Straight Numbers & Tax Talk for Business – December 2017

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In this Issue:Christmas 2017

What a great time of the year with Christmas and the New Year approaching… and I say this with gratitude to my family, my team, our clients and business associates.

When you take a break at the end of a year of hard work, it’s also worth looking at what you’ve achieved over 2017, both in your business and personal life. Sit back and celebrate your achievements with your team or family. Then you’re already one step ahead when you get back to business in the new year.

Family and the people around you matter a lot when you think about these things, especially when you start planning for next year. We hope you’ll enjoy spending time with family and friends, and relish that extra special Christmas food while taking a well deserved break from the daily routines.

If you have any questions about the items published in this newsletter, please don’t hesitate to give us a call on 07 3399 8844… or stop by at our office for a coffee. We’re never too busy to sit down and talk to you.

Best regards from Robert and the Team

Christmas Holiday Business Closure

We are closed from lunch time Friday, 22 December 2017 and re-open for business on Tuesday, 2 January 2018.

Reforms to stop companies avoiding employee entitlements

The Government will introduce new laws to stop corporate misuse of the Australian Government’s Fair Entitlements Guarantee (FEG) scheme.

The FEG scheme is an avenue of last resort that assists employees when their employer’s business fails and the employer has not made adequate provision for employee entitlements, but it is clear that some company directors are misusing the FEG scheme to meet liabilities that can and should be paid directly by the employer, rather than passed on to Australian taxpayers.

The proposed changes will:

  • Penalise company directors and other persons who engage in transactions which are directed at preventing, avoiding or reducing employer liability for employee entitlements;
  • Ensure recovery of FEG from other entities in a corporate group where it would be just and equitable and where those other entities have utilised the human resources of the insolvent entity on other than arm’s length terms; and
  • Strengthen the ability under the law to sanction directors and company officers with a track record of insolvencies where FEG is repeatedly relied upon.

These changes will be targeted to deter and punish only those who have inappropriately relied on FEG, and so should not affect the overwhelming majority of companies who are doing the right thing.

Editor: The Government has separately released a ‘Comprehensive Package of Reforms to Address Illegal Phoenixing’, which will assist regulators to better target action against those who repeatedly misuse corporate structures and enable them to take stronger action against those entities and individuals.

These reforms will include (for example) the introduction of a Director Identification Number (DIN) (to identify all directors with a unique number), and making directors personally liable for GST liabilities as part of extended director penalty provisions.

Buying or Selling a Business

Many clients looking to increase the size of their business look to make bolt on acquisitions.

Likewise, on retirement or in another phase of a career as a self-employed business owner others look to sell the business and build up a nest egg from the years of hard work.

One area often over looked is the GST impact from buying or selling a business.

In the excitement of negotiating a sale or purchase of a business, it is easy to overlook whether the price negotiated is inclusive or exclusive of GST.

Often both parties assume that business sales are GST-free without examining the ingredients of a GST-free transaction.

It is obviously desirable for both parties to have a GST-free transaction as it provides certainty over the negotiated price and there is no need to ‘clawback’ GST from a subsequent BAS.

The Australian Taxation Office created an exemption for the sales of businesses to be exempt from GST as long as the business is a ‘going concern’.

What this means in reality is that the business is actually sold for a consideration, that it is operational up until the day of sale and that the sale includes everything necessary for the buyer to continue operations.

A sale between two registered entities has a tax neutral outcome as the purchaser pays the 10% GST and receives it back from the Tax Office. The seller receives the 10% of the purchase price and remits in back to the ATO. From a cash flow point of view the purchaser is not going to want to have to find the additional money on top of the purchase price which they then have to wait to recoup with their next Business Activity Statement.

The seller also does not want to receive less than the negotiated purchase price. The purchase price should be negotiated and written into the sales contract as GST exclusive so both parties know exactly where they stand. Contracts that are silent are deemed to be GST inclusive. It is worth including a clause in the contract that if you are selling, if for any reason the Tax Office deems the sale to not be a going concern, then the seller can require the buyer to pay the GST.

If you have any concerns about selling or buying a business as a ‘going concern’ contact us today, we are here to help.

Memorable Quotes…

“Dreams are the seedlings of reality”

Napoleon Hill, American Author, (1883—1970)

FREE Tax Blaster Session

There are a number of ways that individuals and small business operators can legally slash their tax. We find that many of our clients only begin to realise after a chat with one of our professional tax agents how much tax they could have saved if they had taken action earlier.

Don’t delay it any longer and book in for your FREE 20-minute Tax Blaster session. We’ve got limited spaces available for people who want to increase their earnings, save on taxes and put more money into their retirement fund.

Find out NOW how you could be making more money for your retirement and facing less financial stress now and in future.

Call our Team on 07 3399 8844 to book your FREE meeting NOW.

Single Touch Payroll update

A limited release of ‘Single Touch Payroll’ began for a small number of digital service providers and their clients on 1 July 2017, with Single Touch Payroll operating with limited functionality for a select number of employers.

Editor: Single Touch Payroll will effectively require some employers to report information regarding payments to employees (or to their super funds) in ‘real time’, via their payroll software.

The following timeline sets out what is happening in the lead-up to the mandatory commencement of Single Tough Payroll next year.

September 2017 – the ATO will write to all employers with 20 or more employees to inform them of their reporting obligations under Single Touch Payroll.

1 April 2018 – employers will need to do a headcount of the number of employees they have, to determine if they need to report through Single Touch Payroll.

From 1 July 2018 – Single Touch Payroll reporting will be mandatory for employers with 20 or more employees.

Smiling Elvis

Heard this one before?

Quick Thinking

A stock boy in the produce section of the supermarket one day had a customer who asked to buy half a head of lettuce. The stock boy told him that they sold only whole heads of lettuce.

The man insisted that he didn’t need the whole head and wouldn’t pay for a whole head if he wanted half of it. Finally the stock boy said he had to ask his manager about the situation. As he walked into the back room, the stock boy blurted out: “Some jerk out there wants to buy only a half a head of lettuce.”

The manager’s eyes grew wide in shock. The stock boy turned around to find the customer standing right behind him.

He quickly said, “And this gentleman here wants to buy the other half.”

Asset Finance Tips

When preparing tax returns it is obvious that too many clients are not choosing the right type of asset finance.

Getting advice in this area instead of using the sales team from where you purchaser a car, or the local bank can save both time and money.

Time that may be better off used to invest in your business. Getting the right finance can also reduce the risk of owning obsolete equipment at the end of the period.

Using tax effective finance for vehicles for commercial and personal use to heavy machinery and shop or an office fit-out has a different outcome depending on rate and the asset and ownership structures.

When financing equipment such as furniture and technology for offices, medical institutions, retail shops, warehouses and factories again it is not just about rate.

Our brokers suggest when considering asset finance options, ask yourself:

How much capital do I need to grow my business?
When do I need to smooth the bumps in my cash flow?
What are the tax outcomes of asset financing?
How long will I need the equipment and will I need to upgrade it?
Is technology rapidly changing in my industry?
Do I want to ‘finance to own’ or ‘finance to return’ my asset?

Generally speaking, asset finance options include:

Commercial Hire Purchases; Financial and Operating Leases; Chattel Mortgages; Novated Leases; and Technology Rentals. Each is suited to different commercial circumstances, so when considering your options, you may want to talk to your accountant or tax advisor.

Christmas Joys

Evergreen boughs that fill our homes
With fragrant Christmas scents,
Hearts filled with the loving glow
That Christmas represents;

Christmas cookies, turkeys stuffed,
Festive holly berry,
Little faces bright with joy,
Loved ones being merry;

Parties, songs, beribboned gifts,
Silver bells that tinkle,
Christmas trees and ornaments,
Colorful lights that twinkle;

Relatives waiting with open arms
To smile and hug and kiss us;
These are some of the special joys
That come along with Christmas.

By Joanna Fuchs

 

FREE Copy of Our Book

We hope that you’ve enjoyed this edition of the Straight Numbers & Tax Talk.

As a Thank You to our readers we’ll give away a FREE copy of our highly sought-after book titled ‘Straight Money Talk – A Straightforward Plan for Financial Independence” (worth $17.95), PLUS the accompanying workbook “5 Steps to Financial Independence”.

In this book, Robert Bauman lays out 10 steps anybody can follow to become truly wealthy, and reveals ‘money myths’ and ‘inside secrets’.

Just contact us on 07 3399 8844 to claim your gift and we will send it out to you.

About Straight Money Talk—A Straightforward Plan for Financial Independence

Amazon screen shot 8.15 am 23 may

 

bookstack3dWHAT PEOPLE ARE SAYING ABOUT THIS BOOK:

“I’ve read many financial books and found this one to be up there with the best. It can really kick-start your journey to get your financial situation into great shape.”
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“Robert has done a fantastic job on this book. My views on how to handle money and how to educate my kids to learn the value of savings have totally changed now. This is an excellent book to guide you to creating great financial wealth in your life!”
– Keith Abraham CSP – Professional Speaker and Best Selling Author

 

BONUS ARTICLE:

 

Are you racing against time?

 

Work on business

 

 

 

 

 

Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.

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