Firm Journal

Strategies to put an end to negative office gossip

Negative gossip in the office is something that is harmful both to your business and to the employees. Whether it encourages individuals to seek work in a less toxic environment, slows down productivity, creates friction between team members or morphs into a legal problem with accusations of bullying and harassment, it is something that managers should put a stop to as soon as possible.

Walk the walk
If you are a manager, employees look to your actions as what expectations of behaviour are in the workplace. If a manager is ever seen engaging in the behaviour, they prohibit this acts to encourage negative gossip as it is seen as acceptable.

Hold a team meeting
If there are issues throughout the team, it should be addressed as a staff issue. A meeting will allow members of staff to voice problems and come up with collaborative solutions to solve them.

Meet with the perpetrators
Having a one-on-one confidential discussion may solve the problem if bad behaviour is being exhibited by individual members of staff. If you assist the person in understanding the damage their actions cause and the potential consequences for their job, this puts the person on the path for creating new helpful habits in their interactions within the workplace.

Posted on 24 September '18 by , under business. No Comments.

Paying super to different visas

Normally employers have to pay a worker super. However, this becomes confusing with the different visas that employees might be on. Some rules are listed below.

Paying super to temporary residents
Temporary residents working in Australia are eligible for super guarantee. When temporary residents leave Australia, they can claim the super paid as a departing Australia superannuation payment (DASP). This is provided that they meet the requirements where you must:

  • Be 18 years old or over (if you are under 18 you must meet the above conditions and work over 30 hours per week to be entitled to SG) and,
  • Paid $450 or more before tax in a month.

Employees working overseas
An employee sent to work overseas must be paid superannuation by their employer. The other country may require the employer or employee to pay super there as well if Australia does not have a bilateral agreement with that country. To gain exemption from the super payment in the other country, the employer needs to show the authorities in the other country a certificate of coverage gained from the ATO.

Employees not eligible for super

  • Non-resident employees, you pay for work they do outside Australia
  • Some foreign executives who hold certain visas for 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 verify this arrangement.

Posted on 24 September '18 by , under super. No Comments.

Authorisations for Single Touch Payroll

On the 1 July 2018, the Australian Government introduced Single Touch Payroll (STP) for employers with 20 or more employees. The new scheme requires employers to report payment activities each time employees were paid. Authorisations for an agent to act on behalf of an employer to streamline the process of STP are provided below.

STP Engagement Authority
If a registered agent reports through STP for an employer, they can get written authorisation to make this declaration through an annual agreement. This authorisation will allow the registered agent to make the relevant declaration to the Commissioner when they lodge an STP at each pay event. Both parties should have a copy for their records although there is no need to provide a copy to the ATO

The agreement should include:

  • An outline of the responsibilities of both parties
  • Agreed terms of the employer’s collation of payroll
  • Their process for calculating and paying their employees
  • Taxation and superannuation obligations

Eligibility for the Authority
For eligibility to provide an agent with the powers given above regarding STP, the employer must not:

  • Have any overdue activity statement lodgements
  • Have any outstanding debts, unless they are covered by a payment arrangement or subject to review
  • Currently be or have been the subject of ATO compliance activity for PAYG withholding in the last two years

Exclusions
The STP engagement authority does not apply to the other approved forms or finalisation declaration. A registered agent must still obtain a signed declaration in writing from an employer before making the finalisation declaration on behalf of the employer at the end of the financial year.

Posted on 24 September '18 by , under tax. No Comments.

Changes to FBT for Utes

The Australian Tax Office (ATO) has released draft guidelines changing its previous stance on Fringe Benefits Tax (FBT) for utes. Amendments originated from reports that dodgy tax returns were responsible for a loss of $8.7 billion in income tax due to wrongful claims. Failure to comply with new requirements listed below may result in a 20 percent FBT imposed on the cost of the vehicle.

The requirement of a logbook
New rules require employers to ensure their workers using these vehicles keep detailed logbooks. Whether the logbooks are electronic or hard copy, it is vital that the process be effective for returns lodged in the 2019 FBT year, when the law takes effect. Employers receive confirmation via email from employees using the vehicles at the end of the 2019 FBT year with their logbook including all regulated diversions and private use.

Diversions and private use rules
The guidelines introduce capped limits for the log books to comply with. Professional travel means that the vehicle must not deviate more than 2km from its usual route. However, 1000 km of non-work related travel is allowed, provided that there is no single trip exceeding 200 km. Such regulations provide greater flexibility than previous guidelines. What the ATO deems “minor” or “irregular trips” like carpooling the children to and from school or an occasional trip to visit relatives will not render you non-compliant so long as it is recorded as non-professional use.

Posted on 14 September '18 by , under tax. No Comments.

Employer super obligations reminder

The Australian Tax Office (ATO) is reminding employers to check they are meeting their obligations when it comes to paying super to their workers.

To help you make sure you are meeting your requirements, consider this checklist:

  • Are you paying the correct amount?

You are required to pay a minimum of 9.5 per cent of their ordinary time earnings to their superannuation fund.

  • Are you keeping correct and up-to-date records?

It is important to maintain accurate record-keeping procedures, so you have evidence to prove you have been meeting your employer super obligations.

  • Are you paying super to all eligible workers?

Like your employees, some contractors you hire may also be eligible for super contributions.

  • Are you making payments to the right fund?

Unless a worker has not provided their details, you should be paying into their fund of choice instead of your default fund.

  • Are you making payments on time?

The ATO allows employers to make contributions quarterly. Always ensure you make payments on time as late payments can incur a superannuation guarantee charge, which is not tax deductible. When making payments on time, they are tax deductible against your business income.

  • Are you paying the right way?

It is important to send the payment and data electronically in a standard format (paying the SuperStream way). Your business may also be eligible to use the free Small Business Super Clearing House to distribute payments to your employees’ super funds.

Posted on 14 September '18 by , under super. No Comments.

Income tax return: what to report

The time to report and lodge your annual tax return for your business is fast approaching. Remember, what you must report will depend upon the type of business entity you have.

Sole traders
As a sole trader, you are required to lodge a tax return even if your income is below the tax-free threshold. This will include:
– tax return for individuals including the supplementary section
– business and professional items schedule for individuals.

You must report:
– The business income minus the business deductions you are eligible to claim.
– The other income like wages and salary (from a payment summary), rental income and dividends, minus deductions against this income.

Partnerships and partners
The partnership must lodge a partnership tax return. This will include the partnership’s net income (assessable income less allowable expenses and deductions).

The ATO does not require the partnership to pay tax on the income it earns. Rather, every partner must pay tax on the share of net partnership income you each receive.

For you (as an individual partner) you must report:
– Your share of the partnership net income or loss.
– Any other assessable income like wages and salary (shown on a payment summary), dividends and rental income.

Trusts and Beneficiaries
When you operate your business through a trust, the trustee will be required to lodge a trust tax return. The trust reports its net income or loss (the trust’s assessable income minus deductions).
Each trust beneficiary must lodge their tax return, i.e., an individual or company tax return.

As a beneficiary of a trust, you must report:
– Income received from the trust.
– Other assessable income including dividends, salary and wages (on an individual’s payment summary), and rental income.

Companies
You must lodge a company tax return. The company is required to report its taxable income, tax offsets and credits, PAYG instalments and the amount of tax it is required to pay on that income or the amount that is refundable. Your personal income is kept separate from the company’s income.

With deregistered companies – ensure you lodge a final company tax return before it is deregistered by the Australian Securities and Investments Commission (ASIC). The ATO will be unable to process a company tax return if the company is deregistered.

Posted on 6 September '18 by , under tax. No Comments.

Winding up a SMSF

The Tax Office is reminding individuals winding up a self-managed super fund (SMSF) that before lodging your final SMSF annual return, you must first have an audit completed by an approved SMSF auditor.

When lodging your SMSF annual return, answer Question 9 in Section A: ‘Was the fund wound up during the income year?’. You should also look to complete Question M in Section D: Supervisory levy adjustment for wound up funds. By doing so, you will reduce the SMSF supervisory levy you must pay, so you do not have to pay the levy the following year.

Remember also to pay any outstanding tax liabilities and lodge any outstanding returns. Otherwise, you may be subjected to compliance assessments and risk penalties.

The Tax Office will send you a letter of confirmation of your wound up fund, which will include:
– confirmation your SMSF’s ABN is cancelled, and
– your SMSF’s record is closed on the ATO’s system.

Avoid closing your bank accounts until all expected final liabilities have been settled and requested refunds received. You can pay outstanding tax liabilities, including the supervisory levy when you lodge your final SMSF annual return.

Posted on 6 September '18 by , under super. No Comments.

Strong leaders ask for help

There is no weakness in a leader who asks for help. Maintaining success in your small business requires you to seek advice from your employees on a range of matters.

However, it is important to ask for help in the right way, so your team does not lose confidence in your leadership ability. You need to communicate that you are asking for input or advice rather than help because you are floundering.

Consider these ways when asking for advice from an employee:

Ask a ‘specific’ question
Avoid asking a vague question and get specific. What exactly do you need from this employee? If you are vague, it will communicate to your staff you are unsure of what you want. When you are specific, they can complete the task quickly and conveys that you are seeking their professional advice, rather than a helping hand.

Offer something in return
When you need help, it might be better to turn it into a negotiation. They advise on a matter, and you do the same in return.

Check you need help
Ensure you have tried to complete the task before asking for help. Asking for help straight away may risk others perceiving you as less competent or even lazy if they point out a simple or obvious way to solve the issue.

Posted on 6 September '18 by , under business. No Comments.

Managing your working capital

Working capital is the money needed for day-to-day business operations and is often a measure of a business’s liquidity, efficiency and financial health.

To ensure your business has adequate working capital, the working capital cycle should be applied. The working capital cycle is the length of time from the purchase of inventory to the receipt of cash from customer sales.

The cycle comprises four elements: cash (funds available), creditors (accounts payable), inventory (stock on hand), and debtors (accounts receivable). Maintaining good cash flow requires control over each component. Ways to improve working capital:

Invoicing
To collect payments from debtors early, consider:
– establishing a credit policy
– invoicing early
– reducing payment terms
– stop supplying credit to debtors that do not pay
– following up on overdue accounts
– offering early settlement discounts

Inventory
Inventory can tie up a large sum of your working capital; reducing inventory through the just-in-time model can increase efficiency and eliminate waste. The just-in-time inventory model is beneficial as it allows for quick changes to customer needs and frees up working capital to better meet financial obligations.

Managing cash outflows
Managing the money you owe to creditors is just as important as managing your accounts receivable.

To ensure your cash outflow meets your obligations:
– consider early payment discounts
– prioritise suppliers
– ensure the accuracy of invoices before making a payment
– only make payments when they are due

Posted on 6 September '18 by , under money. No Comments.

Consider business structure

Creating a new business is an exciting time for any first-time entrepreneur, but it also comes with making big decisions – one of these will be when you must choose which structure your business will take.

Whether you are looking to form say a company or a partnership, it is important to know that there are varying legal and financial requirements that surround each one. Ask yourself which structure will best help your business to grow and flourish?

For instance, many small businesses are set up as a sole trader. A sole trader is one individual who owns the business.

However, choosing the business structure, you will use will predominantly depend on your situation and the structure that best suits your needs and that of your business.

Always look at what is involved with starting up, operating and closing a structure before making your final decision. You can also choose to change your business structure throughout the life of your business.

If you are unsure which structure will best suit your business, it may be helpful to seek professional advice.

Posted on 29 August '18 by , under business. No Comments.