Personal income tax cuts came into effect in the 2020 Federal Budget. These cuts apply from 1 July 2020.
For business employing staff, the changes to personal income tax thresholds have been incorporated into the withholding schedules and tax tables and will apply to payments made on and from 13 October 2020.
Updated tax tables are now available for you to reflect the tax cuts in employee’s take-home pay.
As the changes to withholding are made part way through the income year, employers and other payers who are unable to immediately implement these changes into their payroll will have until 16 November 2020 to do so.
To comply with the new rates you must make sure you are withholding the correct amount from salary or wages paid to your employees for pay runs processed in your system from 16 November onwards.
Payroll software providers will be updating software to implement these tax rate changes. Some payroll software providers may take longer to update their software. If you are using a payroll provider, they should keep you updated on these changes and apply them.
You don’t need to make any other adjustments or refunds.
Any ‘over-withholding’ that occurred prior to updating your payroll software or processes will be included in your employee’s income tax assessment at the end of the year.
Employees and other payees will receive their entitlement to the reduced tax payable for the entire 2020–21 income year when they lodge their income tax return.
One question many people ask is: What motivate hackers.
One of the most common reasons for hackers to hack is to steal or leak information. This could be data and information about your customers, your employees or even private data specific to your business.
Hackers are smart and will attack insecure online systems using Spambots or Botnets to attach to your website or via your email systems to spread malicious software. These “Bots” will look for and attack vulnerable systems by brute force with multiple attacks over a short period of time.
Many botnets are designed to harvest data, such as passphrases, credit card numbers, addresses, telephone numbers and other personal information. The data is then used for criminal purposes, such as identity theft, credit card fraud, spamming (sending junk email), website attacks and malware distribution.
But there are ways you can prevent the incidence of attacks.
Use strong passwords
Creating unique, complex passwords will make it more difficult for hackers to use access your systems. The best passwords include a mix of numbers, letters, and symbols and are at least 8 characters long.
Also use more than one password. Once a hacker has access to one password, you’re wide open to attack on the rest of your data if you use the same password multiple times.
Keep software up to date
Make sure you have the latest versions of all software installed on your devices.
Suppliers like Microsoft regularly update their software to eliminate “bugs” that hackers could exploit. Make it part of your procedures to install all new software updates as soon as they become available.
Use Antivirus Software
Antivirus software acts as a “Bouncer” against viruses. It might not be big and hairy, but it can identify and eliminate the threat before you were even aware of it.
There are many antivirus options available, including free versions, so do your own research before you install. Once you decide on the version you want, only use that option as having more than one antivirus program will slow you PC down and offers no real advantage.
Install a Popup Blocker
Many attacks happen through browsers. Hackers can gain access to your computer from one innocent click on the wrong ad or link.
An ad or popup blocker protects your computer’s data. It will prevent any unwanted pages from opening automatically.
Beware of Email Phishing Scams
32% of reported security breaches begin with a phishing scam.
These often appear as an email form under the guise of a legitimate company. The goal is to get you to either enter personal information or click on an infected link that allows access to your computer.
A legitimate company will have its own domain name for emails. If an email address claims to be from a supplier or customer doesn’t have the domain name of the legitimate business in its address, it’s a scam.
And a legitimate company will never invite you via email to log in and provide personal or billing information.
At the very least, you should perform weekly or even daily backups of all important data. Store it securely in the cloud or on a separate hard drive. Backups can be done automatically by many backup programs.
So if you do accidentally get a virus, your vital information won’t be lost or compromised.
Educate your staff
Finally, make sure you have clear protocols about opening emails, browsing and sharing information throughout your entire team. A few moments of education could mean the difference between cyber attack success or failure.
If you are thinking about setting up a self-managed super fund, make sure you consider the costs, time, risks and skills involved.
When you set up a self-managed super fund (SMSF), the responsibility rests with you. You must make the investment decisions for the fund. You are also held responsible for complying with the super and tax laws. These are major financial decisions and you need to have the time and skills to do it.
As a trustee of an SMSF you’ll also be responsible for operating your fund within the law. You may face severe penalties and your fund may suffer tax consequences if you don’t comply with the laws.
An SMSF must be run for the sole purpose of providing retirement benefits for the members or their dependants.
For example, if your SMSF owns a holiday home, related parties can’t stay in it for any reason – not even when having renovation work done – because this constitutes use of the asset.
You need to make investment decisions for the SMSF, including formulating an investment strategy that you review regularly. You need to understand the restrictions on the investments an SMSF can make.
It costs money to set up and run an SMSF. You might find that the fees you pay for an SMSF are more than you would pay in another type of super fund. Every year that you have an SMSF you’ll need to pay for an independent audit and the supervisory levy.
Most SMSFs also pay for additional help, such as:
preparing the SMSF annual return
valuations of the SMSF’s assets
actuarial certificates for SMSFs paying income streams (pensions)
legal fees, for example if the trust deed needs to be amended
assistance with fund administration
insurance for members.
Your self-managed super fund (SMSF) needs to be set up correctly so that it’s eligible for tax concessions, can receive contributions and is as easy as possible to administer.
It’s best to see a qualiﬁed, licensed professional to help you decide.
Lockdowns and restrictions are continuing in Queensland and border closures will cause further financial hardship.
If you are a sole trader with legal responsibility for all aspects of your business whether you work alone or are an employer, you could be eligible.
On 21 July, the Government announced it is extending the JobKeeper Payment until 28 March 2021 and is targeting support to those businesses and not-for-profits who continue to be significantly impacted by the Coronavirus
We have recently found that some sole traders are not sure of their eligibility to receive JobKeeper Payments. We can hep with advice on your eligibility.
As it stands, further changes were announced on 7 August 2020 to adjust the reference date for employee eligibility and make it easier for organisations to qualify for the JobKeeper Payment extension.
The existing JobKeeper Payment will remain in place until 27 September 2020 and will continue to be open for new enrolments for entities that were in operation on 1 March 2020.
From 28 September 2020, the JobKeeper Payment will be extended, however, payments will be targeted to eligible sole traders that have been, and continue to be, most significantly impacted by the Coronavirus. The payment will also be stepped-down and two tiers of payment will be introduced.
JobSeeker eligibility has also been temporarily expanded to include sole traders and the self-employed if your business has been negatively affected.
Further support is also available for those working in industries, communities or regions particularly affected by the Coronavirus economic downturn including tourism, agriculture and education.
To make sure you know how to qualify or whether you can access these funds, please contact us as soon as possible so we can guide you through the process.
Many business owners struggle with the difference between marketing and advertising. Understanding the difference is particularly important and can put your business on the path to substantial growth.
The following definitions are a good starting point
Advertising: Advertising is the promotion by a business of its products to existing and potential customers. The goal of advertising is to create awareness and stimulate buying activity of existing products and services. Advertising explains WHY customers need a particular product or service, how it will benefit their lives and how to get it.
Marketing: Marketing is the systematic planning, implementation, and control of a process, bringing buyers and sellers together for mutual benefit. Good marketing is about relationship. Once a consumer relates products and services with your overall business name, image and style, then you have a successful marketing strategy.
After reading both of the definitions, the difference may still be confusing, so let’s break it down a bit more.
Advertising is a single component of the marketing process. It’s the part that involves getting the word out concerning the products, or services you are offering.
It involves the process of developing appropriate strategies such as ad placement, frequency, etc. Advertising includes the placement of an ad in such mediums as newspapers, direct mail, billboards, television, radio, and of course the internet.
Marketing is about building long term relationships. Marketing involves building relationships with customers and strengthening their overall customer satisfaction. Marketing takes a long term view and delivers a consistent message over time.
Whilst advertising looks for more immediate responses, marketing seeks to help customers and potential customers identify with your brand, your products and your services on a more personal level.
Advertising is an essential ingredient of your marketing, but marketing is the entire recipe.
When your advertising fits in with your marketing strategy, you have a much higher chances of a successful ad campaign.
Super is one of the best methods towards saving for retirement. If you are self-employed or work as a contractor, paying yourself super is an ideal way to plan for the future.
But it’s a fact that many small business owners put their super at the bottom of their priority list, due primarily to other financial needs of running a business.
Ultimately, this means that small-business owners have significantly less super than people who aren’t small-business owners. Many small business owners also rely on their business to be their super as they tend to put their money into their businesses not their super funds.
The plan – or the hope – is for their retirement to be funded by any proceeds when they sell their business. Unfortunately, expected proceeds from the sale of the business may not happen due to business collapse, undervaluation, or timing.
Does your business setup mean you legally need to pay yourself super? If you were working for someone else, your super contributions would be paid by your employer. When you’re running your own business, and paying yourself, it’s not always clear if super is compulsory, and it’s important to know what your legally obligated to do.
Depending on the structure of your business, you may not have to pay yourself super. For example, if you’re self-employed, a sole trader or in a partnership, you generally don’t have to make super guarantee payments to yourself.
So any super you pay to yourself will be up to you, rather than a legal requirement.
However, if you’re employed by your business under a traditional PAYG setup i.e. you draw a wage from the business, then you may be legally required to pay yourself super.
Super has the advantage of preferential tax treatment, meaning you may pay less tax on earnings within super, and you can often get better investment returns than a bank savings account can offer.
A standard contribution of 9.5% of before-tax income will allow you to plan for life after work, and as an incentive for paying yourself super, you may be entitled to a full tax rebate on your contributions. You may also be able to increase your contributions through concessional contributions.
As a business owner you can, in some cases, claim a tax deduction for contributions you make to your own super. These contributions should come from your before-tax income, and can be up to $25,000 per year. This is called a concessional contribution.
Give us a call to find out your legal obligations and options with regards to super.
The ATO has warned businesses against claiming expenses by providing false information to them. They are checking up cases that are more than carelessness, accidental or an error.
They are targeting tax returns done in a deliberately deceitful manner, from creating fictitious expenses to creating false documentation to support a claim. Some individuals have lodged fraudulent claims in their own name and for their business.
Refund fraud affects both income tax and GST and includes:
providing fictitious payment summary details or fictitious expense claims or offsets on income tax returns and amendments
providing false information in statements such as fictitious expenses
lodging large numbers of fraudulent returns using false or stolen identities
Refund fraud is stealing from the whole community and disadvantages Australians who do the right thing.
The Tax office takes this very seriously, and they have a range of controls and systems in place to detect potential refund fraud, including:
analytical models that use behavioral and statistical algorithms to analyse information on income tax returns, business activity statements and other tax forms
sharing data and intelligence with partner agencies
obtaining information about suspected fraud from the community and other government agencies.
Call us to ensure that you Tax Return is done correctly and that you are not lodging claims that could be seen as “fraudulent”.
As we begin a new Financial Year, and with a lot of uncertainty ahead, make sure that part of your future planning is designed to help you support yourself mentally.
Running a small business can be highly rewarding and satisfying. Especially if you are doing what you love, determining your own destiny , and choosing a work schedule to suit you.
But it can also mean putting in long hours, worrying about cash-flow and at times experiencing an overwhelming sense of responsibility. Added to that, external factors outside your control can affect your business and ramp up the demands on you.
Whether you are driven by the satisfaction of running your business or you feel like your business is running you, taking time out for you, your family and friends is essential. Long working hours have not only been linked with poorer mental health but also excessive fatigue, burnout, worry and irritability, as well as increased injuries.
That’s why it’s important to be proactive about looking after your mental health. Taking care of yourself can help you to face the inevitable stress of running your business.
Take some time out You can only give if your own cup is full, so take enough time out. Gift yourself a sleep-in, get a massage or have lunch outside so you can organize your thoughts. Feeling refreshed allows you to think.
Exercise, exercise, exercise Yes, I know that’s repetitive, but it’s well known that regular exercise is a powerful way of managing stress. When the stress of running a business builds up, it can be difficult to make time to look after our bodies.
To be our best, we need to feel good inside and out, which means a healthy body is key to achieving a healthy mind. Schedule time to exercise before work or escape your phone and email at lunchtime. Using the gym, doing yoga, or just walking around the block can help you make better business decisions.
Get enough sleep Sleep is a vital way to replenish your mental facilities: sleep deprivation impairs our focus, judgment, and ability to make sound decisions. This is because we can’t assess situations rationally and plan accordingly when we’re tired. Use meditation to unwind, or read a book to switch off, and most importantly leave work at the office and don’t take it home.
Establish a meaningful support base Owning a small business can be lonely. Isolated working conditions and lack of like-minded connections are some of the biggest triggers for stress.
Whether it’s your financial situation or something else outside your expertise, build a support base around you. Sharing a problem could make the difference between spending hours mulling over the issue or getting a solution in ten minutes. It’s all about using someone else’s gifts and talents so you can use your own more effectively.
Be aware of those around you The people around you often bear the brunt of your stress, so take notice of how your employees, friends and family are feeling. Stress can be contagious, so if people start asking you if everything is ok, use it as a sign to assess how you’re feeling: The quicker you identify stress, the quicker you can change things. Take time out, delegate work or turn down a project that may cause more stress than its worth.
Be prepared to ask for help Your health and well-being is your most valuable investment: you can’t work if you’re sick.
When stress levels start to take on unhealthy level, seek help. The earlier you ask for help, the faster you will be able to get yourself and your business back on track. Health practitioners can help you find the support and tools you need.
Because if you’re in great mental and physical health, not only will your productivity improve, feeling mentally and physically well can be the key to taking your business to new heights.
As the end of another tax year approaches, and the beginning of a new and potentially very tough year emerges, it’s time to think carefully about your business and personal finances.
Before June 30th take some time to look at both your expected taxable income (essentially your business’s assessable income, minus any allowable deductions) for the current financial year 2019-20; and your projected/expected taxable income for 2020-21.
If you are expecting to have a higher income this financial year, compared to your projections/expectations for the next financial year, you should talk to us to consider the following:
Prepaying some of your 2020-21 expenses (such as your rent, insurance or subscriptions to professional associations) in the 2019-20 financial year. Up to 12 months of the following year’s expenses can be deducted in this current tax year.
Taking advantage of the instant asset write-off, which enables you to immediately deduct assets you purchase for your business costing less than the associated threshold (whether the asset is purchased new or second-hand). Thresholds have changed over the past few years, and will reduce to $1000 from 1 July 2020, so check the ATO website for full details or give us a call.
Other options may be reviewing and postponing some of your invoicing for the current tax year, if appropriate.
However, if you are expecting to have a higher income next financial year (2020-21), you can talk with your us to consider:
If it’s appropriate to do so, bring forward any invoicing into the current financial year for scheduled work that will be carried out in the next financial year.
Paying your expenses as they are due is another tax strategy, rather than pre-paying them in advance this tax year.
Note: Avoid spending on business assets for the sake of claiming tax deductions, In most cases, you’ll find yourself paying $1 to save 30 cents* in tax (*based on the most common business tax rate).
You could also take advantage of the government’s instant asset write-off which affects those with an annual turnover of less than $500 million.
However, as part of your tax planning you should compare which is better: instant asset write-off vs depreciation.
For example, as businesses grow and make more income, there may be a greater benefit in not using the instant asset write-off, as you may lose out on on-going deductions and depreciation.
If your business carries stock, do your stock take as at 30 June 2019. NB: If your estimated closing stock (and opening stock) is less than $5,000 you do not have to do a stock take.
If you have been affected COVID-19, the ATO can help by:
giving you extra time to pay your debt or lodge tax forms such as activity statements fast tracking any refunds owed setting up a payment plan tailored to your individual circumstances including interest-free period remitting penalties or interest charged during the time you have been affected.