Federal Budget update

Federal Budget Update – Key Takeaways

On 2 April, the Government released the Federal Budget for 19/20.

Below are the key takeaways that may be relevant to you and your group:

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Christmas tree with presents

Season’s Greetings & Best Wishes from Brentnalls WA!

Season’s Greetings & best wishes for a happy, healthy and prosperous New Year from your team at Brentnalls WA!

 

P.S. Please note that our office will be closed from1:00pm on Thursday, 20 December 2018 and will re-open at 8:00am on Monday, 7 January 2019. In case of emergency, please leave a message at our office number 08 6212 7200. We will be checking our messages over the holiday period and will get back to you as soon as possible.
Newsletter

November 2018 Newsletter

Focus on Your Cashflow in the Lead up to the Christmas & New Year Holiday
Brentnalls Affiliation National Conference 2018
My Learnings from China – What Makes a Success Business & Do You Measure Your Competitive Advantage?
Proposed Changes to Division 7A
Practical Advice on Agile Leadership
Brentnalls Affiliation in the Top 100 Accounting Firms for 2018
Every Bit Counts
Did You Know We’re on LinkedIn?

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Targeted amendments to Division 7A – Treasury consultation paper

Today, Treasury has released a consultation paper relating to the proposed amendments to the Div 7A rules that are due to apply from 1 July 2019.

 

The release of this paper is significant as it is the first detail provided by the Government on how the new proposed rules are intended to apply.

Prior to today’s release, the Board of Taxation’s report outlining recommendations to Government (finalised in 2014) was all we had available as a guide on how the new rules may be applied. Treasury has made substantial changes from those original recommendations.

The notable points that may affect your group are:

  • New Div 7A loans will be straight line 10 year – principal and interest paid each year (previously 7 years)
  • Interest rate will increase from current ATO benchmark rates, and will be the “Small business; Variable; Other; Overdraft – Indicator Lending rate most recently published by the Reserve Bank of Australia prior to the start of each income year”. This will result in substantially higher interest and repayments over the term of the loan
  • Existing Div 7A loans will transition to new rules, however loan terms will not be extended
  • 25 year loans WILL NOT be grandfathered. Transitional rules will allow for 2 years to transfer the loan to a new 10 year loan. Failure to convert these loans will result in a deemed dividend
  • The concept of “distributable surplus” is being removed – this will result in previously exempt loans and payments being captured by the Div 7A rules and triggering tax that previously would not be payable
  • Self-correction mechanism will apply to rectify Div 7A breaches – make good catch up payments will be allowed
  • Amendment period relating to Div 7A loans, payments and forgiveness will extend to 14 years as an integrity measure (up from 5 year amendment period)
  • Post December 2009 Unpaid Present Entitlements (UPE’s) will be captured by the new Div 7A rules (this includes Sub Trust arrangements set up under the Practice Statement 2010/4)
  • IMPORTANTLY, IT IS STILL NOT YET CLEAR whether Pre December 2009 Unpaid Present Entitlements (UPE’s) will be included in the new rules. The consultation paper is specifically asking feedback asking “Should UPEs arising prior to 16 December 2009 be brought within Division 7A?”
    The proposed changes will affect a large number of taxpayers and in some instances will require proactive tax planning to ensure tax effective structures are maintained during the transition.

We will continue to keep you informed of the changes as further updates come to hand.

August 2018 Newsletter

The latest edition of our Newsletter is on its way to your Inboxes! In it, you will find our Director’s reflection on the current financial market situation, Levi’s take on the importance of understanding the numbers, GrowthCon update & more.

Follow the link to access the Newsletter Download PDF of our August newsletter.

Why establish an estate/business succession plan?

Despite the fundamental importance of succession planning, it is often neglected in current business/farming management practice.

Business owners/farmers should recognise that the need for a fully discussed succession plan is paramount in any business/farming situation. A natural progression from one generation to the next (or in case of unexpected or premature death) through the deceased’s Will. Poor succession planning is the cause of much “hurt in business/rural Australia.” Read more

What Is A Self-Managed Super Fund

A Self Managed Superannuation Fund (SMSF) is a type of super fund set up for those who wish to manage their own superannuation assets privately, rather than be a part of a larger fund where members pool their super funds and these are managed by professional fund managers. It gives the members much greater control over the investment decisions, but also require far greater input by the members of the fund. All super funds are required to comply with their relevant regulatory bodies and with SMSF‘s, trustees are required to oversee these compliance requirements. Read more

Traits of a Successful Business

We want to be the Accountant who will Challenge, Attack, Question, Confront, Dare, Provoke, Contest, Assault, Invade, Blast you on the way you operate your business.

The key areas of any Business that require ongoing maintenance to ensure the Health and Wealth of your business are: Read more

Strategic Planning – 10% Strategy 90% Execution

Where are you on the strategy and execution axis with your business?

It has often been said that an average strategy well executed will always outperform a superior business strategy which is poorly executed. In fact in terms of effort, the development of thebusiness strategy is 10% of the effort and the execution of the business strategy is 90% of the effort. Read more

Improving Value At All Stages Of Your Business

Improving the value of your business is not just about selling. It’s about running the most successful business you can.

The Theory

There are many ways to value a business, however the most commonly used valuation methodology for a profitable trading business is the Capitalisation of Profits Methodology.

This methodology is based on the average earnings of the business (before interest and tax – EBIT) multiplied by a capitalisation rate.

Therefore to increase the value of your business, a business owner should focus on: Read more

Funding Requirement Report

Is it time to visit the Bank?

Visiting your bank is often like visiting the dentist:

• You need to go yearly but you delay it for as long as you can
• Your past sins are obvious as soon as you open your mouth. They can be even worse when the dentist digs a little deeper and does an x-ray!
• The feeling of an unknown outcome – will you get the all clear?
• Feeling like you can’t get your point of view across even when they ask you questions
• The expensive bill at the end of the visit
• The ongoing maintenance and review so you don’t lose all of your teeth. Read more

Fringe Benefits Tax (FBT) and Salary Packaging

The 2011 Federal budget signaled significant changes to the way Fringe Benefits Tax will be calculated on the use of motor vehicles. Traditionally, motor vehicles have formed an essential part of many remuneration packages and it was initially feared that the changes to the legislation would make it prohibitive for employers to use this carrot to entice and retain employees. However, closer analysis suggests that there continues to be scope to tax effectively package motor vehicles into employee’s salary under the new regime.  Read more

What is a Bonus Plan?

Many exceptional companies have bonus plans to reward employees.

Why would you consider a bonus plan?

Advantages include:

  • Staff retention, attraction and motivation.
  • Added incentives to complete jobs on time and achieve agreed milestones.
  • Assists cash flow in the company by minimising annual salary increases.

Read more

Contractors vs Employees: Under the ATO Spotlight

Why Consider the Contractor issue now?

The contractor issue is not at all new, nor has it been subject to any dramatic recent change.  However there are a number of diverse factors that have brought this issue back to the spotlight.

  1. Growth in the number of Contractors: The attractions of contractors are many: a substantial release from the growing obligations that employers face and the flexibility which comes with being able to gain or shed resources in line with needs and the business cycle, just to name a couple.
  2. Government / Treasury Attention: The new contractor reporting regime which will apply to the building and construction industry from 1 July 2012 is the most obvious example of measures to examine contractor arrangements.
  3. Tax Office Attention: The Tax Office’s compliance plan for 2012 is reason enough to note how important the contractor issue has become.
  4. Institutional attention:  It is reasonable to expect that union scrutiny of contractor arrangements will continue.

Read more

The Budget Surplus – Illusion or Reality?

The Government released their Mid-Year Economic and Fiscal Outlook (“MYEFO”) report and announced the following key changes:

  • Corporate PAYG Tax Instalments

Companies with a turnover in excess of $20 million per annum will be required to make PAYG Income Tax instalments on a monthly basis.

  • In-House Fringe Benefits

Under the current legislation, the taxable value of an in-house fringe benefit under a salary sacrifice arrangement would be reduced to 75% of the lowest price at which an identical benefit would be sold to the public or under an arm’s length transaction. This taxable value would then be eligible for a further $1,000 reduction in determining the FBT payable. Read more

New LAFHA Regime Kicks In From 1 October 2012

The new legislation containing changes to the current Living Away From Home Allowances (“LAFHA”) regime was recently passed.

For employers with LAFHA arrangements entered into after 8 May 2012, the new rules will apply from 1 October 2012.
The new rules require the following from the employers and/or employees: Read more

Excess Super Contributions: Once Only Refund Offer

The ATO has started offering refunds to some individuals who have exceeded their annual superannuation concessional contributions cap.

From the 2011-2012 year, there is a once-only opportunity to have excess concessional contributions refunded. Read more

Contractor Payments Undergo ATO Data Matching

The ATO has recently released details of a data-matching program focusing on contractor payments. Under the program, the ATO intends to collect information in relation to payments made to contractors for the 2009-2010 to the 2011-2012 income years by businesses audited by the ATO’s employer obligations area. Read more

Special Circumstances Found To Set Aside Excess Contributions Tax

A taxpayer has successfully argued before the AAT that there were special circumstances in his situation to allow for the exercise of the Commissioner’s discretion under the law to reallocate  superannuation contributions.

Accordingly, monies paid into his superannuation account in late July 2009 could be attributed to the 2008-2009 financial year, and this meant that the taxpayer would not exceed the (then) $50,000 contributions cap. Read more

Depreciation Deduction Allowed For Certain Equipment

A recent case before the AAT has highlighted the need for businesses to maintain appropriate records of plant and equipment used in business. Read more

Honest Mistake In Not Documenting Private Company Loans

A taxpayer has been, in most part, successful before the Administrative Appeals Tribunal (AAT) in relation to a matter concerning loans from a private company.

These loans were made to him, over various years, as a shareholder and director of the private company.

The ATO had treated the loans, which were made in the 2005, 2006 and 2007 income years, as assessable dividends.
The AAT sided with the ATO in relation to the 2005 loans. Read more

Mini-budget tightens fringe benefits, health rebates and more

The Government’s mid-year budget update was handed down in late October 2012.

The Treasurer revised down the expected Budget underlying cash surplus to $1.1 billion for 2012 – 2013 down from $1.5 billion estimated in the May 2012 Budget. Read more

Planning for 2013/14

To survive in difficult times, businesses need to continually review their business operating environment. This would include a review of your marketing strategy, managing costs, innovation, productivity, preparation of cashflow and profit and loss budgets for 2013/14. Read more

3 Key Ideas to Help Business Leaders Succeed in 2013

When did you last complete a competitor analysis?

Almost all business owners/managers are aware of their direct competitors but when was the last time you actually completed a formal analysis by way of a ‘competitor analysis’?  This should be at least an annual process to help pin-point key opportunities for improvement.  To complete a competitor analysis: Read more