All Employers must be SuperStream compliant by 30th June

Employers, are you ready for SuperStream?

Small employers (19 or fewer employees) must meet the SuperStream standard by 30 June 2016. Here’s what you need to do.

1. Choose a SuperStream option

You can choose either to use a clearing house or payroll option that is compliant. Ask your accountant or bookkeeper to help you with this;

2. Collect information and update your records such as:

– employee tax file number
– fund ABN; and
– unique superannuation identifier

If your employee uses a SMSF, they must also provide
– fund bank account details; and
– fund electronic service address

3. Start using Superstream as soon as possible.

Start using SuperStream as soon as possible.

Employers with 19 or fewer employees should be SuperStream ready by 30 June 2016 (larger employers should already be using SuperStream).

However, we recommend making your first SuperStream payment no later than May 2016. This will give you time to make several payments and ensure your system is running smoothly before the 30 June 2016 deadline.

Tax incentives for start ups

“Investors, venture capital funds and innovative companies in all industries will benefit from the measures introduced by the recent Federal Budget aimed at luring wealthy investors with globally competitive tax incentives”

 

What are the tax incentives?

Tax incentive for early stage investors:

  • This will give concessional tax treatment to investors to promote investment in innovative, high-growth potential start-up companies.
  • It includes a 20% non-refundable carry forward tax offset on investments in qualifying companies, capped at $200,000 per investor per year;
  • And a 10 year exemption on capital gains tax, provided investments are held for 12 months or more.

New arrangements for venture capital limited partnerships

  • This will deliver changes to the tax treatment of early stage venture capital limited partnerships (ESVCLP) to attract more investment into venture capital.
  • Investors will receive a 10% cent non-refundable carry forward tax offset on capital invested through an ESVCLP.
  • The maximum fund size for new and existing ESVCLPs will be increased to $200 million with a number of reforms made to the income tax treatment of venture capital more generally.

Who is eligible?

The tax incentives will be available for investments in companies that:

  • undertake an eligible business (scope to be determined)
  • that were incorporated during the last three income years
  • aren’t listed on any stock exchange
  • have expenditure and income of less than $1 million and $200,000 in the previous income year respectively.

The scheme is based on the successful UK Seed Enterprise Investment Scheme which raised over AUD$500 million in startup investment for almost 2,900 companies in its first two years.

In general, wealthy clients who want to diversify their portfolios with high-risk high-reward investments but wouldn’t ordinarily take the plunge in very early stage companies. The new incentives were “attractive enough” to get them over the line.

 

 How it will work in practice?

Jessica is the founder of a startup business called PaySmart Pty Ltd that is developing a software application to automate bill payments. She is looking to raise $200,000 in equity finance to continue developing of the software.

Alex is an experienced early stage (angel) investor and believes that PaySmart has excellent growth potential. He invests $200,000 and claims a 20% non-refundable tax offset, reducing his income tax payable by $40,000.

In addition to contributing capital, Alex uses his business skills to help PaySmart grow. He sells his shares for $400,000 four years later. As Alex has held the investment in PaySmart for the minimum three year period and less than 10 years, the full capital gain of $200,000 is exempt from capital gains tax.

 

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Immediate deductions for small business

New laws have passed that allow small businesses to claim an immediate deduction for assets they start to use – or have installed ready for use – provided each item costs less than $20,000. This will temporarily replace the previous instant asset write-off threshold of $1,000.

If you maintain a general small business pool, this can be immediately written-off if the balance is less than $20,000.

Assets that cost $20,000 or more (which can’t be immediately deducted under other provisions) are deducted over time using the general small business pool. Under the pooling mechanism a deduction for 15 per cent of the cost is allowed in the first income year with a diminishing value rate of 30 per cent deduction on the opening pool balance allowed for each income year thereafter.

This measure starts 7.30pm (AEST) 12 May 2015 and will end on 30 June 2017.

Come and talk to us on how to tax effectively purchase and make investments in your small business.

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Salary Packaging and You

Most of my articles to date have concentrated on small business owners. So here’s one for those who are employed.

As most of you know I’ve worked in the salary packaging industry for a number of years so I’ve seen and implemented a fair number of salary package benefits to know what works and at what income levels. Keep in mind that tax savings are culminating. A $50 a week saving here and there adds up through the course of a year.

So these are my top 5 in order of least to most tax effective:

5. Car parks – for some of you who are unfortunate enough to have to pay for parking at work. It’s a little known fact that there is a small saving to be had, usually around $20-30 a week, to salary package car parking due to the concessional valuation rules for car parking.

4. Cars – on the subject of cars, salary packaging cars is one of the most popular perks. Having a novated lease through your employer mean not only do you save on your tax but also the GST on purchasing and running your car. Further, you don’t have to prove business use.

3. In-house dining – if your work has an in-house dining facility whether they be a canteen or third party cafe you can salary package the cost of lunch as these are considered income tax deductible.

2. Superannuation – salary sacrificing super is effective as the ATO consider these as payments made by the Employer. However before you do this just check with the employer as some count this towards the superannuation guarantee limit.

1. Health workers and those in charities/PBIs – workers in these organisations get special dispensation from FBT in the form of either a rebate or exemption. So for example an ambulance worker can sacrifice their rent, school fees up to a certain limit and not be subject to FBT.

 

So as you can see from above there are still lots of things you can do with your salary in order to effectively give yourself a pay rise without actually getting a pay rise.

And always check with your accountant before getting yourself into one of these arrangements as your mileage will vary.

Cloud services that could help your business

Cloud services can make complex services much more affordable thus freeing up cashflow.

You may already familiar with some of the bigger player’s offerings such as Google – Gmail, Google Apps or Microsoft Office 365. These office cloud offerings allow you to work anywhere as long as you have a reliable internet connection. Further, there is no IT maintenance costs related to setting up your own internal office servers. Google and Microsoft even offers free drive storage.

Some of the advantages of using cloud services are:

  • Easy to setup and use

    • Install and deploy quickly.
    • Set up new user accounts in seconds.
    • Get updates automatically. The Office tools you rely on are always up to date.
  • Work from anywhere

    • Get virtually anwhere access on select mobile devices.
    • Work on your Office files online or offline.
    • All your files are automatically backed up.
  • No IT overheads

    • No servers to maintain
    • No upgrades to perform

Some other cloud services you can consider for your business are:

 Should you make the move?

A recent MYOB survey found that small businesses that use cloud services were 106% more likely to see a revenue rise in the past year, although only 16% actually use cloud services in their business.  Business operators in the cloud were not only more likely to see a revenue rise in the past year, they were more likely to expect one in the next year (37% versus 28%). They were also more positive about the domestic economy improving within 12 months (33% versus 23%).

However, if you’re thinking of going the extra step and moving your whole business online and into the cloud. There are some extra considerations you must take into account. The issues are stability, security and data ownership.

Stability:- Cloud services are subject to outages that are beyond a business’ control. What would happen to your business if you cannot access your programs for a few days?

Security:- often a cloud service provider may not even be located in Australia. There may be privacy laws you need to consider here in Australia or over where your cloud service is hosted that must be complied with. Recently, in the news the United State’s NSA has admitted to collecting personal data on foreign people.

Data ownership:- what happens when you decide to move your cloud-hosted programs to someone else? Do you have the facility to download and retain ownership of that data? In the news, cloud storage service Nirvanix gave only two weeks notice to their users to download their data before they turned off their servers.

You can alleviate some of the above concerns by considering local, Australian-based cloud services such as Telstra’s cloud offering: cloud.telstra.com or iinet’s Business Cloud. These essentially offers a virtual private server whereby you can install your own apps and programs and access it from anywhere.

Conclusion

There are definitely benefits of moving to the cloud, especially if you’re a small business without the resources to perform complex IT functions such as server management, backups and disaster recovery. However a move to cloud services should be approached in a considered way with a view to the pitfalls that could accompany such a move.