The Australian Taxation Office’s ‘Small Business Assist’ tool provides answers to small business tax and super questions. It delivers tailored and accurate information sourced from a range of websites. It includes information such as:

• Registering for an Australian business number
• Understanding and registering for GST
• Employer obligations
• Lodging activity statements

Small Business Assist features links to relevant webinars as well as blogs and forums. Visit the ATO website (www.ato.gov.au) to start using the Small Business Assist tool.

If you are planning to hire new workers, there are a few things to consider and organise in order to meet your tax and super obligations. One thing you must do is make sure your workers are legal – they must be Australian citizens, permanent residents or non-citizens with Australian visas that allow them to work.

Employee or contractor?

Determine whether your workers are employees or contractors. It is important you know the difference between the two because your tax and super obligations will vary depending on whether your worker is an employee or contractor.

Pay as you go (PAYG) withholding

When you pay employees or contractors, you may need to withhold tax from their pay and send these amounts to the ATO regularly. You will need to withhold tax from:

• Employees
• Contractors who have a voluntary agreement with you
• Contractors who do not provide you with an ABN.

Super

You need to pay superannuation for both your employees and for any contractors you are paying primarily for their labour. A default super fund needs to be established and you should also have a knowledge of super choice arrangements.

Fringe benefits tax (FBT)

When you provide fringe benefits to your employees or to their associates, such as payment of school fees, you may have to pay FBT. When you provide benefits to genuine contractors you will generally not attract FBT. When benefits are provided to employees (or their associates) by an associate of yours or a third party under an arrangement with you, you may have to pay FBT.

Expenses you can claim

Most of the expenses you incur as a result of engaging workers are eligible tax deductions.

Setting up a workplace giving program

You may consider setting up a workplace giving program to allow your employees to regularly donate to their preferred charities.

There are many issues to consider when engaging an employee. For more information about your tax and super responsibilities as an employer, speak to your Chartered Accountant.

Changes to the Privacy Amendment Act 2012 (Cwlth) commence on 12 March 2014. These changes establish 13 Australian Privacy Principles (APPs), which replace the existing National Privacy Principles. These principles identify the information that must be contained in an organisation’s privacy policy, including:

How, what, why and for what purpose the business collects and holds personal information

Whether the entity is likely to disclose personal information to overseas recipients

If the entity is likely to disclose personal information to overseas recipients, the countries in which such recipients are likely to be located, if it is practicable to specify those countries in the policy.

Personal information is defined as information that identifies or could reasonably identify an individual. That might include a person’s name, address and date of birth, but it can also include bank account details, photos and videos.

The business’s privacy policy must be available free of charge and in an appropriate form and include information about how an individual can complain about a breach. It must also outline how the business will deal with any complaints.

For cloud data stored outside Australia – on computer servers outside Australia – the country where the cloud service provider’s servers are located will need to be disclosed to clients.

For more information go to:

http://www.oaic.gov.au/images/documents/privacy/privacy-guides/comparison_guide_APP_NPP.pdf

Taking over an existing business, whether it is buying an established business or taking over the family business requires careful analysis and planning. When buying a business, some aspects to consider include:

• Why is the business being sold? What is the vendor’s history with the business?
• Are there any sales patterns or trends? What is the business’ customer base? Who are its current suppliers?
• What are the fixed and variable costs for the business? Are there any staff costs?
• Is the business profitable? How does the business’s previous financial records look? Has it consistently run a surplus?
• What assets does the business have? Does it have any intellectual property or leasing arrangements?
• Does the business have any outstanding debts? What refunds and warranties still exist for the business?
• Have you reviewed the purchase agreement carefully?
• What kinds of tax will apply? Consider GST, Capital Gains Tax, and stamp duty implications.
• What are the legal agreements on leases? What is the business structure?
• What has and hasn’t worked for the previous owner?

While a prospective business owner must carefully consider the factors listed above prior to purchasing an existing business, taking over a family business requires consideration of a different set of factors. They include:

• Work-life balance – business creeping into family life
• Different expectations and work ethics between generations
• Rivalries – family members who don’t work well together or are too competitive
• Older generations not willing to let go and handover control, or younger generations not wanting to join the family business
• Deciding the future direction of the business
• Choosing the right person to take over the business
• Managing disagreements between family members.

The benefits of such a takeover can be significant. Those that take over a family business often have a longer term view of success and plan for returns over a longer period. They often demonstrate stronger customer focus, community reputation and special care for employees.

One of the biggest challenges of owning a family business is balancing the relationship between work and family. Regardless of which option you choose – buying an existing business or taking over a family business, discuss the plan with your Chartered Accountant to ensure you are making a fully informed decision.

The Personal Property Securities Register (PPSR) is where details of security interests in personal property can be registered and searched.

Transitional arrangements have been in place for the last two years. The transitional arrangements for the PPSR expired on 31 January 2014. Suppliers of personal property who failed to register their security interest during the transition period may lose their priority in the event of their customer’s insolvency.

Commercial arrangements that may be deemed transitional security interests and eligible for registration on the PPSR include:

• Leases/hiring agreements
• Retention of title supplies
• Commercial consignments

Should the security interest have been migrated to the PPS register, then the registration details need to be reviewed to identify and correct any errors. Should a customer become insolvent, accuracy of the registration will be important to ensure there will be no issues with enforcement.

For further information and to access a range of tailored fact sheets visit AFSF (formerly known as ITSA) or speak to your Chartered Accountant.

In the words of the late Kerry Packer: “I am not evading tax in any way, shape or form. Now of course I am minimising my tax and if anybody in this country doesn’t minimise their tax they want their heads read because as a government I can tell you you’re not spending it that well that we should be donating extra.”

While many people think they understand the existing tax regulations, myths and misconceptions still abound. In this article, we aim to address some of the more common tax questions

Question 1

“If I put a work sticker on my car, can I deduct 100% of my car expenses?”

Answer

Simply – no. Deductions are based on four different methods. The methods are:

• Cents per kilometre (limited to 5,000 business kms per year)
• 12% of original value (this can be used if you travelled more than 5,000 business kms per year)
• One-third of actual expenses (this can be used if you travelled more than 5,000 business kms per year)
• Logbook method (this requires a logbook to be kept over a continuous 12 week period; the logbook can last for five years as long as it still represents continued use of the car).

Whether the car is heavily branded with work logos or not, the deduction only applies to kilometres travelled for business. Travel from home to work or work to home is generally not deductible. Attending meetings, running business errands and the like are deductible.

For those individuals who do use their car extensively for work in terms of kilometres travelled, log books are good. For those who do not use their car extensively, speak with your Chartered Accountant to determine which deduction method to apply.

Question 2

“I’m looking at buying a car, should I lease, hire purchase or Chattel mortgage?”

Answer

A lot of time can be spent analysing the benefits of each purchase option however it usually comes down to personal preference. Chattel mortgage and hire purchase (for income tax) are treated similarly. Some agreements that say “lease” are actually hire purchase upon reading the detail.

Before committing to any such agreement, have your Chartered Accountant look over the document or, better still, call your Chartered Accountant before you get the finance. Here is a brief matrix of the two:

For hire purchase arrangements entered into after 1 July 2012, GST applies to the entire repayment amount (including the interest component). For that reason, a purchaser who is not able to claim back the GST credit would generally prefer a chattel mortgage over a lease or hire purchase.

Question 3

“I’m looking to start a business, what structure should I have?”

Answer

Many factors need to be considered when deciding what structure to adopt – income tax, capital gains tax, GST and stamp duty, to name a few. Making the wrong decision can become a costly mistake.

While this article cannot cover all the areas of tax structuring, there are some important points to consider as a starting point:

• In today’s litigious environment there are not many businesses that suit a sole trader structure for the long term. Being a sole trader includes basically a personal ABN and, in some instances, a business name. While many may start as a sole trader, this structure needs to be reconsidered once the business is established and generating an ongoing income.
• Family Trusts allow distribution of income to other family members, which may help to reduce income tax. (Children under 18 are effectively limited to $416 each per year.)
• Having a company somewhere in the structure (usually as the trustee of a trust) provides asset protection – an important feature protecting your personal assets from creditors.
• Forming a company is not necessarily a great business or investment structure, mainly for capital gains tax and stamp duty reasons.
• For businesses or investments with two or more individuals or families, partnerships should be considered. Unit trusts are also effective, as are hybrid trusts. It is worth getting your Chartered Accountant to explore these options.

Getting your tax structuring right provides huge tax benefits (both in terms of capital gains tax and income tax), asset protection and can even improve your chances of getting bank finance. Talk to your Chartered Accountant to determine what will work best for you and your business.

Trying to juggle too many things at once? Never seem to get any task finished? Multitasking might be the problem.

Try timing yourself as you write the numbers 1-26 and letters a-z down, but write one number then one letter – 1 a 2 b 3 c… Once that is done, time yourself writing the numbers 1–26 and letters a-z. How much faster were you when you focused on one task at a time?

When running a business it is hard to avoid interruptions but try these easy ideas:

• Turn off your email message notification and instead check your emails once an hour.
• Set aside time each day to return calls. That could be 30 minutes before lunch and another 30 minutes inthe afternoon.
• Take breaks – get out of the office at least twice a day  – go for a walk to clear your head. It may take five minutes.  The break will de-stress you and make you  more focused.
• Eat lunch away from your desk. Use your lunch break as an opportunity to interact with staff in the lunch room.
• Close your office door and ask for no interruptions if  you are working on a difficult task
• Try to handle each piece of paper only once.

Taking these suggestions will save you time and help bring order to your day.

The Government announced a number of measures in the 2011-2012 budget that will impact SMEs and their employees. An outline of these is provided below. It is, however, important to note they have not yet been passed into law and are subject to change.

Minimum pensions
During the global financial crisis the government reduced the minimum pension required to be drawn down for account-based, allocated and market linked pensions. This relief will be reduced by 25 per cent for 2011-12 and phased out in 2012-13.

Low income tax offset for minors
From 1 July 2011 minors receiving non-work income, such as dividends, interest or family trust distributions, will not be entitled to the low income tax offset. This will reduce their tax free threshold to $416.

Accelerated depreciation for small business enterprises
Any motor vehicle purchased from 2012-13 will be eligible for an instant tax write-off for the first $5,000 of its purchase price. The remainder of the purchase value is then depreciated. Depreciating assets acquired from 2013, valued under $5,000 will be able to be written off immediately.

Log books may help reduce FBT
The 2011 Federal budget also announced changes to the calculation of FBT on motor vehicles. The FBT payable will increase if an employer provided car travels over 25,000 kilometres in the FBT year. The table included here provides a concise breakdown of the current and proposed FBT rates based on kilometres travelled.

With the 2011 end of financial year just about wrapped up, we would like to inform you about your super co-contribution and concessional contributions for which you may be eligible.

Super Co-contribution
You could be eligible to receive up to $1,000 from the government just by adding some extra money to your superannuation.You can also reduce your tax payable by making concessional contributions to your superannuation fund.

Is there a deadline?
YES, you must make your contribution by 30th June 2011 in order to receive the 2011 co-contribution.

What is a concessional contribution?
Concessional contributions are paid to a super fund before tax is taken out of your wage.

For Example:

• The mandatory 9% superannuation paid by your employer
• Any extra money that you pay directly to the super fund
• Any money you pay to the fund and get a tax deduction for if you are self employed

What is the concessional contributions cap?
Contributions made by you up to the following amounts will only be taxed in the super fund at 15%. You must be careful not to exceed the annual cap as the excess amount will be taxed at a high rate.