The ATO has recently stated that it has “no concerns” with business owners banking their business takings or other sales in private accounts, but that this may become an issue when this income isn’t reported.
Therefore, the ATO notes that a good way to avoid this problem is to establish a separate business
bank account and only deposit sales and other business income into this account, as this can help
with record keeping and monitoring the business’s cash flow.
This is particularly good news for those business owners with personal mortgages who want to use a debt optimisation strategy to pay down their personal, non-deductible debt as soon as possible.
However, beware that this strategy is not for everyone and will need to be set up correctly with a clear understanding of how to optimise its use to be 100% tax-effective!
An offset account attached to your home loan is another way to help reduce the interest but does not pay off your home loan in the same way that a debt optimisation strategy does.
The ATO uses many tools to identify income earned and to check if it matches the income reported, and reminds taxpayers that business income includes all sales, whether they’re cash or electronic (for example, internet sales), and they must all be reported on the business’s tax return (as well as any earnings for services the business provides).
If you would like to know how a debt optimisation strategy works…
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