RA Business Advisors

Uncategorised

From Accountant to Advisor

By

Most people only contact their accountant at the end of the Financial Year, but accountants are now playing a big part in the continued daily growth of businesses. Noticing this changing trend we decided as part of our recent office move, to re-brand ourselves from Rush & Associates Accountants, to RA Business Advisors. Advancements in technology now allow for us to be more involved in our clients business, outside of basic tax work, and we want to take this opportunity to show how we help our clients grow their business. At RA Business Advisors we offer a range of services to our small business clients including:

 

  • Xero set up and training
  • Help with all Xero issues or problems
  • ReceiptBank set up and training
  • VendHQ set up and training
  • Deputy set up and training
  • Bookkeeping
  • Business advisory and coaching services
  • Self managed superannuation funds solutions
  • Accounting
  • Taxation consulting and compliance
  • Tax planning solutions
  • Small business software advice, set up and training
  • Payroll training
  • All types of Tax Returns
  • BAS and IAS statements
Say good-bye to traditional accountants and hello to your new business advisors.

ATO Cracks Down on Uber and Airbnb Income Earners

By

If you are making some extra cash on the side with Uber, Airbnb or any other sharing economy platforms, the ATO will be going through your tax return with a fine tooth comb. Dana McCauly from news.com.au goes into detail in her recent article “Tax Office cracks down on sharing economy” .

After Uber begrudgingly agreed to its GST obligation the ATO warned its 20,000 to declare their incomes or be audited and penalised. Now the ATO has its eyes set on Airbnb with plans to audit some 75,000 hosts currently listed on the home sharing site. Research by the Deloitte Access Economics states that 53 per cent of Australian consumers “participated in some form of collaborative economy” last year and share economy is now shaping up to be a major player in Australia’s economy.

CPA Australia Head of Policy Paul Drum warns that hiding income from the tax man is not only illegal but foolish in the digital age. The ATO now has the ability to analyse transaction data at almost the click of a button and can crunch land tax receipts and ask “how can this tax payer afford that property?” Although some people believe the ATO can only delve seven years back, if you have been hiding out, which means you have been committing tax fraud and evasion, there is no limit to how far back the ATO will make you pay.

One of the biggest myths about share economy income is that you don’t have to declare sporadic or one-off transactions. Everything you earn from the initial dollar needs to be accounted for. For Uber drivers GST must be paid on every dollar but Airbnb hosts are exempt. Many Airbnb hosts now run their business through their accountant which takes care of keeping track of earnings and expenses.

Tax Accountant Tips

Etax.com.au general manager Simone Gielis says sharing economy participants should know the following rules:

1. Don’t hide your earnings

Whether for an extra bit of cash on the side or as your primary income source you must declare any income made through sharing economy platforms such as Uber and Airbnb. Keep track of your income and expenses and report honestly. Those found to be under-reporting will end up owing back taxes and be dealt with fines, penalties and interest charges.

2. Don’t spend it all

Although your income is boosted from your Uber driving or rental you need to be aware that your tax payable rises with it. A percentage of your sharing economy income should be set aside otherwise you may get a nasty shock when it comes to paying your tax.

3. Keep track of your expenses

Just like you would with your business or job, keep a record of any expenses you incurred and receipts/invoices of these transactions and you may be able to claim back a portion (or all) at tax time.

4. Know what you can claim

If you are renting out a room or apartment, you can claim expenses and depreciation for the percentage of your house that was rented, for the duration someone was paying. You can also claim internet, phone bills, utility, council rates and depreciation on furniture. The most important thing to claim is interest on your mortgage. Ridesharing drivers can claim work-related expenses including insurance and registration costs, car maintenance, repairs and cleaning costs.

5. Know your obligations

If you are unsure of how the sharing economy impacts your individual tax obligations you can enlist the services of a professional tax agent. To avoid being in over your head, or to minimise the additional stress this may be causing you, contact us today.

Work Expenses You Didn’t Know You Could Claim

By

When claiming work expenses in your tax return, whether by yourself or through your accountant, we often struggle with determining what we can claim. We have devised a list of work related expenses you can claim on your tax return this year, some may even surprise you!

1. Clothes and Make Up

If you have ever completed your tax return this is generally the first area you go to claim your expenses. Whether it be for laundry, protective steel cap boots or your uniform you’d be hard bent to find a person who didn’t jump at the opportunity to claim back on this expense. What some people don’t know is that you may also be able to claim your new hand bag/suitcase (if you can prove it carries more than just your lunch!).

2. Electricity

For those of you that work from home the chance to claim back on electricity may seem too good to be true. By keeping a log book of your work hours you can claim 45c per hour which, if you work an average 40 hour week, can lead to a deduction of more than $900 off your next tax return.

3. Car Use

Although you can’t claim travel to and from work (as much as we’d all like to!) you can claim travel to see clients, and to work sites. The ATO will be very strict when checking this deduction this year so make sure you have kept a log book and it is up-to-date.

4. Mobile Phone

Walk past any cafe and I can almost guarantee you’ll find someone suited up typing on their phone with a serious expression on their face. Now whether they are conversing with their boss, crunching numbers, or just on a really hard level of candy crush we may never know. One thing we do know is that you can claim a percentage of mobile usage as a work expense. The ATO will be cracking down on this so don’t claim 100% of your phone usages as a tax write off.

5. Office Equipment

Buy a new standing desk this last financial year? Why not claim it? You can claim office equipment, such as desks, stationary, ink, and antivirus software.

6. Income Protection Insurance

If you pay your Income Protection Insurance separate to your Super Fund you can claim this as a tax expense. If you Super Fund and Insurance is together, you cannot.

7. Self-education expenses

Work in a cafe and had to take a barista course? Were you required to undergo a first aid training course? Any education expenses which are required by your employee or are designed to improve your skills set for work can be claimed.

All these expenses can be claimed on your tax return, provided that you have proof of purchases for expenses under $300. Although there is the magic $300 claimable without receipts, the expenses still must be work related, regardless of whether you provide receipts or not.

To help you keep track of your expenses the ATO has developed an app where you can record your expenses, track trip kilometres and store photos of your receipts. This can then be uploaded straight to your online tax return or can be sent to your accountant. This is perfect for people always on the go, click here to learn more.

Claiming deductions just go easier with the ATO my deductions app.

Not sure what you can and can’t claim? Contact us and we will be happy to help you out.

End of Financial Year Tips for Small Businesses

By

InTheBlack’s Paul Drum has outlined, what we believe to be, an insightful list of tax tips for small business. These have been summarised below, or you can take a look at the article in detail here:

Check eligibility for small business tax regime

Small business entity’s (SBEs) are individuals, partnerships, companies, and trusts that have an annual turnover (excluding GST) of less than $2 million. While meeting the $2 million turnover test automatically entitles SBEs to choose certain concession it is important to note that additional eligibility tests apply to some claims, like the small-business CGT concession.

Maximise depreciation deductions

SBEs will get an immediate tax deduction for almost all purchased individual assets costing under $20,000, purchased from 7:30pm AEST on 12 May 2015 to the given that it is used for an income producing purpose.

For business assets first used, or installed and ready to use prior to 12 May 2015, an immediate deduction can be claimed if the cost of the asset was less than $1,000.

For businesses registered for GST, the $20,000 threshold is calculated on a GST-exclusive basis, but for businesses not registered for GST, the threshold is calculated on a GST-inclusive basis.

A depreciating asset that is not immediately deductible (an asset costing $20,000 or more from 7.30pm on 12 May 2015 or an asset costing $1,000 or more prior to that time) will be automatically depreciated at a flat rate of 15 per cent in the year it was bought to the extent the asset is used for income-producing purposes, and is used or installed ready for use by 30 June 2015.

Take advantages of the tax rate cut for small business from 1 July 2015

A number of tax planning opportunities have opened up with the reduction of company tax to 28.5 percent, and the proposed introduction of a five percent small business tax discount on income tax payable on business income received from an unincorporated entity that meets the SBE test, capped to $1,000 per individual.

In particular, eligible businesses can bring forward expenses into this financial year, and delay revenue into the next financial year.

Seeking professional advice when starting a business

The government has proposed that professional expenses situated with starting a new business be fully deducted in the year they occurred as of 1 July 2015. If a new business and possible, we advise you hold off from seeking professional advice until after the end of financial year.

Review salary sacrifice arrangements

Employees can consider salary sacrifice arrangements under which their gross salary may be foregone to obtain either a packaged car for fringe benefits tax (FBT) purposes,  or they can make additional superannuation contributions.

Make trust resolutions by 30 June

Trustees of discretionary trusts are required to make and document resolutions on how trust income should be distributed to beneficiaries for 2014/15 by 30 June at the latest.

If not executed by 30 June, any default beneficiaries under the deed will become entitled to trust income and subject to tax, or the trustee will be assessed at the highest marginal tax rate on any taxable income derived by the trust.

A trustee must be able to show how an effective resolution was made through draft minutes, file notes or an exchange of correspondence documented before year end.

Stream trust capital gains and franked distributions

Trustees of discretionary trusts can stream capital gains and franked dividends to different beneficiaries of the trust deed allows the trustee to make a beneficiary “specifically entitled” to those amounts. This must be documented before 30 June.

Private company loans

Income tax law can potentially treat a payment or loan by a private company to a shareholder or associate, or the forgiveness of a shareholder’s or associate’s debt, as an unfranked seemed dividend unless an exemption applies.

The most common exemption is to enter into a written loan agreement requiring minimum interest and principal repayments over a specified loan term.

Private companies can do various thing before 2014/15 tax returns need to be lodged, including repaying loans, declaring a dividend or entering a complying loan agreement before the return needs to be lodged.

Prevent deemed dividends in respect of unpaid trust distributions

Any unpaid distribution owed by a trust to a related private company beneficiary that arises on or after 1 July 2014 will be treated as a loan by the company, if controlled by the same family group. The associated trust may be taken to have derived a deemed dividend for the amount of the unpaid trust distribution in 2014/15. This may, however, ne prevented by paying out any unpaid distribution, or a complying loan agreement entered into before 2014/15 tax return is due for lodgement.

Write-off bad debts

Income tax deduction for bad debts can be obtained by businesses when various conditions are met;

  • The debt still exists at the time it is written off
  • Debt is effectively irrecoverable
  • It is written off in the accounts as bad in the year the deduction is claimed
  • Must have been previously brought to account as assessable income or lent in the ordinary course of carrying on a money-lending business
  • Certain additional requirements must be met if creditor is either company or trust

Super guarantee

Employers are required to contribute 9.5 percent of employees’ salary to the super fund of their choice under the superannuation guarantee. Tax deductions for personal contributions can be made if you’re substantially self-employed.

SMSFs and employer contributions

From 1 July 2014, employers with 29 or more employees are required to pay superannuation contributions electronically. For further information what is required for this, take a look at one of our blogs.

FAQs (and myths) about the $20,000 write-off

By

There has been a bit of confusion surrounding the newly announced immediate asset write-off for assets costing less than $20,000 for small businesses, since the release of this year’s federal budget.

The following blog, by Taxpayers Australia, we found, laid to rest many of the frequently asked questions that arose from this announcement. These included:

  • How does the deduction work?
  • What constitutes a ‘small business’?
  • Is the $20,000 threshold inclusive or exclusive of GST?
  • When can I claim a deduction?
  • How do the rules work with vehicle trade-ins?
  • What happens if the asset is used for both business and private use?
  • Can a deduction be claimed for second hand assets?; and
  • What are the consequences if the law is not enacted?
If this sounds like something you’ve been wondering about or you are a small business take a look at this post. Alternatively, if reading is not your thing, we highly recommend the following Taxpayers Australia podcast to give you a clearer picture as to what this write-off entitles.

The Basics of Inventory Management

By

Every company wants to grow, and with growth comes the need to assess and reassess core foundations.  The following basic inventory management tools slot into 4 categories.

 

1. Systems and Organisation
Systems are the key to growth.  Whether your organisation needs it today or you are looking to grow in the near future, developing systems to support robust inventory management is essential.

 

Choosing the right space when stock first arrives is the first step to a streamlined inventory management system. Pallet racking, for instance is one way of maximising warehouse capacity, with varying degrees of sophisticated racking and stacking equipment available, should growth demand it.

 

As an easy starting point, mark out on the floor the direction in which inventory, once receipted, will flow. For example, purchase some bright masking tape and fix lengths to the floor, ensuring each stage of a product’s journey (inwards area, un-packaging spaces, manufacturing benches, etc.) in the warehouse is organised. From a health and safety perspective, it will allow for a much better work environment in the long run, including reducing wasted resources on re-organisation and damaged goods opportunities.

 

Eliminating tardiness in your operations and managing similar aspects such as efficiency across your supply network is another important principle to implement. The care, in which your company takes in recording and storing finished goods, is a barometer of the overall health of your company, as it has a flow-on effect in terms of: shrinkage, waste reduction (aim for a ‘Lean’ work environment), and the cost of extra warehousing.

 

Unseen obsolescence costs and unnecessary additional expenses, such as write-downs have often led to an untimely end for many businesses. It is imperative; therefore, to keep accurate records of all inwards and outwards receipts, for instance, if good inventory tracking is to be achieved.

 

2. Documentation
Stock loss or what is typically known as ‘shrinkage’ has been a major contributor to some ‘once great’ companies failing.

 

Keeping a reign on this is imperative, and therefore, eliminating documentation errors throughout your inventory management system is key.

 

There are a number of ways shrinkage can happen; through physical theft, cyber and IT failure, receipting the wrong item or receipting too many of a cheaper line, receipting too little of a more expensive SKU, or entering incorrect buy, or cost prices when receipted, for instance.
Keeping track of the right barcode is critical in keeping stock errors to a minimum. Internal misadjustments, such as errors recorded during stocktakes, highlight the need for the adoption of technology in this area.

 

3. Planning
Be organised and document everything. When establishing early stage systems and processes, care should be taken in regards to how the following stock-keeping unit details are noted in your inventory management software:

 

  • correct catalogue numbers
  • bar code details
  • source of origin
  • associated spare part data
  • shipping and physical storage location details

 

Sophisticated software is not necessary at this stage; however, smart early stage companies visualize expansion and implement technology to cater for this.

 

Good inventory management involves considering the long term effects of stock housing and organisation. A simple diagram of what goes where in a store room will help with this: Visualising and thinking ahead can prove very beneficial to future growth strategies. Managing workflow from the outset, therefore, is paramount to successful inventory management.

 

4. Communication
Recent software developments have meant that smaller companies are now able to disseminate information more easily to those closest to them and make adjustments to head off disruptions. Timely reports are effective in projecting improvement milestones and gauging efficiency as it pertains to inventory management.

Tips on Processing Payroll this End of Financial Year

By

The following email was sent from Xero’s Payroll team this week and we think it’s important for all Xero users to go over the following steps they outlined:

The end of the financial year is always a busy time but with the tips below you can take action now to streamline your payroll for the end of the financial year.

To start off, set up auto super before the cut off. You can do this by clicking this link and following the instructions, or, alternatively, contact us.

If you are already using auto super and need to pay super contributions by 30 June we suggest that batches are submitted no later than 1pm Monday 22 June to make sure they reach the super funds in time.

If you have not yet done so, now is a good time to do reconciling. For those who have Xero, this is simple and easy. To reconcile Payroll in Xero, you need to:

The total earning, total superannuation and total tax amounts need to match. If they don’t, it’s time to make amends. Here are a list of common problems and how to resolve them:

Problem: Payroll is higher than what’s showing in the General Ledger.
That could mean: A draft bill hasn’t been created for all your pay runs.
Solution: You first have to identify any pay runs that need a draft bill, and then create them.

Problem: The General Ledger is higher than what is showing in Payroll.
That could mean: Multiple draft bills have been created, other transactions have been coded to the payroll account, or payments have been reconciled to the wages expense account rather than the wages payable account.
Solution: Delete or void an invoice or credit note. Or, edit the spend money transactions.

Here at Rush and Associates we pride ourselves in being able to provide you with the best possible service to benefit you and your business. If your Payroll and General Ledger do not match, or you have any other queries or issues, please do not hesitate to contact us so that we can assist you. Ensuring that your End of Financial Year is as smooth and stress free as possible, is a top priority for us.

SuperStream Changes

By

As the 2014/15 financial year comes to a close businesses need to start paying attention to the government’s latest regime, SuperStream.  SuperStream is a government reform aimed at improving the efficiency of the superannuation system for Australian businesses. It provides a simplified process to digitally make employee super payments and at the same time report those payments to the relevant employee superannuation funds.

The following is a video from the ATO explaining SuperStream the new data and payment standard for superannuation:

From 1 July 2014 businesses that employ 20 or more employees were supposed to have started making contributions using SuperStream. However, they had twelve months reprieve to ensure it would be setup and functioning by 1 July 2015.

From 1 July 2015 businesses employing 19 or fewer employees will be required to start making contributions using SuperStream. They too will have a twelve month reprieve period to ensure they put the necessary systems in place to be compliant by 1 July 2016.

What do you need to do to make sure you are SuperStream compliant? You could:

Upgrade to a software solution that is SuperStream compliant;
Use a commercial clearing house;
Approach a service provider who can take care of your SuperStream compliance for you; or
Outsource your payroll and SuperStream processing to a third party.
In a recent ATO webinar they outlined that essentially businesses will need to move to an electronic form of record keeping for payroll purposes to ensure compliance with SuperStream.

If you’re looking to upgrade your software our recommendation would be to upgrade to Xero, the world’s leading online accounting software. Xero is a simple but powerful online accounting software package that can help manage your business but also help you to be SuperStream compliant.

The following is a video of how easy it is to get up and running and be SuperStream compliant with Xero:

Once you find a solution and system to be SuperStream compliant you will need to obtain the following information for all of your employee’s super funds:

  • All Funds:
    • Fund’s ABN
    • Employee tax file number (TFN)
  • APRA-regulated Funds Only:
    • Unique Superannuation Identified (USI)
  • SMSF’s:
    • Bank account details
    • Electronic service address

Once you have this information you can then update your software with that information or provide it to a service provider.

If you need help to assist you become SuperStream compliant please contact us on (07)3839 8869.

The 2015-16 Federal Budget

By

Small businesses received some key changes from the 2015/16 Federal Budget to deliver lower taxes and hopefully cultivate growth.  The following are some of those key changes to small businesses with an aggregated turnover of less than $2 million:

TAX CUTS FOR SMALL BUSINESS

The following tax cuts will be available to small businesses in the 2015/16 year:
  • 1.5% Tax Rate Cut for Small Companies: Company tax rates will be reduced from 30% to 28.5% for small companies. Companies over $2 million will be subject to the current 30% rate. The current maximum franking credit rate will remain unchanged at 30% for all companies.
  • 5% Discount on Tax Payable by Small Unincorporated Entities: Individual taxpayers with business income from a small unincorporated business entity (such as trusts or partnerships) that has an aggregated annual turnover of less that $2 million will be eligible for the small business tax discount.  This discount will be capped at $1,000 per individual for each income year, and delivered as a tax offset.

ACCELERATED DEPRECIATION FOR SMALL BUSINESS

Small businesses that purchase and install assets from 12 May 2015 that are under $20,000 will be able to claim an immediate deduction for that asset.  This accelerated depreciation will be available up until 30 June 2017.

In addition the current ‘lock out’ laws have also been suspended for the simplified depreciation rules until 30 June 2017.

Where assets purchased are $20,000 or more they will be depreciated at 15% the first year and then 30% each income year after that.

IMMEDIATE DEDUCTION FOR PROFESSIONAL EXPENSES

Businesses will now be allowed to claim an immediate deduction for a range of professional expenses to start a new business.

CGT ROLL-OVER RELIEF FOR RESTRUCTURING

Small businesses will now be able to change legal structure and not attract CGT on the transition.  This will begin in the 2016/17 year.

FBT CHANGED FOR WORK-RELATED DEVICES

A FBT exemption will be allowed from 1 April 2016 for small businesses with an aggregated annual turnover of less than $2 million that provide employees with more than one qualifying work-related portable electronic device.

New Penalties for Self-Managed Super Funds

By

The 1st of July 2014 will mark the commencement of a new regime of penalties for Self-Managed Super Funds (SMSFs). The information below aims to provide clarity for you in the organisation of your SMSF, so that you can be prepared for the future.

The new law initiates administrative directions and penalties for contravention in reference to SMSFs including:

  • Rectification directions
  • Education directions
  • Administrative penalties

The ATO has the ability to issue not just one, but two or more, of the above options and can issue a notice of non-compliance if SMSFs do not act in accordance with directives.

Funds that no longer meet the requirements of an SMSF may still be subject to directions and/or penalties, regardless to the fact that the new penalty regime applies only to SMSFs.

This new law voids any condition in the SMSF’s Trust Deed/Governing Rules that would have the effect of excusing a trustee of the SMSF from or indemnifying a trustee/director against:

  • Liability for the cost of undertaking a course of education in compliance with an education directive.
  • Liability for an administrative penalty imposed by the new administrative penalty regime.

The new SMSF Penalty Regime does not replace the current powers that the ATO has to take action against trustee(s), but provides an alternative. Providing a middle ground of the current option, for the ATO when dealing with a fund that contravened SIS, is one of the main reasons for the introduction of SMSF Penalty Regime.

ATO has developed a range of options to deal with breaches of the superannuation law, including:

  • Giving a fund a notice of non-compliance to make the fund a non-complying superannuation fund
  • Accept an undertaking from the trustee to rectify the contravention
  • Disqualifying individual trustees and prohibiting them from acting as a trustee of a superannuation fund or as a responsible officer of a corporate trustee of a superannuation fund
  • Suspend or remove the trustee
  • Freeze the assets of the fund if there is a risk of the member’s benefits being eroded
  • Seek civil and/or criminal penalties through courts

The ATO will continue to have these options available for SMSFs that contravene SIS, however, the new SMSF Penalty Regime will provide a more efficient way for the ATO to deal with SMSFs that have SIS breaches.

Credit to ‘New Penalty Regime for SMSFs’ by Mark Ellem of SuperMate.