Tax Accounting Glossary
Big business 'can do more' for flood recovery

Go to fullsize imagePrime Minister Julia Gillard says more help is needed from the corporate sector to rebuild flooded parts of Queensland.

She is in Brisbane for a meeting of the business taskforce she set up, which includes industry and farm lobby groups, major companies, and state and federal political leaders.

Breakeven Point

Go to fullsize imageThis is the level of sales or gross income that your business must achieve before it can even start to make a
profit. It can be calculated over any time period preferably monthly, weekly or daily. Assuming you are
measuring the monthly breakeven point of your business you will need to know your fixed monthly
overheads. These are the expenses that would be the same whether you opened the doors to trade or not.

Jargon Buster – What are exit fees?

Go to fullsize imageBy Gary Bieser
There has been a bit of coverage on exit fees in the media lately, but most people don’t really know what they are. If you are one of those people then this is the post for you….

Most people wouldn’t know that there are a few different types of exit fees and they can vary depending on whether you have a fixed or a variable rate loan.  Let me explain this in a bit more detail…

business -Valuation methods

Go to fullsize imageThe valuation of a business is usually based on a number of established valuation methods built around the market-based, income-based and asset-based approaches.

These methods include:

  • comparable transactions
  • comparable trading
  • capitalisation of earnings
  • discounted cash flow, and
  • calculation of net assets on a going-concern basis.

Stock Turnover

Go to fullsize imageThis is a very easy ratio simply divide the total cost of the goods you have sold for the year (or period) by
your closing stock or average stock on hand, at cost. This will give you the amount of times your stock turns
over during the year or period. If you divide 365 by the amount of times your stock turns over per year it will
tell you how many days it takes for your stock to turn over. For those businesses with a large amount of
capital tied up in stock this is a crucial indicator.

What is an eligible asset?

Go to fullsize imageTo be eligible for the tax break, the asset must be a tangible 'depreciating asset' for which a capital allowance deduction is available under section 40-25 of the ITAA 1997.

There are several exceptions to this rule – that is, assets which are made eligible for the tax break that would otherwise be excluded (meeting all other eligibility requirements):

  • Assets for which a small business entity claims capital allowance deductions under Subdivision 328-D of the ITAA 1997 may be eligible assets.
  • Tangible depreciating assets that receive deductions under the research and development provisions may also be eligible for the tax break.

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