Monthly Archives: April 2015

Private Health Insurance – Understanding the Rebate

???????????????????????????????????????????????????????????????????????????????If you have Private Health Insurance, then you have no doubt recently received a notice in the mail advising of your new premium from 1st April, 2015 – and in most cases I expect that will be an increased premium!

At the same time the Australian Taxation Office (ATO) have changed to way the Private Health Insurance (PHI) Rebate applies, and the amounts of the rebate.

The ATO advise that “To be eligible for the rebate, you must have a complying health insurance policy and meet other criteria. The rebate amount will depend on your single or family income. You can claim the rebate as either a premium reduction or a refundable tax offset. From 1 April 2014, the rebate percentage is adjusted by a rebate adjustment factor.”

Essentially, there are a number of factors which will impact on your ability to claim the PHI Rebate, namely the type of cover you have, when you started this cover and your income level.

But the key here is the new rebates as adjusted by the rebate adjustment factor.  You can use the table here to look up your income level and the relevant rebate for the period 1st July, 2014 – 31st March, 2015 and 1st April, 2015 – 30th June, 2015.

There’s no need to contact your Private Health Insurer to make a change to the rebate percentage, unless you have determined that you may fall into a different income threshold.



Budgets – the round up!

??????????????????????????????????????????????????????????????????????????????????Over the past couple of weeks we’ve been looking at budgets:

– budgets for start up enterprises (part 1 and part 2)

– the profitability budget, and

– the cash flow budget

The information provided in these posts is not intended to be exhaustive, this is merely a chance for me to let you know about some of the areas I’ve come across where others have had a few troubles, and which I would love for you all to consider…

Having said that, there’s one more issue I’d like to raise with you – and that is a reminder that budgets aren’t just for business, they can be for individuals and households too!

Anyone who is savvy with a spread sheet can prepare a budget, but there are also some pretty amazing (and cost effective) software tools available for assisting with this process as well as recording your actual results and in some cases allowing for electronic filing of documents!

If you’re unsure where to start, The Tax Chic can help!



The cash flow budget

????????????????????????????????????????????????????????????????????????????????????????????????????????The final budget we are going to look at in this series is the cash flow budget.

Quite often the outcome of the cash flow budget and the profitability budget are confused – while most people are able to recognise that they are different reports, there is difficulty in determining why.

The cash flow budget is a schedule of the anticipated inflows and outflows of cash – the main thing that sets it apart from the profitability budget is remembering that there are many inflows and outflows of cash that do not affect your profitability!

Some of the common inflows of cash which are not profit items include:

  • owner contributions
  • proceeds of loans
  • proceeds on sale of plant and equipment or capital items*

Some of the common outflows of cash which are not profit items include:

  • loan repayments**
  • finance repayments**
  • owner drawings

The other item that has a significant impact on cash flow, but does not relate to profit, is the GST (Goods and Services Tax).

Any business registered for GST will have inflows being the sale amount plus GST and outflows being the expense amount plus GST – the GST does not form part of the profit and loss statement, but the BAS (Business Activity Statement) payment or refund should be accounted for in your cash flow budget.

I hope this helps to clarify the difference…



* Part of these proceeds may constitute profit on sale, but it is unlikely the whole amount will be a profit item

** Part of these outflows may relate to interest which may affect profit, but it is unlikely the whole amount is a profit item

The profitability budget

dollar signThe profitability budget is used to forecast the financial results of an enterprise for a specified period of time.

Most businesses will start with a 12 month or financial year profitability budget – but these can be broken into smaller instalments or parts of the year such as six monthly, quarterly or monthly.

The profitability budget focusses on the overall revenues and expenses of an enterprise, including the items that contribute to the overall profit or loss which may not be cash items (such as depreciation).

One of the greatest challenges when preparing a profitability budget (particularly for a start up enterprise), is where to start!!  I recommend looking at similar businesses, the figures of the previous owner, benchmarks from the Australian Taxation Office (ATO), and good old manual thought processes!

Hopefully you will be well researched in your chosen business by the time you get to preparing your profitability budget, particularly for the following items:

  • sales – think about the goods or services sold, the customer or client base, prices and volume – and you’ll have a good basis to start
  • cost of goods sold – if you are selling product, use your research and apply the costs to the sales figures you have determined
  • wages – your staff requirements will also depend on the type of business you are operating, but wage rates can be determined via Fair Work – don’t forget to include superannuation and workcover…and some remuneration for yourself!

I hope this helps with your budgeting processes, good luck!