ATO website has become more user friendly so don't be afraid to use it

  • treeman on 21/05/2016 - 08:54

    Bit of a different one:

    Any truth to the accountants are boozers/drug addicts stereotype that goes around?

    • bemybubble on 21/05/2016 - 09:03
      +1

      Ha. until recently I would have said no. But have seen some funny stuff as of late at events

  • Bargain Master on 21/05/2016 - 09:47

    Hi bemybubble, any suggestions on how to avoid or minimise capital gains tax on selling an investment property?

    • bemybubble on 21/05/2016 - 09:50

      Not really. At the end of the day you've made money, so they want a piece of the action. Remembering if you hold the asset longer than 12 months you get a 50% discount on the assessable gain

      • Bargain Master on 21/05/2016 - 09:51

        Thanks any suggestions on deductions that could be claimed to reduced the possible 'capital gain'

        • bemybubble on 21/05/2016 - 09:57
          +1

          Sure

          All costs associated with the purchase or sale that are capital costs. I.e. Brokerage. Agents fees. Conveyancing to name a few

          Remembering depending of the age of a property that any depreciation claimed has to be factored into the equation. The ATO have a very good guide for CGT with more examples and it's very user friendly

          https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/P…

    • macfanboy on 21/05/2016 - 09:56
      +1

      Try and account for all of the associated costs with purchasing the property

      https://www.ato.gov.au/printfriendly.aspx?url=/Individuals/I…

      This will 'increase' the cost base and therefore reduce the capital gain.

      • bemybubble on 21/05/2016 - 09:59

        Also a friendly guide for CGT and real estate

  • fatlikeyamum on 21/05/2016 - 11:07

    Hi and thanks for your thread. My question is, is there any reason you would not recommend students to study accounting? It may be hard for you to answer as your in a small practice, but do you think there is any over supply of graduates? Do you have any tips for accounting students to get their career on track faster? I am mid 20s and have completed an apprenticeship and over the tradie life, looking to get off the tools, I have been studying a bach of business (accounting) for about a year now part time, correspondence. Even though it will be a big pay cut originally I am going to look to land any trainee/cadet roles in a public practice starting next year.

    • bemybubble on 21/05/2016 - 14:42

      Funny. When I started doing tradies tax returns I thought to myself I picked the wrong profession!

      I would always recommend my line of work to those who have a passion for it. There are always opportunities and now a days information is so easy to share that you can pretty much open the doors to anyone.

      If you want to fast track your career now a days employers are looking for those who are competent with latest developments. Which usually mean accounting and financial planning at a minimum.

      My advice to you is do what ever is going to give you the most satisfaction in life, the money will take care of itself

  • Diesmile on 21/05/2016 - 12:15

    hi, i work in 2 places on regular basis, however my original contract was only for 1 place. every second day, i transfer stocks for business from 1 place, bring them home and then the second place next day.

    am i able to deduct any of the travel for tax? thanks.

    edit: question 2, if i got called into work if someone is sick or on leave, am i able to claim any travel for tax? thanks. does that also apply to early start than usual? ie normal hour starts at 12, then boss called to start at 10 please. etc

    • bemybubble on 21/05/2016 - 14:39

      Sorry mate as described I cannot comment on personal circumstance. What I can say is this:

      Travel is not deductible to and from work, unless:

      You have bulky equipment and have no where to store them at work and you're forced to take them home

      You're an itinerant worker with no fixed job site. I.e a builder goes to a different job site every day

      You have more than one work 'base'. I.e. If I worked for NAB in Melbourne city. Travel to and from there isn't deductible. However if I also was called out to work for NAB in the eastern suburbs. Travel to and from there WOULD be claimable as it is not your normal place of business. Further more travel between both those job sites are also deductible.

      Hope the above distinction helps.

  • slosh on 21/05/2016 - 12:27

    Hi, I'm currently studying a bachelor of commerce with a major in accounting. I'm in my second year and looking to move into a double degree with IT. I'll still major in accounting but I've always liked IT and computers etc. I initially chose accounting as I've always been good with numbers and maths, however I feel I don't want to be forced into something if I don't like it. I feel that adding an IT degree opens so many doors for me If I decide to change careers or venture into something different. What are your thoughts? Do you think this is a good idea?

    • bemybubble on 21/05/2016 - 14:35

      I think you do what you enjoy and let it take you there. Accounting is very much trending to the cloud at a rapid rate. Believe me there will be opportunities with your skills

  • oztite on 21/05/2016 - 12:46

    Hi thank you for the AMA. Could you briefly explain the potential career paths for someone doing accounting? From the least successful (? jobless) to most successful (? partner in big firm/ running own business) and the average salary one would expect from each path?

    • bemybubble on 21/05/2016 - 14:33

      Sure. There's public accounting. Auditing for the big four. Superannuation has its own areas in mid tier and some small firms.

      Accountants in retail groups do very well. Quite a few of my alumni went on to working for just group or cotton on for example

  • oztite on 21/05/2016 - 12:54

    With your financial background and knowledge, would you say borrowing to your maximal capacity and buy the most expensive home you can afford to live in is a sound investment advice? With no capital gain tax and the way the market has been going for the last 50 years, it seems to be, by far, the best way to accumulate wealth (mostly due to the zero tax) up until 2016 at least. Quite a few of my bosses who are in the top income bracket do this (they actually avoid negative gearing because of capital gain tax even with the current discount) although I am not so sure myself… interested to hear your opinion on this.

    • bemybubble on 21/05/2016 - 14:32

      To answer you question no I don't believe so.

      People should borrow to the extent they can afford and that's all. I know quite a few people who purchase property. Make it their primary residence, sell and move on to the next, make it their primary residence and so on. Quite a simple and effective strategy but to be honest if I had capacity to do more I wouldn't be holding back on buying more investments and paying the CGT.

      Buying isn't about getting the most expensive property. It's about knowing the area and finding growth spots. In my experience property tends to work on diminishing returns. I.e. My brother and I both bought property at the same time. His was 600k mine was 350k. In 2 years mine was revalued to 420k. His was 650k. Why? Because you get to a certain level on certain areas where they 'peak' or slow down in growth.

  • bargdebarg on 21/05/2016 - 13:01

    I'm an office worker. How do I pay less tax?

    • bemybubble on 21/05/2016 - 14:23

      The key to minimising tax is to create wealth.

      • bargdebarg on 21/05/2016 - 14:55

        Ok. Do tell?
        I claim as many tax deductibles as possible (usually only donations, $300 of other stuff, portion of internet and phone costs etc)

        • bemybubble on 21/05/2016 - 15:01

          creating wealth. Utilising the negative gearing available to reduce tax and in turn grow.

          Whether you are for or against negative gearing it's the key to minimising tax in my view.

          Find an asset your comfortable with and seek professional advice on how it will reduce your tax

        • bargdebarg on 21/05/2016 - 15:43

          @bemybubble: even before our home loan is paid?

        • bemybubble on 21/05/2016 - 15:49

          @bargdebarg

          Sorry buddy I can't comment on your personal circumstances.

  • Qlander on 21/05/2016 - 13:30

    I am interested in knowing if I can use the super annuation balance plus some savings to buy a property to rent it? If so, does future super contributions from employer go towards mortgage along with the rental income? I dont own any property but it is hard to buy a owner occupied first property with my savings.

    • bemybubble on 21/05/2016 - 14:25

      If you wish to buy a property you will need a SMSF. if you don't have enough you can 'top up' through members concessional or non concessional contributions (which is harder now post budget) or you can borrow the difference inside the fund.

      Once you setup your own fund you can direct your employer to contribute your super into their instead of your current fund

  • BargainisLife on 21/05/2016 - 13:53

    Do you have any advice for someone who will soon be graduating with a Commerce degree that majors Accounting and Finance?

    • bemybubble on 21/05/2016 - 14:23

      For sure. If you can add financial planning into the mix. All compliments each other. Then network. All about networking. Lecturers to tutors to those who come to your uni to just family and friends. You have to network and align yourself with what speaks true to you. The rest will take care of itself

      • Doggiie on 21/05/2016 - 18:16
        +1

        Can agree with this. Networking is everything in Commerce, otherwise you're in the dirt side of the world unfortunately. Get out there and make some friends!

  • No ONE on 21/05/2016 - 15:21

    Hi Bemybubble,
    Thanks for AMA. I just had one question that keeps bothering me and it's regarding trust.

    I know about asset protection part, but I don't get to understand how it is used to income split. If a person is a high wage earner how is going to work with trust?

    • bemybubble on 21/05/2016 - 15:51
      +1

      I see your confusion

      Income earned by a salary and wage earner is income fixed to that individual. Income has to be earned inside the trust to income split. I.e. Business income. Rent. Interest. Just to name a few. Hope this explains it for you

      • No ONE on 21/05/2016 - 16:01

        Thanks, that did cleared up some cloud. But does business has to be registered in trust or it can be stablished as seperate entity and trasfer incomes across the business into trust.

        • bemybubble on 21/05/2016 - 17:31
          +1

          Any income earning activity would need to occur inside the trust.

        • No ONE on 22/05/2016 - 01:01

          @bemybubble: Thanks, just the answer I was looking for. :D

  • ChatCPT on 21/05/2016 - 15:59

    How much do you earn? (remember you said AMA :P)

    • bemybubble on 21/05/2016 - 16:01

      Enough to provide for my family and a little bit more.

      • ChatCPT on 21/05/2016 - 16:01

        haha good work

        • No ONE on 21/05/2016 - 16:05
          +1

          Now are you going to ask op how many people are in the family member :D

        • ChatCPT on 21/05/2016 - 16:21

          @Oz Bargain 3: Good point Oz B… family of one quite easy to provide for

  • Elnato on 21/05/2016 - 16:11

    Why did you become an accountant? Would you suggest that job/work area to others?

    • bemybubble on 21/05/2016 - 17:26

      I became one because I enjoyed it at school. Family were accountants so for me it made sense. Would definitely suggest it for other for sure

  • slothhead on 21/05/2016 - 17:19

    Today I splurged on a new briefcase - $950. What is the ATO's view of its effective life for the purposes of depreciation? I replace my briefcases every 2 years on average, but haven't bothered to claim deductions before. Thank you!

    • bemybubble on 21/05/2016 - 17:24

      Under $1000 you can use the low value pool. 18.75% first year and 37.50% for every year after that. But if the effective life is 2 years due to wear and tear you can write it off over 2 years but would need to justify how it wears out to the point you can't use it again

      • Findmebargain on 21/05/2016 - 17:51

        If the briefcase is a business deduction say by a sole trader for use in the course of small business, I imagine the instant write-off rule applies (under $20k if purchased since 12/5/15 and before 30/6/17)?

        • bemybubble on 21/05/2016 - 18:30

          Correct. If they use the small business simplified rules and meet eligibility criteria

  • [Deactivated] on 21/05/2016 - 17:53

    Hi,

    Q1 How much would the average accounting practice hold in the office as cash ? you know, like in a safe or something.

    Q2 If someone wires you a ton of money into your accountancy bank account can you convert that into physical cash and they can collect from you, like an anonymiser service ?

    Totes just curious.

    • bemybubble on 21/05/2016 - 18:33

      Q1. Maybe $100 tops

      Q2. I'm sure they prob could. But we dont

    • bluedufflecoat on 21/05/2016 - 19:35

      Q2 sounds like money laundering?

    • Elnato on 21/05/2016 - 21:42

      Usually most businesses have "petty cash" which is 100-200 to pay for miscellaneous expenses like office supplies etc

  • leighjames on 21/05/2016 - 18:05

    Rental house is positive geared and their is little expenses each year on it, what can I do tax wise to reduce the pain?

    • bemybubble on 21/05/2016 - 18:34

      Could get a quantity surveyors report done. Money for jam

    • CheapskateQueen on 21/05/2016 - 22:14
      +1

      Realize that you're making a profit and be happy

  • Doggiie on 21/05/2016 - 18:14

    Do you claim the $300 in "Other work related expense" for all your clients even though they haven't made the expense?

    Are you on the side of the law or the side of your client?

    • bemybubble on 21/05/2016 - 18:30

      Yes if there are no other claims I do 300. I'm on the side that maximises the clients position whilst it protects the client from the law

      • WillKillfor5Cents on 22/05/2016 - 13:14

        does this strategy applies to PAYG serfs? Or only if you own an ABN?

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