The small business instant asset write-off threshold has been increased from $1,000 to $6,500 for the 2012-13 income year. This means the long life small business pool and the general small business pool have been consolidated into a single pool to be written off at one rate.
These amendments only apply to small businesses that have an aggregated turnover of less than $2 million. An accelerated deduction can also be claimed for motor vehicles costing $6,500 or more under the same provisions. The cost of the motor vehicle is added to the general pool but unlike other assets, the deduction is $5,000 plus 15% of the remaining amount.
For example if you purchase a vehicle only used for business purposes for $12,000 in the 2012-13 income year you can claim the following:
- $5000 + 15% (12,000 – 5,000) = $6,050
If the motor vehicle costs less than $6,500 it can be immediately written off. For more information on these depreciation rule changes talk to your Chartered Accountant.
Businesses in the building and construction industry must now report the total payments they make to each contractor for building and construction services each year. This change came into effect 1 July 2012. These payments are to be reported to the ATO as part of the Taxable payments annual report.
Who Needs To Report
- Businesses in the building and construction industry will need to provide the report if all of the following apply to them:
- The business is primarily in the building and construction industry
- Payments are made to contractors for building and construction services
- The business has an Australian business number (ABN).
A business is considered to be primarily in the building and construction industry if any of the following apply:
- In the current financial year, 50% or more of the business income is derived from providing building and construction services
- In the current financial year, 50% or more of the business activity relates to building and construction services
- In the financial year immediately before the current financial year, 50% or more of the business income was derived from providing building and construction services.
Details To Report
For each contractor the following details will need to be reported each financial year:
- ABN (if known)
- Gross amount paid for the financial year. This is the total amount paid inclusive of GST.
- Total GST included in the gross amount paid.
When To Report
The first Taxable payments annual report is due 21 July 2013 for payments made in the 2012-13 financial year. In this first year, if the activity statement is lodged quarterly, it can be lodged by 28 July 2013.
Tax planning is one of the most confusing and overwhelming aspects of being a business owner. It’s also one of the most critical. Anyone who has ever tried to go it alone can tell you that a simple mistake, which is made easily by a nonprofessional, can cost endless hours of additional work, not to mention the added financial burden that the errors place on you.
We would all like to think that we know what’s best for our businesses, our futures and ourselves. However, in the sticky, tangled world of finances, one really bad decision can ruin a lifetime of work. A financial advisor can help you navigate through the tricky moments by offering knowledgeable, real world financial advice in the moments when you need it most.
If you need to hire a company accountant, but want to ensure that you are hiring the best, then strongly consider hiring a chartered accountant. Not every accountant has the same skill set and level of training, and not every accountant can become a chartered accountant.
The Government announced its intention to limit the allowable deduction for self-education expenses by individual taxpayers. From 1 July 2014 it will be capped at $2,000 per annum.
The limit will apply to all self-education expenses such as tuition, books, courses, computer equipment as well as travel and accommodation relating to things such as seminars and courses.
The proposal is far reaching and will impact individuals wanting to improve their professional qualifications. Small businesses can continue to help staff with additional training and skills by offering to pay for any courses or tuition for staff making them exempt from the caps. However if staff salary sacrifice to pay for training courses it will be considered a fringe benefit and subject to fringe benefits tax.
From 1 July 2013 the super guarantee increases to 9.25% and the upper age limit has been removed. This means employers may need to make super guarantee payments for eligible employees aged 70 years and over. If you are an employer, you will need to ensure that your payroll and accounting system applies the appropriate increase in the super guarantee rate. Currently the super guarantee rate will increase every year until it reaches 12% in 2019, however the Coalition has announced that if they win the federal election, they will defer any further increases for two years.
If you are an employee salary sacrificing to make additional superannuation contributions, ensure you take into account the increased super guarantee rate; don’t exceed the $25,000 contributions cap. For more information about these changes talk to your Chartered Accountant.
Cloud computing can boost your productivity, but make sure you know what you’re signing up for.
Chances are your email, latest accounting software or job ordering system is based in the ‘cloud’. It lets you do things previously only dreamed of by large companies with dedicated IT services. All the maintenance, development and backups are taken care of for you. You just need a computer and a connection to the internet. A great strength of cloud computing is the fact you can log in at any time from any place.
But what if your phone and data lines go down? Or if someone hacks into the data centre? Is it properly backed up? How sensitive is your information, and how many days will your business survive without access? Can you still run a local backup? Do you know where your data is being stored? Is it still in Australia? Do you trust the provider, and the standards they apply? Will you be able to demand the return of your data, with an assurance that no copies have been retained, and will you be able to use it? Or will it be locked in a format that ties you to only one provider?
These are just a few questions you need to ask yourself before embracing cloud computing. Weigh up the benefits and drawbacks for yourself and your business, get some good advice from others in your industry, your Accountant and your IT provider. Do your research and read the fine print.
Since the Global Financial Crisis there is strong evidence to suggest the relationship between small to medium sized enterprises and banks has changed. Banks are now tougher to deal with – they are managing their risk profile more stringently. There is an increased use of covenants. Covenants set performance criteria for a business and can relate to earnings, interest ratios, liquidity ratios and the like.
To help manage this, banks now seek a higher level of reporting such as interim accounts, debtor analysis, creditor analysis and a strong focus on ATO compliance obligations – particularly in relation to Business Activity Statement lodgements and payments. Banks are also looking for debt amortisation while the concept of long-term interest only loans appears to be coming to an end.
If you are experiencing pressure from your bank, or you are proposing to enter into a re-financing or new financial arrangement consult with your Chartered Accountant to ensure that you can meet the obligations that are placed in the borrowing documentation.
The State Revenue Office is currently issuing Land Tax assessments. Owners of land should ensure these assessments are correct as experience has shown the assessments regularly contain errors and excessive land tax may be levied.
Land owners are encouraged to:
- Carefully check the land tax assessment.
- Ensure the correct names are listed as land owners.
- Ensure the principal place of residence is not included in the assessment.
- Ensure land used for primary production is not included; note that the activity of agistment, on its own, does not qualify as primary production.
- Ensure that land acquired has been properly notified to the State Revenue Office by your legal adviser.
- Ensure that land owned is not assessed separately or the allowable threshold is claimed more than once, reducing the liability incorrectly.
Your Chartered Accountant will be able to assist in this review process.