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 In this issue...


 
  Handing The Family Business Over To Your Kids 
 
Keeping the business in the family when you decide it's time to retire is a common decision for many business owners. However, ensuring the change of hand is carried out effectively is important.

If you plan on handing your business over to your child/children or any other family member, there are specific precautions you should take to ensure that the process you use is not only compliant with Australian business and taxation laws, but that the business model is protected in a way that you so wish.

Consider the following:

Meetings

When changing ownership of any business, to family or someone else, having meetings to discuss various aspects of the changeover helps create a seamless process. Meetings should be periodic and should not be over complicated by discussing too many aspects of the changeover at once. You should plan out what will be discussed at each meeting when you decide you are going to change over ownership.

Transition

When changing ownership of a business, it is always wise to consider doing so in a transitional manner. By using a transitional approach, it allows you to teach your children the ways of the business and the correct process of doing various tasks, in order to keep the business running the same as it always has. This makes the change easier for customers and clients. After the transition has taken place, they can choose to make changes to the business model that they think will improve the business, but they will be doing so with an appreciation and understanding of why things have been done the way they have in the past.

Know the boundaries

One of the biggest obstacles to handing your business over, particularly to your children is mentally preparing for what this change will mean. A common mistake many business owners make when handing the business over is thinking they are still in charge... This is not the case.

By overstepping the boundaries and trying to be over-involved after you no longer own the business, you can cause conflict between yourself and your child, which will inevitably impact negatively on the business. You need to respect your child as a business owner and let them run the business on their own. Of course, you can be there as a sounding board and offer advice should they need it, but anything more can become overbearing. To avoid doing this, you need to prepare yourself for what no longer owning the business will mean… How are you going to fill your time that used to be spent working? It's important to set some goals and plan for retirement.

  
 
  How To Make Better Business Decisions 
 
Business owners are faced with making decisions every day. And although the degree of severity differs, some decisions can make or break a business.

Fine-tuning your decision-making skills will help to make more informed decisions. Consider the following tips:

Stick to facts

Weighing up the benefits/outcomes versus the risks/costs is a crucial step in making a sound decision. Relying on your own intuition or judgment alone is not enough. Stick to the facts and use logic to view the problem objectively.

Consider any past situations or similar situations other companies have dealt with and how they were handled. Use reliable data such as reports, industry trends and expert recommendations as a source of information but also be aware of their limitations.

Using multiple sources is ideal so you can get a broad picture of the problem and the different solutions available.

Eliminate bias and emotions

When you are personally invested in a decision it can skew your judgment, you may lose sight of your goals and become attached to a particular outcome. Beware of falling into the trap of seeking information which only supports your beliefs, also known as 'confirmation bias'. This type of bias ignores information and evidence that doesn't support your beliefs, therefore, providing you with an inaccurate perspective of your problem.

Instead of relying on your opinion solely, it is best to ask an expert in your field for advice. Obtaining another opinion helps you to look at your problem from a different perspective, and it can also provide you with the reassurance that you are making the right decision.

Be prepared for the worst-case scenario

People tend to overestimate the upside and underestimate the downside of an outcome resulting from a decision. If you are not prepared for the worst-case scenario, you may find it difficult to handle if it does occur. Although there will always be a risk of negative results associated with a decision, turning a blind eye to the likelihood of these events occurring is ignorant. Think about the likelihood of the worst-case scenario occurring - how serious are the risks vs the risks of not acting? Come up with a plan of how you would deal with this situation and how you could mitigate the risks.

 
  Harris Black's Digital Toolbox – ClickSend 
 
Digital technology provides great opportunities to amplify the impact of your business activities and practices.

Gone are the days where you need to do everything manually within your practice like ordering, logistics, payments and receipts, marketing, HR, motor vehicle log books and so many more.

Every month, Harris Black will showcase a digital tool that will surely improve awareness, knowledge management, communication, and productivity within your business practice.

In this issue, we give you ClickSend.

What is it?

ClickSend's online short message service (SMS) gateway allows businesses to send and receive SMS communications from any web enabled computer. Send messages to individuals or a large number of contacts through our online SMS service, in one simple step. No setup required – be up and running in minutes.

The use of SMS in a business offers a simple, cost-effective way to reach a large number of customers in a short time frame. The advantage of SMS is that it is immediate. Most people have their phones with them all the time now and they generally read text messages within a few minutes of them arriving.

 
ClickSend SMS Gateway

Source: ClickSend Youtube

Benefits and Features
  • Reliable
  • Amazing 24/7 support
  • High performance – 4800 messages per minute
  • Send SMS online to all countries globally
  • Customise Sender ID
  • Real time status monitoring
  • Secure 256-bit SSL
  • Long 1224 character limit
To learn more about ClickSend, contact your Harris Black team member today. 


  Defining Business Values  
 
Business values, much like personal values, influence behaviour and provide a set of rules or guidelines to follow. However, in a business context, values are often set and ignored.

To avoid this, business leaders need to create values that can lead to action and align with the business' overall mission. Consider the following when defining your business' values:

Assess business strengths

Look at the ways in which your business thrives - do you have ambitious staff or loyal customers that drive your success? Understanding your business' strengths allows you to identify the underlying values which drive current behaviour and action. Once you have a better understanding, you will be able to identify key values that your employees, customers, suppliers and community encompass and use these values as a basis for your business.

Formulate rules based on values

Once you have identified your key values, you can create rules based on these values, so staff and the public know what to expect from your business. For example, your rule might be to "continually search for answers." This would align with a value of innovation, placing a high emphasis on building on new ideas and solutions. Rules also help to foster the right culture in your workplace, making it more enjoyable for staff and management alike.

Tie values to your overall purpose

Values should be used to complement your business' overall mission or purpose. For example, if your mission is to provide education to rural teenagers in disadvantaged areas, adopting a rule such as "continually search for answers" would be appropriate as it encourages everyone involved in the business to look for new ways to meet challenging demands and so on. Therefore, identifying values helps to align strategies, plan and create goals that serve your business' overall purpose.

 
  ATO Urges Employers To Get Ready For Single Touch Payroll  
 
The ATO has called on employers with 20 or more employees to start preparing now for the Single Touch Payroll (STP) reporting regime which will be mandatory from 1 July 2018.

Assistant Commissioner, John Shepherd, said STP will allow employers to meet their ATO reporting obligations for employees' tax and super information using their own payroll or accounting software that is STP ready. Many employers will be able to update their existing payroll software to a version that is STP ready. However, employers with 20 or more employees who do not use payroll software will need to choose a product that offers STP by 1 July 2018, Mr Shepherd said.

Steps to get STP ready

The ATO urged employers to start preparing now to be STP ready. The next steps are:
  • Do a headcount of employees as at 1 April 2018.
  • Talk to existing software providers on how and when their product will be STP ready.
  • Employers who don't have existing software should choose a product that offers STP. A tax or BAS agent may be able to suggest a suitable product.
  • Update the payroll software when it's ready and start reporting to the ATO through STP.
Mr Shepherd said some payroll software providers have asked the ATO for more time to get ready. Therefore, employers should ask if their provider has been given such a deferral and check when their product will be updated to offer STP reporting. While employers with 19 or less employees are not required to use STP until 1 July 2019, Mr Shepherd said such small employers can choose to start reporting through STP early if their software is updated.

A number of STP resources including factsheets, checklists, information packs and advice on how to manage headcount are available on the ATO Webpage at https://www.ato.gov.au/stp.

To know more about Single Touch Payroll, please contact your Harris Black team member today.

  
  Holiday Home Deductions 
 
The ATO has warned owners of holiday rental properties that it will be targeting the "large number of mistakes, errors and false claims" made by rental property owners who use their own property for personal holidays.

Assistant Commissioner Kath Anderson said the ATO will be focusing on taxpayers who claim deductions for holiday homes that are not actually available for rent or only available to friends and family.

Deductions can only be claimed if a property is genuinely available for rent, Ms Anderson said. Deductions cannot be claimed in respect of times when the taxpayer is using it for their own personal holidays, or letting friends and family stay rent-free. If a property is rented to friends and family at "mates rates", the ATO says that deductions can only be claimed for expenses up to the amount of the income received.

If you have any questions regarding holiday home deductions, contact your Harris Black team member today
.

 
  ATO Releases Latest Small Business Benchmarks 
 
The ATO has released its latest small business benchmarks, providing over 100 different industries
 with average cost of sales and average total expenses.

These benchmarks can not only assist businesses with tax compliance (eg by prompting them to double-check their records if their expenses are outside the benchmark range for their industry), but also provide useful information to help businesses judge their performance against others in the industry.

TIP:
You can access the benchmarks online or by using the ATO app. Contact our office if you wish to discuss how your business compares against industry benchmarks.

 
  Capital Gains Tax Withholding: Updated Information For Trustees 
 
The foreign resident capital gains tax (CGT) withholding regime requires purchasers of Australian property to withhold an amount from the purchase price (for remission to the ATO) if the vendor is a foreign resident. This regime is designed to assist the ATO in collecting CGT payable by foreign residents.

If the vendor is an Australian resident, they must provide an ATO-issued clearance certificate to the purchaser on or before the day of settlement to ensure no withholding occurs. The ATO has released some guidance for trusts and superannuation funds about specific information they must provide when applying to the ATO for a clearance certificate.

Contact our office for further assistance.

 
  Goods And Services Tax On Low-Value Imported Goods 
 
From 1 July 2018, goods and services tax (GST) will apply to some offshore supplies of goods valued at $1,000 or less that are purchased by consumers and brought into Australia. The new rules are designed to create a more "level playing field" for local retailers.

The ATO has released a ruling covering GST registration issues for suppliers and other technical aspects of the new legislation. Notably, the existing rules about GST on imports valued above $1,000 are unchanged. 


    "Transition To Retirement" Pensions To Become Simpler  
   
In welcome news for superannuation members, the government has announced plans to simplify the payment of transition to retirement income streams (TRISs) so that they will always be permitted to automatically revert to a dependent upon the death of the original pensioner. This is designed to address a trap in the current legislation that is causing some administrative difficulties for funds when a TRIS recipient passes away.

TIP:
With greater certainty about the payment of TRISs on death, now is a good time for superannuation members to review their estate plans. 


    Superannuation Rates And Thresholds For 2018–2019 
   
We summarise some of the key superannuation rates and thresholds for the upcoming financial year:

Contributions
 Concessional contribution cap   $25,000 
 Non-concessional contribution cap  $100,000*
 CGT cap amount  $1,480,000 
 Super guarantee percentage  9.5%
 Maximum contribution base (per quarter)  $54,030
* 300,00 for "bring forward" arrangement

Government co-contributions
 Lower income threshold  $37,697 
 Higher income threshold  $52,697 

Superannuation payments
 Lump sum low rate cap  $205,000 
 Untaxed plan cap  $1,480,00 
 ETP cap amount  $205,000 
 Genuine redundancy and early retirement   payments - tax-free amounts:  
 -  base amount  $10,399
 -  service amount  $5,200

Pension cap
 General transfer balance cap  $1,600,00 
 Defined benefit income cap  $100,000 
 "Total superannuation balance" threshold  $1,600,00 


    Important Tax Dates 
   
28 April 2018
  • Lodge and pay quarter 3, 2017–18 activity statement if lodging by paper.
30 April 2018
  • Lodge TFN report for closely held trusts if any beneficiaries quoted their TFNs to trustees in quarter 3, 2017–18.
15 May 2018
  • Lodge 2017 tax returns for all entities that did not have to lodge earlier (including all remaining consolidated groups), and are not eligible for the 5 June 2018 concession.
21 May 2018
  • Lodge and pay April 2018 monthly activity statement.
26 May 2018
  • Lodge and pay eligible quarter 3, 2017–18 activity statements if you lodge electronically.  
     
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This newsletter is for guidance only, any professional advice should be obtained before acting on any information contained herein. Neither the publisher nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this newsletter. We recommend that you contact your Harris Black team member before making any decision to discuss your particular requirements or circumstances. 

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