WARNING - CASH BUSINESSES ON ATO RADAR!!

The ATO has begun sending out letters and emails to tax agents of businesses (as well as businesses directly) who they have identified as being predominantly cash-only businesses. 

This serves as a timely warning that the ATO is now taking the cash economy very seriously.  They will investigate and levy interest and penalties where serious abuse of the tax system is identified.

This is a timely reminder for businesses to review their business processes, fix any mistakes and move into the digital age. 

Businesses that accept cash payments only and/or penalise customers for paying electronically will be contacted by the ATO and their tax returns scrutinised.  All cash received is taxable income and must be declared in a tax return. 

It is understandable that businesses see tax as a burden and try to minimise this by skimming cash.  However, when you factor in the value of lost sales (when customers shop elsewhere) and the negative impact of an ATO investigation (interest and penalties), this may very well outweigh the supposed benefits of being predominantly a cash-only business.  

Should you wish to discuss this further, please contact our office.

Scams targeting ASIC customers

As a follow up to our recent post regarding Scams targeting businesses, we thought you should be aware that there is a current scam targeting ASIC customers.

Scammers pretending to be from ASIC have been contacting our clients regarding Business Name Renewals. 

The scam email looks genuine and is difficult to detect that it’s a scam (other than the obvious email address as shown below). 

Important Information to note

The email is from an email address @encounteradio.com.  Any email sent to you by ASIC will come from asic.gov.au

The subject line of this scam email is “Renewal”.   An ASIC Business Name renewal will always state the actual Business Name to be renewed in the subject line of the email.

In order to protect yourself, you should:

• keep your anti-virus software up to date
• be wary of emails that don't address you by name or misspell your details and have unknown attachments
• don't click any links on a suspicious email and delete it from your mailbox immediately (including your deleted items)

If you would like to discuss this matter further, please contact our office.

Fringe Benefits Tax – What you need to Know/Do!

The FBT year ends on 31 March 2018.

FBT is a tax employers pay on certain benefits they provide to their employees – including their employees family or other associates.

For example:

• Allowing your employee to use a work car for private purposes
• Giving your employee a discounted loan
• Paying an employee’s gym membership
• Providing entertainment by way of free tickets to concerts, etc

Some exemptions include:

• Work Tools
• Portable Electronic Devices such as mobile phones, laptops, tablets, etc
• Protective Clothing
• Minor benefits (costs less than $300 in value)

What you need to do if you’re an Employer:

• Take odometer readings of work vehicles on 31 March 2018
• Supply all relevant information to our office for preparation of your FBT Return by 30 April 2018 to enable it to be lodged by the due date
• Pay any FBT owing by the due date of 28 May 2018

If you would like to discuss your FBT obligations further, please contact our office.

Single Touch Payroll

If you have 20 or more employees, from 1 July 2018 you will need to report through Single Touch Payroll.  This is now Law!

If you have 19 or less employees, Single Touch Payroll reporting will be optional until 1 July 2019. It will be mandatory from that date (subject to Legislation being passed in Parliament).

To find out if you need to be ready by 1 July 2018, you will need to do a headcount of the employees you have on your payroll on 1 April 2018. 

Who to include in your headcount:

• full-time employees
• part-time employees
• casual employees who are on your payroll on 1 April and worked any time during March
• employees based overseas
• any employee absent or on leave (paid or unpaid)
• seasonal employees (staff who are engaged short term to meet a regular peak workload, for example, harvest workers).

Do not include:

• any employees who ceased work before 1 April
• casual employees who did not work in March
• independent contractors
• staff provided by a third-party labour hire organisation
• company directors
• office holders
• religious practitioners

When you pay your employees through your Single Touch Payroll enabled solution you will be reporting (directly from your payroll) the following to the ATO at the same time:  

• salaries and wages
• allowances
• deductions (e.g. workplace giving and other payments)
• pay as you go (PAYG) withholding
• superannuation information

Your payroll cycle will not change, nor will your due date for PAYG Withholding and Super contributions.

Software providers are updating their products now.  You should make contact with them to find out when and how your product will be updated.

If you would like to discuss “Single Touch Payroll” further or any other business/tax related matter, please contact our office.

Scams targeting Businesses – Be aware!

Scammers are causing significant financial loss and reputation risks to businesses.  Be it through hacking, ransomware, email scams, fraudulent payments, etc, you don’t want this to happen to you!

Here are some tips to help you protect your business:

• Never provide personal information and banking details to anybody you don’t know or trust
• Don’t let tactics like bullying, negotiations for a lower price, or charges for unordered or unused goods affect your decision
• Don’t open an attachment to an email that looks suspicious.  Remember a Bank or he ATO will never ask you to click on a link to verify your details.  Delete, delete, delete!
• Consider the information you post on social media as scammers use publicly available information to target businesses
• Do not agree to offers or deals straightaway – always ask for an offer in writing
• Have clear procedures for verifying, paying and managing accounts and invoices.  If your supplier suddenly has different bank details, check it with them first.  Chances are it may be a scam!
• Keep your computers and mobile devices secure – install computer protection software and back up your data regularly
• Change passwords regularly

If you spot a scam or have been scammed, report it to the appropriate authority.  It is important you act quickly to reduce your risk of financial loss or other damages.

Are you carrying on a business?

It is important to understand whether you are in a business for tax & other purposes or is it just a hobby?

The following are some factors to consider whether you are in a business:

• Business registration
• Profit making intention
• Repetition
• Size / scale of the operation
• Planning / organisation

There is no dollar threshold for classification of a business, it can present simply as a very expensive hobby.   

When you have determined that you are in a business, we can help you with your business tax obligations such as:

• Setting up structures
• Business registration
• Lodging annual tax returns, etc

For further information or discussion, please contact our office.

Important Upcoming Dates

28 February 2018             December Quarter BAS Lodgement & Payment Due Date

31 March 2018                   End of FBT Year.  Odometer reading needs to be recorded

Mar, Apr & May 2018         Final dates for lodgement of 2017 Tax Returns (please contact us for your specific lodgement date)

It is imperative that if you haven’t yet forwarded your December Quarter BAS information or 2017 Tax Return information to our office, that you attend to this immediately.  The ATO impose penalties for late lodgement of income tax returns and activity statements so it’s best to always lodge on time.

If you ‘d like to further discuss any of the above, please contact our office.

Employer Obligations

Good employees can be your greatest asset and possibly your greatest cost.  There are a number of government requirements related to pay, leave, super and tax.  Are you keeping up with your obligations as an employer?

Warning – Employers who don’t pay super could face jail time

The Age have reported that the ATO are cracking down on Employers who fail to follow the ATO’s direction to pay super entitlements to their employees.  Employers will be subject to court ordered financial penalties as well as up to 12 months imprisonment for non-compliance.

There are a number of changes expected over the coming year with “single touch payroll” to be mandatory for all employers and Superannuation Funds will have to report to the ATO, each payment made to them by employers when the payment occurs.  This should lead to a timelier response by the ATO to non-compliance.

Payslips

It is a requirement that your employees be provided with payslips within one working day of each pay day.  These may be provided in electronic form or hard copy.  Penalties may be applied by the Fair Work Ombudsman for non-issue of payslips.   

If you have any queries in relation to employer/employee matters, please contact our office.

Welcome back and Happy New Year!

What are your goals for 2018? 

It’s that time of year where we traditionally review our past year and set some goals for the new year.

Goal-setting is generally more effective with fewer, specific, measurable goals.  

Your typical business goal may be to:

• Grow your business
• Increase profits
• Minimise Tax
• Achieve Work Life Balance, etc

The CFD Team are all back from holidays, feeling refreshed and ready to tackle the year ahead. 

Please contact us to discuss how we can assist you with your goals.

MERRY CHRISTMAS & HAPPY NEW YEAR

CFD Advisors is a Proud Supporter of the Streetsmart Handbook Victoria

‘What a weary time those years were – to have the desire and the need to live but not the ability’; Charles Bukowski said about youth.  

We here at CFD believe that the Youth is the fabric of the society upon which its future depends.

We are proud to have partnered with Victoria Police (Police Citizens Youth Club Victoria) & Countrywide Austral for the publication of this very important hand book.

The VIC Street-smart Handbook is the essential guide book for year 11 students. Its going to be their reference point for a safe and dignified transition into adult life.

At this time of immense change and uncertainty, this is the least we could do for our youth.  

Rent out your vacant property or pay a fine – Malcolm & Co warn Australians Overseas

There are two bills currently in front of Parliament which, if passed, will impose a vacancy fee on foreign persons who own property in Australia that is vacant for at least 183 days in a 12-month period. 

The fee will be payable by foreign persons as defined in the Foreign Acquisitions and Takeovers Act 1975 (“FATA”) who purchase a residential property.    More importantly - Australian citizens who own property in Australia who cease being Australian residents for tax purposes may become liable for this fee. 

The fee only applies for purchases of residential property where the purchase was not approved under the FATA by 7.30pm on 9 May 2017.  The fee will be based on the purchase price of the property and the type of acquisition. 

Occupation is the key!  The fee will only be payable where the property has been unoccupied for at least 183 days in a 12-month period.  A property will be considered unoccupied if it is not occupied under a lease or license with a term of at least 30 days.  This means that short-term rental options (such as Airbnb) will not be considered proper occupation that meet these criteria. 

If the property is advertised publicly as being genuinely available for rent at market rates for a term of at least 30 days then those days will not be counted as being unoccupied days.  Advertising at inflated rents to discourage rental will be investigated!

If you’d like to know more, please contact our office.

We are your Virtual CFO – we specialise in Accounting & Tax!

Our core competency is Accounting Services. We specialise in Accounting, Tax, Budgeting, Cash Flow, Tax Planning, and we are very good at it.

We are good at identifying and providing solutions for the family group and business.   We act as your Virtual CFO. We have a network of high calibre lawyers, financial planners, bankers, agents, business advisors who are specialists in their field. We will source the best skills as for your needs.

We believe in focussing on our core competencies and providing exceptional service. We think that financial & estate planning, and risk management is ancillary to and dependent on the strength of good financial statements and tax returns.

If you are in the market for a Virtual CFO, please contact us to discuss further.

The correct structure is paramount! Is yours correct?

We come across new client groups and in the first meeting they communicate their investment in a business and/or other assets. 

At our first glance, the structure of such assets is typically incorrect. 

The entities have not changed with current Laws but the operations have changed dramatically.

The ownership of an asset as to whether it is held in a Company, Trust, Partnership or other is of the utmost importance as the costs can be too great to shift such investments.

Please contact us to discuss whether your structure is correct.

It’s not Just about Profit in this Market - Cash Flow is King!

As important as a company’s profitability is its liquidity.

Businesses go bankrupt because they cannot pay their bills, not because they are unprofitable.

Simply put, a positive cash flow is paramount in generating profit.   Cash pays employees and suppliers so that the business can make goods and the sale of those goods helps garner the profit. Therefore, a good business should be structured around generating positive Cash Flow.

We here at CFD work intimately with our clients to achieve and maintain ‘Positive Cash Flow’.

Please contact us to discuss further.

What sets us apart from our Competitors??

We hear the same complaints from our new clients as to why they were unhappy with their previous  Accountant:

• No Engagement!
• No passing of knowledge!  How do we trade? What are our entities?
• No Advice!
• Just a Tax Return & Financial Statement preparation service!
• We pay too much tax!

At CFD we pride ourselves on supporting our clients businesses and in turn we educate our clients to understand their affairs.

If you or someone you know is not getting the service they desire from their Accountant, be sure to give us a call to discuss how we can help.

You’re in business!! What is your plan??

Planning is important and helps you focus on the short & long term goals for your business.  Some may call it a Roadmap or Business Plan!

Are your thoughts in writing?

The following are just some of the things that should be covered in your Business Plan:

• What do you wish to achieve in business?
• How will you get there?
• When will you get there?
• What is the requisite investment?
• How does your business sustain the current conditions in your industry?
• How do we innovate our offering – product/service?

Call us today for assistance with your Business Planning needs.

The Family business has invested in a new era!!

Businesses are often built through generations of family.  Not everyone has the same ideas.

Are there weaknesses in your family business? 

If any of the following apply to you or someone you know, we can assist!! 

• The founders have years of experience and stick to what they know.  You need change?

• The kids are in the business but haven’t found their feet?

• The cultures are not aligned and the plan is not working?

• There are plans in place, but too many hurdles?

• One person does more than the other which causes frustrations? 

Contact us to arrange a meeting about how we can assist your family business.

Small Business Tax Rates Update

Warning – Tax Cuts Ahead

Important update from the Team here at CFD Advisors & Accountants.

The Government has previously indicated its plan to reduce the corporate Tax rates to 25% for all qualifying small businesses. This is a positive move to improve the domestic and international competitiveness of Australia in this global economy. The table below details the rate changes between 2016 – 2027.

From the 2016–17 income year, the qualifying small business tax rate has also been reduced to 27.5%.

This lower rate must be applied by qualifying small businesses with a turnover (aggregated turnover) less than $10 million that are:

• companies
• corporate unit trusts
• public trading trusts.

The company tax rate will remain at 30% for all other entities that are not small business entities.

Dividends and Franking Credits

This is great news for growing businesses due to reduced PAYG Instalment requirements and lower tax liabilities which allows them to have more funds available for distribution.

We must consider the downfall that all tax savings achieved will be short lived if most profits are being paid out as dividends as the franking rate is also levelled at 27.5%. So, we need to be very careful not to over frank dividends to avoid any Franking deficit tax.

So how does this affect me and what do I need to do?

As part of our ongoing service to you we will ensure your current structure is optimised to catch the full benefit of this tax cut. We are always up to date with the most recent law changes so if you want to discuss how this affects your group please contact us so we can tailor specific advice for your situation.

We always get asked what CFD stands for, so we thought we’d let everyone know!

CFD stands for Corporate Family Development.  

We seek to have long standing mutual relationships with our clients as we understand business and how family influences their business culture.  We support and leverage off our clients creativity, wisdom and heart with which they have applied to their business and add inspiration to their journey to sustain the economic environment for growth and prosperity.