Author: Glance Consultants

The CPI (consumer price index) figure, a measure of inflation, was higher than expected for this quarter at 5.1% and this is going to impact businesses and individuals in some way or another. 

Previously, Australia’s inflation rate was lagging behind other countries such as those in Europe and the US, however the scale of the recent increase indicates that this is changing. 

The RBA recently increased its cash rate target to 0.35% as a response and we can expect further inflation pressures to cause uncertainty for businesses in the coming months. 

In particular, small businesses are hit hard by inflation, primarily due to the flow on effect on wages and the cost of capital. Although we are going down the same CPI path as other developed countries, it doesn’t make the news any less difficult to take. 

Tony Greco, the general manager technical policy at IPA acknowledges that ‘the cost of capital is a business cost, so businesses need to factor into their price structures the impact of future rate hikes’.

Highly leveraged operations are going to be more exposed than those that do not have significant levels of borrowing, so the impact and response across the economy is not going to be a uniform one. This is cause for concern for many businesses that have seen it tough over the past few years and have yet to recover, yet would have otherwise had the ability to do so.

Fuel price is yet another great unknown that companies are needing to adjust their forward estimates to compensate for. Temporary excise cuts cannot mitigate the issue for long and there is a large question mark over the likelihood of peace in Ukraine in the foreseeable future. 

However, perhaps the biggest factor for businesses to consider is the need for an increase in wages in response to ongoing inflationary pressures. 

By considering a 5% wage increase and understanding the impacts that this would have in addition to other additional expenses, businesses are able to determine how they are able to continue operations over time. 

Needless to say, many small businesses are going to find it difficult and impacted negatively when CPI increases and the value of the dollar goes down. 

We are aware of the need for forward thinking and proactive approaches at this time and are eager to support our clients in ensuring that they are securing their businesses in these uncertain times. 

Contact Glance Consultants today to get help or advice for your small business on 03 9885 9793

 

Virtual sales calls have replaced the more traditional face-to-face style, even as we move out of the pandemic and lockdown restrictions. Video calls are both flexible and they allow your business to scale up, globally should you wish. They certainly have their benefits.

Meeting over Zoom or Microsoft Teams is convenient for both client and sales representative and has essentially become the normal.

But if you’re unsure whether you have mastered the skill of closing a deal in a virtual setting, then do take a look at some of the following tips. 

 

Plan ahead. 

All telesales representatives have a script that they memorise over time. You can tell the new employees from the seasoned ones by how they deliver their script and whether it sounds natural or simply read out from the screen. 

We suggest that you too use a script to get you started, but with bullet points of information to allow for natural engagement and an organic flow. 

 

Make it engaging.

Imagery sells, so share your screen and create powerpoint presentations, or take them through a series of different websites to paint a clear picture that emphasises the points you are making.  

 

Look professional.

Not only do you look the part by having the right equipment, you will also feel more confident and comfortable within yourself. 

Set up your workstation and invest in a good microphone and in some quality lighting. Perform a test run with a friend to make sure everything is working properly. 

 

Keep an eye for cues.

Our attention spans in front of screens are notoriously low, as in about 10 minutes long. Make sure you are watching your prospect for signs of boredom and react accordingly. 

If something can be added in an email, then skip it during the call. 

Reading body language virtually can be extremely difficult, but a good trick is to occasionally mimic what the other person is doing and make eye contact with the camera when listening. 

 

Be clear about what’s next.

A good sales trick whatever the setting, it’s important to keep your potential client comfortable by letting them know what they are to expect next. 

Follow up all information with an email and potentially include some time-limited sales incentives or other tactics. 

Here at Glance Consultants, we seek to remain at the forefront of technological advances in order to support our clients through their transitions into the next digital generation. Let’s chat about how you can adopt technology more effectively. Contact us now on 03 98859793 or at enquiries@glanceconsultants.com.au

 

It’s pretty clear that recently, there has been a shortage of talent in the workforce and those employees with the necessary skills are highly desirable amongst many competing businesses. 

Business leaders are looking at two very important levers to business success. That is technology and people. 

So how do you approach this battle between your competitors and manage the balance between obtaining the workforce that you need to get ahead and affording to do so?

Be Brave

We have seen that the businesses that have continued to do well over the past couple of years have been those that refuse to be victims of change. The business leaders who have addressed both the issues of talent and technology have remained at the forefront in terms of growth and success. 

But although the business can adopt new cloud-based, highly secured platforms and sustain a remote work setting that got them through the pandemic, without the talent that is needed to leverage this and further development, technology just becomes a cost line item. 

Mid-market businesses report that the two leading changes planned for 2022 are to either:

1. hire new full-time employees, 34%, or
2. decrease staff numbers, 32%. 

This shows bold decision making. It may be that 32% of businesses are faced with a reduction in revenue. It could be that they have developed more efficient systems. If you’re one of the 34%, how on earth do you acquire staff when there are so many other businesses doing exactly the same?

It comes down to how you are winning the hearts and minds of the talent out there. 

Does your business enable the development of meaningful connections in the community? Can you provide hard evidence to support your claims that by joining your company, a potential employee’s life will be better and stronger than if they went somewhere else?

You want to be able to expose your employees to an environment that stretches them and protects them for the future. Whether they plan to work in your company for 12 months or 12 years, it shouldn’t matter to you. They want to build their CV with relevant skills that improve their lives as a result. 

Although technology is effectively invalid without the talent to use it, we also believe that without the technology, you will not gain the talent.

Being brave in your decision to be a leader both in your business and in your sector will help you win the war. Without the technology that your talent wants to work with, you’re essentially bringing a knife to the gun fight. 

For more advice on building your business, get in touch with a team member at Glance Consultants, today. Our office number is 03 98859793 or alternatively you can email us at enquiries@glanceconsultants.com.au

 

FBT year-end checklist

 

March 31 marks the end of the 2021/2022 fringe benefits tax (FBT) year which commenced 1 April 2021. It’s time now for employers and their advisors to turn their attention to instances where non-cash benefits have been provided to employees, and also where private expenses have been paid on their behalf.

Although it will generally fall to your accountant to prepare the FBT return, from your software file or other records, all of the instances where you have provided employees and/or their associates (e.g. spouse) with a potential fringe benefit may not always be apparent to them. To assist you in bringing these potential benefits to the attention of your accountant, following is a general checklist (non-exhaustive).

 

CARS

• Did you provide or make available a car that your business (or an associate of the business) owned or leased, to an employee or their associate for private purposes?

Exemptions include minor, infrequent and irregular non-work-related use by an employee of certain commercial vehicles.

 

• Did you as an employer reimburse expenses of an employee in relation to a car they owned or leased?

Exemptions include where the business compensates the employee on a cents per km basis for estimated travel and where the car has not been used for private purposes.

 

LOANS

• Did your business provide a loan to an employee or their associate?

Exemptions include where the loan is strictly related to meeting an employment expense (which must be incurred within sixth months of the loan being made). Exemptions also include loans made by private companies to employees who are also shareholders but the loan is Division 7A compliant.

 

DEBT WAIVER

• Did your business release an employee or their associate from paying an outstanding debt?

An exemption applies where the debt in question is genuinely written off as a bad debt (as distinct from waived for employment or personal reasons).

 

HOUSING

• Did your business or an associated entity provide an employee or their associate with the right to use accommodation by lease or licence?

The benefit may be exempt in the event that it relates to a remote area.

 

LIVING AWAY FROM HOME ALLOWANCE (LAFHA)

• Did you pay an employee an allowance to compensate them for private non-deductible expenses because they are required to live away from their usual place of residence for work?

Strict exemption conditions can apply which your accountant can walk you through.

 

EXPENSE PAYMENTS

• Did your business reimburse an employee or pay a third-party expense of theirs?

Exemptions include where the expense would have been otherwise deductible to the employee because it was work-related.

 

CAR PARKING

• Did you pay for an employee’s car parking expenses or provide them with a car park during the year?

Various exemptions apply including where the benefit is for a disabled person, or provided by small businesses or certain non-profit employers, or the minor benefit exemption applies.

 

ENTERTAINMENT

• Did your business provide an employee or associate (or in some cases third-parties) with entertainment by way of food, drink or accommodation in connection with this?
• Did your business provide an employee or their associate with a corporate box, a boat or plane for the purpose of providing entertainment, or other premises for the purpose of providing entertainment?

 

Record keeping

Keeping good business records is important for a number of reasons. It assists you to:

■ comply with your tax and superannuation obligations
■ gain a greater insight into the financial health of your business, enabling you to make informed decisions
■ manage your cashflow
■ demonstrate your financial position to prospective lenders, and also potential buyers of your business.

 

ATO REQUIREMENTS

Broadly, the ATO requires that:

■ you keep most records for five years from when you obtained the records, or completed the transactions or acts that they relate to – whichever is the later
■ you be able to show the ATO your records if they ask for them
■ your records must be in English or be able to be easily converted to English.

 

DIGITAL RECORDS

The ATO is reminding business owners that you can keep your records (paper/hard copies) digitally. The ATO accepts images of business paper records saved on a digital storage medium, provided the digital copies are true and clear reproductions of the original paper records and meet the standard record keeping requirements.

Once you have saved an image of your original paper records, you don’t have to keep the paper records unless a particular law or regulation requires you to.

However, if you enter information (for example, supplier information, date, amount and GST) from digital or paper records into your accounting software, you still need to keep a copy of the actual record, either digitally or on paper. Some accounting software packages may do both your accounting as well as your record keeping.

 

STORAGE OPTIONS

1. Cloud

If you use cloud storage, either through your accounting software or through a separate service provider, eg, Google Drive, Microsoft Onedrive or Dropbox, ensure:
■ the record storage meets the record-keeping requirements
■ you download a complete copy of any records stored in the cloud before you change software provider and lose access to them.

2. E-invoicing

Regardless of your E-Invoicing software or system, your business is responsible for determining the best option for storing business transaction data. You should:
■ ensure that your process meets the record-keeping requirements
■ discuss your options with your software provider
■ talk to your business adviser, if necessary.

 

DIGITAL ADVANTAGES

As the ATO point out, there are many advantages to keeping your records digitally. If, for example, you use a commercially-available software package, it may help you:

■ keep track of business income, expenses and assets as well as calculate depreciation
■ streamline your accounting practices and save time so you can focus on your business
■ automatically calculate wages, tax, super and other amounts, including
• develop summaries and reports for GST, income tax, fringe benefits tax (FBT) and taxable payments reporting system (TPRS), as required
• be prepared to lodge your tax and super obligations, including your tax return, business activity statements (BAS) and taxable payments annual report (TPAR) if you are a business that is required to
• send some information to the ATO online (if the package meets ATO requirements), for example, your activity statement
• meet your legal Single Touch Payroll (STP) reporting obligations
■ back up records using cloud storage to keep your records safe from flood, fire or theft.

 

ATO’s new crackdown on Discretionary Trusts

The ATO has just updated its guidance around trust distributions made to adult children, corporate beneficiaries and entities that are carrying losses. Depending on the structure of these arrangements, there is a potential that the ATO may take an unfavourable view on what were previously understood to be legitimate arrangements.

 

Background

For various reasons, including legal tax minimisation and asset protection, many business owners operate their affairs through a trust structure. While trust structures are legitimate, the ATO has become increasingly sceptical of the motivations behind the use of trusts which it believes in many cases are motivated chiefly by tax minimisation.

In February 2022, the ATO updated its guidance directly focusing on how trusts distribute income, and to whom! Consequently practices which may have once been previously accepted may now not be. This may result in higher taxes for family groups in particular – both going forward, and potentially retrospectively.

 

Target

The ATO is chiefly targeting arrangements under s100A of the Tax Act, specifically where trust distributions are made to a low rate tax beneficiary but the real benefit of the distribution is transferred or paid to another beneficiary usually with a higher tax rate. In this regard, the ATO’s new Taxpayer Alert (TA 2022/1) illustrates how s100A can apply to the quite common scenario where a parent benefits from a trust distribution to their adult children.

Released at the same time, the ATO’s new draft ruling states that for the new guidance to potentially apply, one or more of the parties to the agreement must have entered into it for a purpose (not necessarily a sole, dominant purpose) of securing a tax benefit. This sets the bar quite low and may capture a number of arrangements.

 

Assessing the risk

The ATO released an accompanying guideline providing taxpayers with a risk assessment framework for them to work through with their accountants to assess the level of risk involved in current and past distribution arrangements. In the guideline, the ATO has provided a number of examples of high-risk arrangements that are actually quite common and include:

1. Arrangements where the presently entitled beneficiary lends or gifts some or all of their entitlement to another party and there is a tax benefit obtained under the arrangement
2. Arrangements where trust income is returned to the trust by the corporate beneficiary in the form of assessable income and the trust obtains a tax benefit
3. Arrangements where the presently entitled beneficiary is issued units by the trustee (or related trust) and the amount owed for the units is set-off against the beneficiary’s entitlement
4. Arrangements where the share of net income included in a beneficiary’s assessable income is significantly more than the beneficiary’s entitlement
5. Arrangements where the presently entitled beneficiary has losses.

For arrangements that fall into the high-risk category, the ATO advises that it will conduct further analysis on the facts and circumstances of the arrangement as a matter of priority. If further analysis confirms the facts and circumstances of your arrangement are high risk, they may proceed to audit where appropriate.

 

What next?

The ATO’s new ruling and guidelines are still in draft form, and are expected to be finalised soon. Once finalised, they are intended to apply both prospectively and retrospectively. However, for entitlements conferred before 1 July 2022, the ATO has indicated it will stand by any administrative position reflected in its prior website guidance before the new material was released.

If you have any concerns about your trust distributions and exposed risk to Section 100A, you should contact our office to organise a meeting based on your personal circumstances.

 

Ridesharing: The Driver

Uber and other ride-sourcing facilitators have become increasingly popular over recent years. From a driver’s standpoint, there are a number of tax issues potentially in play. See overleaf for the tax implications from a rider’s perspective.

 

INCOME

Income from a driver’s ride-sourcing activities must be declared in their tax return irrespective of the amount they earn, and irrespective of whether they have another job. The amount to be declared is the full fare (including or “grossed-up” by the facilitator’s fee, less GST). The full fare amount must be declared in a driver’s personal tax return (or in an entity’s return if they are operating through a company, trust etc.).

 

EXPENSES

Expenses (less GST) incurred by drivers in operating their ride-souring activities are deductible. However, not all expenses will be deductible and may need to be reduced/apportioned to take account of any private use of the vehicle. The following common expenses are not deductible – fines (e.g. speeding or parking), cost of own meals and drinks during shifts, and clothing except if either compulsory or noncompulsory clothing that is unique and distinctive to the Facilitator you drive for.

In instances where a vehicle is being claimed in the driver’s personal tax return, the costs will be claimed using either of the following methods:

1. Cents per kilometre

Whereby you claim a set number of cents per kilometre travelled (currently 72 cents). The advantage of this method is very little record keeping is required. You only need to be able explain how you arrived at your calculation – you do not need any documentary evidence in the way of receipts or log books etc. Even where you travel more than 5,000 kilometres, you may still elect to use this method (and save the hassle on the record-keeping requirements that are required under the logbook method) by capping your claim at 5,000 kilometres. In summary, this method can be appealing to drivers who:

■ Have travelled less than 5,000 business kilometres
■ Have older vehicles (therefore depreciation and interest costs are low)
■ Have not kept, or do not wish to keep, records of kilometres travelled. This method incorporates all car expenses including petrol, servicing, depreciation, etc. You can make no further car expense claim.

2. Logbook

Under this method, your claim is based on the business use percentage of each car expense, which is determined by a logbook that must have been kept for a minimum 12-week period.

This logbook must be updated every five years. To ease the record-keeping burden, check out one of the innumerable logbook ‘apps’ on the market, either from the App Store or Google Play as the case may be.

In summary, under this method you can claim all expenses that relate to the operation of the car, at your percentage of business use, as established from your logbook. This method generally gives the best result where the vehicle has substantial business use. Drivers can calculate their claim and determine which method provides the largest deduction, by using the ATO’s Work-related car expenses calculator on its website.

 

GST

Under general GST law, you are only required to register for where you are carrying on an enterprise and your annual turnover is $75,000 or more. However, where your enterprise involves providing ‘taxi travel’ you must register for GST irrespective of the level of turnover.

The ATO adopts a broad interpretation of ‘taxi’ to include cars made available for public hire to transport passengers in return for a fare (but not including trucks and bike courier services). The Federal Court has confirmed this interpretation. Drivers therefore generally must register for, and charge, GST as soon as they commence operating.

 

ABN

Drivers generally speaking will always be ‘carrying on an enterprise’, and therefore should register for an ABN. The only instance where it’s conceivable that a driver would not be carrying on an enterprise would be where they are an employee of the facilitator. This is rare, however.

 

Ridesharing: The rider
This article examines the tax implications from a rider’s perspective.

 

DEDUCTION

The same principles apply as per taxi fares. Where the fare is business-related, for example you are travelling from your office to a client’s premises, the fare will be deductible in full. However, where the travel is personal the fare is not deductible. This includes travel between home and work. That is, trips between your home and regular place of work can’t be claimed even if you:

■ live a long way from your regular place of work
■ work outside normal business hours – for example, shift work or overtime
■ do minor work-related tasks – eg, picking up the mail on the way to your regular place of work or home
■ go between your home and your regular place of work more than once a day
■ are on call – eg, you are on stand-by duty and your employer contacts you at home to come into work
■ have no public transport near where you work
■ do some work at home.

To evidence the deduction, the rider will need documentation. The good news is that Uber, and we suspect other facilitators, will provide you with sufficient documentation to substantiate your deduction. You obtain this by logging back into their ‘app’ after the ride.

 

GST

To claim GST on a fare, the trip must be business-related (see earlier), and the rider must be in possession of a valid Tax Invoice. For many fares however, a Tax Invoice will not be required as the total fare may be less than $82.50 (including GST). Where this is the case, any of a Tax Invoice, a docket, an invoice, or a receipt will suffice for your GST claim.

The question then arises, what actual documentation does Uber or the driver provide at the conclusion of the ride? In the vast majority of cases, the driver will not provide you with any documentation (e.g. invoice etc.). Rather, after the ride, if you visit Uber’s ‘app’ they will on behalf of the driver provide you with a tax invoice if the driver is registered for GST. Tax Invoices are provided by Uber even where the fare is below $82.50. We can confirm that the standard Uber-provided Tax Invoices are in full compliance with the ATO’s requirements.

You will need to check the documentation of other facilitators for compliance.

 

ABN WITHHOLDING

Another relevant tax issue is ABN Withholding. Under this regime, if a supplier of a good or service does not provide an ABN and the total payment for that good or service is more than $75 (excluding GST), the recipient generally has to withhold the top rate of tax (currently 45%) from the payment and pay it instead to the ATO.

Having withheld from the payment, the recipient of the supply must then complete a PAYG payment summary – withholding where ABN not quoted and give it to the supplier at the same time the net amount is paid to them or as soon as possible after. However there are various exceptions. In the absence of one of these exceptions applying, this then raises the question of whether the rider would be liable for penalties for failing to withhold.

The reality is that under a typical ride-sourcing model (and certainly with Uber), the Rider is not in a position to withhold the 45% penalty as the payment they make for the fare is in the form of a direct debit of the Rider’s credit card. Therefore, it would be very difficult to imagine the ATO penalising Riders for not withholding when, in a physical sense, they have no ability to do so.

 

Salary sacrificing to super

Are you an employee thinking of putting some of your pre-tax income into superannuation to boost your retirement savings? This is known as salary sacrifice, and the good news is that it can benefit you and your employer.

 

What is salary sacrifice?

An effective salary sacrifice agreement (SSA) involves you as an employee, agreeing in writing to forgo part of your future entitlement to salary or wages in return for your employer providing you with benefits of a similar value, such as increased employer superannuation contributions.

Contributions made through a SSA into superannuation are made with pre-tax dollars and do not form part of your assessable income. This means salary sacrifice contributions are not taxed at your marginal tax rate (MTR) and will instead be subject to superannuation contributions tax of up to 15% when received by your superannuation fund and will count toward your concessional contributions (CC) cap.

The CC cap is a limit to how much you can contribute to superannuation. The combined total of your employer superannuation guarantee (SG) and salary sacrificed contributions must not be more than $27,500 per financial year. Note that there are other, very rare types of contributions that also contribute towards your CC cap.

For most people, the 15% contributions tax will be lower than their MTR. You benefit because you pay less tax while boosting your retirement savings.

Your employer also benefits because salary sacrifice contributions are tax deductible to them and there is no limit to the amount of their contribution/deduction.

However, this is not the case for employees. Salary sacrifice contributions in excess of your CC cap will be included in your assessable income and taxed at your MTR. You will however be entitled to a 15% non refundable tax offset to compensate for the tax paid by the superannuation fund on the same excess contribution.

 

The benefits of salary sacrifice

■ Disciplined approach to saving – individuals who struggle to save may benefit from salary sacrificing as contributions are deducted directly from pre-tax income. This automatic process can help you build your superannuation over the long-term and save for retirement.
■ Tax saving is immediate – because contributions are made from pre-tax salary, the personal tax benefit is derived ‘up-front’. This means the saving goes straight to your superannuation fund and you can benefit from compounding returns on the tax saving amount (presuming the return is positive) throughout the year.
■ Dollar cost averaging – salary sacrifice allows you to buy into the market at regular intervals and, therefore, reduce the risk of market timing.
■ Easy to administer once established – you do not need to claim a deduction in your tax return or lodge a notice of intent form with your superannuation fund when salary sacrificing, unlike personal deductible contributions.
■ Employer matching arrangements – salary sacrifice may also be attractive if your employer offers generous matching arrangements to their employees, for example, an additional 1% employer contribution for each 1% of salary sacrificed.

 

The key issues to consider

■ SSA may be ineffective – where your employer offers salary sacrifice, the arrangement must be in place before you have actually earned the entitlement. This means only income that relates to future employment and entitlements can be salary sacrificed into superannuation. This is known as an ‘effective’ SSA. With any bonus payments, the arrangement needs to be made before a decision to pay the bonus has been made. This applies even when the bonus won’t be paid until some time in the future.
■ No control over when a salary sacrifice contribution will be made – all SSA should be documented and signed by you and your employer in writing. It should also include details outlining the amount to be salary sacrificed and frequency of contributions. This is because superannuation legislation does not specify the contribution frequency required for salary sacrifice contributions, unlike SG contributions.
■ Employer may not offer salary sacrifice to employees – although most employers will offer SSA to their employees, it is not compulsory for an employer to offer salary sacrifice to their staff. Further, due to the paperwork involved and changes to the pay system, some employers may restrict their employees to one salary sacrifice negotiation per year, which can make it hard if the employee changes their mind if things change from month to month.
■ Potential for excess CCs – once established, salary sacrifice should not be a ‘set and forget’ strategy. For example, your salary may increase/decrease, or the CC cap may change. Therefore, it is important to track the contributions regularly if aiming to maximise, and also stay within, the CC cap.

 

Division 293 tax on higher income earners

If you earn more than $250,000 pa in income, you will pay an additional 15% tax on your CCs.

For many impacted people however, CCs are still worthwhile as even though they pay 30% tax on CCs, this is still less than the top MTR of 47% (including Medicare levy) that applies to high income earners who are liable for Division 293 tax.

The additional Division 293 tax is administered by the ATO who will work out if you need to pay the tax based on information in your tax return and data the ATO receives from your superannuation fund(s).

 

Consider the carry forward rules

You may be eligible to make large CCs in a year without exceeding your CC cap under the carry forward CC rules. These rules allow certain individuals to make extra CCs in excess of the general concessional cap by utilising any unused concessional cap amounts from the previous five financial years (commencing from 1 July 2018).

To be eligible to make carry forward CCs in a year, you must have:

• A total superannuation balance (TSB) of less than $500,000 at the end of 30 June in the previous financial year, and
• Unused CC cap amounts for one or more of the previous five financial years in which the extra CCs are made.

 

Click here to view Glance Consultants April 2022 Newsletter via PDF

 

 

The Federal Treasurer, Mr Josh Frydenberg, handed down the 2022–23 Federal Budget at 7:30pm (AEDT) on 29 March 2022.

In an economy emerging from the pandemic, the Treasurer has confirmed an unemployment rate of 4% and an expected budget deficit of $78 billion for 2022–23. As international uncertainties add pressure on the cost of living, key measures in the Budget provide cost of living relief in the form of an increased Low and Middle Income Tax Offset, a one off $250 payment for welfare recipients and pensioners and a 6-month fuel excise relief.

Other measures for business seek to promote innovation, with expanded “patent box” tax concessions proposed, and provide tax incentives for small business to invest in the skills of their employees. A lower GDP uplift rate for PAYG and GST instalments has also been proposed to support cash flows of small and medium businesses.

Please check the following link for our report on the Budget:

Federal Budget Update Glance Consultants 2022-23

 

 

 

The Treasurer, Josh Frydenburg, announced that the government had secured some 80 million Rapid Antigen Tests (RATs) that will be distributed among high-risk settings in the coming months. He went on to confirm that the government is actively looking into removing the uncertainty around the tax expenses of these.

It has now been confirmed that COVID-19 testing expenses will be tax-deductible, providing a lot of clarity and relief for many businesses who were faced with an additional expense to shoulder, alongside continued strain.

The tax-deductibility was only eligible for tests that need to be taken to attend a place of work.

In addition to this, fringe-benefit tax will not be included for those employers who provide COVID-19 tests for their employees.

We do have a stark warning to issue alongside this however, just to ensure that our clients are not caught out by some assumptions that could be made.

This is by no means an open invitation to horde RAT tests on the government’s dollar. This will be strictly controlled and you will need to jump through a few hoops in order to receive the tax relief. Should you be caught out in any way, do not expect the ATO to look kindly upon your situation.

Business use does not equate to private use and you will need to clearly show that RATs are being used for the purpose of employees returning to work. A disproportionate number of required tests compared to the size and nature of a business will be a red flag that you will not be able to ignore.

If you have any questions regarding these changes we would be more than happy to talk you through the latest updates. Call Glance Consultants on 03 98859793 or email us at enquiries@glanceconsultants.com.au

Hiring at the right time is the difference between creating a cash-generating machine and struggling with an unprofitable business. If you are the owner of a service-based company, then you will know all too well the growing pains of business. 

Mastering that balance between supply and demand is tricky, but recognising the cues and triggers is a skill that is greatly needed. Ideally you would want to forecast future growth and hire a new employee at a time where they can be trained up and ready for a surge in demand.

In this article, we look at the important area of knowing when you can afford a new employee. 

Is there ever a ‘right’ time?

Many business owners just go with their gut feel and decide that it’s time to hire someone new. But this mindset is fraught with emotion and a successful business is always run with the numbers in mind.

When you shift your decision making processes to a more systemic framework, you’re going to make better decisions. 

Hiring is a cost

New employees take time to get up to speed. They are a drain on resources and therefore place constraints on your business. Staff needed to support a new employee aren’t adding revenue for a period of time. 

So do make sure that you have factored in enough revenue to cover both the direct and indirect expenses of hiring someone new. 

The two rules for profitable hiring

It is recommended to use the rule of thumb of having at least 2 times the new employee’s monthly salary as committed revenue and 2 times the new employee’s monthly salary in cash. 

This way, you should have the ability to justify the new hire and significantly reduce the risk of eroding your profit.

You do not want to fall into the trap of increasing headcount without increasing your profits. As you expect losses from the unavoidable drain on resources that your new hire creates, you want to have backup revenue and cash to ensure you can maintain a profitable business.

To put it another way, if your new employee expects a salary of $5000 a month, then you will want to ensure you have $10,000 of committed sales and $10,000 in spare cash available.

Using your business’s financials to guide your decision making processes means that emotion and ‘gut feelings’ are left out of the equation or minimised. So next time you’re wondering if you can afford to hire that new employee, go back to the two golden rules of hiring economics. Doing this will ensure you will grow profitably, not grow broke.

If you are interested in discussing this strategy in further detail, contact our team at Glance Consultants.

Are you a new business owner? Even if you’re a seasoned employer, it’s good to brush up on your obligations as an employer to make sure you’re compliant.

We cover a few key considerations here from tax obligations to the code of conduct. Recent changes are something to keep your eye out for, but rest assured knowing that any major changes to the way you do business will be highlighted for you by your team here at Glance Consultants.

It is our duty to ensure that our clients are operating at the best of their abilities and to provide them with up-to-date resources and support.

Employee Tax

You need to withhold tax from your employees’ wages and pay it to the ATO on their behalf. Single Touch Payroll (STP) has been implemented these past years to make this process as seamless as possible. You can find out everything you need to know about this on the ATO’s website, or get in touch with our team for additional information and support.

Superannuation

You need to process Superannuation Guarantee (SG) contributions at a minimum of 10% of your employees’ ordinary earnings. This is to eligible employees only, who are adults (18 – 69 years old) that are paid more than $450 per week. For those under 18, they need to be working for more than 30 hours each week (this applies till the 30th of June 2022). Contractors are exempt, except for in certain conditions.

Wages and Payslips

You must pay at least the minimum wage dictated by the Fair Work Commission. This is reviewed yearly on the 1st July. A payslip needs to be issued within a day of payment and it must include certain information.

Contracts and Documents

Don’t forget that a contract is designed to protect both the employee and the business! Make sure you take the time to draft a complete and compliant contract. Before commencing employment, every employee should receive the ‘Fair Work Information Statement’ as well as their contract. You also need to provide them with information regarding their health and safety on the job.

Leave

Employees are entitled to leave. This could be for holidays, because they are sick, for maternity, a bereavement or stress. Employees except casual employees are entitled to at least 4 weeks of paid leave each year.

This is by no means an exhaustive list. There are several pieces of regulation that you need to be aware of in regards to the welfare of your employee. Do make sure you familiarise yourself with these, and others, on the relevant governmental websites.

Contact Glance Consultants today on 03 98859793 or at enquiries@glanceconsultants.com.au to get the very best out of your business, for yourself and your employees.

It can be a daunting and overwhelming prospect to decide how to set up the structure of your small business.

Not taking the right approach can lead to stumbling blocks in the future. Conversely choosing the right business structure can set you up for success.

If you’re uncertain which avenue to choose, we do recommend having a chat with an advisor here at Glance Consultants, who can discuss with you the advantages and potential pitfalls of using either a trust or a company for your small business. We take the time to listen to your specific needs and learn about what it is you do to offer a bespoke consultation.

In this article, we will outline the key differences between a trust and a company to give you an overview of what they are to make an initial determination about what you believe might be suitable for you.

What is a trust?

Outlined by a trust deed, trusts are basically an agreement between the trustee and the beneficiaries.

You should be aware of two different types of trusts: discretionary trusts and unit trusts.

A discretionary trust allows the trustee to decide what income and capital can be given out to the beneficiaries. Unit trusts give more power to the beneficiaries, where they purchase ‘units’, similar to how shares are purchased in a company. The advantages of a trust include costs, they are both cheaper to establish and receive the 50% CGT discount in certain instances. There is also an appealing nature for some regarding discretionary trusts, where trustees have a significant amount of control.

However, with this power, comes liability. Be aware that the trustee can be held responsible for all debts of the trust, losses are trapped within the trust and there can be complex paperwork to get through to establish one.

What is a company?

A company is controlled by the directors. It is a separate legal entity.

There are advantages to this. You have the ability to sell and transfer shares, there is a capped tax rate of 25% and it is easier to maintain than a trust. But, it is more costly. You aren’t entitled for a 50% general CGT discount like you are for trusts and there are annual ASIC fees to consider.

So, that’s a quick breakdown of what both a company and a trust is.

Do get in touch with us here at Glance Consultants for more support and advice regarding your small business.

Severe levels of burnout have been either experienced or witnessed by a lot of people in recent years, with Mark Bunn, the director of Ancient Wisdom for Modern Health noting the ‘Great Resignation’ trend being one of the many side effects.

Growing work demands, emotional distress that has been strongly influenced by uncertainty surrounding the impact of the pandemic on personal and professional lives and the inability to balance the boundaries between work and home life, especially when we work from home are all attributing factors of burnout.

People are now reflecting on their purpose and their life expectations more than ever before.

A large subset of the population aren’t looking to work tirelessly for 30 to 40 years before reaching retirement and discovering that they have missed out on a lot of things.

So how can we banish burnout from the workplace and ensure that we retain staff that feel connected and positive about their role and their future?

Have an open communication policy

Encourage your employees to share their challenges. Provide a network of support, whether it be from the higher ups, their peers or from outsourced psychologists or well-being managers to assist in targeting specific challenges that they are facing.

It is all about showing empathy and allowing communication to occur.

Look at your workplace culture

Hustle culture, where those that work the hardest are rewarded the highest, is out. An inclusive workplace culture that encourages meaningful work that aligns with an employee’s values is in.

You will find that employees will likely work more, be more productive and morale will improve in the workplace as well.

Try to remove the emphasis from strict hours and client focus to a more holistic approach that suits the needs of everyone.

Celebrate the little things

Micro-recovery is a key way to banish burnout. Focus on small achievements throughout the day and enable frequent and small holidays to enable rejuvenation rather than looking at the 2 week holiday at the end of the year and hope that you can carry on until then.

Ensure your workplace offers information regarding the importance of sleep in aiding mental and physical recovery as well as providing tips on how micro-recovery and hitting small targets can improve their day to day wellbeing.

Contact Glance Consultants today on 03 98859793 or email us at enquiries@glanceconsultants.com.au, let our professional accountants help take pressure off you and your business.