Category: Business


Prepare for Life, Are You Ready?

By Heaney Business Group
Estate Planning

Estate PlanningIf you don’t plan you could learn a hard lesson with assets being lost, family feuds or even money being handed to the government due to you not having made a Will or instructions on where it should be distributed.

For the Australian population, estate planning has become even more important as collectively our wealth has exploded over the last 25 years and looks set to continue.

14.5% of Australian are now 65 years old or over (approx. 3.8 million people). 55% of the country’s wealth is distributed to the Baby Boomer generation who only make up of 25% of the population. Australia is seeing a wealth distribution intergeneration change.

Estate Planning

Estate planning is critical to identify what will happen to your assets and liabilities if something happens to you. Estate planning will give everyone involved piece of mind and make sure your wishes are followed protecting your business partners and beneficiaries.

All of this planning will come in handy when tax outcomes are reviewed and if legal matters are required at a later date.

Being a business owner, you will need to consider a number of different issues that could be caused if you were no longer able to carry out your current role. These issues could include:

  • Who would perform your role?
  • Will your beneficiaries take a share of the business?
  • Will the business need to be sold?

These questions and many more can be considered as part of your estate planning requirements. This kind of planning is very important to help protect your beneficiaries and any business partners attached to the business, plus relieve any anxiety that could be associated with business structure going forward.

Estate planning does not have to be hard work, but it does have to be planned.

Other things to consider when planning your estate other than money could be

  • The care and maintenance of minor children.
  • Managing the respective rights and expectations of beneficiaries, particularly with blended families.
  • Avoiding disputes between family members.
  • Relationships outside of the immediate family.
  • Managing liabilities of the estate.
  • Assets which may not be capable of immediate realisation or where value will be diluted by realisation.
  • The transfer of assets through generations.

Need Help with Your Estate Planning?

For specific advice on your estate planning needs call the team at HBG Tax & Accounting on 9594 1963 and discuss your situation and requirements.

This article was written based on information supplied from Knowledge Shop Newsletter February 2019.

 

Single Touch Payroll – Free Training

By Heaney Business Group
Single Touch

RKCC - FREE Business Training Workshop

Business Workshop – Single Touch Payroll Reporting

Gemma Heaney, CPA of HBG Tax and Accounting and Rockingham Kwinana Chamber of Commerce would love you to attend the Business Training Workshop on Tuesday the 2nd of April from 7:30 to 9:00am. This workshop will provide you with all the information you need about your requirements as a small business plus what your reporting obligation to the Australian Taxation Office are.

Single Touch Payroll or ‘STP’ has now been made law and will apply to all small business owners from 1st July 2019.

“STP is merely an electronic system that will report your gross wages paid, tax withheld and superannuation. Each time you click pay now, this information will be sent to the ATO. Software providers will be ready before this date and you can simply opt in and start using STP as soon as possible. I know for Xero, MYOB and Quickbooks users it is up and live already. For those employers that are not currently using an electronic system, MYOB and Xero have already come out and said they will have a low cost software option they can implement. For these employers the time is now to get this up and running.

The ATO have said they will give business owners until the 30 September 2019 to be ready. Employers with 1-4 staff will have transitional arrangements and will be able to get their BAS or Tax Agent to lodge wage figures quarterly for the first 2 years. We can implement STP for you. Please give us a call on 9594 1963″. Gemma Heaney CPA HBG Tax and Accounting.

Single Touch Payroll – Free Training
Tuesday 2nd of April
7:30 to 9:00am
At Rockingham Kwinana Chamber of Commerce
19 Kent St Rockingham

Book your ticket to this free workshop

RKCC Workshop – Single Touch Payroll

Rising Star Accounting Business Category in THEPAC 2018 Awards

By Heaney Business Group
Rising Star Accounting Business
Rising Star Accounting Business Award Photos

Colin Dunn Co Founder and Head of Content of Panalitix Nicole HBG Tax & Accounting, Gemma Director HBG Tax & Accounting, Aimee HBG Tax & Accounting Mark Ferris CEO of Panalitix

HBG Tax & Accounting (HBG), from Rockingham Western Australia has been awarded for being the embodiment of excellence in a definitive aspect of the accounting business and industry in general.

At the recent Panalitix Annual Conference held at the San Diego, California, USA HBG Tax & Accounting was awarded Rising Star Accounting Business 2018.

Panalitix represents a global community of accountants. Members must demonstrate a consistent level of excellence in being ‘proactive with their clients’. The conference awards ceremony was held at the Paradise Point Resort & Spa. Gemma Heaney HBG Tax & Accounting’s Director along with Nicole Nie, Business Services Manager and Aimee Osman, Accountant were there to celebrate the win. It was a truly unforgettable experience.

This award recognised that as a business in accounting the recipient must have exceeded their business targets and goals through their commitment and dedication. They need to have demonstration implementation in their business with improved strategies to provide high service standards to their clients.

The team at HBG offer their services to a whole range of clients large and small, from preparing a single annual tax return to structuring businesses; they have you covered. Being highly experienced in different accounting software packages, they have the skills and experience to help keep their clients up to date with technological advancements and tax law changes.

HBG Tax & Accounting with Steve Forbes

Nicole HBG Tax & Accounting, Steve Forbes – Forbes Publishing Gemma Director HBG Tax & Accounting, Aimee HBG Tax & Accounting Mark Ferris CEO of Panalitix

Committed to making life easier for Businesses just starting up or to large well-established businesses, HBG will keep your goals in mind. Covering all areas of self-managed super funds, future tax planning, buying and selling of business and estates incorporating trusts, having all your business managed in the one area you will know it is handled right the first time every time.

Speak with the professionals who love working with you to see you and your business succeed!

Congratulations to HBG Tax & Accounting on winning The Panalitix, Rising Star Accounting Business Award.

Cleaners and couriers latest black economy target

By Heaney Business Group

From 1 July 2018, the taxable payments reporting system will extend beyond the building industry to cleaning and courier businesses. This means that these businesses will need to report payments they make to contractors (individual and total for the year) to the ATO. By ‘payment’ the ATO means any form of consideration including non-cash benefits and constructive payments.

The building industry has had this form of “enhanced reporting” since 2012-13. The result was an additional $2.3 billion in income tax and GST liabilities collected through voluntary reporting in the first year alone.

 

What is a cleaning and courier service?

The terms ‘cleaning service’ and ‘courier service’ take their ordinary meaning.

Courier services include activities where items or goods are collected from, and/or delivered to, any place in Australia using a variety of methods including by truck, car, station wagon, van, ute, motorcycle, motorised scooter, bicycle or other non-powered means of transport, or on foot.  Freight services, blood and blood product couriers, and passenger transport are not affected.

A cleaning service is any service where a structure, vehicle, place, surface, machinery or equipment has been subject to a process in which dirt or similar material has been removed from it. This includes office cleaning, road sweeping or street cleaning, swimming pool cleaning, park and facilities cleaning, or cleaning for certain types of cultural or sporting events.

Mixed business that supply services including courier or cleaning services will also be affected.

 

What you need to do

The first annual report for affected cleaning and courier companies is due by 29 August 2019 for the 2018-19 year. The types of information reported to the ATO about contractors include:

  • ABN (where known)
  • Name
  • Address
  • Total paid to the contractor (including GST) for the financial year, and
  • Total GST included in the gross amount that was paid.

If an invoice you receive from a contractor includes both labour and materials, whether itemised or combined, you will need to report the total amount of the payment.

If your business is likely to be affected by the new requirements and you currently do not have systems in place that allow you to readily access the information required by the ATO, it’s important to start your planning now.

Tax benefits for investing in affordable housing

By Heaney Business Group

 

There are two aspects to these changes. Firstly, individuals who make a capital gain on residential dwellings that have been used to provide affordable housing can potentially qualify for an additional CGT discount of up to 10%, this could take the total discount percentage from the existing maximum level of 50% to 60%.  While the additional 10% CGT discount applies if you meet the eligibility criteria, the 60% discount rate is not automatic – it’s ‘up to’ and the final total discount could be less than 60%.

 

The increased discount will only be available if the dwelling has been used to provide affordable housing for at least 3 years after 1 January 2018. The 3 year period does need to have been continuous.

 

The additional discount needs to be apportioned to take into account periods when the individual was a non-resident or temporary resident as well as periods when the property was not used to provide affordable housing over its ownership period.

 

The second aspect to the rules allows individuals to also access an additional 10% CGT discount on their share of capital gains that are distributed by a certain trusts (e.g., managed investment trusts) where the gain is attributable to dwellings that have been used to provide affordable housing for at least 3 years.

 

There are a few compliance hoops to jump through to be ‘affordable housing’:

  • the property must be residential (not commercial);
  • the tenancy of the dwelling or its occupancy is exclusively managed by an eligible community housing provider;
  • the eligible community housing provider has given each entity that holds an ownership interest in the dwelling certification that the dwelling was used to provide affordable housing;
  • no entity that has an ownership interest in the dwelling is entitled to receive a National Rental Affordability Scheme (NRAS) incentive for the NRAS year; and
  • if the ownership interest in the dwelling is owned by a Managed Investment Trust, the tenant does not have an interest in the MIT.

 

If you have any enquiries on how the above may affect you, please feel free to give our office a call on 08 9594 1963.

Not your typical accountant

By Heaney Business Group

It seems this is a very common perception of an accountant, but it couldn’t be further from the truth! Tax and accounting inspires us at HBG – shocking we know. Helping people through a transitional phase of their finances, or finding a solution to a more complex case is certainly inspiring for us. Even the straight forward tax and accounting jobs encourage us to utilise our skills to get the best solution for our clients.

What we really do as accountants is take on an ever-growing business advisory role, which essentially caters to the full business needs of our diverse clients. We partner with our clients help solve their business problems and offer advice on how to create more wealth and opportunity in their business.

So how can an accountant, or HBG, help you? Well, we can provide that sigh of relief and assurance of a job well done. You know that feeling of relief when something is completely taken off your plate? This feeling is strengthened with long-term relationships that we look to build with each of our valued clients.

At HBG, we are here to make our clients’ lives easier and we really enjoy the relationships we have with our clients, staff and local community. We work with our clients to solve any problem they may have, from dealing with the ATO to managing cash flow to marketing and human resource management issues. We pride ourselves on being able to meet our clients’ needs and to be seen as a true and trusted advisor.

If you are thinking about seeking advice, don’t hesitate to contact us. We aren’t your average backroom accountants and we would love the opportunity to get to know you and your business.

Should you have any questions about the how we might be able to help you, please don’t hesitate to contact our trusted tax accountants and business advisors.

 

P: 08 9594 1963

E: admin@hbgtax.com.au

Director’s fees: What and How to Pay Them

By Heaney Business Group

Can you pay a Director?

Directors who work in the company, executive directors, would generally have an agreed executive remuneration structure that takes into account their service including attending Board meetings (so, generally no extra fees for service outside of the agreed remuneration structure).

For non-executive directors, companies can only pay Director’s fees if the company constitution allows for it or a resolution is passed to make the payments. The resolution to pay directors fees must be made and documented prior to the fees being paid.

These fees are in addition to any agreed expenses such as travel expenses to attend board meetings or in connection with the company’s business.

Fees paid to directors are subject to disclosure requirements. Special rules exist for listed entities, not for profits, APRA-regulated financial institutions and specific advice should be sought for the management of director fees by these entities.

 

Tax deductibility of director’s fees

Fees paid to Board members are tax deductible to the company in the year they are paid or intended to be paid. Many Boards pass a resolution to pay Director’s fees just prior to the end of the financial year to claim the tax deduction in that same year.  The fees do not necessarily have to be paid prior to the end of the financial year but the Board must have definitely committed to paying them and then the fees paid as soon as practicable.

 

Tax on director’s fees

Assuming the directors fees are being paid through an individual contractual arrangement (i.e. the contract is with Mr Smith to act as a director, not with Smith Pty Ltd to provide ‘someone’ as a director, and that happens to be Mr Smith), then the directors fees are treated like salary and wages for the purposes of PAYG withholding. PAYG is required to be withheld from the gross directors fees, reported on the IAS or BAS that is used to report the salary and wages and related PAYG W for that period, and should be remitted to the ATO.

Director’s fees fall within the definition of Ordinary Times Earnings, and superannuation guarantee applies.

Director fees are required to be reported on a payment summary, and are generally reported at item 2 of an individual’s tax return. If they are not reported on payment summaries, it could result in errors in the PAYG withholding annual report, and queries from the ATO regarding the payments.

While the ATO may recognise that there can be a difference in the provision of services by and payments to directors (e.g. the contract may be for ongoing director services and attendance at quarterly board meetings, with payments of director fees to be made once a quarter, not monthly), the PAYG W and superannuation contributions are still subject to reporting and payment by the standard deadlines that apply for all other employees.

The directors fee should also be included in any workers compensation calculation and would generally be captured for payroll tax purposes as well.

 

Can Director’s fees be paid as super contributions?

Yes, assuming the proper process has been followed (e.g., effective salary sacrifice arrangement has been entered into before the fees have been earned), fees can be paid to the Director’s superannuation fund as a reportable employer contribution to utilise preferential tax rates.  This assumes the director is within their contribution limits.

ATO Issues Notices To Outlaw Motor Cycle Gang Members

By hbgtax

Two hundred Outlaw Motor Cycle Gang members have been served notices by the Australian Taxation Office (ATO) for failing to comply with their tax obligations.  We hope for the sake of the ATO staff the notices were delivered by mail!

There are not a lot of details about exactly what type of income the ATO is targeting but tax law does not differentiate between legally and illegally earned income: If you earn income, you pay tax. Simple.  An English tax law case back in 1886 set the precedent with Justice Denman stating, “In my opinion if a man were to make a systematic business of receiving stolen goods, and to do nothing else, and he thereby systematically carried on a business and made a profit of 2000 per year, the Income Tax Commissioners would be quite right in assessing him if it were in fact his vocation.”

The difference between legally and illegally derived income is that you can’t claim losses or expenses if you have been convicted of an indictable offence related to that business activity.

The operation targeting the bikers is part of a joint taskforce with the Australian Federal Police. Data matching technology in recent years has helped identify movements of cash and income from undeclared and often illegal activities. The ‘follow the cash’ philosophy works well and often results in frozen bank accounts, disrupted cash flows and supply chains, which impacts on the overall viability of illegal activities.

What is the $20,000 instant asset write-off?

By hbgtax

A deduction is generally available for purchases your business makes.  The instant asset write-off however changes the speed at which you can claim a deduction.  Since 7.30pm, 12 May 2015, small businesses have been able to immediately deduct business assets costing less than $20,000. On 30 June 2017, this $20,000 deduction limit reduces back to $1,000.   When we say “immediately deductible” we mean that your business can claim a tax deduction for the asset in the same income year that the asset was purchased and used (or installed ready for use).  The deduction is claimed on the business’s tax return.

If your business is registered for GST, the cost of the asset needs to be less than $20,000 exclusive of GST.  If your business is not registered for GST, it is $20,000 including GST.

Assets costing $20,000 or more can be allocated to a pool and depreciated at a rate of 15% in the first year and 30% for each year thereafter.

The instant asset write-off only applies to certain depreciable assets.  There are some assets, like horticultural plants, capital works (building construction costs etc.), assets leased to another party on a depreciating asset lease, etc., that don’t qualify – check with us first if you are uncertain.

Also, you need to be sure that there is a relationship between the asset purchased by the business and how the business generates income. You can’t for example just go and purchase multiple television sets if they have no relevance to your business.

For more information on how you can access the $20,000 instant write-off, call your accountant on 08 9594 1963 or send us an email at admin@hbgtax.com.au.

When can I claim self-education expenses?

By hbgtax

Normally, if you undertake study that is connected to your work you can claim the costs of that study as a tax deduction – assuming your employer has not already picked up your expenses.  There is also no limit to the value of the deduction you can claim. While this all sounds great and very encouraging there are issues to consider before claiming your Harvard graduate degree, accommodation and flights as a self-education expense.

A recent case before the Administrative Appeals Tribunal (AAT) looked at, amongst other claims, a large claim of $48,000 for self-education expenses.  In this case, the taxpayer was an engineer who was employed by a company in the heating, ventilation, and air conditioning industry.

In his 2014 tax return, the taxpayer claimed significant expenses relating to research and development projects undertaken in connection with his PhD studies at university. His thesis related to efficient air conditioning systems.  A lot of the expenses he claimed were to test the findings of his new invention.  The taxpayer also claimed that he spent considerable monies to protect his intellectual property and to submit applications for provisional patents for his invention. His argument for the self-education expenses was that his research was a form of self-education as he could not simply read a book or complete a course to advance his understanding. His experiments were a necessary part of his study.

To be deductible, the study must be connected to the income you are earning (either to maintain or improve your specific skills or knowledge), or is likely to result in increased income from existing income earning activities. The problem for the taxpayer in this case was that the expenses were not really connected to his job (his income), but to the industry he specialised in.

The AAT found that the expenses were not deductible as they did not relate to his employment activities and there was no direct connection with the university course. Instead, the expenses related to his own inventions, which he hoped could be commercialised in the future. At best, the expenditure related to a possible future income earning activity, but the expenditure in this case was incurred too soon to be deductible. Without this nexus between income and the expenses, the expenses are not deductible.

The ATO is more likely to target large self-education expenses. For anyone who has completed post graduate study you know that these expenses can ratchet up very quickly, particularly when you add in any other expenses such as books or travel. It’s important to ensure that there is a clear connection between your current job or business activity and the expenses you are claiming before you claim them.

If you are concerned about whether or not the self-education you are intending to complete is deductible, please call or email us and we can help clarify the issue for you.