Harris Black Business Leaders Forum – March 2022

2022 will be a year full of opportunities for many business leaders as they leverage the lessons learned from the last two years as part of a strategic reset for the year ahead. 

In our recent workshop for the Harris Black Business Leaders Forum, we looked at ‘Leveraged Leadership – Resetting your strategies for 2022’.

This theme had us discussing emerging leadership trends, sharing day-to-day best practice with each other and developing practical strategies to guide improved decision making and success.

Discussed on the day:

• Emerging leadership trends for 2022

• Leveraged leadership – how to reset yourself to better capture opportunities

• Making tough decisions faster as a leader

• Coaching your team to lift their capabilities

Overall, it was a great session and attendees walked away with clarity on practical ways they can leverage themselves more effectively in 2022 and some clear action items.

If you are interested in joining our Business Leaders Forum to gain exposure to practical and high-value learning sessions and discussions with other business leaders, then please contact your Harris Black team member.

Tax Planning

As the end of the year draws near, getting your tax in order is vital.

Tax planning can help all businesses and individuals to plan and manage their tax position as the end of the financial year draws closer. This process allows business to see the bigger picture and gain a head start with their tax obligations. Like assessing the need for any Division 7A repayments, utilising unrealised capital gains or losses and planning for the change in the company tax rates.

Tax planning is increasingly important this year due to the additional guidance on Section 100a. To read more refer to this article. (Link to Section 100a Article)

Tax planning simultaneously ensures savings on tax while addressing any legal obligations and requirements by discussing multiple ways to improve your tax position including:

• Writing off bad debts

• Claiming deductions for eligible research and development activities

• Prepayment of expenses before the end of the year

• Utilising carry-forward capital losses

• Checking depreciation rates on plants and equipment – including temporary full expensing which has been extended to 30 June 2023.

• Maximising your tax-deductible debt

• Toping up super to utilise carry-forward of unused concessional contribution caps from prior years.

Tax Planning also allows the smaller items like distribution resolutions, dividend statements that are usually left to the last minute to be prepared and ready for the new financial year. The most important part of tax planning is the plan of your tax position before June 30. This allows for you to understand your options to reduce tax payments and plan cashflow for tax instalments and the tax due on tax return lodgements.

Single Touch Payroll – Phase 2

Today we are reporting with an update on news in Single Touch Payroll world.

Single Touch Payroll (STP) is an ATO initiative designed to streamline the reporting of employee pay, tax withheld and superannuation with the help of software providers (like MYOB and Xero). Phase 2 of the initiative is now underway.
From 1 January 2022, businesses are required to report additional information via STP.

With the assistance of your STP solution or software provider you will now also need to send the ATO the below information:

• Details of the remuneration you pay
– The type of income for the employee (such as salary and wages, or working holiday maker income).

• The components which make up the amounts (such as gross pay, paid leave, allowances or overtime).

• Details of your pay as you go (PAYG) withholding
– The amounts you have withheld from payments you make.
– Information about how you calculated the amount, which you currently provide to us by sending a copy of the
employee’s TFN declaration.

• Superannuation liability information.

• Tax File Number Declarations
– Information collected from TFN declarations – including the TFN itself, employment type and whether the
employee has a HECS-HELP debt — is to be included in STP reports and the declaration itself will no longer need to
be sent to the ATO.

• Employee Separation Certificates
– These certificates are no longer required, as the reason why an employee has left the business will now be
provided via STP reports.

• Lump Sum E payments
– Previously, if an employer makes a payment owing from previous years a Lump Sum E letter would need to be
provided to the employee. This information must now be included in Phase 2 reporting, with details of the payment
appearing in the employee’s income statement.

What remains the same?

• Tax and superannuation obligations do not change.

• The types of payments required to be made do not change.

• The way you lodge STP data and the due dates do not change, including end of year finalisation events.

• The requirement to prepare and lodge Activity Statements (where applicable).

Once your STP solution is upgraded to offer Phase 2 reporting you can transition at any time throughout a financial year.

For more information, the best place to start will be the ATO website (Link Here). Further to this, review the information provided by your payroll software provider for how to ensure you’re ready to report as soon as possible.

Commercial Debt Forgiveness

Forgiving debts between entities (including related parties) can have unintended consequences.

The entity/individual forgiving the debt could end up reducing tax deductions, cost bases of their assets and carried forward losses if not done correctly.

Recently released Taxation Determination TD 2022/1 confirms that in order to forgive a debt for reasons of natural love and affection, the creditor must be a natural person.

Companies can forgive companies and they can mutually decide to forgo any tax implications.
Individuals and trusts however must tread carefully.

This is a complex area. Feel free to give us a call to discuss if you would like to know more.

FBT Tax Time

The 2022 Fringe Benefits Tax (FBT) year ends on 31 March 2022.

Lodgements and payments for FBT returns will be due 27 June 2022.

How do I know if I need to consider FBT?

• Do you make vehicles available to employees for private use that are either owned or leased by your business?
• Has your business forgiven any debts owed by employees?
• Does your business provide loans at a reduced interest rates to employees?
• Has your business paid for, or reimbursed, any private expenses incurred by employees?
• Does your business provide a house or unit of accommodation to employees?
• Does your business provide employees with living-away-from-home allowances?
• Do any employees have a salary package (salary sacrifice) arrangement in place?
• Does your business provide entertainment by way of food, drink or recreation to employees?
• Has your business provided employees with goods at a lower price than they are normally sold to the public?

What to do?

In preparation for an FBT return for the year ended 31 March 2022, be sure to:
• Have your motor vehicle logbook up to date (required for 3 months every 5 years)
• Write down (or email us) your closing odometer readings as at 31 March 2022.

How can we help you?

Today’s financial environment demands a regular review of strategy and a focus on execution.