We're often asked the best way to sell a business There are two key components at play in the sale of a business; structuring the transaction and positioning the business to the market. Both elements are important and can significantly impact your result. Structuring the transaction covers things such as pricing the business, the terms and conditions attaching to the sale, key terms in the contract, and ensuring the transaction structure is as tax effective as possible. Much of the structuring is about ensuring the vendors secure the most efficient and effective outcome from the sale. It is about maximising vendor position. Positioning the business for sale is all about ensuring that you achieve a sale and that maximises your price. It covers areas such as ensuring there are no hurdles within the business that will limit its saleability, identifying the competitive position of the business within its market segment, ensuring that operating performance is as good as it can be and that the business benchmarks well in its market. Positioning also includes identifying the best time to take the business to the market, how to take it to the market, and who the most likely buyers will be. Positioning is about doing everything needed to maximise the probability of a sale occurring, whereas structuring is about getting the best outcome from a transaction once it has occurred. A lot of people make the mistake of spending most of their energy on the structuring of the transaction. It is important but it only becomes important if the sale is achieved. To do this, you need to get an objective assessment of how the business compares in its market, its competitive position, and what, if any, impediments to sale exist – all the things a buyer will look at and look for when they assess your business. Most buyers believe that we are currently in a buyer's market and will try to drive down price expectations. Whether or not you are in a buyer's market depends on your industry segment but regardless of this, you are in a competitive market. Buyers may be comparing your business with similar businesses but also opportunities in other industry segments. Securing a sale at the best possible price is about having your business positioned for sale. Preparation time is needed to achieve this so talk to us well in advance of putting your business on the market. Many business owners believe it will be easy to sell their business for the price they want. However, with many more businesses for sale and fewer buyers, smart business owners do not wait and see; they take control of their own future by checking the value of their business on a regular basis as part of their family wealth creation strategy and reduce any chance of what we call 'value gap' risk occurring. Working closely with you as your Value Improvement Business Advisers, we look at your whole business (not just the numbers). We also cross-check our assessment against the largest and most accurate valuation benchmark data to validate our calculation. Call our team in Ballina or Byron Bay on 02 6686 3000.

The first COVID-19 vaccination in Australia rolled out on 21 February 2021. With the rollout, comes a thorny question for employers about individual rights, workplace health and safety, and vaccination enforcement. The rollout, managed in phases, is expected to complete by the end of 2021 (you can check your eligibility here). While the Australian Government's COVID-19 vaccination policy states that vaccination "is not mandatory and individuals may choose not to vaccinate", this does not mean that there will not be punitive initiatives for those failing to vaccinate including proof of vaccination to move across borders. Australia for example already has a precedent with "No Jab, No Play" policies in place to access child care payments (the ability to object to vaccination on non-medical grounds was removed from 1 January 2016). There are currently no laws or public health orders in Australia that specifically enable employers to require their employees to be vaccinated against coronavirus. However, it is likely that in some circumstances an employer may require an employee to be vaccinated. Can an employer require an employee to be vaccinated? For most employers, probably not. The Fair Work Ombudsman, however, states that there are "limited circumstances where an employer may require their employees to be vaccinated." These are: The State or Territory Government enacts a public health order requiring the vaccination of workers (for example, in identified high-risk workplaces or industries). An agreement or contract requires it – some employment agreements already require employees to be vaccinated and where these clauses exist, they will need to be reviewed to determine if they also apply to the COVID-19 vaccine. A lawful and reasonable direction – employers are able to issue a direction for employees to be vaccinated but whether that direction is lawful and reasonable will be assessed on a case by case basis. It's more likely a direction will be "reasonable" where, for example, there is an elevated risk such as border control and quarantine facilities, or where employees have contact with vulnerable people such as those working in health care or aged care. If an employee refuses to be vaccinated on non-medical grounds in a workplace that requires it, standard protocols apply. That is, the employer will need to follow through with disciplinary action - there are no special provisions that enable suspensions or stand-downs for employees who refuse to be vaccinated against COVID-19. Can an employer require evidence of vaccination? In general, an employer can only require evidence of vaccination if they have a lawful and reasonable reason to do so. Requesting access to medical records and storing data of an individual's medical information will also have privacy implications (see the Office of the Information Commissioner for more details). Your immunisation history is already accessible through your myGov account when it is linked to Medicare. The Express Plus Medicare app enables you to access this information on your phone. More details are expected shortly on Australia's "vaccine passport" that will enable the quick identification of an individual's vaccination status. Israel's "Green Pass" for example uses a simple QR code but there are already concerns that it is easily forged. Can we require customers to be vaccinated? Some high-risk industries are likely to require customers to be vaccinated or where they cannot be vaccinated, subject to heightened measures such as quarantine and/or testing. Qantas CEO Alan Joyce recently told A Current Affair, "We are looking at changing our terms and conditions to say, for international travellers, that we will ask people to have a vaccination before they can get on the aircraft." Qantas is expected to release its position middle-to-end 2021 on domestic and international travel. For employers in high-risk industries, it's important to maintain a conversation with employees and consult an industrial relations specialist if your workplace intends to require vaccinations for employees and/or customers. The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

The full company tax rate is 30% and the lower company tax rate is 27.5%. This information shows when to apply the lower rate and how to work out franking credits. Company tax rates apply to: companies corporate unit trusts public trading trusts. The full company tax rate of 30% applies to all companies that are not eligible for the lower company tax rate. Eligibility for the lower company tax rate depends on whether you are a: base rate entity from the 2017–18 to 2021–22 income years small business entity for the 2015–16 and 2016–17 income years. Base rate entity company tax rate From the 2017–18 to 2019–20 income years, companies that are base rate entities must apply the lower 27.5% company tax rate. The rate will then reduce to 26% in the 2020–21 income year and 25% in the 2021–22 income year. A base rate entity is a company that both: has an aggregated turnover less than the aggregated turnover threshold – which is $25 million for the 2017–18 income year and $50 million from the 2018–19 income year 80% or less of their assessable income is base rate entity passive income – this replaces the requirement to be carrying on a business. Base rate entity passive income is: corporate distributions and franking credits on these distributions royalties and rent interest income (some exceptions apply) gains on qualifying securities a net capital gain an amount included in the assessable income of a partner in a partnership or a beneficiary of a trust, to the extent it is traceable (either directly or indirectly) to an amount that is otherwise base rate entity passive income. Small business entity company tax rate You need to be a small business entity to be eligible for the lower company tax rate in the 2015–16 and 2016–17 income years. For the 2016–17 income year, the lower company tax rate is 27.5%. This lower rate applies to small businesses that both: have an aggregated turnover less than $10 million are carrying on a business for all or part of the year. For the 2015–16 income year, the lower company tax rate was 28.5% for small business entities with an aggregated turnover less than $2 million and carrying on a business for all or part of the year. For the 2017–18 income year and onwards, you need to be a base rate entity, rather than a small business entity to be eligible for the lower tax rate. Not-for-profit companies If you are a not-for-profit company, you don't pay tax on the first $416 of your taxable income. Tax is then shaded in at a rate of 55% of the excess over $416 until the tax on your taxable income effectively equals the company tax rate. You are then taxed at the company tax rate. As the lower company tax rate is 27.5% from 2016–17 to 2019–20, the shade in limit for not-for-profit companies has been reduced to $831 if they are: base rate entities from the 2017–18 to 2019–20 income years small business entities for the 2016–17 income year. Maximum franking credits To work out the company tax rate for franking your distributions, otherwise referred to as 'corporate tax rate for imputation purposes', you need to assume your aggregated turnover, assessable income, and base rate entity passive income will be the same as the previous income year. For the 2019–20 income year, your corporate tax rate for imputation purposes is 27.5% if either: your aggregated turnover in the 2018–19 income year was less than $50 million, and 80% or less of your assessable income was base rate entity passive income the entity didn't exist in the previous income year. Otherwise, your corporate tax rate for imputation purposes is 30%. Our proactive approach ensures we build solid relationships and deliver a consistent service all year round, not just at tax time. Contact Collins Hume in Ballina or Byron Bay on 02 6686 3000, or read more at Services for Business . Source: ATO

Directors will be required to register for a unique identification number that they will keep for life, much like a tax file number under a rewrite of Australia's business registers. ASIC does not currently verify the identity of directors and Elvis Presley and Bob Marley could "quite possibly" be registered. Or at least that was the view of former ASIC Commissioner John Price at a 2020 Parliamentary inquiry. The introduction of the Director Identification Number (DIN) regime is part of the Government's Modernisation of Business Registers (MBR) Program creating greater transparency and tracking the movements of individuals over time. The MBR will unify the Australian Business Register and 31 ASIC business registers, including the register of companies. In effect, the system will create one source of truth across Government agencies for individuals and entities and will be managed by the Australian Taxation Office (ATO). Why a director ID? Under the new regime, all directors will need to have their identity confirmed when they consent to being a director, so no more Elvis Presley unless your name really is Elvis Presley. You will then keep this number permanently, even if you cease to be a director – the number will not be issued to another person. The result is an ID system that traces a director's relationships across companies, enabling better tracking of directors of failed companies and prevents the use of fictitious identities. The target is illegal phoenixing. Phoenixing is when directors transfer the assets of an existing company to a new company without paying full value, leaving the debts with the old company. Once the assets have been transferred, the old company is liquidated leaving creditors out of pocket. Phoenixing has a ripple effect in the community and is estimated to cost between $2.9 billion and $5.1 billion annually. The real face of the impact is to the unpaid creditors – mostly customers and contractors, unpaid employee entitlements, and the broader cost through unpaid taxes. Once the assets are transferred to a new company, the directors then continue to operate the business in a new entity. They just set aside the problems and start again with the benefit of the good parts of their old company as a foundation. Who will need a director ID? The DIN is very broad and introduces the concept of an 'eligible officer'. An eligible officer is a director who: is appointed to the position of director, or is appointed to the position of an alternate director and is acting in that capacity (regardless of the name that is given to that position); or any other officer of the registered body who is an officer of a kind prescribed by the regulations. The definition picks up the concept of 'shadow directors' who act in the capacity of directors through influence and control but are not directors by title. That is, its feasible that someone who is not a director but is seen to be making decisions on behalf of the company can be held to account. An eligible officer is a director of a: company registered foreign company registered Australian body under the Corporations Act such as an association or a charity, or an Aboriginal and Torres Strait Islander corporation (which are registered under the CATSI Act). When the system opens, directors will need to apply for an ID through the Australian Business Register system through their myGov account. If you do not have a myGov account, it would be a good idea to create an account and become familiar with how it works. Your myGov account creates your digital credentials to verify who you are. When you register, you will need to declare that the information you have provided is true and correct, you are or will be an eligible officer within 12 months, and you do not have an existing ID (or applied for one). Existing directors will have until 30 November 2022 to acquire a DIN (30 November 2023 for directors of corporations under CATSI). For the first year of the program, new directors will have 28 days to apply for a DIN from the time of their appointment. From the first year onwards, you will need to have a DIN prior to being appointed as a director. Unlike the existing system that merely registers information, the new regime will verify a director's information and may utilise other sources of information such as your driver's license and/or link to your client record held by the ATO. The problem of directors in name only The new regime will not overcome one problem area – where naive participants are encouraged to become directors in name only such as elderly parents, or a spouse. That is, the identity of that person is legitimate but their role as a director is merely window dressing and they do not fulfil the role as active participants - a situation that is not uncommon in family groups. It's important that anyone agreeing to be a director understands the implications. Being a director is not just a title; it is a responsibility. At a financial level, directors are responsible for ensuring that the company does not trade while insolvent. The by-product of this is that the directors may be held personally liable for the debt incurred. The director penalty regime has also been tightened up in recent years to ensure that directors are personally liable for PAYG withholding, net GST and superannuation guarantee charge liability if the company fails to meet its obligations by the due date. For many small businesses, the directors are also often personally responsible for company loans secured against property such as the family home. Failing to perform your duties as a director is a criminal offence with fines of up to $200,000 and five years in prison. Ignorance is not a legal defence. Don't sign anything unless you understand the consequences. Better monitoring and bigger teeth for ASIC The introduction of a structured director verification system comes with greater controls and influence by the regulators to enforce the law with civil penalties of up to $200,000 in situations which include: Failure to register within the relevant timeframes Applying for multiple DINs Misrepresenting a DIN, and Accessorial liability where someone seeks to pervert the system The failure to register when required is a strict liability and the regulator does not have to prove fault, they will simply issue an infringement notice. Related article: What's the all the din about DINs To have a discussion with us on any aspect of the proposed introduction of the director identification numbers, please contact Collins Hume in Ballina or Byron Bay on 02 6686 3000.

The 2021-22 Federal Budget is a balancing act between a better than anticipated deficit ($106 bn), an impending election, and the need to invest in the long term. It is also a human budget (cynics would say voter-focussed), with $17.7 billion dedicated to aged care, more money in the pockets of low-income earners, the COVID vaccine rollout, $2 billion for mental health, a women's economic package including a child care subsidy increase and funding to prevent violence, and a Royal Commission into defence and veteran suicide. Key initiatives include: Extension of temporary full expensing and loss-carry back providing immediate deductions for business investment in capital assets Introduction of a 'patent box' offering tax concessions on income derived from medical and biotech patents Tax and investment incentives for the digital economy Extension of the low and middle-income tax offset Child care subsidy increase for families with multiple children $17.7 billion over 5 years to reform aged care $2.3 billion on mental health infrastructure and programs New and extended homeownership programs for first homeowners and single parents The Collins Hume team are available to assist you to capitalise on any of the Budget measures or minimise your risk. As always, the detail is important so please let us know if we can assist. We'll keep you up to date as the detail of these measures comes to hand.

Action Required – Reduce Your 2021 Tax With the end of the financial year approaching quickly, NOW is the time to discuss with us the actions you can take before 30 June 2021 to reduce your tax and grow your wealth. Many business owners have reduced their 2021 PAYG instalments to Nil during the COVID-19 period, but with JobKeeper payments you may find that you have generated profits this year and you may have tax to plan. For 2021, key priorities are likely to include: Maximising superannuation contributions without exceeding the relevant limits Bringing forward deductible expenses Deferring taxable income Managing capital gains Using a Family Trust or a "bucket company" to cap your tax at 26% or 30% Imagine what you could do with your tax saved: Reduce your home loan Top up your Super Save for a holiday (when we can all travel again!) Deposit for an Investment Property Pay for your children's education Upgrade your Car Act now Contact us now on 02 6686 3000 to book your tax planning meeting with us! The sooner we get started, the sooner we can help you save tax - well before 30 June 2021 allowing enough time to implement tax saving strategies. For more information, check out our free tax minimisation guides: Minimise Your 2021 Business Tax Minimise Your 2021 Personal Tax We look forward to hearing from you soon!

Reading this may save you tax and save you a lot of stress as a business owner. Between now and 30 June 2021, there are certain areas that we know you need our assistance with, and we want to raise these now so you can plan for them to occur in a specific order. To make it easier, we have combined all the key actions into our "2021 Year End Game Plan" approach outlined below. REDUCING YOUR TAX + PLANNING FOR YOUR TAX PAYMENTS Here is the order of the key tax planning services we recommend for you over the coming months: In May and June 2021 , we can provide you with a Tax Planning Report that will give you specific actions to reduce your tax, including the best way to spread business profits across family members to keep your overall group tax rate as low as legally possible. We'll update this, if necessary, with anything new from the 2021 Federal Budget. Based on our Tax Planning Report, we can then prepare your 2021 Trust Distribution Resolution for any Discretionary Trusts or Family Trusts that you have. You need to sign these before 30 June 2021 or the ATO may tax your Trust at the highest rate of 47% on any trust profits. In July 2021 we will prepare a TaxFlow Plan for you. The important report will outline your next 18 months of tax payments for all individuals and entities in your group – summarised in a cashflow format with totals. This makes it so much easier for you to plan for your tax payments, and discuss with us your options for reducing any PAYG instalments that the ATO may automatically assess for you. FBT – REDUCE ATO AUDIT PERIOD + FINALISING YOUR 2021 STP INFORMATION Here is the order of the key Fringe Benefits Tax (FBT) services we recommend for you over the coming months: In May 2021 we strongly recommend that we prepare 2021 FBT Return (including employee declarations) and lodge a 2021 FBT Return for you, even if it has NIL FBT payable. This restricts the ATO to a 3 year FBT audit period – otherwise the ATO can go back an unlimited number of years to audit your business for FBT. Nothing like having peace of mind! Prior to 14 July 2021 , you will be able to use the "reportable benefit" summary information included in our 2021 FBT Report to include for each employee in your Single Touch Payroll (STP) year end finalisation declaration. This information is required by the ATO so that it can be included in your employee's year end Income Statements. 2021 Tax Planning Report Our advice will help you to: Reduce your tax payable Work out the best way to distribute business profits to your family Have the information needed to prepare your Trust Distribution Resolutions Understand what your next 18 month's tax payments are and when they are due Lodgement of 2021 Fringe Benefits Tax Return If we prepare and lodge your 2021 FBT Return, then the length of time the ATO can audit you for FBT purposes is limited to just 3 years. By limiting this potential ATO audit period to just 3 years, the risk to your business of having to pay large amount of FBT and penalties in the future is vastly reduced. If anything in this update is urgent for you, please feel free to contact Collins Hume in Ballina or Byron Bay immediately for assistance.

To protect older Australians, the Government has moved to formalise 'granny flat arrangements' by providing an incentive to protect all parties in the arrangement. Typically, granny flat arrangements occur when an older person transfers some sort of consideration (often title to property or proceeds from the sale of property) to their adult child in exchange for the promise of ongoing care, support and housing. In some circumstances, it's a way for a parent to give their children access to their inheritance when it's needed not at a later point when the person dies. However, a 2017 Australian Law Reform Commission report highlighted the potential for elder abuse where granny flat arrangements fall apart. If the relationship breaks down, or other unforeseen circumstances arise, the older person can be left homeless. A central problem is a lack of formality in these arrangements. The tax system, in particular, the capital gains tax (CGT) system, acts as a disincentive to formalising a granny flat arrangement. Under the current rules, if a granny flat arrangement if formalised, this can lead to an upfront tax liability for the homeowners . Also, the children can potentially lose part of their main residence exemption when the parent pays for the right to live in the home depending on how the arrangement is structured. If the arrangement is left informal, and the money paid by the parent is merely a gift, the main residence exemption is generally unaffected. Recently released exposure draft legislation seeks to overcome the disincentive to formalising a granny flat arrangement by providing a CGT exemption. This does not mean that every separate dwelling built out the back of a house will have a CGT exemption. The legal meaning of granny flat is derived from social security law; it describes an arrangement rather than a type of accommodation and can arise whenever money or other consideration is given in exchange for a right to use the accommodation for life. The draft legislation provides that no CGT event will arise from a granny flat arrangement where certain conditions are met including where the individual with the granny flat arrangement has: Reached pension age or has a disability, and That the arrangement is in writing and is not of a commercial nature. Tax can be a major cost to your business. We work in partnership with you to minimise your tax and help you achieve your key objectives. Contact Collins Hume's tax specialists in Ballina or Byron Bay on 02 6686 3000.

Australia is facing a shortage of skilled labour. When the supply of staff dry up the focus often turns to retention. But the first step is to understand why people you want to stay, choose to move on? Very few people will reveal the whole truth about why they leave an employer. Partly they don't want their previous employer to think badly of them, they don't want to hurt anyone's feelings, and for others, it's just not worth getting into it. However, there is almost always a catalyst for change. It might not always be the employer but it is very rare that it is "just time". Change in leadership - Leadership vacuum or concern about the impact of the change. Work not challenging - This is the classic reason for leaving that is behind the "it's just time" comment. The employee feels as if the company has nothing left to offer. Conflict with a supervisor - Your business can have the best retention policies and strategies in place but a conflict between Manager and subordinate is immediate and damaging. Change in company dynamics - Each company is generally made up of smaller sub groups. These might be based on age, gender, professional status or cultural identity. The loss of a popular team member from one of these groups will be more deeply felt by their subgroup. Unfavourable change in responsibilities - Changes in team structures, reallocation of resources or taking on new assignments that are not within the skills set or comfort level of the employee. Life work balance issues - Retention is about mutual respect for priorities. The employer respecting the employee's personal responsibilities and employees recognising that they have corporate responsibilities. Both need to be fulfilled. Poor recruitment - Professional or cultural misfits. Ever hired Mr Right now rather than Mr Right? Lack of recognition for perceived value - Overlooked for opportunities held out but not delivered. Sometimes, it's not all bad. We've all had them; that employee who is the cultural and professional misfit. Decisive action when there is a poor fit can improve team morale. Collins Hume Accountants and Business Advisers | Ballina & Byron Bay NSW | Ph 02 6686 3000

Key changes from 1 July 2021 to be aware of Changes to increase the super guarantee to employees and changes to single touch payroll (STP). Please read this 2-minute article to ensure you keep up to date with everything tax-related that affects you. Also, as a business owner there are many obligations that you need to consider and action just before and after 30 June each year. Some of these will help to minimise your tax. Others will reduce your exposure to an ATO tax audit. We have outlined these key areas below to assist you: Brief summary of key dates and actions over the next 2 months Key changes you need to be aware of Your 2021 End of Financial Year Reminders and Actions Please carefully consider this information and contact us immediately if you have questions we can answer or if we can assist. ACTION REQUIRED + UPDATES Pre 30 June 2021 Trusts: Trustee resolutions need to be in place to be able to distribute trust income for the2021 financial year to beneficiaries and avoid being taxed at default tax rates. Companies: Review shareholder loan accounts and make minimum loan repayments (may need to declare dividends). Employee Superannuation: Pay this 24 June 2021 to deduct contributions in the current financial year. Please note that your super payment must clear your bank account by 30 June2021 for it to be a tax deduction in 2021. Complete a stocktake where required. Write off bad debts and scrap any obsolete stock or plant and equipment. Ensure any inter-entity management fees have been invoiced in your accounting system with proper Agreements in place. 1 July 2021 Companies: Tax rate for base rate entities reduces from 26% to 25%. Employee Superannuation: Super guarantee rate increases from 9.5% to 10%. Single Touch Payroll: Commences for "closely held" employees (family members, Directors, etc). Professional Firms: New guidance applies for tax treatment on profits of professional services firms. 14 July 2021 (on or before) Single Touch Payroll Finalisation Declarations need to be made by 14 July 2021 (extensions can apply for "closely held" payees). 28 July 2021 Quarterly super guarantee payment due (1 April – 30 June 2021). 28 August 2021 Taxable payments annual report due for payments to Contractors. Key changes to be aware of Superannuation Guarantee Increases to 10% This is the biggest change that will affect you this year. From 1 July 2021, the Superannuation Guarantee rate will increase from 9.5% to 10%. It is planned to increase by 0.5% each year until it reaches 12% on 1 July 2025. If any employees who are paid wages or salary plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their superannuation payments. ACTION STEP: All employers will need to give immediate action to managing this increase, and they will need to factor in this increase to their cash flow planning for 2022. Single Touch Payroll Changes From 1 July 2021, amounts paid to employees who are called "closely held" payees will need to be reported through STP. If you're a small employer you can report these amounts on or before each payday, or you can choose to report this information quarterly. All other employees need to be reported on or before each pay day. A closely held payee is an individual directly related to the entity from which they receive payments (eg. a family member, a Director of a company or a beneficiary of a Trust). Company Tax Rate Reduction From 1 July 2021, the company tax rate for base rate entities will reduce from 26% to 25%. This will also reduce the maximum franking rate that applies to dividends paid by base rate companies. Profits of Professional Service Firms The ATO has released draft guidance (PCG 2021/D2) that is planned to begin from 1 July 2021. This is designed to prevent structures being set up to divert income away from professionals and reducing their tax. The draft guidance includes a series of tests to identify a professional's risk level, looking at the structure of the business and how its profits are distributed, and whether the structure has any high risk features. ACTION STEP: All professional service firms (eg. doctors, medical specialists, architects, etc) will need to review their existing structure and possibly make changes from 1 July 2021. Some arrangements that were previously considered low risk may now fall into a higher risk zone. Please carefully consider this information and contact Collins Hume on 02 6686 3000 immediately if you have questions we can answer or if we can assist.

ATO Payment Deferrals We can liaise with the ATO and negotiate a deferral or repayment plan if you are having trouble paying any ATO liabilities. Please contact us immediately if you would like our assistance with this. Single Touch Payroll If you are reporting payments to employees to the ATO using Single Touch Payroll (STP), most businesses will need to lodge a STP Finalisation Declaration with the ATO by 14 July 2021. Employees will be able to access their Income Statement through their MyGov account. Small businesses with 19 or less employees and that employed family members were due to start reporting these employees (known as "closely held") through Single Touch Payroll (STP) from 1 July 2020. However, due to COVID-19 the start date of this has been extended to 1 July 2021. Your small business can start voluntarily using STP earlier than this date. All other employees should now be reported through STP. Reportable Fringe Benefits Where you have provided fringe benefits to your employees more than $2,000, you need to report the FBT grossed-up amount. This is referred to as a `Reportable Fringe Benefit Amount' (RFBA) amount, and it needs to be updated for each employee as part of your Single Touch Payroll finalisation procedure for 2021. Stocktake We can liaise with the ATO and negotiate a deferral or repayment plan if you are having trouble paying any ATO liabilities. Please contact us immediately if you would like our assistance with this. Businesses that buy and sell stock generally need to do a stocktake at the end of each financial year as the increase or decrease in the value of stock is included when calculating the taxable income of your business. If your business has an aggregated turnover below $10 million, you can use the simplified trading stock rules. Under these rules, you can choose not to conduct a stocktake for tax purposes if the difference in value between the opening value of your trading stock and a reasonable estimate of the closing value of trading stock at the end of the income year is less than $5,000. You will need to record how you calculated the value of trading stock on hand. If you do need to complete a stocktake, you can choose one of three methods to value trading stock: Cost price – all costs connected with the stock including freight, customs duty, and if manufacturing, labour and materials, plus a portion of fixed and variable factory overheads. Market selling value – the current value of the stock you sell in the normal course of business (but not at a reduced value when you are forced to sell it). Replacement value – the price of a substantially similar replacement item in a normal market on the last day of the income year. A different basis can be chosen for each class of stock or for individual items within a particular class of stock. This provides an opportunity to minimise the trading stock adjustment at year-end. There is no need to use the same method every year; you can choose the most tax effective option each year. The most obvious example is where the stock can be valued below its purchase price because of market conditions or damage that has occurred to the stock. This should give rise to a deduction even though the loss has not yet been incurred. Trust Distribution Resolutions Trustees (or directors of a trustee company) need to consider and decide on the distributions they plan to make by 30 June 2021at the latest. Decisions made by the trustees should be documented in writing, preferably by 30 June 2021. If valid resolutions are not in place by 30 June 2021, the risk is that the taxable income of the trust will be assessed in the hands of a default beneficiary (if the trust deed provides for this) or the trustee (in which case the highest marginal rate of tax would normally apply). ACTION STEP: If you haven't already signed your Trust Distribution Resolution for each Trust you have, please contact our office before 30 June 2021 so that we can properly prepare this document for you to sign. Div 7a Loan Agreement Minimum Repayments When a company makes a loan to a shareholder or an associate of a shareholder, a Loan Agreement needs to be entered into and minimum annual repayments for the loan need to be made before 30 June each year. If these steps aren't taken, then the loan amounts are treated as a deemed unfranked divided and are taxable at the taxpayer's marginal tax rate – which could be as high as 47%. ACTION STEP: Ensure that you have made all minimum repayments for any Div7A Loans that you have before 30 June 2021. Please contact us immediately if you are unsure of this, as you may need to declare a dividend from the company before 30 June 2021 to assist with your minimum annual loan repayment. Reporting Payments to Contractors A "Taxable Payments Annual Report" (TPAR) is due for lodgement with the ATO by 28 August 2021 for the following industries: Building and construction services Cleaning services Courier services Road freight services Information technology (IT) services – including software development Security, investigation or surveillance services Mixed services (providing one or more of the services listed above) This report includes a listing and total of all payments and non-cash benefits made to contractors during the year. Payroll Tax Payroll tax applies to all entities that have an Australian payroll that exceeds state-based limits. You should note that in addition to normal salaries and wages, the following items are generally also included in payroll expenses if payroll tax applies: fringe benefits based on the grossed-up taxable value of fringe benefits; all employer contributions to superannuation on behalf of employees; and some contractor or sub-contractor fees. For more detailed information about whether payroll tax applies to your business, please contact our office. ACTION STEP : The Annual Return/Reconciliation for payroll tax must be lodged by 21 July 2021 (Queensland, Victoria, Northern Territory, Tasmania and WA) or by 28 July 2021 (NSW and South Australia) with your State Revenue Office. WorkCover/WorkSafe Your WorkCover/WorkSafe insurer sends an annual reconciliation to all registered employers at the end of the financial year. In completing your annual reconciliation, you will need to include the following items in addition to normal salaries and wages: fringe benefits based on the taxable value of fringe benefits (do not gross-up); all employer contributions to superannuation on behalf of employees; and some contractor or sub-contractor fees. For more detailed information about what items to include in the reconciliation statement, please contact our office. Once the reconciliation is received and processed by your WorkCover/WorkSafe insurer, you will be issued with a final assessment or a refund depending on the instalments you have paid during the year. ACTION STEP: Complete and lodge the Annual Reconciliation with your WorkCover/WorkSafe insurer by the due date. Goods and Services Tax (GST) A reconciliation of GST should be performed as at 30 June 2021 to determine if there has been an under or over-payment of GST in the 2021 tax year. If a discrepancy has arisen, then it is possible to adjust a subsequent Business Activity Statement (BAS) to rectify the error, however there are limits imposed on adjustments that can be made in this way. Income declared on your BAS should be reconciled to income declared on your income tax returns. Also, please note that you are required by law to substantiate all Input Tax Credit claims with a complying Tax Invoice, and you need to retain these documents for a minimum of 5 years. ACTION STEP: Complete the annual GST reconciliations, and check that you have all required tax invoices and other supporting documents. ATO Audit Activity Please note that the ATO and State Revenue Office are constantly increasing their audit activities. There has been an increase in audit activity for PAYG Withholding, Payroll Tax, WorkCover, GST, Division 7A loan accounts from companies, and Trust distributions from Discretionary Trusts. We can offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit. ACTION STEP: Please contact our office if you would like to request this service. 8 Last Minute Tax Minimisation Tips Here are some final reminders about ways to reduce your tax for 2021: Write-off Bad Debts in your computer system before 30 June 2021 Write-off any trading stock that is damaged or obsolete Review your Asset Register and scrap any obsolete plant and equipment Pay for marketing materials, repairs, consumables, office stationery, and donations before 30 June 2021 Ensure employee superannuation contributions are made and received by your employees' superannuation fund/s by 30 June 2020 to allow a tax deduction this 2021 financial year Realise any capital losses you have before 30 June 2021 to offset against any capital gains you may have made Pass a properly authorised resolution to commit to the payment of a Director's Fee or employee bonus before 30 June 2021, even if it paid within a reasonable time after 30 June 2021 Raise management fees between entities by 30 June 2021 and ensure that you have a signed Management Fees Agreement / Services Agreement in place to support the transaction and to ensure they are commercially reasonable. Do You Need Any Assistance from Us? Feel free to contact our office anytime by phone in Ballina or Byron Bay on 02 6686 3000 or email us - we're here to help.

On 1 July 2021, the Superannuation Guarantee (SG) rate will rise from 9.5% to 10% - the first rise since 2014. It will then steadily increase each year until it reaches 12% on 1 July 2025. The 0.5% increase does not mean that everyone gets an automatic pay increase, this will depend on your employment agreement. If your employment agreement states you are paid on a 'total remuneration' basis (base plus SG and any other allowances), then your take home pay might be reduced by 0.5%. That is, a greater percentage of your total remuneration will be directed to your superannuation fund. For those paid a rate plus superannuation, then your take home pay will remain the same, but your superannuation fund will benefit from the increase. If you are used to annual increases, the 0.5% increase might simply be absorbed into your remuneration review. Employers will need to ensure that they pay the correct SG amount in the new financial year to avoid the superannuation guarantee charge. Where employee salaries are paid at a point other than the first day of the month, ensure the calculations are correct across the month (i.e., for staff paid on the 15th of the month they are paid the correct SG rate for June and July in their pay and not just the June rate). Superannuation salary packaging arrangements will also need to be reviewed – employers should ensure that the calculations are correct and the SG rate increase flows through. Annual superannuation guarantee rate changes Date SG rate 1 July 2020 – 30 June 2021 9.5% 1 July 2021 – 30 June 2022 10% 1 July 2022 – 30 June 2023 10.5% 1 July 2023 – 30 June 2024 11% 1 July 2024 – 30 June 2025 11.5% 1 July 2025 – 30 June 2026 12% New stapled superannuation employer obligations for new staff Currently, when an employer hires a new staff member, the employee is provided with a Choice of Fund form to identify where they want their superannuation to be directed. If the employee does not identify a fund, the employer directs their superannuation into a default fund. When someone has multiple funds, it often erodes their balance through unnecessary fees and often insurance. And, as at 30 June 2020, there was $13.8 billion of lost and unclaimed superannuation in accounts across Australia. From 1 July 2021, where an employee does not identify a fund, legislation before Parliament will require the employer to link the employee to an existing superannuation fund. That is, an employee's superannuation fund will become 'stapled' to them. An employer will not simply be able to set up a default fund, but instead will be required to request that the ATO identify the employee's stapled fund. If the ATO confirms no other fund exists for the employee, contributions can be directed to the employer's default fund or a fund specified under a workplace determination or an enterprise agreement (if the determination was made before 1 January 2021). Legislation enabling this measure is currently before the Senate. Single touch payroll reporting Single touch payroll will apply to most businesses from 1 July 2021, this will include small businesses (those with 19 or fewer staff) and businesses with closely held employees (e.g., directors of family companies, salary and wages for family employees of businesses). No further extensions will be granted. For employers with closely held employees, there are some concessions on how reporting is managed with the option to report one of three ways: reporting actual payments in real time, reporting actual payments quarterly or reporting a reasonable estimate quarterly. These concessions allow a level of flexibility in relation to determining and making payments to closely-held payees. However, if your business is impacted, it will be important to plan throughout the year to prevent problems occurring at year end. If anything in this update is a priority for you, please feel free to contact Collins Hume in Ballina or Byron Bay immediately for assistance.