Budget 2018-19

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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

 

Scams Targeting ASIC Customers

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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:

  • to make a payment over the phone
  • to make a payment to receive a refund
  • for your credit card or bank details directly by email or phone

How do I protect myself from email scams?

To help protect yourself:

  • keep your anti-virus software up to date
  • be wary of emails that don’t address you by name or misspell your details and have unknown attachments
  • don’t click any links on a suspicious email

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.

Warning – ATO Payment Arrangements

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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;

  • All payments must be received by the ATO by the due date (as per the schedule they provide you) and
  • You meet all of your future ATO lodgement obligations by the due date and make payment in full by the due date (ie. includes, business activity statement, instalment activity statements, fringe benefit tax, income tax returns etc).

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

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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:

  • Salary & wages
  • Director remuneration
  • Return to work payments to individuals
  • Employment termination payments (ETPs) – not compulsory if the employee has died
  • Unused leave payments
  • Parental leave pay
  • Payments to office holders
  • Payments to religious practitioners
  • Superannuation contributions (at the time the payment is made to the fund).

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.

 

 

Create a Surplus Income

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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.

Thinking of buying or selling property?

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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:

  • Taxable Australian real property (residential, commercial, land, mining, quarrying or prospecting rights).
  • Indirect property interests.
  • Options or rights relating to the above.

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.

HYD Business Tips No#1

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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.

The Ten Best Ways To Attract Investors

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Article from Brent Gleeson – Forbes Magazine

As an entrepreneur, the biggest challenge you might face right out of the gate is raising money for the first time. It’s not easy to get investors to put their money and their faith in you, but it’s definitely possible. Here are some tips….

Network, network, network. You can never meet enough people. If you have opportunities to go to business events, conferences or mixers, you need to go. And, don’t just look in the obvious places.

Know your industry. Every entrepreneur thinks their idea is the best and most unique. Many focus too much on their own concept and not what has actually worked or failed in the past.

Do your homework! No hockey sticks. Don’t show dramatic initial revenue growth that’s off-the-charts. That is referred to as the “hockey stick.” Make realistic projections and then fight to exceed them. Smart angel investors won’t be impressed by unrealistic numbers.

Know your business plan inside and out. You need to be able to answer any question about your business, whether it’s about your financials or value proposition, without looking at a piece of paper. This business is your baby. Know it inside and out. And know the answer to, “What makes your business different?”

Start with friends and family. Offer them a decent 12-month return on their money and use the money to get started. Get operations moving and get revenues flowing in if you can. Raising a larger round is much easier with some money in the bank.

Back up your valuation. Why is your company worth what you say it is worth? Are there comparable valuations of recently funded companies? Do not inflate your valuation. Investors see right through that.

Pick the right investor. It is crucial to make sure you find the right investor. Don’t just immediately take money because it’s being offered. You don’t want an investor calling you five times a day. You want a partner that believes in you and will let you run your business. You also want an investor that can help and advise the business properly.

Beware of funding consultants. There are definitely some good ones out there, but there are a lot of bad ones too. These consultants see you as an opportunity and they want a large retainer, an equity stake in your company, or both. Be aware of these people and check their credentials. Make sure you find one of the good ones if you decide to use one.

Choose your board of advisors wisely. Investors look for a strong team around you that believes in you. Make sure these advisors are successful, and ask them to be available to speak with potential angel investors.

Sell yourself and don’t give up control. An angel investor is generally not investing in the business or the idea. They are investing in you. Convince them that you are the right person to do the job, and gain their trust. This will make them less likely to ask for control of the company.

Raising angel capital is a tough process. You will fail more than you will succeed. Stay persistent and if you believe in your business, it will happen.

Campaign Monitor: the biggest Australian tech company you have never heard of

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Article from SMH – John McDuling

Campaign Monitor is not just one of Australia’s most valuable technology companies, it’s arguably the most exciting tech firm this nation has produced. Its software helps companies design and create beautiful looking emails, send them to millions of people, then analyse how successful those emails have been in reaching their targets. It is used by some of the world’s most important companies and best-known consumer brands. Think Apple, Facebook, Nike and Coca-Cola.

Yet Richardson and Greiner are not household names. The business community only sat up and started to take notice about two years ago, when Campaign Monitor shocked both Sydney’s investment community and the Silicon Valley tech scene by pulling off a mammoth $US410 million financing round. Orchestrated by Goldman Sachs, it was the biggest single fundraising for an Australian start-­up, if you can call a 13-year-old company with 200-odd staff that.

As part of the deal, Richardson and Greiner sold about half of the company to two top-tier US venture capital firms. Soon after, they stepped away from the day-to-day running of the company, remaining involved in product development and on the board.

The deal valued their business at about $600 million, catapulting the duo into the ranks of the richest Australians.

The Campaign Monitor story has never really been told. Despite being two of Australia’s most exciting entrepreneurs and despite interest in tech start-­ups reaching fever pitch, Richardson and Greiner rarely give interviews and haven’t spoken to the press for nearly two years.

“Yes, it’s a conscious thing,” says Richardson of staying out of the spotlight. “The two of us have no particular interest in building a profile or pushing a political agenda.”

In 2000, at the peak of the dotcom bubble and in the final year of their degrees, they started designing websites for family and friends. Fortunately, the work started to pick up and the pair started building websites and intranets for companies of the ilk of Telstra and Foxtel.

The real breakthrough came in 2004. After running some email campaigns for clients and getting frustrated with the existing software on the market, they decided to build their own. At that point, what’s known today as Campaign Monitor was born. Then, and now, their software did essentially the same thing: help firms send out lots of non-spammy emails that look nice. Initially, they focused on ease of use and simplicity. Greiner says that when they launched Campaign Monitor, it took 40 steps to send an email using the most popular tool on the market. Their product involved just four.

Its appeal spread quickly. Within six months, they were making more money from software than they ever had from web design. Within a year, the business had tripled in size. By 2006, barely two years after launch, it had taken hold among big marketing agencies in the US and Europe, and caught the attention of US venture capital funds.

The product – how Campaign Monitor’s software looked and worked – has always been its founders’ main focus.

Greiner and Richardson admit to spending years perfecting small aspects of their software, and say that process never stops. They are constantly testing, tweaking and making improvements to it.

Regardless, their blend of passion for the product and relaxed attitudes towards life looks to be paying off. Campaign Monitor claims today to have 2 million customers in 151,000 businesses across 186 countries. It has amassed much of this customer base with no sales force, relying on word-of-mouth for its viral growth. Richardson and Greiner wagered that as long as their product was excellent, it would effectively sell itself. And they were right.

In Campaign Monitor’s Sydney offices, the meeting rooms are named after Californian surf breaks. The company’s core values are emblazoned across the walls. “Make Mum Proud”, “Do Less But do it Best”, “If our customers kick ass, we will too”. You could dismiss all of this as start-up excess. Or you could view it as a statement of intent. Campaign Monitor is determined to realise its potential and become the nation’s next multibillion-dollar tech company – or go down swinging in the attempt. If Australia really wants to promote a culture of risk-taking and ideas, that’s exactly the way it should be.

What do you need to do to take your business to the next level?

Contact your Business Manager.