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Saturday 1 December 2012

Claiming GST credits on pre-establishment expenses

Under special rules of the GST legislation, companies may be eligible to claim GST credits for the GST paid on its pre-establishment purchases, once it is established and becomes registered for GST.


These costs may include set-up fees, business registration costs, trading stock and other items such as business premises.

For the company to be eligible to claim credits on such costs, it must meet the following requirements:

    • The purchase must be for the purpose of bringing the company into existence or for carrying on a business after it comes into existence
    • The purchase must not be used to make input taxed sales or for private purposes;
    • The company must come into existence and be registered for GST within six months after the purchase;
    • The purchaser must become a member, officer or employee of the company;
    • The company must fully reimburse the purchaser for the cost of the purchase;
    • The company must not be entitled to a GST credit for the purchase, if it subsequently acquires the thing from the purchaser; and
    • The purchaser must not be able to claim a GST credit for the purchase.

For more information on special rules for claiming GST credits, click here.

Friday 30 November 2012

Company directors - Avoid becoming personally liable for unpaid super guarantee

Generally, where a company does not submit superannuation guarantee by the 28th day after the end of the quarter, it has to lodge a SGC statement and pay the amounts outstanding on behalf of the employees.

After exposure drafts and community consultation, legislation came into effect on June 29, 2012 making directors personally liable to pay penalties for outstanding SGC.

The Tax Office recently released a media statement reminding company directors that they need to ensure that their superannuation guarantee obligations are up to date.

Directors whose company has not paid the superannuation guarantee for the June 2012 quarter and has not lodged the overdue SGC statement with the Tax Office by November 28, 2012 may be personally liable for any outstanding SGC.

Severe penalties may apply where the SGC statement has not been lodged by the due date.

To access the Tax Office SGC statement and calculator, please click here.

Holding a Christmas Party? Watch out for FBT...

With Christmas fast approaching and thoughts turning to Christmas parties and year end celebrations, employers need to remember that the provision of 'meal entertainment' to employees may have FBT implications.

The Tax Office states that 'meal entertainment' includes:
    • The provision of entertainment by way of food and/or drink (e.g. restaurant meals and alcohol); and
    • The provision of accommodation or travel in connection with this entertainment (e.g. taxi fares).
Below is a summary of the tax implications of Christmas functions:

Event
FBT?
Tax Deduction?
Claim GST?
Purchase employee gift costing less than $300
No
Yes
Yes
Purchase employee gift costing more than $300
Yes
Yes
Yes
Party held on premises regardless of cost per head for employee
No
No
No
Party on premises – spouse
Only if benefit is more than $300 per head
Only if benefit is more than $300 per head
Only if benefit is more than $300 per head
Party off premises – employees & spouses
Only if benefit is more than $300 per head
Only if benefit is more than $300 per head
Only if benefit is more than $300 per head
Benefits provided to clients
No
No
No

Super guarantee contributions for individual employees are capped

  1. Superannuation guarantee (SG) contributions are compulsory superannuation contributions made by employers on behalf of their employees. Currently, employers must contribute the equivalent of 9 per cent of an employee’s salary into their superannuation fund.
  2. These contributions are generally required if an employee is aged between 18 and 69 inclusive and their wage before tax exceeds $450 per month [note that the age limit of 70 will be removed from July 1, 2013].

    The maximum amount of SG required is determined using the maximum super contribution base threshold. This threshold specifies the maximum of an individual employee’s gross earnings on which SG has to be paid for each quarter of any financial year.
  3. The maximum super contribution base is indexed in line with the average weekly ordinary time earnings (AWOTE) each income year and the new indexed amount is generally available each May.

    Following is a list of thresholds for the current and earlier financial years:
Income year
Per quarter
2012-13
$45,750
2011-12
$43,820
2010-11
$42,220
2009-10
$40,170

  1. Thus, for the 2012-13 year, the maximum compulsory SG contribution required to be made on behalf of an employee earning over $45,750 per quarter is $4,118 per quarter.

Monday 26 November 2012

Five Benefits to lodging your BAS on time


As we approach the ‘silly season’ many small business owners are busy tackling the day-to-day tasks that come with running a business.  Lodging your BAS on time, not only fulfils your obligations,  it can also be beneficial to your business.


How your business is tracking
Lodging your BAS on time, every quarter, provides you with a snapshot of your business financial position.  From quarter to quarter you will be able to track your business performance & growth. Also you have the added advantage of any discussions with your financial advisers will be on the most up-to-date details of your business.

 
Avoid late penalties
If you don’t lodge your BAS on time with the ATO you may be subjected to a failure to lodge penalty.  The fines can vary in amounts & can be higher if you have poor lodgement history. By lodging your BAS on time, your business will avoid any late penalties.
 

Keep a good lodgement history
If you find yourself in a situation that may require a deferral of payment or if you need to organise s payment arrangement, a good lodgement history will give you an advantage. Lodging your BAS on time means that you maintain a good lodgement history with the ATO.


You will have time to organize a payment arrangement
The ATO understands that debt can be a temporary unforseen problem or a cashflow problem, caused by personal circumstances or a short-term downturn.  To help, the ATO offers assistance to small business experiencing financial difficulties by offering them the option of a payment arrangement.

In some cases the ATO offers payment arrangements for activity statement debt, free of general interest charge for up to 12 months.  These payment arrangements are aimed at providing assistance to small business that have a good lodgement history, but are experiencing short-term financial difficulty.

To find out more about ATO assistance visit www.ato.gov.au/debt or contact the ATO on 13 28 66
 

More time to focus on running your business
The ATO are aware that small business owners have many things drawing their attention.  By lodging on time you can direct your attention back to your business.

Remember, even if you cannot pay on time, you still need to lodge your activity statements by: 
28 October,   28 February,   28 April   &   28 July each year

Sunday 11 November 2012

GST and imported goods

If you are registered for GST and import goods in the course of your business, you can claim input  ax credits for any GST paid on the importation of goods. Most goods imported into Australia will be subject to GST unless:
  • The goods would have been GST-free or input-taxed if supplied within Australia; or
  • The goods qualify for certain customs duty concessions (including goods with a customs value of less than $1,000)
The amount of the GST is 10% of the value of a 'taxable importation' and is payable to The Australian Customs Service.
 
The value of a 'taxable importation' includes:
  • The customs value of the goods;
  • Any customs duty payable;
  • Costs incurred to transport the goods to the port or airport of final destination in Australia, including insurance; and
  • Any wine equalisation tax payable.
You may be able to defer the payment of GST on imported goods by participating in the Deferred GST Scheme which allows you to defer the payment of GST on taxable importations until the first Business Activity Statement you lodge after the goods are imported.

The Tax Office has recently updated its guide 'GST and imported goods'. Click here to access this guide.

Wednesday 24 October 2012

What are the odds of something happening to me, or a loved one?

Although it can be a very unsettling thing to face, there is a significant likelihood of a major health event impacting on us.  The following statistics are provided to emphasise the risks we are all surrounded by.
  1. The odds of a partner dying or becoming totally disabled. Chance of a partner dying before aged 65 is 35 in 100, and of becoming totally disabled before aged 65 is 52 in 100.
  2. You have a more than 60% chance of being disabled for more than 1 month during your working life and a 1 in 3 chance of being disabled for more than 3 months
  3. There are 60,000 strokes each year, (an average of one every 10 minutes).42.5% of strokes result in ‘core activity restriction’ (disability).
  4. 1 in 5 people aged 16 –85 have experienced a mental disorder at some time in any 12 month period
  5. Around 108,000 new cases of cancer are diagnosed each year, (more than the capacity of the MCG) and there are 109 cancer  related deaths every day.
  6. Between 1982 and 2007 there was a 200% increase in the number of new cancer cases diagnosed. Over the same period the population grew around 30%.
  7. Survival rates are increasing for most types of cancer, with the exception of pancreatic, lung and brain cancers. The 5 year ‘relative survival rate’ for all cancers is around 58.4% for males and 64.1% for females.
  8. In 2007 – 08, about 3.5 million Australians had a long-term heart disease

    In 2010, a study by Lifewise found that  95% of families didn’t have adequate levels of insurance. One in five families are likely to be impacted by the death of a parent, a serious accident or illness that renders a parent unable to work. The typical Australian family will need to cope on half or less of their income as a result of underinsurance, creating unexpected financial pressures on top of a serious health event and putting significant strain at a very difficult time.

    Imagine being in a position to not have to face financial ruin if you or a loved one were to suffer a serious health problem.  Take the worry away by speaking to Mark.  Mark will review your life insurance needs with you, and provide cost effective ways to protect you and your loved ones from the perils that life can sometimes throw up.  We are happy to offer a no cost and obligation free meeting to discuss your particular needs.

    Please contact Mark Felton at Lindale Insurances on 03 9848 5933 to discuss.
.
 

Professional help with planning permit and subdivision

Going through planning permit and VCAT? Need help with subdivisions? Council giving you hard time? Need professional advise. Please read on.....

David started as a local government planning officer with the Mornington Peninsula Shire Council in 2001 and has since worked with the City of Boroondara, Shire of Yarra Ranges (Team Leader), the City of Yarra, and most recently the Shire of Baw Baw. In 2005, David established Quelch Town Planning and worked as a private planning consultant engaged in a variety of land use and development projects, particularly lodging planning permit applications and VCAT representation. Working in urban fringe and inner city municipalities, both as a local government planner and planning consultant, has enabled David to gain knowledge and experience in broad spectrum of planning related fields. His trademark is hard work, honesty and a passion for planning. 
David Quelch worked as an Environmental and Planning Compliance Officer for the Yarra Ranges Council for a number of years. During this time, David audited numerous planning permits to ensure that the use and/or development complied with the endorsed plans and permit conditions. The audit often revealed that the land use and/or development did not comply with the endorsed plans and permit conditions and a Penalty Infringement Notice may be issued and enforcement action taken by Council.
Similarly, David investigated complaints and other cases regarding breaches of the planning scheme. Regularly, land owners undertake certain uses and buildings and works without a planning permit when a planning permit is required under the planning scheme. Under these circumstances, the land owner may be issued with a Penalty Infringement Notice, and Council may also seek a conviction at the Magistrates Court or an Enforcement Order from VCAT.
If you have been contacted by your local Council regarding any of the above planning compliance matters, it is essential that you seek professional advice and assistance to potentially avoid costly fines, a criminal conviction, and an enforcement order requiring a particular use to cease or building/s to be removed or other costly remedial action to be undertaken. Quelch Town Planning has the distinct advantage of having experience in both Statutory Planning and Planning Compliance and can work with Councils to resolve these issues by acting on your behalf through mediation, applying for a planning permit or amendment for retrospective approval, or other appropriate measures.
Should you have further questions, please contact David Quelch on 0410 535 043 or send him an e-mail

Monday 17 September 2012

Cloud Accounting – Three Different Solutions


Cloud computing is helping bookkeepers & business owners. Providing us with better interaction, productivity gains by cutting down manual data entry and realtime accounting. New systems also allows for collaborative communication between Accountants, Bookkeepers & Owners of business. There is also financial savings on infrastructure & associated costs. However a good internet connection is required to get the most advantage of these new systems.

As of today, there appears to be 3 different implementations of using the “internet” or the “cloud” to access accounting datafiles:

  1. Browser based:   Accessible through most internet browsers, nothing special is stored on the local machine, all data and the program is provided to you from the providers servers. This requires an internet connection to access. Typically there doesn’t appear there is an ability to do a datafile backup to access the data offline. To maintain business records then either you must retain access to the providers servers or extract the data and reports and save it locally. There is no ability to work without an internet access. What is available in this space: XERO, MYOB LiveAccounts, Reckons CashBook Online
  2. ASP / Hosted (Terminal Server type arrangement):   Accessible when the local machine has the ‘client' connection program ie “Remote desktop connection”. The data and program is provided to you from the providers servers, however typically the program and datafile could also be copied to your local machine and you could work with the file (by copying it) locally, giving you the ability to work either online or offline. This model is simply an internet based connection to running the program on a provided server. A backup of the data could be stored on the provided online servers or the backup could be stored locally. To maintain business records then you backup or copy the datafile locally and ensure you have a program that remains usable. You cannot work on the provided computers without an internet connection, if you have a copy of the program installed locally and copied the datafile to your local machine you could then work locally. This would require you copying the file back to the provided computer at some point. Reckons Quickbooks Online or by using your own ASP arrangement. MYOB version is a hosted or ASP licence to your MYOB product on a third party ASP host
  3. Synched Desktop:   Accessible through the program installed on the local machine, all data is stored on the provided internet server and also a synchronised copy of the file is stored on the local machine. The concept is that you will “normally” work with an internet connection and all processing is made directly into the data that is on the provided server, behind the scenes the program will synchronise the “online” data with the local copy. However if the server is not available or the internet is not accessible then you can, if you must, work on the local copy (normally after a planned “checkout”) and synchronise (or overwrite) the server copy when you do have the internet connection. A backup of the datafile should be made and stored locally, which can then be restored either online or offline. To maintain business records keep a backup of the datafile locally and keep the program installed locally. MYOB AccountRightLive will provide this style of cloud computing

Backup in the cloud world
The “Provided server” does backups but……In each case above, the provided server will be (or should be) doing their backups and have redundancy in their server arrangements. However we also suggest you have local copies of your data in some form

Ultimately the business is required by law to have their business records for up to 5 years, so ultimately it is up to the business to maintain access to the detail. Today's internet based world continues to show cases of internet hacking, server breakdowns, redundancy plans that don’t kicking when required, identity theft (login theft or breaches) resulting in loss of online data etc .We remain of the opinion that best practice requires a copy of your business records to be periodically retained locally.

Multi-use
Multiperson access can be provided in each of these situations, subject to your agreement with the datafile/program providers and also the providers of the server.

“Anywhere / Anytime” Browser based requires a browser on any computer (easy). ASP requires the ASP program “Client” application in order to access the host server. Synch’d desktop requires the computer to first download the application and then to connect to the server. All are arguably anywhere / anytime but with different levels of ease.

Fairwork – Workplace Myths Fact or Myth


MYTH    I can test out a new employee by asking them to work an unpaid trial
FACT     If someone is working for your business you must pay them wages. You must also give them any other conditions they’re entitled to under the National Employment Standards (NES) & any applicable modern award or enterprise agreement.There is no such thing as an unpaid trial. You can ask a prospective employee to demonstrate a skill that is required for the job, for example a touch typing test, or asking them to make a coffee. However, if they perform work they have to be paid for it.

MYTH    Employees have to work for 12 months before they can take any annual or personal leave
FACT     Under the National Employment Standards, employees start accruing leave as soon as they start work. This means that employees can take paid annual leave at any time as agreed with you, even if they have worked for you for less than 12 months. If an employee is sick, they must be paid sick leave as long as they have enough leave and they have given notice and if required, appropriate evidence.

MYTH     I can fire an employee without notice during their probation period
FACT      Under the National Employment Standards, employees who have been working for less than 12 months must get at least 1 weeks’ notice. Certain employees aren’t entitled to notice including casuals, fixed term employees and employees whose employment is terminated because of serious misconduct. You should also check the modern award or any agreement that applies in case it provides a greater entitlement

Monday 3 September 2012

Setting up opening balance for CREDITORS (Quicken)

When you set up a new Supplier (Creditor) in QuickBooks, there is the facility to add an opening balance to the supplier record, as at a date that can be selected from the calendar.

By entering a figure on the supplier record, what QuickBooks is doing behind the scenes, is generating a bill. This bill can somewhat be edited, the name, the date, the amount etc but a tax code cannot be added to the tax column.

If the business is registered for GST on an accruals basis, this is fine because the GST would have been picked up in the previous accounting system. However, if the business is registered for GST on a cash basis, then once this bill is paid, the GST should be reported – and the GST figure is not split from the total expense.

Another point to consider is that the opening balance may be made up of more than one outstanding bill and may cause havoc if you are paying per invoice, reducing the one opening balance amount, but having no concept of aging of the creditor, or individual bill totals. Instead of using the opening balance feature on the supplier record, redo any outstanding bills in the new data file as at the date that it was originally generated. If the business is registered on a cash basis, add the appropriate tax code to the tax column. There is no need to add the tax code if the business is registered for GST on an accruals basis.

There would still be original documentation, so not much detail is required when the bill is re-entered. This would then give accurate aging reports as well as report the GST on purchases correctly.

Setting up opening balance for DEBTORS (Quicken)

When you set up a new Customer (Debtor) in QuickBooks, there is the facility to add an opening balance to the customer record, as at a date that can be selected from the calendar.

By entering a figure on the customer record, what QuickBooks is doing behind the scenes, is generating an invoice. This invoice can somewhat be edited, the name, the date, the amount etc but a tax code cannot be added to the tax column.

If the business is registered for GST on an accruals basis, this is fine because the GST would have been picked up in the previous accounting system. However, if the business is registered for GST on a cash basis, then once this invoice is paid, the GST should be reported – and the GST figure is not split from the total sale.

Another point to consider is that the opening balance may be made up of more than one outstanding invoice and may cause havoc if the customer is paying per invoice, reducing the one opening balance amount, but having no concept of aging of the debtor, or individual invoice totals. Instead of using the opening balance feature on the customer record, create a QuickBooks item called OB (opening balance) positing appropriately in the general ledger. Redo any outstanding invoices in the new data file, using a single line item (OB) to pick up each invoice as at the date that it was originally generated. If the business is registered on a cash basis, add the appropriate tax code to the tax column. There is no need to add the tax code if the business is registered for GST on an accruals basis.

There would still be original documentation, so not much detail is required when the invoice is reentered. This would then give accurate aging reports as well as reporting the GST on sales correctly.

Entering customer opening balances and historical sales (MYOB)

As part of the initial setup of your company file, you need to enter customer opening balances & historical sales. This will enable you to enter customer payments against sales that were made prior to the time you began to use your MYOB software. The date you began using your software is known as the conversion date, & historical sales you made for which you are yet to receive payment are known as pre-conversion sales.

Note: For supplier opening balances and historical purchases the principles & process are the same. Historical sales and purchases will also not generate Baslink figures, so your BAS must be done manually for these periods.


Enter the opening balance of your Trade Debtors account 

This account represents the amount owed to you by your customers. To do this:
  1. Go to the Setup menu & choose Balances then choose Account Opening Balances. The Account Opening Balances window is displayed
  2. Locate the Trade Debtors account, then in the Opening Balance column enter the sum total of what your customers owe you as at the time you began to keep your records using MYOB software
  3. Click OK.

Enter previous sales

Entering the sales you made prior to using your MYOB software which are still unpaid, in other words your pre-conversion sales, will allow you to record payments subsequently received against these sales. To do this:
  1. Go to the Setup menu and choose Opening Balances then choose Customer Balances. The Customer Balances window is displayed
  2. Click Add Sale. The Historical Sale window is displayed
  3. Enter the details of the pre-conversion sale as per the following example

  4. Click Record
  5. Click OK to the alert regarding cash reporting
  6. Repeat steps 2 - 5 for all your pre-conversion sales  Note: You need to enter historical sales for all customers that had pre-conversion sales which were still unpaid as at the time you began to use your MYOB software
When the total value of the pre-conversion sales you have entered equals the opening balance figure for the Trade Debtors account, the following message is displayed: Congratulations! Your total outstanding invoices equal the balance of your linked receivables account. You’re ready to use the Sales Command Centre.