Creating New Roles In Your Business? Here’s A Few Tips

As businesses grow, you will inevitably need to create new roles and hire new staff.

Adding a new member to your team is always challenging; when hiring someone to fill a new position, there is even more pressure to make the right call.

Business owners who can allocate workplace responsibilities efficiently and logically stand to reap significant benefits in the long run.

The challenge is not just choosing the right person but also making sure that you have clearly defined the new role and established your expectations. You should spend time thinking carefully about the skill set, experience and aptitude you will require from your new employee.

Even in times of high turnover, many owners are anxious about the financial commitment of taking on new staff members. While paying additional wages may seem like a gamble, failing to take on the extra labour you need will almost certainly damage your business.

You and your current employees will have much more stress to deal with, and chances are that efficiency and quality may suffer down the line.

In situations where you are worried about taking on a new staff member, it is important not to make the mistake of hiring an inexperienced person on the sole consideration that you are able to pay them a modest salary.

You need to think very carefully about what your business needs today and what you may require from your team as you continue to expand.

For example, as things get busier, you may find that you will need to devote more of your time to dealing with suppliers, and as a result, you will need someone you can trust to manage day-to-day matters at your store.

Hiring new staff and defining their roles within your business is incredibly important to your future success. Staff are the most important asset that a business has, and how management has defined roles and responsibilities can significantly impact employees’ abilities to perform.

Before you start recruiting a new staff member, you should write down all of the tasks you would require a new employee to complete and the responsibilities you may want them to take on in the future.

Once you have written down everything, you can think of, take a step back and look at the list.

At this point, you need to consider whether it will be in the business’s best interests to have a single person take on every task.

You may realise that some of the tasks are suited to an entry-level position, whereas others require specific skills and experience.

If this is the case, you should consider various options for restructuring the division of work between existing roles so that the new role will be suited to a specific type of candidate.

There is also always the option of creating a part-time position, or even two part-time positions,  instead of a full-time role as well, pending business budgets & expenses.

Many businesses will require extra help in busy periods such as the Christmas holidays. When hiring someone for a specific period, you should be upfront with them from the start and clearly explain the dates you have in mind.

Hiring and creating a new role for your business requires careful planning, particularly around payroll, classifying the employee, or even integrating and onboarding them into the pre-existing structure. Speak with a professional business adviser if you are unsure about any of the procedures you may need to implement during the hiring process.

Declaring Superannuation Contributions On Your Return

In some circumstances, superannuation contributions can be claimed on your tax return if made to a super fund or retirement savings account. However, these circumstances are limited and may require professional advice to maximise the benefits.

Superannuation contributions paid by your employers directly to your super fund from your before-income tax cannot be claimed. These contributions include:

  • The compulsory super guarantee (increasing to 11% on 1 July 2023)
  • Salary-sacrificing super amounts
  • Reportable employer super contributions.

However, your superannuation contributions to your super fund from your after-tax income can be claimed. The personal super contributions you claim as a deduction will count towards your concessional contributions cap.

Super contributions that can be claimed as deductions may include

  • contributions made prior to 1 July 2017 if
    • they were made to a complying super fund or a retirement savings account (we’ll refer to both as ‘your fund’)
    • your earnings as an employee were less than the maximum allowed
  • for contributions made on or after 1 July 2017, you made contributions to your fund that was not a
    • Commonwealth public sector super scheme in which you have a defined benefit interest
    • Constitutionally protected fund (CPF) or another untaxed fund that would not include your contribution in its assessable income
    • super fund that notified us before the start of the income year that they elected to either treat all member contributions to the
      • super fund as non-deductible
      • defined benefit interest within the fund as non-deductible
  • you meet the age restrictions
  • you have given your fund a Notice of intent to claim or vary a deduction for personal contributions (NAT 71121)
  • your fund has validated your notice of intent form and sent you an acknowledgment.

Specific contributions cannot be claimed as tax deductions. These include:

  • a rolled-over super benefit
  • a benefit transferred from a foreign super fund
  • a directed termination payment paid into a super plan by an employer under transitional arrangements that applied until 30 June 2012
  • contributions paid by your employer from your before-tax income (including the compulsory super guarantee and salary sacrifice amounts)
  • First Home Super Saver (FHSS) amounts that you have re-contributed to your super fund(s)
  • contributions to
    • a Commonwealth public sector super scheme in which you have a defined benefit interest
    • a super fund that would not include the contribution in their assessable income, such as an untaxed fund or a constitutionally protected fund (CPF)
    • other super funds or contributions specified in the regulations
  • contributions made from 1 July 2018 to a super fund that are identified as downsizer contributions
  • re-contribution of COVID-19 early release of superannuation amounts.

When deciding whether to claim a deduction for super contributions, you should consider the super impacts that may arise from this, including whether:

  • you will exceed your contribution caps
  • Division 293 tax applies to you
  • you wish to split your contributions with your spouse
  • it will affect your super co-contribution eligibility.

If you exceed your cap, you must pay extra tax, and any excess concessional contributions will count towards your non-concessional contributions cap.

Your super fund must be notified before claiming the tax deduction against your personal super contributions. You must give a notice of intent to claim or vary a deduction to your fund by the earlier of either the:

  • day you lodge your tax return for the year in which you made the contributions
  • end of the income year following the one you made the contributions.

Your fund must send you a written acknowledgment telling you they have received a valid notice from you. You must receive the acknowledgment from your fund before you claim the deduction on your tax return.

Maximising your superannuation’s potential could start with boosting your savings with contributions. However, seeking professional advice or guidance before commencing is advisable, as failure to lodge a notice of intent to claim or vary can become an issue.

Why not start a conversation with us to see how we can assist?

Don’t Forget To Declare All Investment Income In Your Return!

If you’ve made a major investment in the last financial year, any income made from it will need to be included on your tax return.

Any income earned from investments and asses must be declared in your tax return. This may include amounts from interest, dividends, rental income, managed investment trust credits, crypto assets and capital gains. Whether you receive it directly or via distributions for a partnership or a trust, this income needs to be declared.

If you, for example, hold the assets that earn the investment income jointly (with another person), it is assumed that the asset’s income is divided equally between you, unless it can be proven that the asset is held in unequal proportions.

Six items must be declared in your tax return as income this financial year, including the following:

Interest Income

Interest income includes:

  • interest you earn from financial institution accounts and term deposits
  • interest you earn from any other source, including penalty interest you receive on an investment
  • interest you earn from children’s savings accounts if you
    • open or operate an account for a child and the funds in the account belong to you
    • spent or use the funds in the account
  • interest we pay or credit to you – for example, interest on early payments, interest on overpayments and delayed refunds
  • ife insurance bonuses (you may be entitled to a tax offset equal to 30% of any bonus amounts you include in your income)
  • interest from foreign sources (you can claim a foreign income tax offset for any tax paid on this income).

Dividends

Dividend income may come from a:

  • listed investment company,
  • public trading trust,
  • corporate unit trust, or a
  • corporate limited partnership (in the form of a distribution).

Some dividends may have imputations or franking credits attached. The franked amount and the franking credit must be declared if you receive franking credits on your dividends. If a company pays or credits you with dividends that have been franked, you’ll generally claim a franking tax offset.

Rental Property Income

You must declare the full (gross) amount of any rent and rent-related payments you receive. This includes amounts you receive from overseas properties. You must work out and declare the monetary value if you receive goods and services instead of rent.

It’s best to consult with a tax adviser to avoid making mistakes involving rental property. This is usually a major red flag area for the ATO, so don’t hesitate to ask for help to avoid compliance issues or declaring for things you shouldn’t.

Managed Investment Trusts

You must show any income or credits you receive from any trust investment product in your tax return. This includes income or credits from a:

  • cash management trust
  • money market trust
  • mortgage trust
  • unit trust
  • managed fund – such as a property trust, share trust, equity trust, growth trust, imputation trust or balanced trust.

Crypto Asset Income

You must declare rewards received for staking crypto assets (often in the form of additional tokens from holding the original tokens. The money value of the additional tokens needs to be calculated and then converted into Australian dollars at the time they were received. These are reported in ‘other income’ in the tax return.

If you receive crypto via airdrop, this is income when you receive them based on the money value of the already established tokens. Occasionally, some crypto projects ‘airdrop’ new tokens to existing holders to increase the supply. Whatever amount is received needs to be converted into Australian dollars and declared as other income.

Capital Gains

Any capital gains that are made when you sell or dispose of capital assets must be declared. This may include investment property, shares or crypto assets. The capital gain is the difference between:

  • Your asset’s cost base (what you paid for it)
  • Your capital proceeds (the amount you receive for it)

Report capital gains and capital losses in your tax return. You can offset any allowable capital losses against your capital gains to work out your net capital gain or loss. You pay tax on a net capital gain. If you have a net capital loss, you can retain the loss to offset capital gains in future years.

To avoid any issues with your tax return this financial year, especially involving investment-related income, start your tax journey with us today. We can help uncomplicate the process for you.

Which Structure Would Suit Your Business?

One of the most important decisions you must make before starting a business is in what structure your business will be operating under. This will be reflected in all facets of your business, so you should spend time understanding the implications of each structure before making a decision.

Sole Proprietorship

A sole proprietorship business structure is a type of business with only one owner. However, that owner has complete authority and control over every aspect of the business. Sole proprietors are generally easy to set up as they do not need to be registered as a business, but you may need a license to operate (depending on the field).

There are liabilities that you need to be aware of when it comes to undertaking a sole proprietorship. A sole proprietor’s income through the business is treated as personal income. However, if the business runs into debt & bankruptcy, your personal and business assets will be at risk as the owner is accountable.

In summary, with a sole proprietorship:

  • You have complete control of your business
  • The owner and the business are not separate legal entities
  • Your business assets and liabilities are not separate from your personal assets and liabilities
  • You are personally liable for debts and obligations of the business
  • Generally a low-cost structure to set up

Partnership

A partnership is a business structure comprising 2 or more people who distribute income or losses between themselves.

There are 3 main types of partnerships:

  • A general partnership (GP) – is where all partners are equally responsible for the management of the business, and each has unlimited liability for the debts and obligations it may incur.
  • A limited partnership (LP) – is comprised of general partners whose liability is limited to the amount of money they have contributed to the partnership. Limited partners are usually passive investors who don’t play any role in the day-to-day management of the business.
  • Incorporated Limited Partnership (ILP) – is where partners in an ILP can have limited liability for the business’s debts. However, under an ILP there must be at least one general partner with unlimited liability. If the business cannot meet its obligations, the general partner (or partners) becomes personally liable for the shortfall.

Individual states and territories have different laws regarding partnerships. Following these according to what is set out for your state is essential.

In a partnership:

  • Partners share control and management of business
  • An ABN must be obtained and used for all business proceedings
  • Each partner pays tax on the share of net partnership income each receives
  • Each partner needs to provide separate tax file numbers and are responsible for their own superannuation arrangements
  • Minimal reporting requirements and inexpensive to set up
  • Must register for GST if turnover exceeds $75,000.

Company

A company as a business structure is a separate legal entity, unlike a sole trader or a partnership structure. This means the company has the same rights as a natural person and can incur debt, sue and be sued. All directors of a company must have a Director ID. 

As a member, you’re not liable (in your capacity as a member) for the company’s debts. Your only financial obligation is to pay the company any amount unpaid on your shares if you are called on to do so. However, directors of the company may be held personally liable if found to be in breach of their legal obligations.

Companies can be expensive and complicated to set up and generally suit people who expect their business income to be highly variable and want the option to use losses to offset future profits.

Companies and directors have key legal and reporting obligations they must comply with. Some of the more common obligations include:

  • update Australian Securities and Investments Commission (ASIC) within 28 days of key changes to company details
  • keep financial records
  • understand and comply with all your obligations as a director

A company, in summary:

  • Is a separate legal entity from its owners
    • All profit, tax, and legal liability are direct to the corporation
  • requires you to understand and comply with all obligations under the Corporations Act 2001
  • requires an annual company tax return to be lodged with the Australian Taxation Office (ATO)
  • requires you to complete an annual review and pay an annual review fee
  • directors are required to have a director ID.
  • Members are not liable for the company’s debt (only liable if you breach legal obligations)
  • Complex business structure plus extensive documentation and record-keeping
  • Wider access to capital

Trust

In a trust structure, a trustee holds your business for the benefit of others (the beneficiaries).

A trustee can be a person or a company an is responsible for everything in the trust, including income and losses. They are the ones legally responsible for its operations.

Trust structures are expensive and complicated to set up, and are generally used to protect the business assets for beneficiaries. The trustee decides how business profits should be distributed to the beneficiaries.

In summary, trusts:

  • Have an expensive set-up and operation
  • Require a formal trust deed outlining the operation required
  • Trustee responsible for yearly administrative tasks
  • Assets are protected
  • Difficult to dissolve or make changes once established.

Setting up a trust is best done with a licensed professional to assist with the registrations and documentation.

It is best to consult with a professional business adviser before deciding on a structure for your business, as they can provide more information based on your specific needs and circumstances.

Why not start that conversation with us today?

What Does Payday Super Actually Mean?

There’s been a lot of buzz around superannuation since the 2023-24 Federal Budget was announced. One such buzz involves the concept of ‘payday super’.

Payday super has been introduced by the government to avoid the discrepancies that those in lower-paid, casual and insecure work often encounter with their superannuation compared to others in more secure positions due to less-frequently paid super.

Employers are currently required to pay the superannuation guarantee of 10.5% on top of employee wages every quarter, even if workers are paid more frequently in fortnightly or monthly pay cycles.

The idea behind payday super is that rather than employers pay their employees their superannuation quarterly, they will be expected to pay it to employees when their pay cycles are run (on ‘payday’). This reform is to come into effect from July 2026.

Aligning the payment of superannuation with wages and salaries will increase retirement incomes through greater compounding returns.

For example – a 25-year-old on an average income who currently receives their super quarterly and their wages fortnightly could be up to $6000 or 1.5% better off at retirement.

More frequent super payments could also help employers by making payrolls smoother, with fewer liabilities building up on their books and making it harder for employees to be exploited by disreputable employers.

Unpaid super is a key issue afflicting the current superannuation system, with an estimated $5 billion missing from Australian employees.

Currently, Australian employees are vulnerable to exploitation if their employer fails to make the required superannuation contributions.

These workers often rely on ATO intervention to recover lost super. However, the ATO can only generally recover up to 15% of owed superannuation.

Could This Assist In Bridging The Gender Gap? 

Another issue for which this may lead to some form of amendment is the gender gap in superannuation.

Women are often victims of this exploitation of unpaid or missing super due to gaps in employment that may occur, affecting how their superannuation compounds and/or stagnates. This could be from taking time off work for caregiving reasons, the overall pay from their job, or even just taking maternity leave. Women are also more likely to be employed in certain areas and industry jobs where they are at risk of unpaid super.

It is believed that women will likely earn $135,000 less than their male counterparts over their working lives as a result. Payday super could potentially lead to further action regarding improving the retirement outcomes for women who take time out of the workforce, such as paying super on paid parental leave.

What Risks Are There To My Business?

Some employers may face cashflow issues when paying superannuation at the same time as payroll. However, three years of notice has been given to those who may have these issues to adjust their cashflow practices and make arrangements. To avoid compliance issues with the requirements to be instated in 2026, it’s best to update payroll systems beforehand.

Not sure where to start? Speak with your trusted business adviser today. We’re here to help with the complexities that can arise with payroll.

The Instant Asset Write-Off Returns

The Federal Budget has reintroduced the $20,000 Instant Asset Write Off to benefit small businesses amidst the myriad of measures announced by the government. 

The instant asset write-off will return for the 2023-24 financial year (1 July 2023 to 30 June 2024). If you buy an asset to use for business purposes and it costs less than $20,000, you can immediately deduct the business portion of the cost in your tax return. This deduction is available for each asset that costs less than $20,000.

Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.

Instant asset write-off can be used for:

  • multiple assets if the cost of each individual asset is less than the relevant threshold
  • new and second-hand assets.

If you are a small business, you must apply the simplified depreciation rules to claim the instant asset write-off. It cannot be used for assets that are excluded from those rules.

The instant asset write-off eligibility criteria and threshold have changed over time. You need to check your business’s eligibility and apply the correct threshold amount depending on when the asset was purchased, first used or installed, ready for use.

Eligibility to use instant asset write-off on an asset generally depends on the following:

  • your aggregated turnover (the total ordinary income of your business and that of any associated businesses)
  • the date you purchased the asset
  • when it was first used or installed ready for use
  • the cost of the asset being less than the threshold.

You are not eligible to use instant asset write-off on an asset if your aggregated turnover is $500 million or more.

The instant asset write-off does not apply for assets you start to hold and first use (or have installed ready for use) for a taxable purpose from 7:30pm (AEDT) on 6 October 2020 to 30 June 2023. You must immediately deduct the business portion of the asset’s cost under temporary full expensing. If temporary full expensing applies to the asset, you do not apply instant asset write-off.

The Temporary Full Expensing Measure Ceases 30 June 2023

Temporary full expensing was introduced to support businesses and encourage investment, as eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose.

The deadline for the expanded Temporary Full-Expensing measure has not been extended by the Federal Budget 2023-24, meaning that it will cease on 1 July 2023, and the write-off will revert to $1,000 from that date.

If you attempt to use the Temporary Full-Expensing measure after 1 July 2023 for an asset over $20,000, you cannot claim anything in the 2023-24 tax return using it.

Businesses will likely feel a cashflow impact, as they will now need to spread depreciation deductions for assets more than $20,000 out over a number of years rather than claim them back up front.

Looking towards the future and want to ensure you’re doing the right thing regarding your tax? Come start a conversation with us so we can assist you with your tax planning needs.

Time For A Business Health Check Up

With the end of the financial year approaching, now is the perfect time to conduct a business ‘health check’ so that you can come out at the start of the new financial year greatly improved and ready to go.

Clients And Customers

Client and customer loyalty is something all businesses should aim for, but if your clients’ values are misaligned with yours, conflict is inevitable. Hence, now is the time to re-evaluate which clients you want to keep loyal and which ones you can see a co-operative future with.

Re-assessing your target audience and deepening your understanding of the wants and needs of your clients would help improve your marketing and sales strategies. If you have clients who frequently struggle to pay you on time or are rude to your employees, assess whether your attention is worthwhile and if you would like to continue to work with them when the economic situation improves.

Employees

Your employees are another stakeholder to check up on during this downtime. Your employees will always be your business’ representatives, so make sure they are up to standard and help them improve their skills. Teach your employees more about your business goals.

Conducting a business health check and strategies and improving the team atmosphere by introducing team recreational activities. Your relationship with your employees now during a global crisis will dictate how they feel about you as a leader and if they can rely on you in the future. Foster respectful, strong and healthy bonds between you and your employees; only good things will come your way.

Suppliers

The critical question to ask when reviewing your suppliers is whether or not you are getting what you need from them at a reasonable cost. If you feel that your suppliers are asking too much from you or letting you down with their product quality, take the time now to look for other options. As businesses struggle through current economic conditions, suppliers are becoming competitive, and more options are needed. Do your research and decide on the suppliers you want to work with for the long term.

Financing

Managing your finances is always difficult but is now more important than ever. Your budget and profit predictions for this year are likely going rogue, so reevaluate your finances and research other funding options such as commercial rent, interest rates and banking services.

Consider how you can minimise cost while maximising efficiency and productivity, save as much money as possible during these downtimes, and review your investments in detail to determine whether or not they are worthwhile.

Want to know more about strategising your business’s plans for the next financial year? Speak with your friendly business advisers, and let us help you work out the best trajectory for your aims and objectives for the next 12 months.

Superannuation & Death: What You Need To Know

What happens to your super when you die? It might not be a question that has cropped up in your mind during your present circumstances, but it is something that you should be concerned about.

Upon the untimely death of someone, their superannuation may be one of the elements of the estate that can be bequeathed and divided between their loved ones (trustees of the estate and beneficiaries. 

This is not done through your will though, as it isn’t automatically included unless specific instructions have been given to your super fund. Often this is done through a binding death benefit nomination. These payments are usually paid out in lump sum payments and split between beneficiaries as the deceased dictates.

However, like any property or asset that can be challenged, the death benefits from superannuation and SMSF can be a legal quandary if the appropriate succession planning measures have not been implemented.

Death benefits are one of the most commonly occurring legal issues that plague the superannuation and SMSF sector for individuals. Many court cases involving death benefits result from poor succession planning, as individuals who were not stated to be recipients of the payments miss out on what may be theirs.

In the event of an individual’s death, the deceased’s dependent can be paid a death benefit payment as either a super income stream or a lump sum. The non-dependents of the deceased can only be paid in a lump sum. The form of the death benefit payment (and who receives it) will depend on the governing rules of your fund and the relevant requirements of the Superannuation Industry (Supervision) Regulations 1994 (SISR).

If succession planning around who the superannuation is to be left to is in place by the deceased, those who may be classed as dependents and non-dependents can become legally blurred.

In any event, dependents are defined differently depending on what kind of law they are being examined under (superannuation or taxation law).

Under superannuation law, a death benefits dependant includes:

  • The deceased spouse or de facto spouse
  • A child of the deceased (any age)
  • A person in an interdependency relationship with the deceased (involved in a close relationship between two people who live together, where one or both provides for the financial, domestic and personal support of the other).

Under taxation law, a death benefits dependant includes:

  • the deceased’s spouse or de facto spouse
  • the deceased’s former spouse or de facto spouse
  • a child of the deceased under 18 years old
  • a person financially dependent on the deceased
  • a person in an interdependency relationship with the deceased

Depending on the type of law under which the beneficiary is classified affects how they can interact with the death benefits.

How Do I Make Sure My Beneficiaries Will Receive The Death Benefits That I Want Them To Have? 

Death benefit payments need to be nominated by the holder of the superfund, as superannuation is not automatically included in your will. If you fail to make a nomination, your super fund may decide who receives your super money regardless of who is in your will.

That’s why succession planning is important when it comes to death benefits, no matter the situation. Even if you are at your healthiest, you’ll want to be prepared for any eventuality.

To get your succession planning right, here are 5 tips that will help you during the process.

  • Locate and/or consolidate your superannuation funds – if you do not, ensure a binding death benefit nomination (BDBN) is in place for each fund.
  • Prepare a BDBN – this is a notice given by you as a superannuation fund member to the trustee of your superfund, nominating your beneficiaries on your death and how you wish for the death benefits to be paid.
  • Seek advice before making changes to your level or type of insurance cover – you may be compelled to disclose medical conditions that may impact your ability to obtain cover or the cost of your cover if you remove or change your insurance cover.
  • Review your binding death benefit nomination (BDBN) each year during tax time. 
  • Seek advice on a superannuation clause under your will. Though superannuation is not an estate asset, the death benefit may be paid to the estate under certain conditions, which you should consult with a super professional about.

PAYG Is A Good Thing! Don’t Freak Out (The ATO Is Not Stealing Your Money)

As a taxpayer, you may have encountered the term pay-as-you-go (PAYG).

PAYG is generally a good thing, but there can be confusion between PAYG withholding and PAYG instalments, particularly if you’re an individual who is eligible for both. Both are amounts by which your tax bill can be offset at the end of the financial year.

So there’s no need to worry – the ATO is not stealing your money. Here’s how to distinguish between the two types of PAYG you may have encountered as a taxpayer.

PAYG Withholding

As an employer, you have a role in helping your payees meet their end-of-year tax liabilities. You do this by collecting pay-as-you-go (PAYG) withholding amounts from payments you make to:

  • your employees
  • other workers, such as contractors that you have voluntary agreements with
  • businesses that don’t quote their Australian business number (ABN).

This is to assist in minimising the impact of your employee’s tax bill at the end of the financial year. If you’re an employee, there’s no need to worry about this amount – it is what is used to work out how much tax you may owe or be owed by the Australian Taxation Office at the end of the year.

Payments other than income from employment may also need tax withheld, including:

  • investment income to someone who does not provide their TFN
  • dividends, interest and royalties paid to non-residents of Australia
  • payments to certain foreign residents for activities related to gaming, entertainment and sports, and construction
  • payments to Australian residents working overseas
  • super income streams and annuities
  • payments made to beneficiaries of closely held trusts.

PAYG Instalments

Pay-as-you-go (PAYG) instalments are regular tax prepayments on your business and investment income.

They’re a way to offset your tax bill by paying regular instalments at the end of the financial year. This way, you should not have a large tax bill when you lodge your tax returns.

If your financial situation has changed, your expected tax may also change. This means your current PAYG instalments may add up to more or less than your tax at the end of the year.

When Do You Have To Pay PAYG Instalments? 

If you are an individual (including a sole trader) or trust, you will automatically enter the PAYG instalments system if you have all of the following:

  • instalment income from your latest tax return of $4,000 or more
  • tax payable on your latest notice of assessment of $1,000 or more, and
  • an estimated (notional) tax of $500 or more.

A company or super fund will automatically enter the PAYG instalments system if any of the following apply:

  • it has instalment income from its latest tax return of $2 million or more
  • it has an estimated (notional) tax of $500 or more, or
  • it is the head company of a consolidated group.

PAYG Varying Instalments

You can vary your PAYG instalments if you think your current payments will result in you paying too much or too little tax for the income year. Variations must be made on or before the payment due date (28 days after the end of each quarter, generally).

You do not have to vary your PAYG instalments at all. It will not change how much income tax you pay for the year.

After you lodge your tax return, if your instalments were:

  • too high, the excess is refunded to you
  • too low, you pay the shortfall.

Your varied amount will apply for all your remaining instalments unless you make another variation before the end of the income year.

You might need to vary your PAYG instalments if any disasters over the past financial year have impacted you.

If you cannot pay your instalment amount, you should still lodge your instalment notice and discuss a payment arrangement with the ATO. You may wish to obtain advice from a tax agent on whether you should vary your instalments.

Does Your Family Business Have A Succession Plan?

Family-run businesses form an essential part of the economy. Tradition, success, history, and their unique dynamic can create a thriving business that many may wish to see continue.

However, as with any business, the conversation about succession and how to continue the business into the future needs to be had.

With only 1 in 4 family-operated businesses considering their approach to succession formally, succession in a family business is one of the most significant viability risks to the actual business and needs to be addressed accordingly.

Family business succession maintains the strong connection between the two most important things in a family business owner’s life; their business and family.

Every family and family-run business is unique, and every transfer or succession of a family business will also be executed differently.  If you are thinking about what your family business’s plan is for succession, you may want to consider keeping these critical factors in mind:

  • Where is your business going? What do you want for your family and business? What are your goals and your time frames for achieving those goals?
  • Is the vision you have for your business shared by your family?
  • You must understand each individual’s perspectives and motivations that the succession impacts. Ongoing communication is vital to gaining this understanding, but an advisor can be employed to unbiasedly look at the situation independently and take the emotion out of a conversation.
  • Create a plan to plot out the path of the business’s future, the challenges it may face along the way, and what it is currently facing.
  • It’s important to remember that a family business does not have to be succeeded by a family (though it’s an outcome you may want). Always consider what your family members wish to do, and consider alternatives if none wish to take over the business.

A succession plan for a family business needs to be created to move forward. It should detail all of the actions you intend to take (including the steps involved with both management and ownership succession).

It needs to be flexible, adaptable and ready to evolve as businesses (as well as families), change over time. Your succession planning process should be transparent and understand and align with the goals set for the business’s further development across the generations.

The most effective succession plans:

  • Preserve and generate family wealth
  • Minimise disharmony and disruption
  • Minimise the impact of tax
  • Encourage personal growth of family members
  • Fund the retirement and family lifestyle

In a family business, communication is critical. A lack of early, constructive communication and planning on succession results not only in disagreement between family members and personal stress, but it also leads to business underperformance and potential erosion of family wealth.

Ensure that all aspects of the succession plan are conveyed to the appropriate parties and that they understand their roles and positions.

Want to know more about how succession planning could assist you with your life goals? Speak with your trusted advisors in preparation for this step.