Successful Business Outcome
Preparing for succession involves looking into the business structure and planning today for future outcomes. CEO of HYD Advisory, Mark Pinhorn, chats to Craig West about stepping back before reaching significant pain points in the business journey and the key drivers in achieving successful business outcomes.
Click here to download the Spring 2018 Issue of our Profit Matters Newsletter
The Honourable Scott Morrison handed down his third Federal Budget on Tuesday night.
Please see below some key points of the budget:
$20,000 Small Business Instant Asset Write Off Extension
The ability for small business entities to claim an immediate deduction for assets costing less than $20,000 has been extended until 30 June 2019.
Personal Income Tax Cuts
The anticipated personal income tax cuts will be delivered as part of a seven year plan culminating in the removal of one tax bracket from 1 July 2024. The Government states that the end result will be that around 94% of taxpayers will be subject to a marginal tax rate of 32.5%.
Changes to Medicare Levy
The proposal in last year’s Budget to increase the Medicare levy from 2% of taxable income to 2.5% has been scrapped.
The government is also proposing an increase in the thresholds at which the Medicare levy becomes payable for low-income singles, families, and seniors and pensioners starting this financial year.
Regulators Target Phoenixing
Corporation and tax laws will be reformed in an attempt to target phoenix activity.
Work Test Exemption for Retirees
An exemption to the work test will be introduced for people aged 65 to 74 with superannuation balances below $300,000, who make voluntary contributions to superannuation. The exemption applies in the first year that they do not meet the work test requirements.
For those of you who love the detail (we know you’re out there) please click below for more detail.
Click Here for 2018-19 Budget 2018
Scammers pretending to be from ASIC have been contacting Registry customers asking them to pay fees and give personal information to renew their business or company name.
Warning signs the email is not from ASIC
An email is probably a scam and is not from ASIC if it asks you:
How do I protect myself from email scams?
To help protect yourself:
You can also check your registration renewal date; ASIC will only issue a renewal notice 30 days before your renewal date. You can search for your business name on our register and if it’s outside our usual timeframe, it might be a scam.
Click Here to go to the ASIC Website to see an scam email example
If you have any further questions please feel free to contact our office.
In the past HYD have been very successful in negotiating with the ATO on behalf of our clients to enter into payment arrangements in respect of outstanding; business and personal taxes and BAS.
The ATO have changed their policy in recent months and as a result it is becoming increasingly difficult for HYD to get the ATO to enter into new payment arrangements on behalf of our clients.
If you are already under a payment arrangement or do enter into one you must ensure;
Please contact HYD if you have any concerns regarding the above, so we can discuss your specific circumstances – we are here to help.
Single Touch Payroll (STP) – the direct reporting of salary and wages, PAYG withholding and superannuation contribution information to the ATO – comes into effect from 1 July 2018.
FOR EMPLOYERS
Employers with 20 or more employees at 1 April 2018 must use standard business reporting-enabled software from 1 July 2018. The head count for ‘20 employees’ includes full-time, part-time, casuals (who worked any time during March), employees based overseas, or on paid or unpaid leave. Directors and independent contractors are excluded from the count. For businesses that are part of a wholly owned group, the total number of employees across the group is used (i.e., if the total number of employees employed by all member companies of the wholly-owned group is 20 or more, all group members must use STP).
STP is currently voluntary for businesses with less than 20 employees although proposed reforms seek to extend the reporting system to all employers by 1 July 2019, regardless of the number of employees.
WHAT MUST BE REPORTED
STP requires PAYG withholding and superannuation contribution details to be reported to the ATO as payments are made to employees or superannuation funds.
When it comes to PAYG withholding, employers will report details of salary and wages paid to employees as well as the PAYG withholding amount at the time the payment is made to the employee. Employers have the option of paying the PAYG withholding liability at the same time, although this is not compulsory.
Payments that must be reported include:
The Government intends to extend STP to salary sacrificed amounts in the near future although these reforms are not legislated.
AN END TO PAYMENT SUMMARIES?
While not compulsory, employers can choose to include reportable employer superannuation contributions and reportable fringe benefit amounts. These payments are reported either at the time the payment is made or through an update event. If these payments are included, the employer will not need to provide payment summaries as employees are able to access their live data through myGov.
If your business does not report through STP or does not finalise its reporting, payment summaries are still required.
NEW EMPLOYEES
If your business utilises STP, when a new employee joins they have the option to electronically complete a pre-filled Tax file number declaration and Superannuation standard choice form online instead of completing the form for you to lodge with the ATO.
EXEMPTIONS
Some exemptions exist for STP for rural employers that do not have access to a reliable internet connection, and employers that employed a group of people during the year for a short period of time, such as seasonal workers.
FOR EMPLOYEES
While the Government and ATO are promoting STP as a way to improve the efficiency of payroll processes and meeting reporting obligations (i.e., cutting down on duplication of work etc.,), there is also a clear benefit to the ATO and Government in implementing this system. One advantage is that the ATO will have early warning of businesses that are finding it difficult or simply failing to meet their PAYG withholding and superannuation guarantee obligations. This should have a flow on benefit to employees who might otherwise miss out on benefits to which they are entitled.
If you are registered with myGov and your employer reports using STP, you will be able to see your year-to-date tax and super information online.
Click Here for Single Touch Payroll – Checklist
Click Here to go to the ATO Website to watch a webinar
Please feel free to contact our office if you have any questions or if you require any assistance.
Managing your personal cash flow is critical.
The basic message here is that you need to make sure that you earn more than you spend.
It is surprising how many people spend more than they earn and even more surprising how many people just don’t know they are in that position.
The starting point is to work out how much it costs you to live each year and compare that with how much you are drawing out of your business or earning from your employment income after income tax.
We have developed some fairly basic personal cash flow models that can help you calculate whether you are living beyond your means or whether there is a “surplus” income available to work with.
If your current spending is too high we can then look at some smart strategies to get this situation under control.
Once you have created surplus income you now have something to work with. You can look at options , such as; accelerating paying off your home loan or start building an investment portfolio.
NEW TAX LAWS TO BE AWARE OF
New rules have been introduced as a means of preventing foreign residents avoiding tax when selling Australian real estate.
WHAT ARE THE RULES?
New tax law applies to clients buying or selling property with a market value of $750,000+ from 1 July 2017 (previously the threshold was $2 million).
Purchasers are required to withhold 12.5% of the purchase price and send it to the ATO (unless a valid clearance certificate has been obtained).
WHO DO THE RULES AFFECT?
Anyone buying or selling property with a market value of $750,000+.
This includes:
AM I EXEMPT IF I AM AN AUSTRALIAN RESIDENT?
If you are selling Australian property, the rules ASSUME you are a non-resident unless you have a clearance certificate from the ATO.
WHAT IF I AM BUYING A PROPERTY?
You need to ensure you receive a clearance certificate from the ATO. Once issued, a clearance certificate is valid for 12 months.
WHAT IF I DON’T GET A CLEARANCE CERTIFICATE?
If you don’t have a clearance certificate, the purchaser of the property must assume you are a foreign resident and will withhold 12.5% of the purchase price to the ATO.
If you would like to discuss further, please contact your client manager.
In each newsletter we are going to supply business tips from HYD Advisory. These tips have been developed from years of business experience and dealing with hundreds of businesses.
TIP No# 1. Pay Yourself First and Tax Effectively – Business Owners
Do you find it difficult to save, despite your best intentions to do so? This is especially challenging for business owners who are responsible for paying the running expenses for their business, such as rent and staff wages. Often owners neglect to look after themselves and their own family.
We find that our most successful business owners make a commitment to automatically pay themselves first from their business a “set amount” each week. this is best achieved by setting up an automatic payment to a personal or investment account.
Treat yourself and your family with the same respect you treat your suppliers and staff.
Talk to HYD Advisory about how to set this strategy up as tax effectively as possible.
This may involve using contribution of salary, dividends, trust distributions, super contributions and income splitting with family members.
If we pay you dividends from your company, you will get a credit for the 30% tax already paid.
Phone: (02) 8543 6800
Fax: (02) 9522 9683
Email: admin@hydadvisory.com.au
Head Office
Suite 3, 284 Belgrave Esplanade,
Sylvania Waters NSW 2224
Postal: Locked Bag 5002,
Sylvania Waters NSW 2224
City Office
Level 6, 7 Macquarie Street,
Sydney NSW 2000
(by Appointment Only)
