Structuring your business for direction

One thing to think is how many challenges your business faces. Are there enough? In an environment of great political, legislative, economic, social & technological change, success will not come naturally. You need to make important decisions about how you operate your business and what direction it takes. So, where do you get directions from? Here are the three options most used by business owners today.

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Tax Planning vs. Tax Evasion – What’s the difference?

The majority of clients seek advice regarding day-to-day business transactions. There is a fundamental difference between tax planning and tax evasion. Tax planning is a legitimate practice aimed to minimise tax liabilities through activities that are allowed under the law; whereas, tax evasion is unlawful. However, the ATO closely examines schemes and arrangements that might comply with the technical requirements of tax law but have a dominant purpose of avoiding tax.

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Changes to the Director’s Penalty Regime

The Director’s Penalty Regime (‘DPR’) was introduced in 1993. The main objective of the DPR is to ensure that directors cause their companies to meet the relevant tax obligations or promptly put the company into administration or liquidation.

Initially, directors faced possible personal liability for failing to ensure that a company complies with the obligation to remit pay as you go (‘PAYG’) withholding. However, directors could avoid personal liability by promptly placing their company into voluntary administration or liquidation.

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CGT discount now limited for non-residents

If you are a foreign or temporary resident or the trustee of a foreign trust, you are subject to CGT if a CGT event happens to a CGT asset that is taxable Australian property (TAP). Under the Income Tax Assessment Act 1997 (Cth) (ITAA97) CGT assets that are taxable Australian property are:

1. taxable Australian real property;

2. indirect Australian real property interests;

3. an asset used in carrying on a business through a permanent establishment in Australia;

4. options and rights to acquire assets covered by items (1) to (3); and

5. a CGT asset that is covered by CGT event I1 (where a person chooses to disregard a gain or loss on ceasing to be an Australian resident).

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The difference between employee vs. contractor

The distinction between “employee” and “independent contractor” is crucial for many areas of tax, super and other government obligations. The ATO requires businesses to keep records to support the decision of whether your worker is an employee or contractor and the factors you relied on. To correctly work out whether a worker is an employee or contractor, you need to look at the whole working arrangement including the specific terms and conditions under which the work is performed. An employee works in your business and is part of your business, whereas a contractor is running their own business.

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ATO targets cash employees

The ATO continues to identify taxpayers who are avoiding their tax obligations by not reporting or under-reporting income, i.e. targeting the “cash economy.”

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Payroll Tax grouping: What does it mean?

In recent times the state revenue offices have increased their audit activities in the payroll tax area, particularly with respect to grouping and contractor payments.

For payroll tax purposes, businesses may be grouped with other businesses if there is a link between the companies as defined below. When a group exists:

• Only a single threshold deduction applies to the group
• Each member of the group is liable for any outstanding payroll tax of the other group members.

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Have your business contracts reviewed for a fixed fee

Whilst keeping up to date with your employment contracts, rental agreements and insurance payments may not be at the top of your ‘to do’ list, letting them expire can not only leave your business open to heartache but can also have serious consequences directly impacting on yourself.

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Maximise your rental property claims

Come tax time, every cent counts. Owning a rental property allows you access to a range of a possible tax deductions that can boost your tax refund and save yourself from paying more. Many investors can miss out on maximising their rental property claims simply because they are unaware of what they can claim.

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Legal changes for the 2014/15 financial year: a guide for small businesses

The new financial year not only means getting ready for tax time, it also means being prepared for the various legal changes that will affect smooth sailing for the year ahead.

By now, your business should be aware and have all these changes under control, and if not, be sure to get on top of these changes as soon as possible.

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