Chris Atkinson explains what tax planning is and the benefits.

Now's the time to review what strategies you can use to minimise your tax before 30 June 2021. Imagine what you could do with tax saved? Reduce your home loan Top up your super Save for a holiday (when we can travel again) Deposit for an Investment Property Pay for your children’s education Upgrade your Car The most important thing to remember is that there is no point in spending money to get a tax deduction unless it’s going to result in something useful for you.

Imagine what you could do with tax saved? Reduce your home loan Top up your super Save for a holiday (when we can travel again!) Deposit for an Investment Property Pay for your children’s education Upgrade your Car Here’s a guide to the strategies you can use to minimise your business tax.

Collins Hume's teams in Ballina and Byron Bay raised more than $4,000 in last weekend's Byron Coast 2021 Charity Walk. With the Westpac Rescue Helicopter providing vital 24-7 aeromedical search and rescue services across the Northern NSW region, Collins Hume was able to raise $4,833 thanks to the support and generosity of our families, clients and the wider community. Donning t-shirts specially designed for the day and with bags of enthusiasm, Collins Hume set out early in three teams covering 12km, 24km and 36km courses. Collins Hume Accountant and fundraising organiser Kim Roy has since crunched the numbers. "On the weekend we walked a combined total of 322km which equates to approximately 467,500 steps," says Kim. "Thus far we have raised $4,833 which, if we were all in one team, would make us the second-highest fundraiser." Make no mistake, the Byron Coast 2021 Charity Walk was no cakewalk, but the effort put in by all the Collins Hume team paid off so was certainly well worth it. "There are a lot of blisters and a few tired legs but overall the atmosphere on the weekend was on a real high," Kim added. "Everyone was so proud of themselves and that we were able to push past what we thought we could do." "I'm really proud to be part of a team of 'out there' individuals who are willing to get up from behind the desk and have some fun while raising money for a great cause." Every dollar raised helps to keep the Rescue Helicopter flying 24-7 for those in need. You can still support Collins Hume's fundraising efforts to keep helicopters and crews ready to respond when needed by following the sponsorship page links here. To find out more about how Collins Hume's gets involved and gives back to our community, please read more at Our Giving Impact.

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.

Chris Atkinson, our CEO, talks about the Collins Hume mission.

My name is Chris Atkinson, and I’m the CEO here at Collins Hume. Our core values aren't just typing on a website. These really are what we are. We documented these core values; it was easy. Collins Hume’s core values are: Lifestyle. Fun and enjoyment. Balance your business with your life. Inspiring. Today, every day, we will inspire others to achieve their best. Caring. We care for our team, we care for our clients, and everyone we connect with. Giving. We always give more than we receive. See us in the Ballina or Byron Bay office, or reach out over the phone.

Super Retail Group - owner of the Supercheap Auto, Rebel, BCF and Macpac brands - handed back $1.7 million in JobKeeper payments in January after releasing a trading update showing sales growth of 23% to December 2020. Toyota announced that it will return $18 million in JobKeeper payments after a record fourth quarter. And, Domino's Pizza has also handed back $792,000 of JobKeeper payments. Toyota, Super Retail Group, and Domino's were not obliged to hand back JobKeeper. Under the rules at the time, the companies qualified to access the payment. However, Toyota CEO Matthew Callachor said, "Like most businesses, Toyota faced an extremely uncertain future when the COVID-19 health crisis developed into an economic crisis …We claimed JobKeeper payments to help support the job security of almost 1,400 Toyota employees around Australia ….In the end, we were very fortunate to weather the storm better than most, so our management and board decided that returning JobKeeper payments was the right thing to do as a responsible corporate citizen." Domino's Group CEO and Managing Director, Don Meij said, "We appreciate the availability and support of JobKeeper during a period of significant uncertainty. That period has passed, the assistance package has served its purpose, and we return it to Australian taxpayers with our thanks." Companies that received JobKeeper and subsequently paid dividends to shareholders and executive bonuses have come under particular scrutiny, not just by the regulators but by public opinion. The first phase of JobKeeper did not require business to prove that they had actually suffered a downturn in revenue, just have evidence turnover was likely to drop in a particular month or quarter. For many businesses, early trends indicated that the pandemic would have a devastating impact on revenue. Many also took action and prevented the trend entrenching by actioning plans to protect their workforce and revenue. The fact that business improved, does not impact on initial JobKeeper eligibility. In the first phase of JobKeeper, employers were not obliged to stop JobKeeper payments if trends improved. Speaking at the Senate Select Committee on COVID-19, ATO Deputy Commissioner Jeremey Hirschhorn stated that the ATO rejected some $180 million in JobKeeper claims pre-issuance. Approximately, $340 million in overpayments have been identified. Of these, $50 million were honest mistakes and will not be clawed back where the payment had been passed on to the employee. Where the ATO determines that JobKeeper overpayments need to be repaid, they will contact you and let you know the amount and how the repayment should be made. Administrative penalties generally will not apply unless there is evidence of a deliberate attempt to manipulate the circumstances to gain the payment.

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!

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.

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 uncertainty of last year is in the rearview, but a bumpy road still lies ahead More than ever, businesses need to understand and manage their finances to navigate the new terrain of 2021, not just to survive but thrive. 2020 lost some great companies, and the years to come will take more. So how can you begin protecting yourself and your investments when the landscape is still shifting below your feet? Here are some essential tips to consider: Know your tolerance for financial risk According to Yelp.com's Local Economic Impact Report, for more than 97,966 businesses, 2020 caught them off guard, causing them to close their doors permanently. Though traffic is picking up for some, there is no promise that revenue will get better for all businesses. Are you ready to put it all on the line? If you are, there is success out there. If you're not, you may need to consider a strategic pivot seriously. OK, now that we have gotten that out of the way. Let's move on to some positive action steps. Build a budget We know we can not predict what lies ahead. However, we can learn from the past, make educated assumptions, and create a budget for the possibility of a tumultuous 2021. To help plan a tentative budget, here are a few questions you should ask: What was revenue like in January and February of 2020? How did it compare to profits in April of 2020? What do you experience as the pandemic restrictions ease/tighten? Do seasonal changes affect your revenue? Do you have revenue streams that continue to grow? Have you increased or decreased expenses during the pandemic? No one knows what's in store for business owners in 2021, but we do know that to survive 2021, business owners need to understand the financial basics for their business. Utilising powerful apps to build a budget will help you do just that. Know your goals For some businesses, making goals for 2021 might seem elusive, especially coming out of a year like 2020. However, by taking the time to define your goals, you will find the grit you need to stay in the fight. Success isn't by chance. Simply dreaming and hoping for growth in 2021 will not cut it. Tips to setting achievable goals: It's still OK to dream big Write your goals down Set achievable milestones Share your goals Work on your goals daily Be SMART (Specific, Measurable, Achievable, Relevant, Time-bound) Actively analyse finances By consistently running a balance sheet and updating your financial statements, you'll always have your thumb on the pulse of your business. There are excellent apps available on the Xero App Marketplace to do just this. If you are uncomfortable building various reports, get help from a trusted advisor like an accountant or bookkeeper who will help you understand your economic landscape. Understand your cash flow Businesses are showing a steady improvement in their spending outlook as 2021 gets underway. As a business owner, you need to know where to spend your money and where to pull it back. Though a business can look successful on paper, businesses fail at an alarming rate due to cash flow. It is essential to shorten the days between spend and collection from sales. The fewer days between the two means more cash on hand and less you will need to borrow. Developing a cash flow projection will ensure you have the money to pay vendors, staff, lenders, and yourself. Here are some apps that can help. Separate business and personal It's more important to separate business from personal finances in 2021. Making the separation will ensure you treat your business like an independent entity while protecting your financial circumstances with a 'corporate veil'. This type of protection makes the company accountable for any debts or legal responsibilities rather than holding the owner personally accountable. Save for emergencies For businesses that have made it through the COVID-19 pandemic, this might be hard. But you got this. Understand you need to count every dollar and make every dollar count. Here are a few cost-saving ideas to help free up money to save: Go paperless Don't pay for landlines Stick to your budget Time management is vital Cut production costs Hire freelancers Travel less Create partnerships for co-marketing Buy from the 'little guy' – for example, your local suppliers and other small businesses Listen to your customers For lots of companies, during economic downturns, they stop serving their current customers and start desperately looking for new customers. A better approach is to produce new products and services for customers who already know and love you. Your customers will let you know how to stay in business. Consider taking the necessary steps to listen to your customers by giving them a way to connect with you 24/7. Don't stop there. Listen to them with the intent to act. Your customers are letting you know how you can serve them better. Remember, other companies are looking for new customers, and if you are not tending to yours, your competition will. Focus on the future, not the past 2020 was devastating for the world in many regards, but there is still a bright future ahead. We must learn from our past, but we mustn't stay in our past. The future is in our imagination, so why not imagine a future of possibilities. When you set your goals, budget, or strategies, be realistic but still shoot for the stars. Be agile Be prepared for anything; you have got to be able to think on your toes. 2021 will not give you the time to cut through red tape. If you're too slow to open the door when opportunity knocks, it will head over to your competitor's open door. Become more efficient by automating redundant tasks to free-up management from routine, time-consuming tasks and allow them to engage in business strategies to increase profits and customer service. Be adaptable Success comes to those that can roll with the punches. Many businesses failed due to their inability to be adaptable. You should be able to pivot at a moment's notice in good times or bad. This past year we saw restaurants close in droves while others seemed to thrive. The difference was the quick adjustment to delivery and curb-side service. Showcase your differentiation In 2021 brand connections are becoming more critical for consumers. Customers are now looking for brands they can trust and support during these challenging times. Companies need to step up and show they are willing to provide superior customer service, operational excellence, clear and transparent communication, and affordable products. Especially in times of struggle, people are looking for assurance that good is out there. Now is the time to shine and show others you care. Remember your 'why' Most important, you have got to remember why you went into business in the first place. Do you have clarity around the 'why' of your business? No? That's OK, but it's time to figure it out. It is not about making money; that is the result. Your why should be the purpose, cause, or belief behind the reason your organisation exists. Knowing why you are in business can help you make hard choices, stay focused on your goals, and take the necessary risks needed to succeed. The landscape is uncertain for 2021, but there is reason to be optimistic. Businesses that stimulate growth with new products and services create jobs and infuse the economy with the money it needs to recover. Collins Hume Accountants and Business Advisers | Ballina & Byron Bay NSW | Ph 02 6686 3000 Source: Xero