Increase of the Instant Asset Write Off Threshold from $30,000 to $150,000

Businesses with a turnover of less than $500 Million (up from $50 Million) will be eligible for this.

• Eligible assets purchased from 12 March 2020 to 30 June 2020 that are under $150,000 will be eligible for the instant asset write off (examples include a concrete tank for a builder, a tractor for a farming business, and a truck for a delivery business).
• Eligible assets that are over the $150,000 will be eligible to claim 50% of the cost as an instant asset write off cost in the year of purchase until 30th June 2021 with the balance to be depreciated at the depreciation rates applicable in future income years.

Boosting cash flow for Employers

Businesses with a turnover of less than $50 Million will be eligible for this.

PAYG Withholding Incentives

• An incentive of up to $100,000 (up from $25,000 previously announced) with a minimum of $20,000 (up from $2,000 previously announced) for anyone who employs staff between 1 January 2020 and 30 June 2020.
• Businesses will receive a 100% (up from 50%) rebate of their PAYG Withholding reported on their BAS or IAS for this period.
• The payments to eligible employees are stated to be made within 14 days of lodgement of the March quarter BAS or IAS (i.e. for the period ending 31 March 2020). It is not clear how this will apply to those who lodge a monthly BAS for January and February 2020. Presumably, the PAYG withheld for these months would also be considered with no further payments to be made once the $100,000 cap is reached.
• These incentives have also been extended to include not-for-profit charities.

Eligible Apprentices

• Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020.
• Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice of trainee.
• Employers will be reimbursed up to a maximum of $21,000 per eligible apprentice or trainee ($7,000 per quarter).
• The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee. The apprentice or trainee must have been in training with a small business as at 1 March 2020.

Targeted support for the most severely affected sectors, regions and communities

• $1 Billion to support those sectors, regions and communities that have been disproportionately affected by the economic impacts of the Coronavirus, including those heavily reliant on industries such as tourism, agriculture and education.
• This will include the waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks.
• Additional assistance to help businesses identify alternative export markets or supply chains. Targeted measures will also be developed to further promote domestic tourism. Further plans and measures to support recovery will be designed and delivered in partnership with the affected industries and communities
• On a case-by-case basis, the ATO will look to provide administrative relief for some tax obligations for people affected by the coronavirus outbreak.

Other announcements that were made last week

• The big four banks announce assistance package for those affected by COVID -19, including deferring loan repayments on small business loans for six months. Banks have also passed on varying cuts to interest rates on these loans so check with your bank as to what your revised rate will be.
• Government to supply a 50% guarantee on small business loans up to $250,000 to keep small businesses alive.
• An interest rate cut by the Reserve Bank of Australia (RBA) to bring the cash rate down to 0.25%, the lowest in Australian history.
• Additional relief being provided temporarily for those businesses facing insolvency and bankruptcy including changes to when creditors can issue a statutory demand. Directors will be temporarily relieved of their duty to prevent insolvent trading for any debts incurred in the ordinary course of the company’s business. This change will also apply for six months.
• Reducing the minimum pension drawdown rates by 50% for this financial year as well as the next financial year.
• Allowing early access to superannuation for those financially affected by the virus up to $10,000 for both this year and the next financial year, which will be tax-free.
• In Victoria, Payroll tax waived in 2019-20 for eligible businesses with taxable wages up to $3 million.
• Additional $750 stimulus payment provided after 13 July 2020 for certain income support recipients.

Parliament meet this week and the above items announced by the Morrison Government are to be tabled so they can be legislated. These are challenging times for our clients and yes, I will use the term ‘unprecedented’. We hope you and your families stay safe during these difficult times.

For any questions in relation to the above, feel free to contact our office.

We have also included some helpful links should you seek further information:

Click here for further information from treasury.gov.au

https://treasury.gov.au/coronavirus

https://www.safeworkaustralia.gov.au/covid-19-information-workplaces

https://www.sro.vic.gov.au/frequently-asked-questions-response-covid-19

The post COVID-19 Stimulus Package – What this means for your business appeared first on HBT Advisory.

Being in business with someone, whether work colleagues or friends getting together is a like a business marriage and therefore you need something in place that can be used to help solve disputes.

The best time to prepare a Shareholders/Partnership agreement is while you are “in love”. This is usually when you are about to start a business or taken the reins from someone else in the business and you are “in love” with being a business owner.

What is a Shareholders Agreement?

A Shareholders / Partnership Agreement covers the funding, structure, management and direction of the business. It outlines the responsibilities and obligations of the business owners and provide guidance should there be disputes between business owners.

Why do we need one and when should we get one?

It is designed to deal with the issues that may arise during the life of a business, by determining in advance, how such issues should be dealt with (hence my comment above about doing it “whilst you are in love”).

The process of developing a Shareholders Agreement and the content included will differ between each entity after discussion and input involving all the relevant partners/shareholders and their relevant advisors. There is no ‘one size fits all’ approach.

What other measures are in place should there be a dispute?

It is a good opportunity for you and your business partner/s to have a think about what you personally want from your business and then collate and collaborate those thoughts with your other business partners.

It is ideal to discuss the items below openly and freely to keep communication lines open. You will get an understanding of each other and the direction that you personally see the business going very quickly!

Common features of a Shareholders/Partnership Agreement include:

• How do we add or remove partners/directors/shareholders?
• What key business decisions that require a unanimous decision?
• Frequency and timing of Directors Meetings (should be regular with an agenda and notes taken)?
• Expectations, roles and responsibilities of a partner/director (or principle of a shareholder) within the business.
• Dividend/Drawing policy & loan accounts within an entity.
• Consequences in the event of death or permanent/temporary disability of partners/directors/principal in the event of death. (There are insurances available to protect this, however we would need to refer you to a business insurance specialist).
• Determining goodwill calculations on entry and exit Agreements need to cover in what circumstances a goodwill payment is made and how any such payment is to be calculated.
• Restraint requirements and notice period on retirement. Care needs to be taken to ensure that any restraint requirements set out under an agreement are enforceable, and do not invalidate the whole agreement.
• Requirement for capital on the happening of a defined event. There may be a need for capital injections into the entity in periods of declining business growth or insufficient economic activity.

A pre-agreed resolution process is extremely important and can save the parties to a Shareholders’ Agreement a lot of time, money and inconvenience in the unwanted event of a major dispute.

On too many occasions, business owners don’t consider a Shareholders Agreement, usually taking the “she’ll be right” approach or the “we have been mates for years” or “I’m sure we can work it out if there is a problem”.

HBT Advisory works with clients to discuss planning opportunities for the business, but also works with the key individuals that are involved within that business. A Shareholders Agreement is a legal agreement and therefore is required to be prepared by a solicitor, however having these conversations with your Accountant can be important to the content of the Shareholders Agreement.

Feel free to contact Andrew to arrange a meeting (either at the office or at your business premises) to discuss the strategic direction of your business.

The post Do you and your business partners have a Shareholders Agreement? appeared first on HBT Advisory.

This is Part One of our two-part series and we will focus on Individuals in Part Two.

Here are a few things to consider leading into 30 June:

Pay it Forward!

If you incur the expense before 30 June 2018, then it can fall into the 2018 Financial Year. Some examples of this can include:

• $20,000 instant asset write off (if you meet the small business entity conditions)
• Office Supplies and Stationery
• Employee Superannuation payments

$20,000 Instant Asset Write Off (set to end on 30 June 2018)

Small business entities with a $10m turnover threshold for the 2018 Financial Year have access to the $20,000 instant asset write-off for new or second hand depreciating assets, if they have been bought and installed ready for use before 30 June 2018. This is a good opportunity for businesses to purchase those assets required to run their businesses and be able to depreciate them fully in the 2018 Financial Year.

Any assets over the $20,000 threshold can be pooled in a general small business pool and depreciated at 15% in the first year, and 30% in the years after that.

With a Federal Budget set to be released on the night of Tuesday, 8 May we will have any further developments about any changes to this posted on our website and Facebook page.

Pay employee super contributions before 30 June

To claim a tax deduction for superannuation for the 2018 Financial Year, the superannuation contribution needs to be received by the employee’s super fund before 30 June. It can take a few days from the time you pay the superannuation contribution to being received by the employee’s super fund so be mindful of this when making the payment.

If you are using the ATO’s small business clearing house, the superannuation contributions are considering to be received when the clearing house accepts them (so you don’t have to worry about when the employee’s super fund receives them!)

Review your debtors

Do you have any debtors that just have not paid? Have you shaken them (not literally, but figuratively) as much as you can to get the money they owe you? If you aren’t getting any traction with the debtor, then these debtors need to be written off. To be able to claim a deduction for a bad debt, each bad debt must be written off before 30 June and have been previously included in the last financial year as income.

Tip: Keep documentation and correspondence of your attempts to chase this debt.

Review your business structure

Whether you are operating your business as a sole trader, partnership, company or a trust, it is a good opportunity to review your business structure as you may find that it may no longer be suitable for your business. This may depend upon when you are growing/expanding or scaling down your business.

For small business entities (that is entities with less than $10 million turnover), you can change your business structure without being subject to capital gains tax on the transfer of assets. This allows businesses to consider what the most suitable business structure would be to continue operating their business without any serious tax consequences.

Between now and 30 June, you can establish that new business structure ready to commence trading for 1 July 2018.

These are a few of the examples that could be available to your business, however it is not always a “one size fits all” approach and we ask that you seek specific advice tailored to your circumstances.

Should you wish to discuss your business and are looking at taking some steps leading into 30 June to help minimize your tax, please contact our office for a free no obligation meeting to discuss your business.

The post What does your small business need to do before 30 June to save tax? appeared first on HBT Advisory.

The Australian Taxation Office (“ATO”) are cracking down on unpaid superannuation by employers and have the data to track outstanding super far better than they have before.

Under the current laws, there are some strict laws which could see a Director become personally liable to pay the unpaid super obligations that the company would have been liable to pay.

When is an employer required to pay superannuation?

Minimum superannuation entitlements must be paid for all eligible employees by the 28th day of the month following each quarter of the financial year.

Once superannuation becomes overdue, the company is required to pay the unpaid superannuation entitlements to the ATO, together with penalty interest and an administration fee per employee per quarter. This can add up to quite a substantial penalty based upon the number of employees you have!

From a tax perspective, the employer can only claim a tax deduction for super payments that are made for eligible employees in the financial year you make payment.

When is a director liable?

A director’s obligation to pay the unpaid super is the day after the payment due date.

This can have quite an impact not only on the current director/s of the business but also an incoming director to a company. This means that it is vitally important that prior to becoming a Director of a company that you know that the superannuation reporting requirements and payments of super have been made on time to reduce your personal exposure to any unpaid super obligations.

However, the ATO must issue a Director Penalty Notice (“DPN”) before it is able to commence recovery proceedings against a Director. Depending on the circumstances of the unpaid super, it may be either a ‘lockdown’ or ‘non-lockdown’ DPN.

What is the difference between a Non-lockdown and a Lockdown DPN?

The non-lockdown DPN is issued in circumstances where superannuation is unpaid and requires that within 21 days the director either pays the outstanding superannuation or comes to a payment arrangement with the ATO. If neither of these can be achieved within the 21 days, the employer may have to look at appointing a voluntary administrator or liquidator.

The lockdown DPN has much further ramifications as the only way to deal with the matter is payment of the debt in full. If payment and reporting obligations have not been complied with and have remained unpaid and unreported for three months after the due date, directors may expect to receive a lockdown DPN and the option of appointing a voluntary administrator or liquidator is no longer available, making the director/s personally liable.

How can I avoid this happening to my business?

You are best to avoid all of these headaches where you can and ensure that super payments are made on time so that interest and penalties are avoided.

The law does not favour the disorganised or uninformed director. A DPN may be avoided if super is paid on time or the unpaid entitlements are reported by lodging an SGC statement by the reporting due date.

It is important to be ensuring that:

• There is an allowance made in cashflow budgets to ensure the super obligations are met before the due date.
• You use tools such as Small Business Clearing House and other clearing houses through software (cloud or desktop) to keep track of what super is to be paid.
• You lodge the necessary reports through the clearing houses to ensure the super amounts for each employee are reported.

There are many ways to keep on top of this in your business and we recommend a clearing house for making payments for your employees super. A cloud-based accounting package can help facilitate this process so feel free to contact the office to discuss this further.

The post Director’s Personal Liability For Unpaid Employee Super appeared first on HBT Advisory.

We do hope all our teachers are enjoying their term 3 school holidays.

The Royal Melbourne Show, Grand Final week and a number of other things going on make it an enjoyable time to be out and about.

Now, the last thing on your minds would be talking tax, but are you aware of the HECS-HELP benefit that you may be eligible for?

Although the HECS-HELP benefit was removed on 1 July 2017, you are still eligible to go back and claim the last two financial years (2016 and 2017 Financial Years). These HECS-HELP benefits could see you claim a reduction on your HECS-HELP debt of up to $3,623!

The good news is that it is not just available for Education courses, it is also available for courses in Mathematics, Statistics or Science, Nursing, Midwifery and Early childhood education. So teachers, tell your nursing friends as well!

What’s the catch?

Well, there isn’t a catch, but there is a criteria you need to meet regarding your course as well as your current employment as a teacher.

For further information, feel free to visit the Study Assist http://studyassist.gov.au/sites/studyassist/payingbackmyloan/hecs-help-benefit/pages/nursing-and-education

or alternatively contact our office to discuss further.

Enjoy the rest of your school holidays teachers!

The post Could you be eligible to receive a HECS-HELP rebate? appeared first on HBT Advisory.