BUSINESS RESTRUCTURE

Businesses have a lifecycle.  They grow, expand into new markets, merge with a competitor, divest assets and return capital to owners. Markets continuously evolve and change.

A business owner may have particular needs, goals and outcomes they want to achieve over the lifetime of their business, so it’s inevitable that a business will require a restructure at some stage.

There are a number of reasons why a small business may restructure:

• Asset Protection

• Preparing to sell

• Outgrow initial structure

• Succession & Estate Planning

• Tax changes / Better tax outcomes

• Industry / Economic risks increase

• Franchising

• New partner/business associate

• Sale of part of a business

• Merging/Acquiring businesses

• Conversion of Trusts into Companies

• Joint Venture

A restructure requires professional advice:

• An Accountant will consider the Tax Law and be aware of the tax consequences that may be triggered when a business is restructured

• A Lawyer will consider the legal consequences of a restructure

Restructuring can be expensive and the benefits must outweigh the costs! 

Additionally, you must consider how quickly your business could recover.

If you would like to discuss your current structure or a restructure with us, please contact our office.

BUSINESS RESOURCES – THERE TO SUPPORT & GROW YOUR BUSINESS!

External resources exist to help support your business.

Resources are the building block to your business, the most important assets needed to make your business model work.  Every business needs them, but not every business utilises them enough!

You probably have the following professionals already engaged to support your business:

• External Accountant

• Solicitor

• Bank/Financier

• Investment Advisor

Each advisor typically has the requisite skills and experience to assist in your business, be it statutory obligations or growth targets.  It is important that you take the time to seek advice from them and reflect on their independent views to guide, support and assist with your strategy.

As business owners, you often need to set aside your achievements and seek additional independent support to drive new concepts into the business for longevity and growth.  The business needs to be fragmented with KPI’s to better its foundations for the journey forward.

Have you thought about a Business Coach?  You may have ideas on new initiatives or strategies for your business but don’t quite know how to put it into practice.  A Business Coach can assist to drive those new ideas, operational and strategic KPI’s and help you grow your business.

Please contact our office to discuss.

COMPLIANCE – YOU CAN’T AFFORD TO GET IT WRONG!

Meeting your Business Compliance requirements can sometimes be a challenge.

We know life is hectic and running a business on a day to day basis can often take priority over the many compliance obligations your business may have, but there are certain requirements by Law that need to be adhered to. 

We have listed below the standard annual requirements and due dates (where applicable) to assist you to meet your tax deadlines on time and avoid penalties:

• Trust Distribution Minute - Trusts are required to prepare a Distribution Minute prior to the end of each Financial Year detailing who distributions are to be made to and the amount of the distribution (either a dollar value or a percentage).  A Dormant Trust is still required to prepare a Distribution Minute.

• June 2018 Quarter BAS – This was due for lodgement and payment by 28 July, 2018.  If you haven’t yet attended to this, you should do so immediately.

• TFN Report – It is a legal requirement of a closely held Trust to lodge a TFN report when any beneficiary details change (i.e. a new beneficiary exists or a change to an existing beneficiary is made).  We are currently in the process of preparing these and will distribute them shortly.

• 2018 PAYG Payment Summaries – If you haven’t yet issued these to your employees or lodged these with the ATO, you should do so by 14 August, 2018.

• July 2018 Monthly BAS – This is due for lodgement and payment by 21 August, 2018.

• August 2018 Monthly BAS – This is due for lodgement and payment by 21 September, 2018.

• 2018 Individual Income Tax Returns – If we lodge your 2018 Tax Return for you, in most cases the due date will be May 2019.  If the due date is earlier than this, we will contact you.

CFD are here to help you stay up to date with your compliance.  Please contact our office if we can assist you further.

Technology is Changing!

Gone are the days of mountains of paperwork and waiting for a letter to arrive by post.  Instead most of us now communicate electronically using emails, texts, social media, etc.  How did we ever live without the internet??

CFD are making changes to keep up with the ever-changing electronic world we live in.  We are introducing a MYOB digital platform that benefits both CFD and our clients! 

Examples of benefits are:

1. Save Money – Cost Reduction

2. Efficiency Gains – Time Savings

3. Protect the Environment – Reduce Waste

4. Easy access to Documents – Digitally approve your Returns on the go!

The “MYOB Portal” allows us to communicate electronically with our clients in a secure environment via the cloud.  Any document we upload is there indefinitely with the ability to access it at anytime, anywhere, providing there is Internet access.

Approve your documents for lodgement electronically.  No more printing the documents, signing them and scanning or mailing them back to our office.  Approve them at a click of a button!

We will be introducing this to our clients gradually so keep a look out for an email invite to join the Portal.

Please contact our office if you would like to discuss this further.

Lifestyle Creep - Beware!

Let’s face it, we all buy that hot coffee from the trendy café around the corner because it tastes so much better than the pod machine at work and it saves time & effort and better still it’s only $4 per cup.  All positives, right? Wrong!  You just paid for that deliciously hot convenient coffee that 5 years or so ago you would have made at work or home and saved the money. 

This is just one example of how lifestyles have changed over time and how it’s become “the norm”. 

Beware of Lifestyle creep. It’s out there and it may affect you or someone you know!

Lifestyle creep is a situation where people’s lifestyle or standard of living improves as their income rises either through an increase of income or decrease in costs.  As lifestyle creep occurs and more money is spent on lifestyle, former luxuries become necessities.  This can become an issue when it takes the form of living beyond your means. 

As Accountants we see & hear it all the time:

• It’s getting harder to manage finances

• Businesses are finding it difficult to keep up with all the red tape

• Government Agencies are cracking down and want their money

• Customers aren’t paying within trading terms which has a domino effect

It may be time for you to assess your affairs so that you don’t become a victim of lifestyle creep.  

• Cut down on life’s luxuries…..make that coffee at home or work

• Save the money you’d normally spend on eating out and use it to reduce debt

• Put off that holiday you want so badly until you can afford it.  Better still invest that money!

• Think about paying down loans or pay off that ATO debt.  You could save a bucket load of interest!

• Live within your means…maintaining an image (i.e. latest car, phone, etc) could have a detrimental effect on your finances

IT’S MELBOURNE…….IT’S COLD AND TAX IS BORING!

It’s the start of a new Financial Year.  We know right….boring!!

It’s school holidays, it’s cold in Melbourne and who wants to get up on these fresh mornings to go to work……..we know where we’d rather be!  

As Accountants, it’s time for us to process those tax returns so our clients can get their refunds and spend their $$$.

What better way to spend your refund than a holiday somewhere warm.   Perhaps its Singapore, Vegas, Greece or maybe even the warmer parts of Australia.  We hope you’re lucky enough to be somewhere warmer than Melbourne 😊

Spare a thought for Melbourne’s homeless who sleep out in the cold, often with inadequate warmth.  We did!

During the 2018 Financial Year, our team donated money to Melbourne’s homeless to pay for sleeping bags to keep them warm at night.  Not only does it help the homeless but our team feels better for doing so.  Even better, its tax deductible!!  It’s a win win!

Remember to include all donations made during the 2017-18 financial year in your 2018 Income Tax Return.  You never know, it may help you reach that goal for a holiday in warmer weather to escape Melbourne’s Winter Blues.

Happy holidaying.

WORK RELATED EXPENSES – GET YOUR DEDUCTIONS RIGHT!

We have advised previously that the ATO are cracking down on Work Related Expense claims.

To explain further, the ATO apply the following General Principles with regards to Work Related Expense deductions:

• Employee’s purposes or reason is not enough to establish deductibility

• Because an allowance is received, doesn’t mean it’s deductible

• Ordinary costs of travelling between home and work are private

• Where relocation costs are preliminary to work, they are not deductible

• Travel expenses incurred in performing the employee’s work activities where no part of them is private, domestic or capital are fully deductible

• Where an expense is part private or domestic in nature, it must be apportioned appropriately

Not sure what you can or cannot claim?  Give CFD a call to discuss.

End of Financial Year - 2018

A Thank you from the CFD Team

We thrive on the positive impact we make, helping people and businesses to grow and prosper.  It’s the reason we get up and come to work each day.

We thank you for your ongoing support and are grateful to you for choosing us.  We look forward to supporting you and growing your business in the new financial year ahead.

Upcoming Important Dates

16 July 2018                        PAYG Payment Summaries should be issued to all employees

21 July 2018                        June 2018 Monthly BAS/IAS due for lodgement and payment

28 July 2018                        June 2018 Quarterly BAS due for lodgement and payment

21 August 2018                  July 2018 Monthly BAS/IAS due for lodgement and payment

28 August 2018                  2018 Taxable Payments Annual Report due date for lodgement

Please contact our office should you wish to discuss any of the above.

$20,000 instant asset write-off – Buy before 30 June 2018!

If you buy an asset by 30 June 2018 and it costs less than $20,000, you can write off the business portion in your 2018 tax return.

You are eligible to use simplified depreciation rules and claim an immediate deduction for the business portion of each asset (new or second hand) costing less than $20,000 if:

- you have a turnover less than $10 million, and

- the asset was first used or installed ready for use in the income year you are claiming it in.

Assets that cost $20,000 or more can't be immediately deducted though they will continue to be deducted over time using the general small business pool.

The $20,000 threshold applied from 12 May 2015 and will reduce to $1,000 from 1 July 2018.

There is a proposal to extend the $20,000 instant asset write-off threshold to 30 June 2019 though this is not yet Law.

Please contact our office if you wish to discuss this matter further.

ATO CRACK DOWN ON WORK RELATED EXPENSES, IN PARTICULAR THE “HOME OFFICE”!

Work related expenses will be front and centre this July with the ATO advertising regularly over the past year that it will be tracking everything from home office claims to car use and deductions made for work uniforms and clothing.

Home office deductions, phone and internet use and work equipment deductions will be scrutinised closely this year. 

If you work from home, you are able to claim a deduction for work furniture, heating and cooling, computers and equipment contained in a home office.

In saying that, you must have a designated home office space – working from the couch or kitchen table is not a designated separate area!

Deductions can be made for the percentage of home phone and internet used for work (you cannot claim the whole expense).  Additionally, you must be able to show itemised evidence of the amounts. E.g. itemised phone bill from which you can identify work related calls or other records.

The ATO has reminded taxpayers that workers cannot claim deductions for mortgage repayments, council rates and home insurance.

Don’t get caught out.  If you’re unsure what you can or cannot claim, please contact our office to discuss.

EMPLOYEE SUPERANNUATION NOT UP TO DATE? TAKE ADVANTAGE OF THE ONE YEAR SUPERANNUATION GUARANTEE AMNESTY!

The Turnbull Government have announced a one-off opportunity for employers to self-correct past Superannuation Guarantee (SG) noncompliance without penalty.

Employers who voluntarily disclose previously undeclared SG shortfalls during the Amnesty and before the commencement of an SG audit will:

• Not be liable for the administration component and penalties that may otherwise apply to late SG payments; and

• Be able to claim a deduction for catch-up payments made in the 12 month period.

To use the amnesty Employers must pay ALL that is owing to their employees, including the high rate of nominal interest and any associated general interest charge. 

Subject to passing of legislation, the amnesty will run for 12 months from 24th May 2018.

Employers that do not take advantage of the amnesty will face higher penalties when they are caught.  This is normally charged at 50% on top of the SG Charge they owe.

If you would like to discuss this further, please contact our office.

CHANGES TO GST ON RESIDENTIAL PROPERTY TRANSACTIONS

From 1 July 2018, if you are purchasing new residential premises or potential residential land subdivisions you will have to pay the GST directly to the ATO as part of the settlement.

These changes will apply to contracts entered into on or after 1 July 2018.

The amount of GST hasn't changed. As the Purchaser, you now pay the GST directly to the ATO instead of paying it to the developer as part of the purchase price.

You won't have to register for GST to make this payment to the ATO.

Property developers will need to give written notification to you when you need to withhold an amount for GST.

If you would like to discuss this further, please contact our office.

BENEFITS OF ONLINE ACCOUNTING SOFTWARE

If you’re not yet convinced that online accounting is the way to go, here are a few reasons why you should consider it for your business:

Real-time Reporting

At the touch of a button, you get real time reports. Instantly view your income and expenses and see where you’re at. 

No software updates

The software auto updates and it doesn’t cost you extra.  Even better, you don’t have to sit by your computer and wait for it to update so no down time.

No time delays

Your Bookkeeper doesn’t have to try to get the backup via email or upload.  We can simply login and access your file.

Fast Reconciliations

With automated bank feeds, much of the reconciliation can be done for you.

Cost Effective

Cloud software is offered on a subscription basis (pay as you go) so if you don’t need it anymore, you simply stop paying for it.

Advantage to your business

The access to live online data allows your internal accountant to be live/updated and accurate so that decisions can be made efficiently with your external Accountants for scope and strategy.

If you’re not using online software and would like to discuss this further, please contact our office.

BUDGET NEWS – THE ATO ARE STEPPING UP PROSECUTIONS!!

From July the ATO will receive a $260 million funding boost from the Budget to pursue taxpayers who overclaim work-related expenses and reclaim unpaid tax debts.

More than $130 million of that funding will go towards expediting the ATO’s debt collectors, enabling them to fund more prosecutions of taxpayers who don’t pay their tax debts.

Foreign bank account holders are also warned as the ATO have funding for four income matching programs allowing them to detect foreign payment sources.

Be careful of your work-related expense claims.  If you don’t have appropriate records to back up your claims, you are at risk of prosecution!

Please contact our office if you wish to discuss this matter further.

MAXIMISE OPPORTUNITIES FROM EFFECTIVE TAX PLANNING

The advent of the federal budget will bring a barrage of changes to the Australian taxation landscape.  Now is the perfect time to talk to your tax advisors and commence tax planning.  We understand that among other priorities such as running your business, spending time with your family and getting enough sleep, tax planning will be the least of your concerns.  Effective tax planning, however, is crucial for being prepared for the coming end of year.  Any good business person will understand that being prepared for the unexpected is just good business sense.

Here is why effective tax planning is a critical financial function of any successful business:

·         Being prepared for a tax bill and planning for it as part of cash flow management will save you grief because you can plan for it by budgeting for it.  Businesses that take advantage of the extended lodgement program by utilising tax agents should not know what their tax bill is many months after the end of the financial year!

·         The changing taxation landscape, while being confusing and costly from a compliance perspective, also affords opportunities to the prepared. For example, Australians under the age of 65 can now deduct personal superannuation contributions up to cap of $25,000 provided payment is made before 30 June 2018.

·         It is an opportune time to get your books up to date as well – review your results year to date, your debtors and creditors (get paid or reach arrangements with creditors) as well as bill for work you have completed.  It is also a good time to consider upgrading to cloud-based software to allow your accountant to see real time data.

·         Reduce tax risks such as ensuring payments to employees and directors (including superannuation) are up to date as well as ensuring related party loan accounts will not cause Division 7A headaches.  The advent of Single Touch Payroll (commencing 1 July 2018) means effective tax planning will be even more crucial.

Talk to us today about how we can assist you to maximise your opportunities with effective tax planning

WORK RELATED EXPENSES UNDER ATO MICROSCOPE

The ATO are reviewing taxpayers whose work-related expense claims in their 2017 Tax Return were higher than expected when compared to similar taxpayers.

In particular, the ATO will ensure:

-        You have actually spent the money

-        the expense must be directly related to earning your income; and

-        you must have a record to prove the expense claim (i.e. receipt)

If you are of concern to the ATO, you will receive a letter to review your expense claims.

If you would like to discuss this matter further, please contact our office.

BEWARE - ATO NEW DATA MATCHING ON MOTOR VEHICLE SALES/PURCHASES

The ATO have advised that they will acquire information from State & Territory motor vehicle registry authorities (e.g. Vic Roads) for the 2016-17, 2017-18 and 2018-19 financial years on vehicles that have been transferred or newly registered where the purchase price or market value is equal to or greater than $10,000.

The purpose for doing so includes the following:

• to identify and address non-compliance with taxation obligations.
• Obtain intelligence about taxpayers that buy and sell motor vehicles to identify risks of non-compliance with taxation and superannuation obligations.
• Use the motor vehicle purchaser’s data as an indicator of risk, to identify taxpayers that have purchased vehicles with values that are not commensurate with the income they have reported.
• Identify cases for investigation of taxpayers of interest to determine if the use of interposed proxy ownership is used to conceal the real accumulation of wealth.
• Identify and deal with taxpayers that have not met their obligations primarily with GST, FBT, Luxury Car Tax, Fuel Schemes and Income Tax.

If you would like to discuss this matter further, please contact our office.

Pay As You Go Tax Instalment

When you vary or revise PAYG income tax instalments, it is important not to underestimate your amount, rate, or instalment income. 

The ATO compares your instalments to your total tax payable on your instalment income for the year, and if your instalments are less than 85% of that total, you may be subject to general interest charge on the difference, as well as penalties.

Reasonable circumstances to vary can include:

·         when you no longer expect to have the same level of business income compared to the previous year

·         interest income may be lower because cash was spent

·         you may also not be self-employed anymore, etc

You cannot vary the instalment simply because you don’t want to pay it or because cash flow is tight.

Varying instalments should not be used to defer your tax to the end of the year. If you vary without reason the ATO can backdate interest from the time you should have paid.  In some cases, they will levy penalties as well.

Please contact our office if you require assistance or wish to discuss this further.

ATO FOCUSING ON HOLIDAY HOMES – ARE YOU AT RISK?

The ATO is looking closely at rental property owners incorrectly or falsely claiming deductions for properties that are not genuinely available for rent, or that are used by taxpayers as a personal holiday home.

A reminder to taxpayers that deductions can only be claimed for the rental property to the extent the property is genuinely rented out, and if rented out to friends or families at ‘mates rates’, the deduction can only be claimed up to the amount of income received.

The ATO has emphasised the importance of keeping accurate records of income and expenses, evidence of the property being rented or genuinely available for rent at market rates, and of who stayed at the holiday home and when, including the time when the property is used for personal purposes.

If you would like to discuss this matter further, please contact our office.

Happy Easter & Important Dates

21 April 2018      - Lodge and Pay March 2018 Monthly Activity Statement

28 April 2018      - Lodge and Pay March 2018 Quarterly Activity Statement

                              - Pay Employee Super Contributions to their nominated Super Funds

15 May 2018       - Lodge 2017 Tax Returns

                              - Companies Pay 2017 Tax

21 May 2018       - Lodge and Pay April 2018 Monthly Activity Statement

                              - Lodge Fringe Benefits Tax Return

28 May 2018       - Pay Fringe Benefits Tax

Nick and the CFD Team would like to wish you a very Happy and Safe Easter. 

May your Easter long weekend be filled with spending time with loved ones and enjoying a chocolate egg or two!!