Tag: small business

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NSW State Budget 2023-24

Posted on | by Allan Hall

The 2023-24 NSW State Budget has a strong focus on tightening tax compliance, as well as changes to a number of exemptions and duties:

  • Funding Revenue NSW to Target Tax Compliance
  • Land Tax – Closing the loophole for Principal Place of Residence Exemption
  • Landholder Duty – changes to threshold for acquiring a “significant interest” in a private trust
  • Fixed and nominal duty amounts increased

This year’s NSW State Budget does not explicitly mention specific measures targeted at small businesses. However, it does mention some broader economic and infrastructure initiatives that could indirectly benefit small businesses. These include:

  1. Toll Reform: Introducing a two-year toll cap and streamlining motorway pricing
  2. Infrastructure and Transport: Investments in infrastructure projects, including road upgrades and improved public transportation
  3. Energy Relief and Reform: Addressing high energy costs through rebates and energy market reforms
  4. Disaster Relief: Funds allocated for natural disaster support and recovery programs.

Measures for First Home Buyers

The State Budget includes an expansion to the First Home Buyers (FHBs) Assistance Scheme to support FHBs with a stamp duty exemption for purchases up to $800,000 and a concession for purchases between $800,000 and $1 million.

Five out of every six first home buyers will pay no stamp duty, or a concessional rate after the Government expanded stamp duty exemptions and concessions from 1 July 2023. According to preliminary figures, more than 1,000 FHBs purchasing in the $650,000 to $800,000 range have availed themselves of the full exemption from stamp duty in July under the scheme.

The measures announced in the 2023-24 NSW State Budget can have implications for the business environment in New South Wales, including those for small businesses and are outlined in the Treasury and Revenue Legislation Amendment Bill 2023 expected to be implemented from 1 February 2024, once the Bill has been passed by Parliament.

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Business debt on ATO’s watchlist

Posted on | by Allan Hall

The five types of business debt at the top of the tax office’s watchlist

The Australian Taxation Office (ATO) has unveiled the top five categories of business debt that have captured its attention, signalling the end of the unprecedented leniency extended to late payers during the COVID-19 lockdowns.

Speaking at the Tax Institute Tax Summit in Melbourne, Vivek Chaudhary, the ATO’s deputy commissioner of lodge and pay, emphasised the necessity of offering substantial support to taxpayers, including small businesses, amidst lockdowns and stringent public health measures.

The ATO’s arsenal during the pandemic included payment plans, deferred deadlines, waived penalties and interest, and the option to file without immediate payment, all aimed at aiding businesses during challenging times. Chaudhary acknowledged the positive outcomes of these measures but also pointed out their impact on payment behaviour, with an increasing number of businesses failing to meet tax deadlines compared to the pre-pandemic period.

Chaudhary identified five priority payment categories where the ATO’s renewed focus will be most evident:

  1. Topping the list is the unpaid Superannuation Guarantee Charge (SGC), a penalty imposed on businesses that fail to fulfil their Superannuation Guarantee obligations. Notably, small businesses owe the majority of this debt, totalling $1.8 billion. To ensure compliance, the ATO has equipped itself with tools such as garnishee notices, payment directives, Director Penalty Notices, and potential legal actions to secure SGC payments.
  2. Chaudhary expressed concerns about new self-assessed debts raised by employers, suggesting that taxpayers might be waiting for the ATO to prompt payment before taking action.
  3. Refund fraud remains a significant worry, with fraudsters siphoning billions of dollars from the tax system through counterfeit GST refunds.
  4. The ATO is also monitoring substantial aged debts exceeding $100,000, and
  5. Debts arising from audit actions initiated by the ATO. Chaudhary emphasised that while some audit adjustments stem from genuine errors, others result from negligence, recklessness, or deliberate attempts to evade tax payments, and such cases will receive no leniency, with heightened expectations for debt settlement.

Consequently, the ATO is reverting to its pre-pandemic compliance strategies to transition from the COVID-induced payment culture to a more standard payment approach. ATO commissioner Chris Jordan revealed that the ATO is pursuing approximately $50.2 billion in collectable debt, with small businesses accountable for over $33 billion of this total.

Read the full speech Addressing collectable tax debt – Tax Institute’s Tax Summit 2023 here »

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Xero research reveals business mistakes

Posted on | by Allan Hall

From working for free to hiring the wrong staff

Xero research reveals 83 per cent of business owners admit to costly mistakes

Xero, the small business accounting and bookkeeping platform, has released research revealing some of the most common learnings shared by Australian small business owners. The findings highlight that hiring the wrong or inexperienced staff and working for free or at low cost are considered the most costly business mistakes, impacting more than one in five (22%) small business owners.

The ‘Do Better Business’ research, which surveyed more than 1,000 Australian small business owners and leaders, not only sheds light on the challenges faced, but offers invaluable insights for businesses embarking on a new financial year, and provides helpful learnings for aspiring entrepreneurs.

“We know running a small business can be incredibly rewarding, enabling people to pursue their passions or achieve greater flexibility. But, as our research has highlighted, it also comes with its unique set of challenges, which have only been exacerbated by a turbulent economic climate,” said Will Buckley, Xero Australia Country Manager.

“As the new financial year commences, it’s a timely opportunity for business owners to reflect on the year that was and embrace key learnings that will pave the way for future success.”

Taking risks and learning from setbacks

Owning a small business is a constant learning process, with the majority (83%) of those surveyed admitting to making costly mistakes over the course of running their business. In addition to hiring challenges and working for free, working with the wrong partners, suppliers and investors (18%) and working with family and friends (12%) were other blunders. Additionally, nearly one-fifth (19%) reported spending every dollar of their personal savings in the early years of running their business.

Among the biggest learnings was a need to implement strong financial management practices, with nearly three-quarters (73%) of those surveyed rating this as the top three priorities they believed small businesses starting up should focus on. This was followed by building a strong network of industry contacts (63%), working with an accountant or bookkeeper (46%), and asking for help when struggling (46%).

Greater flexibility driving business ownership

There are many reasons driving Australians to business ownership, but the survey revealed a desire to be their own boss as the number one reason for 64 per cent. This was followed by seeking greater flexibility (61%) and wanting to pursue a passion or dream (41%). Nearly three-quarters (71%) of small business owners, however, admit to delaying starting their own business, with financial concerns being the number one reason holding them back (35%), followed by a fear of failure (21%). Despite this, 65 per cent of business owners surveyed by Xero say there’s never a perfect time to start a business, but they wish they’d done it sooner.

Small business ownership is also not without its sacrifices, with one in five (20%) small business owners from the survey reporting they missed a significant life moment like the birth of their child, a wedding or a birthday in the early years of running their business. The majority of those surveyed (86%) also wish they could prioritise their personal boundaries more while running their business, especially around their physical and mental health (43%) and spending time with their family, friends or partner (40%).

“Fostering an environment where Australians feel confident to pursue business ownership and are supported throughout their entrepreneurial journey is essential to ensuring a prosperous small business community and a resilient economy. We hope that by understanding some of the challenges facing small businesses, together with industry and governments, we can provide the right tools and technology to ensure businesses have the best possible chance to thrive this financial year and into the future,” said Buckley.

The generational divide and young small business owners holding back

The survey revealed it’s tougher for younger people to get into business ownership, with Gen Z reporting they were more likely to face negativity and discouragement from friends, family and associates about starting their own business venture (77%) compared to Baby Boomers (60%).

The fear of failure was also more common amongst young business owners and entrepreneurs with 29 per cent of Millennials saying they delayed starting their business because they didn’t want to fail, compared to just 12 per cent of Baby Boomers. Despite this, the flexibility of being a business owner was a central reason for 68 per cent of Gen X business owners, with 60 per cent saying they are now achieving this goal.

Considering Xero for your business? Alliott NZ’s Xero Certified Advisors in Auckland are here to answer any questions or to help your business upgrade to or optimise using Xero.

About Xero’s research: The research was conducted by YouGov of 1,022 owners and key decision-makers of businesses with fewer than 50 employees in Australia. Fieldwork was undertaken between 22-30 June 2023.

At Allan Hall, we have extensive experience using a wide variety of accounting software packages and can provide advice on which software is right for you.

CONTACT ALLAN HALL BUSINESS ADVISORS

Is your side hustle now a business? 1

Is your side hustle now a business?

Posted on | by Allan Hall

Be aware of any tax obligations if your side hustle is considered a business earning business income

Work out whether you’re in business and when your business starts for tax purposes.

What is a business?

Generally, a business involves a set of continuous and repeated activities you do for the purpose of making a profit. Profit can be in money, but it can also be made through other means, like being paid with goods or services (such as a barter deal).

A one-off transaction can also be a business if it is either:

  • intended to be repeated
  • the first step in starting a business.

You can run one business or multiple businesses at the same time.

When you’re not in business

Not everything you do to make money is a business. Your activities are not a business when they are:

  • a one-off transaction (unless it is the first step in carrying on a business or intended to be repeated)
  • done as an employee
  • a hobby or recreation from which you don’t seek to profit
  • a simple investment, such as passively holding shares on which you receive dividends or a rental property you let through an agent.

Even if you’re not in business, you may still need to declare certain payments you receive as assessable income in your income tax return.

When a company is not in business

Most companies are in business if they intend to and are likely to make a profit, however some companies are not in business. For example, a company is not in business if it:

  • holds assets solely for its shareholders’ private use, and its running costs are funded solely by its shareholders
  • provides social and recreational activities for members without seeking to make a profit.

Steps to work out if you are in business

  1. Identify all relevant, related activities
  2. Are the activities a business?

When does your business start?

Knowing when will affect the registrations you must have and when you need to apply for them. It may also affect how tax laws apply to your activity, the assets you use, and the tax concessions or deductions available to you.

Have your activities changed?

If your activity changes in a significant way you must reassess whether or not you are in business.

CONTACT ALLAN HALL BUSINESS ADVISORS

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The 120% technology and skills ‘boost’ deduction

Posted on | by Allan Hall

The legislation granting small and medium businesses (SMBs) the opportunity to claim a 120% tax deduction for technology expenses, skills training and training costs has finally passed Parliament, nearly a year after the announcement in the 2022-23 Federal Budget.

However, there are a few timing complexities involved. To benefit from the technology investment boost, you needed to have purchased and installed the technology by 30 June 2023, which was just seven days after the legislation was passed.

Key points

  • Under both the technology and Skills and Training Boost, eligible expenses will be available for the 120% deduction if they were incurred between 29 March 2022 and 30 June 2024
  • The bonus deduction for the technology boost is capped at 20% of the eligible expenditure, up to a limit of $20,000 ($100,000 of eligible expenditure)
  • There is no limit for the skills and training boost.

Who is eligible for the boosts?

Small business entities (including individual sole traders, partnerships, companies or trading trusts) with an aggregated annual turnover of less than $50 million can access the 120% skills and training boost, as well as the technology boost. Aggregated turnover includes the turnover of your business, affiliates and connected entities.

The technology investment Boost

Expenses that may qualify for the technology boost include:

  • Digital enabling items like computer hardware, telecommunications equipment, software, internet costs, computer network systems and services that facilitate their usage.
  • Digital media and marketing expenses including audio and visual content that can be accessed, stored or viewed on digital devices, as well as web page design.
  • E-commerce goods or services that support digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services and advice on digital operations or digitisation such as guidance on digital tools for business continuity and growth.
  • Cybersecurity systems, backup management and monitoring services.

The technology must be primarily or substantially used for a business’s digital operations or digitisation. There must be a direct connection to how the business generates income, particularly through its digital operations.

There are several costs that the technology boost does not cover, such as expenses related to staff employment, capital raising, construction of business premises and the cost of goods and services sold by the business. The boost does not apply to:

  • Assets purchased and sold within the relevant period (on or before 30 June 2023)
  • Capital works costs, including improvements to business premises
  • Financing costs like interest expenses
  • Salary or wage costs
  • Training or education costs, meaning that training staff on software or technology does not qualify (refer to Skills and Training Boost below)
  • Trading stock or the cost of trading stock.

The Skills and Training Boost

The Skills and Training Boost is a program that provides SMBs with a 120% tax deduction for external training courses offered to their employees. The primary objective of this boost is to facilitate the growth of SMBs’ workforce by enabling them to hire and upskill less-experienced employees through external training. This initiative aims to enhance their skills and increase overall productivity.

Please note that sole traders, partners in a partnership, independent contractors and other non-employees are not eligible for the boost as it is specifically designed for employees. Similarly, associates such as spouses or partners, as well as trustees of a trust, are not qualified to participate.

To ensure compliance, there are a few rules to be aware of:

  • Registration for the training course must have occurred between 7:30 PM (AEST) on 29 March 2022 and 30 June 2024. If an employee is already enrolled in an eligible training course, enrolments in subsequent courses or classes after 29 March 2022 are considered eligible.
  • The training must be deductible to your business according to ordinary rules, meaning it should be directly related to how your business generates income.
  • The training needs to be provided by a registered training provider who charges your business (either directly or indirectly) for the training. (Please refer to the section on “What organisations can provide training for the boost?” below)
  • The training must be intended for employees of your business and should be delivered either in-person within Australia or through online platforms.
  • The training provider cannot be your business or an associate of your business.

Training expenditure can include costs associated with the training, such as resources or equipment necessary for the course, provided that the training provider charges your business for these expenses.

What organisations can provide training for the boost?

Please note that not all courses offered by training companies will qualify for the boost. Only courses offered by registered training providers within their registration will be eligible. Typically, these providers offer vocational training to acquire a trade or courses that contribute to a formal qualification, rather than purely professional development.

Qualifying training providers will be registered by:

While some desired training may not be delivered by registered training organisations, there is still a wide range of options available. Short courses offered by universities or flexible courses designed for upskilling, rather than obtaining a degree qualification, can still be explored, especially if they align with the development pathway identified through recent performance reviews for your staff.

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July

1 July Changes

Posted on | by Allan Hall

What you need to know

There are legal, financial, and other changes your business will have to be across very soon. Not sure what they are or what to do? Don’t worry, we have you covered.

It’s been a big year for changes in areas like people management, pay and tax. Here’s a rundown of some key changes that will come into effect 1 July and what they mean for your business and your employees.

1. SUPER GUARANTEE INCREASES

If you haven’t already, then it’s time to get your payroll systems sorted as the superannuation guarantee increases to 11% from 1 July.

Also, make sure you’re across the gradual increases, which will see the super guarantee reach 12% by July 2025.

To work out how this will impact employees’ pay, have a look at whether their contract states their salary is inclusive of superannuation or not.

2. WAGES GO UP

Employees should also be aware that from 1 July, wage increases will come into effect following a ruling from the Fair Work Commission.

For employees who aren’t covered by an award, the minimum wage will go up from 1 July to $882.80 per week, or $23.23 per hour, and will apply from the first full pay period starting on or after 1 July 2023.

For employees covered by an award, minimum award wages will increase by 5.75%, also applying to the first full pay period starting on or after 1 July 2023.

3. FAIR WORK COMMISSION CHANGES

From 1 July 2023, the application fee will increase to $83.30. The fee applies to dismissal, general protections, bullying, and sexual harassment at work applications made under sections 365, 372, 394, 773, and 789FC of the Fair Work Act 2009.

There is no fee to make an application to deal with a sexual harassment dispute under section 527F of the Fair Work Act.

Also effective from 1 July, the high-income threshold in unfair dismissal cases will increase to $167,500 and the compensation limit will be $83,750 for dismissals occurring on or after 1 July 2023.

4. PAID PARENTAL LEAVE CHANGES

From 1 July, amendments to the Paid Parental Leave Scheme will come into effect.

Notably, the Dad and Partner Pay (DAPP) scheme, which currently provides up to two weeks of paid leave, will now be combined with the 18-week paid parental leave scheme. This means eligible parent couples or single parents can share their 20 weeks of leave – aimed at greater gender equity in parental caring responsibilities.

There are other changes, too, such as the whole 20 weeks of leave of instalments can be received flexibly in multiple blocks within 24 months of the child’s birth or adoption date, removing the previous requirement of 12 weeks in one continuous period.

Also, note that employees now have greater rights to request an additional 12 months of leave (24 in total) – and employers need to show reasonable business grounds on which to refuse.

5. CHILDCARE SUBSIDIES

For those who employ parents with young children, it’s worth noting that childcare rebates will change from 1 July. They should result in any employees with a family income of less than $530,000 getting a higher level of subsidy for the cost of childcare.

For example, families earning up to $80,000 will get an increased maximum Child Care Subsidy (CCS) amount, from 85% to 90%. If they earn over $80,000, they may get a subsidy starting from 90%, but it will go down by 1% for each $5,000 of income the family earns.

While these changes are applied automatically, it is worth being aware that they are coming.

6. DOMESTIC VIOLENCE LEAVE INTRODUCED

From 1 February, employers with 15 or more employees were required to provide their employees with 10 days of paid family and domestic violence leave (FDVL) per year. 

For smaller employers who employ less than 15 employees, this entitlement will operate from 1 August 2023.

Paid family and domestic violence leave is quite a sensitive topic, and there need to be procedures in place – on everything from how the HR or manager handles requests to the privacy issues around how it gets recorded on a pay slip.

7. PENSION AGE AND ELIGIBILITY INCREASES

For those businesses employing older Australians, it’s worth noting that from 1 July, the pension age will be raised to 67 for those born on or after 1 January 1957.

Not only that but asset and income eligibility tests will also be revamped, which means singles can earn $204 a fortnight and couples $360 a fortnight, before losing their full pension.

8. ENERGY BILL RELIEF ON ITS WAY

With soaring power bills contributing significantly to business operating costs, $650 in bill relief is on its way from July.

The total amount of bill relief will vary by state. To be eligible, your business must be on a separately metered business tariff with your electricity retailer – so if you run a business from home, you probably won’t qualify.

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Allan Hall name Business Advisory Firm of the Year

Allan Hall named 2023 Accounting Award Winners

Posted on | by Allan Hall

Allan Hall wins Business Advisory Firm of the Year at the 2023 Australian Accounting Awards

Allan Hall Business Advisors is proud to announce that it has been awarded the prestigious title of Business Advisory Firm of the Year at the 2023 Australian Accounting Awards.

Allan Hall has continued to excel in its commitment to supporting and servicing clients.

Director Scott Jago expressed his delight at receiving this esteemed accolade.

“Receiving this award creates a sense of achievement and deep satisfaction, validating that Allan Hall is on the right path,” he said.

Allan Hall’s success can be attributed to its ‘One Allan Hall’ multiservice approach, which provides clients with a comprehensive range of services under one roof. Recognising that clients desire more than just compliance-related assistance, the firm has continuously adapted and expanded its service offerings, ensuring it remains well-positioned to give clients what they want.

This notable recognition reaffirms Allan Hall’s dedication to delivering exceptional business advisory services and its ongoing commitment to supporting small and medium-sized businesses across Sydney’s Northern Beaches and beyond.

Allan Hall named 2023 Accounting Award Winners 2
Allan Hall named 2023 Accounting Award Winners 3
Allan Hall named 2023 Accounting Award Winners 4

The Business Advisory Firm of the Year award highlights outstanding performance and acknowledges the firm in the accounting industry that effectively showcased its business advisory services and client impact. See the full list of 2023 Winners and Finalists here: https://www.accountantsdaily.com.au/australian-accounting-awards/winners/2023-winners-and-finalists

In addition to this recent accolade, Allan Hall was also named Multiservice Firm of the Year and SMSF Firm of the Year Finalists in 2023. The firm’s previous achievements include being named the Best Business Advisory Firm by the 2023 Beaton Client Choice Awards and winning the Australian Accounting Awards for Wellness Program of the Year (2022) and Firm of the Year (2021). These accolades reflect Allan Hall’s consistent dedication to innovation, client service and community involvement.

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eofy 30 june

End of Temporary Full Expensing 30 June

Posted on | by Allan Hall

Just under a month to go before the Temporary Full Expensing Measures finish up

The temporary full expensing rules allow eligible businesses to claim a tax deduction for the full cost of eligible depreciable assets (except for motor vehicles which are subject to the current car cost limit of $64,741).

Key changes

  • The temporary full expensing measures that have allowed small and medium businesses to write off the full cost of new assets, with no limit, (other than the cost limit on motor vehicles) is scheduled to end on 1 July 2023
  • Any business considering purchasing assets and utilising these measures prior to this date should plan now — it is important to note that to receive the deduction, an asset must be installed and ready for use.

To claim the deduction in full, in the year the asset is acquired, the asset must be installed and ready for use and must be used for a taxable purpose.

Temporary full expensing supports businesses and encourages 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.

From 1/7/2023 to 30/6/2024, businesses with turnover up to $10M will be entitled to claim an immediate tax deduction for assets costing $20,000 or less. Assets purchased above this amount will not get an immediate deduction.

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Annual Shutdown and Unpaid Leave changes

Posted on | by Allan Hall

Understanding the revised regulations for Annual Leave and Unpaid Leave during temporary business shutdowns

Impact on employers and employees

Generally, when businesses temporarily shut down over Christmas/New Year, employers have been able to direct their employees to take annual leave or, where they have no annual leave entitlements available, employers have been able to direct their employees to take unpaid leave. 

As a result of changes to 78 Awards, from 1 May 2023, employers will no longer be permitted to direct their employees to take unpaid leave where they do not have a sufficient accrual of annual leave to cover the shutdown. 

The recent findings of the Fair Work Commission were, that making a direction to an employee to take unpaid leave was effectively a stand down, and the Fair Work Act 2009 only permitted employees to be stood down in limited circumstances, which did not include a temporary stoppage of operations such as an annual shutdown.   

Award Covered Employees 

Under the changes to the Awards listed in the Commission’s decision here, employers can still issue a direction to employees to take annual leave during a temporary shutdown if the direction is in writing, is reasonable and their employees have accrued sufficient annual leave entitlement. 

In assessing reasonableness, the following factors are relevant:   

  • the needs of the employee and the business   
  • any agreed arrangement with the employee   
  • custom and practice of the business   
  • timing of the direction or requirement to take leave   
  • whether the length of the period of notice given is reasonable. 

Each Award stipulates the period of notice which must be given to all employees of the shutdown (generally between 28 days and two months) unless a shorter period is agreed with the majority of employees, or for employees who are engaged after notice is given, as soon as reasonably practicable after they have been engaged. 

Employers are no longer permitted to direct employees to take unpaid leave where their annual leave entitlements have been exhausted. 

However, under the changes, employers can still: 

  • agree with an employee in writing that they take a period of unpaid leave; or 
  • come to an arrangement with the employee to take annual leave in advance resulting in a negative annual leave balance. 

But, if employees do not agree to the above, then they will be entitled to be paid wages during the shutdown period.  

Award and Agreement Free Employees 

For award and agreement-free employees, employers can still require them to take a period of annual leave if the requirement is reasonable. 

A requirement to take annual leave may be reasonable if, for example: 

  1. the employee has an excessive annual leave balance
  2. the business is being temporarily shut down for a period (such as between Christmas and New Year). 

Just like Award Covered Employees, Award/Agreement Free employees cannot be directed to take unpaid leave if they do not have sufficient accrued annual leave. 

Need Assistance?

If your business is planning a temporary shutdown of its operations, it is important that you are aware of your obligations under each applicable award for your employees and manage employee leave accordingly. Should you require assistance with notification requirements or reaching agreement with your employees regarding shutdown arrangements, please feel free to call us on 1300 675 393 or contact Alan Hall Human Resources here »