Month: October 2019

GST margin scheme

Posted on by Adam_Admin

The margin scheme is a way of working out the GST you must pay when you sell property as part of your business. The amount of GST normally paid on a property sale is equal to one-eleventh of the total sale price. If the margin scheme is used, the GST is calculated on the difference between the sale price and your purchase price of the property or the property’s value. You can only apply the margin scheme if the sale of the property is taxable.

The margin scheme has been designed by the ATO to help reduce the amount of GST that would normally be payable on sales of new property. It is not an automatic concession and the sale must be eligible for it to be applied.

The margin scheme can be applied to subsequent property sales depending on the original date of purchase and how GST was applied at that time. Property purchases prior to 1 July 2000 are eligible, as the property had not been subject to GST previously. For property purchases after 1 July 2000, the margin scheme may only apply to a subsequent sale when:

  • The original seller of the property wasn’t registered for GST.
  • The property was purchased as an existing residential premises.
  • The original seller sold the property as a GST-free supply and was eligible to use the margin scheme, or;
  • The seller sold the property and applied the margin scheme at that time.

There are limitations to the margin scheme in some situations such as; inheritances, the supplier being a member of a GST group or the property is GST-free (going concern or farmland). In these situations, if the supplier wasn’t eligible to use the margin scheme, the scheme cannot be used when selling the property.

When purchasing a new residential property with the margin scheme being apart of the property transaction, withhold 7% of the contract price, including GST and the market value of non-monetary consideration. This amount will then be paid to the ATO at settlement.

What to do when your employees don’t get along

Posted on by Adam_Admin

Workplace tension between employees can be difficult and uncomfortable to manage, but ignoring them will only lead to the situation worsening. Harmony between staff is key to a positive work environment, as disputes between employees will often affect everybody, not just those directly involved. Discord can disrupt productivity, make an awkward environment for team members and increase stress levels. Identifying areas that can be improved and effectively managing issues will get your workplace harmonious in no time.

Recognition:
Acknowledging that the conflict exists at an early stage can prevent the situation from getting worse. Being open and honest with your employees can encourage open communication from the employees in return. Recognising the conflict on an authority level could also let the employees acknowledge there is an issue that they should work towards resolving.

Define the problem:
Communicate with the affected employees to understand the problem and see if any solutions are available. Acknowledge the interests and emotions of both parties and question them about the issue and the impact it is having on work and relationships.

Encourage them to work it out:
It would be ideal for the employees to communicate openly and resolve the conflict themselves as mature and professional workers. You provide guidance points for them such as suggesting one-on-one meetings between those involved.

Identify resolution points:
Finding areas of agreement and problem-solving through generating possible alternatives can help resolve the dispute. Determine what necessary actions should be taken, and ensure that the involved parties agree on the resolution points.

Monitor:
It can be helpful to schedule a follow-up meeting with the affected employees after a few weeks to assess how they are going and if the solutions are working. This allows for any further communication and problem-solving to take place.

What employment type is best for your business?

Posted on by Adam_Admin

An employment contract establishes the terms and expectations of an employee before they start work. It outlines everything the employee has to know about working for you, including employee rights, working hours and performance expectations in the role. Each employment type has different entitlements and obligations that must be met by both the employer and employee. Before hiring a new worker, take the time to look at what each employment type would mean for you and your business.

Full-time employees:
A full-time employee will work an average of 38 hours a week and is a permanent employee. The specific working hours in a week are agreed upon in the employee contract. Under the National Employment Standards (NES), there are 10 minimum entitlements that need to be provided to employees;

  • Maximum weekly hours.
  • Requests for flexible working arrangements.
  • Parental leave and related entitlements.
  • Annual leave – 4 weeks of annual leave are given every year based on ordinary hours of work. Leave that is left over at the end of each year carries over to the next year.
  • Personal/carer’s leave, compassionate leave and unpaid family and domestic violence leave. Employees receive 10 days of this leave every year.
  • Community service leave.
  • Long service leave.
  • Public holidays.
  • Notice of termination and redundancy pay.
  • Fair Work Information Statement.

Part-time employees:
Part-time employees work on average less than 38 hours a week, usually at regular times, and are permanent employees. Part-time employees have the same rights as full-time workers on a proportional basis.

Casual employees:
A casual employee does not have a definitive commitment from an employer about how long they will be employed for or the days/hours they will work. A casual employee doesn’t get paid sick or annual leave, can end employment without notice, has a higher pay rate than equivalent full-time or part-time employees due to ‘casual loading’, two days unpaid carer’s leave and two days unpaid compassionate leave per occasion, five days unpaid family and domestic violence leave in a 12-month period and unpaid community service leave.

Treasury Law Amendment for super measures moves forward

Posted on by Adam_Admin

The Treasury Laws Amendment (2018 Superannuation Measures No.1) Bill 2019 has passed both Houses of Parliament and reached royal assent on 2 October 2019. First announced in the 2018-19 Budget, the Bill allows eligible individuals, whose income exceeds $263,157 and have multiple employers, to nominate wages from certain employers to not be subject to the superannuation guarantee (SG).

Individuals with more than one employer, who expect that their compulsory super contributions will exceed the annual concessional contributions cap for a financial year, will be able to apply for an exemption certificate to release some of their employers from their SG obligations. Individuals will still need to receive SG payments from at least one employer.

From 16 October 2019, eligible individuals will be able to download an application form from the ATO. The application will need to be submitted at least 60 days before the start of the quarter in which you wish to receive the exemption. The lodgment period for the quarter commencing 1 January 2020 has been extended. Applications lodged on or before 18 November 2019 will be accepted.

The application form provides the Commissioner of Taxation with the information required to make an assessment. This includes which employers the exemption certificate will apply to and the quarter in the financial year for which the exemption is sought. Exemption certificates may be issued for multiple quarters within a financial year but cannot cover more than one financial year.

With an exemption certificate, an employer will not need to make SG contributions to avoid liability for the SG charge, however, it does not actively prevent the employer from making super contributions on behalf of the employee. The certificate does not change the employer’s obligations under a workplace agreement or an employer’s agreement with their super fund.

Employees will need to talk to their employers before making an application as this arrangement and any changes to payments will need to be negotiated.

Breaking down business industry codes

Posted on by Adam_Admin

A business industry code (BIC) is a five-digit code you include on relevant tax returns and schedules that describes your main business activity. BICs come from the Australian and New Zealand Standard Industrial Classification (ANZSIC) codes and are added to by the Australian Tax Office (ATO) for tax return reporting purposes.

Employers must use the correct business industry code on their tax returns to ensure their return is lodged in the right category. Using the correct code for your business helps to reduce the risk of being incorrectly targeted for compliance activities, avoids processing delays and ensures employers receive services and information relevant to their business type.

The business industry code describes the main activity of the business. This can change over time if your business diversifies its products and services. The code is broken down into sections:

  • ANZSIC system is first divided into 19 divisions, described by one letter (A to S).
  • Divisions are broken down into subdivisions numbered with two digits. There are a total of 96 subdivisions.
  • Subdivisions are broken down into groups. Each group is numbered with three digits, with the first two digits derived from the subdivision to which it belongs.
  • Groups are broken down into classes. Each class is numbered with four digits, the first three digits derived from the group to which it belongs.
  • The ATO adds a fifth digit to this system to provide further specifics.

Employers who have changed their business’ products and services can use the ATO’s business industry code tool to check their code before lodging their tax return. If your code has changed, inform your accountant before lodging. Once you have the right code, you can also use small business benchmarks to see how well you are performing compared to competitors in your industry.