KDA Group | Blog

New Data Breach Laws

Mon, 12 Feb 2018 22:00:00 GMT

If the recent "Cabinet Files" of secret, government documents being sold through a second hand store have taught us anything, it's that sensitive documents can be sold both cheaply and easily, even when no there are no nefarious motives involved. New data breach rules in effect from 22 February 2018 place an increased onus on business to both protect and notify individuals whose personal information is involved in a data breach that is likely to result in serious harm.

Regardless of how good your existing systems are, data breaches are a reality either through human error, mischief, or simply because those looking for ways to disrupt are often a step ahead. But it's not all about IT, there have been numerous cases of hard copy records being disposed of inappropriately, employees allowing viruses to penetrate servers after opening the wrong email, and sensitive data on USBs lost on the way home.

Who is covered by the data breach scheme?

The Notifiable Data Breach (NDB) Scheme affects organisations covered by the Privacy Act (those with an annual turnover of $3M or more). However, if your business is 'related to' a business covered by the Privacy Act, deals with health records (eg: gyms, child care, natural health providers, etc.), or a credit provider etc., then your business is also affected (see the full list ). Special responsibilities also exist for the handling of tax file numbers, credit information and details contained on the Personal Property Securities Register.

What you need to do

It's important to keep in mind that complying with these new laws means more than notifying your database when something goes wrong. Organisations are required to take all reasonable steps to prevent a breach occurring in the first place, put in place the systems and procedures to identify and assess a breach, and issue a notification if a breach is likely to cause 'serious harm'.

Taking all reasonable steps – assessing risk

The Privacy Act already requires organisations to take all reasonable steps to protect personal information. The new data breach laws merely add an additional layer to assess breaches and notify where the breach poses a threat. For example, if you have not already, you should assess issues such as:

How personal information flows into and out of your business. For example:

o What information do you gather (including IP data from websites)

o What information do you provide (eg: do you provide information on your clients to third parties?)

o Where private information is stored – map out what systems you use, where these systems store data (if cloud based, your data may be held in a foreign country), what level of security is provided within those systems, and what level of access each team member has (and what they should have access to for their role)

· How private information is handled by your business across its lifecycle and who has access at each stage (not just who is accessing the information for their work but who 'could' access this information)

· Possible impacts on an individuals' privacy (risk assessment)

· The policies and procedures in place to manage private information, including risk management and mitigation, whether these are adhered to, and actively managed

· The policy review process - review policies and procedures at least annually but again with the introduction of new systems and technology. Remember, you can't just have a policy sitting somewhere, it needs to be actively reinforced and adopted by team members

· Instate new project protocols for ensuring privacy where personal information is at risk

· Document everything including your reviews and procedural updates even if nothing changed . If there is ever an issue where your business's culpability is assessed, your capacity to prove that you took all reasonable steps will be important.

Not only in Australia. Does your Business have International Connections?

These days, many businesses also operate overseas or have overseas customers and you need to be aware of the data breach requirements in other countries too. Most US states have compulsory data breach requirements. Likewise the European Union, with the EU's General Data Protection Regulation (GDPR) coming into effect from 25 May 2018. If you operate through a local distributor in the European Union or have direct supply into those countries then it's likely your business will be caught by the Regulation.

Make sure you have a Plan!

When it comes to data breaches, all organisations must have a data breach response plan. The data breach plan covers the:

· Actions to be taken if a breach is suspected, discovered or reported by a staff member, including when it is to be escalated to the response team

Members of your data breach response team (response team), and

Actions the response team is expected to take.

The Office of the Australian Information Commissioner provides a sample breach response plan .

Identifying a Serious Breach

So, what is a serious breach? A breach has occurred when there is unauthorised access to or disclosure of personal information or a loss of personal information that your business holds. Whether a breach is serious is subjective but may include serious physical, psychological, emotional, financial, or reputational harm. If a breach occurs, you need to think through how that information could be used for identity theft, financial loss, threats to physical safety (for example someone's home address), job loss, humiliation or reputational damage, or workplace bullying or marginalisation.

If you suspect a breach has occurred, your business is obliged to take "reasonable" and "expeditious" action regardless of whether you think it is serious or not (you have a maximum of 30 days, but in general the first 24 hours is often the most crucial). Ignorance is not a defence . A lack of systems to identify system breaches fails the Privacy Act's requirement to take all reasonable steps to protect personal information. As soon as a breach is identified anywhere in the business, whether it is IT based or physical, steps need to be taken - even if it is simply noting that no further action is required.

If you suspect a data breach has occurred that may meet the threshold of 'likely to result in serious harm', you must conduct an assessment. Sounds simple right? But the problem for business is often that there are initially no definitive answers about the extent of a breach or its seriousness for the assessment to take place. Take the example of a retail business with an online store. Your IT department tells you that your customer database has been hacked, but can't tell you what information may have been impacted or to what degree. You don't want to alarm your customers unnecessarily but you do need to contain the damage and assess the situation quickly, not just because of the NDB scheme, but because your business's reputation is on the line.

Notifying a Breach

If a breach is assessed to potentially result in serious harm, you are obliged to advise affected individuals and the Australian Information Commissioner. You have the option to:

Notify all individuals whose personal information is involved in the eligible data breach

Notify only the individuals who are at likely risk of serious harm; or

· Publish your notification, and publicise it with the aim of bringing it to the attention of all individuals at likely risk of serious harm.

You advise the Australian Information Commissioner of a serious potential breach using the Notifiable Data Breach statement - Form .

Ignorance is not a Defence. So be Informed, be Empowered and be Ready!

Changes to Company Tax & Franking Rates

Tue, 12 Dec 2017 22:00:00 GMT

As you are probably aware, company tax rates from 2017 financial year (FY) onwards have changed and there are implications for franking rates as a result. To ensure that you consider these changes and the effect that they may have on your business, we thought that we would bring you further clarification.

In the 2017 FY, the lower company tax rate of 27.5% applied if the Small Business Entity (SBE) was carrying on a business, and the aggregated turnover of the SBE was less than $10M in the 2016 or 2017 financial years. There was also no need to analyse passive versus active income, with passive income relating to income streams such as royalties, interest, rent and dividends, capital gains and trust or partnership income.

The franking percentage in 2017 FY was also limited to 27.5% if the above criteria applied. However, if the company wasn't carrying on a business in the 2017 FY, or the aggregated turnover was $10M or more in the 2016 FY, the franking rate was limited to the higher rate of 30%.

Assuming legislation is passed, the 2018 FY will see some changes to the previous criteria. Under the new rules, a company will not be able to access the lower company tax rate of 27.5% unless its aggregated turnover is less than $25M and no more than 80% of the company's assessable income is from passive income streams. This effectively replaces the 'carrying on a business test' with a passive income test.

The Bill also makes changes to the maximum franking percentage rules for 2018. The franking rate will again be limited to 27.5%, but only if the aggregated turnover was less than $25M in the 2017 FY and 80% or less of turnover was passive. Subsequently, the franking rate will be limited to 30% if the aggregated turnover was $25M or more in the 2017 FY or more than 80% of turnover in the 2017 FY was passive. Additionally, if a company didn't exist in the 2017 FY, the franking rate will be capped at 27.5% in the 2018 FY.

As always, we are only a phone call away on 02 4861 8383, and are more than happy to help you maximise your potential, and that of your business.

ASIC is Best - So Why Pay More?

Tue, 31 Oct 2017 22:00:00 GMT

Recently, one of our clients notified us about a letter they had received from a business agency, regarding renewal of their business name. It was from a legitimate company and it referenced ASIC several times. It contained the following renewal and fee information:

Please note that you do not need to use an external agent (or your accountant) to renew your business name. It is now a simple matter of going directly to the ASIC website and completing the online details . The ASIC fee is $35 a year or a discounted fee of $82 for three years.

Of course, if you would like to discuss your renewal or would like us to do it for you, then please give us a call on 4861 8383 and we can discuss your options and any associated fees.

Wages Declaration & Workers Compensation

Tue, 31 Oct 2017 22:00:00 GMT

In Australia, Workers' Compensation is a necessary cost of employing staff, whether full-time, part-time or casual. Although the schemes in different states can vary slightly, many of the fundamentals remain the same. One such fundamental, is the declaration of wages that is required in order to gain an appropriate workers' compensation insurance policy for your business.

You may be forgiven for thinking that wages is a cost that is easily determined by looking at your payroll figures. However, wages as outlined by the various states' workers' compensation acts is so much more than simply wages. In fact, remuneration is probably a better term and besides salary and wages, might incorporate other benefits and entitlements that are made to workers. These may include shift and other allowances, overtime, bonuses, commissions, grossed up fringe benefits, compulsory superannuation guarantee contributions, salary sacrificed superannuation, long service leave payments, termination payments, the value of cash substitutes, payments to working directors and trust distributions to workers in lieu of wages, to name a few. Essentially, any benefit paid (whether cash or non-cash), to or in relation to a worker, is generally to be considered.

Trust distributions to workers in lieu of wages, are one such benefit that is often over looked. Generally, if a trust distribution occurs as remuneration for work done, and is given wholly or partly, as a substitute for wages, then it is to be included in the overall wages declaration for workers' compensation purposes. However, this does vary from state to state. In some states, remuneration is legislated by law, while in others individual insurers outline their inclusions. Therefore, it is vital that you know where you stand in your particular state, and ensure that you include all relevant workers' payments when making your wages declaration.

It's also important to note that in some states and territories you are not required to have Workers' Compensation Insurance if your total "wages" are below certain thresholds. To learn more about the various workers' compensation schemes in Australia, and to ensure that you are meeting your obligations, speak with your insurer and visit the website of the relevant government agency in your state or territory:

ACT: www.worksafe.act.gov.au

NSW: www.workcover.nsw.gov.au

NT: www.worksafe.nt.gov.au

QLD: www.workcoverqld.gov.au

SA: www.workcover.com

TAS: www.workcover.tas.gov.au

VIC: www.worksafe.vic.gov.au

WA: www.workcover.wa.gov.au

Small Business Threshold Increases to $10m

Mon, 17 Apr 2017 23:00:00 GMT

Legislation is expected to pass soon in parliament that will make it easier for many businesses to qualify for the small business concessions that were previously only available to those with an aggregated turnover below $2m.

Once the legislation is passed, businesses whose aggregated turnover does not exceed $10m will have access to many of the same benefits held by their smaller counterparts, allowing them to tap in to a range of tax concessions and hence free up vital funds. Even better, the Bill will be retrospective, meaning that the benefits will apply for the whole of the 2016-17 financial year.

Some benefits that will be available to those who qualify for the increased threshold under the small business rules are as follows:

· Instant asset write-off for assets costing less than $20,000 purchased during the 2016-17 financial year.

· Deductions for professional expenses for start-up and small business rollover when restructuring.

· Small business income tax offset for unincorporated entities.

· Company income tax for small businesses dropping to 27.5% in 2016-17, and then down to 25% over the

next ten years.

Additional concessions may also be available to you depending on eligibility. These are:

· Income Tax Concessions including simplified trading stock rules, an immediate deduction for prepaid

expenses and a two-year amendment period.

· PAYG Instalment Concessions allowing taxpayers to pay a pre-set quarterly amount.

· Fringe Benefits Tax Concessions for car parking and work related devices.

· Super Concessions allowing you to use a small business superannuation clearing house.

· GST & Excise Concessions allowing you more flexibility.

However, the current threshold for access to the small business capital gains tax concessions will remain unchanged at $2m.

Please note that regardless of eligibility, the use of these concessions is optional.

Good news all round for many of you, giving you added flexibility, better cash flow and more simplified processes so that you can get on with the business of running your business. At KDA Group, we're all about helping you to maximise your potential, and this includes making the most of tax concessions available to you. If you think you might need some assistance, we're only a phone call away on 4861 8383.

Business Valuations: A Call to Action!

Tue, 28 Mar 2017 22:00:00 GMT

Imagine the following....

The time comes to sell up. You have an awesome business, sales have grown 20% per year for the past three years, the opportunities are endless and buyers should be climbing over each other to acquire you. Then you list with a well-regarded business broker and one by one, the suitors disappear. Any offers you receive are substantially lower than your asking price. In fact, they only cover your stock and equipment, and not the $1M of goodwill you thought was a given. You can't work it out. Okay, you know you are working around the clock to keep the place going, but that's why you've decided to let someone else have a go. Sure, your cash position is getting worse every week, but that's why you hoped one of your competitors with cash-laden pockets would step in and help you out of a hole.

So what's it all about?

People pay a price for value. When it comes to businesses, investors do their due diligence, because buying a business for millions of dollars is a big decision and no-one likes getting their fingers burnt. The bottom line? Investors will pay a price for a business, but only according to the value that they can extract.

This begs the question, how do you create and improve business value?

The first thing you need to understand is how business value is calculated. There are many methods for valuing businesses, but the most common and widely accepted formula is the Capitalisation of Future Maintainable Earnings method (to use the technical name). Put simply the formula is:

Profits X Capitalisation Rate = Business Value

The reason that we look at profits is that the purchaser of a business wants to know what the predictable financial performance of a business is likely to be over the foreseeable future.

The capitalisation rate is related to assessing the level of risk involved in the business being valued. The lower the risk, the higher the capitalisation rate will be.

So there are two factors at play here – profits, and risk.

You can focus on increasing your profits, as this will drive an increase in your business value. Likewise, you can also assess the risks attached to your business, and work to reduce or eliminate them, as reducing risk will also increase your business value.

We all know the profit piece fairly well. We can:

· Increase sales

· Increase gross profit

· Decrease overheads

All things being equal, these three steps will deliver the profit increase we require. It's not rocket science!

However, reducing risk can be a longer term challenge. Ultimately, investors like businesses that are boringly predictable. There are many factors which reduce the risk associated with a business. Some of the key ones are:

· Low working capital requirement, quick cash conversion cycle (aka, cash

cow)

· Strong supply chain; diversity of suppliers

· Regular repeat sales (annuity type income)

· Diversity of customers (by size, industry, geography, no reliance on a few

customers for the majority of sales)

· Well managed stock

· Retention of staff, particularly management, following transfer of

ownership

· Strong processes and information systems that allow the business to run

like a well-oiled machine

· Protection of Intellectual Property

The crunch line? I'd like to challenge you. Do you know what your business is really worth, and are you doing what you can to improve its value? Remember, working on the profits and capitalisation rate now, even if you're not planning on selling, will make your business more profitable (obviously), easier to manage, more cash positive, and less time consuming. What more could you want?

At KDA Group we're all about helping you to maximise your potential, and this includes business value. If you think you might need some assistance, we're only a phone call away on 02 4861 8383.

Cashflow or Crash Flow?

Tue, 21 Feb 2017 22:00:00 GMT

"Hello, Mr Banker, we're out of cash again…"

Cash is King. Cash is the lifeblood of your business. Lack of cash is the most common cause of company failure in Australia; in fact, in the 2016 financial year, 45.6% of company failures were due to this reason.

We all know how important cashflow is, but what do we really do about it? Do we actively manage it and plan for an outcome, or do we sit by, watch it flow in and out, and hope for the best?

You have probably all heard the adage, 'failing to plan is planning to fail', and this applies to cashflow as much as it does to everything else in life. Everyone does sales projections, and some people do expense budgets but sadly the cashflow forecast often gets pushed into the too-hard basket.

After all, how can you plan for customers who pay anywhere from COD to 90 days after invoice? How are you supposed to know if you'll run out of stock in three months' time, and might need to pay cash on order to your local supplier to buy more stock before your regular shipment arrives from Vietnam?

The trouble is, you don't! However, a good cashflow forecast based on accurate assumptions, and proper double entry accounting principles, will give you the best chance of managing the cash requirements related to these unpredictable events.

By working through a cashflow forecasting exercise you will be forced to:

· Create a forecast of sales for the forecast period

· Estimate your cost of sales (this can be tied back to an estimated gross profit)

· Budget for your expenses

· Think about what personal expenses you have planned

(that will be funded with cash from the business)

· Do a realistic assessment of what capital expenditure will be required

(the new Land Rover Discovery, and the flash office refurbishment), and

· Last, but not least, estimate your tax bills.

The benefits of an accurate cashflow forecast are threefold:

· You have a financial roadmap for the next one to two years

(we recommend forecasting at least the next full financial year)

with which you can drive performance and keep your staff accountable

· You can compare your actual performance against your roadmap,

identify where things are getting out of control, and manage them accordingly, and

· You will identify any:

o Opportunities arising from strong cash generation (maybe setting up the US branch is possible after all!)

o Periods of tight cashflow ahead of time , so you can make appropriate arrangements with your bank or other financiers well in advance (they will LOVE this!).

So don't bury your head in the sand anymore! Grit your teeth, arm yourself with a calculator, paper and pen (or Excel spreadsheet) and get on with it. Who knows, it may not be as hard as you think!

At KDA Group we're all about helping you to maximise your potential, and this includes your cashflow. If you think you might need some assistance, we're only a phone call away on 02 4861 8383.

FBT - Cars & Parties? Or is there more to it?

Mon, 12 Dec 2016 22:00:00 GMT

When we hear the words "Fringe Benefits", many of us think only of motor vehicles, or as the festive season approaches, about the tax implications of the Office Christmas party. However, fringe benefits extend to many more areas, and probably ones you've never considered. As 2016 ends, and you start to wind down and think about celebrating, it might be worth considering the other fringe benefits you may be providing, and planning for the reporting requirements necessary for 31 March 2017.

Fringe Benefit Tax (FBT) audits by the ATO are on the increase. Particular attention is being given to payments made to, or expenses paid on behalf of, employees. Three areas being highlighted in recent times are:

Travel - this is of particular concern where spouses, or entire families, are travelling and only certain family members are travelling for business purposes.

Meals - Excessive food costs where it appears that businesses are paying for private grocery bills, rather than simple meal expenses.

Expense Payments - Where expenses seem unusually high (eg: employees' personal telephone bills).

Other types of benefits that may be of concern include:

Work Parties & Gifts – The end of year festivities must, of course, rate a mention. So before you start ordering the platters, popping the champagne or wrapping gifts for your staff, you might want to take a minute to consider your entertainment fringe benefit liability. For more information, why not revisit last year's blog at http://www.kdagroup.com.au/blog/christmas-considerations or the ATO for a more comprehensive guide.

Accommodation & Meals - If you provide an employee with accommodation rent free, or at a reduced rate at their regular residence, a housing fringe benefit may arise . A board fringe benefit may also arise if you provide your employee with accommodation and there is an entitlement to at least two meals a day. (Eg: a remote construction site or resident boarding school teachers).

Employee Expenses – From time to time you might reimburse an employee, or a third party regarding an employee, for expenses they've incurred. These may be business or private in nature, or a combination of the two. An expense payment fringe benefit may arise as a result.

Low or No Interest Loans – You also provide a loan fringe benefit if you give your employee a loan and charge no interest, or a rate of interest that is lower than the benchmark interest rate (5.65% for 2017).

Living Away from Home - Occasionally, an employee may be required to live away from home for a period of time to perform their work duties, and a living-away-from-home allowance (LAFHA) fringe benefit may arise if you pay an allowance to cover additional costs.

Forgiving an Employee's Debt - Sometimes you decide, or a sense of benevolence urges you, to waive or forgive the whole or part of an employee's debt. For example, if you sold goods to an employee and later told them not to bother about paying the invoiced amount. A debt waiver fringe benefit arises as a result. (NB: This does not apply if you write off the outstanding amount as a bad debt.)

Property and your Employee - Providing your employee with property of any kind, whether free or at a discount may also give rise to a property fringe benefit . Property isn't limited simply to buildings, as it may cover household items or equipment as well as shares or bonds.

Parking a Car - Car fringe benefits are a fairly common expense in many businesses. However, a separate car parking fringe benefit may also apply if your employees park at your business premises for more than four hours during the work day, if they travel between work and home at least once, if there is a commercial parking station within one kilometre of your premises and its all-day fee is more than the car parking threshold ($8.48 for 2017).

Anything Else? - Finally, just in case you thought we've covered everything, there is even provision for those things that don't fit into any of the above. For example, if you offer the use of employer property, or the provision of professional services (eg: a solicitor), or private use of a company truck or utility you may still be subject to a residual fringe benefit .

For more information go to https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/Types-of-fringe-benefits

So as 2016 draws to a close, and you look forward to the endless possibilities that 2017 might bring, put FBT on your agenda and remember that 31 March will be here much sooner than you think.

Employees with Excessive Annual Leave

Sun, 13 Nov 2016 22:00:00 GMT

Do you have employees with excessive accrued annual leave?

New changes now in place

Employees who have accumulated large chunks of annual leave have been an ongoing dilemma for many small to medium enterprise (SME) employers. However, a recently completed Fair Work Commission review has resulted in some significant changes to the rules for 112 of the current 122 modern awards, making it easier to deal with this issue. Hailed as a godsend by many employers, the changes also allow for more flexibility for almost two million Australian workers.

So how do some employees build up so much leave in the first place? Often it's a case of a business not being able to do without a key staff member for long periods of time, so the breaks they take are short and infrequent. It may also be part of a strategy to build up leave prior to retirement or to allow for unforeseen emergencies such as health or family issues. Then again, an employee may not want to take their leave if their family members can't get holidays at the same time. Of course, some employees simply love their work and almost need to be made to take leave. Whatever the scenario, before you know it, the employee has racked up a large amount of leave, which can be problematic for an employer when the time comes to pay out these potentially large sums.

Show me the money

The change of most interest to employees will undoubtedly be the ability to cash out some of their accrued annual leave. The new rules state that:

First and foremost, the application for leave to be cashed out must be made in writing and signed by both the employee and the employer.
The amount of leave to be cashed out must be clearly stated, as must the amount to be paid and the date on which it will be paid.
No more than two weeks annual leave may be cashed out in any twelve (12) month period.
The employee must be left with a minimum of four weeks annual leave up their sleeve.

Options for excessive leave

Some 80 of the 122 modern awards now have an "excessive annual leave" model term included, meaning that a worker has more than eight weeks annual leave accrued (or 10 weeks for shift workers). Once leave gets to this point it may become necessary to see a reduction in the time accrued, to avoid excessive payouts later.

So what happens if agreement between the two parties on how to reduce or eliminate the excessive leave can't be reached? One of two things can occur. Either the employer can direct the employee to take one or more periods of leave, or the employee may give notice that they are intending to do so.

In the case of the employee, they may only give notice if the leave has been accrued for more than six months and they haven't been directed previously by their employer to reduce their leave. Where employees meet the criteria, employers are required to grant the leave.

In any event, any leave taken must be for a minimum of one week and must be taken between eight weeks and twelve months from the date of the direction or notice of intention. Additionally, the employee's remaining annual leave must not be less than six weeks.

Further information is available by contacting the Fair Work Commission on 1300 799 675 or by visiting their website at https://www.fwc.gov.au/

Alternatively, contact Employsure on 1300 798 990 and quote ERA0969 for free advice for employers, or check out their website at http://employsure.com.au

All in all, these welcome changes – which came into effect on 29 July – are positive ones from which both employees and employers will benefit.

Advice and Your Self-Managed Superannuation Fund

Tue, 08 Nov 2016 22:00:00 GMT

As you know, here at KDA Group we have always endeavoured to keep you abreast of changing government regulations regarding superannuation in general, and your Self-Managed Superannuation Fund (SMSF) in particular. In line with this practice, we would like to inform you of some changes that came into effect earlier this year.

On July 1 2016, the laws relating to advice and SMSFs changed. This was done to ensure both the quality of the financial advice given to consumers and the provision of additional protection to taxpayers.

What the regulatory changes mean for you in practical terms, is that from now on we need to provide Statements of Advice formalising particular discussions we have with you regarding your superannuation needs.

Under the new laws, accountants are no longer able to provide advice in relation to superannuation unless they hold an Australian Financial Services Licence (AFSL) in their own right, or are licenced as an Authorised Representative of an AFSL holder.

To date, very few accountants have become licenced and therefore the pool of accountants able to provide advice on superannuation matters has shrunk considerably.

KDA Group SMSF Strategists Pty Ltd along with Kevin and Roxley have held the required licence since 2010, and are now Authorised Representatives of Merit Wealth Pty Ltd, AFSL No. 409361, allowing us to continue providing financial advice on the following:
    • Setting up a SMSF
    • Making contributions into your SMSF
    • Use of a borrowing arrangement within your SMSF
    • Establishing and finalising pensions
    • Winding up your SMSF

As the holder of a full Australian Financial Services Licence, Merit Wealth has access to a range of financial advisers. We are confident that if your advice needs extend beyond the scope of our licence, Merit Wealth will be able to provide experienced advisers to assist you.

Regardless of the regulatory changes, you can be assured that we will continue to provide you with the same high quality of service and professionalism that you have come to expect from us here at KDA Group.

Increased Flexibility for Farm Management Deposits Scheme

Tue, 11 Oct 2016 22:00:00 GMT

Increased flexibility for Farm Management Deposits Scheme

Life on the land is not for the faint-hearted. Across Australia, farmers and primary producers are increasingly doing it tough, very often facing challenging circumstances that push them to their limits and put pressure on their finances and families. An already uneven income stream exacerbated by the ever present risk of natural disasters, combined with climate and market volatility only adds to the stress. However, the introduction of the Farm Management Deposits Scheme was a step in the right direction, helping to alleviate the strain for many farmers. Recent enhancements which came into effect on July 1 ^st have also been roundly welcomed.

Farm Management Deposits Scheme recap

The Farm Management Deposits Scheme has been specifically designed for farmers. It deals with cash flow fluctuations by allowing primary producers to invest money from profitable years with a financial institution in a specific savings account, which then earns interest, so that it can be called upon in leaner years.

At the same time, the scheme also has the potential for tax advantages. That's because if a Farm Management Deposit is held for longer than twelve months, farmers may claim the amounts they have deposited as a deduction in the year the deposit was made. Subsequently, any withdrawals need only be declared as assessable income in the year in which the withdrawal is made.

Eligible primary producers must be carrying on a primary production business at the time of making the deposit and includes sole traders, partners in a partnership and primary production trust beneficiaries.

More information on the Farm Management Deposits Scheme can be found at www.agriculture.gov.au/fmd

What are the changes?

In an effort to make the scheme a more attractive investment for primary producers, the government has introduced three significant changes designed to provide greater flexibility.

1. An increase in the Farm Management Deposits Scheme cap

The Farm Management Deposits Scheme cap has now been doubled to $800,000 for each eligible primary producer. So, if more than one partner is involved with primary production, they can each invest up to $800,000 into the Farm Management Deposit account within the partnership.

2. The re-introduction of an early access trigger

This trigger gives a primary producer confidence that, should they experience severe drought and need to access monies they've deposited within the last twelve months, they can do so without it affecting their previously claimed tax deduction. As you would expect, the farmer must meet certain criteria to be able to do this, specifically:

They must have made their deposit to the Farm Management Deposits Scheme within the previous financial year;

The deposit must have been held for at least six months; and

At least part of their farming property must have been affected by a lack of rainfall for six consecutive months. Essentially this means that the rainfall must have been within the lowest five per cent of that recorded for their property for that specific six month period.

The particularly good news here is that a farmer is able to self assess, based on Bureau of Meteorology (BOM) information which is publicly available. There's no need to apply to any government agency for a decision. An online tool, known as the Farm Management Deposits Scheme Rainfall Analyser, can help primary producers determine their ability and is easily accessible via the BOM website at www.bom.gov.au/climate/ada

3. Farm Management Deposits Scheme fund may be used as an offset account

Banks can now offer Farm Management Deposit offset accounts to primary producers who are sole traders or partners in a partnership, allowing them to use their Farm Management Deposit to offset the interest costs of farm business borrowings. In order to take advantage of this facility, primary producers need to hold both their loan and Farm Management Deposit with the same financial institution. However, farmers should also note that using their Farm Management Deposit as an offset account may have wider tax implication for their business, such as reducing the tax deduction that they can claim in relation to interest incurred on farm business loans.

Mention should also be made of the consequences of using a Farm Management Deposit to offset the amount of interest payable on non-primary production loans – currently a penalty of 200% of the amount by which the interest has been reduced. Wise farmers wanting to make use of the offset facility may decide it's prudent to keep separate loan accounts to easily distinguish each type of loan.

Even the most viable farm businesses are not immune from unforeseen circumstances and the devastating effects of consecutive seasons of drought, floods or fire. Overall, the enhancements to the Farm Management Deposits Scheme are good, practical changes which give Australia's primary producers even greater flexibility to manage their finances when times are tough, helping them to weather the bad years that will – inevitably – come.

If you'd like to know how the Farm Management Deposits Scheme may benefit your business, or if you would like further advice in this area, contact KDA Group on 02 4861 8383 and speak to one of our consultants.

Data Back Up - Saving Your Business' Bacon

Sun, 11 Sep 2016 23:00:00 GMT

DATA BACKUP – SAVING YOUR BUSINESS' BACON

Ask most people if the name Joseph Licklider rings a bell and you'll probably receive nothing but blank looks in return. Yet we all owe Lick, as he was affectionately known in the world of computer science, a huge debt of gratitude for coming up with the original concept of cloud computing. Today, thanks to Lick's pioneering work, cloud storage has largely alleviated the ever-present problem of how to source more digital space in which to keep our important personal and business information. But simply parking your data in cyberspace is only half the answer; backing up your files is equally essential if you're serious about keeping vital records safe.

A quick search on the internet will bring up any number of horror stories detailing a permanent loss of files uploaded to various cloud storage providers such as Dropbox, Google Drive, Mega, pCloud and more. Was there a software glitch? Was it a case of user error? At the end of the day, it doesn't really matter – the files are gone. Experts say that the most common cause of permanently lost data comes from user ignorance: the assumption that uploading to the cloud is in itself security enough. The simple fact is, it isn't.

Of course, keep in mind that data you store in the cloud is no different to data that is stored in your office, be it on a server or your local desktop. It is important that you have a robust strategy for backing up all types of data wherever it is stored.

What does online backup really mean?

In basic terms, online backup means you're saving a copy of all your files to someone else's hard drive. All around the world, data centres owned by online backup providers charge you to store a copy of your encrypted files by transferring them over the internet. Once installed, most programs will automatically backup your files, recognising which ones have been created or edited since your last backup. In other words, it's a set-and-forget process which allows you to get on with your business, knowing you're prepared against possible disasters.

However, there's also a school of thought that says paying for backup is an expense you can do without, arguing that juggling free space from multiple cloud storage services can act as a really good backup plan. After all, it's spreading the risk between providers, so it should work, right? Possibly. But detractors of this kind of "solution" point out that users can very quickly find themselves in an ever more complex and time-consuming configuration of storage. And, unless you can be 100% sure that corrupt files or accidental deletions don't appear across all services, it's a textbook example of false economy.

Next steps

So, if uploading your data to the cloud isn't in itself a guarantee of security and if attempting to economise on backup is akin to willfully ignoring the looming iceberg as you sail by on the Titanic, what can business owners do to safeguard their information?

There is an increasing number of online backup services which automatically transfer critical business data to your chosen cloud storage provider, including www.getboxkite.com , www.safeguardmy.com and www.ledgerbackup.com to name just a few.

Useful questions to ask before making your choice should cover:

How fast is data recovery ? If there's an emergency, how long can you expect to wait? Hours, days or weeks? Your business depends on its data, so this question is critical.

How safe is my data? Many backup services have what's known as redundant data sites in case their own data centre experiences problems, but not all do.

What is their policy on data retention? For example, if there's a billing dispute and you haven't paid within the required time frame, will the provider automatically delete all your data?

What level of security is on offer? Most providers offer different packages involving varying levels of security and encryption, so make sure you're satisfied with what your fee entitles you to.

How easy is it to restore your data? Does your provider offer you local help in this regard? How confident do you feel when it comes to file restoration?

It's also a good idea to check out online reviews of such services as these can also give you some good insights into how easy an online backup provider is to deal with when it comes to the crunch.

Still not convinced you need it?

It's worthwhile remembering that security of data when utilising software or other services is not always guaranteed. For example, Xero accounting software, specifically designed for small businesses and a popular choice for many clients, currently offers no such promises. It's Terms and Conditions make it quite clear that the onus is on the user to take appropriate steps to ensure a robust backup process exists and it accepts no liability if things go pear-shaped.

5.3 Backup of Data:

You must maintain copies of all Data inputted into the Service. Xero adheres to its best practice policies and procedures to prevent data loss, including a daily system data back-up regime, but does not make any guarantees that there will be no loss of Data. Xero expressly excludes liability for any loss of Data no matter how caused.

And further...

7.1 Limitation of Liability

To the maximum extent permitted by law, Xero excludes all liability and responsibility to You (or any other person) in contract, tort (including negligence), or otherwise, for any loss (including loss of information, Data, profits and savings) or damage resulting, directly or indirectly, from any use of, or reliance on, the Service or Website.

It's a fact of life in this technological age that archiving data critical to your business is essential in preventing a data disaster that could well mean the loss of all you've worked so hard to achieve; signing up with an online backup service could well be one of the best business decisions you ever make.
To ensure your backup requirements are met, we strongly suggest you contact your IT specialist and speak to one of their consultants.

Is Your Small Business SuperStream Ready?

Thu, 21 Apr 2016 23:00:00 GMT

Of all the tasks small business owners face, administration relating to employee superannuation is regularly voted as one of the most time consuming and frustrating. However, hundreds of thousands of Australian businesses are already enjoying the benefits of switching to SuperStream, the new payment system that does away with cumbersome processes. If your business hasn't already made the change, it's time to make it a priority.

SuperStream is a range of reforms introduced as part of the Australian Government's Strong Super package. In simple terms, it means paying super and sending employee information across the super network – between employers, funds, service providers and the ATO – in a standard, industry approved electronic format. No more cheques to send or paper to post; everything is done online.

Last year, larger businesses were required to change over to the new system. 30 June 2016 is the deadline for all businesses with fewer than 20 employees to make the switch.

The beauty of SuperStream, particularly for time-poor small business owners, is the introduction of easier processes and subsequent reduced processing times. With a simpler, consistent method for making super contributions, setting up super accounts for new employees and providing required data to the ATO, you may find yourself with valuable extra time to devote to other aspects of your business.

And the benefits don't end there. Not only are contributions allocated to employees' accounts much faster, the introduction of SuperStream also means the chance of errors is greatly reduced, sparing business owners the frustration of dealing with "please explain" enquiries from multiple super funds. So, wins all round.

But, with less than 80 days to go before the June 30 deadline, the clock is ticking. Employers who haven't yet taken steps to incorporate the required changes need to get their skates on to make sure everything is in place for the transition to the new system.

Part of SuperStream's appeal is that it offers a range of choices for implementation. Business owners can choose from:

Their own super fund's online system;
A clearing house;
A payroll system that is SuperStream ready; or
A messaging portal.

If your current accounting software or payroll system doesn't offer a SuperStream solution, then help is at hand. First up is courtesy of the ATO. Their Small Business Superannuation Clearing House is a free, online service specifically designed for employers with 19 or fewer employees. It's also ideal for businesses with an annual aggregated turnover of less than $2M per annum.

Designed to cut admin and compliance costs, this ATO-administered service means businesses can make a single super guarantee electronic payment and the clearing house then distributes the correct payments to the various employees' funds. You can find out more about how this free service works by visiting the ATO website at www.ato.gov.au and typing SuperStream in the search function.

Help can also be found through a number of other providers.

Australian Super helps individuals and entities at all levels meet their super responsibilities. Visit their website at www.australiansuper.com and find out how QuickSuper can assist your business.
National Australia Bank's wealth management division, MLC, provides superannuation advice and support to corporate, institutional and retail customers. More information on MLC's SuperEzy programme can be found at www.mlc.com.au .
Organisations large and small can also contact Superchoice, a leading specialist superannuation contribution exchange service.

Superannuation Deputy Commissioner, James O'Halloran, says that details are already coming in of reporting processing times being cut by as much as an impressive 70 per cent, so it's clear that SuperStream really is good news for Australian small businesses.

But probably its biggest benefit is that it's a genuine time saver, giving owners much needed space to concentrate on growing and running their enterprise; allowing them to focus more fully on the needs of their employees.

If you have any questions regarding how to comply with SuperStream obligations for your business, KDA Group can help. Simply give us a call on 02 4861 8383 and we'll be glad to assist.

Super Newsflash

Mon, 04 Apr 2016 23:00:00 GMT

IMPORTANT! 2016 superannuation contributions

You have no doubt followed the media attention around the forthcoming Federal B udget and possible changes to superannuation that have been mooted . There appears to be concern in the public arena that superannuation is being used extensively by the very rich to accumulate wealth, rather than for its primary purpose of accumulating sufficient assets to provide an income stream for an individual's retirement.

The ATO has issued a statement declaring that superannuation funds should not be used for estate planning.

It is generally acknowledged that individual requirements vary but the superannuation industry's research indicates that a couple requires approximately $60,000 per annum to live comfortably in retirement, while a single individual requires around $45,000 per year (based on today's values).

Currently the Age Pension is around $20,000 per person per annum, depending on personal circumstances.

For a time there were discussions around the principle of increasing tax on funds being withdrawn from superannuation, as well as earnings being accumulated in superannuation, however current indications are that these changes are off the table at the moment.

However , there are certainly whispers among the top superannuation professionals that there may be some changes to superannuation contribution caps.

The current caps on contributions to superannuation are:

Tax-deductible contributions

Up to age 49 $30 ,000 per annum

50 and over $35 ,000 per annum

Non-deductible contributions

$ 180,000

There is also a three year 'brought forward' provision to enable non-deductible contributions in any one year, for the current and the next two years.

This means the maximum non-deductible contribution that can be made in one year is $540,000 ($180,000 x 3 years), however further non-deductible contributions cannot be made until the three year period expires.

Anyone aged over 65 must meet the work test before contributing to superannuation. The work test is 40 hours of paid work in a 30 day period.

Subject to meeting the work test, superannuation c ontributions can be made until 30 days after the end of the month in which a member turns 75.

In the light of the current uncertainty as to what changes may be made the superannuation system in the upcoming Federal Budget, we suggest as a matter of urgency, that you consider what contributions you wish to make to superannuation, prior to Budget Night on Tuesday 3 May 2016.

We also suggest that it would be wise to ensure that all pension payments required for the 2016 financial year are made prior to Budget Night in case unexpected changes affecting pensions are announced.

Planes, Cezannes and Automobiles

Tue, 01 Mar 2016 22:00:00 GMT

The ATO's January announcement that it will be taking a much closer look at an individual's assets by conducting data matching exercises with insurance companies may well give owners of undeclared fleets of vintage cars or those guilty of stashing several 'old masters' in the attic some sleepless nights.

A spokeswoman for the ATO told the media that it had given tax agents "advance notice of plans to expand our data-matching activities to enhance profiling, especially of the wealthy". Insurers can expect to shortly receive notices giving details of those individuals who may be of interest. Its aim, the ATO says, is to ensure wealth estimates are accurate and that tax obligations are met.

But just what is the definition of wealthy these days? Well, according to the ATO it's those who, together with their business associates, control net wealth of $5M or more. The range of asset classes being put under the microscope has expanded and will now include:

The practice of data matching by the ATO is nothing new; it's been conducting such activities for many years in an effort to improve the quality of data it holds, help uncover and reduce fraud, and encourage better levels of compliance by individuals and businesses.

Is there a sudden focus on the wealthy, however? As you'd expect, the rich have always been of interest, but it's only in comparatively recent times that technology has allowed the ATO to more effectively join up the dots. Of recent years, it has set in its sights those deemed to be 'very wealthy' (those with more than $30 million), contacting them for further asset information. In the 2014-15 tax year alone, more than $2.1 billion in liabilities and $1 billion in cash collections was raised as a result.

Controversially, the ATO issued a 'last chance amnesty' in 2014 to encourage tax cheats to supply details of previously undeclared hidden assets and income without risk of the usual penalties, and with the assurance that no further investigation criminal or otherwise would occur. In excess of $127 million in tax collections was raised by Project Do It, as it was called, and the ATO remains confident that this amount will continue to rise. Additionally, more than 5800 disclosures as part of the amnesty were made, which meant more than $5 billion in assets declared and more than $600 million of omitted income being disclosed.

Data matching has also been used for some years now as a way of keeping tabs on the massive growth in online businesses that sold goods or services with a total value of more than $10,000, beginning with the 2011-12 tax year. This included those who didn't see themselves as businesses per se , such as individuals selling through eBay, Gumtree and the like.

Other data matching programs the ATO continues to run include those targeting Childcare Services and Educator Payments, as well as taxable payments and government grants. Once again, the idea is to ensure records are correct, tax is paid where it should be and that voluntary compliance is encouraged as much as possible.

So, how many people will be affected by this latest announcement regarding data matching of assets listed with insurance companies? The ATO is expecting to initially receive approximately 100,000 records on the new asset classes alone. And, as you would expect, if an individual is of interest, investigations will be no doubt be thorough. It would be wise, therefore, not to underestimate the power of these programs to detect failures in tax compliance or risk facing the consequences.

For professional and up to the minute advice on your personal situation in this regard, contact the KDA Group on 02 4861 8383 and speak to one of our consultants.

Tougher Times Ahead for Tax Avoidance Via Trusts

Sun, 28 Feb 2016 22:00:00 GMT

The ATO is becoming ever more vigilant in searching out hiding places for undeclared income. Its most recent announcement will now see trusts come under a very bright spotlight indeed. In particular, the ATO will be looking to find evidence of non-compliance with two anti-avoidance rules and January 2016 has seen the roll out of a pilot program to do just that.

Trusts have long been seen as a way of avoiding paying income tax. Whilst it's true that income produced from trusts certainly attracts tax, the astute investor can minimise their tax obligations by distributing proceeds to those on low tax rates. Typically, this would involve individuals such as children or retirees.

It was after the landmark Bamford case in 2010 that tougher anti-avoidance rules were first introduced. In that particular scenario, it became clear that the amounts that beneficiaries were assessed on for tax purposes weren't necessarily the same as those under trust law. It was obvious, said the ATO, that such a mismatch gave rise to "opportunities for tax manipulation" and subsequently the ATO took steps to introduce tougher anti-avoidance rules.

The two rules which will now be looked at closely are:

Tax Commissioner Chris Jordan is confident that the pilot program will give much-needed information in order to provide him with "…an accurate picture of whether the integrity rules relating to distributions of income to tax-exempt entities are understood by taxpayers and their advisors and are operating effectively".

Specifically, the pilot study will be looking to:

The ATO has not made clear exactly which or how many trusts will form part of the review, but has advised that a limited number of letters will be issued in the months to come. One thing that is for certain, however, is that the opportunities for confidently sheltering large amounts of income via trusts look set to be greatly curtailed.

For professional and up to the minute advice on how best to meet your ensure you meet your business obligations in this area, contact the KDA Group on 02 4861 8383 and speak to one of our consultants.

Are You Meeting Your Superannuation Guarantee Obligations?

Tue, 16 Feb 2016 22:00:00 GMT

The superannuation guarantee (SG) is one of those unavoidable facts of life: if you have employees, you are required to pay it, no matter what. If you don't, there are serious penalties.

Currently, the ATO checks that employers are meeting all SG requirements when undertaking PAYG compliance reviews. Additionally, a thorough investigation will be launched if the ATO receives a complaint from an employee that they have not received their full SG entitlements.

Some small business owners fail to pay the SG as when it falls due, they do not have the cash flow to finance the contribution. Another difficulty is defining what is an 'employee'. Whilst the employer may believe they have an independent contractor on board, the ATO may categorise the contractor as an employee. So, exactly what are the consequences for employers who fail in their SG obligations? Following is a brief outline of what you can expect.

THE SUPERANNUATION GUARANTEE CHARGE (SGC)

If the minimum amount of SG for your employee has not been paid into the correct fund by the due date, you may have to pay the SGC. It's made up of 3 components:

· The SG shortfall amounts which are calculated on your employee's salary or wages. If you have also failed to offer a choice of super fund, paid their contribution into a fund not of their choice or charged your employee a fee for doing so, then a "choice liability" penalty may also be added into the equation.

· Interest on those amounts. This is currently 10%.

· Administration fees. Currently $20 per employee and paid per quarter.

DIRECTOR PENALTIES

The director of a company that fails to meet an SGC liability in full by the due date automatically becomes personally liable for a penalty equal to the unpaid amount. Even if you're a no longer a director of a company, or you're newly appointed, these penalties may still apply. Clearly, the objective here is to ensure that directors cause the company to comply with their tax and super obligations; that they ensure prompt and appropriate action is taken to remedy any shortfall in employee entitlements being met.

OTHER PENALTIES

A range of other penalties may also be applied to businesses whose commitment to meeting their SG obligations are less than ideal. These can include:

· General interest charge (GIC) This applies to late payment of SGC. It begins to accrue from the date the SGC was due, right up to the date it's paid in full and it's calculated on a daily compounding basis.

· Administrative penalty False or misleading statements which prompt you to pay less SGC than you should have will trigger this further penalty, which can be up to 75% of the shortfall.

· Failing to keep records Individuals guilty of this offence can be hit with a maximum 30 penalty units and may even incur a further administrative penalty of an additional 20 penalty units.

· Failing to provide an SGC statement when required Late statement lodgement, no statement, or information not provided when requested during an audit, will incur a maximum penalty of 200% of the charge payable.

· Failing to pass on a tax file number (TFN) to a super fund Ten penalty points apply here.

If you enter into arrangements designed to avoid certain obligations such as your liability for the SGC, you may incur the charge you avoided plus an additional penalty based on the circumstances.

The ATO has made it clear that it is stepping up its campaign to clamp down on non-compliance with SG obligations, including a 100% investigation rate if even one employee makes a complaint. But it's unlikely to stop there; further investigations into other aspects of the business will almost inevitably follow. And, with no reimbursement offered by the ATO for lost time and money during an investigation, the costs of non-compliance can be very high indeed.

For professional and up to the minute advice on how best to meet your business obligations in this area, contact the KDA Group on 02 4861 8383 and speak to one of our consultants.

Christmas Considerations

Mon, 07 Dec 2015 22:00:00 GMT

AVOID FBT THIS CHRISTMAS

For many businesses, the festive season is one of the busiest times of the year. Rushing to fulfil last minute orders or pushing to get a job completed before the holiday deadline can mean that any thoughts about staff gifts or an office Christmas party are relegated to the back of the queue. But when you do take time to wonder how best to recognise the contributions your valued employees have made over the past year, you'd be wise to take care to ensure your generosity doesn't trigger Fringe Benefits Tax (FBT) and end up having a more expensive Christmas than you bargained for.

In general terms, if any entertainment you provide attracts FBT, you can claim a tax deduction. Conversely, if no FBT applies, you won't be able to claim a tax deduction, nor claim GST credits for any expenses. Here are the basic rules which apply to staff gifts and office Christmas parties.

Giving gifts

There are two main points you'll need to keep front of mind when rewarding your employees with a gift this silly season:

1. Making sure that your chosen gift qualifies as being a "minor benefit"; and

2. Keeping gifts below the $300 limit, above which FBT (49%) will apply.

Minor benefits

In short, a benefit is considered minor, and therefore FBT-exempt, if it:

· Is given to a staff member or their associates (typically a spouse or partner);

· Is given irregularly or infrequently; and

· It's not seen as being a reward for any services rendered.

To add another layer of complexity to the Christmas stocking, not all gifts will qualify for a tax deduction as an expense if they could be classified as "entertainment". And entertainment also means recreation. For example, tickets to the theatre, movie vouchers, a weekend break away for two, front row seats at a premier game – all would be considered to fall under the entertainment category by the ATO.

Gifts and the $300 limit

Most employers won't have an issue with finding an ideal gift which will allow them to keep well below this limit. A Christmas ham, a gift certificate, a lovely bunch of flowers or the latest bestseller – all these would be classed as being legitimate minor benefits as long as they each cost below $300. On the other hand, a designer handbag or a membership to a sporting club will not only set you back significantly more, but will also incur FBT at 49%.

The idea may have crossed your mind to make a gift of cash, enabling your employee to treat themselves to something special of their own choosing. All well and good, but you need to be aware that any money exchanging hands in this way will be treated the same way as salary and wages, subject to PAYG withholding, super guarantee and payroll tax rules.

The Christmas party

It's all about location, location, location. If you want to keep the whole event tax free, then the most tax effective way to host your Christmas bash is to hold it at your business premises – and on a week day. Doing it this way, means that the cost is unlikely to attract FBT, irrespective of how much you spend per person. The catch for this method is that it applies to current employees only.

Of course, you may want to invite staff to bring their partners to enjoy the festivities and, in this case, you'll once more need to take care to keep below the $300 limit if you're hoping it will still qualify as a minor benefit and thereby remain shy of attracting any FBT.

Having a party at the office also means there's good news in this scenario when it comes to taxis. Any taxi travel that either begins or ends where an employee works will not attract FBT, so you can pile everyone into a cab to send them home safely and not worry about this extra cost.

Partying elsewhere

Not all places of employment lend themselves to being the kind of venue you'd want to host a Christmas party, no matter how well you might deck the halls. If your party will be held away from your business premises, keep to below the $300 limit for everyone – employees and their partners – to keep the all important minor benefit status.

The main point to take into account here is that the $300 limit referred to in these circumstances is the total of all meals, drinks, entertainment and any associated benefits per person, so you'll need to keep a close eye on costs as they add up.

Do remember, however, that sending people on their merry way by taxi once the evening is over may incur FBT if they are going home and not back to the office.

What about gifts given at the Christmas party?

The ATO will allow both party and gift to be classified as minor benefits and FBT-exempt if each is considered separately to determine that they are less than the magic $300 in value.

Whichever way you look at it, celebrating Christmas can be expensive all round. If you'd like advice on the best and most cost effective way for you and your employees to celebrate this festive season, get in touch with the KDA Group on 02 4861 8383 and speak to one of our consultants.

Obligations for Every Employer

Sun, 01 Nov 2015 22:00:00 GMT

Australia's industrial relations system has come a long way since it first began in 1904. Over a century ago, landmark decisions of a basic minimum wage and the right to take leave were enormous steps forward in the working lives of the average Australian. In 2015, our modern system places greater emphasis on achieving consistency across all industries and creating a fairer system for employers and employees alike.

The Fair Work Act 2009 (FW Act) sets out requirements that all businesses, even small ones, need to be aware of. Three of the main areas which relate to employer obligations are the National Employment Standards (NES), the Australian award system, and Workers Compensation.

Employee Entitlements and National Employment Standards (NES)

The phrase "employee entitlements" covers many aspects, from hours worked and the pay rates which apply, to when breaks must be taken and much more. Rules regarding an employee's exact entitlements are set out under an award, a registered agreement or an employment contract. Agreements and contracts can offer additional benefits, but cannot be less than what is provided for in the NES or any award which may apply.

Briefly, the 10 NES categories are:

The Fair Work Ombudsman website www.fairwork.gov.au is an excellent point of reference for NES guidance for both employers and employees. It includes a number of helpful best practice reference documents, including "Small Business and the Fair Work Act".

Awards

There are 122 industry and occupation awards that cover most people working in Australia, so it's important for business owners to know their responsibilities to an employee under an award. There are two main types of awards in the Australian workplace relations system:

The Fair Work Commission sets award pay rates and conditions and also works as a point of reference for dispute resolution. Business owners or employees wishing to study a specific award and its requirements can search on the Fair Work Commission website www.fwc.gov.au .

Workers Compensation

If an employee becomes sick or injured at work or because of the work they do, they may be eligible for an insurance payment by submitting a workers compensation claim. Such payments help an employee by covering their wages whilst they are not at work and assist with medical expenses and any rehabilitation they may require.

An employer must take out workers compensation insurance to cover both themselves and their employees. From 1 September, 2015, the regulatory and insurance functions of what was once WorkCover NSW have been split between three separate entities:

The move toward these separate agencies aims to address WorkCover's conflict of interest in its role as both regulator and insurer.

Controversial changes to the WorkCover scheme in 2012, which resulted in the drastic reduction of medical benefits to injured workers, have now been wound back, with NSW Premier Baird believing they "went too far". It's not only workers who will benefit from the government's about face on earlier cuts. Employers are set to benefit too, with performance improvements in workplace safety and injury prevention being rewarded with premium discounts of between 5-20 per cent. All up, some $1 billion in benefits will be restored to injured workers and businesses.

Pending the launch of individual websites for the three new agencies, WorkCover's existing website www.workcover.nsw.gov.au still holds all relevant information for employers and employees alike.

Relevant websites for the other states and territories are:

Australian Capital Territory - www.worksafe.act.gov.au
Victoria - www.worksafe.vic.gov.au
South Australia - www.rtwsa.com
Tasmania - www.workcover.tas.gov.au
Western Australia - www.workcover.wa.gov.au
Queensland - www.worksafe.qld.gov.au
Northern Territory - www.worksafe.nt.gov.au/home.aspx

For professional and up to the minute advice on how best to meet your business obligations in this area, contact the KDA Group on 02 4861 8383 and speak to one of our consultants.

Standard Form Contracts - New Laws Provide Leverage for Small Business

Sun, 25 Oct 2015 22:00:00 GMT

Australian small businesses have welcomed the introduction of new legislation designed to extend unfair contract terms for small business contracts. Widely acknowledged as a long overdue step, the changes will see small businesses now gain much needed leverage during contract negotiations and bring the laws protecting them more into line with those protecting individual consumers.

Earlier this year, in a joint media release with then Small Business Minister, Bruce Billson, former Prime Minister, Tony Abbott, described small businesses as "the engine room of Australia's economic future". Contracts, their statement went on to say, were often presented to small businesses on a "take it or leave it" basis, with "little scope to negotiate just and fair terms".

And they were right. Prior to changes passed by the Senate on 14 September 2015, bigger and more powerful businesses could issue standard form contracts which included terms that were often manifestly unfair. For example, a larger company could deny a smaller business the right to terminate the contract when the larger company itself was free to do so. Similarly, the contract could include terms which allowed the bigger business to unilaterally change prices at any time during the course of the agreement.

The new protection rules, which are expected to come into effect late 2016 , will apply only to standard form contracts involving small business.

Small business contract definition

When a contract is prepared by one party and given to the other without consultation or the opportunity to negotiate terms, and where the party who has prepared the contract holds most, if not all, of the bargaining power, the contract is referred to as a standard form contract.

Under the revised regulations, a contract is considered to be a small business contract if at least one of the parties has no more than 20 employees. Based on headcount rather than one an hours-worked approach, this total includes full and part-time employees and any casuals employed on a regular and systematic basis.

The value of the contract is significantly higher than first proposed, with the upfront price threshold now $300,000 for a single year agreement or $1,000,000 for those extending beyond 12 months.

Terms considered to be unfair

There are three main points here. Under Australian Consumer Law, a contract term is considered unfair if:

· It is not reasonably necessary for it to be included in the contract to protect the legitimate interests of the party being advantaged by the term;

· Its inclusion in the contract gives rise to a significant imbalance in the parties' rights and obligations; and

· It would be to the detriment of a party if relied on, be that in a financial sense or otherwise.

It's important to note that any terms which clearly set out the main subject matter of the contract and which set the upfront price cannot be deemed to be unfair.

What can the courts do?

First, they must look at the contract as a whole, gauging whether the term in question is able to be easily understood within the context of the contract. A court can rule a term be struck out if it deems it to be unfair. In other words, it becomes unenforceable and treated as if it didn't exist. However, the contract may still continue to operate and be binding to both parties as long as it is able to be so, without the unfair term, and as far as it is practicable to do so.

Whilst there are no specific fines or penalties associated with a term being found to be unfair, the court can impose significant fines if the fact that the term was included in the contract in the first place is found to be unconscionable. In these instances, fines can be as high as $1.1 million for corporations and $220,000 for individuals.

How should my business prepare for these changes?

All small businesses, including those which are not-for-profit, need to examine their low-value standard form B2B contracts. Included in the review should be any contract used in conjunction with suppliers, customers or independent contractors which may potentially involve dealing with businesses of 20 or fewer employees.

Because what may be an unfair term for one business may not be recognised as an unfair term for another, it's important that each standard form contract is reviewed on its individual merits to ensure it is free of any terms which may cause it to fall foul of the new legislation.

For professional and up to the minute advice on how best to meet your business obligations in this area, contact the KDA Group on 02 4861 8383 and speak to one of our consultants

Grants for Small Businesses - Are You Missing Out?

Wed, 07 Oct 2015 22:00:00 GMT

As any small business owner knows, it can be tough going at the beginning. Giving birth to a great idea is one thing, seeing it past its first birthday can be quite another. So why do some businesses thrive while others don't?

The failure rate for new small businesses is high, with almost 75 per cent not making it past their fifth year. Lack of management and planning, together with a lack of finance and poor cash flow, are cited as two of the major reasons behind a new venture reluctantly closing its doors.

A third reason is failure to take advantage of assistance programs and grants designed to promote business development, innovation and education. Here are just a few of the more than 700 different grants available for Australian businesses.

Small Business Grant – NSW

The Small Business Grant is a key priority of the NSW Government and is designed to encourage small business owners who don't pay payroll tax to hire new employees and expand their horizons.

The Office of State Revenue (OSR) website, www.osr.nsw.gov.au provides excellent information on this incentive. It applies to those NSW businesses with an ABN, who pay no payroll tax liability during the 12 month employment period of a new person as of June 30 of the financial year. The payroll tax threshold for FY2016 is $750,000. In general terms, the business will receive a $2000 grant if:

· A person is employed in a position which is a new job;

· Employment began after 1 July 2015 and before 1 July 2019;

· The number of full time equivalent (FTE) employees prior to creating this new position increases and is maintained over a 12 month period; and

· The new worker performs their duties wholly or mainly in NSW.

Jobs Action Plan – NSW

Also outlined on the OSR website are incentives for businesses who are above the $750,000 threshold and who do pay payroll tax, such as the Jobs Action Plan. This has been extended to 30 June 2019 and is open to companies whose employee headcount at specified milestones since 1 July 2011 has increased.

The rebate has been increased recently, too, and is now $5,000 for each new person a business employs after 1 July 2013. A company should register the new roles as they are created, but the OSR has reportedly been exercising its discretion, permitting some business owners to pursue claims retrospectively. If allowed, this could represent a sizeable rebate in some cases, so it could well be a line of enquiry worth pursuing.

R&D Tax Incentive – National

This incentive is open only to companies conducting eligible research and development. It is not available to trusts, partnerships or sole traders. It aims to help reduce the cost and risk of undertaking such activities, something which many small businesses simply can't find the funds to support.

Companies with an aggregated turnover of less than $20M may receive a 45% refundable tax offset, while those above the $20M mark receive a 40% offset. To be able to claim, the business must have notional R&D deductions in an income year of at least $20,000.

As you'd expect, the R&D work needs to be recognised as an eligible activity to benefit from the incentive. Allowable activities fall into two broad categories:

· Core R&D activities – where the business tries to create or do something that hasn't been done before and which requires experimentation; and

· Supporting R&D activities – where the activities undertaken have a direct, close and immediate relationship to the core activities.

The great thing about this incentive is that it's open to businesses of all sizes and across all sectors, so small businesses are on an equal footing with large corporates, as long as they meet the criteria.

The Australian Government Business website www.business.gov.au offers an easy to understand "R&D Tax Incentive Snapshot" which gives a clear six-step overview of the scheme.

Go Solar – National

Although not strictly a grant, the recent 2015 Budget announcement of tax deductions for small businesses installing solar panels may also offer opportunities to free up funds. Companies with an annual turnover of under $2M can claim an immediate tax deduction on all purchases under $20,000 up until 30 June, 2017; an improvement on the prior need to spread deductions over several years.

This change could be a positive move for many smaller entities, with good electricity rebates available and the added benefit of solar energy being better for the environment. As always, business owners need to do their homework and ensure they choose a reputable solar energy provider. www.yourenergysavings.gov.au has further information on rebates available.

Seek Assistance

Sometimes, finding the time and energy to investigate the grants and programs available to your small business is in itself a problem. There's a very good chance you're eligible for a number of incentives, so it may be worthwhile investing in the services of a third party. The Pattens Group provides consultation services, identifying grants which may suit your circumstances and giving advice on how to apply. To date, they've secured funding of almost $600M for businesses of all sizes across Australia. Visit www.pattens.com to find out more.

Another avenue for some quick grant research is www.grantguru.com.au . This group has a long association with the grants industry and maintains a comprehensive business grants database designed to check your eligibility, evaluate your chances of success and calculate effort vs. reward.

For professional and up to the minute advice on small business assistance, contact the KDA Group on 02 4861 8383 and speak to one of our consultants.

ATO Wind Up Applications on the Rise - Bad News for Small Business?

Sun, 21 Jun 2015 23:00:00 GMT

The 2014/15 financial year may be drawing to a close, but the ATO is busier than ever, ramping up its efforts to crack down on businesses with long overdue tax bills. The ATO's muscle flexing is having serious repercussions for businesses that have delayed meeting their tax obligations, for whatever reason.

The ATO takes action to wind up a company if it has failed to pay its debts and no suitable payment arrangements have been made. Such circumstances are generally taken as clear warning signs that a company may be insolvent and pose a significant risk that creditors will not be paid if the company is allowed to continue trading.

Insolvency practitioners have reported seeing a significant shift in emphasis at the ATO, citing a record 556 wind up applications last month alone as proof that the ATO has now abandoned the former soft approach shown to tardy tax payers during the GFC. May's high number of wind up applications accounts for more than half of the of the ATO's annual average for such measures and indications are that June lodgement figures will almost certainly be even higher.

However, businesses that take action before the ATO does place themselves in a strong position to negotiate. KDA liaises with the ATO on behalf of clients to develop payment plans that meet their ATO debts and avoid the actions that could see them put out of business.

The ATO says its recent actions are not indicative of a desire to simply clamp down on recalcitrant SMEs. Rather, it claims that this is part of a broader response to concerns expressed by numerous community and business associations that an increasing number of businesses have been deliberately dodging their responsibilities for years and getting away with it.

Assistant Commissioner, Thomas Ryan, has clarified the ATO's position, stating that it's about taking a 'timelier and stronger' stand. Reiterating that the issuing of a wind up notice was a last resort, he stressed that earlier intervention and the application of other powers – such as garnishee notices requiring a third party to pay tax money owed – could avoid the closing of a business altogether. In an interview with Business Insider , Mr Ryan made it clear that the ATO was "always willing to work with taxpayers who are having difficulty paying, but are willing to work with us".

However, there appears to be little doubt that the ATO is standing firm. One indicator is the apparent lowering of the debt threshold at which action can be taken from $300,000 to approximately $100,000, with some sources believing it could actually be as low as $30,000. The ATO meanwhile, is adamant there is no threshold, pointing out its policy of judging each case on its merits, including the size and nature of the debt and the future possible income of a business.

Critics remain sceptical of the ATO's claims of a generalist approach to the issue, stating such actions are a clear case of targeting small business and seemingly at odds with the small business package included in the recent Federal budget.

Whatever the ATO's position, it's clear that the room for businesses to manoeuvre is shrinking. KDA recommends that if your business is experiencing difficulties meeting its tax obligations, or anticipates that it will do so, you act before you hear from the ATO. Our team can advise you on the best course of action.

If you'd like further advice on wind up applications or if you need help identifying the best option for your circumstances, contact KDA Group on 02 4861 8383.

New Accelerated Depreciation Rules Receive A Warm Welcome

Tue, 09 Jun 2015 23:00:00 GMT

Two of the most welcome announcements in this year's Federal Budget have been the introduction, as part of the Government's Jobs and Small Business package, of accelerated depreciation for small businesses and changes to immediate deductions for capital expenditure by primary producers. Both moves are widely seen as being excellent tax incentives, giving a much needed confidence boost to business owners and farmers alike.

$20,000 immediate deduction for small business

Under the new rules, small business entities with a turnover of less than $2 million can now claim an immediate tax deduction for each depreciating asset costing less than $20,000. Key points to note are:

Excluded assets include horticultural plants and in-house software allocated to a software development pool. However, these assets may fall under specific depreciation rules.

There's good news too for any asset with a price tag greater than the $20,000 allowable. Such acquisitions can be included in a small business pool which allows for the deduction over a set period of time, with deductions in the first income year equalling 15%, and 30% each following income year.

In the rush to buy assets, business owners need to be mindful that to be eligible for a deduction, the asset must be used for actual income-producing purposes. The ATO has made it plain that it will be keeping a close eye on the new scheme, warning that it won't hesitate to take swift action against any business found to be rorting the system.

Primary producers benefit from accelerated depreciation on vital infrastructure

Under current ATO rules, primary producers can claim a deduction for a decline in the value of:

Announcements in May's Federal Budget now allow all primary producers to:

Similar to the $20,000 deduction for small business, this amendment applies to eligible assets and expenditure from 7.30pm (AEST) on 12 May 2015.

Federal Agriculture Minister, Barnaby Joyce, has said in a joint statement with Federal Treasurer, Joe Hockey, that long term drought preparedness had been a "key priority" in instigating the new measures, which are part of more than $400 million in targeted support for farmers and communities who continue to be impacted by severe conditions.

For professional and up to the minute advice on either of these incentives, contact the KDA Group on 02 4861 8383 and speak to one of our consultants.

Ready, Set, Superstream!

Tue, 12 May 2015 14:00:00 GMT

Now is the time to be finalising your SuperStream preparations.

Employers and businesses with an SMSF are now in the final stretch as the race to improve efficiency of the superannuation system by implementing new government data standards is about to begin. Who does it apply to? What benefits will there be for your business or fund? And what changes do you need to make to ensure you're ready as the countdown begins?

Why SuperStream?

SuperStream's main aim is to improve our current system by ensuring contributions to super funds are paid to a member's account in a timely, efficient and consistent manner. Further benefits include much faster processing of rollovers and contributions and a considerable reduction in the number of lost accounts and unclaimed monies, maximising payouts at retirement for a larger number of Australians.

SuperStream standards apply to all employers making super contributions for 20 employees or more, APRA regulated super funds, and SMSFs receiving contributions from an employer.

Benefits and compliance for employers

The main benefit for employers is that they will now be able to send contributions to any number of funds in a single, standard electronic format, reducing time and administration costs and taking away many of the complexities which, until now, have caused headaches for employers coping with different arrangements for different funds.

Employers have two main ways in which they will need to comply. Firstly, they must now make super contributions electronically; sending a cheque will no longer be an option. Secondly, details of the payment made, together with the employee's name, TFN and fund member number must also be sent to the superannuation fund.

Benefits and compliance for SMSFs

SMSFs can now look forward to a timely and reliable flow of payments and information regarding contributions to the fund. There will also be an electronic record readily available which will make meeting accounting and tax obligations simpler, including the annual SMSF return.

SMSF trustees will need to comply by obtaining an electronic service address for the delivery of contribution messages. Additionally, they need to provide their ABN, bank account details and electronic service addresses to the employers of their fund members.

Individuals with an SMSF will not be affected by the standard if their fund receives personal rather than employer contributions. Nor will they be affected if contributions are made only by members or if contributions are made only by related party employer(s), for example, a husband and wife run a business which pays contributions into the SMSF.

Timing is key

The compliance deadline is 1 July 2015 so you must take action now if you are not ready. Smart clients with fewer than 20 employees wanting to be ahead of the game, however, should start making the necessary changes as soon as possible and KDA Group is ready to help. Utilising BGL's internationally recognised, easy-to-understand super fund management compliance software, we're already assisting many of our clients to be ready for SuperStream.

Why not give KDA Group a call today on 02 4861 8383 and get up and running?