In this Issue:
- FREE Tax Blaster Session
- Changes to the ‘backpacker tax’
- ATO data matching programs
- Deductibility of expenditure on a commercial website
- Take the Triple-A Approach in Workplace Conversations
- Easier GST reporting for new small businesses
- Finland Facts Trivia
- How to Kick-Start a B2B Marketing Strategy
- Memorable Quotes…
- Can a UPE be written off and claimed as a bad debt?
- Laughter is the best medicine
- FREE Copy of Our Book
I hope you are not falling in with the ‘worry crowd’ of small business owners in 2017. According to a recent survey of MySmallBusiness (Fairfax Digital) major areas of concern cited by readers were cash flow problems and lack of finances which are very concerning for 27 per cent of those surveyed, followed by the cost of insurance and superannuation/retirement plans.
Sure, the broader economic circumstances can affect business performance, however, it’s important to pay attention to getting the basics right in your business first, before you start blaming external factors.
Business success is not just about being on top of your administrative and financial management and targeting your marketing to the right slice of customers. It’s also about keeping your finger on the pulse of your customer world and having the capacity to adapt and change your product or services mix to stay ahead of your competition.
If you’ve hit a tough patch in your business and can’t quite find the way out, we’d be only too happy to show you the way. Simply arrange a FREE Tax Blaster Session with our Team and find more ways to take the worry out of your business.
If you have any questions about the items published in this newsletter, please don’t hesitate to give us a call on 07 3399 8844… or stop by at our office for a coffee. We’re never too busy to sit down and talk to you.
Best regards from the Team
FREE Tax Blaster Session
There are a number of ways that individuals and small business operators can legally slash their tax. We find that many of our clients only begin to realise after a chat with one of our professional tax agents how much tax they could have saved if they had taken action earlier.
Don’t delay it any longer and book in for your FREE 20-minute Tax Blaster session. We’ve got limited spaces available for people who want to increase their earnings, save on taxes and put more money into their retirement fund.
Find out NOW how you could be making more money for your retirement and facing less financial stress now and in future.
Call our Team on 07 3399 8844 to book your FREE meeting NOW.
Changes to the ‘backpacker tax’
From 1 January 2017, tax rates changed for working holiday makers who are in Australia on a 417 or 462 visa (these rates are known as ‘working holiday maker tax rates’).
If a business employs a working holiday maker in Australia on a 417 or 462 visa, from 1 January 2017, they should withhold 15% from every dollar earned up to $37,000, with foreign resident tax rates applying from $37,001.
Businesses must register with the ATO by 31 January 2017 to withhold at the working holiday maker tax rate.
If they don’t register, they will need to withhold at the foreign resident tax rate of 32.5% (and penalties may apply to businesses employing holiday makers that don’t register).
Editor: Therefore, if this affects you and you haven’t registered by the time you read this, please contact us immediately!
Also, note that businesses already employing working holiday makers will need to issue two payment summaries (with different rates) this year – one for the period to 31 December 2016, and a second for any period from 1 January 2017.
ATO data matching programs
Editor: The ATO has announced that it will be undertaking the following two data matching programs.
Ride Sourcing data matching program
The Ride Sourcing data matching program has been developed to address the compliance risk of the registration, lodgement and reporting of businesses offering ride sourcing services as a driver.
Editor: ‘Ride sourcing’ = Uber (basically).
It is estimated that up to 74,000 individuals (‘ride sourcing drivers’) offer, or have offered, this service.
The ATO will request details of all payments made to ride sourcing providers from accounts held by a ride sourcing facilitator’s financial institution for the 2016/17 and 2017/18 financial years, and match the data provided against their records.
This will identify ride sourcing drivers that may not be meeting their registration, reporting, lodgement and/or payment obligations.
Where the ATO is unable to match a driver’s details against ATO records, it will obtain further information from the financial institution where the driver’s account is held.
Credit and debit card and online selling data matching program
The ATO is collecting new data from financial institutions and online selling sites as part of its credit and debit cards and online selling data-matching programs, specifically:
- the total credit and debit card payments received by businesses; and
- information on online sellers who have sold at least $12,000 worth of goods or services.
The ATO will be matching this data with information it has from income tax returns, activity statements and other ATO records to identify businesses that may not be reporting all their income or meeting their registration, lodgement or payment obligations.
Deductibility of expenditure on a commercial website
The ATO has released a public taxation ruling covering the ATO’s views on the deductibility of expenditure incurred in acquiring, developing, maintaining or modifying a website for use in the carrying on of a business.
Importantly, if the expenditure is incurred in maintaining a website, it would be considered ‘revenue’ in nature, and therefore generally deductible upfront.
This would be the case where the expenditure relates to the preservation of the website, and does not:
- alter the functionality of the website;
- improve the efficiency or function of the website; or
- extend the useful life of the website.
However, if the expenditure is incurred in acquiring or developing a commercial website for a new or existing business, or even in modifying an existing website, it would generally be considered capital in nature (in which case an outright deduction cannot be claimed).
Editor: Please contact us if you want any guidance about the ATO’s latest views on this important issue.
Take the Triple-A Approach in Workplace Conversations
Good meetings and workplace discussions follow some basic rules. Every time you have an informal chat or a significant conversation with a co-worker, customer, or manager, remember these tenets of effective communication—all of which start with the letter A:
Acquire. Before you start talking, acquire the information you need to conduct the conversation properly. Do your homework and have some questions ready. Don’t go into the discussion unprepared.
Acknowledge. Before starting in on your agenda, acknowledge that the other person has points to make, too. Listen carefully and ask questions to identify his or her issues.
Act. When the discussion is over, act on what you’ve learned. If you’ve made a commitment, follow up. If you’ve promised action, follow through. Don’t let a good talk go to waste by failing to take the next step.
Easier GST reporting for new small businesses
The ATO has notified taxpayers that, from 19 January 2017, newly registered small businesses have the option to report less GST information on their business activity statement (BAS).
Therefore, if you plan to register for GST after receiving this Update, we can help you access the reporting benefits of the simpler BAS early.
Editor: From 1 July 2017, small businesses generally will only need to report GST on sales, GST on purchases, and Total sales on their BAS.
Finland Facts Trivia
“Sauna” is the one common English word that is directly taken from Finnish.
How to Kick-Start a B2B Marketing Strategy
The key to having a company’s marketing efforts be a success is having a solid marketing strategy. B2B marketers should use a proactive approach to marketing projects rather than a responsive approach, focus on what they are attempting to accomplish as well as the nature of the customers they want to reach and when, and a plan for successfully achieving the intended result. Happily there are a number of tips that can assist with this endeavour.
One good tip is to immediately set the goals you wish to achieve. The great advantage of marketing in today’s digital age is the sheer number of available options, including social media, online ads, events, email campaigns and webinars, but it is of equal importance to be aware of how capable you are of successfully executing these endeavours. Marketing goals should be specific, achievable, timely, measurable and realistic.
Another good tip is to have a clear timeline for your marketing strategy to reach those goals. This should include deadlines, associated tasks and vital milestones. A clear plan helps you to identify your deadlines, goals and successes will ensure that nothing is forgotten along the way.
Memorable Quotes…
“A day without laughter is a day wasted”
Can a UPE be written off and claimed as a bad debt?
Editor: A ‘UPE’ (or ‘unpaid present entitlement’) arises where a trust makes a beneficiary entitled to an amount of the trust’s income (and therefore the beneficiary may have to pay tax on their share of the trust’s taxable income that year), but that amount has not been physically paid to the beneficiary.
If the beneficiary never receives payment from the trust, they may want to write their entitlement off as a bad debt, and claim a tax deduction.
The ATO has released a Taxation Determination explaining their view that there is no ability to claim a ‘bad debt’ deduction where a beneficiary of a trust writes off as a bad debt an amount of a UPE.
This is because of the technical wording of the tax legislation regarding claiming deductions for ‘bad debts’, which requires the debt (e.g., the UPE) to have been previously included in the beneficiary’s taxable income – however, a beneficiary is not taxed on the UPE itself. Instead, the amount of the UPE is used to calculate the amount to include in their assessable income (and this may be different to the actual amount of the UPE).
Example
Archie Pty Ltd (‘Archie’) is a beneficiary of the Linus Family Trust (‘Linus’), which rents out a property.
In the 2014 income year, Linus’s trust income (made up of net rent) was $25,000, but its net (taxable) income was actually $20,000 (thanks to a ‘capital works deduction’ of $5,000).
Archie was made presently entitled to 100% of the trust income (i.e., $25,000). As a result, it was also assessed on 100% of the net (taxable) income of the trust (i.e., $20,000).
The $25,000 was not paid to Archie (i.e., it was recorded as a UPE) and was invested by Linus in a related entity, but during the 2017 income year it was clear the investment had failed and was now worthless.
Archie was now well aware that Linus was no longer in a position to satisfy the UPE and wrote the $25,000 off as a bad debt.
Can Archie claim a deduction for the bad debt?
No. While the debt is clearly bad and has been written off as such, no part of Archie’s UPE (of $25,000) was included in its assessable income. Rather, Archie included its share of Linus’s net (taxable) income of the trust (i.e., the $20,000) in its assessable income.
Laughter is the best medicine
Proof
A woman went to a lawyer. “My neighbour owes me $500, and he won’t pay up. What should I do?”
“Do you have an IOU for the money?” the lawyer asked.
“No, it was just a promise.”
“Here’s what you do,” the lawyer said. “Write him a letter asking for the $5,000 he owes you.”
“But he only owes me $500,” the woman said.
“And when he writes you back to say that, you’ll have your proof!”
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Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.