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The Australian Small Business and Family Enterprise Ombudsman’s latest inquiry into payment terms that have affected the livelihood of almost five million Australians involved in small business has left me reflected on the experiences I have had with big companies and government enterprises. At my last job I was chasing up a substantial payment from a multi-million dollar, international company who was almost two months late on their payment. After repetitive, one-way conversations, office staff essentially told me that it would be paid when it was paid, despite the agreed upon 14-day payment terms they had signed prior to the job. The repercussions of this late payment had a chain reaction that affected payroll, budgets and financial position. This interaction between big companies and small businesses puts to question the effects of late payments on the owners of small businesses. Big companies and government enterprises are said to be owing at least $26 billion in unpaid invoices to small businesses. With 90 per cent of small businesses closing due to poor cash flow, the resulting unpaid invoices have led to small business owners taking out loans in order to pay suppliers and wages. “If small-to-medium businesses start falling off a cliff, economic conditions in Australia will certainly follow, so it’s incumbent on big businesses and governments to follow best practice and pay their bills on time,” (Kate Carnell, 2016). If you have a problem with late payments you can talk to your accountant for help with issuing reminders and debt collection, or just for help speeding up the payment.

Last year the ATO released a free tool for their app ‘MyDeductions’ in order to help taxpayers keep track of deductions and expenses, on-the-go. The app is simple and easy to use; all you have to do is add the date of purchase, amount and a description. You can also categorise your receipts into deduction labels whenever you like. Come tax time you will be given the option to upload your completed deductions data to the ATO and will be imported into your tax return pre-fill. The MyDeductions app allows you to keep a record of all work-related:

• Car expenses; point-to-point, odometer method or electronic log book
• Travel expenses; public transport, flights, taxi and Uber fares, tolls, parking fees, meals, accommodation and incidental expenses incurred while travelling for work
• Clothing, laundry and dry-cleaning expenses; compulsory uniform, protective clothing, occupation-specific clothing, and laundry expenses for these clothes
• Self-education expenses; costs of attending seminars, conferences, educational workshops, and job-specific course fees
• Other expenses; home office expenses, mobile, internet

You can also use MyDeductions to record non work-related expenses such as;

• Gift and donations
• Costs associated with managing your tax affairs

Download the ATO app from the app store to start using MyDeductions.

If eligible to sell your business property to your SMSF, you can receive a tax concession on investment earnings and hence, if you are eligible, you will only be taxed at 10% as per capital gain tax (CGT). Also, if you are careful and structure the sale transaction right you may pay no CGT when you sell the property, when paying a pension from your fund.

Like most things with the ATO, there are strict rules and guidelines surrounding the sale of a business property to a SMSF.

Eligibility

•  Must be defined as a business real property, meaning it needs to be a freehold or leasehold interest in real property that is capable of assignment or transfer.
• Needs to be wholly and exclusively in one business
• If the property is being acquired from a related party, then related party transaction rules apply
• Business real property doesn’t include property used partly for running a business and partly for residential purposes.

Exceptions

• Above restrictions do not apply to farmers whose SMSF can own a farm and lease it to a member
• The predominant purpose of the entire rural property can’t be for private of domestic purposes
• Small businesses can use their SMSF monies to own their business premises

Alternatives

For a list of alternate options and useful mechanisms, click here. 

Interested in learning about how you can sell you business property to your SMSF? Give us a call today to talk to one of our small business experts or book a meeting with our director.

The ATO is warning small businesses who have yet to sign up to SuperStream that time is running out. With a deadline on 28 October 2016, businesses not set up are at risk of being not-compliant with no individual extensions to be granted. As mentioned in previous blogs, SuperStream is an electronic reporting standard for superannuation payments to staff. Luckily, 75% of small businesses are SuperStream compliant but there is still a way to go to make everyone compliant. The SuperStream system is designed to save administration time and costs.

If you are yet to set up your SuperStream now is the time to do so. Take a look at our ‘SuperStream Changes’ blog, visit the ATO for a step-by-step guide, or contact us to hear how we can make you compliant before the deadline.

In one of our first ever blogs, back in December 2011, we discussed “What is the Cloud” after holding our first information session with a small group of clients and non-clients. Now, five years on, who would have guessed the technological innovations the cloud would have helped us achieve? From multimillion dollar businesses such as Uber and Airbnb, to internet giant Amazon, it has so far seemed that cloud technology may not just be for big companies with big IT budgets. CTO at Amazon, Werner Vogels, believes that greater competition and consumer power has put cloud technology in the hands of smaller companies and average households. He stated that “almost anything that draws a current will eventually become connected to a network.” You will be able to talk to your appliances to turn them on, much like the movie “Parental Guidance” smart house. This rapidly growing technology will soon be part of everyday households and our everyday lives.

Last week over 2,000 bookkeepers, accountants and software partners came together for the 2016 Xerocon South. Xerocon launched a number of new and exciting elements Xero had been working on including;

The introduction of the Government’s Enterprise Tax Plan Bill, if passed, will see important tax breaks for small businesses with a turnover of up to $10 million. Australian Small Business and Family Enterprise Ombudsman, Ms Kate Carnell noted that “An important element of this budget is empowering small businesses to generate much needed economic growth though tax breaks that allow them to re-invest and grow their business.” From 2016-17 financial year, small businesses with an annual turnover of less than $10 million may see a company tax cut to 27.5%. This is expected to decrease the tax of 870,000 companies. This is part of a 10 year government plan to eventually decrease all company tax by 25% to encourage investment and higher-paid jobs. A 5% tax discount is proposed to be introduced for unincorporated small businesses as well as immediate deductibility on assets under $20,000.

Xero has many excellent add-ons, the newest have been discussed below.

Expensify
Expensify offers one-click expense reports in real-time, which allows you to track your business and personal expenses. The Xero integrations allow you to customize how expenses are coded to Xero accounts, tracking categories, customer contacts, and more. This integration leads to a more seamless accounting and bookkeeping experience and alleviates the headache of business administration. Expensify is focused on building for the small business, and making sure a customer never outgrows their product.

Hubdoc
Hubdoc extracts key information from your receipts, invoices and bills and stores them in one secure location on the cloud, easily accessible wherever you are. Hubdoc works by snapping, emailing, or scanning an invoice or receipt and then, based on the information in the document, files it to its appropriate folder. You can then publish the document data to Xero, making for seamless integration and bookkeeping process. Now this may sound like ReceiptBank but one cool feature HubDoc has that ReceiptBank doesn’t is the ability to automatically pull bills and statements from your online accounts. This means you don’t need to log in every month to ten different sites to collect your monthly invoices such as your phone bill. Hubdoc can help you simplify your business, go paperless, and offers bank level security for your documents.

TSheets
TSheets is a mobile timesheet app which simplifies and streamlines tedious tasks like payroll, invoicing and labour costing. TSheets mobile time tracking allows for employers to see who is working and where they are working. This is ideal for maintaining employees who work remotely or switch locations regularly. TSheets allows employees to clock in and out in real time or enter their time manually and allocate time to custom fields, projects or tasks. Easily track and manage employee sick leave, annual leave and paid time off. You can schedule employees by shift, job or task and send your roster to your employee’s phones as soon as it is ready. Simple to use, easy to edit and always in sync, with customisable alerts and calendar integrations.

• 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

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.

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

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.

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.

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.

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.

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.