Do you have your tax debts under control?

Tax debt

From 1 July 2017, a new tax measure will come into play for small businesses, and we’re here to help prepare you for this tax change.

Businesses that haven’t engaged with the Australian Taxation Office (ATO) to get their tax debts under control could have their tax debt information disclosed to credit reporting agencies by the ATO.

Initially, the ATO will be applying this new disclosure measure to businesses with a tax debt greater than $10,000 and is in default (at least 90 days overdue). If your tax debt is disclosed by the ATO, your credit rating will be adversely affected for the next 5 years.

What do you need to do?

If you have a tax debt that is 90 days or more overdue, you need to secure a payment arrangement with the ATO before 30 June 2017, regardless of how big or small the tax debt is.  We also encourage everyone who has outstanding tax payments not yet in default, to get these paid as soon as possible.

Tax debts, once disclosed to credit reporting agencies, will go on your credit rating file for 5 years which could greatly impact your chances of securing finance in the future or enter in to credit arrangements with your suppliers.

So, it is important to get your tax debts under control as soon as possible, and well before 1 July 2017.

How we can help you!

As your tax agent, we can help you negotiate an effective payment arrangement with the ATO without negatively affecting your cashflow.

Get in touch with us today to discuss your options and get control of your tax debts.

Contact our office on (03) 9744 7144

General advice disclaimer – General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

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Is bullying happening in your workplace?

Aggressive Businessman Shouting At Female Colleague

Everyone has a right not to be bullied or harassed at work.  A worker is bullied at work if;

  • a person or group of people repeatedly act unreasonably towards them or a group of workers
  • the behaviour creates a risk to health and safety

Unreasonable behaviour includes victimising, humiliating, intimidating or threatening.  Whether a behaviour is unreasonable can depend on whether a reasonable person might see the behaviour as unreasonable in the circumstances.
In June 2011, Victoria’s anti-bullying legislation was passed.  Known as Brodie’s Law, this law was introduced as a result of the tragic suicide death of young Brodie Panlock, who was subjected to relentless bullying in her workplace.

Case study
In September 2006, 19-year-old Brodie Panlock ended her life after enduring ongoing humiliating and intimidating bullying by her co-workers at a café in Hawthorn.

The tragedy of Brodie’s death was compounded by the fact that none of those responsible for bullying Brodie were charged with a serious criminal offence under the Crimes Act 1958. Instead, each offender was convicted and fined under provisions of the Occupational Health and Safety Act.

The introduction of Brodie’s Law means that the criminal justice systems is now able to appropriately respond to the most serious examples of bullying in our community.  The law ensures certainty in the application of the criminal law to cases of serious bullying.

Source – Victoria State Government Justice & Regulation

If you would like to learn more about this very important topic, please join us for a special breakfast seminar on Thursday 27th April 2017, where we will discuss this topic and more.


Are the tools in your toolkit sharp enough to take your business to the next level?

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We see it everyday, businesses that think the unexpected won’t happen to them, but the reality is, IT CAN.  Are you up to date with the latest OH & S rules and regulations?  Does your business have the right insurances to protect you?  Is your business ready for cloud computing?

Learn how to;

  • Embrace new systems that will reduce the time you spend on your books and keep you up to date with your businesses performance.
  • Create debtor systems to manage cash flow and make it easier for customers to pay you sooner.
  • Protect your assets with the right registrations and paperwork.
  • Be aware of your legal obligations in the workplace.
  • Ensure you are taking all the necessary steps to protect you, your business and your family.
  • How to prepare yourself if injury or death occurs of a key person, including owners.  If serious illness occurs, how to protect yourself so that it does not affect your business.


Guest speakers:
Mark Hooper – Senior Account Manager Xero Accounting Software
Andrew McLellan – Director EDX (Melbourne) Pty Ltd
Richard Williams – Acting General Manager – Workplace Relations Victoria Chamber of Commerce and Industry

When: Thursday 27th April
Time: 7.30am
Where: Sunbury Football Club – Riddell Road Sunbury
Light breakfast supplied
R.S.V.P  Monday 24th April 2017
Click on the link below to book on line or call
Lynda (03) 9744 7144 or email lynda@mcmahonosborne.com.au

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What employers need to know about fringe benefits

FBT

On 31 March 2017, the Fringe Benefits Tax (FBT) year ends. With increased focus on data matching, the ATO will be reviewing whether employers who should be paying FBT are, and that they are paying the right amount.

To help you meet your fringe benefits obligations, we’ve put together a list of essentials every employer needs to know about FBT and review every year, such as:

  • Do I have to consider FBT?
  • What information do I need to give my accountant?
  • What is exempt from FBT?
  • How can I reduce my FBT liability?

These questions are all answered for you below, as well as some log book management tips.  Remember this advice is general in nature and we encourage you to discuss your specific circumstances with our accountants who are all trained in FBT matters.

1. FBT Rate change –  On 1 April 2017, the FBT rates will decrease to:

FBT Rate                       47%

Type 1 Gross Up Rate    2.0802

Type 2 Gross Up Rate    1.8868

2. Do I have to consider FBT?

Generally, if you have employees, including directors and you provide them with cars, car parking, entertainment (food and drink), employee discounts, reimburse private expenses etc, then you are likely to be providing a fringe benefit and we will need to give consideration to FBT.

It’s important you start gathering all of the details of these provided benefits as soon as possible using our annual FBT Questionnaire so we can calculate any potential FBT liability and lodge your FBT return on time if required – due 25 June 2017 with payment to be made by 28 May 2017.

3. What items are exempt from FBT? 

If you’re providing items like mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc., or minor and infrequent benefits that are less than $300 in value, you are unlikely to have to worry about FBT.

You can fill out our short FBT Questionnaire to be 100% sure.

4. An easier way to manage your vehicle log books.

For employers with 20 or more ‘tools of trade’ cars – a car required for the job, like for a sales rep travelling extensively for the business – the ATO has a new process for validating the business use percentage of the car.

It’s called the ‘simplified method’, and if you meet the access conditions, you can apply an average business use percentage to all ‘tools of trade’ cars in your fleet for first log book year and the next 4 years. Conditions to be met are:

  • valid log books kept for at least 75% of the cars in the log book year;
  • the employer chose the make and model of the car, not the employee;
  • each fleet car has less value than the ‘luxury car’ limit when purchased, generally $64,132 in 2016/2017;
  • the cars aren’t provided under a salary packaging arrangement / employee remuneration package; and
  • your employees can’t choose to receive additional remuneration in lieu of using the cars.

5. Ways you can reduce your FBT liability.

Here are some ways in which you can reduce your FBT liability:

  • replace your fringe benefits with cash salary;
  • provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves;
  • look at providing benefits that are exempt from FBT; and
  • use employee contributions, for example, an employee paying for some of the operating costs of car fringe benefit such as fuel that you don’t reimburse them for. Though you should note that employee contributions may be deemed assessable income to you and subject to GST.

How we can help you.

The FBT year ends on 31 March 2017, so be sure to complete and return the FBT Questionnaire as soon as possible so you don’t miss the lodgment date of 25 June 2017, and meet the payment due date of 28 May 2017.

We look forward to helping you meet your FBT obligations and are available anytime to answer any questions you have around reducing your FBT liability or creating effective salary sacrifice arrangements.

 Call us today on (03) 9744 7144.

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Avoid these common mistakes to keep your business on track

Plan icon(1)

From managing to marketing and everything in between, the world of small business can be both exciting and overwhelming. When you first start up, you have dreams of making the big time. But as time goes on, you may discover that although you have the passion, the energy runs out quickly when each day provides the next challenge.

Don’t let these common mistakes keep you down. Avoid them, and get your business back on track.

Failing to plan – The saying is true: If you fail to plan, you plan to fail. This is a big problem for many small businesses. If you don’t have goals and specific plans on how to get the business where it needs to be, you will be distracted by every detour along the road and your business may end up nowhere near the ultimate destination. Spend a day at the beginning of each year setting out your goals and plans — it doesn’t have to be pages long. In fact, try to put your goals on one page and pin it above your desk so you can refer to it regularly.

Not understanding cash flow – Remember, cash is king. Every business fails when they run out of cash. Most business owners focus on sales and profits, but cash flow is critical to the success of your business. Many profitable business still struggle with cash flow. You need to understand the difference between profit and cash, and focus on ensuring you have adequate reserves to cover the unexpected.

Believing “build it and they will come” – Don’t listen to those who say, “build it and they will come.” Of course we believe in our product or service offer to customers. Just because we feel that we have the answer to the customers’ problems does not necessarily mean they are aware of their problem — or know you have the solution. It takes more than simply opening a business to guarantee sales will happen. You need to stay on your marketing toes at all times to keep a steady stream of customers visiting your business.

Putting garbage in — and expecting to understand it later – If you put garbage in, you will get garbage out. Many small businesses use spreadsheets to keep their financial, customer and key business records. Although this might suffice at the beginning, once the business is up and running, you need specialist software that will ensure all the information you record is correct and accurate. Spreadsheets are prone to errors. There are no built-in controls over the information entered, and spreadsheets will not provide critical information in a decision-making format without an enormous amount of time and effort. Use tools that are designed for record keeping and deliver reports and key performance measures on demand — it will make your life easier and improve your business.

Have you established a solid team? – If you are going to be successful, you’re going to need a team of people to make it happen.  You are an expert in your field, and that is why you decided to start your own business, right?   Well what about other areas of the business, where specialised skills are also needed?  By putting together a team of professionals, that have the skills to benefit your business, you will give your business a higher chance of survival.

Are you thinking of starting your own business?  Cementing the right foundation from the start can help you avoid these common mistakes. We have over 27 years experience working with small business.  Success stories come from when businesses have a very clear plan from the start.  We can help you with your business plan.

Register now for our FREE small business workshops.  Held the first Tuesday of every month in The McMahon Osborne Group Boardroom, at 5.30pm.

First workshop is Tuesday 7th March 2017, at 5,30pm.

To register click on the link below

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General advice disclaimer – General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

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Don’t leave behind a financial mess for your family

binding-death-benefits

Husband Barney, 64 and wife Lisa, 45 decided to setup a SMSF using a corporate company as trustee.  The SMSF invested in a residential property, Australian Shares and a Managed Fund.

Barney & Lisa have 2 young children from their marriage.  Barney also has 2 adult children from a previous relationship, Jessie who is the oldest girl at 30 and Jason who is 25. Jessie is married with children of her own and Jason is young single and travelling the world.

Barney has a super benefit of $560,000 and Lisa a super benefit of $140,000.  Both have a will and named Jessie as their executor (Legal Personal Representative).
Neither Barney nor Lisa had Binding Death Benefit Nominations in their SMSF. Lisa had expressed her wishes to Barney for her super monies to go to their 2 young children, however Barney wanted the super money to go to all four of his children equally. They have also written this in their will.

Unfortunately Lisa was diagnosed with aggressive terminal cancer and died within weeks of the diagnosis. As Barney was the trustee he abided by Lisa’s wishes and paid her benefit to their 2 young children.
Lisa was removed on death as a director of the trustee company and Barney continued on as the only director and his super benefit remained in the fund.
Barney died a couple of years later from a heart attack.  As Barney has died his legal personal representative needs to step in as the single director trustee, being Jessie.

In the circumstances as there is no binding death benefit nomination and the will cannot control superannuation monies, it is up to the trustees discretion on who the benefit is paid to.
Jessie feels that she is more entitled to the money than anyone else and has decided to pay the entire benefit to herself.
Jason was very upset as he believed he was getting a quarter of the fund, the young children had no idea what was happening.

Jason engaged a solicitor and challenged the trustee’s payment of the benefits in court as his father had expressed verbally to Jason and also in his will that it was to be divided up equally.
The courts ruled that Jessie was able to pay the entire benefit to herself as there was no binding death benefit nomination, the will cannot control superannuation and the verbal expression was only a wish and not binding. The law states it is the remaining trustee’s discretion as to where the money is paid when there is no binding nomination.

Alternative Result:
If Lisa had completed a valid Binding Death Benefit Nomination (BDBN), she would not have to rely on Barney doing the right thing and paying her benefit as per her “wishes”. Barney would be legally obligated to payout as per her BDBN.
If Barney completed a valid BDBN, Jessie would not have been able to get away with paying the benefit to herself. She would be legally obligated to payout the benefit as per the BDBN in 4 equal shares, and all of the children would be provided for as per Barneys “wishes”.

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** LIMITED SEATS REMAINING – LAST DAY TO BOOK ** 

If you would like to learn how not to leave behind a financial mess for your family, then register your interest for our FREE “Is your retirement plan measuring up?” seminar, where we will discuss this topic and more.

When: Thursday 16th February, 2017
Where: Sunbury Football Club
Time: 7.30am
Cost: FREE
Register your interest NOW

Thank-you to all those people who have already booked!

General advice disclaimer – General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product

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Risk profiling, the key to a successful outcome.

Happy retired couple sitting on the bench

The year was 2006 and Gary & Janet had been married for 27 years and were contemplating retirement as they were both nearing 60, their children were now living independently and their investments were really well placed including their industry based super funds which had been providing massive returns year by year.

They had always looked after their own finances and thought they had a pretty good handle on this but, prior to retirement they thought it prudent to see a financial planner and were recommended to us.  We had a look over their situation and, on the face of it, everything seemed pretty good – wills in place, powers of attorney in place, some solid investment properties and a healthy super balance with a well reputed industry fund.  But something just didn’t feel right……… it was almost too right.

A closer inspection of the super fund showed that Gary & Janet were allocated to the default strategy within the fund which had served them very well to date as it was called a “Balanced Growth Fund” and had 75% aggressive assets and 25% defensive assets.  Heading into retirement with protecting the wealth built up Gary & Janet had no concept just how aggressive this could be.

Following an extensive discussion regarding “risk vs return” we determined that Gary and Janet were far better placed for a less aggressive structure and moved their investments to 50% aggressive and 25% defensive along with some additional planning to increase liquidity and income focus in their investments.

In the following three years after this change the Global Financial Crisis was at its peak and a number of Gary and Janet’s close friends in similar positions lost a large portion of their retirement savings which remained in aggressive superannuation portfolios.

On the other hand, Gary and Janet’s superannuation savings held up during the GFC – they still had a small loss but nothing like the losses suffered by their friends.  The combination of a portfolio suited to their risk profile together with an income rather than growth focus meant that the losses from the market were reduced and most of the losses were offset by an increased level of income.

Risk profiling was the key to this outcome.  In a world of immediacy and instant solutions, the importance of risk profiling can be quickly lost.  Returns should never be based upon a single month, single quarter or even a single year.  Returns must be viewed in the context of risk taken and risk profiling.  The S&P 500 (the largest share market in the world) has negative returns on 46% of trading days, yet the worst return over any 20 year investment term was 54% positive return.  Over any 30 year period the worst return was 854% positive return.

So the questions each investor must ask are:

  • How much of a short term loss can I sustain before I am nervous?
  • How long a period can I stay with my convictions before I start second guessing my decisions?
  • What is my primary objective from my investment mix?
  • What is the time frame for my investment period (remember the day you stop investing is either the day your money runs out or the day you die – whatever comes first)?
  • Do I even understand my own risk profile?
  • What education do I need to understand risk profile more soundly so I avoid any rash decisions?

If you are unsure about your investment portfolio, register your interest for our FREE “Is your retirement plan measuring up?” seminar, where we will discuss this topic and more.

When: Thursday 16th February 2017
Where: Sunbury Football Club
Time: 7.30am
Cost: FREE
Register your interest NOW

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General advice disclaimer – General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product

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Heartache that could have been avoided

divorced-couple

Case Study

Michael & Tanya were separated with two beautiful children (aged 19 and 14 years old).  Despite being separated they still had a very healthy friendship and were both committed to helping each other out and worked well in bringing up their children.  The eldest child was in the 3rd year of his plumbing apprenticeship and lived with two mates in the next town whilst the 14 year old lived with Tanya.

Tanya worked part time and lived in their primary residence whilst Michael was living in the couple’s investment property only a few blocks away.  Michael was very fit and jogged regularly, however after a morning run he suffered a major heart attack and to the complete shock of everyone passed away.  Unfortunately, there was no Estate Planning in place – Michael and Tanya had discussed the issue many times but had never got around to actually putting any steps in place.

Michael’s superannuation fund carried with it a life insurance policy so, including his superannuation account the total payment was around $800,000.  This was contested by Michael’s family (who still held Tanya responsible for the separation) and after 10 months the trustee of the fund determined that they would pay the benefit direct to the two children equally.  As the eldest child was a non-dependent his pay out was burdened with a significant tax bill of around $90,000.

Further to all of this, as the two houses were owned by Michael and Tanya as joint tenants the ownership of both properties reverted to Tanya on death automatically.

All in all, no one was happy with the overall outcome and this only added to the personal stress and heartache that everyone was suffering as a result of Michael’s sudden passing.  So much of this could have been avoided with some advice and planning.

What Could Have Been Done?
Binding Death Benefit Nominations (BDBN) – if a BDBN had been in place Michael could have specified who would receive the funds from his superannuation payment.  A super trustee is obliged to follow the instructions of the BDBN so the trustee would not be required to make a determination but rather just follow the instructions.

Life Insurance – the life insurance policy could have been established outside of super and the payment be directed to the benefit of the eldest son.  In turn this would have given Michael the ability to direct a greater proportion of his superannuation benefit to his 14 year old.  This would have meant that the $800,000 would have been taxed at a much lower rate as payments from a life insurance policy held outside of super and payments to a financial dependent from a superannuation fund are both tax free payments.

Property Ownership – the properties could both have been held as “Tenants-in-Common” rather than “Joint Tenants”.  Michael’s share of each property would then have formed part of his estate and a valid Will could have been prepared to define who would be entitled to the benefit attached to each property.

Moral of the Story
Whilst everyone agrees that good Estate Planning is important far too many people don’t get around to sorting out their estate planning.  Yes, it takes time, effort and some quality advice and the preferred combination is to have your lawyer, financial planner and accountant all aware of your intentions.

Michael & Tanya’s situation is real and could have been avoided – if you are one of the many Australian’s who haven’t addressed their Estate Planning needs, don’t become a Case Study.  Commit to completing this task and then take it one step at a time.  Like anything worth doing, there will be times when the task seems too daunting but, when you get through those challenges, you can sleep safe in the knowledge that you have showed true care and commitment to the most important people in your life.

If you would like to learn more about how you can make sure your family is protected, register your interest for our FREE “Is your retirement plan measuring up?” seminar, where we will discuss this topic and more.

When: Thursday 16th February 2017
Where: Sunbury Football Club
Time: 7.30am
Cost: FREE
Register your interest NOW

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General advice disclaimer – General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product

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