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  Key Actions That Business Owners Should Take Before 30 June To Reduce Tax 
 
For businesses to maximise their cash position, they should consider the following tax planning opportunities before 30 June.

Prepay expenses before the end of the year:
  • If turnover is < $10m, you can claim 100% deduction in the year an expense is paid
Bring forward the purchase of plant & equipment if you are a small business:
  • Equipment costing less than $30k, installed and ready for use by 30 June 2019 will be fully tax deductible in the current year
Maximise superannuation contributions:
  • Super is only deductible if paid by 30 June
  • Annual concessional contribution caps are $25k
  • Salary earners can now make concessional member contributions as the previous restriction (10% rule) no longer applies
Write off bad debts:
  • If debts are not recoverable, and all action has been taken to resolve then write off the bad debt before 30 June to bring to account the expense
  • Ensure GST is adjusted
Write off slow-moving or obsolete stock
  • Review your stock holding
  • If the market value is lower than the cost of the stock, a deduction can be realised for the difference
Utilise unrealised capital losses:
  • Ensure you take advantage of capital losses within your group
  • Consider whether distribution minutes can be prepared in a way to utilise group losses
Review plant & equipment:
  • Review depreciation schedule for any scrapped plant & equipment that can be written off
  • Review the effective lives of equipment and consider whether appropriate to increase rate of depreciation
Review remuneration to owners:
  • Are dividends or profit share a more appropriate way to remunerate business owners
  • If the business is making a loss, you could be unnecessarily paying tax on wages
Repayment of Div 7A loans:
  • Cash repayments can reduce the requirement for dividends to be declared
Review tax rate applying to companies:
  • Base rate companies pay tax at 27.5% while all others pay tax at 30%
  • Review any planning that could occur to achieve the desired tax rate (may be lower to reduce tax, may be higher to maximise franking credits on dividends)
11. Claim and document your Research & Development activities:
  • When engaged in R&D activities, clearly document the activities and costs relating to those activities to take advantage of R&D Tax Offsets
Review your tax position prior to 30 June:
  • Understand your options to reduce or defer tax
  • Plan the cash flow for instalments of tax, and the tax due on lodgement of tax returns
  • Identify opportunities to vary tax instalments and improve cash flow
  • Implement above tax planning and other savings
  • Finalise trust distribution minutes before 30 June
Please do not hesitate to contact your friendly Harris Black team member for help with your tax planning.

 
  The Importance Of Budgeting In Business 
    By Chris Mandzufas (Brentnalls WA – affiliate firm) 
   
A realistic and detailed budget is crucial for guiding your business to tackle unexpected challenges and to ensure you stay on track to grow.

It may seem obvious that business growth can only occur when there is money available for reinvestment but it is surprising how many businesses do not budget and do not track their performance against a budget.

A realistic and detailed budget is a very important tool for providing valuable information, guiding your business to tackle unexpected challenges and most importantly ensure you stay on track to grow.

Not having a budget could be like driving a car in the dark without lights on – how do you know where your business is going? A robust budget will help you identify the cash from operations you can generate, identify the capital you need to grow your business and consider any debt and income tax obligations you need to consider as your business moves forward.

Another way of thinking about your budget is as a way of measuring your business' performance against expectations. That is, each month tracking actual revenue and expenses and comparing them to what you had budgeted.

For example, if your sales are lower than you had budgeted you have the opportunity to review and debate why and take corrective action immediately. Conversely, if you exceed your sales targets you can review the key reasons why and focus more energy in leveraging that knowledge in future periods.

If you are running your business without a budget, you may find you are actually wasting energy, being inefficient and not meeting your long-term goals. By taking the time to set a proper budget and manage that budget, you will give your business the best chance of achieving its full potential.

If you need any help with your budgeting process, contact you Harris Black Team member today.

 
    Single Touch Payroll To Include More Businesses 
   
Single Touch Payroll (STP) is changing the way employers report their workers' tax and super information to the ATO.

Employers are expected to report information on a variety of areas through software that offers STP reporting or third-party service providers. Withholding amounts, superannuation liability information, ordinary times earnings, salaries, wages, allowances and deductions should all be included in reports.

Parliament has passed legislation to extend STP to now include businesses of any size. There are separate guidelines and due dates in place for different sized businesses.

Businesses with 20 or more employees
 

As STP for businesses with 20 or more employees started on 1 July 2018, relevant businesses should already be reporting through STP or have applied for a deferral. If you are unsure if your current software has STP reporting, the ATO recommends talking to your software provider or tax professional.

Businesses with 5-19 employees
 

Reporting can start anytime from 1 July to 30 September 2019. If you already use payroll software which offers STP, you can update your product and start reporting early. Online forms will be available from April 2019 for those who need to defer reporting or meet exemption criteria.

Businesses with 1-4 employees
 

Micro employers with four or less employees who don't currently use payroll software can report STP information in other ways. The ATO has listed software developers who offer no-cost and low-cost STP solutions to make the transition smoother. There is also an option for your registered tax or BAS agent to report your STP information quarterly rather than each time you run payroll. This will be available until 30 June 2021.

To help with ease of transition for everyone involved, the ATO offers no penalties for mistakes, missed or late reports for the first year. Exemptions from STP reporting can also be provided for employers experiencing hardship, or in areas with intermittent or no internet connection.

 
    ATO Takes Strong Stance On Superannuation Compliance 
   
The ATO will be enforcing stricter penalties for employers who fail to meet their superannuation guarantee (SG) obligations.

Penalties have been introduced to hold employers who are unable or unwilling to meet their SG obligations accountable. This includes non-payment, underpayment, or late payment of super contributions to an eligible employee's complying super fund. The ATO provides tools that enable employers to understand and meet their SG obligations.

Paying super contributions

Employers are required to pay 9.5% of an employee's ordinary time earnings to superannuation. These contributions must be paid to a complying fund by the quarterly due dates, which are 28 days after the end of each quarter.

Penalties

Employers who do not meet their SG obligations may be liable for a range of penalties or charges. If the correct amount of contributions to a worker's super fund has not been made by the due date, employers will be required by law to lodge a superannuation guarantee charge (SGC) statement. In addition to the SGC, other penalties that may be imposed include:
  • A Part 7 penalty which is applied if an employer lodges their SGC late, or fails to provide a statement or information when requested. 
  • A general interest charge (GIC) that is applied when an SGC is not paid by the due date. The GIC is calculated on a daily compounding basis and is tax deductible in the year it is incurred. 
  • An administrative penalty if an employer makes false or misleading statements in order to pay less SGC than they should. 
  • A choice liability, imposed when an employer does not give an eligible employee a choice of super fund. 
In some cases, legal action may be taken by the ATO to recover outstanding tax and superannuation debts. SG audits may also be undertaken in the ATO's tough approach on compliance. For more information and to ensure that you are meeting all SG obligations as an employer, you should consult your financial advisor.

 
    Instant Asset Write-Off With Budget Changes Now Law 
   
Changes to the instant asset write-off rules have now become law, including measures recently announced in the government's Federal Budget.

The write-off has been extended to medium sized businesses (with aggregated annual turnover of $10 million or more, but less than $50 million), where it previously only applied to small business entities (with aggregated annual turnover of less than $10 million).

The second important change is that the instant asset write-off threshold increases to $30,000, where it was previously $25,000.

The changes apply from 2 April 2019 to 30 June 2020, and the write-off works on a per-asset basis, so eligible businesses can instantly write off multiple assets.

 
    Rental Deductions: ATO Audits To Double
   
The ATO has warned that it will increase its scrutiny of rental-related deductions this year. It says some people are still claiming travel to residential rental properties, but from 1 July 2017 taxpayers (aside from excluded entities) have no longer been permitted to claim tax deductions for travel expenses related to inspecting, maintaining or collecting rent for a residential rental property.

The ATO expects to more than double the number of its in-depth audits this year to 4,500, with a specific focus on over-claimed interest, capital works claimed as repairs, incorrect apportionment of expenses for holiday homes let out to others and omitted income from accommodation sharing.

 
    Brentnalls Affiliation Conference – May 2019 
   
Wednesday 1st May saw the Harris Black Directors and Managers heading to Melbourne for the first of our bi-annual Brentnalls Affiliation Conferences for the 2019 year. The conferences are always a fast paced and rewarding experience held over three days during which we collaborate with our other firm affiliates. The Brentnalls Affiliation includes firms from Sydney, Melbourne, Adelaide, Hamilton VIC, Perth and Auckland NZ. We are a close knit group of colleagues who share similar values and a strong ethos of wanting to help clients achieve their goals and grow their wealth.

The agenda for the 3 day conferences generally includes group sessions and guest speakers. The key focus for Melbourne 2019 was how we might better be able to provide advisory services to our clients that are not only highly valuable but constructive and clearly defined so as to improve their capacity to achieve great outcomes. In this regard, a full day was devoted to improving our Mindshop skills and capabilities which we believe will enhance our clients' advisory service experience with Harris Black.

On the social side, there is always plenty of great banter over a drink and a good meal with old and new friends, the obligatory early morning walks designed to clear the head and kick start the day and quite a lot of "coffee runs" between sessions. Always a great event, with stimulating conversations, the sharing of ideas and ultimately ongoing benefits to the HB team and our clients.

 
    Important Tax Dates 
   
5 June 2019
  • Lodge tax return for all entities with a lodgment due date of 15 May 2019 if the tax return is not required earlier and both of the following criteria are met:
    - non-taxable or a credit assessment in latest year lodged
    non–taxable or receiving a credit assessment in the current year.
  • Lodge tax returns due for individuals and trusts with a lodgment due date of 15 May 2019 provided they also pay any liability due by this date.
21 June 2019
  • Lodge and pay May 2019 monthly business activity statement.
25 June 2019
  • Lodge 2019 Fringe benefits tax annual return for tax agents if lodging electronically. Payment (if required) is due 28 May.
30 June 2019
  • Super guarantee contributions must be paid by this date to qualify for a tax deduction in the 2018–19 financial year.



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This material 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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