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As the Coronavirus COVID-19 continues to unfold, the economic fallout is fast hitting home.  Whilst Western Queensland has (to this point in time) been insulated from the virus, it is clear we will not be protected from the potential devastating financial impacts.  For small business, now is the time to act, NOT wait.

Business in hospitality, retail, events, personal services and tourism are directly impacted now, but everyone will feel the indirect effects.  It is fairly clear at this time that the 2020 tourist season will be late at best, and non-existent at worst.  For businesses coming off a long 'off-season', you must do all you can to protect cashflow now.  

Some immediate actions you can take in your business:

  • Start revising cashflow projections now using assumptions for a reduced turnover if you think this applies to you;
  • Plan how you can reduce costs at least over the next quarter but possibly longer;
  • If you already have existing debt with ATO and banks/lenders, start talking to them now about revised cashflows and payment arrangements (the banks have today announced small business loan repayment deferrals for 6 months, but you will need to confirm this applies to you);
  • Discuss with the ATO possible delayed payment plans for the upcoming BAS lodgement;
  • If you rely on particular suppliers, ensure they are in a position to keep providing to you;
  • If you have 'business critical' owners or staff, have a plan in place if they are forced to quarantine;
  • Investigate your insurance policies to see if there is any coverage relating to this crisis.
  • Discuss with your landlord possible deferral or payment arrangements

If you are in one of the 'high-risk' industries requiring customers coming in the door, you will need to be proactive in keeping a customer base:

  • Look at how you can offer differently e.g. are you set up for web sales, can you deliver or do takeaway rather than have customers in the shop/cafe?
  • If you are able to offer a different type of service, start advertising now
  • Ensure you are following all health advisories for public safety, and advertise these regularly in shop and social media.

There have already been government incentives offered.  Some will be automatically provided, and others will be by application.  It is important to be prepared if you think you are going to apply for assistance.  For instance, if you need to apply to borrow to get through this period, it will be vital to have up to date projections and cashflows available as soon as possible.

Once details of various incentives are available, we can unpack these and publish, but information is in short-supply at present.

Hopefully, we will all support each other to stay healthy and keep our local businesses going, but as we have seen already in other areas, some businesses are going to struggle to survive.  Now is the time to do all you can to come out the other side.

As always, please consult with your Accountant for advice as it relates to your circumstances.


ATO Investigation of Lifestyle Assets

Australian Taxation Office Investigation of Lifestyle Assets

The ATO is obtaining information from data providers for the 2014 and 2015 financial years to identify taxpayers who held insurance policies for lifestyle assets such as marine vessels, enthusiast motor vehicles, thoroughbred racehorses, fine art and aircraft.

The ATO will match this data with income tax returns (including capital gains tax schedules), Business Activity Statements, Fringe Benefits Tax returns and self-managed superannuation fund returns. If the information reported on these returns indicates that the taxpayer might not have sufficient income to fund these lifestyle assets an audit might be triggered.

If you are one of the rare taxpayers at risk from such a tax audit, you might consider voluntary disclosure. The ATO is usually much more lenient with penalties when there is voluntary disclosures.

By one means and another the tax net continues to tighten.


Amendments to Instant Asset Writeoff

The increase to the instant asset write-off is now law. From 7.30 pm on 2 April 2019 small business entities can access an immediate deduction for depreciating assets costing less than $30,000. From 1 July 2018 to 29 January 2019 the threshold is $20,000; from 29 January 2019 to 2 April 2019 it is $25,000.There are three different thresholds in the one financial year.

Medium business entities (those with turnovers between $10 million and $50 million) can now access the instant asset write-off for depreciating assets costing less than $30,000. There are some complications with medium size businesses so speak to your accountant before purchase.

The increase in these threshold s can now be taken into account for tax planning purposes but the usual caveat applies. Buy an asset because it will benefit your business and not because of the tax saving. The tax savings should be the icing on the cake. Speaking of cake you cannot have your cake and eat it too. By claiming the instant asset write-off you forego the depreciation you could otherwise have claimed in following years.

Please contact the office to make a tax planning meeting today. 

Cryptocurrency - An Auditors Perspective



Cryptocurrency is digital money.  The most important difference between traditional money transactions and cryptocurrency transactions is that cryptocurrencies eliminate banks. The cryptocurrency itself becomes its own bank. One other thing it is necessary to know is that a "blockchain" is the encrypted record of a set of transactions, equivalent to a ledger in traditional accounting.

I know next to nothing about cryptocurrencies. I do not have a licence to provide advice about them and a jolly good thing too considering the depth of my ignorance. Therefore please do not take anything I write as advice. I do not want a rap over the knuckles or worse from the regulators and I do not want to be sued. All I want is to put my auditor's hat on and ask some questions.


What is the product?

Products come in two forms, goods and services. I feel comfortable in eliminating goods as a product. I have never heard of a cryptocurrency offering bread for sale or mattresses or Mediterranean cruises or any other tangible product. Therefore it must be a service and that service must be so valuable that a single bitcoin (for example) can be worth thousands of dollars in the marketplace. What could this income-generating service be? Cryptocurrencies do provide a transaction service which is said to be safe and secure. This might well be true. (The auditor in me says "verify"). Even if it is true, the transaction fees I have seen quoted are trivial and much smaller than the fees charged by banks. At this stage of my learning process it is not possible for me to believe that such negligible fees could cover costs, much less generate enough income to make cryptocurrencies so valuable. In fact cryptocurrencies themselves do not make such a claim.

Read more…

The Englishman's Holiday

We might take a look at cryptocurrencies soon. This is a complicated subject about which I have many questions but as yet not many answers. It can be difficult to identify the risks and weaknesses in any financial system, much less complicated ones. To demonstrate, let's consider, not for the first time, the case of The Englishman's Holiday. This is a problem involving a very simple set of facts, much simpler than cryptocurrency facts, yet it  still manages to intrigue. It demonstrates that in economics nothing is simple.  Here is the problem.

There once was a very upright and very proper Englishman who regularly took his summer vacation on a tiny agreeable Aegean island. The Englishman had returned to the island so many times that his credit worthiness had been established beyond any possible doubt. There was absolutely no chance that this Englishman's bank would fail to honour his cheques and indeed all of them had always been honoured promptly.

Since the Englishman's credit was so sound the islanders were totally happy to allow him to pay by cheque with the certain knowledge that they were good cheques. Indeed, so well-known and trusted was the Englishman on this tiny island that the islanders were happy to accept the Englishman's cheques from each other. For example, if the restaurateur wished to pay the grocer partly with a cheque he had received from the Englishman in payment for a meal, the grocer was happy to accept the cheque. The grocer was then able to buy fuel with the cheque and so on. In this way the cheques circulated around the island forever and were thus never returned to the Englishman's bank for collection.

Who paid for the Englishman's holiday?

I will allow a little time in case any reader wants to offer his or her answer to the question. Then I will say a few words about cryptocurrencies.


Drought Relief Assistance Scheme

The Queensland Government has announced further assistance for graziers affected by drought. At a minimum you must be a member of the grazing industry, have a property in a drought-declared area and operate in Queensland. There are other eligibility criteria.

Subsidies or rebates of between $20,000 and $40,000 per property might be available.                           

The forms of assistance eligible for funding include freight subsidies to transport fodder or  water and a rebate of part of the cost of purchasing and installing water infrastructure for animal welfare needs.

The rules regarding eligibility and funding are quite restrictive but it is worth spending a few minutes to assess whether you meet all the criteria.

You can find more details online Drought Relief Assistance Scheme QLD 

Please give us a call if we can be of any assistance.

Single Touch Payroll - Coming Ready or Not

Single Touch Payroll (STP) begins for most employers on 1 July 2019. From that date, all employers must send their payroll data electronically to the ATO  every time they pay employees.

If employers do not presently have payroll software the ATO will not force them to purchase it but this does not mean that these employers will be exempt from the reporting requirements. The ATO has not yet decided on the reporting options for these employers but it will provide more information in the near future. Some possible options might be a portal or a phone app, a payroll service or the introduction of inexpensive payroll reporting software (under $10 per month). Whatever the options it appears that they all involve the digital world. Photocopying a manual wages book and posting it to the ATO every week is not likely to cut the mustard.

Employers must report not only the current pay run but also year to date gross values of wages, allowances, deductions and PAYG withholding tax for each employee.

Employers must also report all employee superannuation liabilities. The ATO can check these with information from superannuation funds. Presently employers can fly under the radar to some extent if they do not pay super guarantee on time. It appears that from 1 July this will not be possible. The ATO net is tightening.  The ATO will also be able to identify employers who do not remit PAYG Withholding payments on time. Recent estimates indicate the about $2.5 billion per year is not remitted.

Read more…

Fake tax agent scam alert

Currently scammers are coercing victims into parting with money by pretending to be the victim's tax agent. 

The scammer tries to convince the victim that he or she owes money to the ATO which must be paid immediately to avoid the issue of an arrest warrant. The ATO has warned taxpayers that it "will never demand immediate payments, threaten with arrest or request payment by unusual means such as iTunes vouchers, store gift cards or Bitcoin cryptocurrency".

You would think that no-one would fall for such an obvious scam but people do. Last month (November 2018) the ATO received 37000 reports of scam attempts. 

The total money scammed for the month has not been reported yet but one person was conned out of  $236,000.  I have received calls from scammers who were very convincing. 

If you receive any call placing undue pressure on you to make immediate payment, contact your tax agent before you part with any money.                  



If you are a local or state government employee, you will typically be required to contribute a mandatory percentage of your wage to superannuation (usually about 5-6%) which is matched by an employer contribution.  In previous years, unless you have been salary sacrificing this amount, this has been regarded as a non-concessional contribution meaning you cannot claim a tax deduction for it and the super fund does not pay tax on the contribution.

Due to changes made in 2017, all employees can elect to treat these contributions as concessional, meaning you can claim part or all of the contributions made in 2017-18 as a tax deduction on your personal tax return and the super fund will pay tax at a rate of 15% on the contribution.  If your own marginal tax rate is greater than 15%, there is a clear tax advantage.  If you are already salary sacrificing this contribution from your pre-tax salary, these changes will not benefit you because you are already getting the tax advantage.

To claim a deduction for personal super contributions, you need to make the contribution to a complying super fund or a retirement savings account so you need to check eligibility with your fund.  For example, if your contributions are going towards a defined benefit account, they will probably not be eligible.

Other Conditions apply:

  • The tax-deductible contributions are capped at $25,000 from all sources.  This means that the total of your employer contributions, any salary sacrifice you make and your voluntary contributions cannot be more than $25,000 for the year.
  • There are age limitations on super contributions.  People over 65yo must meet a work test to contribute to superannuation.  People over 75yo are not permitted to make additional personal contributions.
  • You will need to complete a declaration to give to the super fund advising you intend to claim a tax deduction.  You will need the acknowledgement of the notice from the super fund before claiming the tax deduction.  This is a simple form but is important because without it the tax deduction is not valid.

For those government and Council employees not currently part of a salary sacrificing regime, this is a great opportunity to claim a significant tax deduction. 

As always, please seek advice from your accountant, super fund or financial planner before proceeding.

Do you own vacant land?

Do you own vacant land? If so, be aware of the proposed changes to the law which will deny deductions for loan interest, rates and other holding costs from 1 July 2019.

Presently in most but not all circumstances, owners of vacant land can claim interest and rates as an income tax deduction (rare) or more commonly as part of the cost base for capital gains tax purposes when the land is sold. If the proposed changes pass through both houses of parliament and receive Royal Asset, these concessions will be lost. There is no need to panic at this stage because the commencement date is a year away and the proposed changes might not even become law. However it is worth monitoring. Vacant land that was purchased twenty years ago, for example, could easily have accrued costs in excess of $20,000. These costs might not be available to reduce a capital gain if the land is sold after 30 June 2019. If you are considering selling it might be beneficial to do so before 1 July 2019. Remember that it is the date of signing the contract that counts and not the settlement date.

As always, we recommend you seek advice from your trusted professionals before selling or buying investments or assets.  


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