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In this issue...
  What's The Most Important Thing You Can Be Doing Right Now?
    

The end of financial year is almost here, the most important thing you can be doing right now (other than your annual tax planning meeting with the Harris Black Team) is planning for the year ahead.

In a rapidly changing environment, clients that have thoroughly planned for the year ahead have a significant advantage over their competitors. These clients are able to consider changing circumstances, how they will react to cost pressures or tightening revenue and the ultimate impact on their cash flows. At the end of the day cash is king!

We are currently working with clients to forecast their profit and loss for the year ahead and then determining their closing bank balance at the end of each month.

We have successfully helped clients:

  • By giving them confidence about the year ahead
    • Knowing the peaks and troughs of their bank balance throughout the year and when funding from the bank may be required.
    • Ensuring enough money is set aside to cover tax commitments for the year ahead.
    • Knowing the breakeven point for the business and therefore the minimum sales/revenue required per month.
    • Knowing when and how much to pay in dividends throughout the year.
    • Knowing the minimum hourly rate to charge out an employee to break even on a project.
                
  • By giving them the confidence to make a decision
    • Running different financial scenarios and determining the impact of those decisions on profit and most importantly cashflow.
  • By having early warning signs when things aren't going as planned.
  • By giving them the best chance to approach the bank and have their finance approved.

So take control of the year ahead and consult with your Harris Black team member so that you will have confidence to rise above your competitors and reach your full potential.

  

  APRA Clamping Down On Interest-Only Loans 
 
In March 2017, the Australian Prudential Regulation Authority (APRA) wrote to all lenders about the changing lending standards for interest-only loans – to restrict interest-only loans to 30% of total new residential mortgage lending. For most of 2016, interest-only loan approvals were around 35% (increasing to 38% in the December quarter).
           
You might have been noticing lenders applying lending restrictions on Investment Loans through higher interest rates, lower levels of discounting and with other policies put in place around interest-only facilities.

Over the course of each quarterly period, APRA supervisors will be monitoring the tightened lending standards and will likely impose additional requirements on lenders, if new lending exceeds 30% of total new mortgage lending.

We are coming to the end of the quarter and some Banks are already implementing additional requirements, to align themselves with APRA's lending standards. Some lenders have also reduced the LVR (Loan to Value Ratio) for interest only loans from 90% to 80%; some may not extend the existing interest-only term if the LVR is over 80%; and some are even reducing the maximum interest only term available.

If interest-only loans are a part of your lending exposure, now is a really good time to make an appointment with the team at Harris Black, to make sure your structure continues to suit.

 
  Growing Your Business With Livestreaming 
 

With video marketing here to stay, why not take advantage of live streaming to grow your business?

Livestreaming is the ability to broadcast live straight to the internet through social media platforms. It is a tool that has been adopted by savvy tech-heads and it is powerful when reaching out to clients and building your customer base.
With over one billion users on Facebook and five hundred million Instagram users, why not take advantage of the ability to boost your business through livestreaming and gain a competitive edge?

As a marketing strategy tool, livestreaming is impressive; it's fast, it's easy and it's cost-effective. Livestreaming allows you to speak directly to your clients in real time. It does not require teams of individuals working on a marketing campaign; writing, proofing, designing and editing are not present in this process, saving you and your business time and money.

It is personable. Livestreaming is real. Customers can put a face to the name and can relate on a more human or intimate level to your business. The nature of livestreaming is fun; it gives customers an opportunity to see a side of your business they simply would not get to see just from visiting your website or following you on social media.

Take your customers behind the scenes, show them what goes into product development and allow them to be a part of the process. They will feel like they know your company and this is where trust can be built.

Using Facebook as a livestreaming platform gives you instant feedback. Data on the number of viewers and how long they are tuning in for are just some of the benefits that are not available as readily through any other marketing platform.

To use livestreaming effectively, consider the following:

  • Keep it natural and avoid reading from scripts. This helps remove barriers and allows the viewer to feel like you are talking directly to them.
  • Have a plan. Know what topics you are going to discuss to avoid awkward air time.
  • Promote. Get the word out there about when you will be going live to maximise viewers.

  Harris Black's Digital Toolbox 
 

In the previous editions of Harris Black Considered Value, we have been sharing you the latest accounting add-ons that will help keep you focussed and become more efficient within your own practice. We hope that these add-ons have helped you become more aware of what is available in this space.

It is truly amazing how accounting add-ons have evolved in the world of accountancy.

From this month onwards, Harris Black will open its digital toolbox to everyone and share the latest apps and tools in the digital technology world.
           
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 book and so many more.

Digital technology provides a great opportunity to amplify the impact not only to yourself personally but also to your business practice.

Our first tool for this month's edition of Harris Black's Toolbox is Sendible.

Keeping you and your business up to date with what is happening around you is perhaps the most common thing and vital to our day to day living. Digital tools like Sendible can help you gather, collate and share information simply and easily.
           
Sendible is one of the best social media management tools around. This tool features an awesome scheduling functions and the ability to run multiple campaigns simultaneously. 
 

 

Sendible - Social Media Management Software
Source: Sendible YouTube

Benefits of using Sendible:

  • Stop you from juggling your social media profiles
  • Save you time publishing to social media
  • Make team collaboration more effective

Sendible provides an easy to use dashboard for all your social media accounts, posting and sharing contents, scheduling post as well as analysing and reporting.

Sendible makes social media management simple!

 

  Harris Black Top 10 – Things To Do Before 30 June 2017 
 
The year seems to fly by in the blink of an eye!

Before you know it, the end of financial year is approaching and you might not be quite aware of what you need to do.

In this month's edition of Harris Black Top 10, our team have pooled out some tips and things 'To Do" before the financial year ends.
  1. Clean up – throw out records older than 7 years.
  2. Setting up "Shoebox" app on smartphone, so that the collection of receipts will be much better for the next financial year.
  3. Speak to your accountants regarding 30 June 2017 tax planning strategies.
  4. Refresh your office with new stationary and claim as a tax deduction for 30 June 2017.
  5. Discuss with your accountant any updates required to trust resolution for the year ended 30 June 2017.
  6. Make a donation to your favourite charity.
  7. Purchase any work-related technology pre 30 June 2017.

    and for the fun part...

  8. Planning a party in July because the financial year has ended.
  9. Pick an outfit to wear to the Harris Black's EOFY function.
  10. Go to an End of Financial Year sale and shop 'til you drop!

Happy End of Financial Year All!

          

  Applying The Small Business Restructure Rollover  
 
Small business entities can change the legal structure of their business without incurring an income tax liability, following the introduction of the small business restructure rollover in July last year.

Small businesses may choose to restructure their business for various reasons, i.e. to minimise tax and compliance issues, raise new capital or to provide greater asset protection.
The rollover applies to the transfer of active assets that are CGT assets, trading stock, revenue assets or depreciating assets. Active assets are assets used or held ready for use, in the course of carrying on a business.

To be eligible for the rollover, the transfer of assets must form part of a genuine restructure as opposed to an artificial or inappropriately tax-driven scheme.

The ATO considers a 'genuine restructure of an ongoing business' as one that could be reasonably expected to deliver benefits to small business owners in respect of their efficient conduct of the business. The following features are indicative of a 'genuine restructure of an ongoing business: 
  • It is a bona fide arrangement undertaken in a real and honest sense to facilitate growth, innovation, and diversification; adapt to changed conditions; or reduce administrative burdens, compliance costs and/or cash flow impediments.
  • The economic ownership of the business and its restructured assets is maintained.
  • The small business owners continue to operate the business through a different legal structure. For example, there is:
  • continued use of the transferred assets as active assets of the business
  • continuity of employment of key personnel, and
  • continuity of production, supplies, sales or services.

In addition, to meet the requirements for the rollover, the transaction must not result in a change to the ultimate economic ownership of transferred assets.

The ultimate economic owners of an asset are the individuals who, directly or indirectly own an asset. Where there is more than one individual with ultimate economic ownership, there is an additional requirement that each individual's share of ultimate economic ownership is maintained.

Discretionary (family) trusts may be able to meet the requirements for ultimate economic ownership, for example, when there is no practical change in which individuals economically benefit from the assets before and after the transfer.

Family trusts may meet an alternative ultimate economic ownership test where the trustee has made a family trust election, and every individual who had ultimate economic ownership of the transferred asset before the transfer, and every individual who has ultimate economic ownership after the transfer, must be members of the family group relating to the family trust.

Business owners must seek proper advice to ensure resettlement does not occur and the associated potential flow on tax consequences.

Although the rollover presents an opportunity for small businesses to change their legal structure without income tax consequences, there may still be potential liabilities to consider prior to restructuring, such as stamp duty and GST. If you are considering restructuring your business, seek professional advice.

 

    Are Your Website Costs Tax Deductible 
               
The ATO has provided business owners with further guidance on the deductibility of website costs in a recent Taxation Ruling.

The Tax Office considers a commercial website as a website which is used in the course of a business, irrespective of whether it is used directly to produce income. This does not include software provided on the website for installation on the user's device.

Hardware, the right to use the domain name, and content available on or incorporated into a website that has independent value to the business are considered separate from a commercial website.

The tax deductibility of a website depends on whether the expenditure on a commercial website is revenue or capital in nature under section 8-1.

Examples of expenditure which are tax deductible in the year incurred include: 
  • Periodic operating, registration and licensing fees
  • Expenditure incurred in maintaining a website
  • Modifications to a website that add
  • minor functionality or make minor enhancements to existing functionality
  • Domain name registration fees and server hosting costs
  • Maintaining a social media presence and updating content mainly for marketing purposes
  • 'Off-the-shelf' software that is licensed periodically

Costs that are 'capital' in nature are generally claimable over a number of years. Examples of capital expenditure include:

  • Labour costs that are directly referable to the enhancement of the profit-yielding structure of the business
  • 'Off-the-shelf' software products where the product provides an enhancement of the profit yielding structure of the business
  • Acquiring or developing a commercial website for a new or existing business
  • Modifications resulting in structural advantage
  • Extended or new functionality

In-house software

Expenditure that is not deductible under section 8-1 may be 'in-house software' and deductible under the capital allowances regime or the simplified depreciation rules for small business entities. If the expenditure on in-house software is incurred through developing computer software, the expenditure may alternatively be allocated to a software development pool and deducted in accordance with the pool rules.

  

    Changes To Penalty Rates – Retail, Hospitality And Pharmacy  
   
From 1 July 2017, changes to current penalty rates will come into force affecting the retail, fast food, restaurant, pharmacy, and hospitality industries. 
 
According to the Fair Work Ombudsman, changes are as follows: 

Retail

Sunday rates from 200 per cent to 150 per cent and 175 per cent for permanent and casual employees respectively. Public holiday rates from 250 per cent to 225 per cent and 275/250 per cent to 250 per cent for permanent and casual employees respectively.

Fast Food

Sunday rates from 150 per cent to 125 per cent and 175 per cent to 150 per cent for permanent and casual employees respectively. Public holiday rates from 250 per cent to 225 per cent and 275 per cent to 250 per cent for permanent and casual employees respectively.

Restaurant

Public holiday rates from 250 per cent to 225 per cent for permanent employees and casual employees remaining at 250 per cent. The 15 percent after midnight penalty will apply to hours worked between midnight and 6:00am (instead of 7:00am).

Pharmacy

Between 7.00am and 9.00pm, Sunday rates from 200 per cent to 150 per cent and 225 per cent to 175 per cent for permanent and casual employees respectively. Public holiday rates from 250 per cent to 225 per cent and 275 per cent to 250 per cent for permanent and casual employees respectively.

Hospitality

Sunday rates from 175 per cent to 150 per cent for permanent employees and casual employees remaining at 175 per cent. Public holiday rates from 250 per cent to 225 per cent and 275 per cent to 250 per cent for permanent and casual employees respectively.

While changes in rates are set to apply from 1 July 2017; the Fair Work Commission is adopting a transitional approach when implementing the changes for Sunday rates.

  
    Ride-Sharing Drivers Must Register For GST 
   

In a recent decision, the Federal Court has held that the UberX service supplied by Uber's drivers constitutes the supply of "taxi travel" for the purposes of GST. The ATO has now advised that people who work as drivers providing ride-sharing (or ride-sourcing) services must:

  • keep records;
  • have an Australian Business Number (ABN);
  • register for GST;
  • pay GST on the full fare they receive from passengers;
  • lodge activity statements; and
  • include income from ride-sharing services in their tax returns.

If you work as a ride-sharing driver, you are also entitled to claim income tax deductions and GST credits on expenses apportioned to the services you have supplied.

TIP: You must register for GST if you earn any income by driving for a ride-sharing service. The usual $75,000 GST registration threshold does not apply for these activities.

 

    Tax Offset For Spouse Super Contributions: Changes From 1 July 2017 
   
The ATO has reminded taxpayers that that the assessable income threshold for claiming a tax offset for contributions made to a spouse's eligible superannuation fund will increase to $40,000 from 1 July 2017 (the current threshold is $13,800). The current 18% tax offset of up to $540 will remain in place. However, a taxpayer will not be entitled to the tax offset when their spouse who receives the contribution has exceeded the non-concessional contributions cap for the relevant year or has a total superannuation balance equal to or more than the general transfer balance cap immediately before the start of the financial year when the contribution was made. The general transfer balance cap is $1.6 million for the 2017–2018 year.

The offset will still reduce for spouse incomes above $37,000 and completely phase out at incomes above $40,000.

TIP: Contact us for more information about making the most of super contributions for you and your spouse.

  
    ATO Targets Restaurants And Cafés, Hair And Beauty Businesses In Cash Economy Crackdown 
   

The ATO will visit more than 400 businesses across Perth and Canberra in April as part of a campaign to help small businesses stay on top of their tax affairs. The primary focus is on businesses operating in the cash and hidden economies. ATO officers will be visiting restaurants and cafés, hair and beauty and other small businesses in these cities to make sure their registration details are up to date. These businesses represent the greatest areas of risk and highest numbers of reports to the ATO from across the country, and the visits are part of the ATO's ongoing program of compliance work.


    Super Reforms: $1.6 Million Transfer Balance Cap And Death Benefit Pensions 
   

Where a taxpayer has amounts remaining in superannuation when they die, their death creates a compulsory cashing requirement for the superannuation provider. This means the superannuation provider must cash the superannuation interests to the deceased person's beneficiaries as soon as possible. The ATO has released a Draft Law Companion Guideline to explain the treatment of superannuation death benefit income streams under the $1.6 million pension transfer balance cap that will apply from 1 July 2017.

The Draft Guideline provides that where a deceased member's superannuation interest is cashed to a dependant beneficiary in the form of a death benefit income stream, a credit will arise in the dependant beneficiary's transfer balance account. The amount and timing of the transfer balance credit will depend on whether the recipient is a reversionary or non-reversionary beneficiary.

TIP: To reduce an excess transfer balance, you may be able to fully or partially convert a death benefit or super income stream into a super lump sum. Contact us if you would like to know more.

 

    Harris Black News 
   
Harris Black would like to congratulate Gerald Simeon on recently becoming an Australian Citizen!
           
The process of obtaining a Permanent Residency Visa and eventual Australian Citizenship is by no means simple and requires an enormous amount of commitment. Gerald Simeon is a key member of the Harris Black team who displays dedication and loyalty to all aspects of his role, so it is not at all surprising that he would apply the same degree of enthusiasm and application to the process of becoming an Australian Citizen. Gerald arrived in Australia in 2008 as a student from the Philippines. He graduated with a MBA-Marketing Degree in 2009 and decided to apply for permanent residency at that time… And so the process began…

In 2010 he was granted a Bridging Visa and after 5 years of having to exit the country for a short period of time on a yearly basis to maintain this visa, he was finally granted a Permanent Residency Visa… After waiting the obligatory 12 month period, Gerald booked his citizenship test in September 2016 and started reviewing the citizenship material provided by the Department of Immigration and Border Protection. Taking the exam in December 2016 he topped the class with 100% score! On 17 May 2017 he proudly attended a Citizenship Ceremony at the Brisbane City Hall where he took the pledge and affirmation led by Lord Mayor Quirk to become an Australian Citizen!

Congratulations Gerald from us all!

 
    Important Tax Dates
   

5 June 2017

Lodge tax return, including companies and super funds where the tax return is not required earlier and both of the following criteria are met:

  • taxable or a credit assessment as at latest year lodged
  • non–taxable or receiving a credit assessment in the current year.

This is for all entities with a lodgement end date of 15 May 2017, excluding large/medium taxpayers and head companies of consolidated groups.

21 June 2017

Lodge and pay May 2017 monthly activity statement.

25 June 2017

Lodge 2017 Fringe benefits tax annual return for tax agents (if lodging electronically). Payment (if required) is due 28 May.

 Back to top
     
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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Since 1994, Harris Black has been providing accounting and advisory services to our valued clients to help them achieve their business and personal wealth goals.

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