Harris Black, Author at Harris Black

Quarterly Business Review

30 November, 202012 July, 2021 by Harris Black

by Renee Bettenay

Finding time to implement the ideas you have to improve your business is challenging. Determining where your energy should be focused when you have a multitude of concepts for different key areas can also see you running around in circles. Many of our clients have struggled with both of these issues and tell us that ultimately their inability to determine the next best step finds them simply run out of time and energy to do anything!

At Harris Black we have developed a Quarterly Business Review process through which we help our clients rationalise and implement their ideas for business improvement. Together, we identify the relevant key areas of their business that require focus in order to improve. We then determine accountability for the implementation of new concepts or processes and ensure focus is maintained. Harris Black clients who are participating in our Quarterly Business Review process are having great success at finally implementing their ideas and involving their entire internal team to help drive home positive change. This also ensures everything doesn’t fall on the shoulders of the business owners. Those clients that have been working with us for some time have now developed impressive strategies for momentum when it comes to implementation and are enjoying the benefits of clear decision making and continual improvement in their business.

To learn more about our Quarterly Review Process please take the time to watch the video below or call your Harris Black team member.

Federal Budget 2020-2021

8 October, 2020 by Harris Black

Personal Taxation

Personal tax cuts brought forward to 1 July 2020.

Reduction of tax rates per the following table:

Business Taxation

Small business tax concessions extended to medium businesses

Businesses with aggregated turnover between $10M to $50M will be eligible for the following concessions (already available to businesses with aggregated turnover less than $10M).The extension of these concessions to medium businesses will be delivered in three phases:

– From 1 July 2020, eligible businesses will be able to immediately deduct certain start-up expenses and certain prepaid expenditure.
– From 1 April 2021, eligible businesses will be exempt from the 47% FBT on car parking and multiple work-related portable electronic devices, such as phones or laptops, provided to employees (note that an FBT exemption for retraining redeployed employees will also apply from 2 October 2020).

From 1 July 2021:

– eligible businesses will be able to access the simplified trading stock rules, remit PAYG instalments based on GDP adjusted notional tax, and settle excise duty and excise-equivalent customs duty monthly on eligible goods;
– The time limit for the ATO to amend income tax assessments will be reduced from four to two years for eligible business for income years starting from 1 July 2021; and
– the ATO power to create a simplified accounting method determination for GST purposes will be expanded to apply to businesses below the $50 million aggregated annual turnover threshold.

The eligibility turnover thresholds for other small business tax concessions will remain at their current levels.

Outright capital assets deduction until 30 June 2022 for most businesses

Businesses with aggregated annual turnover of less than $5 billion will be enable to deduct the full cost of eligible capital assets acquired from 7:30pm AEDT on 6 October 2020 (Budget night) and first used or installed by 30 June 2022.

Full expensing in the year of first use will apply to new depreciable assets and the cost of improvements to existing eligible assets. For small and medium sized businesses (with aggregated annual turnover of less than $50 million), full expensing will also apply to second-hand assets.

Businesses with aggregated annual turnover between $50 million and $500 million can still deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 under the current instant asset write-off rules. Businesses that hold assets eligible for the $150,000 instant asset write-off will have an extra six months (until 30 June 2021), to first use or install such assets.

Small businesses (with aggregated annual turnover of less than $10 million) can deduct the balance of their simplified depreciation pool at the end of the income year while full expensing applies. The provisions which prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended.

Loss carry-back from 2019–2020, 2020–2021 and 2021–2022

The Government will allow eligible companies to carry back tax losses from the 2019–2020, 2020–2021 or 2021–2022 income years to offset previously taxed profits in 2018–2019 or later income years.

Companies with an aggregated turnover of less than $5 billion will be able to apply tax losses against taxed profits in a previous year, generating a refundable tax offset in the year in which the loss is made.

The tax refund will be limited by requiring that the amount carried back to not exceed the earlier taxed profits and to not generate a franking account deficit. The tax refund will be available on election by eligible businesses when they lodge their 2020–2021 and 2021–2022 tax returns.
Companies that do not elect to carry back losses under this measure can carry losses forward as normal.

Instant asset write-off: minor change

Given the largesse of the new outright deduction for capital assets until 30 June 2022, the instant asset write-off rules have become temporarily irrelevant for most taxpayers (those with aggregated annual turnover of less than $5 billion).

Accordingly, there were no changes to the rules, other than a slight tweaking for costs relating to second-hand goods acquired by large businesses (with annual aggregated turnover between $50 million and $500 million).

R&D Tax Incentive changes

The Government has announced a number of changes to the R&D tax offset measures contained in the Treasury Laws Amendment (Research and Development Tax Incentive) Bill 2019 and deferred the start date of those measures to income years starting on or after 1 July 2021.

State COVID-19 business support grants: NANE income

The Federal Government announced that the Victorian government’s business support grants for small and medium business will be non-assessable, non-exempt (NANE) income for tax purposes. The Victorian Government announced the grants on 13 September.

Eligibility for this treatment will be limited to grants announced on or after 13 September 2020 and for payments made between 13 September 2020 and 30 June 2021.

JobMaker Hiring Credit

The Budget announced that the Government will provide $4 billion over three years from 2020–2021 to accelerate employment growth by supporting organisations to take on additional employees through a hiring credit. The JobMaker Hiring Credit will be available to eligible employers over 12 months from 7 October 2020 for each additional new job they create for an eligible employee.

Wage subsidy for new apprentices

The Government will provide a capped 50% wage subsidy to businesses who take on a new Australian apprentice from 5 October 2020 to 30 September 2021.

It will be available to employers of any size or industry, Australia-wide, regardless of geographic location or occupation. There are two important caps:
– it is limited to 100,000 new apprentices or trainees in total; and
– the 50% subsidy will be limited to $7,000 per quarter ($28,000 per annum).

More information can be found on the Department of Education, Skills and Employment website. The payment will be paid in respect of commencing or recommencing apprentices; that is, it will be possible to re-employ former apprentices whose employment had been terminated.

The scheme will run from 5 October 2020 to 30 September 2021. The measure was earlier announced by the Prime Minister on 5 October 2020. The Department of Education, Skills and Employment states that the start date for claims is 1 January 2021; that is, payments will be made in arrears.

Other Measures

CGT Exemption For “Granny Flats”

The Budget confirms that the Government will put in place a “targeted” CGT exemption for granny flat arrangements.

Under the measure, CGT will not apply to the creation, variation or termination of a granny flat arrangement providing accommodation where there is a formal written agreement in place. The Budget states that it will apply to arrangements that provide accommodation for “older Australians or those with a disability”. There are no further details as to what constitutes “older” or “disability”.

The exemption will only apply to agreements that are entered into because of “family relationships or other personal ties” and will not apply to commercial rental arrangements.

It is intended that the measure commence from 1 July 2021 (ie next financial year), subject to the passage of necessary legislation.

Social Security

$250 cash payments for income support recipients.

The Government will pay two $250 economic support payments for eligible income support recipients and concession card holders. The payments will be made from November 2020 and early 2021 to eligible income support recipients and concession card holders, including:

– Age Pension;
– Disability Support Pension;
– Care Payment;
– Family Tax Benefit, including Double Orphan Pension (not in receipt of a primary income support payment);
– Carer Allowance;
– Pensioner Concession Card (PCC) holders (not in receipt of a primary income support payment);
– Commonwealth Seniors Health Card holders; and
– Eligible Veterans’ Affairs payment recipients and concession card holders.

The $250 cash payments are tax exempt and will not count as income support for social security purposes. These cash payments follow the two $750 stimulus payments in April and July 2020 for social security and veteran income support recipients and concession card holders.

Should you have any questions in relation to these changes, please do not hesitate to contact your Harris Black Tax Specialist.

Insurance – Paying More Than You Need To?

1 October, 2020 by Harris Black

The following article has been prepared by the Advisers at NewLeaf Tailored Financial Solutions. Harris Black has had a long-term relationship with NewLeaf, and they assist many of our clients with their financial planning needs. They are based within our office, and we work closely with them and many of our clients.

For the past 18 months, premiums for personal insurances have been rising. Unfortunately, we will all be hit with these increases in some way. This also extends to insurance cover held via industry super funds.

None of us like this, but what makes it worse is not reviewing your policies and later finding out that you have been paying too much for inferior insurance cover or that there are cheaper alternatives available.

Now is the right time to speak with your financial advisers to review all your personal insurance policies. They will assess your individual needs, review your current polices, undertake market wide research and determine whether you will save money by changing insurer or modifying your polices.

As we grow older, get married, build families and start businesses, we come to realise that life and disability insurance is a fundamental part of having a sound financial plan. We also know how important it is to have personal insurances in place particularly considering that in 2019 alone the Australian Prudential Regulation Authority reported that the life insurance industry paid out approximately $13 billion in claims which equates to $33 million paid to Australians every day.

Depending on your unique situation, life and disability insurance can be tailored via several funding options. Your financial advisers will guide you on the best way to structure your polices with due consideration to your needs, cashflow and tax effectiveness.

We can all relate to being busy and time poor. However, with the challenges being faced by many Australians due to COVID19, now is the right time to seek advice and protect what matters most: your family, physical and mental health and your long-term financial well-being.

At Harris Black, we care about our clients financial and personal well-being and encourage you to review your personal insurance needs and polices. Please seek help from your financial advisers. NewLeaf are available to discuss your situation at any time.

Exciting News – Bjorn Kirberg

30 September, 2020 by Harris Black

We are pleased to announce the promotion of Bjorn Kirberg from Senior Manager to the position of Associate.

Bjorn joined Harris Black in March 2014. He brought with him a passion for taxation and advisory, together with a strong knowledge of business gained from working with a range of different clients in public practice.

Bjorn gets an enormous amount of satisfaction from helping clients identify their challenges before delivering solutions to them with clarity and simplicity. He works with clients and their advisors to provide practical advice and assistance in the areas of business structuring, asset protection, business succession and the development of tax strategies.

His areas of expertise include GST, property transactions, Capital Gains Tax, small business CGT, consolidations, corporate tax, Division 7A, taxation of trusts and SMSF rules. Bjorn is one who stays abreast with the constantly changing taxation environment and as a result is able to solve complex and technical tax matters. Bjorn is also actively involved in various committees with The Tax Institute.

His qualifications include:

- – Bachelor of Business (Accounting);
- – Member of Chartered Accountants Australia and New Zealand;
- – Chartered Tax Advisor of The Tax Institute; and
- – Currently completing a Masters of Taxation through the University of NSW.

Outside of work, he enjoys spending quality time with his wife and two young children and when time permits is a fan of hiking, CrossFit and following Formula 1.

Are You Ready For The End Of JobKeeper?

30 September, 202012 July, 2021 by Harris Black

Unless your business was severely impacted by the Covid-19 related restrictions over the past 6 months, you may find you currently have a comfortable amount of cash in your bank accounts as a result of the cash boost, payroll tax and JobKeeper assistance. Regardless, for many businesses the support received to date is about to run out or be reduced.

So… Have you looked beyond September? Do you know what your profit and cash balance might look like over the next 12 months? How do you best deploy the cash you currently have in the business bank account?

If you haven’t done this already, one of the most important things you can do right now is a 3 way forecast. A realistic and detailed forecast is crucial for guiding your business to tackle unexpected challenges and to ensure you stay on track during these uncertain times. A 3 way forecast is the most robust type of forecasting as it brings together your balance sheet (working capital, assets and loans) and your forecast profit to help predict your cashflow into the future.

Many clients tell us that due to the uncertainty of the current times, it is impossible to look forward. However by doing a 3 way forecast we have been able help our clients to:

know what costs are ahead and therefore know the minimum sales required to meet those costs – this is called a breakeven analysis;
keep track of the payments they have deferred paying (tax, rent etc) to ensure the business has enough cashflow to pay them in the future;
run various scenarios regarding the 12 months ahead – what happens to my profit and cash flow… If my sales are down 15%? If we lose a major client? If my staff work 4 days a week? When the government stimulus runs out? If we pay ourselves a dividend? If our clients start paying us slowly? If I buy this important piece of equipment for our business?… The scenario planning options are endless; and
track actuals results against the forecast for the year identifying warning signs for the business and making decisions before it is too late.

Running your business without a forecast is pretty much like driving a car in the dark without the headlights on…

By taking the time to set are 3 way forecast and managing that forecast, you will give your business the best chance of survival and even growth during these uncertain times!

If you would like to have more certainty about your businesses future, please contact your Harris Black team member.

JobKeeper 2.0

30 September, 202012 July, 2021 by Harris Black

The current JobKeeper program ends on Sunday 27 September 2020. A two-tiered reduced rate of JobKeeper continues depending on the hours worked by employees in either February or June 2020.

In order to qualify from 28 September onwards, there must be at least 30% reduction in actual GST turnover for the September 2020 quarter, compared to the September 2019 quarter. Businesses currently enrolled for JobKeeper will not need to re-enrol.

Although the September 2020 quarter is not yet finalised, you should consider doing the following now:

– Estimate whether you will likely have reduced GST turnover of 30% or more for the September 2020 quarter;

– Decide whether to suspend paying employees top-up payments where it is unknown whether the business will have reduced GST turnover of 30% or more (where employees would ordinarily be paid less than JobKeeper); and

– Ascertain if eligible employees meet the 80 hour test in the 4-week payroll period commencing before 1 March 2020 or 1 July 2020 (you can choose either period on an employee by employee basis).

There are a number of alternative turnover tests as well as additional rules where payroll records are unavailable to test hours worked.

There are also ATO concessions which allow wages to be paid prior to 31 October for the 2 JobKeeper fortnights from 28 September to 25 October 2020 to allow businesses to evaluate whether they still qualify.

Harris Black

Author: Harris Black