Many of you have complex structures with assets owned by different vehicles.
At Harris Black, we take a 'total view' approach to wealth creation – utilising our comprehensive selection of services, specifically designed to empower you to create and accumulate wealth.
We help determine your stage in the personal wealth lifecycle and evaluate and help you create a master plan to increase your overall wealth. We will work with you and industry professionals to maximise your financial performance and secure your future. By having regular reviews, follow-ups and informal chats, we will help you execute your plan and achieve financial success.
One of our most valuable tools is determining your total net asset position. We can help you understand your total wealth position and then review year on year to ensure you are heading in the right direction. If you would like to know what you are really worth, contact your Harris Black team member.
Which is better for my business?
You might be asking yourself this question. Our accounting team have put together a MYOB and Xero factsheet to help you decide which one is best for your business.
Online accounting software has evolved so much in recent years. It is easier to use, more automated, less time consuming and easier to share information with your accountant. No matter which you choose between MYOB and Xero, you should be pleasantly surprised.
Click the link below and we will guide you through.
Xero - All You Need To Run Your Business
Why Choose MYOB?
To find out more, contact your Harris Black team member today.
The start of the New Year provides small businesses with the perfect opportunity to improve their credit management and cash flow conversion cycle.
Cash flow was one of the biggest causes of small business failures last year, with around 90 per cent of enterprise insolvencies due to businesses putting their tax debts last to supplement their working capital.
Managing cash flow is more than just good practice for business; it is key to survival. Here are five tips for improving your credit management and cash flow in 2016:
Routinely review your business's credit policy to ensure it remains appropriate for the business's risk profile.
Terms of trade need to be documented and include aspects like prepayments, deposits, guarantees, security and payment terms.
Routinely carry out credit checks for new and existing customers to identify any issues that can influence credit terms and limits.
A business's process for collections should be clearly mapped out, understood and strictly followed by all staff. Businesses who are disciplined in their collections process are more likely to see this kind of behaviour in clients who will follow the same practice after seeing the importance of paying on time.
Good credit management is about safeguarding profitability. Provisions for bad debts should be made in the budgeting process to minimise the risk of impacting on profitability.
If you have any questions regarding this please contact your Harris Black team member.
Employees who cease work with your business may be entitled to an employment termination payment (ETP).
An ETP is a lump sum payment that must be made within 12 months of an employee's termination to receive concessional tax rates. If the payment is made outside the 12 month period, it is included in the employee's assessable income and taxed at marginal rates.
It is the responsibility of employers to work out the tax on the ETP and issue a separate PAYG Payment Summary where an ETP has been made. The ETP Payment Summary must be supplied to the employee within 14 days of making the payment and lodged with their income tax return.
An ETP may include payment in lieu of notice, a gratuity or 'golden handshake', compensation for the loss of a job, unused rostered days off or unused sick leave, or certain payments after the death of an employee.
An ETP is subject to two caps to qualify for the concessional rates of tax: the ETP cap and the whole-of-income cap.
The ETP cap applies to all ETP and has a threshold that is indexed annually. The ETP cap applies only to excluded payments, such as:
- genuine redundancy payments and payments that would have been genuine redundancy had the employee not reached the retirement age;
- early retirement scheme payments invalidity payments;
- compensation payments principally for personal injury, unfair dismissal, harassment or discrimination; and
- payments that do not meet the ETP rules.
The ETP tax rate is dependent on whether the employee is under or over the preservation age. Employees who have reached the preservation age or over are taxed at a maximum rate of 15 per cent plus 2 per cent Medicare levy. Employees under the preservation age are taxed at a maximum rate of 30 per cent plus 2 per cent Medicare levy.
Both employees under or over preservation age may be taxed up to 47 per cent plus 2 per cent Medicare levy, if amounts exceed the ETP cap.
The whole of income cap is a non-indexed cap that applies to some ETPs and works in conjunction with the ETP cap. The cap has $180,000 limit that can only be applied to non-excluded ETPs, which include:
- non-genuine redundancy payments;
- payments for rostered days off;
- payment for unused sick leave; and
With the whole-of-income cap other income received during the year is deducted from the cap before applying the cap to the ETP, and will reduce the component of the ETP subject to concessional tax rates.
If you have any questions about ETP please contact your Harris Black team member.
At first glance, an employer's responsibilities and obligations under superannuation law can seem complex.
However, Australia's superannuation rules are fairly straightforward once employers become accustomed to the rules and concepts.
All employers must choose a default super fund for an employee's Super Guarantee (SG) contributions. A default fund is a fund where employers pay, on an employee's behalf if they haven't nominated a super fund, an employee's super contributions. SG contributions are the minimum amount employers must pay to their employees.
Unless a specific enterprise agreement or award states otherwise, all employers must pay a set rate of SG contributions into each eligible employee's super fund.
For the 2015-16 financial year, the SG rate is 9.5 per cent of an employee's ordinary time earnings. This rate is set to increase gradually over the next few years.
Employers must pay SG at least four times per year by the quarterly due dates into a complying super fund and report this to the ATO.
For superannuation purposes, an employee's income includes regular wages, as well as commissions, shift loadings and some allowances. Overtime payments are excluded from an employee's income.
Some employees may ask their employer to deduct extra super from their pre-tax income, and pay it into their super fund. This activity, known as salary sacrificing, is a popular way for employees to boost their retirement income while also providing taxation benefits.
Employers must notify the ATO of all such payments in the PAYG Payment Summary.
Australia's superannuation laws and regulations are often changing and employers need to stay up to date with any new rules and obligations introduced. Luckily, most default funds send members regular updates on changes to employer responsibilities and procedures.
Business owners preparing for the sale of their business can take advantage of the "going concern" exemption which allows a business to be sold GST-free.
The supply of a going concern requires the seller to provide all things necessary for the continued trading of the enterprise in the foreseeable future. Once a business is considered to be a going concern, the sale of the business becomes exempt from GST.
The reason a buyer of a going concern business would apply for the exemption is to avoid paying additional funds to cover the GST involved in the sale, therefore paying less up front for the purchase. Applying the going concern will also reduce the stamp duty payable on the sale.
However, the seller faces an increased risk if the ATO does not view the sale to be a supply of a going concern for GST purposes. To prevent this some sellers may choose to include a clause in the sale contract, which requires the buyer to compensate the seller for any GST payable if the ATO does not allow the exemption.
The "going concern" exemption is applicable to businesses where the following requirements are met:
- the previous business owner supplies everything required for the continued operation of the business;
- the previous owner continues managing the business until the day of the new owner taking over supply;
- the purchaser is registered or required to be registered for GST;
- payment is made for the sale; and
- the buyer and seller agree before the sale, in writing, that the sale is of a going concern.
If you would like to know more about Selling Your Business GST-Free, please contact your Harris Black team member.
Employers registered for GST may be able to claim GST credits for payments they make to reimburse employees or partners for work-related expenses.
Individuals who run a business are entitled to a GST credit for an employee-reimbursed expense if:
- the employee expense is directly related to their activities as an employee, or the reimbursement is an 'expense payment benefit';
- the sale of the item bought by the employee was taxable; and
- the employee is not directly entitled to a GST credit for the expense.
The ATO states that businesses can claim GST credits when they can provide relevant documents, such as receipts or tax invoices, to substantiate claims for reimbursement. Once this documentation has been provided, businesses can claim a GST credit in their Business Activity Statement.
According to the tax office, an 'expense payment benefit' is made when a business makes a payment to, or reimburses, another person 'in whole or in part, for an amount of money spent by the person as part of their employment.
A business is not entitled to receive GST credits if it has reimbursed non-deductible expenses, expenses relating to input taxed sales that are made through running of the business and exceed the special threshold for financial purchases or paid the employee an allowance.
The tax office also states that businesses cannot claim to have made a reimbursement for payments made to employees based on a "notional" expense e.g. making a cents-per-kilometre payment to cover the work-related use of an employee's private car.
A business is considered to make a reimbursement when it pays an employee for the price, or part of the price, of a purchase the employee made e.g. if an employee incurs an expense of $200 and is paid the whole or half of the $220 amount, either payment will be a reimbursement.
A business is also considered to have made a reimbursement when it:
- pays an employee for a particular expense they haven't yet paid, but are soon to be liable for;
- pays an employee in advance for an expense they have not yet incurred, provided that the employee pays back any unspent amount of the advance to the business; and
- pays an expense on behalf of the employee.
When any personal use of a purchased item is involved or the expense relates to non-cash employee benefits, a business's liability for FBT should be considered.
The Government is looking to cut red tape for employers by simplifying tax and superannuation reporting obligations through its initiative called Single Touch Payroll (STP). "Employers currently manually report Pay As You Go (PAYG) withholdings to the ATO," the Assistant Treasurer Kelly O'Dwyer said. "Under the new STP this information will be automatically reported to the ATO through Standard Business Reporting (SBR) software."
The ATO will be conducting a pilot in the first half of 2017 focusing on small businesses. From 1 July 2017, all businesses will be able to commence STP reporting, with the option to make voluntary payments. In addition, the ATO will transition employers with 20 or more employees to STP. From 1 July 2018, employers with 20 or more employees will be required to use STP enabled software for reporting to the ATO. The Government will make a decision on timing for rolling out STP reporting for employers with less than 20 employees after the pilot is completed.
To assist small businesses with a turnover of less than $2 million, the Government will offer a $100 non-refundable tax offset for SBR-enabled software. This offset is proposed to apply from 1 July 2017 and for software purchases or subscriptions made in the 2017–2018 financial year only.
Although there are benefits to streamline reporting, some commentators have highlighted cash flow concerns relating to making more frequent payments. Real time pay day reporting also gives the ATO an earlier intervention signal to contact struggling businesses. If you have any questions, please contact our office.
The Government is looking to support innovation and its recently released Innovation Agenda proposes a suite of new tax and business incentive measures. A key proposal is to provide concessional tax treatment to encourage early stage investors to support innovative start-ups. Under the proposal, investors will receive a 20% non-refundable tax offset based on the amount of their investment (capped at $200,000 per investor, per year), as well as a 10-year capital gains tax exemption for investments held for three years. The Government has advised that the scheme is expected to commence during 2016 as soon as supporting legislative amendments are passed into law.
The incentive is proposed to be available for investments in companies that: undertake an eligible business (scope to be determined); that were incorporated during the last three income years; aren't listed on any stock exchange; and have expenditure and income of less than $1 million and $200,000 in the previous income year, respectively.
The ATO has issued a notice announcing that it will be acquiring details of real property transactions for the period 20 September 1985 to 30 June 2017 from various state revenue offices and tenancy boards. In relation to rental properties, the ATO is seeking details of rent paid and contact details of landlords. In relation to property transfers, the ATO is seeking details of the transfers, including details of the transferors and transferees and any state land tax and/or stamp duty concessions sought.
The information will be matched to the ATO's data holdings. The ATO said an objective of the data matching program is to ensure taxpayers are correctly meeting their taxation obligations. The ATO expects that around 31 million records for each year will be obtained. Based on current data holdings, the ATO said records relating to approximately 11.3 million individuals are expected to be matched.
The data matching program goes all the way back to the start of the capital gains tax (CGT) regime in September 1985. Some commentators suggest this could be the ATO looking for CGT revenue on previously undeclared capital gains or incorrectly claimed CGT concessions. Note also that the ATO intends to carry on its data matching program from 2017. It will no longer announce details of its program as law changes will make it mandatory by then for revenue authorities and other entities to report real property transactions to the ATO.
A Bill has been introduced in Parliament that proposes to amend the tax law to change the capital gains tax treatment of the sale and purchase of businesses involving certain earnout rights (ie rights to future payments linked to the performance of an asset or assets after sale). As a result of these amendments, capital gains and losses arising in respect of look-through earnout rights will be disregarded. Instead, payments received or paid under the earnout arrangements will affect the capital proceeds and cost base of the underlying asset or assets to which the earnout arrangement relates.
Clarifying the CGT treatment of earnout rights has been a long time coming – it was first announced on 12 May 2010 as part of the 2010–2011 Budget. The amendments contained in the Bill are proposed to apply from 24 April 2015. However, note there will be protections for taxpayers who have undertaken other actions in reasonable anticipation of announcements made about the amendments in the 2010–2011 Budget.
The ATO has released details of its administrative treatment pending the formal enactment of the legislation. Please contact our office for further information.
The new calendar year is a good time to conduct a superannuation health check and set some new goals to help boost superannuation savings. Although there have been no seismic shifts in the superannuation landscape of late, it may be prudent to reacquaint yourself with the rules. The following are some considerations:
- Make extra contributions – the general concessional contributions cap is $30,000 for 2015–2016. For people aged 50 and over, there is a higher concessional contributions cap of $35,000 for 2015–2016.
- Check super savings – it is a good habit to check your super balance regularly. You may also want to protect your super from identity crime. For example, you may want to change passwords for accounts that can be viewed online.
- Look for small lost super accounts – the threshold below which small lost super accounts will be required to be transferred to the ATO has increased to $4,000 (from December 2015).
- Consolidate multiple super fund accounts – you may want to consider consolidating multiple super fund accounts. This may help avoid paying multiple fees, reduce paper work, and make it easier to keep track of your super.
- Salary sacrifice super – you may want to ask your employer about salary sacrificing super, or you may want to consider reviewing existing arrangements with your employer.
Professional advice should be obtained before implementing a new retirement saving strategy. Please contact our office to discuss your circumstances.
Tax return for non-taxable large/medium entities as per the latest year lodged (all entities other than individuals) due date for lodgement and payment.
Self-managed superannuation fund annual return for new registrant (taxable and non-taxable) self-managed super funds (SMSF) – due date for lodgement and payment.
Quarterly activity statement, quarter 2, 2015–16 – due date for lodging and paying – all lodgement methods.
Quarterly instalment notice (form R, S or T), quarter 2, 2015–16 – due date for payment. Lodgement is only required if you vary the instalment amount.
Annual GST return or information report – due date for lodging (and paying if applicable) if the taxpayer does not have a tax return lodgment obligation.
Due date for lodging the Superannuation guarantee charge (SGC) statement– quarterly and paying the super guarantee charge for quarter 2, 2015–16 if the employer did not pay enough contributions on time.
February 2016 monthly activity statement – due date for lodging and paying.