Category Archives: Practice Updates

Get set for a 2.5% wage increase on 1 July 2015

The Fair Work Commission has announced a 2.5% increase to minimum wages.  The increase will apply from the first full pay period starting on or after 1 July 2015.

The Fair Work Ombudsman is working on updating their pay tools with the new pay rates and will make an announcement when they’re available.

The increase only applies to employees that get their pay rates from the national minimum wage, a modern award or in some cases a registered agreement.

The new national minimum wage will be $656.90 per week or $17.29 per hour.  The national minimum wage applies to employees who aren’t covered by an award or agreement.

Most employees are covered by an award. Award rates will increase by 2.5%.  If you’re not sure which award applies to you, they can be viewed here List of awards.

What happens next?

The Fair Work Commission will issue draft determinations and orders about how this decision affects each modern award.  Updated information will be available by 1 July 2015.

You can also follow the Fair Work Ombudsman on Twitter, Linked In or Facebook for updates on the minimum wage decision and other important news affecting your workplace.

Find out more:

• Annual Wage Decision
• Fair Work Commission – Annual Wage Review 2014 – 2015
• Privacy Policy

Source:  Fair Work Ombudsman

More news on the $20,000 accelerated depreciation deduction

The Australian Government announced a new measure in the 2015 Budget for small businesses with immediate deductibility for assets costing less than $20,000.

The measure will apply to assets acquired from 7.30pm on 12 May 2015 until 30 June 2017.  You will get to claim the deduction in the year in which the asset is first used or installed ready for use.

Is the measure law yet?

No. The law to give effect to the changes has not been enacted.

Who is eligible?

Any business that meets the definition of small business entity, that is one with an aggregated turnover less than $2 million, may be eligible to immediately deduct the cost of assets acquired for less than $20,000.

Are all assets eligible?

All assets (including new and second hand) will be eligible, except for a small number of exclusions which receive different depreciation treatment.

Excluded assets include:

• Horticultural plants – subject to their own ‘uniform capital allowance’ rules (UCA);
• Capital works – subject to their own ‘capital works’ depreciation rules;
• Assets allocated to a low-value pool or software development pool – subject to the deduction rates applicable under those rules;
• Primary production assets for which the entity has chosen to use the normal depreciation rules rather than the simplified depreciation rules; and
• Assets leased out to another party on a depreciating asset lease.

GST inclusive or exclusive?

If the entity is registered for GST, then the GST exclusive amount is taken to be the cost of the asset.

Where the entity is not registered for GST, then the GST inclusive amount is taken to be the cost of the asset.

Source:  Australian Taxation Office

Business Benchmarks: How does your business compare?

The ATO have recently updated their Small business benchmarks. The benchmarks now contain 2012-13 financial year data compiled from income tax returns and business activity statements.

Small business benchmarks are financial ratios that can help you compare your business performance against other businesses in your industry. You can use them to work out where adjustments to costs and expenses can be made to improve your performance.

After you calculate your benchmarks, you might be above or below the range for your business turnover in your industry. If you have included all your income there may be reasons for this difference. For example you could have higher costs or lower selling prices than others in the industry.

We recommend you review your business performance against the benchmarks annually. In doing so, you can see how your business compares with other businesses in your industry.

When the ATO see a business outside of the benchmarks it indicates something may be unusual and it could prompt them to ask for further information.

For assistance with checking your business performance please contact our office.  Or you can check your business performance with the Small business benchmarks information on the ATO website.

Source:  Australian Taxation Office

Budget 2015: Small Business Wins!

Expanding accelerated depreciation for small business

From Budget Night the government will allow small businesses with an aggregated annual turnover of less than $2 million to immediately deduct assets they start to use or install ready for use, provided the asset costs less than $20,000.  This will apply for assets acquired and installed ready for use between 7:30pm (AEST) 12 May 2015 and 30 June 2017.

Tax cuts for small business

From 1 July 2015 (i.e. 2015/16 income year) the government will deliver tax cuts of 1.5% for small companies and 5% discount on income tax payable for unincorporated small business activity.

• Reduction in company tax rate – The company tax rate will be reduced to 28.5% (i.e. a reduction of 1.5%) for companies with an aggregated annual turnover of less than $2 million.  Companies with an aggregated annual turnover of $2 million or above will continue to be subject to the current 30% rate on all their taxable income.

• 5% discount on tax payable for other taxpayers – Individual taxpayers with business income from an unincorporated business that has an aggregated annual turnover of less than $2 million will be eligible for a small business tax discount.  The discount will be 5% of the income tax payable on the business income received by an unincorporated small business entity.  The discount will be capped at $1,000 per individual for each income year, and will be delivered as a tax offset.

Immediate deduction for professional expenses on commencing a new business

Currently, some professional costs associated with commencing a new business are deducted over a five-year period.

From 1 July 2015, the government will allow businesses to claim an immediate write-off for a range of professional expenses associated with starting a new business, such as professional, legal and accounting advice.

CGT roll-over relief for changes to entity structure

CGT roll-over relief is currently available for individuals who incorporate, but other entity type changes have the potential to trigger a CGT liability.  From 1 July 2016, the government will allow small businesses with an aggregated annual turnover of less than $2 million to change legal structure without attracting a CGT liability at that point.

Accelerated depreciation for primary producers

Currently, the effective life for fences is up to 30 years, water facilities is three years and fodder storage assets is up to 50 years.  For income years commencing on or after 1 July 2016 (i.e. from the 2017 income year), the government will allow all primary producers to:

• immediately deduct capital expenditure on fencing and water facilities such as dams, tanks bores, irrigation channels, pumps, water towers and windmills; and
• depreciate all capital expenditure on fodder storage assets such as silos and tanks used to store grain and other animal feed over three years.

Important AUSkey news

AUSkey and Chrome

Google are planning to release an update to the Chrome browser to version 42. If you are a Chrome user this update will prevent you from using your AUSkey to access government online services, including the business portal. To continue using your AUSkey you will need to use an alternative browser that is compatible with AUSkey.

Find out more

To find a browser that is compatible with AUSkey, refer to AUSkey browser compatibility.

Use Java with AUSkey

If you or your staff use an AUSkey to access online services, you must be using the latest version of Java software.  Installing and using the latest version, means you will be aligned with industry security standards. If you are using the latest version of Java you don’t have to do anything further.

To check which version you are using, go to the Java website. If you need to, you can then follow the prompts to install the latest version.

If you are not using Java and cannot install it yourself, we suggest you contact your IT area for assistance, or visit the technical help desk website for information.

Find out more

Java software requirements for AUSkey.

Managing AUSkeys

Correctly managing AUSkeys that are linked to your ABN is important so your business information is protected. In AUSkey Manager you can update your AUSkey details, change your password, cancel your AUSkey and more. Managing AUSkeys

Tips for getting your BAS right

Some businesses make simple mistakes, others don’t provide up-to-date information and others don’t take advantage of time saving options.

Here’s five tips to help you save time and get things right the first time:

1. Lodge all your outstanding activity statements.  The ATO can’t process refunds until all your lodgements are up-to-date.
2. Fill in the contact telephone number and name of the person who completed the BAS.  The ATO can then check any small details quickly and easily over the phone.
3. Make sure the ATO have your latest financial institution details.  Without this information the ATO can’t issue your refunds.  You can update your details online or phone 13 92 26.
4. Leave paper behind and lodge online.  If you do lodge online, don’t send a paper copy as well – this can cause delays in processing.
5. Check all the amounts you’ve filled in:
   1. the right amounts are at the right labels
   2. you’ve transferred amounts correctly to the summary section
   3. all your additions are correct.

If you require any assistance with preparation of your BAS please contact our office.

Year End Tax Planning

As we move into the final quarter of the 2015 financial year, it is time to take a look at Tax Planning for you and your business.  It is important to review your tax position well before 30 June to allow for any plans to be implemented.

It is very important to look beyond your cash position.  The level of your bank account is often a very poor indicator of profitability.  Cash reserves can be low and profit can still be strong if money has been directed towards other areas.

Some common planning strategies to implement prior to 30 June include:

• Superannuation contributions
• Income Protection Insurance
• Investments (including the pre-payment of interest)
• Writing off bad debts
• Writing off obsolete stock
• Undertaking normal maintenance
• Purchase of consumables
• Purchase of minor equipment
• Payment of all unpaid superannuation entitlements
• Prepayment of 12 months of expenses (for small businesses only)
• For primary production businesses, consider opening a Farm Management Deposit account

We can assist with a review of your accounting records and are happy to discuss any strategies and plans.  Please contact our office if you would like to discuss your tax position and how you can utilise the above strategies.

Get your website mobile-friendly by 21 April…or lose your Google ranking…

Starting from 21 April, Google will be expanding its use of mobile-friendliness as a ranking signal.  This change will affect mobile searches and will have a significant impact in Google search results.  Consequently, Google users will find it easier to get relevant, high quality search results that are optimized for their mobile devices.

To get help with making a mobile-friendly site, check out Google’s guide to mobile-friendly sites.

If you would like check out your website, Google has produced some tools that might be of assistance:

• If you want to test a few pages, you can use the Mobile-Friendly Test.
• If you have a site, you can use your Webmaster Tools account to get a full list of mobile usability issues across your site using the Mobile Usability Report.

ATO update regarding the “Director Penalty Regime”

Editor: The release of this ATO fact sheet follows a number of recent cases involving directors being largely unsuccessful in arguing why penalties under the director penalty regime should not apply to them.

The ATO has issued a new fact sheet aimed at helping directors (and those that are about to become a director) understand their obligations under the Director Penalty Regime in respect of unpaid and unreported Pay As You Go (‘PAYG’) and Superannuation Guarantee Charge (‘SGC’) amounts.

In particular:

• Directors will be personally liable for unpaid PAYG withholding or SGC amounts.
• Director penalties can apply even if an individual is no longer a director of a company, or is a newly-appointed director.
• The ATO is likely to issue a director penalty notice to collect company debts where the company hasn’t engaged to resolve outstanding obligations.
• Payment is the only option to remit the penalty if the associated company liability was not reported within three months of the due date (e.g., if an SGC statement was required to be lodged by 28 August, but this had still not been done by 28 November).
• The ATO recommends that address details with the ATO and ASIC are kept up to date to ensure any time-sensitive action can be taken by impacted directors.

Find out more – Director Penalty Regime – a guide for directors

Eligibility for net medical expenses tax offset

The Medical Expenses Tax Offset is being phased out.

To be eligible for the offset for 2014–15, you must have received a Medical Expenses Tax Offset in both of their 2012–13 and 2013–14 income tax assessments.

The eligibility rule for the Medical Expenses Tax Offset does not apply to taxpayers with out-of-pocket medical expenses relating to disability aids, attendant care and aged care.  These expenses can continue to be claimed until 30 June 2019.

Entitlement to Medical Expenses Tax Offset

  *plus $1,500 for each dependent child after the first.

There is no upper limit to the amount you can claim