Single Touch Payroll – Changes ahead

Just when you thought you had all your systems bedded down for Single Touch Payroll (STP), the government is expanding the information on employee payments you need to provide.

So, what will the changes mean for your small business?

STP reporting to expand

Under the current STP rules, employers are required to report payroll information to the ATO each time they pay an employee salary or wages, pay-as-you-go (PAYG) withholding or superannuation.

In the 2019-20 Federal Budget, the government announced an expansion of the data it collected through the STP system starting from 1 January 2022.

The change is called STP Phase 2 and under the new rules, employers will be required to report additional information on or before each pay day.

According to the government, the aim of STP Phase 2 is to “reduce the reporting burden for employers who need to report information about their employees to multiple government agencies”.

The additional data collected from 1 January 2022 will also be used in the administration of the social security system.

New STP Phase 2 requirements

The key changes in your reporting include providing extra information on the employment basis for each of your employees (full-time, part-time or casual).

You will also need to provide information on the tax treatment of their salary. This is to help the ATO identify the factors influencing how you calculated your employee’s PAYG withholding. For instance, where your employee has notified you that they have a Study Training Support Loan.

When an employee ceases employment, you will now need to provide information on the reason, for example, voluntary separation, redundancy or due to illness. This will remove the need for you to provide former employees with separation certificates.

Phase 2 also gives you the option to include child support garnishees and child support deductions in your STP report, reducing the requirement to provide a separate remittance advice report to the Child Support Registrar.

More detailed information

Reporting of income types and country codes is also being introduced with STP Phase 2 to help the ATO identify employee payments with specific tax consequences. The government believes this will allow your employees to complete their personal tax returns more easily.

A significant change with Phase 2 will be the new requirement to separately itemise the components of any gross payment amounts such as bonuses and commissions, directors’ fees, paid leave, salary sacrifice, overtime and allowances.

Allowances will need to be reported separately, not just expense allowances that may be deductible for your employees. Any lump sum payments you make to employees need to be reported under new labels.

Although you need to provide additional information in your STP reports, the way you submit the report, due dates and types of payments covered in your reports will stay the same. Your tax and super obligations and the requirements for end of year finalisation will also stay the same.

Benefits from the STP expansion

The government claims employers will receive a number of benefits from the introduction of STP Phase 2.

A key one is a reduction in the duplicate information you are required to provide to different government agencies, reducing unnecessary interactions with these departments.

You will also no longer be required to send tax file number (TFN) and withholding declaration information to the ATO, as this will be captured in the employment conditions section of your STP report.

By more clearly defining the components making up an employee’s gross income, the government says it will be easier for employers to understand their various obligations.

Assistance with new reporting requirements

The government is working closely with digital service providers to ensure they update their software, so it is ready to commence collecting the additional information from 1 January 2022.

The specific information your business needs to provide for STP Phase 2 depends on the particular software product you use, and how you manage your payroll.

Contact us on 03 5120 1400 if you would like more information or help transitioning your business to the new STP requirements.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.


Avoid the rush: Prepare your business for June 30

As the economy begins to get back on its feet, it’s time to get your business back on track and start preparing for this year’s tax time.

Although 30 June may seem a long way off, there have been so many changes and government initiatives announced during the current financial year, you are likely to need extra information and paperwork to lodge your business’ return.

Here’s a list of things to consider and/or seek advice on.

Reporting JobKeeper support

JobKeeper payments are assessable income, so they need to be included in your business’ tax return if you operate through a company structure. Entities operating as a partnership or trust also need to report JobKeeper payments as business income in their partnership or trust return.

If you are a sole trader who received JobKeeper payments, you need to include your payments as business income in your individual tax return.

Cash Flow Boost credits

On the other hand, the government’s Cash Flow Boost payments to employers with a turnover of less than $50 million are classed as non-assessable income. This means your business won’t pay tax or GST on them.

How these credits are reported in your tax return or financial statements depends on your business structure, so contact us for more advice.

Budget tax changes and incentives

It’s also sensible to consider whether or not you plan to take advantage of the government’s temporary full expensing measure in this financial year. This measure applies from 6 October 2020 to 30 June 2022 for businesses with turnover of up to $5 billion. The initiative allows you to deduct the full cost of eligible depreciable assets of any value in the year they are first used or installed ready for use.

Another tax decision to start mulling over is whether to use the new temporary loss carry-back measures. These allow you to offset tax losses against previous business profits on which tax has been paid to generate a tax refund. Losses incurred in 2019-20 and 2020-21 can be carried back against profits made in or after 2018-19. If you are eligible, you can elect to receive a refund when you lodge your 2020-21 return.

Extended tax concessions

Businesses with turnover of up to $50 million (up from $10 million) can now take advantage of tax concessions allowing an immediate deduction for eligible start-up expenses (such as professional fees and accounting advice) and prepaid expenditure incurred after 1 July 2020.

From 1 April 2021, you can also claim an exemption from the 47 per cent FBT on any car parking or multiple work-related portable electronic devices (such as phones and laptops) provided to your employees.

Defer assessable income

Despite the difficult trading conditions, some businesses may need to consider deferring assessable income. Businesses wishing to delay paying tax on their income could review the potential benefits of deferring invoicing until after 30 June to ensure income from any payments is not assessable until the following financial year.

Do a stocktake

Over the next few months, identify and dispose of any obsolete, slow-moving or damaged stock so you can claim a tax deduction for the write-off.

Employee super contributions

Since the SG Amnesty finished in September last year, the ATO has indicated it will actively check compliance in this area, making it important to ensure your reporting and payments are up to date.

Consider your personal tax

Now is also a great time to review your personal tax preparations for 30 June. Look at personal tax decisions such as implementing a salary sacrifice arrangement for the remainder of the tax year, making personal super contributions and collecting the necessary paperwork to substantiate work related deductions.

Contact the ATO

If you are struggling to stay on top of your tax obligations due to the pandemic, consider contacting the ATO to discuss deferring your tax payments or varying your quarterly PAYG instalments. You can also apply to move your GST reporting cycle from quarterly to monthly to gain faster access to GST refunds.

If you would like help getting your business ready for tax time, call our office today on 03 5120 1400.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.



COVID-19 Update – August 2020

Tax season is firmly upon us here at RGM, and due to the current lockdown restrictions we are doing things a little differently.

We are conducting most tax returns via telephone appointment with the help of Microsoft Teams for screen sharing. Clients are also able to sign their tax lodgement forms digitally through our secure MYOB portal via our website. If you haven’t already done so, please download our RGM app which allows you to view, upload and digitally sign specific documents directly into our secure area. Please see links below for how to download the RGM App.

These measures ensure that social distancing can be observed throughout the tax return process, which is excellent news for any of our clients in Stage 4 lockdown in the Cardinia, Casey or Greater Melbourne areas.

We are currently discouraging face-to-face appointments, depending on your situation. However, if you do have to come into one of our offices you must wear a face mask in accordance with the DHHS mandate.

This year, it is more important than ever to get the most out of your tax refund. If you have been working from home, we recommend that you keep a log of your hours worked in order to claim the 80% COVID hourly rate deduction.

If you would like to book an appointment, or have any queries, please don’t hesitate to contact us on 03 5120 1400.

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The Economic Stimulus Package: Instant asset write-off threshold increase explained

A key part of the government’s economic response to the coronavirus is to support business investment and cashflow by increasing the instant asset write off threshold and eligibility rules.

So what is the instant asset write-off (IAW) and how can it help your business? 

Claiming an immediate deduction

Put simply, the IAW provisions allow your business to claim an immediate tax deduction for the full cost of a business asset you buy. Normal depreciation requires you to deduct the cost against your business profits over several tax years. 

Under the new rules, you can claim a tax deduction in the same financial year you purchase new or second-hand plant and equipment costing under $150,000. 

The IAW is not a cash refund. You don’t get the amount you spend back from the ATO, but instead get the advantage of bringing forward a tax deduction you would normally receive over several tax years. 

A simple example is a plumber who buys a new $16,000 trailer for his company. Using the IAW he can claim an immediate tax deduction of $16,000, which in turn reduces his business profit so he pays less tax. 

Rules for the IAW

To claim the IAW, the total cost of the asset must be under the relevant threshold. This includes the cost of having the asset installed and ready for use. 

Each asset must be under the threshold, but there’s no limit to the total amount your business can claim. 

If your business is registered for GST, the IAW threshold excludes GST. Otherwise, the threshold includes GST. 

From 12 March 2020, businesses with an aggregate turnover of up to $500 million are eligible for the IAW, up from $50 million previously. 

Eligible assets for the IAW

What you can purchase ranges from furniture through to computers and IT equipment, that may be required to enable staff to work remotely. 

Industry specific kit such as new tools for tradies, or POS devices and security systems for a retail store also meet the rules. 

Although the IAW is generous, assets such as horticultural plants and in house software are ineligible. 

Watch out for the traps

To claim the deduction, your new asset must be fully installed and ready for use before the end of the financial year in which you lodge your claim. 

If you are a sole trader, you also need to apportion any private use. For example, if you purchase a new car and use it for business purposes 70 per cent of the time, you can only claim 70 per cent of the cost. 

You are not permitted to reduce the asset’s price with a trade-in or personal use apportionment to get under the current $150,000 threshold. For example, if your new equipment costs $210,000 and business use is 70 per cent (leaving a claimable amount of $147,000), you can’t claim the IAW as the original cost is still over the threshold. 

If your business is structured as a partnership, it’s important to remember the partnership owns the asset – not the individual partners – so there’s no double-dipping. If a partner buys the asset in their own name and doesn’t qualify as a small business taxpayer personally, they can’t claim the write-off. 

Using simple depreciation

If your business buys an asset valued over the IAW threshold, you can’t claim the immediate deduction. You can, however, allocate it to your general small business pool and use the simplified depreciation rules

The general depreciation rules apply if you are ineligible or choose not to use the simplified rules, or if the ATO classes your business as medium-sized. 

Using a general small business pool allows you to combine the business portion of higher cost assets and claim a 15 per cent deduction in the financial year you start using them, then 30 per cent each year after that. 

Accelerated depreciation initiative

As part of the government’s coronavirus response, medium businesses with a turnover of less than $500 million can use accelerated depreciation rules to deduct 50 per cent of the cost of an eligible asset on installation. Normal depreciation rules apply to the balance of the asset’s cost. 

In these unprecedented times, we are here to assist you. Please don’t hesitate to give us a call on 03 5120 1400 if you have any questions about the instant asset write off or any aspect of the broader stimulus package.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

The Economic Stimulus Package

Maintaining confidence, supporting investment, keeping people employed

By now you’re probably aware that the Federal Government has “announced” a $17.6 billion stimulus package. One designed to “protect the economy by maintaining confidence, supporting investment and keeping people in jobs”.

If you’re wondering what that might mean for you, here’s a brief guide to the four major components of the package.i

Payments to lower-income households

Post-GFC, the Rudd Government sent $900 cheques to adult Australians earning less than $80,000.ii The Morrison Government is doing something similar by providing Newstart recipients, age pensioners and veterans a one-off payment of $750. These payments will start flowing into the bank accounts of 6.5 million (mainly) lower-income Australians from March 31. While most working Australians won’t receive this payment, this type of tightly targeted payment will provide maximum bang for buck in terms of stimulating the economy. 

Cashflow assistance to business

Business owners and their employees have also been well-catered for in the stimulus package. 

Small and medium-sized businesses that employ staff and have a turnover of less than $50 million will be eligible for tax-free payments of between $2000-$25,000. It’s estimated this “Boosting Cash Flow for Employers” measure will benefit 690,000 businesses that collectively employ 7.8 million people. Given there’s a $25,000 ceiling on the payment regardless of the size of a business’s workforce, it’s a measure that will benefit smaller businesses much more than medium-sized ones.iii

Business owners who employ apprentices and trainees are also eligible to apply to have the Government pay half their wage for the first nine months of 2020. It’s estimated this measure will assist 70,000 business and 117,000 apprentices and trainees. 

While it’s a separate initiative, the Government’s provision of modest financial support for casual workers who contract Coronavirus will directly benefit those casual workers and indirectly benefit their employers. Without this payment to casuals, employers might have, for instance, had to worry about infected staff turning up to work out of financial desperation.iv

Support for business investment

The government is loosening the criteria around the instant asset write-off. Pre-Coronavirus, businesses with a turnover of up to $50 million could instantly write-off the purchase of assets costing up to $30,000. Post-Coronavirus, businesses with a turnover of up to $500 million can write off asset purchases of up to $150,000. 

On top of this, the Government has also accelerated depreciation deductions for the next 15 months. Up until June 30, 2021, businesses turning over less than $500 million will be able to deduct 50 per cent of the cost of any eligible asset the moment it’s installed. It’s predicted these two tweaks to the investment rules could benefit up to 3.5 million businesses that collectively employ almost 10 million Australians. 

Assistance for regional Australians

Regional Australia, already laid low by drought and bushfires, will be disproportionately impacted by Coronavirus. Many regional economies are dependent on the industries – tourism, education and agriculture – most affected by the pandemic. It’s yet to provide much detail, but the Government has promised to spend $1 billion propping up the nation’s regional economies. 

The end of the beginning

There’s broad agreement the Government’s stimulus package has been well-designed and will reduce the chance of Australia slipping into its first recession in three decades. But with share markets across the globe increasingly volatile and countries closing their borders, Australia is in unchartered territory and there may well be further changes to Australia’s economic policy settings in months to come. 

If you have any queries in relation to how the above measures may apply to your circumstances, please do not hesitate to contact our office. 

i Unless otherwise end noted, all the facts, figures and claims in this article come from the CommSec Economic Stimulus Package document 

ii https://finance.nine.com.au/personal-finance/900-cash-bonus-who-gets-it/facdc354-9a48-4e9e-850c-2bb8705dbe29 

iii https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Assistance_for_businesses.pdf 

iv https://www.smh.com.au/politics/federal/casual-workers-face-wait-up-to-13-weeks-for-coronavirus-payment-20200312-p549cj.html

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.



Tax concessions: helping small business

Running a business keeps you pretty busy, so it’s easy to overlook the help that’s available. Many small businesses don’t realise the government offers a range of valuable concessions that can make a real difference to their annual tax bill.

Depending on your annual turnover, these can include reduced tax rates, asset write-offs, simplified depreciation rules and tax-free restructuring.

Lower income tax rates

A key concession for small business entities (SBEs) is lower company tax rates. If your business has an aggregate turnover threshold of under $50 million, you are eligible for a flat income tax rate of 27.5 per cent during the 2018-19 and 2019-20 financial years. In 2020-21, this tax rate will drop to 26 per cent, with a rate of 25 per cent applying in 2021-22 and later years.

These lower company tax rates represent a significant discount on the tax rates applying to personal income and sole traders and the full company tax rate of 30 per cent.

Another valuable concession is the instant asset write-off, which allows eligible businesses to immediately deduct the cost of a depreciating asset if the asset costs less than $30,000. This concession is currently available until 30 June 2020 for business entities with an aggregate turnover of less than $50 million.

Simplified asset depreciation

For SBEs with an aggregate annual turnover of under $10 million, another valuable tax concession can be the rules for simplified asset depreciation.

These allow you to “pool” the business portion of higher cost assets (those not eligible for immediate write-off), and claim a 15 per cent deduction in the year you start using them. You can then claim a 30 per cent deduction each year after that and deduct the balance of the pool at the end of the year if the balance is less than the instant asset write-off threshold.

If the difference between the value of your trading stock on hand at the start and end of an income year is less than $5,000, an SBE can also choose “not to account” for its trading stock in that income year.

SBE restructure roll-overs

Another useful tax concession permits SBEs to access a “rollover” where – as part of a genuine restructure – ownership of its assets are transferred without a change in ultimate economic ownership.

This means any gains and losses arising from transfer of capital gains tax (CGT) assets, depreciating assets and trading stock to a new business entity are not counted, so tax is not payable on the restructure.

When you first “start-up” an SBE, there is also a tax concession for some of the costs involved. Fees for professional advice and government fees, taxes and charges are all immediately tax deductible.

The ATO also has a shorter “time period” (two years) to amend a business tax assessment for an SBE, rather than the normal four years.

Small business income tax offset

A valuable tax concession for SBEs operating as unincorporated entities (such as sole traders) with an aggregate turnover of less than $5 million, is eligibility for the “small business income tax offset.”

This concession provides a discount on your income tax liability for business income and comes in the form of a tax offset (capped at $1,000 per taxpayer per year). In 2019-20 the discount rate is 8 per cent, rising to 13 per cent in 2020-21 and 16 per cent in 2021-22.

When it comes to disposing of assets, there are valuable “CGT concessions” if an SBE has an annual turnover under $2 million. These concessions can limit the amount of CGT payable when business assets are sold and represent significant tax savings if you are eligible.

In addition, many SBEs also qualify for concessions allowing them to use the “Simpler BAS” rules, account for GST on a cash basis and pay GST in instalments. They can also make an annual apportionment of their input tax credits.

SBEs may also qualify for exemptions on “car parking” and work-related “devices” under the FBT rules, and can pay their PAYG tax obligations in “instalments.”

If you would like more information about the tax concessions available to your SBE, call 03 5120 1400 and speak to an adviser at RGM.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

Tax Alert December 2019

If the introduction of Single Touch Payroll (STP) wasn’t a big enough challenge, small businesses can now look forward to the arrival of e invoicing and changes to the Superannuation Guarantee (SG) rules.

Here’s a roundup of some of the latest tax developments.

E-invoicing to be rolled out

Small businesses can look forward to increasing use of “e-invoicing” following the ATO’s appointment as the local Peppol Authority. Currently being used in 34 countries, the Peppol framework provides a standardised e invoice for both domestic and international trade.

With e-invoicing, invoices are directly exchanged between the supplier’s and the buyer’s accounting systems – even if they use different software.

According to the ATO, by adopting e-invoicing businesses of all sizes can expect to see improved cashflow and quicker payments, easier processing and cost savings, fewer errors and reduced risk of compromised invoices.

The ATO will now work with digital service providers to deliver a range of e invoicing products for local businesses.

Inactive ABNs will be cancelled

Inactive Australian Business Numbers (ABNs) are an increasing area of interest for the ATO. If the tax man believes your business is no longer carrying on an enterprise, you face the risk it could decide to cancel your ABN.

To determine if an ABN is still being used, the ATO is checking the ABN holder’s tax return, whether their compliance and lodgement documents are up-to-date and a range of third party information.

If your ABN is mistakenly cancelled, you can reapply for the same ABN if your business structure remains the same. But if the structure is different – such as a sole trader now operating as a company – you will receive a different ABN.

Rule change for salary sacrifice and SG

Legislation to prevent employers from using employee salary sacrificed amounts to reduce their minimum Superannuation Guarantee (SG) payments has passed Parliament and will apply from 1 July 2020.

The new rules mean an employer can no longer count the amount salary sacrificed by an employee as part of the amount the employer is required to pay in SG contributions.

Also, the base amount on which SG contributions are calculated can no longer be reduced by any salary sacrificed amounts.

Limiting deductions for vacant land

Tax deductions for losses or outgoings (such as interest costs) incurred when holding vacant land not genuinely being used to earn assessable income have been reduced under new legislation.

The changes limit the claimable deductions for holding vacant land on or after 1 July 2019 – even if the land was held prior to that date.

Tax deductions are not affected if the land is held by a corporate tax entity, used for carrying on a business, used for primary product and leased, or where exceptional circumstances have affected a permanent structure on the land.

ATO tip-offs on the rise

Small businesses in the cafe and restaurant industry are “more likely” to be subject to a tip-off and subsequent investigation by a specialist team, according to the ATO’s Tax Integrity Centre (TIC).

There are also high volumes of tip-offs about black economy behaviour in the hairdressing and beauty, building and construction, and cleaning industries.

The TIC is receiving 230 tip-offs a day about black economy activities by small businesses such as undeclared income, paying workers cash in hand and not reporting sales.

Tax man focussing on SG compliance

With the tax man currently checking SG contribution payments for around “400,000” employers for the 2018-19 financial year, small businesses will need to stay on top of their obligations in this area.

The ATO is now “heavily focused on reducing the incidence of non payment of SG” courtesy of new Single Touch Payroll information, according to deputy commissioner, James O’Halloran.

With an “unprecedented level of “visibility” of super information at the account and transaction level”, the tax man plans to increase checks of SG payments and follow up employers not paying on time.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

5 SIGNS of a well run business

Every small business owner wants their business to thrive, but it can be tough to keep the money coming in the door while staying on top of all the necessary paperwork.

One way to ensure success is to understand the behaviours that separate a well-managed business from one that’s just muddling through.

Surprising as it may sound, the ATO is keen to help small business owners prosper and to share its insights on running a successful business.

Getting the basics right

Since it’s charged with keeping an eye on almost four million Aussie small businesses, the tax regulator is well placed to know what works and what doesn’t when it comes to keeping the doors open.

According to the ATO, when a small business is operating well, it tends to get the basics right. That means keeping good records and having in place effective tools so you can easily reconcile your business’s income and expenses.

Here are five simple steps you can take to ensure your business is running smoothly:

1. Keep informed

The ATO finds business owners who are operating effectively take the time to understand their tax and super obligations and to keep on top of any changes affecting their business’s processes.

2. Know your cash flow

Small businesses that are well managed use a cash flow projection or budget tool, as this is the main reason small businesses fail. If you don’t have clear insights into your cash flow position and are not carefully managing the business’s income and expenses, it can be a recipe for trouble.

The cash flow projection or budget tool can be an off-the-shelf product, or talk to us about how we can work with you to use the ATO’s new “Cash Flow Coaching Kit” to improve your management of this area.

3. Declare all income

Well-run businesses declare all their income – including any cash income – in their income tax return. Although it?s the ATO?s job to collect tax, it argues small businesses not declaring all their income are heading for trouble down the track.

4. Split your expenses

It’s important to carefully apportion (or split) your business expenses between private and business use.

5. Keep up to date

The final marker of a well-run business is that all its details are up to date – particularly with the ATO. That means keeping your ABN details, contact information and bank details current and easy to find.

Although many of these indicators are straightforward, it’s surprising how many small businesses don’t take these simple actions.

Behaviours to avoid

Just as there are habits that mark a well-run business, there are behaviours common to operations heading for trouble.

Businesses that omit income by depositing it into private accounts or mortgages, or that don’t declare cash sales or record director’s fees correctly, are not on top of things.

The same goes for failing to account correctly for private use of business assets or funds. If you are claiming an excessive business portion of an expense with both personal and business use, it’s a sign of poor management. As is claiming private expenses as a business expense, or not having the necessary records to substantiate your claims.

Making errors because you don’t understand your tax responsibilities is also a sign that things are not being well-run.

Bring in the professionals

With so many rules and regulations, it’s not surprising that business owners may occasionally overlook some of their obligations. There is an easy solution though.

Well-run small businesses seek professional advice when they need it. We can work with you to improve your business overall, not just to meet your tax obligations.

In fact, the ATO’s 2017-18 research and audit work with around “120,000” small businesses indicated that those who have regular contact with a tax professional are more likely to report correctly.

ATO deputy commissioner, Deborah Jenkins recently gave her top three tips for effectively managing your business: maintain good business records, keep an eye on your competition using the ATO’s Small Business Benchmarks and take care of your mental health because running a small business can be very stressful.

If you think your business could do with a financial tune-up, give us a call today and speak to an adviser on 03 5120 1400.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

Tax Alert September 2019

The landscape of Australia’s personal income tax system has changed significantly following the passage of the Morrison Government’s tax legislation through the Parliament.

Here’s a roundup of some of the other recent developments in the world of tax.

Tax reform legislation passes

Many Aussies are receiving a larger tax refund following passage of The Treasury Laws Amendment Act 2019, which made law the three-stage income tax cuts announced in the 2019-20 Federal Budget.

The new legislation increases the base and maximum amounts of the Low and Middle Income Tax Offset (LMITO) for the period 2018-19 to 2021-22.

It also lifts the top threshold of the 19 per cent income tax bracket from $41,000 to $45,000 from 2022-23 and reduces the 32.5 per cent tax rate to 30 per cent from the 2024-25 financial year.

Guidance on FBT exemption for taxis

Employers need to take note of new guidance released by the ATO clarifying that the existing FBT exemption for employee taxi travel does not extend to ride-sourcing services such as Uber. Unlike its previous view, the ATO has now stated the FBT Assessment Act limits the definition of “taxi” to a vehicle licensed to operate as a taxi by the relevant state or territory. This definition of taxi travel is different to the one used for GST purposes.

Employee travel is still eligible for FBT relief if it involves a traditional taxi service used for a single trip beginning or ending at the employee’s place of work, or if the travel is due to employee sickness or injury.

Tip-offs likely to grow with new hotline

After a record 70,000 tip-offs were received by the ATO during 2018-19, the introduction of its new Black Economy Hotline and Tax Integrity Centre (TIC) is likely to see this number rise further.

From 1 July 2019, Australians can report known or suspected tax evasion, black economy and phoenix activities via an ATO website tip-off form, the ATO app, or the new Black Economy Hotline (1800 060 062).

Behaviours such as demanding or paying for work cash-in-hand to avoid tax, not reporting or under-reporting income, underpayment of wages, ID fraud, sham contracting arrangements, GST fraud and money laundering can all be reported.

No deductions for unreported employee payments

The tax man is reminding employers that unreported cash-in-hand payments made to workers after 1 July 2019 are no longer eligible for tax deductions. In addition to the loss of a tax deduction, employers not complying with their PAYG withholding obligations may be penalised.

The new rules cover payments to employees not complying with PAYG withholding obligations as well as payments to contractors who do not provide an ABN where tax is not withheld. The change affects payments made during 2019-20 and all subsequent financial years.

As an employer, if you fail to withhold or report your PAYG obligations and voluntarily disclose this before any compliance action is taken, you won’t lose your deduction. You may also be entitled to reduced penalties.

New luxury car tax thresholds

The luxury car tax (LCT) thresholds for cars imported, acquired or sold during 2019-20 have been announced by the ATO. If you buy a car with a GST inclusive value over the LCT threshold, the purchase attracts the 33 per cent tax.

For the 2019-20 financial year, the new threshold for fuel-efficient vehicles is $75,526, which is the same as in 2018-19. The LCT threshold for other cars is $67,525, up from the 2018-19 limit of $66,331.

Escape Australia, not your student debt

Expats are being contacted by the tax man to remind them that heading offshore doesn’t mean leaving their student loans behind.

Under new rules, student debtors with an income contingent loan travelling overseas need to notify the ATO of their new address and lodge an overseas travel notification. They are also required to report their worldwide income if they earn $11,470.

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.