Month: September 2022

Insurance & Your Business – Are You Covered?

Posted on by Adam_Admin

Providing your business with insurance is like providing a safety net to a trapeze artist. You hope that you won’t need it, but having it in place adds security and protection if the worst-case scenario should occur.

Your business may require certain types of insurance, depending on the circumstances. These may be because it is required by law (such as workers’ compensation insurance) or because people you deal with may require it to provide something to you.

Other types of insurance are your choice but can be an important way to reduce business risk and protect things like your:

  • business assets (such as equipment, premises and stock)
  • customers
  • employees
  • business owners
  • earnings

Some forms of insurance are required by law.

  • Workers’ compensation insurance is compulsory if you have employees.
    • If you are an independent contractor, you may require your own insurance.
    • If you are a sole trader, you cannot cover yourself as an ‘employee’ with workers’ compensation insurance. So you’ll need to consider your own personal death, illness and disability insurance. You can cover yourself for accident and sickness insurance through a private insurer. This policy will compensate you for the loss of revenue while you recover.
  • Third-party personal injury insurance is compulsory if you own a motor vehicle. This is often part of your vehicle registration fee.
  • Public liability insurance covers you for third-party death or injury and is compulsory for certain types of companies.

Other forms of insurance may be necessary for your business’s needs to provide you with security in the event of incidents (and keep you from having it taken out of your pocket). Keep in mind the following for your business’s purposes.

Personal Or Loss Of Income Insurance

These are personal insurances that cover things that could happen to you. These may include income protection or disability insurance, life insurance, business interruption or loss of profits insurance, or even employee dishonesty.

Stock Products & Asset Insurance

If you have important business assets, property, stock or products you can’t afford to lose, these types of insurance provides cover. This may include building and contents, tax audit, transit goods, farm insurance, etc.

Accident & Liability Insurance

Liability insurance protects you if you are liable for the damage or injuries sustained to another person or property. This is mostly optional, but it’s highly recommended for your business if the possibility of legal action is high. For some industries, liability or professional indemnity insurance is mandatory.

Technology & Cybercrime Insurance

Insurance cover is required to protect against emerging technology risks within businesses. This may include:

  • Electronic equipment insurance will cover your electronic items from theft, destruction or damage.
  • Cyber liability insurance protects your business against cybercrime. This insurance covers the cost of keeping your data secure and the expenses from disrupting your business

Examine each type of insurance and consider if it’s something your business needs. Talk to a licenced insurance broker, business advisor or insurer for advice.

SG Payments & Your Employees – What You Need To Know

Posted on by Adam_Admin

Superannuation payments need to be made to your employees, otherwise, stringent penalties can be implemented that could be financially more devastating to your business than simply paying their super.

Eligible employees must be paid their minimum superannuation of 10.5% of their ordinary time earnings (OTE). By 2025, this is predicted to increase to 12%.

This compulsory payment is called the super guarantee (SG) and is paid at least quarterly.

The current super guarantee percentage is the minimum required by law. You may pay super at a higher rate under an award or agreement.

You must pay the super guarantee charge if you don’t pay the required SG amount by the quarterly due date. This amount will be more than the super you would otherwise have had to pay to your employee and is non-tax-deductible.

To manually work out how much super to pay for a quarter, multiply your employee’s OTE, based on salary and wages paid in the quarter (before tax), by the SG rate. If you’re paying super at a higher rate, use that rate.

Employees who started during the quarter need to have their super worked out based on any salary and wages paid in the quarter.

What Are Ordinary Time Earnings (OTE)? 

Ordinary time earnings (OTE) is the gross amount your employees earn for their ordinary hours of work (before tax). It includes

  • over-award payments
  • commissions
  • shift loading
  • annual leave loading
  • allowances
  • Bonuses

Ordinary hours are the normal hours an employee works unless their hours are specified in an award or agreement.

In the case of casual employees, where determining the normal hours of work changes per week, the actual hours worked by the employee are their ordinary hours of work.

For contractors paid mainly for their labour, the SG is calculated based on the labour component of the contract.

You must pay super on back pay of OTE amounts, even if the employee no longer works for you. If you don’t, you’ll be liable for the super guarantee charge.

Is There A Cap To SG Payments? 

You don’t have to pay SG for your employee’s earnings above a certain limit, which is known as the maximum contribution base. This amount is indexed annually. For the 2022-23 income year, this is currently capped at $60,220 per quarter.

When Do I Not Have To Pay Employees The SG? 

High-Income Earners Who Opt Out Of Super

You do not have to pay super for high-income earners working for multiple employers who ask you not to pay the super guarantee to them. If this is requested, you must have an SG employer shortfall exemption certificate for the employee (sent by the ATO after the employee has applied to opt-out).

International Workers

You do not have to pay super for:

  • non-resident employees who work outside Australia
  • some foreign executives who hold certain visas or entry permits
  • 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 prove the exemption.

If you’re a non-resident employer, you do not have to pay super for resident employees for work they do outside Australia.

Self-Employed

If you’re self-employed as a sole trader or in a partnership, you do not have to pay super guarantee to yourself.

The Proposed Electric Vehicle FBT Exemption On Everyone’s Minds

Posted on by Adam_Admin

You may have heard a lot of buzz in the news regarding electric cars. What was once a car for the elite is now a far more common sight on the streets. Electric cars are becoming hot commodities, with one-third of electric vehicle sales in Australia occurring within New South Wales alone.

There have been numerous tax questions regarding the purchase of electric vehicles, which the government has discussed since their election in May.

Draft legislation (Treasury Laws Amendment (Electric Car Discount) Bill 2022) was released last month by the Federal Government to follow through with their election commitment to allow certain electric cars to be Fringe Benefits Tax (FBT) exempt.

In very broad terms, a business that acquires an electric car (with the car being used for private purposes/parked at private residences) will subject the employer to FBT. This can be a significant tax cost on top of already large expenditures.

If your business has been considering an electric vehicle as the new company car, this may have caused you to balk. But, an electric car is an attractive perk to offer employees as a fringe benefit.

The new draft release presents a new key tax planning consideration for employers (and employees) to save tax.

The exemption outlined in the draft release will be available for eligible electric cars with a retail price below the luxury car tax threshold for fuel-efficient cars ($84,916 for 2022 23) first made available for use on or after 1 July 2022. If you provide a car to your employees, it would be highly irregular for you to be worse off (even if you bought a car last year) to purchase/trade-in for a new car to take advantage of this proposed FBT exemption.

It also states that:

  • If an employer provides a model valued at about $50,000 through this arrangement, the estimated FBT exemption should save the employer up to $9,000 a year per car.
  • Individuals/employees using a salary sacrifice arrangement to pay for the same model would save up to $4,700 a year. A salary sacrifice arrangement involves the individual employee reducing their gross income to pay for the car, which effectively can reduce their personal tax bill.
  • If eligible, businesses may claim a full tax deduction for the electric cars up to $64,741 for the 2022-23 year under the “temporary full expensing provisions.” At this stage, the temporary full-expensing provisions end on 30 June 2023.

Whilst the legislation is not yet passed as law, this is an opportune time for employers to consider whether they will update their internal policies and processes to allow salary sacrificing for electric cars to be a more attractive employer and/or change the priority to acquire electric cars for their business to save on FBT.

If you are looking for tax planning assistance to minimise your business’s FBT liability or for how an electric vehicle could benefit your business (and maximise its tax effectiveness), you should consult with a professional tax adviser (such as us).

Successfully Starting A Business Requires 3 Things (Plus A Great Strategy)

Posted on by Adam_Admin

Starting a successful business requires three things:

  • A good idea,
  • The right amount of capital you’ll need, and
  • Creativity.

However, with the challenges many businesses faced over the last few years (particularly those who were finding their feet and starting up, having just those three things to face the pressures of the business environment might be a little daunting. That’s why having a strategy in place for your business and a plan for its path in the future is of paramount importance.

Think Through Every Element Of Your Startup (From Top To Bottom)

Having the idea for your business is a great starting point, but articulating that idea to your investors with a solid foundation behind it is even more important. Think about the questions that your investors might ask you about critical elements of your business, including your target audience, the competition in the field, your company’s goals and your potential marketing strategies, as well as potential questions investors might ask you about each of those aspects of your business. Having solid answers in place will give your investors (and you) a better picture of the idea and your potential as a business innovator.

Draft A Business Plan

Having a physical business plan that includes all of the elements you brought forward to your investors or partners will help you move forward on your business trajectory and also gives a map of your business goals.

Creating a business plan should be easy as it simply puts in writing what you have already discussed ahead of time with your investors. You may also be able to speak with us about creating business plans at the beginning of your business and throughout your business’s lifetime.

Put Your Money Into The Resources You Need (Not The Ones You Want)

It might be tempting to shell out for the best and the flashiest equipment that your business could have a use for all at once, but it’s best to plan out your expenses. Determine your needs upfront and invest in them. Are you planning a physical space for your business, or can operations be conducted remotely? Putting the extra money into the critical resources and equipment your business needs initially may help you produce a quality product and earmark your business.

Don’t Skimp On The Marketing

Marketing is one of the most important business growth strategies but is often neglected or overlooked by new businesses. Use social media, create a website, set up a blog or create email campaigns to bring awareness to your business.

Hire An Accountant

An accountant is specially trained to manage your finances and keep them in good order. While you might be able to keep track of your finances in the early stages of the business’s growth, we’re equipped to help when things start to pick up speed. Start a conversation to find out how we can help your business today.