The responsibilities associated with successfully running a business have never been more extensive or stringent than today. One area which is often put to the ‘back of the pack’ for most is their Business Activity Statement (BAS) and Taxation obligations. However, the ATO do not subscribe to this notion and have prioritised increasing their effectiveness at regulating these lodgements. They have frequently enhanced their penalty system under the Crimes Amendment (Penalty Unit) Bill and from December 2012 these units have increased astronomically by 91%. Therefore, it is more important than ever to make sure you have all your BAS reporting and Tax affairs in order. However, if you have submitted a late BAS statement, here’s what to do.

See key ATO Due Dates here. 

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ATO DUE DATES

Income Tax Returns
Tax return for all individuals and trusts where one or more prior year tax returns were outstanding as at 30 June 2019. Tax return for clients prosecuted for non-lodgment of prior year tax returns and advised of a lodgment due date of 31 October 2019.

Click here to see further information about individuals and trust return due dates in 2019 and 2020.

Business Activity Statements (BAS’s)

Click here for our latest information regarding Business Activity Statements. 

Quarterly BAS’s are due for lodgement the 28th day following the respective BAS period (e.g. March 2018 Quarter BAS’s are due 28 April 2018). However, if lodged through a BAS agent you will be granted an extended due date of the 25th day two months following the respective BAS period (e.g. March 2018 Quarter BAS’s are due 26 May 2018). Businesses lodging Monthly BAS’s have a due date of 21st day following the BAS period and do not receive the extended due date concessions afforded to Quarterly lodgers. If you are currently lodging BAS’s on a monthly-basis and wish to change to quarterly reporting for the convenience and extended lodgement periods, you must have sales turnover less than 20 million and contact the ATO to make the switch as long as they haven’t previously determined you must lodge monthly for other reasons.

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PENALTIES AND GENERAL INTEREST CHARGES

If any of the above mentioned due dates are breached, you may be subject to the ATO’s penalty system for which they issue Penalty Units (currently $210 per unit) depending on the infraction and period outstanding. ‘Failure to lodge’ penalties are calculated based on the size of the entity and each 28-day period the tax return or BAS statement is overdue. ‘Small Entities’ which have a turnover of less than 1 million are issued one penalty unit per period overdue which is capped at a maximum of five penalty units being $1,050. ‘Medium Entities’ which have a turnover of 1 million and below $20 million or have PAYG withheld amounts totalling between $25,001 and 1 million in a previous year (medium withholders) are issued two penalty units per periods overdue. ‘Large Entities’ with a turnover of 20 million and above or PAYG withheld amounts totalling 1 million in a previous year (large withholders) are issued five penalty units per periods overdue. In addition to this the ATO applies a general interest charge (GIC) for any unpaid tax liability or BAS statements from the date it was due to be paid until which time the amount in question is settled (including the associated penalties and interest charges).

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YOU’RE LATE – WHAT TO DO NOW?

The ATO generally does not apply penalties in isolated cases of late lodgement where an entity has maintained a good lodgement history. Also, if you were subject to extenuating circumstances impacting your ability to lodge (i.e. natural disaster or serious illness) you can apply to have the penalty and interest charges remitted. If neither of the above applies then you will need to lodge and pay your Income Tax Return or BAS Statement (including any penalty and interest) as quickly as possible. If you are unable to make immediate payment then it is in your best interests to enter into a payment arrangement with the ATO which can avoid or reduce your penalty consequences, however general interest charges will still be applied.

If you’d like to make an appointment to speak to one of our accountants, get in touch.

Have you ever run into a speed bump when tackling a tough task that at first seems impossible to solve but after dropping and revisiting it with ‘fresh eyes’, realise the answer is simple and right in front of you? Fundamentally this is what an Advisory Board can offer in the modern-day business world, a ‘fresh-eyed approach’ to your business operations. A well-structured advisory board can not only bring a much needed outside perspective, but also critical advice and networking opportunities to complement your existing skills and assist in achieving business goals.

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What is an advisory board?

An advisory board is essentially a group of people carefully selected by an entrepreneur with the sole intent of providing non-binding strategic advice and support to the businesses’ many stakeholders (owners, shareholders or directors etc). When compared to the traditional ‘Board of Directors’ arrangement, it provides entrepreneurs with a safe haven to express their thoughts as it is structured to be informal and flexible. While they may not make decisions for the business, they are still legally required to fulfil their obligations with care and due diligence.

What services can an advisory board provide?

Every business’s journey is unique, this means their expectations in respect to an advisory board must be handled differently and be specifically tailored to the business needs. A few general examples of where an advisory board can assist a business include:

1. Requiring additional funds to be raised
2. Where rapid growth has occurred
3. Wanting to access a larger network or establish strategic partnerships
4. Major changes in mission statement, core values or strategic direction
5. Smoothing the transition between different business cycles
6. Manoeuvring through complex succession issues
7. Enhancing market reputation and creditability
8. Implementing a better business culture
9. Generating new business ideas or identification of overlooked issues

What is the selection process of an advisory board?

The selection process of your advisory board must be handled with great care. A business should evaluate itself honestly and identify what areas of the business are strengths and weaknesses and determine how best utilisation of external support can supplement or complement existing skills. Common areas for business skill gaps include strategy, legal, taxation, finance, technology, marketing and human resources. Advisory board members are usually compensated with a daily fee for each meeting, however if more is required than these occasional meetings a periodic retainer can be negotiated. In high profile arrangements company equity is also another option, usually being 0.25% (but can vary 0.10% to 2%) depending on the value of the advisor, time commitment to the role and length of the contract.

In today’s global economy and rapid progressing technology front, advisory boards are being mass adopted for their unparalleled flexibility and wide-spread application to all business’s regardless of size, industry or lifecycle stage.

How can we help?

Quill is the largest multi-disciplined financial services practice on the Gold Coast, with an extension office in Brisbane. We provide a high touch personalised service delivered with competence, confidence and amazing results.

At Quill we are passionate advocates for our clients, and our team focus is always to provide an amazing experience, not just great service.

To ensure your business is receiving the service it requires, talk to Quill today to find out what we can do for you. Get in touch with us here.

“We now hold our Board meetings at their office and they have become an integral part of those meetings. All reports for the Board are prepared and distributed in a timely manner. We have no hesitation in recommending the Quill Group to anyone looking for professional accounting services at a fair and reasonable rate.”
– Ian Overett

The Government introduced Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 into Parliament on 28 March 2018 which affects employer superannuation contributions. This Bill introduces very serious consequences for employers who break the law by short changing their employees. The ATO will have access to new enforcement and collection provisions, including strengthened arrangements for director penalty notices. Some of the proposed amendments are to:

1. enable the Commissioner of Taxation to issue directions to employers to pay unpaid superannuation guarantee
2. undertake superannuation guarantee education courses
3. to disclose more information about superannuation guarantee non-compliance to affected employees;
4. extend Single Touch Payroll reporting to all employers;
5. require more regular reporting by superannuation funds
6. strengthen the commissioner’s ability to collect superannuation guarantee charge and pay as you go withholding liabilities

As an employer, specifically as a Director of a company where employer superannuation contributions and obligations have not been met, you may find yourself personally liable for unpaid superannuation. This is because Director penalties can apply to Directors of companies where the company does not meet its Superannuation Guarantee Charge (SGC) obligations.

Proposed Superannuation Guarantee Amnesty

The Government introduced Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018. The Bill makes numerous amendments to superannuation and related tax laws, including to encourage the recovery of unpaid Superannuation Guarantee (SG) by introducing a temporary amnesty from late payment penalties for employers who disclose that they have underpaid SG in the past.

It is estimated that in 2014-15, around 2.85 billion in SG payments went unpaid. Of particular concern is that this estimate only relates to one income year!

The Bill complements measures proposed in Treasury Laws Amendment (2018 Measures No. 4) Bill 2018 into Parliament on 28 March that seeks to strengthen the penalty regime for SG non-compliance.

The Amnesty is proposed to last for 12 months, commencing on Thursday 24 May 2018 and ending on Thursday 23 May 2019.

The Amnesty applies only to disclosures of previously undeclared SG shortfall amounts that are made during the 12-month amnesty period and the disclosures relate to the quarters starting when the SG regime commenced and all subsequent quarters until and including the quarter starting on 1 January 2018 — that is, the period from 1 July 1992 to 31 March 2018. This is an astonishing 26 years.

The benefits of the Amnesty will not be available for SG non-compliance that occurs on or after 1 April 2018.

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When is an employer eligible for the Amnesty?

To be eligible for the Amnesty, an employer must:

1. voluntarily disclose SG shortfall amounts, relating to any period from 1 July 1992 to 31 March 2018, within the Amnesty period (24 May 2018 to 23 May 2019);
2. disclose SG shortfall amounts that have not previously been disclosed;
3. make the payment of the SG shortfall amount during the 12-month Amnesty period; and
4. not have been previously informed that the ATO is examining (or that it intends to examine) the employer’s SG compliance for the relevant quarter.

An employer may still qualify for the Amnesty if it has previously made disclosures about an SG shortfall for a quarter but comes forward with information about additional amounts of SG shortfall for that quarter.

 

 

The benefits for employers who take part in the amnesty are:

1. Administration component for SG shortfalls will be waived (currently $20 per SG statement lodged)
2. the Part 7 penalty for failing to lodge an SG statement, equal to double the amount of the SGC, i.e. 200 per cent of the SGC payable will not apply
3. Catch-up SG payments made between 24 May 2018 and 23 May 2019 will be tax deductible (generally, late payments of SG are not deductible for tax purposes)

The measures are aimed to incentivise employers to get up to date with their obligations and assist the Government in tackling the SG gap problem.

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We are your business accounting specialists.

Get in touch with us or give our office a call on 07 5528 2000 to discuss registration in more detail. At Quill, we are passionate advocates for all of our clients and our team is focussed on providing an experience, not just great service. As the largest multi-disciplined financial services practice on the Gold Coast, we provide a high touch personalised service delivered with competence, confidence and amazing results.

Working here at Quill as the Accounts Assistant for the last 4 years and having previously owned a successful bookkeeping business and supported my husband with his business accounts for over 15 years, I know first-hand how important a disciplined approach to your accounts is for a sound and healthy business.

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Here are my Top 5 tips for successful account keeping practices:

1. Get automated

Invest in a professional online Accounting Software program. The monthly subscription costs can be claimed as an expense to your business and far out-weigh the value of your time and resources. This will give you back valuable time to re-invest into your business and focus on the big picture, and not spend your precious time on the small stuff.
I would also recommend you investigate some of the add-on apps available too. These apps can upload your small receipts on the go, so no more crumpled up pieces of paper in your car or handbag.
I will include some links below that I use and recommend. There are many more on the market and it is a personal choice as to which work best for you and your business.

2. Be organised

Spend time getting your accounts in order and set up a schedule for bookkeeping duties. Put aside time either weekly, fortnightly or monthly to record your business expenditure and review your accounts payable and receivable.
If you are time poor, think about hiring a professional bookkeeper for a few hours per week/month to help with these tasks. Your expertise in your business can be better spent on productive and income producing activities. Outsource the small stuff.

3. Utilise Supplier payment terms

Ask your suppliers for payment terms rather than COD. Set up 30 day accounts where you can and utilise these terms to free up cashflow.

4. Follow up your Debtors

Don’t be afraid to follow up overdue invoices owed to you. Most times it is simply a forgotten invoice and a quick call is all it takes to get paid.
Some online accounting software programs have in-built invoice reminder features, or use an add-on app that sends automated reminders, meaning you don’t have to be on the phone chasing money and can help take the stress out of these tasks.

5. Align your business with an experienced Accounting Practice

It’s important to have a professional accounting practice you can trust, so ask colleagues or business associates for recommendations. Seek out a firm who has experience with your type of business. Take the time to build a trusted relationship with your accountant to gain the very best financial outcome for you and your business. Need help with this? Get in contact with Quill Group today.

Here are some links that I use and recommend:
Xero Accounting Software – https://www.xero.com/au/
Receipt Bank – https://www.receipt-bank.com/
Invoice Sherpa – https://www.invoicesherpa.com/

 

If you run a business, it’s more than likely you have desires to grow. But this probably comes with mixed emotions, one of which is usually fear.

Not a fear of growing, more a fear of what it will bring. Will you lose control of your processes? Do you have to invest in more hardware? And will you require a larger team, which can bring a whole new set of worries.

A larger team means more training and management. You’ll be faced with challenges finding the ideal people and building the right team, not to mention keeping your existing team happy and valued. There is a reason acquiring and retaining the right team members has been identified as a major barrier for all businesses.

And it’s no wonder that despite your yearning to grow, you might be tempted to stick with running your business the way you do now.

But why should you settle?

There is a better way.

Growing your business doesn’t always require a bigger team. You don’t need to turn your back on the reasons you built your business in the first place, spending endless hours recruiting and training, or create a whole set of new problems for yourself. Not if you are smart about how you approach your growth.

Be clever about the way you utilise your existing resources. Improve your efficiencies in every possible way by redesigning, defining, and documenting your processes. Automate wherever possible. Look at where you are making the most revenue and make changes that will empower your team to boost their output. If you can do this properly, growing your business will be a certainty. And this can be without any increase to your staff overheads.

Some of the essential steps to help you achieve this are:

• • Focus On Output – look at process refinement. Improving the method your team delivers output will lead to big gains – you will be able to produce more in less time.

• • Standardisation – You can’t improve a process if your team are doing the same tasks in a different manner to each other.

• • Improve Your Process – Explore every option to speed up the way every task is performed.

• • Automation – When you find ways to automate processes that were previously manual, you will start to see big gains in efficiency.

• • Look at where the revenue comes in—and where it doesn’t – look at the areas of your business where time and money is spent but takes a longer period of time to convert into sales. Explore avenues to reduce this time and standardising the process, or alternatively decide if this revenue stream is worth keeping.

Growth doesn’t have to be scary, it can be exciting and rewarding in more ways than one.

With the 30 June 2018 fast approaching now is a great time to discuss possible tax savings strategies for your business.

Below are several strategies to think about prior to 30 June 2018:

1. Pay Employee Superannuation

To secure a tax deduction for your June 2018 quarterly superannuation owing, you will need to pay this amount prior to 30 June 2018. This payment must clear your bank account prior to 30 June 2018 for it to be considered a tax deduction in the 2018 tax year.  We recommend you make these payments by 20 June 2018 to ensure there is sufficient time for the contributions to clear in the employee’s super fund.

2. Concessional Contributions Cap of $25,000 

As a business owner you may wish to contribute extra superannuation into your super fund to obtain a tax deduction. Please note: that the contributions cap includes compulsory super guarantee (SG) payments made by your employer and salary sacrificed amounts. For the 2018 financial year the concessional contributions cap is $25,000 for all age groups.  Please ensure you do not exceed this cap as it could be a costly mistake.

3. Defer Income

If possible, delay issuing invoices to your customers until after 30 June 2018. This will push that income into the following financial year.

4. Bring forward expenses 

If possible, you could incur expenses for business use prior to 30 June. This way these expenses will be included in the 2018 financial year rather than 2019 financial year, reducing your tax payable in the 2018 financial year. (Examples include: consumables, repairs, and office supplies).

5. Prepayment of expenses (Small Business Entities only)  

If possible, you could review your expenses to determine if any of your 2019 expenses (i.e. rent, insurance or subscriptions) could be prepaid. As a Small Business Entity (SBE) you can get a tax deduction in the 2018 financial year for expenses you prepay relating to the 2019 financial year as long as the prepayment was made prior to June 2018 and it is not for a period of more than 12 months. To qualify as a small business entity (SBE) for the 2018 financial year, you need to be operating a business and have aggregated turnover of less than $10,000,000.

 

 

6. Small business instant asset write-off of $20,000 (Small Business Entities only)  

For SBE’s the instant asset write-off threshold is $20,000 for the 2018 financial year. This instant asset write-off applies to most assets but there are some exclusions so if you are unsure please check with us before you purchase your business assets.  If you are an SBE and you purchase an eligible business asset with a value of $20,000 or less prior to 30 June 2018, you can get a deduction for the full amount in the 2018 financial year. To qualify as a small business entity (SBE) for the 2018 financial year, you need to be operating a business and have aggregated turnover of less than $10,000,000.

7. Review of your debtors 

You could review all of your debtors to determine if you have any outstanding debtors that are unlikely to pay? If so, you should consider writing these off prior to 30 June 2018 so you are not paying tax on money you are not going to receive.

8. Review of your depreciation schedule (Non-Small Business Entity clients only)

You could review your depreciation schedule for any assets that should be written off (because they are obsolete, no longer used in business or have been stolen) prior to 30 June 2018. This could enable you to get a tax deduction for the closing book value of the asset written off in the 2018 financial year.

9. Motor Vehicle Expenses 

To maximise your motor vehicle tax deductions please ensure you have a valid logbook. Having a valid logbook gives us more options to choose from when we are selecting an ATO calculation method for your motor vehicle claim each financial year. For a logbook to be valid it needs to be kept for a period of 12 continuous weeks and it should be no more than 5 years old.

10. Stock take 

If you hold stock on hand, you should complete your stock take as close to the 30 June 2018 as possible. Once completed, you should review your stock take to identify any obsolete/worthless items that need to be written off.  By writing off these items prior to 30 June 2018 you will receive a tax deduction for the cost of this stock.

 

 

11. Reducing the corporate tax rate 

From the 2018 financial year a company that qualifies as a Base Rate Entity (BRE) will be taxed at the lower corporate tax rate of 27.5%. For a company to qualify as a BRE, they must meet the following three criteria:

1. Have an aggregated turnover of less than $25,000,000 and
2. Be carrying on a business, and
3. Have no more than 80% base rate entity passive income (This last one is currently a proposed amendment to the law but if it is passed will take affect from the 2018 financial year).

12. Trust Distribution Minutes

Have you completed your Trust Distribution Minutes? Your Trust Distribution Minute records the Trustee’s intention to allocate the Income of the Trust to the beneficiaries in a specific manner.  The 2018 Trust Distribution Minute needs to be completed and signed by 30 June 2018.

If you would like to discuss any of these tax saving strategies with us please feel free to get in touch with our experienced team at Quill Group. It would be our pleasure to assist you with any of your business accounting needs. 

 

The Fringe Benefits Tax (FBT) year ends on 31 March. We’ve outlined the key hot spots for employers and employees:

1. Motor vehicles – using the company car outside of work
2. New safe harbour for utes and commercial vehicles
3. Car parking – are you really declaring the true cost of parking?
4. The living away from home allowance – the common errors
5. Salary sacrifice or employee contribution – where employers are getting it wrong
6. Housekeeping essentials – FBT rates and how to save some time
7. Not registered for FBT – the areas where the ATO’s view might differ
8. Crackdown on salary sacrifice calculations

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Motor Vehicles – using the company car outside of work

Just because your business buys a motor vehicle and it is used as a work vehicle, that alone does not mean that the car is exempt from FBT. If you use the car for private purposes – pick the kids up from school, doing the shopping, use it freely on weekends, garage it at home, your spouse uses it – FBT is likely to apply. While we’re sure the old, “what the Australian Tax Office (ATO) doesn’t know won’t hurt them” mentality often applies when the FBT returns are completed, it might not be enough. The private use of work vehicles is firmly in the sites of the ATO.

Private use is when you use a car provided by your employer (this includes directors) outside of simply travelling for work related purposes.

If the work vehicle is garaged at or near your home, even if only for security reasons, it is taken to be available for private use regardless of whether or not you have permission to use the car privately. Similarly, where the place of employment and residence are the same, the car is taken to be available for the private use of the employee.

Finding out that a car has been used for non work-related purposes is not that difficult. Often, the odometer readings don’t match the work schedule of the business. These are areas the ATO will be looking at.

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Utes and commercial vehicles – the new safe harbour to avoid FBT

When an employer provides an employee with the use of a car or other vehicle then this would generally be treated as a car fringe benefit or residual fringe benefit and could potentially trigger an FBT liability.

However, the FBT Act contains some exemptions which can apply in situations where certain vehicles (utes and other commercial vehicles for example) are provided and the private use of the vehicles is limited to work-related travel, and other private use that is ‘minor, infrequent and irregular’.

One of the practical challenges when applying the exemption is how to determine if private use has been minor, infrequent and irregular. The ATO recently released a compliance guide that spells out what the regulator will look for when reviewing the use of the exemption.

The ATO has indicated that in general, private use by an employee will qualify for the exemption where:

1. The employer provides an eligible vehicle to the employee to perform their work duties. An eligible vehicle is generally a commercial vehicle or one that is not designed mainly for carrying passengers. The requirements are very strict and guidance on this is published on the ATO website.
2. The employer takes reasonable steps to limit private use and they have measures in place to monitor this – this might be a policy on the private use of vehicles that is monitored using odometer readings to compare business kilometres and home to work kilometres travelled by the employee against the total kilometres travelled.
3. The vehicle has no non-business accessories – for example a child safety seat.
4. The value of the vehicle when it was acquired was less than the luxury car tax threshold ($75,526 for fuel efficient vehicles in 2017-18 and $65,094 for other vehicles).
5. The vehicle is not provided as part of a salary sacrifice arrangement; and
6. The employee uses the vehicle to travel between their home and their place of work and any diversion adds no more than two kilometres to the ordinary length of that trip, they travel no more than 750 km in total for each FBT year for multiple journeys taken for a wholly private purpose and, no single, return journey for a wholly private purpose exceeds 200 km.

If you meet all these specifications, the ATO has stated that it will not investigate the use of the FBT exemption further. However, the employer will still need to keep records to prove that the conditions above have been satisfied and to show that private use is restricted and monitored.

If these conditions are not met then this doesn’t necessarily prevent the exemption from applying, but you can expect that the ATO would devote more time and resources in checking whether the conditions have actually been met. Employers who do not take active steps to check the way commercial vehicles are being used are at high risk of significant FBT liabilities.

 

Car parking

We all know how expensive commercial car parks can be. The ATO has noticed that where car parking benefits are being declared (that is, where an employer provides parking to an employee), the value of what is being declared is significantly less than what you would expect to pay.

Common errors include:

1. Market valuations that are significantly less than the fees charged for parking within a one kilometre radius of the premises on which the car is parked;
2. Using parking rates or facilities not readily identifiable as a commercial parking station;
3. Rates charged for monthly parking on properties purchased for future development that do not have any car parking infrastructure; and
4. Insufficient evidence to support the rates used as the lowest fee charged for all day parking by a commercial parking station.

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Living away from home allowances

Living Away From Home Allowances (LAFHA) continue to cause confusion for both employers and employees.

A LAFHA is an allowance paid to an employee by their employer to compensate for additional non-deductible expenses they incur, and any disadvantages suffered, because the employee’s job requires them to live away from their normal residence.

As a starting point, FBT applies to the full amount of the allowance that has been paid. However, if certain strict conditions can be satisfied the taxable value of the LAFHA fringe benefit can be reduced by the exempt accommodation and/or food component.

Common errors include:

1. Mischaracterising an employee as living away from home when they are really just travelling in the course of their work. The ATO has released updated guidance in this area in TR 2017/D6.
2. Failing to obtain the declarations required from employees who have been provided with a LAFHA.
3. Claiming a reduction in the taxable value of the LAFHA benefit for exempt accommodation and food components in circumstances that don’t meet the criteria.
4. Failing to substantiate accommodation expenses and, where required, food or drink. Verifying accommodation expenses is important as the ATO will look closely for scenarios where employees are paid an allowance but go and stay with friends or relatives or stay somewhere cheaper and pocket the difference. The expense actually has to be incurred and substantiated.

 

Salary sacrifice or employee contribution?

One issue that frequently causes confusion is the difference between the employee salary sacrificing in order to receive a fringe benefit and making an employee contribution towards the value of that fringe benefit.

Salary sacrificing for a fringe benefit

To be an effective salary sacrifice arrangement (SSA), the agreement must be entered into before the employee becomes entitled to the income (e.g., before the period in which they start to perform the services that will result in the payment of salary etc.).

Where an employee has salary sacrificed on a pre-tax basis towards the fringe benefit provided – laptop, car, etc., they have agreed to give up a portion of their gross salary on a pre-tax basis and receive the relevant fringe benefit instead.

As a starting point, the taxable value of the fringe benefit is the full value of the expense paid by the employer. The salary sacrifice arrangement doesn’t actually reduce the FBT liability for the employer.

The employer recognises a lower cost of salary and wages provided to the employee as their ‘cost saving’, which results in lower PAYG withholding and superannuation contribution obligations, but they still recognise the full value of the fringe benefit as part of their taxable fringe benefit which is subject to FBT.

The employee recognises that they have a reduced amount of salary and wages, and a non-cash benefit in the form of the fringe benefit.

What is an employee contribution?

An employee contribution is made from post-tax income and will often form part of arrangements relating to car fringe benefits. The employee recognises the gross salary and wages as income in their tax return. However, the payment of an after-tax employee contribution would generally have the effect of reducing the taxable value of the fringe benefit that was provided to them by the employer.

The employer would still be subject to the ‘standard’ PAYG withholding and superannuation contribution obligations in relation to the gross salary and wages amount.

The ATO is looking for discrepancies with contributions paid by an employee to ensure that these have been treated consistently for income tax and GST purposes as well as on the FBT return. This is really an issue for the employer and a discrepancy may mean that there is an FBT exposure or that the employer has paid less GST or income tax than what they should have.

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Housekeeping

If your business has cars and you need to record odometer readings at the first and last days of the FBT year (31 March and 1 April), have your team take a photo on their phone and email it through to a central contact person – it will save running around to every car.

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FBT rate change

The FBT rate decreased on 1 April 2017 when the 2% debt tax on high income earners ended on (Temporary Budget Repair Levy) 30 June 2017.  The FBT rate was brought into line with the Debt Tax to discourage high income earners from using the FBT system to lower their taxable income.

Remember to review salary packaging arrangements to ensure they remain effective.

FBT year	FBT Rate	Type 1 Gross Up rate	Type 2 Gross Up rate
1 April 2017 onwards	47%	2.0802	1.8868

Should I be registered for FBT?

If you have employees (including Directors of a company) then it’s possible your business needs to register for FBT. Generally, your business needs to register for FBT if you are providing any benefits to employees that are not exempt from FBT. So, if you provide cars, car spaces, reimburse private (not business) expenses, provide entertainment (food and drink), employee discounts etc., then you are likely to be providing a fringe benefit.

There is a list of exemptions that are considered exempt from FBT, such as portable electronic devices like laptops and iPads (although there are rules around how many), protective clothing, tools of trade etc. If your business only provides these exempt items, or items that are infrequent and valued under $300, then you are unlikely to have to worry about FBT.

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Crackdown on salary sacrifice calculations

A loophole in the superannuation guarantee legislation allows unscrupulous employers to reduce their superannuation guarantee (SG) obligations when employees salary sacrifice contributions into superannuation. The loophole occurs when employers calculate SG on the post salary sacrifice earnings base. This method of calculation may reduce the contribution being made by the employee.

Legislation currently before Parliament will prevent contributions made as part of a salary sacrifice arrangement from satisfying an employer’s SG obligations by specifically including salary sacrificed superannuation in the base for calculating an employer’s SG obligations.

Firstly, thanks to the GCJCC, Gold Coast City Council, Business News Australia and Lemon Tree Marketing for putting on an inspiring event.

We were lucky enough to have one of Australia’s most successful tech entrepreneurs and investors, Steve Baxter, as a special guest. Not taking anything away from the other guests but I must say Steve shared some great wisdom and knowledge. Honestly, he is one of the great Australian business minds focussed on helping Australia dominate the business world. I loved Steve’s ruthless comments on the domestic landscape and his vision on the future of business, innovation and technology in Australia. We will see a huge benefit from having him as Queensland’s Chief Entrepreneur.

Whilst Steve did share a lot of information across the breakfast, there were a few stand out comments that I think should be shared. This is what I took away from his appearance:

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1. Plan of attack as Queensland’s Chief Entrepreneur

For those that were there, it was really funny when Steve was asked about what the role actually means for him. He responded by saying “It means 2 days a week unpaid”. Laughter broke out of course but as soon as he began to speak about his passion for entrepreneurship and love for Queensland, the room was silent. Steve is incredibly dedicated to fostering entrepreneurship and is passionate about what the future holds for Queensland businesses.

Here are the main items on his agenda:

1. Get out of Brisbane – There is so much already happening in the capital of Queensland. He wants to get out and explore the untold opportunities and potential outside of Brisbane as well as take established entrepreneurs out there to tell share their stories.
2. Increase investment capital – He is actively working to fix the investment capital shortage. Doing a lot of work encouraging angel investor groups and making early stage capital available through a wholesale platform being developed.
3. Improve communication across Queensland – Steve is working on a project using a government owned network to make it cheaper and more efficient for communication between bush and city.

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2. Traction trumps opinion

“So, the things that blow my mind are progress and traction.”

Steve was asked who has blown his mind in a business or entrepreneurial sense? And what blows his mind is how well businesses are performing and achieving traction. One of his favourite sayings is traction trumps opinion. Basically, when it comes to your startup idea or business venture, your results speaks louder than someone else’s opinion about it. He talked about experiences as an investor where he expressed that an idea was terrible but he was then proven wrong when that idea had established strong traction in the market.

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3. Execution and speed in execution

“In general, you’re never the first person to do something.”

We have all experienced that moment you think of an idea and after a quick google, you find out it has already been done. We are always quick to park the idea into the “too late” basket. But what we forget to acknowledge, is that being first to market does not mean you will dominate the market or there isn’t opportunity to execute better and take market share. As Steve mentioned, there were 129 search engines before Google. Look at today’s landscape, before Facebook, there was Friendster and Myspace. Starbucks wasn’t the first place to ever sell coffee, and Spotify didn’t create the idea of streaming music through an app or platform. It is not really about being first to market, it is about being able to execute your plan effectively and quickly. Many investors talk about the fact that they invest in people who can execute, or even better, have a history of successful execution. When the world is your playing field, there is a world of opportunities.

So, don’t give up on an idea or business just because you are not the first to do it. Just make sure, you’re quick to execute and deliver the goods.

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4. Australians need to act now​​​​​​​ and invest in future

“These things will happen. Our choice is do we have it 10 or 15 years after LA, or 1 year after LA. That’s our only choice.”

This was the moment Steve began talking about flying cars and what we should (and should not) be doing to address the traffic congestion issues we have in South East Queensland. According to Steve, we have to stop building roads. Queensland spends between $4 billion – $7 billion a year on roads with a​​​​​​ projection of $21 billion investment over the next four years. All this expenditure to add or expand roads to just “make them suck less… they will still suck when we finish them, they’ll just suck a little bit less”. This year there are 5 new driverless flying cars being released, think an upscale drone. That’s what we need to look at – the future of transport vs the same tech, in the same situation, not solving the same problem.

We have all seen, heard and learnt about the big companies that got eaten alive because of lack of innovation and lack of investment into innovation. The same principles apply to Queensland, and Australia as a country. We need to enable and foster innovation across the board to ensure we stay relevant in the global market.

The Innovation and Science Australia’s 2030 strategy plan warns that Australia is falling behind. The world’s largest economies are doubling down on investments in a range of technologies to develop, connect and improve existing systems.

“Australia is gleefully consuming digital disruption… we’ve got to get smarter because the world is eating us.”

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5. Australian businesses need to take the world’s GDP

In terms of being a truly impactful player and competing for the world’s revenue, Australian businesses still have so much opportunity. We need to create and help grow more glocal businesses. Yes, it is not a spelling error. The phrase ‘glocal’ was featured in a 2017 report commissioned by nbn to describe a new breed of SMEs “harnessing fast broadband and online applications to expand their business internationally, while enjoying the freedom and lifestyle of staying local.”

“Australia has 3 percent of the world’s GDP… If people come to me and tell me their customers are in Australia, I ignore them. 97% of the world’s revenue sits outside of Australia. We need to start exporting more goods and services. We can take the rest of that 97% of the world’s GDP.”

Australia needs to increase exporting products and services for both macroeconomic and microeconomic reasons. Ideally, we want to continue our growth rate in the industries we are not traditionally known for, diversify our reach and capture more of that revenue. Below you can see where we are excelling and some potential growth opportunities.

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Bright future ahead

The above are just some of the topics Steve covered in his appearance at the breakfast. It is a great opportunity for businesses to extract as much knowledge and experience from Steve and the businesses he is showcasing on his tours around Queensland. One thing is for sure, with him on our side, and more and more Australian businesses getting worldwide recognition, the future is bright.

For many, the New Year is a chance to make resolutions and goals. Are you perhaps one of those people that make a resolution each year to improve the financial viability of your business, but you’re not quite sure where to start?

We have compiled a list of key tips in order to assist you in analysing your business spending and improve the viability of your business in 10 minutes.

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Keep your bookkeeping up to date

Keeping your bookkeeping up to date is one of the most important things you could do within your business.

On a regular basis, be it once a week or more regularly if required, allot time to enter in your transactions. Many accounting packages now have bank feeds that make keeping your accounting up to date easy.

Once you have your accounting system up to date, you will be able to produce meaningful reports.

Here are some tips on what reports you should be running and how to analyse these reports.

 

 

Balance Sheet

Each month run a Balance Sheet report from your accounting package. This report details your assets, liabilities and equity over a period of time. The main reason you will be running this report will be to ensure that everything is coded correctly.

1. Bank and Loan Accounts
It is important to ensure that your bank and loan accounts balance to your statements each month. Even if you have bank feeds this is an important check as sometimes bank feeds drop out.

Bank Statement balance doesn’t match to your Balance Sheet?
Run a bank reconciliation report. This report will show if you have any outstanding receivables or payables. If you have bank feeds, these may have dropped out so some transactions may be missing.

2. Suspense and clearing accounts
Ensure that there are no balances in the suspense and clearing accounts, if there are, drill down and review the items coded to these accounts, and recode as necessary.

 

 

Aged Receivables and Aged Payables Reports

Your Aged Receivables and Aged Payables reports detail the money that you currently are owed by your customers and the money that you owe your suppliers. It is very beneficial to you and your business to regularly review these reports.

1. Aged Receivables Report
• Have all the invoices been entered?
• Do you need to chase up any customers who are running behind on their payments?

2. Aged Payables Report
• Have all the invoices been entered?
• Are you running behind on your bills? Can you make any payment arrangements?

 

 

Profit and Loss

Lastly, once you have reviewed the above reports, you will want to analyse your Profit and Loss. This will be the most important report to review. This report details your income and expenses over a period of time. We recommend that this report is run with comparatives. Most businesses run monthly, quarterly, bi-annual or annual reports. We would recommend that you run these reports as frequently as required, however, run whichever reports make the most sense for your business.

1. General Expenses
If you have any expenses coded to the general expense code in your file, drill down and review the transactions. Are any of these transactions better placed in a different allocation, i.e. printing and stationery?

2. Patterns in your expenses
Look for patterns in your expenses. If your rental income is the same each month and there is a variance in a month, review the expense and see why.

3. The right questions to ask yourself when reviewing your profit and loss.
• Is this expense necessary?
• Do my suppliers offer any discounts that we are missing out on?

Don’t forget that we are always here to assist. If you are unsure or would like someone from our office to assist you, please contact us. We love to hear from you, and help wherever we can.