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.
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.
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.
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.
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.
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.
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.