Not to rehash podcasts 32 episodes in but in this episode I discuss the ATO benchmarks. While these have not been met with the warmest regards, it is about finding how to put them to work for you.

The benchmarking process is a staple of the Wise Accounting service, and you can utilise them in the same way we do. We employ them for 3 reasons:

1. To determine if a business is operating outside of the industry benchmarks and if they are an audit risk.
2. To track how a taxpayer is performing in relation to their industry peers.
3. Test assumptions on new business ventures and forecasted results to see if they pass the "sense test" and are in line with these known percentages.

The benchmarks can provide you an insight in to your business that you may not be able to get otherwise. Competitors are not going to share this information with you, and this is the next best thing. The benchmarking data will provide you a handful of key performance indicators to evaluate the performance of your business at any time.

Familiarise yourself with these ATO benchmarks and evaluate your business against industry peers: https://www.ato.gov.au/business/small-business-benchmarks/

U R OK - Wise Accounting Podcast Episode 30

As a caveat we are not in the business of motivation, but we are in the business of ensuring business success and sometimes that means reassuring people. So let us reassure you too, things will be ok. You just need to stay true to what made your business successful previously, monitor your cash and heed the key performance indicators below and discussed:

1. Debtor days - get these down as low as possible. If you are not decreasing debtor days then you are bank rolling your customers and clients.
2. Personal Business Withdrawals - ensure these are not more than the business can afford and maintain. This may mean a (dreaded) pay cut, but could be for the long term survival.
3. Decrease illiquid assets - keep assets that can be easily converted to cash to allow your business to "survive" challenging times. Assets that can be readily converted to cash are worth a premium during tough times.
4. Monitor overhead expenditure - especially labour costs. These need to be at least representing the same % of sales as they have previously; however decreasing will allow you to increase cash flow further.
5. No replacement for hard work - this may mean more hours, more work, and less free time...for now.
6. Cash flow, cash flow, cash flow - these are needed and should be referenced frequently; to compare your business to how it is going and how you thought it would be going. This could be the most important aspect of your business and should be maintained regularly.

Above all else, do not get disheartened, you are not alone, and if you stay true to the business foundations you can adapt, survive, and then in happier times your business will be designed to flourish. If you need help, guidance or anything else, do just get in touch with us and we will be happy to assist.

• The new Omnibus proposal involves retaining the existing framework but lowering the non- concessional contribution limit from 1 July 2017 to $100,000 a year (or $300,000 over three years if they are under age 65). However, a new eligibility condition will be imposed which precludes any person who holds a balance of more than $1.6m at the start of the financial year (ie 1 July) from making any further contributions in that financial year.

• The Tax and Super Laws No 2 Bill contains amendments to allow primary producers to access income tax averaging 10 income years after choosing to opt out, instead of that choice being permanent. The measure assists primary producers as averaging only recommences when it is to their benefit (they receive a tax offset) and they can still opt out if averaging no longer suits their circumstances.

• The ATO is seeking the views of small business and individuals on the ATO's approach to penalties for failing to lodge a return or statement on time, or for failure to take reasonable care. In a consultation paper on its Let's Talk hub, the ATO proposes to give clients one chance before applying a penalty in certain circumstances:
  •  for certain small business and individual clients where false or misleading statements are made, for failure to take reasonable care for errors made in income tax returns and activity statements, and
  • failure to lodge on time for late lodgement of income tax returns and activity statements.

The mini return!  It has been quiet, but it is not our fault!  Thankfully there has not been much to report, and even this week it is debatable.  However, with the sharing economy getting more and more ATO attention it seemed fitting to record one and share some "hot spots".  This week:

• The ATO "fix it squad" gets it teeth stuck in to the sharing economy.  Reminding us to remind you, that if you earn income from these methods, eg Uber, Air BnB, Task Rabbit that it is still assessable income and needs to be declared.  Keep your records and ensure all income and deduction sources are at hand.
• The Treasure has announced that the $1.6 million cap on retirement benefits is not going anywhere!  The Government still intends to introduce this in to parliament.  If this affects you, then you may eant to watch how this develops closely.
• ASIC has slugged a practice $10,800 in fines for advertising misleading the consumer in regards to the establishment of a Self Managed Super Fund.  Again, just letting accountants know they are out there and keeping a close eye on everything to do with SMSF.

While it was a slow tax week, on the news front, there were some pieces of news that were worth of being shared.  This week we discuss when do you need to remit the GST on Bartercard receipts (yes, Bartercard is still a thing); remind you that if you are in the construction industry your Annual Taxable Payments Report is nearly due; and finish off on more GST - this time simplified GST.  You ca hear it all:

• The AAT has held that a taxpayer must attribute the GST payable on taxable supplies it made under a barter scheme to the tax period when its trade account was credited for those supplies. see Taxology Pty Ltd v FC of T 2016

• The ATO has reminded tax agentsthat if they have clients in the building and construction industry who paid contractors during 2015-16, their Taxable payments annual report is due by the 28th August 2016.

  Reporting to the ATO is required if all of the following apply: 

  * a business is primarily in the building and construction industry 

  * it makes payments to contractors for building and construction services 

  * the business has an ABN. 

  The ATO considers a business to be a business that is primarily in the building and construction industry if any of the following apply: 

  * in the current financial year, 50% or more of its business income is derived from providing building and construction services 

  * in the current financial year, 50% or more of its business activity relates to building and construction services 

  * in the financial year immediately before the current financial year, 50% or more of its business income was derived from providing building and construction services. 

  The information reported about payments made to building and construction contractors is used by the ATO in its data matching program to detect contractors who have not either lodged tax returns, or included all their income on tax returns that have been lodged. 

• The ATO have released Draft SAM 2016/D38- GST: Simplified Accounting Method Determination (No 38) 2016 for Restaurants, Cafes and Caterers - purchases snapshot method. 

  The Draft SAM notes that an entity may choose to use the simplified accounting method (SAM) stated in Clause 5 of the Draft to work out its input tax credits for acquisitions of trading stock for a tax period if: 

  * it is registered for GST throughout the tax period 

  * during the tax period, it operated a restaurant, café or catering business, and 

  * its GST turnover does not exceed the small enterprise turnover threshold. 

  The steps for this SAM are: 

  * Choose a sample period 

  * Work out the amount of trading stock purchased during each sample period 

  * Work out the percentage of GST-free trading stock purchases for the sample period 

  * Work out the input tax credits the entity can claim for each tax period using the GST-free trading stock purchases percentage. 

  General information about use of SAMs is on the ATO website. 

Welcome back! This week was very much a mixed bag of offerings on the tax news front with some good, and some bad news delivered.  The first part of the podcast we discuss the foreign residen 10% withholding regime, in some detail (but not nealry enough), and then finish on, surprise surprise, SMSF warnings form the ATO.  You can hear it all below:

Foreign Resident 10% Withholding Regime

From 1 July 2016, purchasers who acquire interests in Australian land valued at $2m or more from foreign resident vendors will be required to pay 10% of the first element of the asset's cost base (usually, the purchase price) to the Commissioner of Taxation (Commissioner).

If the purchaser fails to pay this amount on or before settlement, they may be liable to an administrative penalty equal to the 10% they failed to withhold. 

The purchaser will not be subject to the withholding requirement where the vendor obtains and produces a clearance certificate from the Commissioner in respect of transactions involving TARP or company title interests. The clearance certificate, which will be valid for 12 months, must be provided to the purchaser prior to settlement.

Where a vendor is disposing of an indirect real property interest (but not a company title interest), the purchaser may rely on the knowledge condition, or a residency declaration, to exclude the withholding requirement. 

We will look to discuss this in further detail in another blog post or video.

Deductibility of gifts to clients

This determination provides that a taxpayer who carries on a business is entitled to a deduction under s 8-1 of ITAA 1997 for an outgoing incurred on a gift made to a former or current client if the gift is characterised as being made for the purpose of producing future assessable income. 

The outgoing is not deductible where it is of a capital nature, relates to the gaining of exempt or non-assessable non-exempt income, or some other provision of the income tax law prevents it from being deductible.

Example

Sally is carrying on a renovation business. Sally gifts a bottle of champagne to a client who had a renovation completed within the preceding 12 months.

Sally expects the gift will either generate future business from the client or make them more inclined to refer others to her business. Although Sally got on well with her client, the gift was not made for personal reasons and is not of a private or domestic character. 

Deduction for Airport Lounge Membership Fee

This determination provides that an employer is entitled to a deduction under

s 8-1 of ITAA 1997 for annual fees incurred on an airport lounge membership for use by its employees where that membership is provided because of the employment relationship.

The ATO notes that the annual fees will be deductible in full even if there is substantial private use of the lounge membership by employees. 

- See more at: http://www.wiseaccounting.com.au/media/wap027-tax-news-4th-august-2016#sthash.iXqes4a1.dpuf

Exciting tax times this week, as they are every week (sarcasm intended) however, there Episode 26 is very much a listen as in this podcast Tyler discusses several of the weeks changes in detail.  It may even pique your interest as to whether or not the small business restructure is something you should be considering.  Specific items discussed in the podcast are:

• Companies who provide their Australian-based employees the opportunity to participate in an employee share scheme (ESS) have to meet mandatory reporting obligations to both those employees and to the Australian Taxation Office (ATO) and they are 14th of July 2016 and 14th of August 2016 respectively.

• The ATO has simplified the process of claiming fuel tax credits for those claiming less than $10,000 in fuel tax credits a year. From the Business Activity Statement (BAS) period ending 31 March 2016 onwards, where there is a change in the rate during a BAS period, the claim may be calculated by using the rate applicable at the end of the period. Also, to calculate the quantity of fuel purchased in a tax period, the total cost of fuel purchased may be divided by the average price per litre for the BAS period.

• The ATO has updated information on fuel tax credit rates that will apply from 1 July 2016.  For heavy vehicles using taxable fuel such as diesel or petrol, and travel on public roads, the fuel tax credit rate has increased to 13.6 cents per litre from 1 July 2016. For such users, as the road user charge exceeds the rate of duty paid for biodiesel (B100), there is no fuel tax credit entitlement for B100.  The fuel tax credit rate for biodiesel is 1.3 cents per litre from 1 July 2016.

• The ATO has released the following Law Compliance Guidelines relating to small business restructure roll-overs introduced by Tax Laws Amendment (Small Business Restructure Roll-over) Act 2016:

  • ​LCG 2016/2 Small Business Restructure Roll-over: consequences of a roll-over

  • LCG 2016/3 Small Business Restructure Roll-over: genuine restructure of an ongoing business and related matters.

• ​The ATO has reminded tax practitioners that overseas business clients may no longer be subject to GST from 1 October

Welcome back to the Wise Accounting Podcast…it has been a while! This week, Tyler discusses the tax changes that have occurred and will potentially impact your end of year positions.

Below are the specifics of information discussed in the podcast:

1. The ATO cents per kilometre for vehicle travel, up to 5,000km has been clawed back significantly to $0.66 per kilometres regardless of the vehicle type. This is down from as high as $0.78 previously: http://bit.ly/centsperkm
2. Transitional period over for accountants offering SMSF advice. Effective July 1st accountants need to registered in some form with an Australian Financial Services Licence to offer SMSF advice as it stands here is what is permissible and what is not: see website.
3. 4. The supervisory levy for SMSF's will increased to $590 for all funds for the 2016/17 financial year.

Negative gearing. It's such a trendy term we've all heard of it, but is it everything it's cracked up to be? In this podcast I discuss the benefits of having a negatively geared property, and share some of the tips and traps that can be waiting for investors who want such a property. Understanding the cashflow consequences that go along with the taxation ones is something that many people forget, however, thanks to our developed calculators I'll show you how to go in to such an investment with eyes wide open.

Below is a tutorial to see how to access the calculator and how to best use it:

A favour please? If you have found this podcast, or any other episodes useful it would greatly appreciated if you could please a review in the iTunes store " they help with our ranking and I read them all"good or bad!

Welcome back to the Wise Accounting Podcast! Jeff White, the CEO of White Echo, a social media management company, joins us to discuss social media. Where your efforts should be focussed, what the future holds for this medium. If you want to survive in the modern market place you must have a social media presence. It can be daunting understanding the ever changing social media environment, but Jeff shares his pearls of wisdom on how to maximise your online social media presence.