Architecting Wealth: Joy Ford Starts With Tax

Tom Carr: Welcome everybody. We've got another episode of the property web and lots to get into. So really looking forward to this one. It's a time to talk a little bit more about tax, which I know is not always the topic that people want to touch on, but I think we can learn a lot from it. Today we've got someone amazing. We've got Joy Ford who runs her own business beyond taxation. And I'm really excited to sort of get into this and figure out what people may need to be thinking about or doing next. So Joy, welcome. Thank you. Thank you, Tom, for the opportunity to share my story and my business. Absolutely. Yeah. And yeah, I think I always like to touch on the personal because it's not just about, you know, the nuts and bolts of what you do. There's also a story behind that and kind of the reasons why you're doing it as well. So why don't you tell us what, what, why don't we start from the beginning of your Australia trip? Because I'm also from not from Australia and so I do resonate with people who come here. What was it that led you here to Australia? That was probably about 25 years ago. So I came to Australia, came to study, then I fell in love with this country. I like the fresh air, the blue sky, the oceans. I grew up in the seaside. ⁓ So I love the ocean, love Australia. And particularly, I like the smile on people's face. People can be a stranger, say hello to each other on the road. Probably not nowadays, but used to be 25 years ago. Simple pleasures. Simple pleasures. So it's just so friendly, so welcome, and so welcoming country. And I do like the respect each other, for people respect each other and respect each other's. Privacy. Okay, so you came over as a student. That was the big appeal. Yeah, initially. Yeah. And what so what did you what did you study back then? I can't. Okay. Yes. And so what what was the dream at that point? What were you planning to do? Like, did you imagine you'd start up your own business? Or was that was that always on the cards? No, in the beginning, right? When you finish a study, you want to find a job. And you know, you want to find a job, you want to stand a foot in this country. So that was ⁓ for a few years, not for a few years until one day kids came along. ⁓ That's become impossible to work for someone else, get up early morning, come back home late. ⁓ Then I thought, hmm, maybe I should start my own business. ⁓ And that's how I started. ⁓ Nearly 10 years now. I quite enjoy that ⁓ work-life balance. I do work on Saturdays sometimes, but I do have that privilege. If I need to go to ⁓ schools, some ceremony or assembly, I can be there. If kids are sick, I can bring them to see the doctors. You get to decide. Yeah, I get to decide when I work, how I work, who I work. I think that's the main point for enjoy doing business as a business owner myself. Yeah. And you get to give back as well. I remember when we first met, we talked about what we do for our schools, our local schools. And I'm on the PNC of my school and you play your part as well. think being an accountant, you get the treasure. They say you have to be the treasurer. You have to look after our book. yes, I'm in a PNC of my kid's school. And I remember last time both of us cannot go to one of the meetup group because both of us have to go to the PNC meeting. it does come with commitments. Yeah, it is. But it's incredibly rewarding when you see your kids go through the school and you get to actually contribute back through fundraising or getting policies in place. And, you know, so. Yeah, it's a quite interesting journey. You get to know, ⁓ especially in kids in high school. Not so much in primary school, know, know, constantly contact with teacher, but in high school, kids tend to be on their own and not much communication in terms of ⁓ in terms of teacher and us as parents. So we do go to the school maybe once a year to meet a teacher, get five, 10 minutes out of it and running around. for the 10th subject. So not much opportunity, but by joining that school, the PNC group, we get to know how the school run the classes. then especially we got an interesting topic the other day, talking about the wellbeing, talking about the school using, how the school using AI, have a different, know, login software, know, kind of encourage. kids to use it, but also in a restrictive way, because we cannot stop that, you know, the wave of AI, but we just need to adopt it and how to guide the kids go through that process. So I think it's very rewarding role in the PNC. Yeah, absolutely. And trying to use AI in our business, I'm sure I am, and I'm sure you are. I guess the kids are doing it too. Everyone's doing it right. Yeah. So why don't you tell us a little bit more about You how the business, well, you've told us how it started, but who are you actually trying to sort of help? Who are your key customers and what sort of stage are they at when they come to you? ⁓ The idea which we, our customer is small to medium sized business because those are business owner. They do not have a resource, maybe have full resource to have a finance team. to do the things, to do the cash control, to do the planning they needed. So this is the space we can step in as a content step in to help them to do a cash flow, to do a proper planning, to help their business grow. So that's one side of our business and we like to help those small to medium sized business. The other area which I found is many professionals. especially medical professionals, doctors, dentists, they are very busy making money, but they have no time for their tax. When I see the doctor or dentist come to us, I usually find a few years tax return outstanding and I pay lots of tax and sometimes I tell them, I wish you could come to see me a bit earlier. We can do a little bit planning. I just hate you sending 50,000 to tax department. If you've a two or three years and then you've got a GST, that's a couple of hundred thousands of tax fee you need to pay to the tax department. are the mistakes that people are making? I mean, bring that to life a little bit more. What is if someone's a doctor, they've got two years tax returns they haven't paid. What are the, is that the mistake or is there other things that are sort of building up? It's kind of, there's no, they don't have a time to manage it and they keep it delayed it. So that's one mistake, they're not managing the tax obligation, large amount obligation. Because of that light large amount, there's any planning, any structured advice, any planning advice is going to be too light, right? Because every financial year, we usually run year-end financial planning, tax planning to maximize the tax, maximize the money, keep it on hand and minimize tax. That's what we normally do. But by not doing my not-launchment tax, by not talking to accountant regularly, I'm missing a point. I'm missing a planning point. And that's the time, sometimes very time sensitive, such as the super contributions. Because you can't really go back. No, you can't. And just do something that, yeah, it's all forward looking in terms of you implement. Yeah, definitely. Definitely. There's a deadline you need to meet. If you want to claim tax deduction for certain things, especially super. So if you miss that opportunity, even you may have some money sitting in your bank account, so you just missed the opportunity. ⁓ And then that's everything too late. Then you end up a penalty, potential interest catch up, you know, and it's combined impact on you. And then next year you're going to have a very, very big installment. So cash flow is also a problem. Even doctors, dentists making lots of money. So you brought up there what happened, you people are making mistakes. They're not coming. They're not thinking about tax. They're not planning it properly. What are some of the things that if people do reach you, what are you doing or what are you suggesting they do to fix that? are the top of the list? If people coming up with the outstanding, we try to catch up as soon as possible, make arrangement, a call the ATO, stop the reminding letter. catch up the lodgement as soon as possible. Then we put a forward plan and say, what are going to do going forward? Can we fix the structure if you're already in a wrong structure, can we fix it? Or what can we do going forward to make it more tax efficient? And how are we going to make the cash flow tax planning more efficient? Sometimes we need use the software, right? Are there any big strategies that people would be putting in place? ⁓ If you've got a, you mentioned a $50,000 tax bill, I know I've got a client with a hundred dollar, a dozen dollar tax bill. What, what, what are the big picture things that they can be thinking about to try and minimize that? Or are there any? Yeah. Yeah. I think the first part is just before it's too late, ⁓ make sure you go to see the accountants can help with a set up a right business structure. Is it going to be a sole trade or structure, a company trust structure or trust structure? Can you run through that structure? Can you use that structure to minimize the tax properly? That's a structure side. part is very important. ⁓ If you get a wrong structure, sometimes you can end up paying a lot of tax. So structures, business structure as it's starting up, on the day you're thinking about ⁓ you want to have your new business, you should. have a structure set up properly. that is the mistake there that people are just starting as sole traders? Yeah. And then they're just they're not seeing where it could go after that? that the common? I usually see people just say, Wow, I need to someone asked me to give them my ABA, you know, or I want to start my own business. That's that's just a search how I register for ABA. They search up ABA, they register, take them half an hour, 20 minutes. Dumb, get an ABM. And they think that's it. But this is more than just ABM, right? ABM is your sole trader business in link to your personal asset, personal tax, tax rate is on your personal. So ⁓ come back to the point is, it's of course the apply for ABM simple. You can deal with it yourself, but is it going to be in most tax effective way? Probably not, right? Before you consult with the tax professional. Yeah, okay. And so then, so the structure is one big mistake. Yeah. And that's, there's multiple ways that they can sort that out with trusts and different business structures and all sorts of incorporation methods. What about another one? Is there another big ticket item that people are making a mistake on or could do differently when it comes to tax? When it comes to the tax, I think people fail to plan. Fail to plan the cash flow, wait until last minute. Cash flow is people's small business quite struggle with the cash flow. Sometimes they put their heads in the sand, try to say, let's not deal with it until the last minute. And then that's another problem. when you cash flow hit your business and in the meantime, you have to deal with the put some money away for the tax department. That can be difficult. when I always recommend ⁓ my business clients say, least you at least need to have a two bank account, one bank account as operating purpose, In and out expenses, but in the meantime, you put some... 20 % or 25 % to cover the GST, to cover that tax. It may not be enough, right? But at least you put some money away. Do a calculation, know, put it away. And then sometime the every quarter end or month end is quicker than you think. Just come around the corner. You got a PYJ reporting monthly, possibly. And then quarterly you got a super, you know, you got a PYJ withholding, you've got a GST. Lots of the bill coming up very, very quick. So the other suggestion is to have that, know, manage that cash flow by separate a couple bank accounts, set it up, put the money away, rather than you see there's a 50 grand, let's spend it because that 50 grand is not yours. Some of them is belong to the tax department. GST is a big part. PYG withholding on the salary is a big part. And so the, mean, some of these things may seem obvious, but I suppose if you, you're seeing people who this is not common, they're, just, their heads in a different place, I suppose. And they're just focused on the business building and they're not just, they're not planning cash. You know, I think they need to have a proper cash planning cash flow. talk to your account and see how much money I need to put it away for my GST, for my tax, and then have that banker come put it away. Try not to touch it. Once you put it away, you put it away. then when the view come, here we go, we have the money. Yeah. I guess there's just a fear about the complexity dealing with the ATO potentially. mean, no one wants to probably call them and go through their website and figure out all the ins and outs. And that's something you would be doing. Yeah, definitely. I think everyone has their specialised area. you ask me any knowledge about some other area we're engineering, I have no idea about. I'm okay with the tax. So I guess business owners especially, you run your business, you are good at what you're doing, but tax is not necessarily your side. At this point, you need to bring in a accountant professional to help you to manage that process and on early engagements. So I'm not sure if this is different or not, but in terms of risk management, is this an area that comes up as well? mean, auditing, I mean, the ATO is getting quite cracking down. ⁓ tools, we mentioned AI earlier, I think they've got a lot of tools themselves. Are they doing different things now to spot when people are doing ⁓ them? ATO always on checking, but used to check large organisations, but now because all the technology available, know, AI, know, matching process, lots of programmes linked together. So they reach out pretty much. all pretty much all the angles, especially rental property space. I initially got a letter the other day say, hey, you didn't, we got a property, I noticed you purchased property, you rented, why? How come you didn't declare rental income? Right? So we look at it through the file, why we didn't declare it because the property settled on a 29 of June. It's not even available for rent. That's why we're not declaring it, but see. how far reach ATO system is, right? So this is just matching our side through the registry, through the office of state revenue, matching that side. The other side which they matching is, or they do average calculation is based on tax return lodged. If there's 50,000 rental property schedule, if average, the people declare or claim the repair maintenance is 2000, but your tax return showing 10 grams, that definitely bring up ⁓ some attentions. And then you get a letter, please explain, right? So that's some ATO definitely getting smarter on this space. And how do you, are you helping people mitigate that in like upfront or are you dealing with people who've got the problem and then you've just got to try and fix it? I always say if you deal with deal reactively deal with things it's too late. You got to be upfront. You got to be to to see if there's some something you can do before you do that. first things we always make sure if we claim something in a tax return, we have a reasonable comfortable we have something to substan that just in case ATO lock the door. That's the first starting point. We try not to be a cowboy, put everything in and see what happens. Maybe we get lucky, right? We don't do that. We just make sure we are comfortable what we claim. The other part is if we see we have the ⁓ insurance, something called accounting insurance in price, right? In our practice. So ⁓ it's not compulsory for everyone to have that insurance cover, right? So that insurance pretty much cover the professional fee for such as accountants fees, such as a tax lawyers fee in case ATOs audit, right? But that cover can be any time after you take the cover, can be any time. ATO could be auditing 24 tax return. We are in 26 financial year, right? Could be auditing there. So as long as you covered, right? Take up the cover. and the ATO asking questions, you are covered. So if we spot, ⁓ if we feel some property, some taxpayer have ⁓ higher risk, we always encourage them. We tell them what's the risk. We make sure they take the ⁓ insurance cover before we click the button. And that literally for one of the case have seven rental properties. Seven of them, seven rental properties. We said, we think there's a risk, right? And I said, make sure you take up the cover. He said, okay, Joy, I listen to you. So he took the cover because half a year, halfway. sort of cover are you talking about? It's called accountancy cover. Accounting, accountancy insurance cover. It's kind of cover. You talk to your accountant and make sure you, you know, your accountant have this kind of a policy in place, right? Not every accountant offer this kind of insurance cover, but we do. And that's for individual clients can take this out or individual and in clients individual super farm You know business any clients rental property. So we certainly make sure covered he paid $70 in my memory and how much is the bill light on come to it's a 10 grams because the seven rental property we go through every single things provided documents at or ask lots of questions prepare for that process It's very, very tedious process. And we make sure we're not looking back by the ATO say, now we're not happy. Now I give you a penalty. And we don't want a penalty. We always make sure if anything will respond to ATO audit, we make sure we are comfortable. We're going to get a positive feedback or positive result. That's what we are aiming for. OK, but they had the insurance in case. in this case, he doesn't need to pay me. or pay tax lawyer 10 grams. he's quite happy, right? Very happy. And I think that's quite important. If there's a risk, make sure you cover that. And that's quite expensive when it's come to ATO audit. Yeah, yeah, okay. Definitely, I've something new there. That's good. So what about property investing? I know, you know, that's my world, property and tax is a big part of... of that world, know, investors are looking to offset and take advantages of that. What are you seeing there? Did you see investors come? I this must be a big part of the advice that you give them. What are some of the things there that people are looking to try and do when it comes to tax when they're investing in property? Yeah, I always get a phone call say, Joy, I'm going to buy a property. Where do I buy? The first question I asked them, where do you want to buy? Then they will say, I want to buy under my name. I heard someone tell me buy in a trust. I heard there's a news saying you buy it in a super farm. And some people have no idea what it is. But if some people have already, some client already have done some background search, we will explain a bit more. What will be your current situation? How many property you already have? What is your income? What is your taxable income? How much do you make? If we buy in your personal name, what will be the tax impact, right? Do you run your business at a high risk? Do we need to protect, shield that property away from that risk, business risk? So we talk quite a bit of things. also, sometimes more than the tax from the tax department, it's from offices, the revenue. You you've got to lend tax as well, right? So we explore all these different options, look through the backgrounds, you know, what is the income look like, what is the risk look like, and what is the cash flow? Cash flow is very important as well. And sometimes people even make quite good money, but they already have large borrowing under their personal name. They can't really borrow. And like you are mortgage broker, so you know that it's already max out, so you can't really borrow. So we may explore the other option, which is a self-managed superfund, right? Self-managed superfund has some money sitting there, right? Is it possible using superfunds money? What is the tax impact? What is the, you know, in and out in that superfund holding a property? So that's all the strategy we consider. separate part of your business really it's the whole SMSF mechanics. one way to explain it isn't it because you, am I right, you would actually set up the fund and... Yeah we are financial planner in that space so we have that ability to give people the advice to say ⁓ what need to be thinking about if you have a self-managed super fund, what be the cost involved, what be the downside, what be the plus side. You know, when you sell this property, when you're in retirement phase, what would be the benefit out of that? We give them a comparison of the numbers in terms of tax. We tell them what's going on. Sometimes not everyone's super fun buying properties, not for everyone. We also need to look at the risk. people come to you when they've got very small balances? What can we do here? I mean, I presume you need... people to have sort of built up a reasonable number there. Yeah, definitely. Because there's ongoing costs as well. Yeah, definitely. I got someone saying, Joy, I have 10 grand in the silver fund. Can I set up a super fund I want to buy cryptocurrency? I said no. No, this is not my word to recommend you set up a silver fund. You know, this is too much risk. then, you know, it's not something you should be looking at. right for you to set up a super fund to do that. Yeah. So if it come to us, we make sure we do a full background checking, ⁓ reasoning why they should or shouldn't. And then we go from there to sector, they the plans, you know, should we go ahead or should not? Yeah. Okay. So maybe this is a good time to just bring some of this to life because I know you've had some interesting clients along the way. And I'd love to sort of hear one of their stories, one maybe with someone you really helped or someone who kind of had some trouble. What comes to mind? Yeah, I do have one of the clients. think the point is before sometime live event, I call it a live event when you buy property or sell property. This is one of the live events. And if not playing well, if not planning well, it can end up lots of attacks. So we have someone approaching us ⁓ to planning to sell property interesting in the nearby area. So it's kind of a townhouse. ⁓ So he wanted to sell, ⁓ but he lived overseas. He's an Australian citizen living overseas. So he wanted to sell, he wanted to see what's the tax impact. He said, I'm going to sell next year. I said, great, let's do some calculations. It's a calculation. It's not about, you know, sale proceeds minus cost divided by two, which is you got a discount, then times tax rate. It's not about that simple because the personal rule change in 2012 about the, you know, residency, about the capital gain tax, man, resident, exemption, everything else. So we did a ⁓ very good checking calculation. Then we say, have this much tax bill. Right? It's over, if I remember, it's probably about over 130 or 140,000 tax bill. It's huge. So we said, what can we do? Then we look at their contribution history, and then we said, okay, you should be able to use the five years, bring forward five years. Back then was 25 grams, Five year, you know, and then. between husband and wife, it's a couple, right? Husband wife, you can put in 150 gram. But we plan it really well. It's not necessarily putting 150 gram. I think we end up putting around 145. We calculate and we also tell them how much tax paid in the super fund, which is 15 % in, right? And then how much you saved, right? 45 % because now resident. So in the end of the day, we're able to save around 80 gram for the couple. They are quite happy. So the planning ahead is very important. I'm glad that they reached me out before they sell the property. Yeah, because I mean, they hadn't, they would been on the hook for a big bill. Yeah. Yeah. Yeah. Okay. Well, that's pretty rewarding as well. Yeah, it is. save people money and a significant amount as well. I think of like I enjoy that part when people say joy, thank you. You saved me so much in tax. ⁓ yes. And it just make me feel nice and keep going. Next day I'm going to office. Yes, I'm saving people's tax legally. That's awesome. And so if you, you know, maybe this last question, but if someone's listening to this thinking, tax is just not for me, I'm sort of a little scared of. of the whole process. It's just alien to me. It's not something I really think about that often. What would you say to them? Is there a of a closing message if you like? I think any big decision, you should talk to your accountant first, right? And in live event decision, talk to your accountant before you do anything. That's the first point. And then I would say set up a business also a live event. Talk to your accountant, see if any business structures we consider rather than simply register your personal name. Is there any business structure? That's a critical moment. The moment you start a business, that should be the key. That should be the key. Talk to your accountant, any structure words I need to consider before I do anything. And then accountant might say, yeah, you should set up a two bank account, you should manage your cash flow. And that's the starting point. Okay, well, it's professionals first good advice and I think I think the challenge is that people just don't know where to go they and then they've ever think that part of it and so they just ignore it Yeah, but it's know, hopefully with things like this we can get ourselves out there and and people actually will know what to do and who to go and speak with so ⁓ Joy, it's been pleasure having you on I really appreciate you being here lots of good little tips there and I think you just reach out because that seems to be the main message. Just have those conversations before you make a big life event like starting a business or something else. So how can people get hold of you? What's the best way to reach you? ⁓ If you are local, we are in Palmata. So literally five minutes walking from Palmata station or Westfield. So that's where we located. If you want to reach out to see before you see us, have a look at our website, which is www.beyondtaxation.com.au. Have browse our website, see what service we offer. We do have quite good clients reviews there. Have a look around. It's always come from you hand out your personal information, financials. You do need a trust accountant. on your side as your partner, as your business partner. So I think that's important. I'll put your email and other details in there the notes and so people can reach you. problem. Listen, thank you. This has been another awesome episode of The Property Web and I really look forward to seeing you next time. So thank you.