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As we are well and truly in the midst of the silly season, we thought we would take a light-hearted look at the complexity of Australian taxation laws through an open letter from the ATO to the one and only Mr. Santa Claus 

Dear Santa,

Thank you for the opportunity to provide tax advice for your operation. We are pleased you have initiated this advice as the Australian Taxation Office (ATO) is looking closely at any business or individual that operates within Australia but has significant transactions or operations internationally. The fact that you run a global business that generates no profit but 'gifts' millions of toys each year produced by your offshore factory, have significant brand value in Australia across thousands of goods and services, have never lodged a tax return, or paid tax in Australia, is likely to trigger an investigation. We have identified a number of issues as a starting point for further discussions. These are: Read more…

Director’s fees: What and How To Pay Them

The issue of Director's fees often comes up – should we pay directors, how to pay, and if we do pay fees how should they be paid? We answer the common questions for private companies.

1 - Can you pay a Director?
Directors who work in the company, executive directors, would generally have an agreed executive remuneration structure that takes into account their service including attending Board meetings (so, generally no extra fees for service outside of the agreed remuneration structure).  

For non-executive directors, companies can only pay Director's fees if the company constitution allows for it or a resolution is passed to make the payments. The resolution to pay directors fees must be made and documented prior to the fees being paid. 

These fees are in addition to any agreed expenses such as travel expenses to attend board meetings or in connection with the company's business. Read more…

Entities with a global parent or that are part of a large group of companies are being caught in the multinational tax crackdown regardless of their size in Australia.

With effect from 1 July 2016, many smaller entities connected to a larger parent or group are now only grappling with the changes prior to the lodgement of the 2016-17 tax returns. 

A series of laws targeting multinationals came into effect from 1 July 2016 to ensure that tax is paid on economic activity in Australia. But it's not just entities with revenues of $1bn or more that are affected. Subsidiaries may be caught by the new rules if they:

 

  • Have a large global parent with annual global income of A$1bn or more, or
  • Form part of a group of entities consolidated for accounting purposes where the global parent entity has an annual global income of A$1 billion or more.

This includes Australian headquartered entities (with or without foreign operations) and local operations of foreign head-quartered multinationals.   Read more…

Living your Tag-Line

Accountants can get a hard time! Perception is that we are stale and often boring and only concerned with spreadsheets.

But at Walsh Accountants; We're different!!!

When Lou McGregor from Lou McGregor Strategy recognised that we are truly living our tag-line and putting People First, Numbers Second - that's something to be a little proud of!

Lou often get asked if Tag-lines or Positioning Statements attached to a company logo actually serve a purpose or are a waste of time.

Her response is simple...
"It depends if you actually LIVE what you say you DO" - Click below to read her Case Study on Walsh Accountants.

LIVING YOUR TAG-LINE : WALSH ACCOUNTANTS CASESTUDY

 

Every vendor selling a property needs to prove that they are a resident of Australia for tax purposes unless they are happy for the purchaser to withhold a 12.5% withholding tax. From 1 July 2017, every individual selling a property with a sale value of $750,000 or more is affected.

 

To prove you are a resident, you can apply online to the Tax Commissioner for a clearance certificate, which will remain valid for 12 months.

 

While these rules have been in place since 1 July 2016, on 1 July 2017 the threshold for properties reduced from $2 million to $750,000 and the withholding tax level increased from 10% to 12.5%.

 

The intent of the foreign resident CGT withholding rules is to ensure that tax is collected on the sale of taxable Australian property by foreign residents. But, the mechanism for collecting the tax affects everyone regardless of their residency status.

 

Properties under $750,000 are excluded from the rules. This exclusion can apply to residential dwellings, commercial premises, vacant land, strata title units, easements and leasehold interests as long as they have a market value of less than $750,000. If the parties are dealing at arm's length, the actual purchase price is assumed to be the market value unless the purchase price is artificially contrived. Read more…

Main residence exemption removed for non-residents

The Federal Budget announced that non-residents will no longer be able to access the main residence exemption for Capital Gains Tax (CGT) purposes. Now that the draft legislation has been released, more details are available about how this exclusion will work.

 

Under the new rules, the main residence exemption – the exemption that prevents your home being subject to CGT when you dispose of it – will not be available to non-residents.  The draft legislation is very 'black and white.' If you are not an Australian resident for tax purposes at the time you dispose of the property, CGT will apply to any gain you made – this is in addition to the 12.5% withholding tax that applies to taxable Australian property with a value of $750,000 or more (from 1 July 2017).

 

Transitional rules apply for non-residents affected by the changes if they owned the property on or before 9 May 2017, and dispose of the property by 30 June 2019.

This gives non-residents time to sell their main residence (or former main residence) and obtain tax relief under the main residence rules if they choose.

 

Interestingly, the draft rules apply even if you were a resident for part of the time you owned the property. The measure applies if you are a non-resident when you dispose of the property regardless of your previous residency status.

 

Special amendments are also being introduced to apply the new rules consistently to deceased estates and special disability trusts to ensure that property held by non-residents is excluded from the main residence exemption.

 

The rules have also been tightened for property held through companies or trusts to prevent complex structuring to get around the rules. The draft amends the application of CGT to non-residents when selling shares in a company or interests in a trust.  The rules ensure that multiple layers of companies or trusts cannot be used to circumvent the 10% threshold that applies in order to determine whether membership interests in companies or trusts are classified as taxable Australian property.

 

The residency tests to determine who is a resident for tax purposes can be complex and are often subjective. Please contact us if you would like to better understand your position and the tax implications of your residency status. Simply living in Australia does not make you a resident for tax purposes, particularly if you continue to have interests overseas.

Does superannuation offer an avenue to help downsizers and first home savers? The Government seems to think so. In July 2017, the detail of the housing initiatives announced in the Federal Budget were released for consultation. We explore what's on offer and the implications for those over 65 looking to downsize and first home buyers saving for their deposit.

 

Super concessions for downsizers

If you are over 65, have held your home for 10 years or more and are looking to sell, from 1 July 2018 you might be able to contribute some of the proceeds of the sale of your home to superannuation.

 

The benefit of this measure is that you can contribute a lump sum of up to $300,000 per person to superannuation without being restricted by the existing non-concessional contribution caps - $100,000 subject to your total superannuation balance - or age restrictions. It's a way of building your superannuation quickly and taking advantage of superannuation's concessional tax rates. The $1.6 million transfer balance cap will continue to apply so your pension interests cannot exceed this amount. And, the Age Pension means test will continue to apply. If you are considering using this initiative, it will be important to get advice to ensure that you are eligible to use this measure and the contribution does not adversely affect your overall financial position. Read more…

Investment Property: Post 30 June

Anyone with investment property in Australia is probably feeling a little edgy with all the recent media attention on deductions, affordable housing, and negative gearing.  We take a look at some of the key tax issues for investors.

 

No more deductions for travelling to and from your investment property

The days of writing-off the costs of travel to and from your residential investment property are about to end. From 1 July 2017, the Government intends to abolish deductions for travel expenses related to inspecting, maintaining, or collecting rent for a residential rental property.

 

Depreciation changes and how to maximise your deductions now

Investors who purchase residential rental property from Budget night (9 May 2017, 7:30pm) may not be able to claim the same tax deductions as investors who purchased property prior to this date. In the recent Federal Budget, the Government announced its intention to limit the depreciation deductions available.

 

Investors who directly purchase plant and equipment - such as ovens, air conditioning units, swimming pools, carpets etc., - for their residential investment property after 9 May 2017 will be able to claim depreciation deductions over the effective life of the asset. However, subsequent owners of a property will be unable to claim deductions for plant and equipment purchased by a previous owner of that property. If you are not the original purchaser of the item, you will not be able to use the depreciation rules to your advantage.  Read more…

GST on imports: new rules for goods under $1,000

Last month, Parliament passed legislation that will see GST applied to all consumer imports regardless of their value. Currently, imports below $1,000 are excluded from GST. 

The perceived preferential treatment of internet shopping has been a contentious issue for a while with the retail sector lobbying hard to ensure that where a business is benefiting from sales to Australian consumers, the purchase is taxed in the same way as local retailers.

While the start date of the change has been pushed back until 1 July 2018, businesses importing goods into Australia will need to review their position to check whether supply chains are affected and determine which entity is actually liable for the GST. Australian businesses that purchase low value goods from overseas should also check to make sure that overseas suppliers are not imposing GST on supplies of these goods unnecessarily.

The new rules are intended to apply to situations that are not captured by the existing GST importation rules because the goods are worth $1,000 or less. The rules are designed to only apply when goods are delivered to Australian consumers who are either not registered for GST in Australia or where the goods do not relate to an enterprise or business being carried on in Australia. If your business imports goods into Australia and is registered for GST, the tax should not apply to low value goods you import.

GST applies where the supply is to an Australia consumer – it doesn't matter who makes the purchase. So, you could have the scenario where GST applies to a gift purchased for you by an overseas relative if the gift is shipped directly to you. 

Where goods are purchased through electronic platform providers, such as Amazon, eBay or Alibaba, responsibility for collecting the GST will rest with the platform provider as they manage the customer billing on behalf of the supplier. However, it will be more difficult for the Government to force foreign companies to comply with the new rules leading to concerns about the costs of the administration required to enforce GST on low value goods.

For overseas suppliers, if the value of goods sold into Australia is greater than $75,000 per annum, the entity is required to register for GST. However simplified options are available for those that only export to Australia and have no need to claim tax credits in Australia.

Are you a Business Owner paying too much Tax?

If you're in business and you feel year after year you're giving too much of your hard-earned dollars away to the ATO, there may be some strategies we can implement for you to minimise the amount of tax you're required to pay.

In this paper we share with you 10 proven strategies we have executed for our clients that have saved them thousands of dollars ... 

CLICK THE BANNER TO DOWNLOAD 

We are very excited by the initiatives brought forward for small - medium business in the 2017 - 2018 Budget. They are unprecedented and bring with them great opportunities which Small-Medium Business owners may now be in a position to take advantage of.  
Walsh Accountants is a strong advocate for business reforms and any legislative changes that will help build a strong business sector. We are very excited by the changes that were announced on the 9th May and the opportunities it creates for our Small – Medium business clients.  
If any of these changes speak to you and you would like to discuss how you can take advantage of them for your business, please do not hesitate to contact us to speak with your accountant.  

Changes include:  

  • Tax cuts begin in 2016–17 for businesses with annual turnover less than $10 million, with the tax rate for companies cut to 27.5 per cent – the lowest level in 50 years.

Read more…

The popular $20,000 instant asset write-off for small business ends on 30 June 2017.  This concession enables small businesses to immediately write-off depreciable assets which cost less than $20,000.

Until recently, this instant write-off was only accessible to businesses with an aggregated turnover of less that $2 million.  But, a last minute deal struck between the government and Senator Nick Xenophon to pass the enterprise tax Bill - containing amongst other things the tax cuts for business and a change in the small business threshold – will see up to 90,000 more businesses access the instant write-off.

While the Bill containing these changes is not yet law, we expect that it will be passed when Parliament next sits.

For those businesses that have not accessed this concession previously, it's important to understand how you can take advantage of it before 30 June 2017.

What is the $20,000 instant asset write-off? Read more…

We have just been informed that the Australian Taxation Office intends to notify credit rating agencies of businesses that have outstanding tax debts. This will take effect from 1st July 2017.

The plan will see the ATO disclose the tax debt information of businesses that have not effectively engaged with the ATO to manage these debts to credit agencies.  This means that if your or your clients business has a tax debt and steps have not been taken to work with the ATO, they will ensure that the business owner cannot access new finance or potentially maintain existing finance levels without first addressing the debt to the ATO.

We worry that this move will put significant pressure on business operators. The government says it expects the change will encourage businesses to pay their tax debts in a timely fashion to avoid doing damage to their credit ratings 
Debts will only be reported where:
  • The debt is for a taxpayer that has an ABN
  • The debt is not in dispute
  • No payment plan has been established or an existing payment plan has defaulted
  • The debt amount is over $10,000 and unpaid for over 90 days (we have little doubt however that this measure will eventually extend to all tax debtors)
The important thing is that anyone with an outstanding tax debt engage with the ATO - This will prevent the credit agency threat being triggered. The ATO will notify a business that it intends to refer its tax debt to a credit bureau before it passes on the information.

After many years of trying, Australia will have a mandatory data breach notification scheme in place within the year following the passage of legislation through the senate on the 13th February.

What does the data breach notification mean to you? All you need to know for your business

This newly passed law means organisations that determine they have been breached or have lost data will need to report the incident to the Privacy Commissioner and notify affected customers as soon as they become aware of a breach.

The notification must include a description of the data breach, the kind of information involved, and how customers should respond to the security incident.

Those that fail to notify face penalties including fines of $360,000 for individuals and $1.8 million for organisations.

Pride & Prejudice: Top Four Predictions for 2017

The global economy is picking up and Australia is about to secure the global record for the longest period a country has gone without a recession. But with the focus on the political environment, there is an uneasiness in the market and with uneasiness comes a reticence to take risks. The fortunes of Australians this year will have much to do with how you or your business is positioned and how you respond to challenges. Here are our top predictions:

1. Trumponomics will impact on our region

2. For business: Innovate or Perish

3. For you: Superannuation knee-jerk reactions will disadvantage some

4. International is still a dirty word

Read more…

The wide ranging superannuation reforms originally announced in the 2016-17 Federal Budget have passed Parliament.

 

As the majority of the reforms start from 1 July 2017, it's important to consider how these might impact on you and whether you need to take any action before then.

 

Please contact Rachael Keuning  on 5592 3644 or rachael@walshaccountants.com if you would like to discuss the impact of these reforms. 

 

Walsh Accountants in-house SMSF Specialist, Tax Specialist, and Accounting Team will be more than happy to discuss your queries/concerns with you.  

KEY REFORMS INCLUDE:  Read more…

Parental Leave. Where are we up to?

How did paid parental leave get to be so contentious?  The current debate is not about parental leave in general; the entitlement to 12 months with a potential for 24 months of unpaid leave with your job guaranteed (or an Parental Leaveequivalent position) remains.  It's about who pays for paid leave.

 

According to a recent report, on average across OECD countries, mothers are entitled to just less than 18 weeks of paid maternity leave around childbirth.  Almost all OECD countries offer paid maternity leave that lasts at least three months. The United States is the only country to offer no statutory entitlement to paid leave on a national basis.  On the flip side, UK mothers can take up to nine months paid maternity leave.

 

On average, OECD countries offer eight weeks of paid father-specific leave, either through paid paternity leave or paid father-specific parental or home care leave. Nine OECD countries provide no paid father-specific leave at all, and 11 offer two weeks or less.

 

Most OECD countries provide payments that replace over 50% of previous earnings, with 12 countries offering a mother on average earnings full compensation across the leave period. Payment rates are lowest in Ireland and the United Kingdom, where only around one-third of gross average earnings are replaced by maternity benefits.  As a result, despite lengthy paid leave entitlements, full-rate equivalent paid maternity leave in these countries lasts only nine and 12 weeks respectively.  Read more…

Making Sense of Super Reformes

In the 2016–17 Budget, the Government announced a package of reforms designed to improve the sustainability, flexibility and integrity of the superannuation system. It set out a clear objective for superannuation: 'to provide income in retirement to substitute or supplement the Age Pension', which guided the superannuation changes

If you are waiting for the superannuation reforms announced in the Budget to pass Parliament before working out what they mean to you, you might miss out on any opportunities available.

 

When enacted, the reforms will represent the single biggest change to superannuation since its inception. While there has been a softening of the original Budget announcements, there are still some very big changes coming your way.

 

Accumulators: Under 65s

The reforms likely to impact on you are: Read more…

Last call for SuperStream Compliance!

The ATO's final deadline is fast approaching. 28 October is the day all businesses that pay super - big and small - need to be using a SuperStream-compliant process, whether that be a super clearing house, messaging portal, or compliant software.

The ATO's employer checklist provides a good overview for those still non-compliant. SuperStream
Employee Checklist: a step-by-step guide... 

If you need any assistance, please contact us ASAP. Our team have been assisting our clients get set up and they would be more than happy to assist you.

Please contact Rachael Keuning on 5592 3644 or rachael@walshaccountants.com to discuss. 

Uber is calling for drivers, Airbnb is seeking more hosts but what are the implications of becoming part of the sharing economy?

The basics of tax apply regardless of how you earn money.  That is, even though you may be earning income from different sources or using different platforms to generate income, the fundamental tax issues remain the same. You don't have to be carrying on a business to pay tax on income you earn.

And, given that so many of these services are through sharing platforms, the Australian Tax Office (ATO) has the capacity to data match money flowing through to financial institutions specifically from these platforms.

'Sharing' a room or an entire house

Sharing a room or your house through services such as Airbnb can be a great way to earn income from an existing asset.  The tax treatment of what you earn from these services is the same as any other residential rental property arrangement.  This means you must include the rental income in your income tax return.  For example, if a husband and wife jointly own a property that they rent out through a sharing service, whatever they earn needs to be declared on their income tax returns in the same proportion as the ownership of the house in the year they earned the income. Read more…

Security Alert! Ransomwear Attacks

On Wednesday, three Gold Coast businesses called our IT & Data Security provider Insane Technologies to report their systems had been attacked and their critical business files have been locked. This was all in the space of 2 hours!

We spoke with David Ruddock from Insane Technologies regarding the nature of the attacks –

The two variants of ransomware that had taken over their systems were CryptoLocker (one of the earlier versions of ransomware) and Locky (one of the newer versions, delivered in Microsoft Word .doc, .docx and even .rtf files).

Ransomware encrypts your files and then asks you to pay a ransom to recover your files.

If you don't have a backup, your ONLY OPTION is to pay the ransom. For some businesses, it may sometimes be cheaper (due to the time it would take to restore the files, loss of income, downtime etc.) to just pay the ransomware. However, some ransomware will then only unlock certain parts of your data demanding you pay more to release more files.

As a result of this simple logic, many ransomware victims just pay the ransom and don't report the crime. As payments are made by the anonymous crypto-currency Bitcoin, the risk of being caught for criminals is very small.

These two factors make ransomware a very attractive and lucrative income generator for organised criminals!!  Read more…

The Practice was founded by Graham Walsh in 1976. Mimicking the growth of the Gold Coast, the firm has evolved and expanded over the past 40 years.

"As the business world has changed, so have the needs of our clients' Graham explains. 

The firm over this time has successfully assisted its clients to navigate through the various business cycles as well as the business and tax changes that have occurred during this time. We have assisted our clients in managing their operations from record keeping on hand written ledgers, the introduction of Capital gains tax, superannuation and GST, transitioning to computer based accounting systems and now the advent of cloud based accounting systems and international trade.

 

Through the ongoing support of local business clients the firm has expanded significantly since 1976.  Graham merged the practice with Paul and Lynn Yates in the late 1990's.  Graham's son Tom Walsh joined the practice in 1994 and the firm became known as Walsh & Walsh in 2000.  Murray Kilpin joined the company in 2010 and brought with him his experience and knowledge in many areas including franchising and management rights, and become partner in 2014.  Read more…

Most people are not surprised when a start up business fails. But it's not just start ups that grow to death; it's also a common cause of business failure for mature businesses.

Start-up businesses often fail because they are undercapitalised.  They grow until the money runs out and then they can't afford to fund further growth.  The banks refuse to lend to them as they have no history and no assets to leverage, and then they die. It's an easy trap to fall into. The entrepreneurial spirit that drives people to start up a business is often the same spirit that keeps them focussed on a growth path.  The mentality is that the faster you drive sales and bring in the cash, the more successful the business (and the entrepreneur) will be.  However, this cycle of sales and profit is missing two key components; financial, and cash flow management. A successful and sustaining business has all of these elements.

 

For the more mature business, growing to death is often the result of unplanned growth opportunities. It's ironic that seizing a major sales contract or a big new client can be your business's ruin but it's more common than you think.  More often than not it's an issue that business operators don't identify until it is too late. Read more…

Life-time limit on Non-concessional Contributions 

Non-concessional contributions are contributions for which no tax deduction is claimed.  Prior to Budget night these contributions were limited to $180,000 per year (or $540,000 every three years for individuals aged under 65 utilising the "bring forward" rule). 

Effective from 7.30pm (AEST) on 3 May 2016, a lifetime non-concessional contributions limit of $500,000 is to be introduced. To ensure maximum effectiveness, this limit will take into account all non-concessional contributions made on or after 1 July 2007.  Accordingly, extreme care should be taken in respect of any future non-concessional contributions. 

Pensions - $1.6m transfer balance cap   

Currently income earned by a superannuation fund in pension phase is tax free.                           Read more…

Upper-middle Australia is set to reap the greatest rewards from the Turnbull Government's election eve budget, while high-income retirees are facing a surprise hit on their earnings.

Key points:

  • Wealthy retirees' tax free super capped at $1.6m
  • 25 per cent flat company tax rate by 2026
  • New $10m turnover ceiling for small business tax breaks
  • Tax receipts down $6.4b next year

Explore who's a winner and who's a loser as a result of Scott Morrison's 2016 Budget...   

Budget 2016: Winner & Losers                          Read more…

Budget Whispers - Could this affect your Retirement Plan?

In recent weeks, the media has been overrun with commentary about what the 2016 federal budget may contain in relation to superannuation.  

Over the past ten years a popular strategy employed by many Australians has been affectionately referred to as 'Transition to Retirement' (TTR) whereby persons still working are able to access between 4% and 10% of their superannuation account balance per annum. This is typically coupled with a salary sacrifice arrangement to replace the drawings from the fund and reduce the overall income tax liability.

Firmly in the headlights is the Transition to Retirement strategy with media commentary suggesting that this strategy may be in the firing line for change, or even abolition, in the budget.

We spoke with Lewis Clelland from Corso Private Wealth; he commented "whilst salary sacrificing will still be available, there is a very real chance the government will close the door to new participants of the pre-retirement TTR strategy thereby only allowing access to superannuation monies when a person has fully retired"

Additionally Lewis said "In the past the majority of changes to superannuation apply prospectively and any existing arrangements are typically grandfathered. Therefore clients who are currently undertaking this strategy should be able to continue to do so – of course there are no guarantees when it comes to government policy".   Read more…

If your business is in the hospital/non-profit sector and uses salary packaging for team members, you're a small business, or provide team members with a gym

or space to do yoga, then there are a few things you need to know beyond the basic FBT changes when the new FBT year starts on 1 April 2016.

1. You will pay more FBT

 2. Meal entertainment crackdown – medical professionals beware

3. Salary sacrificing may not be worth it

4. Two laptops are better than one for small business 

5. Yoga or gym classes at the office?                                             Read more…

The ATO has issued a stern warning to SMSFs with collectible assets ahead of rule changes that come into effect on 1 July this year.

Following the 2010 Cooper Review, the rules relating to ownership of collectibles in an SMSF have been tightened. 
Under the new rules, there are a series of investment standards that need to be met by the SMSF holding the collectibles, including that the asset cannot be stored in a private residence of a related party. In addition, there must be a documented decision about asset storage. 

Most significantly, the collectible must be insured in the fund's name within seven days of the SMSF acquiring it. 

Speaking at the SMSF Association's national conference in Adelaide last week, the ATO's Kasey Macfarlane said the commissioner is not going to be sympathetic to those who have not met the new standards.  Read more…

Ups & Downs: Managing in uncertain times

Ups & Downs: Managing in uncertain times

How do you create certainty in uncertain times?  Much of what we do personally to grow and protect our wealth, and commercially for the businesses we manage is subject to unpredictability and change.

 

The answer is that there are no certainties in life - sorry about that.  But, this doesn't mean that you can't take charge and protect against uncertainty - you just need to know where and how to look at it.

Where we are at

Government spending will continue to be a focus this year with the interest on Government debt now running at $1 billion per month according to Treasury.  There are only a few ways the Government has of dealing with the increasingly ominous debt trend; initiatives to lift productivity and growth to boost tax revenues, spending cuts, and increased taxes or a reduction in tax concessions.  This year, for you personally, your SMSF, and your business, you should keep this in mind when trying to manage change as Government policy is likely to provide both opportunities and risks in the short and long term. Read more…

Team Christmas Function

With the silly season nearly upon us, the staff Christmas function is a hot topic of conversation around the coffee machine. 

As you are no doubt on the cusp of holding this year's Christmas function, it's now a good time to remind you of the risks involved in end of year functions and the risks alcohol can bring to a business.  Over the years, there have been many cases where employees have sought damages from employers for negligence, sexual harassment and inappropriate behaviour from one staff member to another. 

Without being a party pooper it is advisable that as a business you try to reduce any possible risk of adverse actions occurring at your Christmas party, please consider, the below:

  • Set a clear start and finish time for the function.
  • Ensure that alcohol, if available, is served responsibly and there is plenty of food and non-alcoholic drinks available.
  • Ensure that everyone can safely get home after the event i.e. taxis are easily accessible and that no-one drinks and drives.
  • Nominate 'supervisors' for the party – managers to keep an eye on staff ensuring that everyone is having a good time but not in excess.
  • Prior to the event, advise employees that the Christmas party is a work event and that they are expected to conduct themselves in a manner which they would in the workplace.  Remind staff of policies that may be used for the basis of any disciplinary action if things go wrong.  A good opportunity to remind staff of your code of conduct, sexual harassment, discrimination, workplace harassment and code of conduct policies (draft email below).
  • Ensure there is a complaints process for any issues that may arise after the Christmas party.
  • Finally, ensure that your insurances cover typical Christmas party activities.  Read more…

Naughty or nice? Xmas tax checklist

It's that time of year again - what to do for the Christmas party for the team, customer gifts, gifts of appreciation for your favourite accountant (just kidding), etc., etc.   Here are our top tips for a generous and tax effective Christmas season:

For your business

What to do for customers?

The most effective way of sharing the Christmas joy with customers is not necessarily the most tax effective. If, for example, you take your client out or entertain them in any way, it's not tax deductible and you can't claim back the GST.  There are specific rules designed to prevent deductions and GST credits from being claimed when the expenses relate to entertainment, regardless of whether there is an expectation of generating goodwill and increased business sales.  Restaurants, a show, golf, and corporate race days all fall into the 'entertainment' category.

 

However, if you send your customer a gift, then the gift is tax deductible as long as there is an expectation that the business will benefit (assuming the gift does not amount to entertainment).  Even better, why don't you deliver the gift yourself to your best customers and personally wish them a Merry Christmas.  It will have a much bigger impact even if they are not available and the receptionist tells them you delivered the gift. 

 

From a marketing perspective, if your budget is tight, it's better to focus on the customers you believe deliver the most value to your business than spending a small amount on every customer regardless of value.  If you are going to invest in Christmas gifts then make it something people remember and appropriate to your business.

 

You could also make a donation on behalf of your customers (where your business takes the tax deduction) or for your customers (where they receive the tax deduction).  Donations to deductible gift recipients (DGRs) above $2 are tax deductible and can make an active difference to a cause (see For you below).   Read more…

Earlier this week the government released it's innovation statement announcing tax breaks and law changes to encourage and entice innovation and investment in entrepreneurial start-ups.

Key tax incentives included in the announcement include:

  • Early stage investor tax break- expected to commence 1 July 2016
  • Changes to company losses tests
  • Changes to employee share schemes
  • Changes to Depreciation rules for intangible assets
  • Tax offset for early stage venture capital partnerships - expected to commence in July 2016
  • Insolvency reforms

Early stage investor tax break- expected to commence 1 July 2016

The statement outlines tax breaks for eligible companies (Unlisted companies, incorporated during the last 3 years, undertaking an eligible business with expenditure less than $1mill and income less than $200,000 in previous year) that provide a 20% non-refundable tax offset based on the amount of investment capped at $200,000 per investor, per year. The incentives also provide a 10 year CGT exemption for investments held for at least three years.

Read more…

Bad Deeds: Is your SMSF at risk?

Your SMSF's trust deed is its rulebook.  If the deed does not allow or recognise something then the trustees can't do it.  Despite this, a lot of trustees are unaware of what their trust deed says – it was just something that was required when the fund was established.  The problem with any document is that unless you amend it, it is only current for the circumstances that existed at that time.  However, the law changes regularly and so do individual circumstances.   This month, we shortcut the review process and highlight the key SMSF trust deed problem areas.

Trust deed does not allow the types of payments being made

Trust deed does not recognise life changes and estate planning needs

Flexibility and control

 

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This is the last instalment of Murray feature exploring activities from this chapter of Scaling Up by Verne Harnish

Point 1 - Help people play to their strengths.

Murray's Key Points

  • Consider what constitutes strength in this scenario – A strength isn't just something you're good at. Its only a strength if it literally gives you strength and provides you with boundless energy.  In turn; a weakness could something that you may be good at, but it drains the life out of you.
  • Focus your employees on activities that give them energy and consider diverting the draining parts of anyone's job to others that have an aptitude for these tasks.  It is possible that this might create new positions but if the result is a happier, more productive, and more loyal workforce, the switch will pay dividends in the long run.
  • Consider getting your team to document all the activities they either love (energising activities) or loathe (draining activities).  Ask them to put forward suggestions on how to overcome these challenges.  You will get a more engaged team that are automatically 'on-board' with any changes required.
  • Don't forget to apply this to yourself!  Focus on eliminating or delegating tasks that drain you.  From my own personal experience; I find getting bogged down in reviewing detailed tax returns frustrating and draining.  I had no energy left to think about clients' bigger picture dreams and goals and even less energy to go out and discuss this and possible solutions with them (what I really enjoy the most about my job).  I delegated this reviewing task to one of my team leaders who has an incredible technical mind and loves the detail (but finds communicating with clients draining and confidence sapping).  Win-Win for both our firm and the client.

Consider these traits when describing your team:

Good Manager - Speaks in generalities about his team… they are all hard-working, responsible, diligent and fun etc.

Great Manager - Describes each team member with specific details about their personality, strengths and achievements. 

Read the Except Read more…

Following on from last week - Murray explores the next activity from this chapter of Scaling Up by Verne Harnish.

Murray's Key Points

  • Identify what frustrates your employees and take steps to remove (or reduce the burden) of these frustrations.
  • Review your processes and procedures with an open mind for change. I am always challenging myself and my staff to look for better and more efficient ways of running the business and removing obstacles.
  • No-one likes having to work alongside "Bozo's".  Put significant thought into your hiring process (e.g. consider how a candidate's personality will fit in with not only you but also consider the dynamics of your team).  Will the new candidate inspire and motivate others or deflate and bring down team morale?
  • Fixing people issues within your team shouldn't stop at the employee level.  Consider if any clients are at fault of demotivating your team through unreasonable behaviour 

Read the Except Read more…

Bernard Salt of KPMG has undertaken an analysis of the historical trends of the Gold Coast
including population, migration and dwellings. The report focuses on investment and development, education, health, tourism and visitation, retail, economic development, creative arts and culture, and technology and innovation.

An analysis of key strategies developed by the City of Gold Coast has been undertaken and complied the a report – link below.

Beyond the Horizon - Full Report

Tom's Thoughts:

 The report gives a great snapshot as a city about where we've come from and what the Gold Coast is likely to look like in the years to come from the perspective of population, demographics as well future education, health and service needs. Most importantly for local businesses it helps to identify where the opportunities lie. 

Some of the highlights I took from this report are: Read more…

Following on from last week - Murray explores the next activity from this chapter of Scaling Up by Verne Harnish. 

Point 3 - Set Clear Expectations and Provide a Line of Sight

MURRAY'S KEY POINTS                                    

  • From within your business, think of the core values you exhibit, its brand promise, and the purpose of your business.
  • Think of what KPI's (Key Performance Indicators) your individual employees (and you) need to focus on to achieve the goals of the business. 
  • A great manager will give employees autonomy to find their own way of achieving their own goals/KPI's (within the boundaries of the core values and brand promise that exists within your business).
  • Identify quarterly priorities that need to be addressed to keep employees focused on achieving their KPI's.  Communicate these priorities with your employees and update them regularly so that they can clearly see progress is being made.
  • Identify a "Critical Number" that each employee or team can focus on fixing/achieving during a quarter.
  • Can your employees explain how what they're doing helps deliver on your company's purpose, strategy, and Brand Promise?

Read the Except Read more…

Following on from last week - Murray explores the next activity from this chapter of Scaling Up by Verne Harnish. 

Point 4 - Give Recognition and Show Appreciation   

MURRAY'S KEY POINTS                                    

  • Staff won't going to give you 100% if they feel no-one cares and appreciates what they do.
  • Thank people each and every day (why limit this to staff?).
  • Consider each individual's personality when giving recognition (some prefer one-on-one comments – others want it announced nationwide)
  • Consider all positive vs. negative interactions.  A ratio of 3:1 for work…..5:1 for marriages!!!

 Read the Excerpt  Read more…

5 Key tips to assist in growing your business

Murray has selected a chapter from Scaling Up that personally appealed to him: The Managers – Keeping & Growing (Educating) the Team. 

The executive summary reads:

"Once you've hired your team members, it takes great managers to keep them happy and engaged.  Failing to develop these managers throughout the organisation can become a major growth barrier.  We identify five critical activities that distinguish great managers and the routine s they use to educate their people – and we suggest that the term manager be replaced with the word 'coach' which more accurately describes the role."

To assist in keeping your talent (e.g. staff) engaged, Verne has developed 5 main activities that successful managers regularly employ.  In reverse order of importance:

5. Hire Fewer People but pay them more

4. Give Recognition and show appreciation

3. Set clear expectations and give employees a clear line of sight

2. Don't demotivate; "dehassle"

1. Help people play to their strengths.

Over the next 5 weeks we will take an excerpt from Verne's book on each of the 5 points listed above and use this as a discussion point in the hope that together (we are here to help you) we maximise the growth potential of your businesses.

MURRAY'S KEY POINTS - From excerpt point 5 - Hire Fewer People but pay them more...                                     

  • Money does not necessarily motivate all employees (consider flexi-time or work from home arrangements)
  • Have a documented, well thought out and rigorous hiring system in place to minimise time wasters and provide the best opportunity to scoop the best talent from the available pool (consider external HR consultants and/or self-educating  via Top Grading or similar)
  • Match your remuneration structure to fit the company's culture and vision (are you service focused or sales driven?)
  • Be flexible in your approach to employing staff

Excerpt - Hire Less; Higher Pay  Read more…

Scaling Up Your Business

As a fellow business owner (yes, we employ staff, pay taxes and have the same challenges as our business clients) we are always looking for opportunities to improve and grow our business, identify opportunities that ensure our firm is set-apart from our competitors.

Whilst we often rely on our own 'best practice' business knowledge by staying in touch with market developments and industry events; recently we have started looking further afield. We wanted to ensure that all our stakeholders (e.g. staff, customers, suppliers and directors) can clearly identify a point of difference in the way we go about our business which (we hope) will ultimately assist us in achieving our long-term goals.

To this point, Tom and I attended Verne Harnish's scaling up workshop to develop a roadmap of where we wanted our business to be in the next 10 years and critically; how to get there. After reading Verne's latest book (Scaling Up: How a few companies make it - and why others don't) we felt it made sense to implement a number of Verne's management practices in our own firm.

As Tom and I progress through improving our own business strategy we will communicate some of the more critical aspects of Verne's recommendations to our own clients in the hope that together; we can all 'scale up' our businesses and take it to the next level.

Murray Kilpin – Director

Treasurer raises ‘idea’ of personal tax cuts

Who doesn't like a tax cut when they personally benefit from it?  In a recent speech, the Treasurer said that personal tax cuts were required to prevent 'bracket creep' – that's jargon for what happens when the tax rate thresholds don't keep pace with inflation and more people are pushed into a higher tax bracket (they get taxed more and potentially lose access to benefits but are economically standing still).

 

The last change to the tax brackets was in 2012 to increase the tax-free threshold.  The Government estimates that in the next two years, 300,000 Australians will move into the second highest tax bracket.  And, by 2025, 43% of taxpayers will be in the top two tax brackets.  The political problem is that because personal tax rates are a percentage, any cut to personal tax rates benefits higher income earners - they earn more therefore the dollar value of the cut is more.  As it stands, the top 10% of income earners pay almost half of all personal tax collected – in the 1990s it was closer to 25%.   Read more…

What now for the GST?

Fifteen years after the introduction of the GST in Australia debate still rages over what should be taxed and whether the GST rate should increase. 

Unless the Government changes the GST Act, any change requires the approval of the States and Territories.  The Treasurers' workshop late last month resolved to keep the GST rate at 10% but enable a series of other changes.  We look at the key areas of change:

GST on online products

The 'Netflix tax': GST on digital goods

GST to remain on tampons  Read more…

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