Monthly Archives: September 2016

ATO’s small business benchmarks

The ATO’s small business benchmarks have recently been updated for the 2014 financial year. They cover over 100 industries and in particular the sort of cash industries the ATO love to audit.

The ATO use this as one of their main tools for identifying businesses to audit and actively select anyone well outside their norms. Please refer to the June 2012, 2013 and 2014 edition of Tips and Traps to see how the ATO has assessed substantial income tax and GST shortfalls as well as hefty interest charges and penalties.  They are eye watering amounts.

Their data is split into three groups based off turnover. They also have some regional and metropolitan ratios.

If the ATO has a small business benchmark for your business then we will discuss it with you in your annual general meeting. If you like to learn more though in the meantime you can go to:-

Before closing I must though express a personal view on benchmarks. They can be a great tool but must be used with care as:-

  • You may not be comparing apples with apples. Even if the right industry has been selected there can be natural differences between say a newly established business and one establish some time ago.
  • There is great danger in comparing oneself to a norm. It is not the average you should be comparing yourself to but the upper quartile.

I also wish to add that we are trialling some non-ATO industry benchmark software of which you will hear more later.

At MRS, we will spend today planning for your success tomorrow.

 

Three proposed changes to super

On Thursday, the Treasurer Mr Scott Morrison announced three proposed changes to super.

The three changes to those changes announced in this year’s Budget are:-

  1. A new non-concessional contribution (non-deductible) limit system.
  2. Deferment of the concessional catch-up system.
  3. Abandonment of the proposal for those aged between 65 and 74 to be able make concessional and non-concessional contributions without having to first satisfy a work test.

Yet not all is as bad as what the press may have you believe. Yes, some of the changes are unpalatable.  Yes, future generations will not be able to accumulate significant sums in super as previous generations have.  But that all said, there are still some sensible and attractive reform announcements from this year’s Budget.  If you want to read more about those tax changes, email accountants@mrsaccountants.com.au and we will forward you a copy of our 2016 Budget briefing paper and addendum thereto.

With all this negativity and uncertainty about super, it is important to remember two things:-

  1. Super is before all else a low tax environment with current tax rates being 15% on contributions, 15% on earnings within accumulation mode (10% for capital gains) and 0% on the earnings on the balance in pension mode. These tax rates are less than those for many working Australians, often significantly so.
  2. It is arguably the best asset protection vehicle.

So don’t be misled by all the negativity and political debate. It would though just be nice to return to the position we had from 1983 until 2006 when we had a prolonged period of sustained stability and promotion of super (as both Keating and then Costello understood the benefit to the government purse on encouraging people to look after themselves rather than relying on the age pension at a time of rapidly ageing population).

 

At MRS, we will spend today planning for your success tomorrow.

Travel expenses made simple

Travel expenses made simple. Most would disagree as keeping, and at times even getting receipts when you’re travelling is difficult.  This is a problem that is even more difficult in respect of getting employees to hand over the right records.

Fortunately, the ATO provide some relief. Each year, the ATO issues what are called reasonable travel rates; the determination also covers overtime meal allowances.

Reasonable travel rates are set for:-

  • Domestic travel – amounts in respect of overnight stays for accommodation, food & drink and incidentals.  These amounts vary for each major centre and high cost remote areas.
  • Overseas travel – amounts for food & drink and incidentals (receipts must be kept for all accommodation).  Allowance rates vary for each country and the employee’s salary level.

Employers who pay no more than these reasonable amounts are set by the ATO do not have to withhold PAYG withholding.

Employees who receive a reasonable allowance are not subject to substantiation unless their expenses exceed the reasonable amount.  You can obtain a copy of the 2016/17 rates at http://tinyurl.com/jft95s2

Please always remember that an overseas travel claim is not deductible unless it is supported by a travel diary or record.  The same applies in respect of a domestic trip which is for 6 or more nights.

We would welcome your questions as to how you may benefit from using this system.

 

At MRS, we will spend today planning for your success tomorrow.

 

New credit card surcharge rules

New credit card surcharge rules came into effect as of today. You probably heard this on this morning’s news on TV and radio.

But don’t panic, it may not affect your small business yet.

These new rules don’t apply to small businesses until September 1, 2017. It does though already apply to businesses with more than $25 million of turnover or more than 50 employees.

These new laws have been introduced by the Australian Competition and Consumer commission (ACCC). With their past history, it is a given that they will very quickly make someone a scapegoat.

Under these new rules, there are maximum percentage surcharge rates that can be used. And for those businesses that charge a fixed amount, that amount must not exceed the cost to the business.

Most businesses charge a percentage. The set maximum rate for Visa and MasterCard is 1.5%, 0.5% of debit cards and 3% for American Express.

I would expect there to be very loud protests leading up to September next year as many businesses are charged more than the 1.5% on Visa and MasterCard transactions by their bank. And then there are those that use generic solutions such as Square which charges a flat 1.9%.  We will keep our clients updated leading up to this second implementation date next year.

If you would like to read more, a good short summary has been prepared by MYOB which can be accessed at:-

http://tinyurl.com/jeyxllv

If you want to read the nitty-gritty or are have trouble sleeping, you can read the Reserve Bank review at:-

http://tinyurl.com/zk2d79u

 

At MRS, we will spend today planning for your success tomorrow.