Issue 132 - December 2019
Focus on Your Cashflow in the Lead up to the Christmas and New Year Holidays
The Christmas and New Year holidays require business owners to give thought to how they are going to run their business during that period. It's important to prioritise the actions required to manage cashflow successfully.
The checklist below is a reminder of the key actions that all business owners should take in regards to sales, staffing, expenses, and funding related matters.
- Make sure you invoice earlier in December so you do not miss your customers' processing run and their timely payment.
- Focus on collecting your debtors before your customers close their office for the holidays;
- To increase cashflow in the short term, close any outstanding sales orders and focus on sales that have a short sales cycle versus more complex transactions;
- Focus on sales where there is the opportunity to run down inventory, including your fast moving inventory items;
- Invoice your outstanding work in progress;
- Quit slow-moving and old stock – if you have not sold it now, take the loss and convert it into cash.
- Review your staff levels;
- Encourage people to take leave if appropriate;
- Review your level of casual staff compared to permanent employees;
- Review overtime levels.
- Review all discretionary expenditure, including training, travel etc.;
- Return any hire equipment not needed over the holiday period.
- Prepare your December, January, and February weekly cashflow forecasts to identify any funding shortfalls;
- If needed, renegotiate terms with key suppliers, speak the tax office or seek additional funding from your bank.
If you need any assistance with the above, please contact our office.
We would like to advise that our office will be closed for Christmas and New Year from Friday 20 December 2019 at 12 noon and will re-open on Monday 6 January 2020.
Increase in Luxury Car Tax Refunds for Farmers & Tourism Operators
Luxury car tax applies where the GST-inclusive price of a motor vehicle exceeds a certain threshold. The threshold for the 2019/20 income year is currently $75,526 for fuel-efficient cars and $67,525 for all other vehicles. Generally, the tax is calculated at a rate of 33% for the amount over the threshold.
Primary producers and tourism operators are eligible for a partial refund of the luxury car tax paid on the purchase of eligible four-wheel and all-wheel drive cars. For vehicles acquired on or after 1 July 2019, you can apply for a refund up to a maximum of $10,000. Refunds for vehicles purchased prior to this date are capped at $3,000.
Eligibility criteria consist of the following when carrying on a tourism business, with the principal purpose of business to carry tourists for tourist activities or when carrying on a primary production business:
- The car must be used for the purpose of carrying on business
- Registered for GST
- The car purchased must be a four-wheel drive or all-wheel drive, AND either
- a passenger car (having up to 9 seating positions) and has a ground clearance of not less than 175mm, or
- an off-road passenger vehicle (having up to 9 seating positions and being designed with special features for off-road operation)
Tourism operators can claim a refund for all eligible cars. Therefore, multiple claims can be made each year.
Primary producers can only claim one refund per financial year and the refund claim must be within four years of purchase.
Note, the refund applies even if the car is purchased through a financing arrangement.
Please contact our office should you wish to discuss your eligibility for either of these refunds.
Modern Slavery Act
The Modern Slavery Bill 2018 (Cth) came into force earlier this year and requires reporting entities to issue a Modern Slavery Statement annually within six months of the end of their reporting period. This means the first reporting period for reporting entities with a 30 June financial year end will be 1 July 2019 to 30 June 2020 with a Statement due by 31 December 2020.
Reporting entities are entities operating in Australia with over $100 million in consolidated revenue.
Modern Slavery includes forced labour, child labour, human trafficking, debt bondage, deceptive recruitment, involuntary servitude, human trafficking, forced marriage and other slavery-like exploitation.
The Modern Slavery statement should include identification of:
- modern slavery risks in its operations and supply chains;
- identification of due diligence, remediation processes and staff training to address the risks; and
- an assessment of how effective those actions have been.
If there are no Modern Slavery risks identified, the statement should still outline how they address risks and the effectiveness of actions.
There are currently no civil or criminal penalties for organisations who fail to produce a modern slavery statement or who have false and misleading information in their statements. However, non-compliance is likely to result in significant reputational damage for the reporting entity as the Minister may publish information about entities that fail to comply.
In November 2019, the Financial Review released the Top 100 Accounting Firms for 2019. We are proud to announce the Brentnalls Affiliation Group were ranked 28th. In addition, we ranked 2nd for top firms by Female Partner Revenue in the category under $50 million. We look forward to continued growth nationally and in New Zealand. Thank you for your support.
Work Christmas Parties and Gifts
As we approach the holiday season, many businesses are in the process of planning the annual Christmas party and deciding what gifts, if any, to purchase for both their employees and customers.
Tax laws regarding gifts to employees and clients can be complex, so having some understanding of these laws will ensure the gift giving is enjoyed by all.
How the Fringe Benefit Tax rules are structured means that it can be more tax effective to both give a gift and hold a Christmas party, rather than hosting a more elaborate party. A gift and the party are viewed as separate benefits for the $300 minor benefits limit, which means employees can have twice the fun without FBT applying.
Non-entertainment gifts provided to employees are usually exempt from FBT where the total value is less than $300 inclusive of GST. These include skincare and beauty products, flowers, wine, perfumes and hampers for example. The business can also claim a tax deduction and any applicable GST credits.
Providing entertainment as a gift or Christmas party has different tax implications. If the cost for each employee is less than $300 GST inclusive, FBT is not payable, but no tax deduction or GST credit can be claimed. Examples of entertainment gifts include tickets to the theatre, a movie, sporting event, or providing a holiday.
If you provide an employee with a non-entertainment gift that is more than $300 GST inclusive, FBT may be payable at the rate of 49% on the grossed-up value however a tax deduction and GST credit can still be claimed.
Non-entertainment gifts given to clients and suppliers do not fall within the FBT rules. Generally, a tax deduction and GST credit can be claimed for gifts to clients, provided they are not excessive.The idea of gift giving to clients is usually something that will promote the business and create goodwill, leading to further business being generated in future.
Businesses should maintain separate accounts in the general ledger for recording the above transactions to ensure that the correct income tax, GST and FBT treatment is applied.
The best tax outcome for your business this Christmas is keeping to the $300 rule and to give staff, customers and suppliers nonentertainment type gifts.
Please contact our office if you have any questions.
Government Grants-Entrepreneurs' Programme
The Australian Government currently has a funding and incentive program for Entrepreneurs in targeted growth sectors. This program assists small and medium enterprises to:
- be more competitive and productive
- attract investors and commercialise their products
- work with the research sector to solve problems
Eligibility criteria to apply for the Entrepreneurs' Program is as follows:
- Have an annual turnover or operating expenditure between $1.5 million and $100 million or between $750,000 and $100 million for an applicant from remote Australia or Northern Australia
- Have operated in Australia and filed business activity statements showing ongoing trading in at least three consecutive years
- Operate in a growth sector background from advanced manufacturing, food and agribusiness, medical technologies and pharmaceuticals, mining equipment, technology and services; oil, gas and energy resources; or Northern Australia tourism.
The program is made up of different elements from business evaluations, incubators, growth, and accelerating commercialisation.
For more information, please contact our office or go to https://www.business.gov.au/Grants-and-Programs/Entrepreneurs-Programme
What is it?
MYOB AccountRight and Essentials users now have access to a new feature to assist in their recordkeeping – MYOB Capture.
MYOB Capture is an app that allows a receipt to be photographed and digitally stored in your MYOB software. Users can download for free from the Apple App Store and Google Play.
After taking a picture of your receipt, the user adjusts the image using the purple outlines that appear over the image. With the image aligned to the markers, hitting next brings up a cropped image that can then be sent to your MYOB In Tray where the system will extract key information. Having the image now appear in the In Tray, there are a number of options that become available to the user. The image can be used to create a new bill, it can be linked to an existing bill or another bank transaction, or simply used to create a Spend money transaction.
This new feature provides all users with a quick and easy way to securely store and organise all your tax time receipts.
MYOB Capture is included in the price of your MYOB AccountRight or Essentials subscription.
Congratulations to Sharon Starick on recently being appointed chair of Animal Health Australia.
Congratulations to Craig Linke Bespoke Buildings on winning two awards at the recent HIA Awards Night-Small Commercial
Project and Best Bathroom over $35,000.
Congratulations to Fat Farmers on recently winning the Community Award at the 2019 SA Regional Showcase Award Night.
We congratulate all staff recently completing their university exams, particularly those who have now finished their degrees.
In October, Brentnalls SA supported the Can:DO 4Kids in their Loud Shirt Day.
We congratulate our New Zealand affiliate firm, Chester Grey Chartered Accountants on recently celebrating 50 years in practice.
John Crouch is a proud supporter of Legacy and on the 7th November 2019, several team members from Brentnalls SA assisted in the breakfast sausage sizzle in support of the Legacy Memorial Walk from Torrens Parade Grounds.
This Christmas, instead of sending Christmas gifts, we've made a life changing donation to Make-A-Wish.
This month Brentnalls SA is supporting: Salvation Army - NSW Bushfires
In November, we witnessed the devastation of the NSW bushfires. Not only the loss of homes and crops but lives were lost, human and animal.
This month we are supporting The Salvation Army, they offer a range of services and assistance measures to help those people who have been impacted by the bushfires.
Meet Catherine Zarantonello
I started working at Brentnalls SA in July 2017 as a Junior Accountant while studying a Bachelor of Commerce Accounting at the University of South Australia, which I recently graduated from in October this year. After enjoying a 6 month break from study and travelling across Europe, I now plan to begin the Chartered Accounting program in the new year.
Brentnalls offers a great environment to work in with a supportive team who are continuously helping me to learn and develop my professional growth.
Outside of work you will often find me travelling back to the country to play netball for my home town, spending time with my family and friends, and enjoying the outdoors.