Preparing for the second half of the financial year

Businesses should start reviewing whether their accounting systems are keeping track of all revenue and expenses, together with any private use of business assets.

Planning ahead can save significant tax penalties, which start at 25 per cent of the unpaid tax to as high as 75 per cent.

There are a few key areas business owners should focus on.

–       Go through each employee and check whether contractors are actually employees, as the ATO has flagged this as an issue they will be cracking down on.

–       Look at whether any new business equipment needs to be bought in order to take advantage of the new $6,500 instant write off.

–       Review quarterly PAYG instalments. If profit is down considerably from last year businesses may wish to reduce their instalments.

–       Businesses may also wish to review personal loan agreements and trust deeds to make sure they comply with the law and that company distributions to owners are properly treated for tax purposes.

Facebook announces search engine

Facebook is urging businesses to increase their proficiency of the social networking site as it announces a new search engine, the Graph Search, which allows users to search their friends, pages and connections for data.

In order to take full advantage of this new update, businesses should make sure their Facebook page is up to date, has active content and contains useful information.

The move is being touted as one that could shake up Google’s ownership of the web search space- potentially completely changing the landscape for business advertising.

As well as being able to search friends and pages connected to them, users can also search through the entire Facebook ecosystem, gathering information from all pages and profiles to bring the results.

Australian economy moved slowly into 2013

The latest pair of indicators show that the economy moved slowly into the new year, with building approvals falling by 2 per cent for the third month in a row. The weakness of the building and other sectors showed itself in a slowing of job ads , which fell by one per cent on the internet and in newspapers. Although a standalone marginal figure, it was the tenth fall in a row, marking the lowest point of jobs advertised in three years. These economic figures point to a general consensus among some leading economists that the job unemployment rate will rise to 5.5 per cent from 5.4 per cent.

This is a still a relatively low unemployment figure but along with the high Australian dollar points to the economy making a slow start to 2013.

Submissions for 2013 tax reforms

The Tax Institute has put forward a number of suggestions to the Federal Government in its 2013 budget submission paper. Among the suggestions are reforms in state tax, calls for a new small business entity and tax deductions for childcare.

One of the key proposals is to make childcare costs fully tax deductible, as opposed to the current 30% rebate. The proposed scheme would encourage mothers to return to the workplace.

The Tax Institute also put forward an idea for a new class of small businesses, which would take the best structures of all small businesses, such as a company, or trust, and create a new classification known as a ‘small business entity’.

There were also suggestions to address “the low level and inflexibility of contributions caps” in regards to Superannuation, especially as media reports continue to suggest the Government will be targeting super funds for revenue.

Fuel tax credit rate

Changes made to the Fuel Tax Credit system (FTC) on 1 July have to potential to significantly impact FTC entitlements for many SMEs.

Businesses that have a fleet of more than one vehicle will need to familiarise themselves with the changes to avoid paying too much tax.

The biggest change is that fuel used in off-road activities, such as forklifts will become entitled to the full credit rate.  Before 1 July such vehicles only qualified for a half credit rate.

The other major change involves the taxation of gaseous fuels (LNG, LPG and CNG).  These fuels that are supplied for use in non-transport activities were previously not subjected to tax.  The carbon tax now applies to these fuels.  They will now only receive a partial exemption from tax on gaseous fuels.

Users of non-transport gaseous fuels may be able to recover some of the carbon tax placed on the fuel if their business is classified within an industry or use that is exempt from the clean energy measures.

The following table summarises the impact of the changes for the fuel tax credit update.

Super can to improve cashflow for SMEs

Experienced SME owners can reduce their outgoing costs by restructuring their wage programs to include the Transition to Retirement Pension.

The Income Tax Act allows for eligible SME owners to reduce wages and leave extra cashflow in the business through a mechanism called the Transition to Retirement Pension. This enables a portion of income to be earned from super,with considerable tax benefits.

SME owners over 55 can receive a highly tax advantaged pension from their super fund.  Once over 60, the pension becomes completely tax-free. This means that eligible owners can earn a portion of their income through their super fund while still working.  One benefit will be the reduction of wage bills to the SME, without compromising their take home income. One of the major benefit of SME owners placing themselves on some form of pension in a super fund is that the income from the assets that support a pension becomes tax-free in the super fund it iself.

For example, if a pension is supported by assets of $200,000 and the fund’s income on those assets is, say, $10,000, normally the tax on that income is $1,500 i.e.15 percent.  By simply receiving the minimum pension amount allowable SME owners can save themselves $1,500 tax within the super fund.

Super contributions due

This tax year the ATO will be targeting employers who fail to pay super for contract workers. Many employers fail to realise that some contractors are considered employees under super guarantee law.

If employers fail to pay their super obligations, they will have to lodge a Super Guarantee Charge Statement. This will pay the super guarantee charge to the ATO.

Employers should seek advice in order to determine whether their contractors are eligible for super contributions.

Paid parental leave obligations

As of 1 July 2011, businesses which fail to fulfill the Federal Government’s new ‘paid parental leave’ obligations will receive penalties imposed by the Fair Work Ombudsmen.

Businesses should update their payroll systems to make sure they are fulfilling all relevant obligations. These include:

• Withholding tax from Parental Leave Pay under the usual PAYG withholding arrangements.
• Include Parental Leave Pay in the total amounts on their employee
  
  General News

• Understanding employment contracts

  Posted on September 7th, 2011 admin No comments

  A recent decision in the New South Wales Court of Appeal is a reminder for businesses throughout the country to ensure that bonus provisions in contracts of employment properly reflect the intent of both parties.

  • It may now be considered breach of contract to not set performance criteria and not assess employee performance, when a contract states that you will do so.
  • Making a bonus
    
    General News

  • Changes to unfair dismissal

    Posted on September 7th, 2011 admin No comments

    On 1 January 2011, the definition of what constitutes a small business changed. Businesses must now have fifteen or less employees – including full time, part time and regular casual employees – to be considered a small business.

    Companies no longer regarded as ’small business’ will not be able to rely on the small business unfair dismissal exemption. this means that employees will now qualify for such coverage after six months of employment, as opposed to the previous twelve.

    General News
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