As a business owner, do you sometimes take work trips? When a trip is clearly for business purposes only, the rules for deducting your expenses are fairly straightforward. But what happens when you’ve planned a holiday or to catch up with family or friends while you’re travelling?

Airfares

Assume you travel to London for a two-week trade show and stay a few extra days for sightseeing. If business is the primary purpose of the trip, you can claim the whole cost of the return airfares as a business deduction, because the sightseeing is just incidental. If you have a significantly longer holiday, so the primary purpose of the trip is not just business, you may need to apportion your airfares. And if the primary purpose is clearly private with some incidental work activities, you generally can’t deduct airfares.

Accommodation

Accommodation deductions are limited to the nights that you’re required for the business purpose. In our London example, you couldn’t deduct your accommodation costs for the nights you stayed for sightseeing. This applies even though you could deduct the full airfares.

Record-keeping

Sole traders and partners must keep a diary if they travel for six or more consecutive nights, detailing each business activity, the location, the date and time it began and how long it lasted.

If your business runs through a company or trust structure, it’s not compulsory to keep a diary, but it’s strongly recommended.

TIP: For companies, be careful about your business paying for any private part of your travel, as this could have consequences under the “deemed dividend” rules about benefits for shareholders and their associates.

Legislation has recently been passed to ensure that any goods or services provided by a trustee of a superannuation fund is at arm’s length.

Non-arm’s length expenses incurred by a superannuation entity in gaining or producing assessable income will result in such income being taxed at 47%.

This can include for example a real estate agent providing management services or a builder providing their labour to build or repair an asset owned by the fund.

Individuals with more than one employer, who expect their employers’ compulsory super contributions will exceed their annual concessional contributions cap for a financial year, will be able to apply for an exemption certificate to release some of their employers from their SG obligations.

Individuals will still need to receive SG payments from at least one employer.

From 21 October 2019, eligible individuals will be able to download an application form from ato.gov.au.

Legislation has been passed recently to deny deductions for losses or outgoings incurred that relate to holding vacant land by individuals, partnerships, trusts or self-managed superannuation funds.

Various exclusions apply including where land is for primary production or where it is held available for use in the course of carrying on a business.

The amendments apply from 1 July 2019.

Termination is often a complicated and awkward issue for any business owner, but is a situation that needs to be handled thoughtfully and compassionately.

There a number of situations where termination can occur. It is important that each situation is carefully managed to ensure that the process is compliant with employment laws. Often, it may be a good idea to seek legal or HR advice before initiating the termination process.

If a business fails to comply with the provisions of a termination they can be liable for legal action, as well as fines and penalties. Employers should consider the various ways to terminate an employee’s role within the business and the legal requirements that will follow before making any decisions.

Redundancy

Redundancy occurs when an employee’s role within a business is no longer required. This can occur due to a reconstruction of the business, or technology taking the role of an employee. A redundancy is based on the operational needs of the business, not the personal performance of the employee. When an employee is made redundant they are often entitled to compensation and other entitlements. It is important the employer follows the correct protocols when making an employee redundant, which are laid out in the award or enterprise agreement.

Abandonment of employment

This form of dismissal occurs when an employee is absent from work for an extended period of time without providing a reasonable excuse. This could occur if an employee does not return to work after a leave of absence, or for walking off the job without providing an explanation. If an employer wishes to terminate an employee under abandonment of employment they must show that they have taken steps to contact the employee before terminating them.

Summary dismissal

A summary dismissal is when an employee is immediately terminated from employment due to a serious breach or misconduct, such as theft or assault. Generally there is no period of notice or financial compensation in lieu of notice. Although this type of dismissal does occur quickly it is still important that the correct formal process is followed, and that any allegations against the employee are thoroughly investigated before the employee is dismissed.

Dismissal for a cause

A dismissal for a cause is less serious than a summary dismissal. It is used when an employee is terminated for under-performance or other issues such as inappropriate behaviour. Leading up to a dismissal for cause there must be a disciplinary process which can include warnings and performance management in an attempt to correct the employee’s actions.

Termination by notice or agreement

This is when an employee’s role in the business is terminated by one party giving notice to another. This can occur when an employee resigns, or if an employer informs a casual employee or contractor that they wish to terminate their agreement. Termination agreements often come with various provisions that must be complied with, for example, the timeframe for notice. There may also be other steps to follow listed in the relevant award.