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Staying Safe At Tax Time Begins Now!

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As the year comes to a close and the financial year moves forward at full-steam, it’s important to be on top of your tax time practices now to prevent heartbreak later.   

The ATO have profiled the five most common mistakes Australians are making during the end of the financial year period:  

  • Leaving out some of their income (for example, money earned from cryptocurrency etc.) 
  • Claiming deductions for personal expenses (for example, between work travel, personal phone calls etc.) 
  • Forgetting to keep receipts or records of their expenses (around half of the adjustments the ATO makes are because the taxpayer had no records, or they were poor quality) 
  • Claiming for something they never paid for 
  • Claiming personal expenses for rental properties (either claiming deductions for times when they are using their property themselves, or claiming interest on loans used to buy personal assets like a car or boat) 

If you are worried about what you can claim for work-related personal expenses, just remember these three golden rules:  

  • You must have spent the money yourself and not have been reimbursed 
  • It must be directly related to earning your income 
  • You must have a record to prove it 

With ATO efforts to crack-down on tax time cheats increasing, it’s more important than ever to ensure you don’t get caught off-guard when June 30 comes around. 

If you are worried about any of these, don’t hesitate to get in contact with us! Especially if you are worried about ensuring you are on top of your receipts over the year. Through utilising apps such as ReceiptBank with Xero you can streamline your business and won’t have to worry about storing receipts ever again!  

 

What To Do When You Want To Keep Your Business ‘In The Family’

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What to do when you want to keep your business in the familyHave you got a family business you love but want to have some peace of mind for when it’s time to step away? You aren’t alone as more and more Australians start their own business, we are hearing about more people worried they will have to sell or close down their business they have worked so hard for. 

But this anxiety doesn’t have to plague you, transferring your family business to the next generation can be a very straightforward and hassle-free experience! 

Who will take over the business? 

This is an important question everyone asks themselves, and there are a few things to keep in mind when considering this. Skills should always be at the top of your list when you rattle through your list of candidates – you may have a great affinity to help out your daughter, but your son’s best friend may be better skilled for the position. Make sure you take the time to find the ideal candidate, hold a panel, a series of interviews, whatever will give you the best insight into the perfect candidate! 

What’s the steps for handing over the business? 

There are a number of steps if you are transferring to a family member and you will no longer be a part of the business and these may include: 

  • Transfer business name or cancel your business name 
  • Cancel tax registrations such as GST 
  • Lodge all required tax returns 
  • Pay outstanding bills, activity statements etc. 
  • Make GST adjustments on your final activity statements 
  • Transfer any other assets such as domain names or web domain registrations 
  • Transfer business records, customer records and employee records 
  • Cancel your ABN after you have met all of your obligations for lodgement, reporting and payments 

Start planning now! 

A succession/exit plan is integral to a smooth transition for you and the new business owner. When you develop this plan, remember: 

  • Will you transfer both ownership and management? 
  • Are you going to review the plan regularly? 
  • Are you going to include direct family members in the business? What roles are they going to play? 
  • Is training or mentoring required on your part for your successor? 

A terrific guide issued by the Australian Government on what steps are best can be found HERE

How To Stay Safe Against The ATO Crackdown On Declared Income

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Warning Time

The Australian Taxation Office (ATO) is closing in fast on everyone who doesn’t properly declare their income and pay the correct amount of tax.

As your Tax Accountants, we want to help you be aware of what the ATO is doing and how you can protect yourself.

How Does The ATO Know?

The ATO is linking databases of property sales, car purchases, international plane flights, dividends paid from shares, and sales of shares and investments with the income declared on your Tax Return.

If your Tax Return income doesn’t match with your spending or repayment of loans, then the ATO will probably “red flag” you for a tax audit.

These databases have not been linked before like this, so we’re expecting to see a huge increase in the number of tax audits over the next 12 months.

Business Cash Receipts Not Declared

Many small business owners pocket some of their cash takings each week and don’t declare this in their Tax Returns.

The ATO now has the tools to catch this out

When your business Tax Return is lodged, the ATO compares your profit and other key indicators as a % of your total sales with other businesses in your industry. If your profit % is lower than average, then the ATO may decide to do a tax audit just to see if you’re properly declaring all the income you actually receive, or if the expenses you’ve claimed are actually allowable as tax deductions.

Also, not declaring cash income from your business could result in you getting a much smaller price for the sale of your business. We’ll discuss this in a future article.

What Are We Doing To Help You?

We have 2 keys roles as your tax accountants.

  1. Ensure you pay least amount of tax you legally should.
  2. Assist you to lodge a correct tax return, so if you’re audited by the ATO you can sleep peacefully at night knowing that you’ve done the right thing.

While we don’t like paying tax just like you don’t like paying tax – at the end of the day it simply is a normal part of life and there’s nothing we can do about it except for obeying the laws and lodging a true and correct Tax Return.

If you don’t declare all income you receive and if you claim as expenses things that aren’t properly allowable tax deductions – then if you’re audited and lose you will have to pay back tax PLUS pay large penalties to the ATO.

Is this really worth it?

We’re On Your Side. Talk To Us Today!

Let’s talk frankly. If you’ve been naughty in the past, talk to our expert accounting team about it. There are option we can advise you on to help you and reduce possible fines and penalties.

It’s better for us to help you declare past sins before the ATO finds out and starts their attack on you.

We’ll help you fight the ATO if the occasion is needed. But you need to do the right thing – even if you disagree with the tax laws.

Please – don’t doubt our resolve to help you.

Contact your expert team at RA Business Advisors today on 07  or by email at mail@raaccountants.com.au

We’re your good friends. And we’re here to help you!

Utilising the Xero App Marketplace to Save You Time

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Time saving for small business has always been the focus of Xero, with over 700 apps on the marketplace to make Xero save you even more time. With so many apps it can be overwhelming, but there is no need to worry about which ones are best for your business as each app is reviewed by users – no room for bias! 

Xero app marketplace

Research has shown small and medium businesses who use cloud apps grow revenue 30% faster!

There are four key areas that Xero apps help businesses exceed in 

  • Project visibility and delivery: Achieve real-time views of projects that give you meaningful insight into how work will be completed and the impact on bottom line. 
  • Managing cash flow: Make sure your cash flow is healthy by realising revenue and settling bills efficiently 
  • Improve customer relationships: Generate new business through acquiring new clients as well as growing existing client revenue 
  • Managing people: Improve your processes to attract, retain and develop the right staff 

What are the best apps on Xero?

Let’s take a look at a restaurant business with a single storefront for example.

All of their accounting and payroll are processed through Xero, they also use apps to streamline point-of-sale, invoicing, and rostering.  

Vend

Vend provides a database of products which can be used to view profitability against wages and other expenses, opportunities to see sales, payments and posted stock orders as well as plenty of tools to analyse loyalty programs.  

Receipt Bank provides a one-stop automated solution for all supplier invoices to be deposited. Using your mobile device you can easily upload invoices through simply taking a photo. Receipt Bank automatically scans for GST and all other relevant information. This is all automatically uploaded to the cloud and transferred Receipt Bankinto Xero.

Deputy provides rostering software that all employees can easily use for time-sheets as well as processing leave and issuing rosters. Employees automatically receive messages whenever there is a roster change or associated changes. This app also allows you to easily juggle rosters in the case of an absent employee or spur-of-the-moment sick leave.  

You don’t need to worry about juggling between apps as all of these are integrated into Xero. Even better, these are all scalable, a store expanding to multiple stores can easily use Deputy to manage multiple stores, for example. 

But what if you don’t have a physical store?  

If you are thinking that maybe Xero might not be for you as you don’t have a retail business, there’s still value for you if you are operating a trade business for example.  

Through apps such as Tradify, tradies can manage jobs across multiple vehicles and process each job quickly through Xero. Through Tradify, a trade business owner can link their vehicles to employees, assign jobs, process billing for each vehicle and process payments for their employees – all through one app. Business owners can view all of this information through Xero at the end of the day, automating the things you don’t want to do and providing information you want all in one place.

How do I set this up? 

If you are already an avid Xero user, jump on the app marketplace and have a look at the highest rated apps. Otherwise, if you want to take the guesswork out of integrating apps – give us a call! We understand the importance of time and can set up your business with Xero and associated apps using the method that suits you best. We pride ourselves on providing you with knowledge and advice to incorporate Xero into your daily life without any hassle. Apps such as Tradify offer automation opportunities within Xero that truly change how you work, book a meeting with us now and see which apps would benefit your business!

Here’s What Went Down At Xerocon 2018 In Brisbane

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When we first started using Xero in 2010 we attended product seminars in small rooms of less than 100 people. There was no telling that less than ten years later, the Brisbane Convention Centre would be transformed into an all-encompassing more than 3700-person celebration of the platform.  

Xerocon 2018

What did speakers focus on?

Across two days of “Coachella for Accountants” we heard about some of the most exciting developments in the platform, but also learned to better appreciate work-life balance (and how Xero facilitates this, of course). The focus on work-life balance was part of the #HumanAtHeart theme for this year’s event.  

Who were the best speakers? 

Throughout Xerocon the speakers were presented in a way we haven’t seen before, all speakers were on stage at once, speaking at once. But while this may seem comical, each speaker was in their own separate quadrant of the stage, and the audience could choose which one to listen to through their headset.  

Day 1: Simon D’Odorico was a treat; talking about the Xero product roadmap and how the mobile apps Xero are rolling out are going to give more freedom to anyone on the platform. Genevieve Bell spoke about the emergence of AI tech and their impact, while everyone seems to focus on AI as the end of humans at work, Genevieve brought a fresh set of eyes. AI is moving from a command and control paradigm into more of a contextual environment.  

Day 2: Mark Manson kicked off the day with a bang, talking about finding happiness through adjusting your focus. As the author of The Subtle Art of Not Giving a F*CK, Manson had a great wealth of knowledge and made us laugh out loud while shifting our perspective on work.

Why is Xerocon called the ‘Coachella for Accountants?’ 

Xerocon sees thousands of accountants converging from around the country to hear all about Xero, network, and generally have a good time. When you take a look at what Xerocon offers, the name makes a bit more sense as well… 

Pools…Mini golf…Fancy lighting…There was even DJ sets. 

It’s like a mixture of a rock concert and a playground. 

Pool at Xerocon 2018 Playground at Xerocon 2018

What was our highlight? 

Having just read The Subtle Art of Not Giving a F*CK, hearing from the author Mark Manson was phenomenal! Manson’s view of the world is like no other, while we came to Xerocon hoping to leave with a fresh set of eyes on the power of Xero, we walked away with a fresh set of eyes on life itself.  

Take a look at the great wrap video for Xerocon 2018 below! 

https://www.youtube.com/watch?v=NyFcG1ifIjw

Market Turmoil Leaves Australia On Top

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Market turmoil leaves Australia on topThe Australian dollar is currently hovering around a 20-month low against the US dollar, and several emerging markets across the globe are experiencing havoc. Yet the Australian economy is showing solid progress.  

According to Commonwealth Bank economist Gareth Aird, “A lower Australian dollar is positive for growth. When it drops and stays lower for longer, that’s when the benefits come through.” 

The global turmoil for the markets is due in large part to the growing trade war between China and the US. The main issues stemming from this are the impact each party’s negotiation tactics have on global investors. US president Donald Trump is well known for making big claims and pulling out late during negotiations, with this putting investors into a head spin.  

Currently, trade figures show goods export volumes lifted 1 per cent and services exports 1.2 per cent in the June quarter. With an expected “very solid” second-quarter GDP, which may come as a surprise given the current dollar. However, as Annette Beacher of TD Securities explains, “normally you would need wages or consumer price inflation to disappoint [for the currency] to be at these levels.” With these unaffected, GDP is expected to be surprisingly positive this coming quarter.  

China’s Caixin manufacturing PMI experienced a slightly bigger-than-expected decline, with Chinese growth continuing to slow overall. Emerging markets such as Argentina and Turkey are also trying to battle inflation and slumps in currency value. Su Lin Ong of the Royal Bank of Canada believes “Leading indicators are telling us that global growth is slowing and the breadth of growth is less. That’s the emerging market linkage to the Australian dollar.” 

In conclusion, it seems that Australia will not be experiencing growth or a boom any time soon, in fact we sit in a similar position to other struggling markets. However, as exterior forces unaffected by the trade war remain steady (wages and consumer price inflation), Australia is expected to come out on top. With the earliest indicator of this set to be the second-quarter GDP data expected on September 6. 

Downsizer Contributions – Is It Time To Sell Your Home?

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Downsizer contributionsAs of July 1 2018, super funds are now able to accept downsizer contributions from their members. The federal government introduced the initiative to help relieve housing affordability pressure, encouraging seniors to relocate to smaller homes.

What is a downsizer contribution?

Downsizer contributions were introduced as an easier means for those selling their home to deposit up to $300,000 into their super fund from the sale. These are available for those who are 65 years old or older and meet the eligibility requirements. Until the total balance is re-calculated, the contribution doesn’t affect total super balance.

How do I make a downsizer contribution?

There are 7 eligibility requirements you must satisfy, if you meet the 65+ age requirement:

  • The contribution must be from the proceeds of selling your home, where contract of sale was exchanged on or after July 1 2018.
  • The home was owned by you or your spouse for 10 years or more prior to the sale.
  • Your home is in Australia and is not a caravan, houseboat or other mobile home.
  • Proceeds from the sale of the home are either exempt or partially exempt from CGT under the main residence exemption or would be entitled to this exception if the home was a CGT rather than a pre-CGT asset.
  • You have completed the downsizer contribution into super form before or at the time of making downsizer contribution.
  • The downsizing contribution is within 90 days of receiving the proceeds of the sale.
  • You haven’t previously made a downsizer contribution for another home.

What are the benefits of making these contributions?

There are two main benefits from making these contributions – the amount doesn’t count towards contribution caps or total superannuation balance for the financial year. The contribution also doesn’t have the standard ‘work test’ for voluntary contributions attached to it, which applies to Aussies aged 65-74. Members should be aware that downsizer contributions are not deductible.

However, members who are receiving/hoping to receive the Centrelink aged pension should be vigilant for the impact this has on eligibility. Assets within a super fund contribute towards the asset test which determines eligibility to receive a pension, once at pension age.

If you are an SMSF with members starting to ask about downsizer contributions and don’t feel prepared, give us a call! We are experts in SMSF and small business; we can help you meet your customer needs without sacrificing your own.

Xero Up Their Game With Acquisition of Hubdoc

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Xero acquires HubdocXero’s vision for the workplace is focused on providing code-free accounting, and the platform has taken huge steps towards this with the acquisition of Hubdoc. Hubdoc is an automated data capture solution for real-time financial data that verifies and organises data from over 700 financial institutions.

With this acquisition, Xero adds streamlined data collection and classification to its arsenal, complimenting Xero’s “financial web” strategy. Integration between the two services is currently surface-level, but deeper integration is promised for the future. This acquisition follows the recent partnership between Xero and Gusto to deliver full-service payroll. Xero and Hubdoc are currently dedicated to further enhancing the AI and machine learning features of Xero.

For businesses this development is very exciting, as cloud-based accounting solutions continue to change the face of accounting, Xero has been a frontrunner. With this acquisition, the Xero platform continues to increase in ease and accessibility, enabling businesses to offload bookkeeping completely as all documents are available in one central location.

Collaboration is one of the biggest benefits of using Xero; the ecosystem of the platform allows users to pick and choose from endless tools to suit their needs. Whether you are doing your own accounting, or an accountant delivering value to your clients, the Xero marketplace has tools for everyone. At RA Business Advisors we are passionate about small businesses utilising Xero; if you would like to learn more about how Xero and Hubdoc could benefit your business, get in contact with us today!

Mid-Market to See Xero and Intuit Enter Arena

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Xero and Intuit to enter mid-marketAs the roll-out of Single-Touch Payroll sweeps across Australian businesses, MYOB Premier have decided against adding relevant services to their platform. This has given Xero and Intuit incentive to enter the mid-market, but is it worth your time?

Hang on, what is the mid-market?

The mid-market consists of the 50,000+ businesses in Australia with more than 20 but less than 200 staff. As well as more than $3 million turnover and three or more users of the core business system. This is a market currently dominated by MYOB, but soon to be contested by Xero and Intuit.

Why would I want to use Xero or Intuit anyway?

These platforms have been game changers for small businesses, offering a cloud-based platform which is constantly updating to include support for the future. Technologies such as machine learning, bank feeds, as well as well optimised user interface are huge selling points of Xero. However, to many these options are only available to small businesses with Xero or corporate level businesses with Workday. This is where the mid-market jump for Xero and Intuit comes into play.

Why isn’t the mid-market using these platforms now?

One of the main reasons cloud software hasn’t penetrated the mid-market is because of fear and cost of change. The majority of companies using MYOB do so because they doubt smaller software can perform, and fear the cost of corporate platforms. But this is not the case, as more businesses are realising Xero can match and exceed the performance of MYOB, as well as offering more features at a lower price point.

Single-Touch Payroll: How Is It Going To Change Things For You?

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While the name may suggest some weird form of physical payroll, single-touch payroll (STP) is a new initiative from the ATO which came into effect at the start of this financial year. STP is currently applicable for employers with 20 or more employees. However, STP will also be used for employers with fewer than 20 employees from the start of next financial year.

single-touch payroll

 

What is single-touch payroll?

STP enables employers to report salary or wages, PAYG withholding and super information directly to the ATO at the same time they pay their employees. STP will send a copy of these to the ATO automatically when these are sent to the employee. The system is designed to make reporting easier for employers, as well as addressing the unpaid superannuation crisis.

How do I report through STP?

Reporting is easy as the process of STP is automatic, once your reporting software is STP-enabled. Before lodging your first report, make sure you authorise people to lodge reports on behalf of your business. As well as checking if you are in need of an AUSkey, this identifies you as the representative for your business when using online government services.

There are some payments which cannot be reported through STP, these include:

  • payments that are generally not paid through a payroll process;
  • payments made by payers to recipients that are generally not their employees

Are there any issues that could arise from STP?

As long as you are up-to-date on your super payments there is no need to worry. However, for smaller businesses that don’t pay super on time due to limited cash flow, consider breaking down these payments to be more regular to meet your obligations under STP. If you’ve missed superannuation payments in the past, there is an amnesty period until May 2019 to rectify any past non-compliance without penalty. Grievances can be backdated as far as 1992, so make sure you are on top of your superannuation!

Are there any benefits for employees?

Peace of mind. Through establishing the STP system, the ATO will get a report every time an employee is paid and will be able to instantly verify the superannuation payments are up to date. Employees will also be able to complete Super Choice forms and TFN declaration forms through their myGov account.