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Business Solutions Winter 2021



BUDGET – Wrap for Business

The Budget was relatively quiet on the business front this year, with only a few notable measures:

Full Expensing Extended

Temporary full expensing will now be available until 30 June 2023. It was originally due to end 12-months earlier on 30 June 2022. Temporary full expensing allows eligible businesses with aggregated annual turnover or total income of up to $5 billion to deduct the full cost of eligible depreciable assets. Assets must be acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.

The 12-month extension will provide eligible businesses with more time to access the incentive, including projects that require longer planning times and those affected by COVID-19 related supply disruptions. It assists cashflow by enabling businesses to claim depreciation deductions immediately, rather than potentially having to depreciate assets over a number of years.

Temporary Loss Carry-Back Expanded

Temporary loss carry-back will also be extended by one year. This will allow eligible companies to carry-back tax losses from the 2022-23 income year to offset previously taxed profits as far back as the 2018- 19 income year.

Companies with aggregated annual turnover of up to $5 billion can apply tax losses incurred during the 2019-20, 2020-21, 2021-22 and now the 2022-23 income years to offset tax paid in 2018-19 or later years. The tax refund will be available to companies when they lodge their 2020-21, 2021-22 and now 2022-23 tax returns.

ATO Power to Pause Debt Recovery Action

In a little publicised but welcome announcement made in this year's Budget, taxpayers who are indebted to the ATO but who have a dispute over their assessment at the AAT, will be able to apply to the AAT to have ATO debt recovery action paused or modified. The proposition is that recovery action would be stayed until the underlying dispute is resolved by the AAT.

The announcement is silent as to what happens where a taxpayer is unsuccessful before the AAT and decides to appeal to the Federal Court – presumably, the government considers that taxpayers with the means to pursue that avenue will be able to make their own arrangements with the ATO. The ATO has for many years allowed most taxpayers to pay only 50% of the tax in dispute in the case of unresolved objections or appeals, although legally the full amount shown on the notice of assessment is payable by the due date.

This has applied even where the amounts involved are quite large. The ability to defer the full amount of tax in dispute for small businesses represents a significant improvement over this practice, and also takes the decision out of the hands of the ATO. These new powers will apply only to small business entities – i.e. individuals and other entities with an aggregated turnover of less than $10 million per year. Taxpayers can apply to the AAT for a pause/ modification in relation to appeals that are lodged with the AAT from the date of Royal Assent of the relevant legislation.


Super Guarantee Rate Increased

Super Guarantee Rate Increased

The superannuation guarantee rate (currently at 9.5%) will increase to 10% from 1 July 2021, as part of the already legislated plan to increase it to 12% over the coming years as follows:



Further on Super Guarantee, in the Federal Budget, the Government also abolished the exemption for low-income earners.

The Superannuation Guarantee $450 per month eligibility threshold will be removed from 1 July 2022.

 As a result, employers will be required to make quarterly SG contributions on behalf of such low-income employees earning less than $450 per month (unless another Super Guarantee exemption applies).


These other exemptions include:

· people you pay to do work of a domestic or private nature for less than 30 hours per week

· non-resident employees you pay for work they do outside Australia

· some foreign executives who hold certain visas or entry permits

· members of the army, naval or air force reserve for work carried out in that role employees who opt out of receiving super if you're 

· covered by an SG employer shortfall exemption certificate in relation to the employee for the quarter

· Employees temporarily working in Australia who are covered by a bilateral super agreement – you must keep a copy of the employee's certificate of coverage to verify the exemption.




 

 

COVID Vaccine Rollout

 


COVID Vaccines and the workplace


As the COVID-19 vaccination rollout continues throughout Australia - with the aim of offering every adult a vaccination by the end of October. There are many unanswered questions from employers around how the vaccine sits with the workplace health and safety (WH&S) obligations. To fill this knowledge vacuum, in February Safe Work Australia published some initial guidance as follows:


How the vaccine works

For background, COVID-19 vaccines will help protect people by either preventing or reducing symptoms of COVID-19 in the person who has received the vaccine. At this early stage it is too early to tell if the COVID-19 vaccines will stop a vaccinated person from being infected with the virus.

This means that a vaccinated person may unknowingly carry and spread the virus to others around them, including workers and others in their workplace. For this reason, employers must continue to apply all reasonably practicable control measures even where everybody in your workplace is vaccinated.


Do I have to ensure my workers are vaccinated under WH&S laws?

Under WHS laws, you have a duty to eliminate or if not possible, minimise, so far as is reasonably practicable, the risk of exposure to COVID-19 in the workplace. You may not be able to completely eliminate the risk of workers being exposed to COVID-19 while carrying out work. However, you must do all that is reasonably practicable to minimise this risk and vaccination should be considered as one way to do so in the context of a range of COVID-19 control measures.

To reduce risks such as COVID-19 in the workplace, you should:

· undertake a risk assessment for your business (more information is available on the risk assessment page)

· consider the available control measures and how they will help manage the risks of COVID-19, including any available vaccines, taking into account available evidence.

· consult with workers and health and safety representatives about COVID-19 and relevant control measures, including the COVID-19 vaccines (more information on your consultation options are available on the consultation page)

· determine what control measures are reasonably practicable for you to implement in your workplace (more information on the meaning of reasonably practicable is available on the risk assessment page).

While the Australian Government is not making vaccination mandatory, states and territories may do so for some industries or workers (for example, those who work in aged care) through public health orders. More information is available on the public health orders page.

Can I require customers and visitors to the workplace to prove they have been vaccinated as a condition of entry?

It is unlikely that WHS laws require you to ask customers and visitors for proof of vaccination. However, you might still want to require this as a condition of entry to your premises. Before you take action to impose this kind of requirement, you should seek advice as there may be privacy and discrimination issues that apply.

Can my workers refuse to come to work because another worker isn't vaccinated?

Under WHS laws, a worker can only cease or refuse to carry out work, if the worker has a reasonable concern, that to carry out the work would expose the worker to a serious risk to the worker's health or safety from an immediate or imminent exposure to a hazard. In most circumstances, a worker will not be able to rely on the WHS laws to cease work simply because another worker at the workplace isn't vaccinated, however this will depend on the circumstances.

There is currently insufficient evidence about the impact of COVID-19 vaccines on the transmission of

COVID-19. Therefore, there is no reason why workers who are currently attending workplaces with other people should stop doing so because of the vaccine rollout. For vulnerable workers, you should continue to implement other working arrangements where you reasonably can, such as working from home.

You need as a business owner, to understand what activity level needs t o be met that incorporates a fair return to yourself as the owner commensurate with your financial investment in the business as well as the business risk you are taking. Again set activity levels at a granular level to assist you to drive achievement of the KPI levels set.

 

 

 

 

 

 

 

COVID-19 Stimulus Package - Apprentices & Trainees

In line with the second economic response package, the federal government is supporting small business to retain their apprentices and trainees. Wages subsidies will be paid to eligible employers equal to 50% of their apprentices/trainees wages from 1 January 2020 to 30 September 2020. Employers who are eligible will be reimbursed up to a maximum of $21,000 per apprentice/trainee.

Eligibility

  • The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee as at 1 March 2020.
  • Has re-employed a displaced apprentice/trainee, who was employed by a small business at 1 March 2020 but who has since been released from their apprenticeship/traineeship by their employer.
  • Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.
    Employers will be able to access the subsidy after an eligibility assessment is undertaken by an Australian Apprenticeship Support Network (AASN) provider.

Timing

Employers can register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020. Further information is available at:

  • The Department of Education, Skills and Employment website at: www.dese.gov.au
  • Australian Apprenticeships website at: www.australianapprenticeships.gov.au For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN) provider.
For further information on how to apply for the subsidy, including information on eligibility, contact an Australian Apprenticeship Support Network (AASN) provider.

A $550 fortnightly Coronavirus supplement, to commence from 27 April for an initial six month period, will be paid to eligible recipients.

Eligibility

  • Permanent employees who are stood down or lose their employment, sole traders, the self-employed, casual workers and contract workers. This payment is in addition to the JobSeeker Payment under expanded accessibility
  • Existing and new recipients of the JobSeeker Payment, Youth Allowance JobSeeker, Youth Allowance Student, Parenting Payment, Farm Household Allowance, Special Benefit

If you're already receiving one of the welfare payments listed above, you don't actually have to do anything. Services Australia will automatically pay the Coronavirus Supplement to eligible recipients each fortnight.

If you're not currently receiving welfare, you'll need to apply online at MyGov using a Centrelink account or contact Services Australia by phone.

If you require further information on any of the above, require assistance in working out your eligibility or help lodging an application, please call our office on (03) 5032 9422



COVID-19 Stimulus Package – Boosting Cash Flow Employer Payments

The Government is providing up to $100,000 to eligible small and medium sizes business, and not-for-profits that employ people, with a minimum payment of $20,000.

On 12 March 2020, the government announced the Boosting Cash Flow for Employer's measure. The measure initially provided up to $25,000 to business, with a minimum payment of $2,000 for eligible businesses.

The government has now enhanced this measure as of the 22nd of March 2020 as part of the second economic response package. Under the enhanced scheme, employers will receive a payment equal to their PAYG withheld on employees' wages, with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.

Above all this, an additional payment is also being introduced in the July to October 2020 period. Eligible entities will receive an addition payment equal to the total of all the boosting cash flow for employer payments they have received.

Eligibility – Boosting Cash Flow for Employer payments

Small and medium sized business entities and not for profit organisations with aggregated annual turnover under $50 million and that employ workers will be eligible.

  • The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020
  • Eligible employers that withhold tax to the ATO on their employees salary and wages will receive a payment equal to the amount withheld, up to a maximum payment of $50,000
  • Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax
  • The payments will only be available to active eligible employers established prior to 12 March 2020.

Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020. Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements.

To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (300 per cent) in the March 2020 activity statement. The minimum payment will be applied to the entities' first lodgement.

Eligibility – Additional payment

To qualify for the additional payment, the entity must continue to be active.

For monthly activity statement lodgers, the payment will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgement of their June 2020 , July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000)

For quarterly activity statement lodgers, the payment will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgement of their June 2020 and September 2020 activity statements (up to a total of $50,000)

If you require further information on any of the above, wish to check if your eligible or need assistance lodging your activity statements to ensure you receive the credits, please call our office on (03) 5032 9422. As the situation changes we will continue to relay the information to our clients and community.

For more general information please follow the link to the Treasury Fact Sheet

COVID-19 Stimulus Package - What it means for you?

 

We have already seen how COVID-19 has impacted our everyday living from our daily grocery shop, all the way through to our local community, sporting events & tourism industry.

We have seen supply chain disruptions making it difficult for businesses to provide the usual goods and services, as the flow of imported and exported goods from China and other countries are being delayed or halted.

That means our local building and supplies store might not have the materials we need for the weekend DIY job, or bigger yet, the materials we need for building homes & commercial properties.

In addition, our local farmers are having difficulty sourcing chemicals for their upcoming cropping season with some of these chemicals being on order since December.

It also means your local café or restaurant might not have access to the same everyday products, as the demand for food continues to grow.

Ultimately, COVID-19 is having a domino effect not only on our individual health but on our small business economy.

So, what's out there to help small businesses?

On 12 March 2020, the government announced a package of measures to help the economy withstand and recover from the economic impact of coronavirus.

The following measures may be introduced to government legislation in the coming weeks.

-          Increasing the instant asset write-off threshold from $30,000 to $150,000 for eligible businesses with an aggregated annual turnover of less than $500 million.

-          A time limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions. An instant deduction of 50% of the cost of an eligible asset on installation will apply.

-          Boosting Cash Flow for Employers by providing up to $25,000 to assist with staff wages. The payment will be delivered by the ATO offsetting the amount of your PAYG Withholding tax payable for the first 6 months of the calendar year.

Facebook is also offering $100 Million in cash grants and advertising credits. The grants will be available for up to 30,000 eligible small businesses in over 30 countries.

The big 4 banks are providing fee-free redraws on loans, early access to term deposits, deferred payments on business credit cards, waiving merchant fees and deferring home loan repayments.

This is a tough time for everyone but we need to keep in mind that our local businesses still need our support.

If you require further information on any of the above, please call our office on (03) 5032 9422. 

This is a developing situation changing daily and sometimes even hourly as more relevant information come to light we will keep you informed.

Is bad cash flow keeping you awake at night?

It is common to see profitable businesses struggle with cash flow difficulties.  Small Business owners need to understand the ebbs and flows of their business and plan ahead.

The ideal situation for a business owner is to be able to pay all suppliers by due dates.  Fall behind and the grapevine always seems to spread faster with bad news. A bad reputation for paying bills has many repercussions including difficulty in obtaining supplies and can also lead to a downturn in customers.

It's common that many small businesses fail during their infancy.  This is due to new business owners spending cash flow without planning for future liabilities including Tax, GST, PAYG Withholding and Superannuation commitments.

It is often the second year in business that hurts most as you can get through the first year without paying any income tax.  But when it catches up, it catches up two fold as you will be required to pay your prior years tax in full, and start paying instalments toward the year you are currently in.

The key is to understand and manage your cash flow, and budget!

For assistance in the area of cash flow – get in touch with your accountant!  Many see accounting fees as an additional cost of operating their business, rather than seeing it as an investment in your business reaching its full potential

 

Fact – 88% of sales is repeat business. It's at least 10 times easier to get another sale from an existing customer than a new prospect.

I have heard the talk over the past 5 years or so that online businesses are to blame for a decline in business profits. Change is here and has been for some time and will not stop. Change is now apart of everyday life. Technology, Cloud Technology, online shopping and society as a whole continually change & all business sectors need to adapt to continue to remain relevant.

Below are some brief ideas that anyone can adopt to ensure they remain relevant, competitive and profitable:

  1. Treat all your customers will the utmost respect. Greet all customers with a smile and show them that you care. 1st impressions last.
  2. Can't beat them join them. Customers will tend to look up goods & services on the internet. Your business should have a website. You can be open 24 hours a day.
  3. Websites need updating regularly as well. The more updates you do to your website the more google hits you wil receive. A stale website is a negative experience for a customer.
  4. Entice customers into your business. You need to devise sales and marketing strategies.
  5. Problem solve for your customers. If you don't have an immediate product or answer for your client assure them that you will source a result. Create relationships with business partners.
  6. Up sell. Teach your staff to up-sell. Do you want fries with that?
  7. Up sell. Package products together. 6 pack of beer & some chips.
  8. Training, training, training. You need to invest time & attention to all staff. They are a reflection on the business. Continued training, reviews and new challenges are also required.
  9. Praise. Thank customers for their support. And importantly don't forget to thank your staff as well.
  10. Listen more & talk less! 2 ears 1 mouth!
  11. Have devised systems and processes for all aspects of your business.
  12. Bean counting. Review your gross profit & overheads regularly using cloud accounting to identify issues and fix before they become a bigger problem.
  13. Always deliver on your promises. Do what you say and remember to follow up requests.

Change occurs each day and that is why it is important to review your business on a continual basis. We all know how busy owners are working in their business & that is where GMG can help. We can become your business coach to assist you working on your business and to ensure you remain relevant.

The 101 for First Home Buyers - Part 2

 

Buying your very first home can be a very exciting process, but also an expensive one.  It's very important to fully understand what you are getting into before making what is likely to be your most expensive purchase so far in your life.  Here are some helpful hints that may make the process a little more stress free.

Building your dream home?

From the 1st of July 2017, the Andrew's government will double the First Home Owners Grant (FHOG) from $10,000 to $20,000, payable when a contract is signed for a newly established home. First home buyers may also eligible to receive 50 – 100% off their stamp duty on the purchase of their land. Lenders will take these amounts into consideration when calculating the required deposit for a home loan.

For example, a $200,000 property could be bought with a $20,000 cash deposit and the $20,000 FHOG – a total deposit of $40,000 or 20%. Such a situation might save you from having to pay Lenders Mortgage Insurance, as the deposited amount is 20% or more of the property. This is a huge saving to first home buyers as more funds may be available to put towards to the property build.

This is expected to help over 6,000 Victorians purchase their first home and to build and live in their local communities. Note: the grant is only available to first home buyers building new homes valued up to $750,000 in regional areas (ie. not Melbourne).

Buying Established Home?

As of the 1st of July 2017, the Andrews's Government will axe Stamp Duty for First Home Buyers on both new and established homes under $600,000. First home buyers purchasing a property between $600,000 and $750,000 will receive a tapered discount.  For example, stamp Duty on a $300,000 home will drop from $5,685 to NIL for first home buyers – this gives first home buyers the advantage of being able to put more money into their new property.

What is Stamp Duty?

 Stamp duty is a charge which is applied by the state governments in relation to the transfer of land or property. As such, each state has its own rules - here we have discussed those which apply in Victoria.

Low Deposit Home Loans

Financial institutions generally required deposits to be around 20% of the property value. This is to provide confirmation to your lender that you have the ability to save and are able to meet your monthly mortgage repayments.  In an ideal world you would be a banks model candidate. Depending of the price of the property, first home buyers may not be able to afford the 20%, and that's okay because there may be more options available to you.

Lenders will often allow individuals to borrow above 80% of the property value to own their dream home faster. They do this by adding a one off payment to the loan - lenders mortgage insurance (LMI). The aim of this payment is to protect the lender (not the borrower). The lower the deposit on your property, the higher the risk you become to the bank. This payment is a once off premium, with the payable amount entirely depending on the amount being borrowed. Some lenders may allow the borrower to add the cost of their premium to their monthly loan repayments, - meaning no upfront cost.

Other factors to Consider

Its getting harder and harder for Australian's to save for their first home. These few changes have made it somewhat easier although we still need to consider the underestimated additional costs.

 Items such as home and contents insurance, legal fees, moving costs, inspection reports, council rates and transfer fees need to be well-thought-out. It's important that these additional costs are taken into consideration, as well as knowing exactly how you will make the monthly repayments on you property. 

It is important to shop around; each lender will have different packages to attend to your needs and financial capabilities. Lastly, ask questions, this is so important! It's not everyday that individuals go and purchase homes and it isn't something which you will naturally understand the process of. As such, there is no such thing as a silly question!

If you are interested to learn more about this topic and how it may affect you, you can call or book an appointment on (03) 5032 9422.



 
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