It’s late December. Bells are jingling, Santa’s arrival is questionable (that’s if he’s allowed into NSW or stuck in quarantine) and retailers are squeezing in the last of the Christmas rush… And then Sydney receives the worst Christmas present of all – another round of Coronavirus spreading quickly through the NSW capital. It has been the year where bush fires destroyed homes, a global pandemic brought upheaval, and then months of uncertainty, and consumers were stuck in their homes changing the way businesses operate. Through all this ambiguity, there is one thing small businesses can do to bring clarity to their company; and that is to see (and/or hire) an accountant that can offer accountant and tax services.

You may be questioning why it’s important to see an accountant and tax professional during this time of year.

After all, it’s the holidays – and it’s time to take a well-deserved break. However, accounting and tax assistance is a necessity by the end of the year 2020 that has been. Earlier this year, the Australian Government introduced measures to lessen the impact of COVID-19 by decreasing the risk of otherwise viable businesses being placed into external administration. Australia’s economy plunged into its first recession in almost 30 years, and these changes were put in place to help avoid a potential wave of financial distress and corporate collapse. The measures are there to prevent the closure of companies that are experiencing short term financial distress as a result of COVID-19. In addition, the measures in place protect small business owners from potential personal liability and allow business owners to feel confident to continue trading through the COVID-19 pandemic crisis. Has all this jargon lost you at COVID-19? You can see why the importance of hiring an accountant and tax service is a necessity. 

The temporary insolvency and corporations’ laws that raised the thresholds for issuing statutory demands will end in just over a week on 31 December 2020. If you believe you are just scraping through this year, don’t fear – hire an accountant and taxation professional to assist you in managing your finances in 2021, and help you navigate the changes in legislation. Debt collection in 2021 will be on the rise, and businesses that are close to insolvency may be liquidated by the order of the court. If your business goes into the hands of a liquidator – the liquidator has the authority to take possession of a director’s personal items and assets for company debts via an insolvent trading claim. If you have not maintained and kept your business financial records in good order – and as required by the Corporations Act, your company may be assumed to be insolvent. Therefore, to avoid the stress and headache of insolvency, all companies should be getting their accounting records up to date now! Once again – there is no better time to get in touch with your accountant and tax professional to ensure all your records and data are in order. 

As of 1 April 2020, your business Good’s and Service Tax (GST) has been added to Pay as You Go (PAYG) and the Super Guarantee Charge (SCG) as potential personal liabilities of directors in the case that a Director Penalty Notice was issued by the Australian Taxation Office (ATO). However, if you already work closely with your professional accountant and tax professional, your activity lodgements would never be more than three months overdue. And of course – your accountant and tax service would ensure that the super guarantee charge is always reported on time. If this is the case, the most ATO can do is issue your business with and Director Penalty Notice. Directors can avoid all accountability within 21 days by negotiating a settlement with the ATO or placing the business into involuntary liquidation of voluntary administration.

The super guarantee amnesty ended on 7 September 2020. The amnesty allowed employers to disclose and pay previously unpaid super guarantee charge for the quarters between 1 July 1992 through to 31 March 2019 without incurring the administration component. The super guarantee charge made to the Australian Taxation Office under the amnesty was also tax-deductible. Now that we are in the post-amnesty period, all disclosures of super guarantee shortfall will now incur the administration component (in addition to nominal interest) and will not be tax-deductible. It’s not an ideal situation making a late submission, and there are numerous penalties for failing to comply with your super guarantee obligations. However, even though the amnesty has ended, and you may be up for penalties, there are still benefits in making a voluntary disclosure due to the Australian Taxation Office having the power to remit certain penalties. 

There is a lot to absorb when it comes to super guarantee and business insolvency. If you are unsure about how your business is dealing with the situation, the best you have a meeting with your professional accountant and tax service. Their expertise will guide you in the right direction. 

To add to the complication of the insolvency laws of 2020, in 2021 expect to see reforms. There will be the introduction of a genuine debtor-in-possession restructuring process which involves a small business restructuring practitioner to engage and assist the board present the terms of the restructuring proposal to creditors. This process has two eligibility criteria. Firstly, employee entitlements are required to be on time, and secondly, lodgements with the Australian Taxation Office are required to be up to date. This debt restructuring process is an opportunity for any business that has suffered during COVID-19 to develop a proposal, present it to creditors and secure a recovery quickly. 

Another reason to visit your accountant is to take advantage of the current low-interest rates. Interest rates are at a record low, and this is the time to seize up your old debt and refinance! Low-interest rates allow you to refinance old debt cheaply and give you the opportunity to expand your operations, acquire property/equipment, or diversify your product. If you take advantage of the low-interest rates and invest in your business, it will be a requirement to regularly provide your financial institution with relevant and recent financial statements and reports to negotiate capital. Your accountant and taxation service can assist you in preparing all documentation required and can also work together with you in securing capital.  Accountants have the knowledge and skills that a business owner may lack when it comes to growing a business and ensuring the business financials remain healthy. 

Single Touch Payroll is just around the corner – and by 1 July 2021, all businesses must be utilising it. If your business has not even thought about this process, you need to be on the phone pronto with your accountant and taxation service. 

If you’re a business owner of a small business and you want to enter 2021 feeling confident that you are starting the new year all jolly, then now is the right time to get in touch and have an important meeting with an accountant and taxation professional. It may be a tough road ahead, but there are plenty of ways that you can ensure your business will continue to service in 2021. By outsourcing, seeking advice, and working together with financial advisors/accountants, you can set yourself up for a successful road to recovery. Boost your confidence in your business’ road to recovery in 2021. Have a chat with us at RT Taxation accountant services for small businesses. We want you to feel confident in our financial expertise while you focus on building your business.

The COVID-19 pandemic has affected everyone’s lives, and Self-Managed Super Fund (SMSF) trustees are no exception.

While the worst of the pandemic is (hopefully) behind us, trustees still have difficult questions to ponder as they focus. How best to position their Self-Managed Super Fund (SMSF) in the 2020-21 financial year.

Meeting new pension requirements

To help manage the economic impact of COVID-19, the Government has reduced the minimum drawdown requirements by half on common pensions, such as account-based pensions and market-linked pensions, for 2019-20 and 2020-21. This also occurred after the GFC in 2008, and you will need to consider and amend your pension strategies for 2020-2021 financial year. 

This includes ensuring that the minimum pension has been paid for this financial year. Where this requirement is not met, SMSFs will be subject to 15% tax on pension investments instead of being tax free.

It is important to amend your pension strategies for 2020-21 to reflect the “new” minimum pension standards. Where you have been receiving regular pension payments, it is likely you may want to withdraw more than the 50% of the required minimum payment for this year. Specialist SMSF advice should be sought to help you determine the most tax effective way to structure benefit payments, please get in contact with us to discuss this further.

Contribution Changes

For 2021 financial year, you should review your contribution strategies to ensure you can contribute in the most effective way and ensure you are below the contribution caps.

Non-concessional (after-tax) contributions are limited to $100,000 for the 2021 financial year and concessional (before-tax) contributions are limited to $25,000. There are strategies might be available to increase the concessional and/or non-concessional contributions depending on the personal circumstances.

SMSF trustees should be aware of the legislation that is slated to pass before the end of the financial year. If passed it will allow people aged between 65 and 66 to make voluntary contributions (previously restricted to people below 65) without meeting a work test. These older individuals will also be able to make up to three years of non-concessional superannuation contributions under the bring forward rule, so it will pay to get advice to maximise their contributions.

$1.6 Million Transfer Balance Cap and Total Superannuation Balance

The $1.6 million transfer balance cap applies to SMSF members who are receiving a pension. A $1.6 million transfer balance cap limits the amount of tax-free assets that can support a pension.  Ensure you are aware of the consequences of excess transfer balances and avoid exceeding the cap.

Different total superannuation balance thresholds exist for SMSF. Ensure you are across your fund’s total superannuation balance which may be relevant for contributions, exempt pension income or transfer balance account reporting.

How Can We Assist?

The team at R T Accounting & Taxation Services will provide you with all the assistance you need to get your SMSF up and running with minimal fuss. Our SMSF Administration Package includes:

• Tax Return
• Year-Round Support
• Fund Accounting and financial statements
• Online portal
• Coordination of annual audit via our in house Registered SMSF Auditor
• Fund minutes and resolutions
• Corporate secretarial services for your SMSF Trustee company where applicable

This is a reminder that employers need to pay their super guarantee obligations on time. Otherwise, they could be up for significant penalties.  Super guarantee contributions must be made to a complying super fund. Also, retirement savings account within 28 days after the end of the quarter in which the liability arose. See the below table for outlines of key dates. It is important to note that some superannuation funds require monthly contributions.

Employers who fail to pay the super guarantee contributions by the due date are required to lodge a Super Guarantee Charge Statement. And pay the Super Guarantee Charge (which is not tax-deductible).  This obligation remains even if all the super guarantee contributions were made only a couple of days late.

The penalties for late payment of super guarantee contributions are quite severe and should be avoided at all costs.  There are essentially three aspects to the Super Guarantee Charge:

• The calculation of the super guarantee shortfall amount
• How interest is calculated on those amounts
• The administration fee of $20 per employee per quarter

Shortfall Amount

Normally the super guarantee contributions are calculated on the employees’ Ordinary Times Earnings (i.e., excluding overtime). However when their super guarantee contributions are paid late there is a recalculation of the super guarantee contribution amount.  Super is now payable on the employee’s total earnings (i.e., inclusive of overtime).  This could result in a significant amount of additional super payable if the employees have been working overtime.

Interest Calculation

Under the current Super Guarantee system, interest accrues (currently at 10%) on the super guarantee shortfall amount from the start of the quarter that the super guarantee was not paid on time through to the date that the Super Guarantee Charge Statement is lodged, and the Super Guarantee Charge is paid.  This is probably the most brutal of the penalties for late payment of an employee’s super guarantee contributions:

• Interest is calculated from the start of the quarter that the super guarantee contributions were not paid on time and as such an employer could end up paying interest for a period prior to a liability arising. For example, if an employee commenced with a business on 15 June 2020 and their super guarantee contributions were paid late, interest would be calculated from 1 April 2020, some two and a half months prior to them commencing employment.  The anomaly does not just apply to new employees but could also apply to employees earning less than $450 in the first two months of the quarter (i.e., where there is no requirement for super guarantee contributions to be made).
  
  This is like paying the bank interest on a mortgage prior to taking out the loan.
• Interest is calculated up until the time that the Super Guarantee Charge Statement is lodged. And the Super Guarantee Charge paid, and as such interest will still accrue. Even where the employee super guarantee contributions have been paid, albeit late.  For example, if an employer pays the super guarantee contributions for the June quarter on 30 July (2 days late), interest will accrue from 1 April through until the date that the employer lodges the Super Guarantee Charge Statement and pays the Super Guarantee Charge, which in some instances could be years later.
  
  Using our home loan analogy this would be like paying interest to the bank after you repay your loan.

 Administration Charge

The administration fee of $20 per employee per quarter may not sound like much, however if you pay 30 employees late, even by 1 day, the administration fee becomes $600.  This is intensified if you are late for several quarters.

Late Lodgement Penalties

As if the above penalties are not enough to get employers to pay their super guarantee contributions on time, there are penalties if the employer fails to lodge a Super Guarantee Statement within the required time frame.  The Tax Office can impose penalties of up to 200% of the Super Guarantee Charge payable for late lodgement of the Super Guarantee Statement. 

Denial of Tax Deduction

Any Super Guarantee Charge payments are not deductible to the employer.  As the late paid super guarantee contributions form part of the Super Guarantee Charge the contributions themselves would be non-deductible to the employer in addition to the penalties imposed.  Paying the super guarantee contributions one day late could mean that an employer is not entitled to a tax deduction for those contributions.

Directors Personally Liable

Directors of a company that fails to meet a Super Guarantee Charge liability in full by the due date cannot hide behind the corporate veil and can become personally liable for a penalty equal to the unpaid liability.

Getting Caught Paying Late

Superannuation funds now report to the Tax Office when they receive super guarantee contributions for employees (including working owners).  The Tax Office is using this information, as well as the information reported through the Single Touch Payroll system, to identify employees who have paid some or all their super contributions late or have not paid the right amount by the due dates.  With this data, matching it is only a matter of when an employer will be caught, not if. 

We are already receiving letters from the Tax Office advising that they have identified employers who may have a Super Guarantee Charge obligation, so it is essential that employers pay their super guarantee obligations on time.

If you need help in ensuring that all Superannuation Payments are made on time and to the right accounts, do not hesitate in getting in contact with the Accountants at R T Accounting & Taxation Services, who will be more than happy to assist you in all your Superannuation needs.

A business cannot understate the importance and value of a professional accountant service for small business. A bookkeeper is helpful for basic accounting, however investing in an accountant service can cover you for accounting, tax planning and preparation, payroll services and strategic advice on how you can grow your business. 

Accounting and tax software are also on the rise – and has in some ways replaced an in-house accountant. However, small business owners find that as their business grows, accounting issues become more complex, tax filing become too weighty for them to handle. Therefore, working alongside an accountant service for small business will assist small business owners take on financial tasks that they cannot overcome.  

How accountant services for small business can help you

Hiring an accountant service for small business is more of a business necessity rather than a nice to have. A small business accountant can maintain your books, asses financial results, prepare and file your business taxes, action and stay abreast of your payroll and work together with you on ensuring your business has a positive cash flow and year-on-year growth. 

Furthermore, accountant services for small business are your partner when it comes to tracking your sales, expenses, incomings and outgoings, and can even pay your invoices for you in a timely manner. Accountant services for small businesses can also run your payroll and keep on top of all legislations that you are required to adhere to. Think of your accountant as a one stop shop for your business. 

Your chosen accountant service for small business can also provide you with reports – including balance sheets, income statements, cash-flow statements and payroll reports – and an overall picture of your company’s financial health. With their experience, you can have the confidence that your business financials are well taken care of. 

In addition to simple accounting tasks like bookkeeping and tax filing, an accountant service for small business can offer ratio analysis and discover the areas in which your business could improve its efficiency, which in result can boost your bottom line. As a business owner, you can work together with your accountant service and implement their suggested changes that can yield bottom line profits. 

We have four things you need to consider when looking for the right accountant service for your small business.

1. What are you looking for out of an accounting service?

A helpful way to understand what you are looking for out of an accountant service for small business is to make a priority list of tasks you would like to handover. You list may include: 

• Audit preparation
• Bookkeeping
• Accounts payable and accounts receivable 
• Tax preparation and filing
• Payroll
• Financial reports
• Business planning and analysis
• Budgeting

It’s important to consider your current needs and your future needs for your business. For example, a bookkeeper may be great for the short-term, however if you are thinking of also handing over your payroll duties, then you will have to look for an accountant service. If you think long-term, you can start off with an accountant service that offers both bookkeeping and payroll services. 

2. Do you want to outsource or bring an accountant in-house? 

Whether you decide to outsource to an accountant service for small business or you hire an in-house accountant, both have benefits and draw backs. Your decision will come down to how much accounting assistance you need for your business, and if it is worth the investment of having a full-time in-house employee. 

If you hire an in-house accountant, you want to ensure that your investment into their full-time or part-time salary is maximised. Small businesses generally don’t have the constant need for a full-time accountant. Therefore, an accountant service for small business can be more beneficial from a financial perspective. You pay a set fee (whether its monthly / hourly / yearly etc) and you don’t have the headache of the extra expenses that hiring an employee has (like wages, employee payroll taxes and other benefits). 

If you’re unsure whether an accountant service for small business is for you, why not give them a try first. Provide them with a portion of your accounting workload prior to making a decision whether you want to continue. 

3. Know your budget?

Work out how much you would like to invest into your accounting services for small business. Keep in mind, investing in accountant services for small business isn’t a nice to have. It really is a necessity for your business to continue operating. Your books need to stay up-to-date to avoid tax fines and an unsuccessful audit. 

Your budget should also reflect the expertise your business requires and considers the complexity of your accounting issues. It doesn’t hurt to ask your peers how much they are investing in accountant services for small business. This can give you an idea of how much you should be allocating to accounting services per month. 

4. Utilise technology

There are so many cloud technologies in the marketplace that can assist you with your accounting, payroll and tax. If your business doesn’t already use a software, then now is a great time to start. Cloud software can automate a lot of your day-to-day accounting – including bookkeeping, and filing your quarterly payroll tax returns. 

Once you implement a cloud service for your accounting needs, your accountant service for small business can manage the platform for you and take care of the tasks you need completed. A cloud software and an accountant service for small business can work in tandem to obtain efficient accounting for your business. 

5. Compare fees

All businesses have different ways of working out their fees. Some accountant services may charge a monthly fee to do your taxes, and others may charge a bookkeeping fee and then additional charges for business and personal taxes. Before choosing the right accountant service for your business, you want to understand how they are calculating fees and how much this will be. Depending on your cash you, you may be able to negotiate how and when you fulfill payments. 

6. Look at references and small business experience

If you are looking for an accountant service for small business, then you should be looking at exactly that. An accountant that specialises in small business experience. The big accounting firms may be enticing; however, you need someone who works well with small businesses. In addition, it would be great if they also have experience in your industry! When an accountant works with clients from a specific industry, they gain industry knowledge and learn the challenges the industry has. Also gives them the expertise in legislations and government issues, and can guide you in making the right financial decisions for your business expansion and growth. 

7. Make the right choice for you

You need an accountant service for small business that you can count on. Someone who you feel is part of your greater team. It’s best to do your research and investigate at least three accounting firms before you make a decision. If you feel that the accountant service for small business you have chosen isn’t working for you, then you may need to make he decision to move on. You want the best for your business, and while changing firms may give you some short-term extra work, it will give you the long-term benefits. 

You need an accounting professional on your team. Interview at least three candidates before you select your accountant. You need to choose an accountant that is a fit for your small business. If you hired an accountant that does not feel like they are on your team, move on. While you might feel some short-term discomfort while doing this, you will get long-term benefits for your business. You need up-to-date financial information to make the best business decisions. This starts with professional accounting services. An accountant service for small businesses is an important part of your company’s success. You need a firm that is reliable and there for you when an issue arises. When you choose an accountant firm for small businesses, they can manage your accounting tasks and offer you business advice and support. Start your accounting firm search today, by getting in touch with us at R T Taxation & Accounting Services. You can take advantage of our Outsourced CFO Services to leave the administrative hassle of running your small business to the experts and for you to do what you know best.

Are you thinking of starting a small business doing what you love the most? Are you feeling overwhelmed with all the financial management, accounting complexities and bits and pieces that need to be ticked off to get your small business off the ground? Starting a small business is an adventure – it involves a big learning curve. And it is easy to get it wrong and make mistakes along the way. You want to build your small business pursuing your new product of innovative service. But have no idea how to how to do financial management and other basics. 

A recent bank study has revealed that eight out of ten businesses struggle with poor cash-flow management. It’s so easy for your new business to fall prey to cash-flow issues. Irrespective of what service or product your small business specialises in. You cannot understate the value of using accountant services for small business. Working together with a specialised accountant service for small business can take care of the more complicated accounting and payroll services for your business. In addition, accountant services for small business can assist you with tax planning and also prepare taxes for your business. Furthermore, your accounting partner can share strategic advice on how you can continue to grow your business. 

When you are running day-to-day operations of your small business, it is highly recommended you outsource to an accounting firm that specialises in accounting services for small business. Researching the right firm for the best fit to you and your business can be a daunting task. Before you can choose the right accountant for small business, it is best to know a few key basics to set up your business for success. 

Understand cash flows

Cash flow is the money that is coming in or going out of your business during certain specified periods of time. Money coming in is classified as positive cash flow. Money going out is classified as negative cash flow. Primarily – you want your business to have a positive cash flow. 

While your business lifts off the ground, you may have more negative cash flow rather than positive cash flow. As you invest in equipment, inventory or marketing. It is important to have a view of how much your cash flow, and a complete understanding of how much money is being spent – and if it is more than what you are earning. 

Meticulous bookkeeping can be challenging for new business owners to upkeep. Outsourcing to accounting services for small businesses can assist you with maintaining a cash flow and can help you understand how your cash flow caries throughout the year. 

Tidy the books

Working together with an accounting service, it is important to have a firm grasp on all aspects of your cash flow and its ongoing success. In addition, establish a method to document moneys earnt and moneys spend. 

It is very helpful having your numbers easily accessible. It allows you to quickly view and track payments, schedule expenditures, and identify your most profitable goods and services. 

Your business can benefit from having an accountant work for you, or outsourcing to an accounting service for small business. If you decide to have an accountant work for your business, it may be difficult to find, recruit and retain knowledge and expertise. Many small businesses chose to work together with an accountant service for small business. 

Tax time

Small businesses that opt for using small business accounting software may perceive that they can eliminate a professional accountant. This is definitely not the case. A professional accountant that offers accountant services for small business can assist you in preparing your taxes and advise you on the correct and maximum advantageous filing. In addition, your professional accountant for small business will ensure you are complying by wage compliance taxes, payroll taxes, and business taxes. 

If you work on your own tax documents, you may save yourself the money of outsourcing to an accountant service for small business. However, when you work with a good accountant, they can use their tax and legislation expertise to suggest ideas on how you can increase your cash flow, decrease costs and even raise capital for business expansion. 

Know government legislations

It can be very difficult dealing with the government paperwork when you are trying to get your business off the ground. Hiring an accountant service for small business can also assist you in coping with more than just your tax returns. They can also help you cooperate with government legislations. 

A good professional accountant service for small business can help you:

• File all the right legal and compliance documents for your business
• Ensure your business is up-to-date with the tax laws
• Update your business status on the government company register
• Prepare annual accounting reports
• Record keeping 
• Manage your payroll – from employee’s tax codes are recorded correctly, paying payroll taxes, and to ensuring payments are processed in a timely matter 
• Assisting you with record sharing / stock allocation in relation to business partners and equity investments. 
• Not violate any tax laws. 

The government is always watching small businesses, and it’s best to hire an accountant service for small business before you are audit ever happens. 

Financial options

You may need to invest cask into your business at a point in time. You may find yourself in the situation where you need to find cash “outside” your business – whether it be to cover a short-term cash flow issue or invest in future growth. It’s good to be across the range of financial management options that are available to you. Some of the most common types of financing options for small business include:

• Bank loans: Your business may be eligible to chose from a variety of loan types, with terms and repayment options that are right for you and your business. If you work together with an accountant service for small business, they can assist you in searching and selecting a loan that will benefit you and your business. In cases where you need money immediately, a short-term loan may be the only answer for you. This may cover payroll or emergency expenses. Short-term loans pose a greater risk, but they can retrieve you from a sticky situation.  
• Grants for small businesses: A small business grant does not need to be paid back!  There is a catch… Firstly you need to research all the current grants accepting proposals, and you need to meet all the criteria, compile the application and go up against other businesses seeking the same funding. However, if you do win the grant, it’s all yours to use towards your business.
• Crowdfunding: This is a source of financing that is becoming more and more popular. Crowdfunding is funding a project or venture through asking a large number of people – typically through the internet. A business gaining funds usually offer something in return for a donation to their business. This may be merchandise or exclusive memberships. 
• Venture capital: Professional investors may want to invest in your business if you have a high-growth potential. Funding from venture capitalists can be a significant sum, and may come with strings attached including the investor wanting a share in the company which may involve a shift in the decision-making power.  

Starting a new business may be a headache, but your business financial management shouldn’t be.

Financial management do require more than just keeping track of your profits – which is why we always recommend you work together and hire a professional accountant service for small business firm. Outsourcing your accounting will empower you to continue working on building your business and your accountant figures out all the numerical stuff. To hire the professional accountants, you need for your business, R T Taxation & Accounting Services. You can take advantage of our Outsourced CFO Services to leave the administrative hassle of running your small business to the experts and for you to do what you know best.

Does your job require you to wear a suit for professionalism, or a uniform that displays the company logo, or in the case you work in a clothing store – is it obligatory that you purchase your work clothes from your store of work? Many small businesses require that their employees wear a work uniform, and other businesses impose a specific dress code. As an employee, if you have to spend money on work-related expenses, you may be eligible for a tax deduction.

However, if you choose to purchase expensive clothing to comply with your company dress code, it does not always mean you can claim a tax deduction for your work clothes. The Australian Tax Office allows you to receive a tax deduction on work clothes and uniforms if you satisfy a number of requirements, that are specific to your occupation and aren’t everyday attire. To claim a work clothes tax deduction, you will always need to provide the right evidence that you purchased the correct clothing that adheres to your role and has evidence of cleaning costs. If you provide your employees with an allowance – or you receive an allowance from your employer, you need to state the amount of the allowance for work clothes when completing tax returns. 

Clothing deduction requirements

Clothing that is specifically not related to your employment treated as a private expense. And also required for your taxable income. Whatever the situation is for your and your business, employees need to conform to the employer’s dress policy to be eligible to receive tax deductions for work clothes. 

Firstly,

To receive the tax deduction for work clothes and the expense of cleaning them, employers must document that they require you to wear specific clothing as a condition of your employment. The ATO also requires that the clothing is not appropriate for personal wear. This means that you cannot claim things like a business suit, black pants, jeans, or white shirts. If, however, an employer requires the white shirt to feature the business logo, you can then deduct the cost. One of the biggest mistakes employees make with trying to complete their tax deduction for work clothes, is trying to claim a deduction for ordinary clothing they bought for work. 

Secondly,

The ATO has stated, that in the case of an audit, you should be able to provide evidence on how your laundry expenses are calculated, why you need to wear specific clothing for work, and how your tax deduction to figure was calculated. Claims for under $150 are not required to keep records, you need to show how this was calculated. Interestingly, the ATO has discovered that over 1.6 million taxpayers claim a deduction of exactly $150. ATO Assistant Commissioner Kath Anderson stated, “We expect many of these claims to be legitimate but the results of our random audits show that people are making mistakes.” In addition, when it comes to cleaning expenses (washing, drying, and ironing), the ATO considers $1 per load is reasonable, or 50c per load if you included your personal items. 

To assist you in adhering to the Australian Taxation Office policies, and make the out of your tax deductions for work clothes, we have put together a guide that outlines what you can and can’t claim. Firstly, it is important to understand that tax deductions for work clothing must fall into one of four specific categories:

1. compulsory work uniform
2. non-compulsory work uniform
3. occupation-specific clothing
4. protective clothing

1. Compulsory work uniform

A compulsory work uniform is required to perform your role as an employee. It is a strictly enforced policy while you’re at work. 

You may be able to claim a tax deduction for shoes, socks, and stockings. Where they are an essential part of a distinctive compulsory uniform. And where their characteristics (colour, style, and type) are specified in your employer’s uniform policy. Often, employers have specially designed uniforms that employees must wear every time they are at work. Examples of this include airline flight attendants, fast-food chain employees, supermarket employees. 

If your employer does not reimburse you for the expense of purchasing your work uniform. And also do not provide a laundry allowance as part of your wages. Then you may be eligible to receive a tax deduction for work clothes and all uniform related expenses. 

Additionally, you may be able to receive a tax deduction for shoes, socks, and stockings. If they are an essential part of your distinctive compulsory uniform. 

2. Non-compulsory work uniform

You cannot claim expenses or receive a tax deduction for work clothes. If it is for non-compulsory work uniforms unless the business has registered the design with AusIndustry. The only way to claim for a non-compulsory uniform is if the uniform is unique. And also distinctive to the organisation you work for. For the clothing to be unique, it is designed and produced by the employer. It has the company logo attached and the clothing is not available to the general public. 

If the uniform is generic clothing that can also be used for personal use. Then you are unable to receive a tax deduction for work clothes. 

3. Occupation-specific clothing

Come occupations require specific clothing that isn’t in everyday nature. And also allows the general public to recognise an occupation even though it is not their official uniform. Some examples include nurse’s and doctors’ scrubs, factory worker’s hairnets, or a chef’s chequered trousers. The clothing that is specific to your occupation can be eligible for a tax deduction for work clothes.

In relation to claiming the cost of laundering occupation-specific clothing. Employees may be able to claim laundry expenses for occupation-specific clothing if they are compulsory to their occupation. However, it is best to review the occupation and industry-specific guides to correctly claim your tax deductions for work clothes. 

4. Protective clothing

Clothing and footwear that protects employees from the risk of illness or injury are eligible to receive tax deductions for work clothes. You can claim the cost of purchasing and maintaining your protective clothing. Ordinary clothing that does not provide you with protective qualities. They are not classified at protective clothing and are not eligible for tax deductions. For the items of clothing to be considered protective clothing, they must provide protection. Examples of protective clothing that can be used as a tax deduction for work clothes. This includes fire-resistant and sun-protection clothing, steel-capped boots, personal protective equipment, or high visibility clothing. Also rubber boots, non-slip nurse’s shoes, safety-colored vests, fire-resistant, and sun-protection clothing, gloves, overalls, and heavy-duty shirts and trousers. 

You can claim a tax deduction for work clothes if your protective gear falls into one of the eligible protective clothing categories. If you’re unsure about tax deductions for work clothes, or if you prefer outsourcing all your tax needs – give us a call at our Eastern Suburbs tax accountant practice. We work effortlessly to understand and simplify all the taxable deductions that your business can be eligible for. Our aim is to help you focus on your business while you leave the boring tax stuff to us. We want you to have the confidence to run your business while our tax experts work on ensuring you are up-to-date with your tax requirements. 

Personal and Business Tax planning has never been more pertinent than currently with the impact of COVID-19. The last thing you need during these times is that you are required to pay more tax than what is legally required. Being halfway through the 2021 Financial Year, it is a good time to get on top of your tax planning strategies. It should be before the end of the financial year on 30^th June 2021.

Superannuation

Maximise contributions to your own superannuation each year (for both you and your spouse). This is the best tax planning available. You are essentially getting a tax deduction for investing in your own future. Most people can claim a deduction for personal contributions they make into their super account up to your contribution cap. You are free to make a personal contribution at any time during the year. And claim a tax deduction in your tax return. This can be useful towards the end of the financial year if you have not reached your concessional contributions cap of a total of $25,000.

Carrying forward your concessional contributions cap (for low balance members)
The super rules were changed to allow low balance members (under $500,000) to use any of their unused concessional contributions cap on a rolling basis for five years. This means if you do not use the full amount of your concessional contributions cap in a particular year, you can carry-forward the unused amount and take advantage of it up to five years later. Any amount not used after five years expires.

This means you may be entitled to make additional deductible contributions. And above $25,000 this year to catch-up any missed contribution amounts in prior years to boost your super balance and potentially reduce tax.

Employers
As an employer, the super contributions are deductible for the year the superannuation fund receives them. So, paying your staff’s superannuation into their fund so it is there prior to 30 June ensures your business will receive a tax deduction in this year.

Instant Asset Write-Off

Under instant asset write-off eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.

Instant asset write-off can be used for:

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

When purchasing new assets to access the instant asset write-off, there are several dates and thresholds to you are required to consider now with the new laws being passed:

Limits – Motor vehicles
If you purchase a car (a passenger vehicle, except a motorcycle or similar vehicle, designed to carry a load less than one tonne and fewer than nine passengers) for your business, the instant asset write-off is limited to the business portion of the car limit of $59,136 for the 2021–21 income tax year. You cannot claim the excess cost of the car under any other depreciation rules.

Bad Debts

As a business it a good idea to check all the people who owe you money before the end of the financial year. If the debt is not able to be recovered it should be written off as bad debt on or before 30 June. Be realistic, if they have not paid before COVID-19 it is unlikely they are in a better position now. Write it off.

Inventory

If you are a Business with inventory, ensure a stocktake is done on the 30th June. Your inventory can be valued at market value, cost, or replacement value. Usually whichever is lower. The different valuations can make a significant difference to your tax outcome. All you need to do is complete the stocktake, and we will advise on the best valuation method for tax treatment.

Prepayments

Consider bringing forward your expenditure. Look at your cashflow. You could bring costs forward into this year and reduce tax payable.

Interest deductions for prepaid interest are generally available for interest expenses associated with investment income (as well as some other eligible expenses).

If you are a small business with an aggregated turnover of less than $10 million per year, then prepaid expenditure may be immediately deductible under the 12-month rule. This rule can generally be applied to deductible expenses such as Rent, Insurance, Lease Payments, Interest, and other business expenditure.

If you are struggling with your business tax planning for the coming financial year, it is never too late (or early) to start planning for your future. We are experienced in assisting you with all your tax planning requirements to ensure you pay no more tax than what is required. If you would like to discuss further or need help, please contact us and one of our Accountants will be in touch with you shortly.

COVID-19 has negatively impacted many different industries. Some businesses have thrived through the pandemic and others have weakened. However, the pandemic has made one thing clear, your business accounting team/accounting partner / outsourced accounting firm/payroll partner is your hero at the moment. Accountants and payroll specialists are giving you support. And also knowledge on how to get through the crisis, assisting you with your cash flow, your payroll legislation, staffing challenges. And the constant threat of further lockdowns and business shutdowns. 

Even though Australian COVID-19 numbers are low, the future is still looking bleak. Borders are closed to international visitors, and consumers are watching every dollar. On the surface, we may think that things are normalising. Offices are reopening, shop floors are filling up, people are out and about. However, below the surface there is chaos. And the recovery from this COVID chaos is where accountants and payroll departments are going to work harder than ever to help your business recover to its full potential. For your business, recovering to its full potential may mean that you need to broaden your service offerings. Or just simply take a look at your current processes and revenue streams and streamline where you can.   

Recovery is going to look very different for every business. And will present new challenges for business owners, leaders and teams. Expectations are unknown until you assess the situation you are in. We are here to help you look at what you can do to start your business on its recovery plan, and how your payroll team/partner is a key function for you to focus on. 

Starting your recovery

Every business wants to be busy – and see their business growing. But there is no point being “busy” if your pipeline of work is not earning you the right profit margin, generating revenue, and raising your profit. Now that 2021 is approaching, make time to review, assess, and analyse your processes and goals of your business. A good place to start is looking at outsourcing your payroll and accounting functions to specialists that can help you analyse the data and reports you have, and assist you with ideas and strategies for the future. 

In addition, there is new technology on the market that can assist you and your business to have an efficient payroll and streamline your basic data entry, low-level bookkeeping, and business as usual financial admin. Your chosen accounting and payroll partner can also support you in using the technology to its full potential – retrieving payroll and business reports and data needed to have a full view of your business. There is a lot of value in allowing cloud solutions and applications along with your accounting and payroll partners do the heavy lifting for your business, while you and your teamwork on what you do best – client liaison. Your number one priority is to listen to your client’s challenges and feedback, finding the best possible solutions for them. 

Increase your business profitability

Every business will have different issues, threats, and opportunities by the end of 2020. There is no one size fits all strategy that will help a business achieve post-2020 recovery. As a business leader, there is a lot of work ahead of you, and you need to be aware of what is going on in the marketplace and in your team. Your teams are your front line in the recovery phase – and your leadership needs to adapt accordingly.  

To help you adapt and understand how you can start your recovery, we have outlined a few key foundational steps that can be followed to increase your business survival. Give your business a fresh start in 2021. 

1. Determine your financial health

Before you even think about what you need to do for business recovery, you need to determine your financial position, your revenue streams, your profit margins and your payroll. You also need to ensure your financial statements are up to date. It will also be helpful to determine your short-term cash flow commitments. 

2. Review your business’ mission

Once you have assessed your business revenue streams and have a clear understanding of where your profits are coming from, think about what areas of expertise you want to focus on and who your ideal clients are. The clearer you mission is, the easier is it for you and your financial advisors to strategise how you are going to grow and recover your business in 2021.  

3. Employee care

Your employees are the key to your business success. Taking care of the wellbeing of your staff is imperative for your business success. Keeping your staff engaged and informed, understanding their expectations will allow them to feel valued and supported. Involving them in business issues and ensuring that they are aware of business strain will give you a more cohesive and practical team. In addition, if you keep on top of your payroll, you guarantee that their benefits and wages are still valid. 

4. Review your customers

Our consumer behaviours and decisions are what keep businesses ticking. COVID-19 has changed the way businesses also interact with their customers. As an example, 44% of global consumers indicate they would be more likely to do grocery shopping online as a result of the pandemic. For a business to survive, it needs to understand how its customers will interact with them and adapt accordingly. 

5. Update your technology

There are so many cloud technologies that can change the face on how your deal with your accounting and payroll. Your financial data, documentation, payroll and internal practices have the possibility to be managed on one single platform. This allows you to streamline your payroll and HR processes, allowing you to access client information, financial reports and data easily and remotely.  

6. Review your processes

If there is a process that can be automated and performed more effectively through the use of software – then automate it. Some processes to look at can start from data entry, to payroll management. These things can be automated, giving you’re the freedom to access data outputs and high-level workflows. 

7. Outsource where you can

Business recovery after COVID-19 is going to be challenging. Outsourcing some aspects of your business will allow you to focus on building your business back up. Additionally, working together and partnering with outsourcing professionals can give you the support you need to get on the road to recovery. You can start small by outsourcing all your payroll function and accounting needs. Working together with tax and financial specialists ensures you get the input and guidance on where you can focus your finances to grow your profits. In addition, outsourcing your payroll function will ensure that all the legislative knowledge required to complete payroll taxes is taken care of. 

It’s going to be a tough road ahead, however, there are plenty of ways that you can ensure your business can stand out from its competitors and creates a unique business offering. By outsourcing, seeking advice, and working together with financial advisors/accountants, you can set yourself up for a successful road to recovery. Boost your confidence in your business’ road to recovery from COVID in 2021. Have a chat with us at RT Taxation accountant services for small businesses. We want you to feel confident in our financial expertise while you focus on building your business.

Annual payment summaries were required for employees to file their tax returns at the end of each financial year. But one of the benefits of the new Single Touch Payroll (STP) reporting system — one that, interestingly, has not been widely publicised to date — is that it will make the issuing of such summaries redundant.

Under the new digital system, employers feed payroll data to the tax office automatically with every pay run, including year-to-date data on employee earnings and tax withheld.

This will be made available to employees in real time via their myGov accounts, or through their tax agents’ portals, eliminating the need for employers to manually generate a report for every employee at the end of the tax year.

In a guide for employees on the incoming changes under Single Touch Payroll, the ATO said that “your employer is not obliged to give you an end-of-year payment summary for the information they report through Single Touch Payroll”, noting that the law has changed to reflect the new reporting system.

“Your payment summary information will be available in myGov at the end of the financial year,” it said.

“Your payment summary information will be called an income statement in myGov. This is the equivalent of your payment summary (some people may still refer to it as a group certificate).

“We’ll send a notification to your myGov inbox when your income statement is ‘tax ready’ so you or your tax agent can complete your tax return.”

The guide notes that the roll-out of STP is being staggered, and that some employers may opt to still provide a payment summary under their first year of reporting.

In addition to wages and tax information, employees will also be able to see employer payments of superannuation contributions via their myGov account.

Single Touch Payroll is already being used by employers with 20 or more staff members since it was introduced on 1 July 2018, making this the first year-end they will be able to avoid generating payment summaries.

It was extended to smaller employers from 1 July this year, making the end of the 2019–20 financial year the first time that most small business employers will be able to go “payment summary-free”.

Quarterly reporting for closely held payees

The ATO has shed light on how employers will be able to report quarterly for closely held employees under the new single touch payroll regime, including the ability to make amendments before extended finalisation due date.

The Tax Office previously announced that the closely held group will be granted a one-year exemption from Single Touch Payroll reporting, with employers starting quarterly reporting from 1 July 2020.

The ATO’s definition of a closely held employee is one who is a non-arm’s length employee, directly related to the entity from which they receive payments, including family members of a family business, directors of a company and shareholders or beneficiaries.

Recognising that closely held payees are not always paid on a regular basis or a regular amount, ATO director Michael Karavas said the agency will adopt several methods for employers to make reasonable estimates to report on a quarterly basis.

The ATO will allow employers to calculate the amounts through actual withdrawals, not including payments of dividends or which reduces the liabilities owed by the business entity to the closely held employee; 25 per cent of the salary or director fees from the previous year per quarter; or by varying the previous years’ amount within 15 per cent of the total salary for the current financial year.

“If you lodge quarterly using one of the methods, then the ATO will accept that you made a genuine effort to meet your Single Touch Payroll obligations and that will allow you to do that finalisation and make any adjustments at the time you do your tax return at the end of the year,” said Mr. Karavas.

While other businesses will have to provide a finalisation declaration by 14 July each year, the ATO has granted an extension to closely held payees to the due date of their income tax return.

“We are not saying that you need to know your final position by 14 July, but we are saying you have made a reasonable estimate, each quarter reported throughout the year and by doing that you are able to make reasonable adjustments at the end of the financial year,” said Mr Karavas.

“You’ll be able by the due date of your tax return, make that finalisation of what your actual final salary and wages or directors fees are. That finalisation will then make information available through pre-fill for that person’s tax return”.

Generally, to determine the productivity in the system of payroll, payslips no of per payroll Full-Time Employee is used. But, actual consideration should be given to the processing of payroll Productivity.

In-house vs outsourced is another major factor. all of these factors confirm that the system is analyse in correct way. 

Its Importance

The number of per payroll payslips is used to measure the payroll productivity of the resources of payroll as a group and as people. In addition to the fact that this measures efficiency, yet it additionally distinguishes matters that are contrarily affecting profitability.

Strategical Implications

Best Performing payroll organisations are 56%  more productive than others. They target some important areas:

– Ommison of copy processes

– Improving processes in the the enterprise

– Create a single sourcing payroll platform

Although attention to these factors improves payroll productivity, companies should also check the method of sourcing when apply this method. 

We also discovered that payroll organizations that are profoundly gainful additionally advantage from lower activity costs.

When utilizing the number of payslips per finance FTE as an efficiency measure, it should be standardized to incorporate thought for the sourcing alternative, the quantity of pay cycles, and quantity of workers. 

All of these may effect on the output.

Are You Know?

• Around 1.5 Payroll FTE ought to be answerable for management of payroll of 1k workers 
• On normal, for every hundred workers, there are a minimum of 79 inquiries every year 
• 24 to 48 hours The normal analysis time for the inquiry a payroll.
• The most basic inquiry is identified with payslip questions – 25 percent 

For business pioneers seeing approaches to help profitability to counterbalance increment in labour and creation costs, they ought to think about these functioning factors: 

– Are there running manual cycles that might be computerized? 

– Because of the system limitations is the processes have baggage steps?

– Is information entered in various spots? 

– Are processing time slowing due to older systems?

How Can We Help?

Payroll is one of our main business services and should not be something you need to stress about. Our expertise are dedicated in controlling the whole payroll cycle from first to last, however frequently you require. 

The service surely dispel the need for our clients to gain payroll knowledge give chances our clients to concentrate on providing data that relate with the companies objectives and strategic.

R T Accounting & Taxation Services boasts a qualified and experienced payroll team, having been in the industry for over the decade. The R T Accounting & Taxation Services team are in the heart of the Eastern Suburbs of Sydney and have great knowledge on New Zealand and Australian legislation of payroll.

STP – Single Touch Payroll

As per the current system, employee’s yearly payment results are necessary to complete files of their tax returns. And it’s a required work at the last of financial year.

However, as per the new STP system, issuing annual payment summaries are not mandatory. This is one of the major benefit of this unique payroll system.

According to the new system,

The tax authority gets the payroll data with tax withheld info of the employees automatically. And this is the employer’s responsibility to send this data to the tax office accurately.

The most interesting thing is, it made the job easier for the employers. Because, as a result, they no longer need to do the report that they had to do manually at the end of the tax year for each employee. Through myGov accounts or tax agent’s portal, it will be open for each employee on time.

Australian Taxation Office confirmed the issue in one of their guides that, for the information the employers report via single touch payroll system, it’s not binding for them to provide end of year summary for that info to employees. The bottom line is that to be in line with the new reporting law, this law has been changed. 

ATO also confirmed that at the end of every financial year, employees get their payment summary in myGov.  Employees will receive this summery like an statement of income form. After completing the statement, employees will get a notification in the inbox of their myGov and ready to do their tax return.  

In addition to main info, employees will also check employer contributions to superannuation via their myGov account.

Ever since it was created on 1^st July of 2018, employers who have 20 or more worker have been using this special payroll system. 

But from 1^st July 2020, it was also open for the smaller employers. This is the maiden time for many small business owners to experience a financial year with this facility.

Reporting Quarterly For Closely Held Payees

Also, the Australian Taxation Office highlights according to the new STP system how employers quarterly report for closely held employees, with the power to make alternations before the due date of an extended completion. In earlier, ATP declared that the closely held group will be allowed from STP reporting a one-year exemption. 

But who is called a closely held employee? According to the Australian Tax, Office definition is the person who closely engages with the entity from whom he receives payments. 

ATO director M. Karavas recognise that closely held payees don’t always get regular basis payment. He also said that to make quarterly basis report, an agency can apply various methods.

Employers are allowed by ATO to count the figure via real withdrawals, except dividends payment and anything that reduces business liability related to the closely held employee. 

Mr Karavas also said, if you are following any of the methods to report quarterly, then the Australian Tax Office recognise that you tried to follow the obligations of STP and then they give you permission to do any adjustments during your tax return. 

When other business entity have to make declaration of finalisation within 14 July every year, ATO give facility to make it income tax return due date the closely held payees.

Mr Karavas ensure that it’s not necessary to know the actual positon within 14 July. However he said that to make an appropriate estimate. It helps you to make any necessary adjustments or corrections at the financial year end. 

For micro-businesses, the ATO recently introduced STP products by a detailed register, with currently available several options.

If you are having any troubles with STP reporting, get in touch with one of our Payroll Specialists at R T Accounting & Taxation Services and ensure that you are STP compliant.