Month: November 2019

Time limit on GST refunds

Posted on by Adam_Admin

Small businesses entitled to refunds of GST may not be aware of the four-year time limit on claiming those refunds. Your entitlement to a GST credit ends four years from the due date of the earliest activity statement in which you could have claimed it.

GST refunds are claimed under the indirect tax concession scheme (ITCS), which also covers luxury car tax (LCT), wine equalization tax (WET) and excise. They are a form of “outstanding indirect tax refunds”, which are tax refunds that are entitled to the taxpayer but are yet to be claimed. “Outstanding indirect tax refunds” can be claimed in the following cases.

Refund of a net amount for a tax period:
This applies to those that have yet to lodge an activity statement for a tax period. Small businesses that have GST entitlements that amount to $2,000, (which exceeds the net GST, WET and LCT liabilities for that period $1,500), are able to claim an outstanding indirect tax refund of $500.

Refund of an overpayment of a net amount:
Due to a clerical error, a business owner reports and pays $4,600 net GST for a tax period instead of the actual amount of $4,060. The excess amount of $540 is an outstanding indirect tax refund which the business can claim.

Refund due to an underreported initial net refund entitlement:
A business claims a net GST refund of $3,000 for the tax period and receives the refund. Afterwards, however, it is realised that the actual refund entitlement was $3,200, the excess $200 represents an outstanding indirect tax refund that can be claimed.

Refund of indirect tax relating to an importation:
$100 GST is overpaid for an importation. This $100 represents an outstanding indirect tax refund that can be claimed.

Preventing cybercrime on your business’ social media

Posted on by Adam_Admin

Having a digital presence nowadays is crucial to getting the most out of marketing your business. However, being online puts you at risk of being a target for cybercrime, which means that you and your customers are at risk of being scammed, hacked, harassed or stalked. Business owners have legal responsibilities to ensure that their business and customer information is safe. For this reason, it is vital that you take precautions when putting anything online.

While social media platforms such as Facebook and Instagram have policies in place to prevent people being victim to cybercrime, it is still possible for hackers to dodge these measures and attack your business. It is therefore important that you implement your own safety measures to reduce the risk of being targeted.

Many cybercriminals target business’ social media accounts to get access to a large following of people they can trick or manipulate. It is crucial that your business account has a strong password consisting of at least 8 characters, with a mix of upper and lower case letters, numbers and symbols. Ensure that only authorised users have access to the business’ social media accounts.

Create a social media use policy for your staff to ensure that they are aware of the consequences and risks of sharing account information and being careless with social media handling to reduce the risk of misuse and security breaches. It is also useful to provide a cybersecurity incident response management plan to help your business prepare for security breaches and know how to respond to them quickly and effectively to prevent them from escalating.

When planning a social media campaign, think about ways you can prevent your campaign from being hijacked by hackers to keep you and your followers safe. For example, if your campaign is a competition that involves participation from your followers such as them uploading a photo, think about ways to keep them safe from hackers. Perhaps you can provide guidelines for entering the social media competition, such as discouraging them from geotagging their location and ensuring they don’t have their house or any other personal details evident in the picture.

Moving your business online 

Posted on by Adam_Admin

In order to keep up with the growing demands of digital accessibility and convenience, many businesses decide to partially or completely move their business online. This can help with extending customer reach beyond the geographical boundaries of a physical business, offering customers easy access to your products or services, scaling and growth, and reducing costs on rent, staff, and marketing. Here are some steps to get started on building the digital side of your business:

Plan:
Shifting from a physical business to an online one can be stressful and often puts you in an awkward transition period where you and your customers are unsure of how to go about the usual business while everyone is adjusting to the change. Having a strategic plan of how you’re going to go about the change will encourage a smooth transition and help you avoid any unexpected issues and complications that can slow down business processes and annoy customers.

Set up a website:
The first thing you should do is create a fully functional website. Register a domain name that is original and represents your brand, as this will be part of your online identity. Your potential clients will often be getting their first impression of your business from your website, so it is important that you have an effectively executed layout, user interface and design. On top of your products or services, make sure your website includes key information about your business, such as an about page, contact details, FAQs, social media links, or call to action prompt. Make sure your website is continually updated to provide fresh, relevant contact and correct information.

Build a social media presence:
If you’re not already on social media platforms, or if your social media presence is weak, focus on creating engaging and relevant social media content for your audience. This can help you build a stronger relationship with your clients, share content they would find interesting and useful, and establish a brand image.

Keep customers updated:
Clients can get frustrated and feel uncared for if they are not told about important changes to your business that will affect them. Whether you’re moving partially or completely online, it is important that you keep your clients updated. This can be done through a simple email, having a sign in-store, and verbally telling them when you interact with them.

Approaching difficult conversations at work

Posted on by Adam_Admin

Difficult conversations are apart of every aspect of life, including work. Employers and employees all face having to initiate difficult discussions at some point during their working life and avoiding these conversations can increase the potential for issues in the workplace or in extreme cases, legal claims.

Sensitive topics may initially be uncomfortable to approach but they can end up being important learning experiences for everyone involved. Addressing issues head on can allow people to work better together, understand different perspectives, practice empathy, and grow as individuals. As this is easier said than done, here a few ways you can prepare for a difficult conversation in the workplace.

Prepare:
Going into a difficult conversation prepared can help you cover the areas ou wish to discuss and possible solutions you can present. This will help you present issues in a calm and positive way. Before approaching the conversation, ask yourself questions like;

  • What is the purpose of the conversation? Establishing to yourself what you wish to achieve can help you direct the conversation to an outcome.
  • What attitude are you going to have? Depending on what outcome you are looking for will dictate what mood to enter the conversation in. Going in with a heated or negative stance will intimidate the person you are talking to whereas a gentler attitude will encourage conversation.

While planning can help you prepare for a difficult discussion, completely scripting your interaction can often create a disadvantage for you. Overly prepared responses can appear disingenuous, instead, prepare questions that can elicit discussion.

Listen:
The point of difficult conversations is to resolve an issue that is affecting the workplace. Listening to the person you are discussing this with is the first step to fixing the problem. Communication in the workplace needs to go both ways for a cohesive environment so listening to the other persons’ point of view or suggestions will reflect positively on you and the situation.

Solve:
Don’t leave a difficult conversation unresolved. This will only mean having to revisit the same issue at a later point, only this time everyone involved will have preconceived ideas of how the discussion will go and the lack of outcome. Having a clear plan moving forward helps ensure accountability and acts as a reference should something arise again.

Commutation authorities for SMSFs

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Commutation authorities are issued by the ATO when a member of a SMSF has exceeded their transfer balance cap. A commutation authority will be issued after the member has received an excess transfer balance determination alerting them they have passed the cap.

The transfer balance cap is currently $1.6 million and is applied to the combined total of all superannuation accounts held by an individual. To receive a commutation authority, a SMSF member has either;

  • Not commuted the excess amount in the determination in full by the due date, or;
  • Has made an election for the ATO to send a commutation authority to their fund to have the excess amount commuted.

After receiving a commutation authority, individuals must then;

  • Pay a superannuation lump sum by way of commutation. The commutation authority will detail the amount that must be commuted from a specified income stream for that SMSF member. Or;
  • Choose not to comply with the commutation authority because the member is deceased or the ATO issued in relation to an income stream that is a capped defined benefit income stream.
  • Send the ATO a transfer balance account report (TBAR) stating the details of the commutation or why you have chosen not to comply with the commutation authority.
  • Notify your member in writing that you have complied or not complied with a commutation authority.

This will need to be done within 60 days of receiving the commutation authority. Though the Commissioner of Taxation issues the authority, they do not have the power to grant an extension of time to respond. If you fail to commute or respond to the ATO regarding the authority, the income stream will stop being in retirement phase, affecting the fund’s entitlement to exempt current pension income. You may also be liable for penalties or subject to compliance action.

Limiting tax deductions for holding vacant land

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On the 28 October 2019, The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Bill 2019 received royal assent. The new tax law creates limitations for deductions related to the expenses of holding vacant land from 1 July 2019. This is likely to affect those who acquire land for investment purposes and begin developing for rental investment purposes.

The amendments will only apply to holdings on ‘vacant land’, meaning that it will not apply to any land that has a substantial and permanent structure in use or ready for use, or is a residential premise that is lawfully able to be occupied. Land is considered vacant if both of these are not true.

The changes will not apply to vacant land held by ‘excluded entities,’ which are:

  • Corporate tax entities.
  • Managed investment trusts.
  • Public unit trusts.
  • Superannuation plans other than self-managed superannuation funds (SMSFs).
  • Unit trusts or partnerships where all members are of the excluded entities listed above.

The law will also be inapplicable if:

  • Structures affected by natural disasters or similarly exceptional situation.
  • The land is in use or available for use in carrying on a business by the taxpayer or their affiliates, connected entities, spouse or child under 18.

The land is in use or available for use for business purposes under an arm’s length rental arrangement.

How to create an effective social media calendar

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Having a well-planned and engaging social media presence is nowadays a core aspect of marketing. With 77% of consumers more likely to buy from brands they follow on social media, it is important to plan your content ahead of posting to maintain a successful social media campaign, avoid any mistakes and ensure posts will help you achieve your business goals. Creating an effective social media calendar will often involve four key areas that can help you make the most out of your social media presence.

Key information:
This is normally presented in a table format that provides details of what is being posted, such as the date and time for posting, content type, hashtags, the image and text to be posted and what platforms it is being shared on. It is also useful to integrate an evaluation section you can fill in after each post has been made that provides information such as reach, engagement, shares, comments, reaction, follower increase/decrease. This can be done on apps like excel, or specialised social media calendar templates online.

Social media audit:
Before planning out the rest of your content, look back on your current social media pages and see which posts and platforms are working the best, how often you’re posting, what the goals of each network are, what should be changed or improved, and how people are responding to the content.

Plan content strategy:
It is a good idea to have a strategic content plan rather than just sharing whatever you feel like. This can involve determining which topics your content can cover and when, investigating the needs and wants of your audience and catering to them, and what order posts should be shared in.

Content check:
When planning future content, remember that posts that may be relevant now may not be so appropriate by the time you actually post them. Check if any of the content is out of date and whether it can be updated or should be deleted. For more variety, try planning posts around a special event or holiday that is coming up to make content more interesting.

Are you prone to emotional overspending? 

Posted on by Adam_Admin

Online shopping is available 24/7, making it easy to indulge in retail therapy whenever you’re feeling low. With many consumers using PayPal or saving their credit card details on Google, spending money is so easy that it may not feel like a big deal when clicking the ‘order’ button. While treating yourself every once in a while is normal, making poor and impulsive spending decisions often occurs when you’re in a bad frame of mind.

A 2019 comfort spending report by Mozo found that 81% of Australians are spending money as something to do when they are bored, or to make themselves feel better when they are stressed or anxious. Nationwide, comfort spending reaches $25.5 billion a year, which averages out to $1,430 a year.

The findings showed that 47% of people spent money when they were bored, and 45% of people spent money when they were stressed or anxious. Another study by MyState Bank found that 62% of Australians said that their emotional state was enough to drive them to make purchases.

Here are some ways you can deal with comfort spending:

  • Get into the habit of doing a different activity when you’re bored or stressed. There are many hobbies that would benefit your mental and physical health more than shopping, such as taking a walk or talking to a friend.
  • Give yourself some financial freedom. If you immediately implement an over-restrictive budget, you might be tempted to splurge after feeling deprived. Try to find a balance between treating yourself every now and comfort spending as a habit.
  • Recognise your comfort spending behaviour and set a budget for it, instead of eating into your savings
  • Avoid using a credit card, or if you do, make sure you pay the balance off in full each month.

The ATOs ABN cleanup 

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The ATO has announced that in October 2019, they will be focusing on the bulk Australian business number (ABN) cancellation program. This program will be cancelling ABNs that the ATO is confident are inactive in an attempt to create cohesion within the Australian Business Register (ABR).

There are a few areas the ATO looks into to find indications of inactive ABNs, such as;

  • Whether there are outstanding lodgements from the ABN holder.
  • Information from the ABN holder’s tax return and other lodgments.
  • Third party information.

In the event the ATO mistakenly cancels your ABN that is still in use, you can;

  • Reapply for the same ABN if your business structure remains the same, or;
  • Apply for a new ABN if the business structure has changed.

Last year, a Treasury consultation paper that examined a reform of the ABN system suggested periodic renewals for ABNs to ensure information is up-to-date, as well as renewal fees. This was suggested to remind ABN holders to review registrar rules and any changes that might be implemented.

As business data is used for various reasons, such as emergency services and government agencies during times of natural disaster to identify where financial disaster relief may be needed or other agencies when assessing potential receivers of grants, it is important for the ABR to be up to date with active ABNs.

Travels with my SMSF

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Travelling overseas for an extended period of time is an exciting adventure and a chance to have a break. However, SMSFs do not take a break when you do, which is why it is important to ensure everything remains in line while you are away.

Trustees that travel or relocate overseas for an extended period may find the residency status of the SMSF, compliance status and ability to receive tax concessions to be affected. SMSFs that breach the residency rules are taxed at the marginal rate of 49% rather than the concessionary rate of 15%. Before travelling, trustees must consider the implications to their SMSF.

Fund recognised as an Australian fund:
The SMSF will be recognised as an Australian super fund provided that the setup of and initial contributions have been made and accepted by the trustees in Australia, however, the trust deed does not have to be signed and executed in Australia. An SMSF that has been established outside Australia will also satisfy the test if at least one of the fund’s assets are located in Australia.

Management and control of the fund carried out in Australia:
The central management and control of the fund must usually be in Australia. This means the SMSF’s strategic decisions are regularly made, and high-level duties and activities are performed in Australia, such as formulating the investment strategy, reviewing the performance of the fund’s investments and determining how assets are to be used for member benefits. Generally, funds will meet this condition even if its central management and control is temporarily outside Australia for up to two years. If central management and control of the fund is permanently outside Australia for any period, it will not meet this requirement.

In the event that the “ordinarily” requirement cannot be satisfied, consider;

  • Appointing a legal personal representative with an enduring power of attorney.
  • Winding up the fund and roll benefits over into a retail/industry fund.
  • Converting the SMSF into an APRA fund.

Active member test:
An “active member” is a contributor to the fund or contributions to the fund have been made on their behalf. To satisfy this test, the fund will need to have active members who are Australian residents and hold at least 50% of the total market value of the fund’s assets attributable super interests, or the sum of the amounts that would be payable to active members if they decided to leave the fund.