Accounting News
ATO Compliance Focus for 2011/12
The Australian Taxation Office recently released its Compliance Focus for the new financial year. The Compliance program expresses the ATO’s particular concerns and their plans to combat them, with a focus on tax and superannuation compliance. A number of their concerns may implicate small business owners, and these are listed below.
Land Taxes Levied 31 December
Land tax is a tax levied on the owners of land in NSW as at midnight on 31 December of each year. In general, your principal place of residence (your home) or land used for primary production (a farm) is exempt from land tax. If you own property other than your principal place of residence or primary production land, and the combined value of this land is greater than the land tax threshold, you will need to register for land tax.
Christmas Functions and Fringe Benefits Tax
Christmas is slowly creeping up on us and most of the annual party preparations are underway. As business owners start making decisions about events for clients and employees, an important issue to consider is the possible fringe benefits tax that may be applicable when providing ‘entertainment’ to staff.
Considering a Trust?
A trust is an entity where a person (trustee) holds and governs property or other assets guided by the terms of a trust deed for the gain of another person or persons – the beneficiaries of the trust. A trust is not a separate legal entity like a company. All transactions in respect of the trust are undertaken by the trustee. Consequently, a transaction entered into by the trustee is a personal obligation.
What is the difference between Insolvency and Bankruptcy?
Insolvency is defined by the Corporations Act as an inability to pay debts, as they fall due, out of the debtor’s company resources and refers specifically to businesses and companies. Usually used to refer to a business, insolvency refers to the inability of a company to pay off its debts.
SMEs – Watch out for the audits undertaken by the ATO, Payroll Tax and WorkCover
An audit is a review of the annual accounts and is usually carried out by an independent person or party, or a firm of accountants who are also accredited auditors. It is used to identify whether your business complies with accounting standards and relevant laws, regulations and government directions. Audits can also be of benefit to a business by highlighting opportunities for improved accounting and financial systems. The most common types of audits are usually related to various taxes such as GST and Payroll but can also be for other business areas such as Workers Compensation or Occupational Health & Safety.
Watch out – OSR coming down hard on Grouping of companies
Many businesses are required to pay Payroll Tax to the Office of State Revenue (OSR). Payroll Tax is a state-based tax imposed on wages that are paid or payable in the relevant state, and is generally applied to the annual payroll of employers/grouping of linked employers. Wages includes most payments for services made by an employer to employees, directors and contract workers who are deemed to be employees.
It’s getting harder to negotiate repayment of outstanding tax debt over time with the ATO
Tax debt is the amount of tax incurred during previous financial years that you still owe to the Australian Tax Office (ATO). Debt to the tax office can become increasingly difficult to manage when the ATO enforces its penalties for late payment, thus creating even more debt for you. However, if you undertake the right measures and heed some advice you should be able to avoid these penalties and perhaps even some tax debt.
Capital gains made by trusts
If you receive a distribution from a trust, you may have capital gains tax (CGT) consequences. If the amount by which an asset’s selling price exceeds its initial purchase price. Trusts include managed funds, such as property trusts, share trusts, equity trusts, growth trusts, imputation trusts and balanced trusts.
How to handle a Bad Debt
Every business faces the challenge of collecting payment from non-paying clients and customers. This can have the potential to ruin your business, since you can’t always pay your own bills when you are waiting on money that never seems to be coming. Not to mention that it also prevents you from gaining that bit of extra cash to allow your company to grow and expand. As such, a successful business will usually have an effective credit management process in place, which relates to the accounts receivable (debtors) section of a business’ balance sheet.
