The Australian Govt has now passed legislation for the extension of the Job Keeper Payment scheme from the 28 Sep 2020 – 28 Mar 2021.
Extension from the 28 Sep 2020
The existing Job Keeper scheme runs up until 27 Sep 2020. The Govt has announced the Job Keeper scheme is to be extended from the 28 Sep 2020 until 28 Mar 2021. There will be two separate extension periods.
For each extension period, an additional actual fall in turnover test applies and the Job Keeper payment rate is different. Alternative tests to determine payment rates and turnover may be available in some circumstances.
The extension periods will be:
Business – What you need to do
From the 28 Sep 2020, you must do all the following:
Fall in turnover
The rates of payment will change
The Job Keeper Payment rate will depend on the number of hours worked by an eligible employee, or an eligible business participant is actively engaged in the business. It will be split into two rates.
| Tier 1 rate: | Tier 2 rate: |
This rate is expected to apply to:
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This rate is expected to apply to:
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Employers and businesses will need to nominate the rate they are claiming for each eligible employee and/or eligible business participant. The Job Keeper payment rate is also different for each extension period.
Job Keeper Extension Period 1
The rates of the Job Keeper Payment in this extension period are:
Job Keeper Extension 2
The rates of the Job Keeper Payment in this extension period are:
What does not change
To claim for fortnights in the Job Keeper Extension Period 1 or 2:
At Accorti Accountants & Advisors we specialise in helping clients with complex and challenging issues. We work with clients all over Australia and have offices in Brisbane and the Gold Coast. If you have questions or need assistance: Contact us now
#economicstimulus #covid19 #coronavirus #JobKeeper #JobKeeperScheme #tax #JobKeeper2.0
Source: Australian Taxation Office
Personal and Business Tax planning is now more important than ever given the impact of COVID-19. The last thing you need in these uncertain times is to pay more tax that you are legally required. Many tax planning strategies require action before the end of the financial year 30 June.
Below are our top tips to improve your tax position for 2020.
Maximise contributions to your own superannuation each year (for both you and your spouse). This is the best tax planning available. You are literally getting a tax deduction for investing in your own future. Most people can claim a deduction for personal contributions they make into their super account up to your contribution cap. You are free to make a personal contribution at any time during the year (provided it is received by your super fund by 30 June) and claim a tax deduction in your tax return, which can be useful towards the end of the financial year if you have not reached your concessional contributions cap of a total $25,000.
Carrying forward your concessional contributions cap (for low balance members)
The super rules were changed to allow low balance members (under $500,000) to use any of their unused concessional contributions cap on a rolling basis for five years. This means if you do not use the full amount of your concessional contributions cap in a particular year, you can carry-forward the unused amount and take advantage of it up to five years later. Any amount not used after five years expires.
This means you may be entitled to make additional deductible contributions over and above $25,000 this year to catch-up any missed contribution amounts in prior years to boost your super balance and potentially reduce tax.
Employers
As an employer, the super contributions are deductible for the year the superannuation fund receives them. So paying your staff’s superannuation into their fund so it’s there prior to 30 June ensures your business will receive a tax deduction in this year.
Under instant asset write-off eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.
Instant asset write-off can be used for:
When purchasing new assets to access the instant asset write-off, there are several dates and thresholds to consider now:
| Eligible businesses | Date range for when asset first used or installed ready for use | Threshold per Asset |
| Less than $500 million aggregated turnover | 12 March 2020 to 30 June 2020 | $150,000 |
| Less than $50 million aggregated turnover | 7.30pm (AEDT) on 2 April 2019 to 11 March 2020 | $30,000 |
| Less than $10 million aggregated turnover | 29 January 2019 to 7.30pm (AEDT) on 2 April 2019 | $25,000 |
Limits – Motor vehicles
If you purchase a car (a passenger vehicle, except a motor cycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers) for your business, the instant asset write-off is limited to the business portion of the car limit of $57,581 for the 2019–20 income tax year. You cannot claim the excess cost of the car under any other depreciation rules.
As a business it a good idea to check all the people who owe you money before the end of the financial year. If the debt is not able to be recovered it should be written off as bad debt on or before 30 June. Be realistic, if they have not paid before COVID-19 it is unlikely they are in a better position now. Write it off.
If you are a Business with stock ensure a stocktake is done on the 30th June. Your Stock can actually be valued at market value, cost or replacement value. Usually whichever is lower. The different valuations can make a significant difference to your tax outcome. All you need to do is complete the stock take, and we will advise on the best valuation method for tax treatment.
Consider bringing forward your expenditure. Look at your cashflow. You could bring costs forward into this year and reduce tax payable.
Investors
Interest deductions for prepaid interest are generally available for interest expenses associated with investment income (as well as some other eligible expenses).
Small Business Prepayments: 12-month rule
If you are a small business with an aggregated turnover of less than $10 million per year, then prepaid expenditure may be immediately deductible under the 12-month rule. This rule can generally be applied to deductible expenses such as Rent, Insurance, Lease Payments, Interest, and other business expenditure.
As with all planning, it is best to start as early as possible, so all options can be considered and budgeted.
At Accorti Accountants & Advisors we are here to help you build a better future. We are experienced in assisting with all your tax planning needs to ensure you pay no more tax than required. If you would like to discuss further or need help please contact us now. We work with clients all over Australia and have offices in Brisbane and the Gold Coast.
See the new rules for Employers, Employees and Casuals.
https://www.ato.gov.au/General/JobKeeper-Payment/
The changes come in from 28 September 2020
The government has now passed legislation for the $130 billion JobKeeper Payment scheme to support businesses significantly affected by the coronavirus to help keep more Australians in jobs.
Eligible employers will be reimbursed a fixed amount of $1,500 per fortnight for each eligible employee. Employers will need to pay eligible employees a minimum of $1,500 (before tax) per fortnight to claim the JobKeeper payment. This will be paid to the employer in arrears each month by the ATO.
The first payments to eligible employers will commence in the first week of May 2020. JobKeeper payments can be made for the period beginning 30 March 2020.
To be eligible for the JobKeeper payment, employers and their employees must meet a range of criteria.
If your business is affected by the coronavirus, you may be eligible to access the JobKeeper payment to assist you to be able to continue paying your employees.
Employers can choose to participate in the scheme and then nominate the employees they wish claim for. An employer can choose not to participate in the JobKeeper payment.
Employers will be eligible for the JobKeeper payment if all the following apply:
You only need to satisfy this requirement once – you don’t need to retest turnover each month.
To work out your fall in turnover, you can compare either:
As an employer, you will receive a payment from the ATO of $1,500 per employee per fortnight as long as you and your employees meet the eligibility criteria.
The ATO will pay you for each eligible employee monthly in arrears beginning in May 2020. Payments will be made from the first week of May.
An employer will usually get $3,000 a month per eligible employee for the two fortnightly periods in that month.
| Example of amounts paid to employers | |
| Payment date | Amount per employee |
| May | $3,000 (for fortnights starting 30 March and 13 April) |
| June | $3,000 (for fortnights starting 27 April and 11 May) |
| July | $3,000 (for fortnights starting 25 May and 8 June) |
| August | $3,000 (for fortnights starting 22 June and 6 July) |
| September | $4,500 (for fortnights starting 20 July, 3 August and 17 August) |
| October | $3,000 (for fortnights starting 31 August and 14 September) |
To enrol and apply for the JobKeeper payment follow the steps below.
You or a registered tax professional can enrol for the JobKeeper payment:
Confirmation of eligible employees you will claim JobKeeper Payment for (available from 4 May 2020 onwards)
You or a registered tax agent can apply for the JobKeeper payment for your eligible employees:
If you use the ATO Business Portal, you will need a myGovID linked to your ABN in relationship Authorisation Manager (RAM). You can find out how to set this up at ato.gov.au/mygovid
If you would like us to assist your business to enrol and apply for the JobKeeper Scheme please contact us here.
Your employee is eligible under the JobKeeper Payment scheme if they:
You cannot claim for any employees who:
Casual employees are not eligible unless they were employed by you on a regular and systematic basis for at least 12 months as at 1 March 2020.
Nominating employees
Before you enrol to receive JobKeeper payments, you need to notify each eligible employee that you intend to nominate them as eligible employees under the JobKeeper scheme.
You must tell those employees that you have nominated them as an eligible employee to claim the JobKeeper payment. They must agree to be nominated by you by completing the JobKeeper employee nomination notice and returning it to you for your records.
The nomination form does not need to be provided to the ATO however employers are required to keep a copy of the completed form as part of their record keeping obligations under the law.
If you would like us to assist your business to enrol and apply for the JobKeeper Scheme please contact us here.
You need to pay your eligible employees at least the minimum amount of $1,500, even if you re-hire them or they earn less than this per fortnight. You cannot pay your employees less than $1,500 per fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay your nominated employee less than $1,500 per fortnight.
You need to re-start or continue to pay your eligible employees at least $1,500 a fortnight in line with your existing pay cycle through your existing payroll solution.
You should pay your employees for each JobKeeper fortnight you plan to claim for. The first fortnight is from 30 March – 12 April and each JobKeeper fortnight that follows.
For the first two fortnights (30 March – 12 April, 13 April – 26 April), the ATO will accept the minimum $1,500 payment for each fortnight has been paid by you even if it has been paid late, provided it is paid by you by the end of April. This means that you can make two fortnightly payments of at least $1,500 per fortnight before the end of April, or a combined payment of at least $3,000 before the end of April.
If you usually pay your employees less frequently than fortnightly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a monthly pay cycle, your employees must have received the monthly equivalent of $1,500 per fortnight.
If your eligible employees change or leave your employment, you need to notify the ATO.
You must pay the minimum $1,500 before tax to each eligible employee per fortnight to claim the JobKeeper payment for that fortnight.
If your eligible employees earn less than $1,500 per fortnight before tax, you must pay them at least $1,500 for each fortnight to claim the JobKeeper payment. This is a ‘top up’ of their salary or wages and will ensure they remain eligible. You cannot pay your employees less than $1,500 per fortnight and keep the difference. You will not be eligible for the JobKeeper payment if you pay your nominated employee less than $1,500 before tax per fortnight. If your eligible employees earn more than $1,500 per fortnight, you should continue to pay them their regular salary or wages. However, you will only receive $1,500 for each eligible employee. Any amount you pay above $1,500 per fortnight is not subsidised by the JobKeeper payment.
If an employee has been stood down after 1 March 2020, you can start paying them $1,500 per fortnight to qualify for the JobKeeper payment for that employee. If an employee ceased working for you after 1 March 2020, you can re-engage them and pay them at least $1,500 per fortnight. You will only be eligible to claim for the fortnights after you re-engaged your employee.
If you usually pay your employees monthly, the payment can be allocated between fortnights in a reasonable manner. For example, if you pay your employees on a four-week pay cycle, your employees must have received at least $3,000 for every four-week period.
All JobKeeper payments are assessable income of the business that is eligible to receive the payments. The normal rules for deductibility apply in respect of the amounts your business pays to its employees where those amounts are subsidised by the JobKeeper payment.
The JobKeeper payment is not subject to GST.
New rules are being introduced by the government with the intention to not require super guarantee to be paid on additional payments that are made to employees as a result of JobKeeper payments. Further updates will be available once legislation or regulations are in place.
You cannot claim the JobKeeper payment on behalf of employees who were not paid at least $1,500 before tax during each JobKeeper payment period.
You cannot claim the JobKeeper payment in advance. The JobKeeper payment is a reimbursement from the ATO to an employer in arrears and cannot be paid in advance in any circumstances.
If you would like us to assist your business to enrol and apply for the JobKeeper Scheme please contact us here.
At Accorti Accountants + Advisors we specialise in helping clients with complex and challenging issues. We are here to help. We work with clients all over Australia and have offices in Brisbane and the Gold Coast. If you have questions or need assistance: Contact us now
#economicstimulus #covid19 #coronavirus #JobKeeper #JobKeeperScheme #Construction #Medical #Professionalservices #Property #Tourism #Advice #tax #Bookkeeping
Sources:ATO
Eligible Employees
Eligible Employers
The Morrison Government announced on 30 March 2020 a 3rd round of economic stimulus aimed to keep Australians in jobs, keep businesses in business and support households and the Australian economy as the world deals with the significant challenges posed by the spread of the coronavirus.
Details of the update to the plan are below:
The Government has announced a $130 billion JobKeeper payment to help keep more Australians in jobs and support businesses affected by the significant economic impact caused by the Coronavirus. Around 6 million workers will receive a Government funded fortnightly payment of $1,500 (before tax) through their employer. The payment ensures eligible employers remain connected to their workforce and will help businesses restart quickly when the crisis is over.
If your business has been significantly impacted by the Coronavirus you will be able to access a wages subsidy to continue paying your employees. Under the JobKeeper program, you will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months. This assistance will help you keep staff and will help you restart when the crisis is over.
The JobKeeper payment helps businesses significantly impacted by the Coronavirus cover the costs of their employees’ wages, so more Australians can retain their jobs and continue to earn an income. Your employer will notify you if they intend to claim the fortnightly payment of $1,500 on your behalf.
To receive the JobKeeper Payment, employers must:
Employers will be eligible for the subsidy if:
The employer must have been in an employment relationship with eligible employees as at 1 March 2020 and confirm that each eligible employee is currently engaged in order to receive JobKeeper Payments. Not-for-profit entities (including charities) and self-employed individuals (businesses without employees) that meet the turnover tests that apply for businesses are eligible to apply for JobKeeper Payments.
Eligible employees are employees who:
If your employees receive the JobKeeper Payment, this may affect their eligibility for payments from Services Australia as they must report their JobKeeper Payment as income.
Initially, employers can register their interest in applying for the JobKeeper Payment here from 30 March 2020. Subsequently, eligible employers will be able to apply for the scheme by means of an online application. The first payment will be received by employers from the ATO in the first week of May.
Eligible employers will need to identify eligible employees for JobKeeper Payments and must provide monthly updates to the ATO. Participating employers will be required to ensure eligible employees will receive, at a minimum, $1,500 per fortnight, before tax. It will be up to the employer if they want to pay superannuation on any additional wage paid because of the JobKeeper Payment.
Businesses without employees, such as the self-employed, can register their interest in applying for JobKeeper Payment here from 30 March 2020. Businesses without employees will need to provide an ABN for their business, nominate an individual to receive the payment and provide that individual’s Tax File Number and provide a declaration as to recent business activity.
People who are self-employed will need to provide a monthly update to the ATO to declare their continued eligibility for the payments. Payment will be made monthly to the individual’s bank account.
At Accorti Accountants +Advisors we specialise in helping client with complex and challenging issues. We are here to help. If you have questions or need assistance: Contact us now
We work with clients all over Australia and have offices in Brisbane and the Gold Coast.
#solveaccountants #economicstimulus #covid19 #coronavirus #Construction #Medical #Professionalservices #Property #Tourism #Advice #tax #Bookkeeping
The Morrison Government announced an increase to their economic plan to keep Australians in jobs, keep businesses in business and support households and the Australian economy as the world deals with the significant challenges posed by the spread of the coronavirus.
Details of the updated plan are below:
The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This will be paid to both existing and new recipients of JobSeeker Payment, Youth Allowance Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020. Around half of those that benefit are pensioners. The second payment will not be made to those eligible for the Coronavirus supplement.
The Government is also offering administrative relief for certain tax obligations, including deferring tax payments up to four months. This is similar to relief provided following the bushfires for taxpayers affected by the coronavirus, on a case-by-case basis.
The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21. Individuals will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.
The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21. This measure will benefit retirees holding these products by reducing the need to sell investment assets to fund minimum drawdown requirements.
On 12 March, the Government announced a 0.5 percentage point reduction in both the upper and lower social security deeming rates. The Government will now reduce these rates by another 0.25 percentage points.
As of 1 May 2020, the upper deeming rate will be 2.25 per cent and the lower deeming rate will be 0.25 per cent. The reductions reflect the low interest rate environment and its impact on the income from savings.
The Government is enhancing the Boosting Cash Flow for Employers measure it announced on 12 March 2020. The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not for-profits (NFPs) that employ people, with a minimum payment of $20,000. These payments will help businesses and NFPs with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.
Small and medium-sized business entities with aggregated annual turnover under $50 million and that employ workers are eligible.
Under the enhanced scheme, employers will receive a payment equal to 100 per cent of their salary and wages PAYG withholding (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.
An additional payment is also being introduced in the July – October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received. This means that eligible entities will receive at least $20,000 up to a total of $100,000 under both payments.
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive. The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide temporary and targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. In 2017-18 there were more than 360,000 businesses that benefited from the current instant asset write-off, claiming deductions to the value of over $4 billion. This measure will support over 3.5 million businesses (over 99 per cent of businesses) employing more than 9.7 million employees.
The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice. Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
Support will also be provided to the National Apprentice Employment Network, the peak national body representing Group Training Organisations, to co-ordinate the re-employment of displaced apprentices and trainees throughout their network of host employers across Australia.
The Government will set aside $1 billion to support regions most significantly affected by the Coronavirus outbreak. These funds will be available to assist during the outbreak and the recovery. In addition, the Government is assisting our airline industry by providing relief from a number of taxes and Government charges estimated to total up to $715 million.
At Accorti Accountants +Advisors we specialise in helping client with complex and challenging issues. We can help you weigh up various options to get the best outcome possible and protect your business. We work with clients all over Australia and have offices in Brisbane and the Gold Coast.We work with clients all over Australia and have offices in Brisbane and the Gold Coast.
#solveaccountants #coronavirus #Construction #Medical #Professionalservices #Property #Tourism #Advice #tax #Bookkeeping #economicstimulus #covid19
Source: ATO
A business structure is generally right when it is set-up by an accountant; however, business like life is subject to constant change. This may mean that your business structure is no longer appropriate for you given the evolution in your business and personal affairs. This can result in bad outcomes as outlined in our case studies below.
Case Study 1
We were recently approached by a new client that was looking for a new accountant. He was concerned he was paying too much tax and wanted some advice. He had approached his former accountants first to get some assistance from them but was advised against a change. Something didn’t seem right, so he came to us for a second opinion.
The client had started a business 3 years earlier and as it was a new business at the time it was set-up as a sole trader. However, the business had grown rapidly in both the size and complexity of its operations. Unfortunately, the former accountant did not take the time to understand the change in circumstances and as such the structure had not been reviewed or changed.
This resulted in the client paying an extra $35,000 in income tax over a 3-year period plus triggered additional liabilities for PAYG instalments.
This could have been avoided with the establishment of a company for less than $1,000 upfront which would have resulted in a better tax outcome for past and future years as well as improved the client’s risk management by separating the business from their personal affairs. That tax saving could have been used to grow the business, pay off debt, take a holiday, or any number of other uses better than paying unnecessary tax.
Case Study 2
We also had another new client that had a company which they had used to previously operate a business. The business was not successful and resulted in a small loss which was trapped in the company. Prior to becoming a client, they decided to start a second business and buy a substantial investment property.
They decided to:
Their logic was that the new business would lose money for the first year and they did not want to pay tax on the rent from the investment property while they got up and running to improve cash flow. Unfortunately, while they paid no tax on rent for the first year they also lost entitlement to the general discount on capital gains which allows most entities (but not companies) to disregard 50% of the capital gain on the sale of capital assets (i.e. investment property).
This will result in an additional $200,000 of tax to pay at the time of disposal (at its current valuation alone).
In hindsight the new business should have gone into the old company and the investment should have been bought in a trust. This would have allowed the client to benefit from the general discount and still utilise the losses from the old business. Again, that tax saving could have been used for any number of other uses that are better than paying unnecessary tax.
Solution
The solution in both situations is simple: get good advice before major decisions.
How do you know if it is good advice? If you don’t understand the advice this is a big red flag. Also, get input from your other advisors or get a second opinion.
Business and investment structures often have competing short-term and long-term results, and these can be difficult to manage and get right. In addition, the complexity created when things change (which is inevitable) requires assessment and consideration up-front. This often involves input from your lawyer or others. We work with all your advisors to get the right results. We love helping clients to solve difficult issues and can help you weigh up various options to get the best outcome possible.
At Accorti Accountants +Advisors we are Business Accountants. We work with clients all over Australia and have offices in Brisbane and the Gold Coast. If you have any questions or need help please contact us now.
#accortiaccountants #tax #advice #structures
The ATO announced on 18 December 2019 (just in time for Christmas) an extension to their insurance policy request from insurers for another 5 years to include the year(s) ended 2016 – 2019 as part of their ongoing taxation compliance profiling activities to identify those taxpayers who are not fulfilling their tax and superannuation reporting obligations.
The ATO has been using a variety of data matching measures to identify those individuals who own or control significant assets to ensure that their level of income reported to the ATO is consistent with the taxpayer’s “lifestyle”. The ATO now receives a vast amount of data from banks, insurers, state titles office(s) and other agency to help them identify at risk taxpayers.
Under the program, the ATO has already collected data on insurance policies for the 2013–14 and 2014–15 financial years. The ATO expects to receive information about assets owned by around 350,000 taxpayers from 2015–16 to 2019–20 as part of its data-matching program of work.
ATO Deputy Commissioner Deborah Jenkins said that if a taxpayer reports their taxable income to be $70,000 to the ATO but they have a yacht valued at $3 million then there is likely to be some red flags raised.
Taxpayers who make a voluntary disclosure can generally expect a reduction in the administrative penalties and interest charges that would normally apply.
Are you at risk? We can help you.
At Accorti Accountants +Advisors we are experienced in managing high- value voluntary disclosure(s) and taxation audits with the ATO. If you have concerns you may be at risk, please contact us to discuss your options. Having a plan in place prior to any action by the ATO is prudent.
At Accorti Accountants +Advisors we are Business Accountants. We work with clients all over Australia and have offices in Brisbane and the Gold Coast. If you have any questions or need help please contact us now.
#tax #lifestyle #lifestyleassets #ato #audit
The Christmas countdown is happening, and we are rushing to get everything done to capitalise on all opportunities before the post-Christmas lull. Whether Christmas is a busy period or not, it does cause volatility and dislocation for most businesses. It is not business as usual and that is what causes the problem.
Business owners cope better with predictable and consistent trading conditions, and solutions to issues that arise are easier, it is a very different picture during disrupted periods. Watch out for these five things this Christmas:
1. The headache that is Christmas trading stock – Ho, Ho, No …
If your business sells goods and your activity spikes over Christmas, there will be the temptation to increase stock. It makes sense as long as you don’t go over the top. Having too much post-Christmas stock means you have a lot of cash tied up with stock or will be carrying out of season product. Find suppliers than can work on short notice. Or better still, see if they will place stock on consignment, then you only pay once stock sells. Sometimes it is better to lose a few sales rather than carrying a lot of stock and headaches into the New Year.
Stock management is not just about the cost aspect. Consumers will purchase online if they cannot purchase in store. Retailers can capitalise on this by giving consumers the opportunity to buy online while still in their store if the stock is not currently available or may provide free shipping.
2. The trend to discount
Consumers want a bargain and usually find one. With Black Friday sales stock is usually available. Those consumers waiting for last minute bargains just before Christmas, are left with whatever stock remains.
If you decide to discount stock, it is crucial to know what your profit margins are so you can calculate what you amount you can discount. Carefully consider your strategy and what your business can sustain. Example – a business with 30% gross profit margin that decides to offer a 25% discount needs to increase sales volume by 500% simply to maintain the position they were in beforehand. Quite often businesses end up trading below their break-even point and therefore generate losses.
3. The increased costs of Christmas
Costs increase over the Christmas period. Employing more staff, holiday and other leave costs, downtime from public holidays, and promotional costs all add to the cost of doing business. Keep a close eye on the costs. It is awesome to embrace the Christmas spirit as long as you don’t get a hangover for New Year.
A lot of businesses bring on more casual staff. Make sure you are paying staff the correct pay rates and meeting your Super obligations. Example – Under Retail Award, the rate for casuals (21+ years) starts at $26.76/hr. There is a 3 hour minimum shift for all casual workers. Check the Fair Work website findyouraward to check correct rates.
4. Cash flow headaches into the New Year
Quite often the New Year means quieter trading and also tighter cash flow. The first quarter (Jan-Mar) is usually the toughest quarter for cash flow for the year. Ensure you have a cash buffer heading into the New Year. Don’t over-commit at the end of the year or it will lead to problems in the New Year.
5. Be like Scrooge – chase in those debts
If your customers have accounts, start following up the debtors early. If they are experiencing any cash flow problems, Christmas will increase that pressure. Creditors who chase early and hard get paid first. You don’t want to be the last supplier on payment list – the cash flow bucket may well be empty at that time.
Christmas is a magical time of year. Don’t get caught up in the hype and rush and lose control.
At Accorti Accountants +Advisors we are Business Accountants. We work with clients all over Australia and have offices in Brisbane and the Gold Coast. If you have any questions or need help please contact us now.
#tax #advisory #bookkeeping
Parliament passed legislation last month that will prevent taxpayers being able to claim deductions for expenses that were incurred when holding vacant land. The amendments are not only retrospective but go further than solely vacant land.
Previously, if you had purchased vacant land intending to build an investment property on the land, then expenses incurred for holding the land (council rates, loan interest, etc) may have been able to be claimed as tax deductions.
The new laws will prevent these types of deductions from being claimed. Mum & Dads (individuals, closely held trusts and SMSFs) are the people that the new laws will affect the most. As the new laws will apply retrospectively to outgoings or losses incurred on or later than 1 July 2019 regardless of whether the land was first held prior to this date, and with no grandfathering in place, these amendments not only impact those that are intending to develop the vacant land but also those that have already acquired the land for development. It is the same target as previous tax changes that denied travel claims for visiting residential rental properties and claims for depreciation for plant and equipment in some residential rental properties.
The changes however, go beyond purely vacant land for residential purposes. Deductions could be denied also for land with a building on it, if it is deemed that the building is not ‘substantial’. The problem is that legislation does not clearly state ‘substantial’ definition.
A shearing shed or silo would be substantial, but a residential garage would not meet the test from what the bill suggests.
If the new measures prevent holding costs from being claimed as a deduction, then they will generally be added to the cost base of the asset for capital gains tax (CGT) purposes. This means that they can potentially reduce any capital gain made when you dispose of the property in the future. However, holding costs for CGT assets acquired before 21 August 1991 cannot be added to the cost base and these costs cannot increase or create a capital loss on sale of a property.
On a positive note, if the vacant land is leased to a third party under an arm’s length arrangement it may continue to meet eligibility for deductions for the holding costs after 1 July 2019 if the land is being used in a business activity. Also, primary production land used in business will generally be excluded from the new rules. However, if there are residential premises on the land already or they are being constructed on the land then deductions could still potentially be lost (at least to some degree).
There are also carve outs for land which has become vacant or which cannot be used to produce income for a period of time due to structures being impacted by natural disasters or other events beyond the owner’s control.
The amendments will not apply if you (or certain related parties) are carrying on a business on the land or the land is owned by superannuation funds (other than SMSFs), companies, certain public trusts or managed investment trusts.
At Accorti Accountants +Advisors we can help you understand and navigate the property and tax issues to help you achieve your goals.
We work with clients all over Australia and have offices in Brisbane and the Gold Coast. If you have any questions or need help please contact us now to discuss land and property tax.
#accortiaccountants #tax #property
The Government has resurrected the Superannuation Guarantee amnesty giving those employers that have fallen behind with their Superannuation Guarantee obligations the ability to self-correct themselves. However, this time the amnesty incentive is strengthened by harsher penalties for those that fail to take action.
The amnesty was originally announced back in May 2018 and was due to run 24 May 2018 – 23 May 2019, but the amnesty failed to secure passage through Parliament after a backlash from those thought that the amnesty was too lenient on recalcitrant employers.
The Australian Government reports more than 7,000 employers have come forward since the original announcement to voluntarily disclose historical unpaid super. The Superannuation Guarantee tax gap is estimated at around $2.85 billion in missing or late Superannuation Guarantee payments.
New legislation to enable the amnesty is currently before Parliament, if enacted it will apply from the date of the original amnesty announcement 24 May 2018 – 6 months after the legislation has passed Parliament. Employers have this time period to disclose voluntarily unpaid or underpaid Superannuation Guarantee payments to the Commissioner of Taxation.
The amnesty applies to historical unpaid or underpaid Superannuation Guarantee for all periods up to March 2018 quarter.
Employers must disclose the outstanding Superannuation Guarantee to the Tax Commissioner to qualify for the amnesty. They must pay in full, or if that is not possible for the business then it must enter into a payment plan agreement with the Australian Taxation Office. If they agree to the payment plan and fail to meet the payments, then the amnesty will not apply.
The amnesty will only apply to voluntary disclosures. The Australian Taxation Office will continue with their compliance activities during the Superannuation Guarantee amnesty period so full penalties will apply if they find the underpayment first. The amnesty also does not include amounts already identified as owing or the employer is subject to an audit with Australian Taxation Office.
Normally, if the employer fails to meet their quarterly Superannuation Guarantee payment on time, they will have to pay the Superannuation Guarantee charge and lodge a Superannuation Guarantee Statement. The Superannuation Guarantee charge applies even if you pay the outstanding Superannuation Guarantee soon after the deadline.
| What employers pay for failing to meet Superannuation Guarantee obligations | |
| No Amnesty | Amnesty |
| Superannuation Guarantee charge comprised of: | Superannuation Guarantee charge comprised of: |
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| Penalties of up to 200% of the amount of the underlying Superannuation Guarantee charge (minimum 100% for quarters covered by the amnesty) | No penalties |
| A general interest charge if the Superannuation Guarantee or penalties are not paid by the due date | A general interest charge
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| Superannuation Guarantee charge amount is not deductible – even if you pay the outstanding amount | Superannuation Guarantee charge amount is deductible |
Under the quarterly Superannuation Guarantee, the interest component is calculated on an employer’s quarterly shortfall amount from the first day of the relevant quarter to the date when the Superannuation Guarantee charge would be payable (not from the date the Superannuation Guarantee was overdue).
The ability to deduct Superannuation Guarantee charge and the reduction in penalties under the amnesty could be significant for employers that have fallen behind with their Superannuation Guarantee obligations.
If Superannuation Guarantee is paid late, special provisions exist within the legislation to automatically protect employees from inadvertently breaching concessional contribution cap limits if the unpaid Superannuation Guarantee is paid to the Commissioner and then transferred to the employee’s superannuation fund. Where the employer makes the payment directly into the employee’s fund, the individual would need to apply to the Commissioner requesting the exercise of discretion to either disregard the concessional contributions or allocate them to another financial year.
If an employer fails to take advantage of the amnesty and is found to have underpaid employee Superannuation Guarantee, they are required to pay the Superannuation Guarantee charge which includes penalties of up to 200%. Outside of the amnesty period, the Australian Taxation Office has the power to reduce the penalty in whole or part. However, the legislation enabling the amnesty imposes tougher penalties on employers that do not voluntarily correct unpaid or underpaid Superannuation Guarantee by removing the Australian Taxation Office’s capacity to reduce these penalties below 100%. In effect, the Commissioner loses the power for leniency even in cases where an employer has made a genuine mistake.
Even if you don’t think that your business has any Superannuation Guarantee underpayment issues, it is well worth completing a payroll audit that will ensure your payroll calculations are correct, and that your employees are being paid at a consistent rate as per their entitlements under workplace awards and laws.
If your business has fallen behind on its Superannuation Guarantee obligations and is eligible for the amnesty, you need to start working through the issues now or contact us to work through the issues for you. There are several calculations that need completing and these may take some time to complete.
If your business has engaged any contractors during the period covered by the amnesty, then the arrangements will need to be reviewed as it is common for workers to be classified as employees under the Superannuation Guarantee provisions even if the parties have agreed that the worker should be treated as a contractor. You cannot contract out of Superannuation Guarantee obligations.
If a problem is revealed, you can correct it without excessive penalties applying under the amnesty.
At Accorti Accountants we can help you ensure you have met your obligations and, in the event you have not, help to resolve.
Contact Us at Accorti Accountants +Advisors located on the Gold Coast & Brisbane, Australia to discuss your super obligations
#accortiaccountants #superamnesty #tax #superannuation #smallbusiness
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Brisbane & Gold Coast Business Accountants.
Accorti Accountants + Advisors is a firm of chartered accountants that provide business accounting, tax, and advisory solutions for evolving businesses in Brisbane and the Gold Coast region.
