HAPPY EOFY – Tax Tips for Small Business + Sole Traders

What a time we have had over the last six months, first with the devastating bush fires and now with the Covid-19 pandemic, it certainly has been a different time, the likes that many of us have not seen before.

Many small businesses and sole traders would have been entitled to receive Government assistance during this period including grants and concessional loans for those affected by the bush fires and JobKeeper reimbursements, cash flow boost for employers and State Government grants for those affected by the Covid-19 pandemic.

Of these assistance packages some will be tax-free, while others will be considered taxable income.  Here are some of the packages and their tax treatment:

  • DISASTER RELIEF PAYMENTS [BUSH FIRES] // these are non-taxable payments + do not need to be included in your tax return
  • JOBKEEPER REIMBURSEMENT [COVID-19] // as the name implies, these are reimbursements + are therefore considered taxable income
  • CASH FLOW BOOST [COVID-19] // these payments are tax free.  They are not required to be paid back once the business’ cash flow improves
  • STATE GOVERNMENT BUSINESS SUPPORT FUND GRANT [COVID-19] // this one-off payment to eligible businesses is considered taxable income

Due to Covid-19, your business income may have been affected to such a degree that you will not have any issues with the 2020 Financial Year tax, but if you will here are some tips to help reduce your taxable income:

  • SUPPLIER INVOICES // pay any supplier invoices prior to 30 June, even if they are not due until July or later.
  • SUPERANNUATION // pay the June quarter superannuation obligations prior to 30 June.  Generally, it takes 5-7 business days for payment to be received by the employees superannuation fund, so payment will need to be processed earlier to allow for this.
  • BUSINESS OWNERS // if you are a business owner, you could pay an additional superannuation contribution to maximise the $25,000 concessional contributions cap.
  • SOLE TRADER // if you are a sole trader, you may take a concessional contribution to your superannuation fund and claim a tax deduction for it.
  • INSTANT ASSET WRITE-OFF // the threshold currently stands at $150,000, so any piece of equipment or business vehicle, below this threshold, will be able to be deducted in full in the 2020 financial year, if purchased and in use by 30 June 2020.

 

Danny Grigg – Senior Accountant

BComm CA

 

Business Pivot OR Business Adaptation?

As we look forward to relaxation of lockdown in our lives and businesses, it can be difficult to find or maintain motivation.  But let’s take a look at a quote attributed to Albert Einstein: “In the midst of every crisis, lies great opportunity”.So, the question is, what opportunities are there for you, or for your business?

Business Pivot or Business Adaptation – What is your “great opportunity”?

You might think in these JobKeeper days that you or your business has to undertake a significant “Pivot”, and radically change the way you do things to ensure not just survival but success.

But equally, that may not be what you want, or more importantly what your customers want. You may need to make smaller changes, refine processes, update your systems or even just modify the language you use to talk to your customers.

Be it Pivot or Adaption, considering your customer needs and wants should be a significant part of your plan.

Now, this article is about motivation, so the words above are about WHY you may want to change. The most difficult part can be making the first step.


STEP ONE // DO NOT LET THE OPPORTUNITY PASS

STEP TWO // WHEN IN DOUBT, REFER TO STEP ONE

 

Every one of you who has got this far does need to find your own motivation.  Is the crisis enough, or is there something about your situation that you really want to change?  Sometimes the biggest obstacle is not knowing how you can possible achieve your goals.  This is where the team at Canny Group can really help. We spend time with our clients understanding goals.

But it is the next part that can be the “secret to motivation”.  Rather than stopping at identifying goals, we can work with you to identify the action steps, what you actually have to do, to move toward your goals. Not only that, we can keep you accountable to those actions.

This could be to do with your business goals, where our Accounting team will work with you.

It could be to do with your financial or retirement goals, where our Advisory team will work with you.  And if you have goals with succession planning, litigation or asset protection the Legal team will work with you.  Best of all, if you have goals the encompass a mixture or all of these, you can rest easy knowing we will work together to help you achieve them all.

A FINAL WORD ON MOTIVATION FOR CHANGE:

“It is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is best able to best adapt and adjust to the changing environment in which it finds itself”

This quote could almost have been tailored to the times we find ourselves in today, but is also one that is often mis-represented as being a quote from Charles Darwin tied to his work “On the Origin of Species”.  It was actually written by the significantly less famous Leon C. Migginson in “Civilisation Past and Present” in 1963.  Fast forward 57 years and the quote holds true.

 

Adam Ramage – Senior Business Adviser + Accountant

B.Bus CA

Keeping Vigilant During Troubling Times

The COVID-19 crisis has shocked and astounded us all, and we are a long way from knowing where it will end.  Both the local and global economies are under tremendous pressure and we are all being heavily tested on multiple fronts.

It is pleasing to hear some early good news, with signs that here in Australia, and in other parts of the world the tough measures that we are taking seem to be having an impact and slowing the number of cases.

Sadly, though, while our minds are all so focused on this important situation, cybercriminals are using this crisis as an opportunity to exploit people and to fill their own pockets.  We are intercepting an increasing number of COVID-19 related email threats, as well as other malicious email scams, so this is not a time that we allow ourselves to complacent in keeping our computers, and personal information safe from threats, and even more so now that many are working from home, on personal computers, laptops and mobile devices, and perhaps have lower security configurations that those of workplaces and manages office systems.

Last week AustCyber [The Australian Cyber Security Growth Network], a federal government initiative, also shared similar sentiments encouraging Australians to:

  • TRAIN THEIR TEAMS, WITH CYBER SECURITY TRAINING
  • STAY ACROSS THE LATEST SCAMS, INCLUDING THOSE EXPLOITING COVID-19 CRISIS IN PARTICULAR
  • REPORT IT IF YOU’VE RECEIVED AN SMS OR EMAIL YOU THINK IS A SCAM TO SCAMWATCH [OR YOUR LOCAL AUTHORITIES] TO VERIFY IF WHAT YOU’RE SEEING IS REAL OR MALICIOUS
  • USE LOCAL IT SUPPORT SPECIALISTS TO PROTECT YOU AGAINST THREATS + PROVIDE INFORMED ADVICE ON HOW TO ADVICE BEING TAKEN ADVANTAGE OF

So, in light of the above, here are just a few ways that scammers and cybercriminals are using to take advantage of the unsuspecting.  Knowledge is power, so simply being aware of these mechanisms with thwart cybercriminals and give you back some much-needed control and prevent you, your workmates and loved ones from being exploited.

1. PHISHING EMAILS // the word “phishing” [aka “fishing”] was coined around 1996 by hackers stealing America Online accounts and passwords.  By analogy with the sport of angling, these internet scammers were using e-mail lures, setting out hooks to “fish” for passwords and financial data from the “sea” of internet users.

In layman’s terms, scammers sent out [literally] millions of emails to unsuspecting users by pretending to be from a legitimate source.  For example, from a social media or email account [Facebook, LinkedIn, SnapChat, Gmail, Microsoft Office, Telstra Bigpond], or from a web page you use for internet banking or financial services [Westpac, NAB, Commonwealth Bank, PayPal, Western Union], or from a whole myriad of other businesses.  Because we do so many things online, it’s really easy to grab a business that has a login page online, and pretend to be that businesses.

Here is an example which we recently received which was actually really professionally done:

  • A Scammer sent an e-mail pretending to be from “Westpac” to indicate that the person’s bank account had fraudulent activity and had been “locked” to prevent any possible exploitation.
  • The e-mail asks the user to click on the link contained in the email and to enter their username and password for the person’s internet banking in order to confirm that the activity was from them and to prevent the account being locked.
  • If the customer was to click on that link it would take them to a “bogus” web site which the scammer has copied to look like the normal login page for Westpac Internet Banking, but is really just a front.  When the person types their real username and password t o log into their bank account, they are simply giving up their details directly to the scammer.
  • The website then [automatically] diverts the customer back to the “real” Westpac site where the message will pop up that they entered their details incorrectly, and to retry.  The customer enters them again, and then they login to their normal internet banking, none the wiser that they have just given cybercriminals the keys to the financial bank accounts.
  • A short time later the cybercriminals will login to Westpac using the customers *actual* login details and proceed to transfer funds to their own accounts [usually via a series of other stolen or illegal money laundering accounts or other bank accounts etc.]
  • By the time the customer realises that their account has no money left, the criminals have withdrawn the funds or transferred them to offshore bank accounts which are no longer accessible, leaving the end user high and dry, leaving them to try and sort out with their bank to try and recover their money.

There are a whole host of variations on the above scam.

In another variation of the scam, a hacker tries to “phish” out a business username and password to an e-mail account, and then [once has access] will sift through the sent items folder looking for invoices or statements that the business has sent to their clients, and will then form them, changing the bank account payable details on the invoice and re-sending them to the original recipients, asking them to take note that the business has changes their bank account details and to make payment into the [criminal’s] bank accounting instead of the legitimate one.  The list of variations on such scams is endless, but the fact of the matter is that the cybercriminal does not actually “hack” into anyone’s systems, they just fool the legitimate owner into simply “telling” the criminal what their login details are, and then it’s easy street for them to take advantage of that to exploit wherever and however possible.

The lessons to be learned from the above:

  • NEVER click on links directly in e-mails to get to websites
  • NEVER call back numbers sent to you as an SMS
  • ALWAYS treat e-mails or SMS text messages asking you for login detail or personal information as suspicious, and never give anyone your personal details, logins or passwords either via email, or over the phone.
  • REMEMBER that your bank, or ISP, or service provider will already have your details, and they can reset your password if you have lost it.
  • IF YOU DO NEED to verify a suspicious transaction, call your bank, ISP, service provider on their known, registered phone number, and ask them to verify and suspicious activities.
  • CHANGE YOUR PASSWORD REGULARLY, and especially if you feel something suspicious has happened – change it anyway, just to be safe.
  • IF POSSIBLE, use 2-factor authentication on any/all of your online services wherever possible to thwart illegal transactions occurring without you knowing.

2. VIRUSES + WORMS // as our PCs, laptops and phones become more and more sophisticated, viruses, trojans and worms [all different types of programs used to infect your technology] are becoming scarcer, however, there are still viruses out there which are still seen from time to time.  Once again, the aim is to exploit the end used by any means possible.

Cryptolocker is a really nasty virus, for example, that will infect a PC or Mac and systematically “scramble” all documents, files, photos, videos, emails and other critical data on your computer, and then demand a ransom payment in order for you to get your information back.

Others are less obvious – for example another type of virus called a “keylogger” will sit quietly on your computer just “looking” at you typing all your personal information, and then sends it to a listening criminal.  It’s the more sophisticated variation of the “phishing” scam, but you are unaware it’s even happening.

To protect yourself from viruses and hackers:

  • NEVER click on links directly in e-mails to get to websites
  • NEVER click on random links on websites which are dubious and resist the temptation of clicking into illicit websites [many criminals will deliberately host porn sites and other questionable web pages purely to lure unsuspecting users, and then use it as a springboard to infect computers].
  • ANTI-VIRUS, make sure you use a reliable anti-virus package and keep your anti-virus up to date [and yes, Mac Users, that means you too – Macs CAN and DO also fall prey to most scams and also have viruses, there are just fewer Mac users than PCs, so they are less publicised].
  • IF YOUR COMPUTER IS INFECTED, [particularly with a cryptolock virus] DO NOT pay any ransom demands – you will NOT get your data back, even if you do pay, you’re just going to lose money to top losing your data.
  • BACKUP, make ABSOLUTELY sure that you BACKUP your data.  Syncing your data to the OneDrive, DropBox or other Cloud service is NOT good enough – that can also be scrambled.  Use a verified, secure, offline backup mechanisms to that if something does happen to your data, you have something to recover from.

3. SCAM PHONE CALLS OR SCAM E-MAILS // this is also becoming extremely prevalent these days.  Scammers [usually from overseas] will just systematically call numbers listed in the phone book and spin up a story to fool you: “Sir/Madam, this is John Doe from Microsoft and I’m calling you because we have detected a virus which has been sent from your computer“, then try and get you to allow them to connect to your computer remotely so that they can [again] perpetrate some kind of scam to either exploit you, siphon funds from your bank account, or perhaps convince you that your computer is infected, and charge you a “bogus” amount of money to “clean” it for you.

A variation of this is being perpetrated about the current COVID-19 virus asking for donations to support fundraising efforts for a cure or asking for some kind of payment.

And then you have the classic scam where someone tells you that you have a “long lost relative” who has died, and you have some fortune to inherit, but you just need to pay for some legal/admin fees in order to access it.  The mind boggles on the sheer number of variations criminals use to exploit people.

Some simple guidelines to follow:

  • NEVER trusts a total stranger cold calling you.  If you have any doubts, call back businesses or organisations using their *published* known phone numbers.
  • NEVER divulge personal information over the phone.
  • NEVER make payment or provide credit card details or banking information to anyone on the phone, and never allow anyone access to your computer remotely unless you know they are a reputable IT support provider [preferably ones that you know personally].
  • AND if something sounds too good to be true – it probably is.  [If you really had a long-lost uncle John who was the sole heir to a fortune, they you will soon know about it via official channels when the executor of their will sends you the details].

I hope the above examples give you reason to pause when dealing with e-mails, text messages and phone calls, and disarming criminals from doing you any harm.

Despite the increased risk to you or any of your staff members – whether they’re on the front line in high-pressured healthcare or emergency services roles or working remotely to keep the economy on its feet, our IT managed services and my team are committed to stopping any threats intent on doing your business harm.  That’s the last thing that you need right now.

If you find yourself doubting an e-mail, text or phone call, then pause and seek help and clarification.  Please reach out to our support team should you require assistance, at support@universal.com.au or on our dedicated support lines for customers and partners on +03 5277 9797.

To our customers and partners here in Australia, and to those throughout the world, my thoughts are with you and your teams for continued good health and safety.  In times like these, it is important that we stick together and survive personally and on the business front, and I sincerely appreciate you sticking with us.

 

Nenad Saflin – Managing Director

Universal Computer Solutions

COVID-19 // Economic Stimulus + Survival Guide

The Federal Government and State Government have together announced multiple stimulus packages to help support everyone affected by Covid-19 [Corona Virus].  With that in mind, we want to try to provide you with a brief and up-to-date rundown of the benefits for individuals and Small to Medium Sized Businesses [SME’s].  Please note that this is not exhaustive, and we have provided links to original Government releases, so you can double check all information and keep abreast of developments.

April 2020

April Announcements
If you are an EMPLOYER – click here.  

Also important for employers to register with the ATO here AND here.  If you are an employer and have a State Revenue Office payroll tax registration click here.

If you are an EMPLOYEE – click here

If you are a SOLE TRADER – click here.  

Also important to for sole traders to register with the ATO here AND here.

If you need information on ACCESS TO CREDIT for small business – click here

If you employ APPRENTICES – click here

If your income falls BENEATH $1,075 p/fortnight you may be entitled to the Coronavirus Supplement – click here

If you are a VICTORIAN small business with a turnover of +$75,000 – click here

If you are a TENANT – click here

 

March 2020

March Announcements
Small – Medium Businesses – https://treasury.gov.au/coronavirus/businesses

  1. Businesses with turnover of less than $50M who employ workers will be eligible for the “Boosting Cash Flow for Employers Package”.  All employers will receive a minimum payment of $10,000 [increased from the initial $2,000 announced in mid-March] and the maximum is calculated as 100% of the PAYG withholding withheld from employee wages up to a maximum of $50,000.  The amount is calculated on PAYG withheld between January and June 2020 and calculation varies depending on how often you lodge your activity statements.
  2. An additional payment is being introduced from the July – October 2020 period.  This amount will be exactly the same as the original amount received by the business.  This effectively doubles the amount received to a minimum of $20,000 and a maximum of $100,000 https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf.
  3. The Victorian Government has announced that SME’s with a yearly payroll of less than $3M, will be provided with 12 months Payroll Tax relief.  Businesses that currently pay payroll tax [ie. business with payroll, including superannuation, of greater than $54,166 per month] will receive a refund to their bank account of any payroll tax paid for the period 1 July 2019 to 29 February 2020.  In addition, there will be no further payroll tax payable up to 30 June 2020.  The Victorian Government advises that refunds will be accessed by 27 March 2020 https://www.premier.vic.gov.au/economic-survival-package-to-support-businesses-and-jobs/.
  4. There are also measures to temporarily assist businesses in financial distress, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_temporary_relief_for_financially_distressed_businesses.pdf.
  5. Instant asset write-off is increased from $30,000 to $150,000 for those of you who are not concerned about cash-flow and view this as a good time to invest in assets for your business, https://treasury.gov.au/sites/default/files/2020-03/Fact_Sheet-Delivering_support_for_business_investment.pdf.  There are also measures around depreciating fixed assets faster, https://treasury.gov.au/sites/default/files/2020-03/Fact_Sheet-Delivering_support_for_business_investment.pdf.
  6. Wage subsidies are available for up to 50% of an apprentice or trainee’s wage for the nine months from 1 January to 30 September 2020.  Employers will be reimbursed to a maximum of $7,000 per quarter per apprentice/trainee, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Cash_flow_assistance_for_businesses_0.pdf.

March Announcements
Support for Cash Flow Needs for Small – Medium Businesses – https://treasury.gov.au/coronavirus/business-investment

  1. The Federal Government will provide a guarantee of up to 50% of loans made to SME’s https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf.
  2. Lenders will be provided with a temporary exemption from the responsible lending obligations to provide loans to existing small business clients to enable faster approval and provision of loans to SME’s, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Supporting_the_flow_of_credit_1.pdf.

March Announcements
Individuals + Households – https://treasury.gov.au/coronavirus/households

  1. Income support payments and coronavirus supplements to existing and new recipients of some Centrelink payments, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Income_Support_for_Individuals.pdf.  There will also be streamlined application for Centrelink benefits and reduced waiting times for payments.
  2. Two separate payments to recipients of social security, veteran and other support payments from Centrelink.  These are due to be paid as $750 on 31 March 2020 and $750 on 13 July 2020, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Payments_to_support_households.pdf.
  3. Temporary early release of superannuation amounts up to $10,000 for the financial year 2019-20 and again for the financial year 2020-21.  There will be no tax payable on the amounts withdrawn and they will also not effect Centrelink or Veterans’ Affairs payments, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Early_Access_to_Super_1.pdf.
  4. Temporary reduction in superannuation minimum drawdown amounts for those receiving a pension from their super fund, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_support_for_retirees_to_manage_market_volatility.pdf.
  5. Reduced Centrelink deeming rates to support retirees, https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Providing_support_for_retirees_to_manage_market_volatility.pdf.

Self-Education

It’s February and so in keeping with the ‘Back to School’ theme I thought I would revisit the opportunities that are available for self-education and professional development.

Whether you are supported by your employer or not you may be able to claim a tax deduction for self-education expenses if they relate to your current work activities.  You cannot claim the costs however if it is for the purpose of new employment or to open up a new income earning occupation. Some of the costs that you can claim are:

  • COMPUTER + STATIONARY CONSUMABLES EG. PAPER, PRINTER CARTRIDGES
  • COURSE FEES [IF PAID BY YOU]
  • PURCHASE OF EQUIPMENT, OR IF THE COST IS OVER $300, DEPRECIATION OF EQUIPMENT
  • INTERNET USAGE
  • STUDENT UNION FEES
  • TEXTBOOKS
  • TRAVEL; BETWEEN HOME + THE PLACE OF EDUCATION + BETWEEN WORK + THE PLACE OF EDUCATION

Likewise, there are also opportunities to claim the cost of professional development.  If you are in an occupation that requires a certain number of certified professional development hours, the costs of attending relevant seminars and conferences can be quite high, however if they are relevant to your employment they can be claimed as a tax deduction.  If you are a business paying this cost for your employees this is a claimable business expense.

Aside from the bonus of a tax deduction, it is a great idea to keep up to date with ideas, techniques and changes in the law no matter what industry you are in.  Maintaining your knowledge is both good for your self esteem and enhances your chances of maintaining your employability.

If you are thinking of taking on additional study and are unsure about how this will affect your tax or your business, just call our office and one of our qualified team will be happy to help you.

 

Amanda Wilkens – Director

CPA

Christmas + FBT

It’s coming up to the Christmas holiday period which means scheduling the staff Christmas party and purchasing gifts for your employees, but as we skip into the month of December, it’s important that we remember what is deductible in relation to gifts and entertainment provided and how fringe benefits tax [FBT] relates with these actions.

FBT is payable by employers on the value of certain benefits that have been provided to their employees in respect of their employment. The purpose of the legislation to ensure fair tax treatment between cash paid to employees and benefits provided to them during their employment. Fringe benefits can include but are not limited to: providing an employee a vehicle that is owned by the business to drive, providing a loan to an employee with no interest, and also functions and gifts provided to an employee at Christmas time.

Towards the end of December, many employers schedule a work breakup or event to celebrate the holidays with their employees or purchase a gift for the employees and their families. These events can include costs such as venue hire, food and alcohol purchases or booking entertainment such as a band. Are these expenses tax deductible? Is the employer entitled to claim goods and services tax [GST] back on those expenses incurred?

Generally, providing entertainment to an employee is not tax deductible unless FBT is paid. Employers cannot claim deductions for the cost of Christmas gifts purchased for employees if the gift directly provides entertainment by way of food, drink or recreation. Similarly, the expense of a staff Christmas function would not be deductible as it involves the provision of entertainment.

However, there are some exceptions. The cost of a Christmas party is tax deductible if provided on a working day on the business premises and consumed by current employees. Another exception is providing a minor benefit by ensure the cost of the Christmas party and gifts are less than $300 per employee. And when it comes to GST, the credit is available if FBT is paid or the benefit is exempt from FBT and a tax deduction can be claimed.

If you are providing more than salary and wages to an employee, now is a good time to book an appointment with one of our accountants to ensure you are not inadvertently paying more tax than necessary by providing a non-cash benefit to your employees.

 

Jamie Arrington – Manager

B.Com CA

New Labour Hire Laws In Victoria

ATTENTION ALL BUSINESSES.. does your business or organisation use labour hire workers?  If this applied to you, then you need to be aware of the new labour hire laws that are now in place, and how they may affect you and your business!

 

Under the Labour Hire Licensing Act 2018, labour hire providers will have until 29 October 2019 to apply for and be granted a licence by the Victoria Labour Hire Authority to operate in Victoria.

Licences can be applied for from the Labour Hire Authority website.  These licences are valid for a period of no more than three years.

There is a test that needs to be satisfied to obtain and maintain a licence.  This is known as “fit and proper test”.  Businesses will need to prove past compliance with the applicable employment, tax, immigration and workplace health and safety laws.

To ensure compliance of the new licensing system, the Victoria Labour Hire Authority will employ inspectors.  These inspectors will be able to enter and search premises, examine, seize or inspect anything suspected of relating to a possible contravention.

KEY POINTS FOR BUSINESS OWNERS:

  • LABOUR HIRE PROVIDERS MUST REGISTER ONLINE TO CREATE AN ACCOUNT + then apply for a licence.
  • LABOUR HIRE PROVIDERS WILL HAVE SIX MONTHS, or until 29 October 2019 to register online + apply for a licence.
  • IF PROVIDERS DO NOT APPLY FOR A LICENCE within the six-month transition period, they will be prohibited from providing labour hire services from 30 October 2019
  • UNLICENSED LABOUR HIRE PROVIDERS CAN FACE SUBSTANTIAL FINES, with a maximum penalty for a natural person being more than $120,000 + for a corporation exceeding $500,000.
  • HOSTS [BUSINESS WHO UTILISE LABOUR HIRE WITHIN THEIR BUSINESS] who enter into an arrangement after 29 October 2019 with a labour hire provider who has not applied for, or who has been refused a labour hire licence face substantial fines ranging from a maximum in excess of $120,00 for a natural person to in excess of $500,000 for a corporation.
  • THERE IS AN APPLICATION FEE, + ANNUAL LICENCE FEE, payable by the labour hire provider.

If your business uses labour hire workers in Victoria, we recommend you begin enquiringly with the providers as to their intentions with respect to applying for a licence.

Please contact Canny Legal on 5278 9500 if you have any queries regarding the new Labour Hire regime.

Deceased Estates

There are no inheritance or estate taxes in Australia.  The person responsible for administering a deceased estate is most commonly referred to as an executor, but could also be an administrator where letters of administration are granted by a court.  Both are considered a legal personal representative by us.

When a person dies, there are some important tax and superannuation issues for the executor and the beneficiaries, including:

 

IF YOU ARE A BENEFICIARY OF A DECEASED ESTATE

There may be some tax obligations for beneficiaries, depending on the nature of any distribution they may receive:

RECEIVING SUPER BENEFITS

If the deceased person had super, the super fund’s trustee will work out who to pay any benefit to [either as a lump sum or an income stream].  Super paid after a person’s death is called a ‘super death benefit’.  The tax on a super death benefit depends on:

  • WHETHER YOU WERE A DEPENDENT OF THE DECEASED UNDER TAXATION LAW
  • WHETHER IT IS PAID AS A LUMP SUM OR INCOME STREAM
  • WHETHER THE SUPER IS TAX-FREE OR TAXABLE AND WHETHER THE SUPER FUND HAS ALREADY PAID TAX ON THE TAXABLE COMPONENT
  • YOUR AGE AND THE AGE OF THE DECEASED PERSON WHEN THEY DIED (FOR INCOME STREAMS).

RECEIVING ASSETS

Capital gains tax (CGT) applies to the disposal of an asset; so if you receive an asset you are not affected by CGT.  If you later sell that asset, CGT may apply.

EARNING INCOME

If you as a beneficiary are presently entitled to income of the deceased estate, the income is assessable in the year your present entitlement arose, not in the year the amount is received.

For example, if you were presently entitled to the deceased estate income on 30 June 2018 but did not receive it until September 2018, you are personally assessable on that amount in the year ended 30 June 2018, not in the year ended 30 June 2019.

COMPLETING YOUR TAX RETURN

As a beneficiary, you need the following information:

  • YOUR SHARE OF TRUST INCOME TO WHICH YOU ARE PRESENTLY ENTITLED
  • THE AMOUNT OF YOUR ENTITLEMENT THAT WAS PAID TO SOMEONE ELSE FOR YOUR BENEFIT
  • THE ASSESSABLE INCOME AMOUNT
  • YOUR SHARE OF FRANKING CREDITS ASSOCIATED WITH ANY DIVIDENDS IN THE TRUST DISTRIBUTION
    • THIS MEANS THAT THE COMPANY PAYING THE DIVIDENDS HAS PAID INCOME TAX FOR THE AMOUNT.
    • IF YOU ARE AN AUSTRALIAN RESIDENT BENEFICIARY, YOU ARE ENTITLED TO THE ASSOCIATED FRANKING CREDIT WHEN THE INCOME DISTRIBUTION IS INCLUDED IN YOUR TAX RETURN FOR INDIVIDUALS.

BENEFICIARIES PRESENTLY ENTITLED BUT UNDER A LEGAL DISABILITY

If you are a beneficiary presently entitled but under a legal disability you also need to know the amount of tax the trust paid on your behalf.  If you need to lodge your own tax return you are entitled to receive a tax credit for this so that the same amount isn’t taxed twice.

NON-RESIDENT BENEFICIARIES

If you are a non-resident beneficiary, you will also need to know the amount of:

  • INTEREST IN YOUR DISTRIBUTION AND THE WITHHOLDING TAX PAID
  • UNFRANKED DIVIDENDS IN YOUR DISTRIBUTION AND THE WITHHOLDING TAX PAID
  • FRANKED DIVIDENDS IN YOUR DISTRIBUTION
  • TAX THE TRUST PAID ON YOUR BEHALF

 

Kim Sandhu – Senior Accountant

CPA – B.Com M.Acc

How To Plan For Your Possible 2019 Tax Refund + Possibly Maximise It!

How to plan for your possible 2019 tax refund and possibly maximise it!

As the days tick down towards the end of the financial year it is without doubt that many of you are beginning to consider your 2019 Tax Return and hope or perhaps expect you will be in a tax refundable position this year.

I suggest now is the time to begin collating your tax receipts into a tidy folder.  Grouping your deductible tax invoices by the type of expense will assist dramatically in allowing us to process your return effectively and efficiently.  For those taxpayers that have numerous allowable deductions, consider storing copies of the tax invoices on your phone in a folder titled “2018/19 Tax Receipts”.  Further, for example, a tradesman who may have purchased a number of tools during the year, adding these into an excel spreadsheet and totalling them will be of great assistance.

With the above in mind in order maximise any tax refund you may be entitled to [or reduce your tax payable] ensuring you include/remember all your allowable deductions is essential.  The Australian Taxation Office provides “industry and occupation specific guides” [see link at the bottom of the article].  These guides will allow a number of you to review what expenditures you may have incurred in carrying on your job as a wage earner in common industries [note this is not an exhaustive list].  Moreover, they will advise you on a number of deductions that are not allowable and save you the time of collecting these.

Hopefully the above tips will assist you this tax season and come the new financial year we look forward to seeing you all and again assisting in the preparation of your Tax Returns.

https://www.ato.gov.au/Individuals/Income-and-deductions/Occupation-and-industry-specific-guides/

 

Sam Higgins – Accountant

BComm

Cars + Running Expenses

Did you know transport is the second largest expense after housing, equating to almost 14% of household budgets?  As this cost continues to climb, people are looking for more effective ways to reduce their daily bills.  A Novated Lease on a new or existing vehicle may be the solution, providing significant tax savings on the purchase price and running costs of a vehicle.

BE SURE TO CONSIDER ALL YOUR OPTIONS..

Have you consulted with Canny Group about a smarter way to purchase your next vehicle?  Or if there is a more financially sound way to run your existing one?

As transport costs continue to climb, people are looking for more effective ways to reduce their daily bills.  On average individuals spend over $17,000 annually on transportation, equating to almost 14% of household budgets^.

A Novated Lease on a new or existing vehicle may be a solution to ease transport bills.  It is a three-way agreement between you, the financier and your employer, consisting of a vehicle salary packaging arrangement to pay a large portion of the finance and running costs using your pre-tax income. No business-use is required.

There is no other product or method in Australia that allows tax savings on the personal-use of a vehicle.

And whilst business-use can be taken into account, because of the way the ATO have catered for this concession, unless significant, business-use likely won’t increase the saving any further.

Novated Lease savings come from four key areas:

  • PAYG TAX ON VEHICLE REPAYMENTS + RUNNING COSTS – Australian tax law allows you to salary package a significant portion of the total finance repayments and anything the ATO deems to be a necessary vehicle running cost.
  • GST ON FINANCE REPAYMENTS + RUNNING COSTS – In addition to saving on PAYG tax, you also have the ability to save the GST on the salary packaged portion of finance repayments and running costs (i.e. an additional 10%).
  • REDUCED VEHICLE PURCHASE PRICE – Leasing providers like FleetChoice have purchasing power, resulting in significant discounts on the price of a new vehicle.
  • NO GST ON VEHICLE PURCHASE PRICE – If you purchase the vehicle from a GST-registered vendor (e.g. A fleet provider, a new/used car dealership or a GST registered business), you have the opportunity to not pay GST on the purchase price of the vehicle.  The vendor is paid the full price for the vehicle however you will only finance the GST exclusive price of the vehicle.

Put simply, a Novated Lease allows you to drive the car you want and pay for it in a cost effective way.  It’s also common for families to take advantage of multiple Novated Leases as the lease holder does not need to be the main driver of the vehicle.

Whether you travel 0km or 50,000km per year, the total cost of ownership under a novated lease is more often than not, much cheaper than had you paid cash for the vehicle.

Significant discounts on new cars are accessible via a Fleet Provider because of the sheer volume of vehicles they purchase each year.  And whilst a used or demo vehicle could be put into a Novated Lease agreement, it’s a good idea to get a comparative lease quote on the brand new equivalent.  In some cases, a year old used vehicle or demo model may come in at the same lease cost, or more!

Alternatively, if you aren’t ready to say goodbye to your existing car, you can have a Novated Leasing Consultant run the numbers on packaging your existing vehicle and running costs into a Novated Lease agreement.

Whilst fleet pricing is just as good all year round, May-June can provide that little bit of extra saving.  With EOFY knocking down the door, if you find you are in the market for a car, it might be a good idea to enquire into a Novated Lease soon, so you have enough time to compare your vehicle options wisely.

Most people don’t realise the amount of money they spend on getting from A to B, including to and from work.  It’s the second largest expense after housing, so it’s not surprising that 48% of employees are stressed about the cost of transport^.

If this sounds like something you are interested in knowing more about, get in touch here or speak to a Novated Specialist on 1300 34 33 88.

Alternatively if you would like to understand more about the benefits Novated Leasing can bring to your business, at no cost, download a free copy of The Forgotten Employer Initiative whitepaper.

FleetChoice specialise in the SME market and we make it easy for the employer because ultimately they do have to agree to be a part of the employees Novated Leasing agreement.

 

By Ellen Jessop

After a long 10+ years in the industry, Ellen has a passionate focus and demonstrated history in Income Tax Law, Fringe Benefits and more specifically Novated Leasing.  Enjoyer of expensive things like Reformer Pilates and our good old friend interior design, she currently helps pay for her fabulous Art Deco apartment renovation and ongoing exercise classes using the savings she enjoys on leasing her car.

 

*(FY19; 32.5% for those on $37,001-$90,000 annual Income, 37% for those on $90,001-$180,000 annual income). ^Source: 2018 Employer Talent Investment index. A national study conducted by Mantis Research.

 

 

Cyber Security – How Not To Be An April Fool

Do you know how valuable you are?  Identity thieves do!

Every year thousands of Australians have their identities stolen.  Criminals use stolen personal information to commit identity crimes.  This can leave their victims with a bad credit rating and impact their ability to gain finance, run a business, or access government services.

Once your identity is stolen it can take a long time to recover.  The same goes for your business, staff and client information and ensuring that this is also secure.  If your data is lost or compromised, it can be extremely difficult as well as very costly to recover.

The Australian Taxation Office (ATO) along with the leading industry bodies, consultation with the Cyber Security Working Group (CSWG), a group of tax practitioner industry groups and other partners, such as software developer associations have created a list of top identity security tips to help keep you, your information and your business safe.

Some tips and tricks for Individuals to consider:

TREAT YOUR PERSONAL INFORMATION LIKE CASH

Do not leave your personal information lying around. If your personal information is stole, it is very difficult to get back.  Keep your personal information private.  Only share it when you are required to, and only share it through authorised processes and to authorised people.

Some tips and tricks for Businesses to consider:

REMOVE SYSTEM ACCESS FROM PEOPLE WHO NO LONGER NEED IT

Immediately remove access for people who; no longer work for your business or have changed positions and no longer require access.  Unauthorised access to systems by past employees is a common cause of identity security or fraud issues for businesses.

DO NOT USE USBS OR EXTERNAL HARD DRIVES FROM AN UNFAMILIAR SOURCE

USBs and external hard drives may contain malware, which can infect your business computers without you noticing.  It can cost your business a lot of money to repair the damage.  Stolen information could be used to commit crimes, often in your business’s name.

Some tips and tricks for both individuals and businesses to consider:

ENSURE YOUR PASSWORDS ARE STRONG AND SECURE

Use multi-factor authentication where possible.  Regularly change passwords, and do not share them.  Multi-factor authentication required used to provide multiple pieces of information to authenticate themselves – for example, a text message sent to your phone when logging in to a website.  An additional layer of security on your accounts can make it harder for others to access your accounts.  Strong passwords with a mix of upper and lower case letters, numbers, and symbols also make your accounts harder to hack.

ENSURE ALL DEVICES HAVE THE LATEST AVAILABLE SECURITY UPDATES

Run weekly anti-virus and malware scans and have up-to-date security software.  Instances of malicious software (malware) are increasing.  It can be easy to accidentally click on an email or website link which can infect your computer.  In some instances, your device may be impacted by ransomware.  Ransomeware can; lock your computer until you pay a fee to criminal and/or install software which provides access to your bank accounts, allowing criminals to steal your money.

USE A SPAM FILTER ON YOUR EMAIL ACCOUNT

Always use a spam filter on your email account and do not open unsolicited messages.  Be wary of downloading attachments or opening email links you receive, even if they are from a person or a business you know.  They can infect your computer with malware and lead to your business or client information being used to commit fraud.  Spam emails can be embedded with malware and/or used to trick you into providing information, paying fraudulent invoices or buying non-legitimate goods.

SECURE YOUR WIRELESS NETWORK

Be vigilant when using public wireless networks.  Avoid making online transactions while using public or complimentary wi-fi.  Not all wi-fi access points are secure.  By making online transactions (such as online banking) on an unsecured network, you can put your information and money at risk.

BE VIGILANT ABOUT WHAT YOU SHARE ON SOCIAL MEDIA

Keep personal information private and be aware of who you are interacting with.  People are accustomed to sharing personal information on social media.  The same goes for many businesses as they also now have a social media presence.  However, before sharing ask yourself if it is information you want strangers to have access to.  It is very easy for information on social media sites to be shared outside of your network, even when your security settings are set to private.  Scammers can take information you publicly display and impersonate you or your business.  Impersonators may send emails to trick your staff into providing valuable information or releasing funds.

MONITOR YOUR ACCOUNTS FOR UNUSUAL ACTIVITY OR TRANSACTIONS

Check your accounts (including bank accounts, digital portals and social media) for transactions or interactions you did not make, or content you did not post.  If an organisation you deal with sends you an email alerting you to unexpected changes on your account, do not; click on included hyperlinks or open any attachments.  You should immediately; check your account and contact the organisation by phone.

ENSURE YOUR MAIL IS SECURE

Ensure your mail is secure and consider using a secure PO Box.  Mail theft is a leading cause of personal information security breaches.

DO NOT DOWNLOAD PROGRAMS OR OPEN ATTACHMENTS

Some programs contain malware that can infect your computer, or be used to harvest your personal and business information.  Be sure you are downloading authorised and legitimate programs.  Unless you know the program is legitimate, do not open attachments or download it.

DO NOT LEAVE YOUR INFORMATION UNATTENDED

Secure your electronic devices wherever you are.  Your personal information can be taken in an instant.  In some situations, you won’t even know it was stolen.  Make sure you; do not leave electronic devices unattended, secure your electronic devices with passcodes and securely store portable storage devices (such as thumb and hard drives) when not in use.

 

Source: Australian Taxation Office (ATO)

Discretionary Trusts + Keeping It In The Family

A family trust is a form of a Discretionary Trust and one of the most important investment vehicles that individuals can look at starting.  They are very useful in particular for building wealth for the benefit of future generations, flexibility in daily operations, family investments, holding and protecting your family’s properties and other assets.  These assets could include investment properties, share portfolios, personal use assets (holiday homes, boats, land, antiques etc.).

Many of our clients also prefer to keep properties used in their business under a trust structure while carrying on their operations from other business entities under a rental agreement to protect their assets from creditors and other third party legal action.

The purpose of a trust is to hold these assets and cash flow for the benefit of the members of the “family group”.  Their operation is for the most part subject to the terms of the trust deed which is prepared when a trust is established.  This makes the trust deed the single most important document for this structure.  It dictates various things including:

  • Who is the Trustee (who looks after the legal property of the trust for the benefit of the family members and decide on annual distributions – generally mum and/or dad)
  • Who is the Appointor (Person in charge of selecting the trustee)
  • Who will be the beneficiaries (those entitled to the trust’s income and/or those who have right to trust’s assets)
  • Definition of trust income including how, to whom and what type of income will be distributed.
  • What happens when a trust vests or ends.

 

Due to the fact that the trust deed of the trust defines who the potential recipients of trust income will be on formation (usually family members), trust is a structure very much favored by family businesses (I.e. a Family Trust) who can provide capital if expansion is required in the future, investments need to be purchased or excess cash of family members needs to be loaned to the trust.  This is because, besides commercial loans, it is not possible to pursue external investor capital as a family trust.

If succession planning and keeping the business with in the family is the main goal, then this is the ideal business structure.  Discretionary trusts allow the business to be passed down to the next generation of family members.  In this case, the trust deed must allow for the change of Appointor or Trustee.  As there is no change in beneficial ownership of the trust and given all family members are beneficiaries of the trust, the changeover in the control of business within the family is not subject to any CGT implications.

This trust structure offers various benefits such as:

  • Being an ideal tool for succession planning and transferring within the family without immediate tax implications.  For example, when you want to hand down the family business to your next generation while avoiding any CGT implications.  This is true, as long as they are deemed to be beneficiaries as per the trust deed which also needs to be carefully drafted.
  • Strong asset protection is provided from creditors (for instance, in the event a family member experiences bankruptcy or a related entity is going through insolvency).  This requires that the trustee is a company and trust deed limits the trustee’s liability upon being sued to the share capital invested in the trustee company.  Please note that exceptions do apply when it comes to family law.
  • High degree of flexibility in distribution of income to various beneficiaries in the most tax effective way including family and friends ensuring all the family members tax free thresholds are fully utilized.

Distributions can also be varied every year to reflect changing income of family members.

  • Access to various small business Capital Gains Tax (CGT) concessions on sale, restructure of and retirement from business.  The individual also receives a 50% CGT discount when distribution is received from the trust.
  • Overall flexibility in operation of trust as it is mainly governed by the trust deed.

One of the main drawbacks of a trust structure would be that losses cannot be distributed and there are substantial hurdles to recoup such losses.  However, trust losses can be carried forward to future years and offset against future tax income.

Due to the trust offering such significant benefits and potential tax savings, the ATO have been looking more closely into them recently.  Recent changes included reduction in distributions to minor members of the family (usually under 18 years old).

All in all, it can be quite complex and challenging to identify your business needs and selecting the appropriate business structure or combination of entities.  Furthermore there are various commercial and taxation implications when it comes to family trusts.

Keeping your business circumstances in mind, and to ensure there is a seamless transfer of wealth between generations, it is recommended to get professional advice before making any such decision so you can customise your entity structure to your business needs.

 

Humam Siddiqui – Accountant

BComm