Entrepreneurs and their employees will see a bit more in their pay packets this week as the third tranche of the Rudd Government’s tax cuts kick in from July 1.
Under the new tax rates that come into effect from tomorrow, the 30% tax threshold will increase from $35,000 to $37,000, and the marginal tax rate for those earning $80,000 to $180,000 falling from 38% to 37%.
The low-income tax offset (LITO) will also increase to $1,500 from $1,350, effectively lifting the tax-free threshold to $16,000.
The impact on your weekly salary will of course depend on how much you earn, but using a benchmark salary of $100,000 for an up-and-coming entrepreneur, the weekly saving is $9.62 a week, or just over $500 a year.
It’s not exactly a lot of money, but here at SmartCompany we have found 10 practical and creative ways for an entrepreneur to get the best value for their extra money.
1. Expand your reading list
Entrepreneurs are like sponges – they love soaking up ideas. With this in mind, consider taking out a subscription to a new publication that can give you a global perspective, such as The Economist or Harvard Business Review. Alternatively, consider buying a new business book every month. Even if you only get one good idea, it’s money well spent.
2. Upgrade your mobile phone
Having the latest smartphone is not just an indulgence, it’s a necessity for the savvy entrepreneur. If your phone is looking a little old, or doesn’t have a sufficient data plan, spend your extra $40 a month on an upgrade. But don’t move too soon – the new iPhone is just around the corner.
3. Take a course
SmartCompany blogger and Churchill Club founder Brendan Lewis likes to take a different course every year – he’s learnt about everything from welding to sausage making. Not only does it give him a new skill, but it helps him to approach problems in a different way. It’s a brilliant self-development idea.
4. Take a different contact for coffee every week
If you feel you’re getting stuck behind that desk, make a commitment to use you tax cut to take a different contact – it might be a colleague, someone you met at an event, a mentor or even a competitor – out for coffee every week.
5. Improve your health
A monthly massage, a contribution towards a gym membership or an annual trip to a health spa are all great ways to use your tax cut. You’ll feel fitter, fresher and more energetic – and ready to win more business.
6. Attend a conference
Many businesses have cut back on attending conferences and events in the last few years, but this tax cut might provide that extra bit of cash required to get back out there again. Conferences are great opportunities to hear about the latest thinking in your industry, learn from other successful companies and, of course, network.
7. Give it away
If you’ve been thinking about becoming more philanthropic, the new tax cut could be the spur you need. For example, according to World Vision’s website you can sponsor a child in a developing country from $43 a month – this would be a great thing to get the whole office involved in.
8. Give your staff a little treat
We know many entrepreneurs think of their staff first, so why not consider using the tax cut to give your staff a little treat. If you’ve got a small team, a few bags of lollies on a Friday afternoon goes a long way; if you’ve got a larger team, why not start a monthly prize (movie tickets or a gift voucher) to the staff member who has come up with the best idea that month.
9. Invest it
Okay, investing $10 a week isn’t going to make you a millionaire overnight, but putting your tax cut into super or some sort of managed fund is a sensible (if slightly boring) long-term idea.
10. Save up for a short break
Why not use your new tax cut to establish a holiday fund. You could take a few short breaks through the year, or perhaps a longer trip to somewhere warm in the middle of the year. Whatever the case, entrepreneur must make time for holidays and this tax cut can help.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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