Posted in: money
In an effort to minimise physical contact during the global pandemic, most businesses are making the switch to cashless payments. While contactless credit cards and mobile wallet applications remain the most common type of cashless payments, many other methods have emerged in recent times. In the event that your business is also looking to make the switch, here are a few cashless payment types to be aware of.
Radio-frequency identification (RFID):
RFID uses radio technology to track tags containing electronic payment and banking information. RFID tags are most commonly attached to wristbands, watches or badges and can be scanned using mobile phones and RFID system technologies.
RFID tags can also be used at business events or service-providing organisations to keep track of clients while also acting as their digital wallet.
Unstructured Supplementary Service Data (USSD):
USSD services are another real-time cashless payment method which require a mobile network. With the USSD method, clients must dial a USSD code on an interactive menu provided by the business (could be a mobile phone), which will then allow clients to make payments to chosen recipients. The USSD code is dependent on a client’s mobile network and in order to make successful payments, clients must have their bank accounts correctly linked to their mobile phone number.
Quick Response (QR) Codes:
A QR code is a two-dimensional gridded pattern of black squares and is a viable cashless payment method as long as both clients and businesses have modern image-reading and camera technologies. Payments made through QR codes require a user to scan the QR code of a merchant to complete the transaction and can be done through banking apps or third-party payment applications on mobile phones.
While it may be tempting to make an immediate switch into cashless payment methods, the technology required to support cashless transactions is a costly investment. Before jumping the gun and spending money you do not need to, take note of which cashless payment methods would best accommodate your clients’ needs and fit into your existing business operations.
Posted in: business
Enforcing health precautions is an essential step to creating a safe workplace and giving your employees peace of mind, especially during the current pandemic. Businesses looking to invite their employees back into the office after the easing of lockdown restrictions should implement safeguards to ensure their workplace is a safe one.
Conduct a COVID-19 risk assessment
Before opening your office to employees, conduct a COVID-19 risk assessment with Safe Work Australia. A risk assessment will include an evaluation from Safe Work Australia regarding your business’:
- responsibilities and leadership,
- worker engagement, alternative means of communication and participation levels,
- COVID-19 hygiene principles (such as the 4 metre square requirement),
- hierarchy of controls, and
- employee health and safety plan.
The progression of additional business activities will also be assessed. For example, the safety of business trips when travel restrictions are lifted.
Implement cleaning processes
Invest in frequent cleaning services and processes to lower transmission risk and give your employees peace of mind. In addition to hiring a cleaning service, you can also keep your workplace safe by providing employees with disinfectant solutions for door handles, light switches and keyboards.
Other cleaning and hygiene processes to implement include:
- Distributing hand-sanitizer
- Reminding employees to wash their hands
- Providing PPE wherever necessary
- Minimising physical interaction between your employees (e.g. using disposable condiments, laminating documents for easy cleaning)
Support your employees’ mental health
Supporting your employees’ mental health is just as important as their physical health. To create an environment that your employees feel comfortable and safe to work in, provide aid in the form of workplace flexibility, therapy and counselling services, home-to-business transportation options and financial advice. Additional services such as child-care can also be helpful to supporting your employees’ mental health.
Posted in: super
Self-managed super funds (SMSF) may be required to lodge a transfer balance account (TBA) report by 28 July 2020 in the case of a TBA event.
A TBA report will need to be lodged with the ATO in the event that both of the following apply:
- A TBA event occurred in a member’s SMSF between 1 April and 30 June 2020,
- Any member of the SMSF has a total super balance greater than $1 million.
SMSFs will also need to complete this report when a member needs to correct information about a TBA event that they have previously reported to the ATO or are responding to a commutation authority.
According to the ATO, an event is classified as a TBA event if they result in credit or debit in a member’s transfer balance account. Such events include:
- Super income streams in existence just before 1 July 2017 that both continue to be paid on or after 1 July 2017, or were in retirement phase on or after 1 July 2017,
- Super income streams that stop being in retirement phase,
- Limited recourse borrowing arrangements (LRBA) payments entered into on or after 1 July 2017,
- LRBA payments resulting in an increase in the value of the member’s superannuation interest supporting their retirement phase income stream,
- Personal injury (structured settlement) contributions that occurred post 1 July 2017,
- Voluntary member commutations.
There are a number of ways you can lodge your TBA report with the ATO:
- Lodge online by completing an interactive online form in the Business Portal
- Lodge online by completing an interactive online form with a tax agent and filing through online services
- Lodge a paper report (you can report up to four events for the same member on a paper report)
- Use bulk data exchange (BDE) to submit through file transfer facilities. You will generally need support from a software provider to meet BDE specifications.
Posted in: tax
The end of the financial year has rolled around again, but this time, COVID-19 may affect the way you fill out your tax return. The ATO has released a range of methods to make tax time easier for businesses and individuals experiencing unprecedented circumstances.
How JobKeeper will affect tax returns
Sole traders receiving JobKeeper payments on behalf of their business are required to include these payments as assessable income for the business. Employees receiving JobKeeper will see that those payments have been automatically filled out in their tax return.
Individuals who have had their wages increase due to JobKeeper should identify whether they have been bumped into a higher tax bracket as a result. If an individual is working multiple jobs and receiving JobKeeper at one of these positions pushes them into a new tax bracket, they may be faced with a higher tax bill on their return if their other employers had continued deducting tax at their original lower rate.
How JobSeeker will affect tax returns
JobSeeker payments are considered taxable income. The ATO will automatically upload JobSeeker details in the ‘Government Payments and Allowances’ section of recipients’ tax returns. However, recipients are advised that there may be a delay in these JobSeeker details being updated, potentially until the end of July. The ATO recommends delaying tax return lodgements until these details are finalised. Recipients that wish to complete their returns prior to this must ensure they include these details themselves, as leaving out assessable income can slow down the return process or result in a bill later.
COVID-19 protective equipment
Occupations that require public interactions may be able to claim personal protective equipment (PPE), including:
- Anti-bacterial spray
This would typically apply to industries such as healthcare, retail and hospitality. Many workplaces now have this PPE available for employees, however, employees who must pay for their own COVID-19 PPE and are not reimbursed for it will be able to make a claim.
Working from home
The ATO has introduced a new ‘shortcut method,’ which applies from 1 March 2020 to 30 June 2020. Under this new method, employees working from home as a result of COVID-19 can claim expenses incurred at a rate of 80 cents for each hour worked from home. Employees must keep a record of the hours they worked from home as evidence to support their claim.
Deductible running expenses include:
- Utilities such as heating, cooling and lighting.
- Cleaning costs for your work area.
- Mobile or landline phone expenses for work calls.
- Internet connection.
- Computer consumables and stationery.
- Repair costs for home office equipment and furniture.
- Depreciation of home office equipment, computers, furniture and fittings.
- Small capital items such as a computer (purchased for the purpose of working from home) can be claimed if they cost under $300. If the cost exceeds $300, the decline in value can be deducted.
Posted in: business
Expanding your business to open in multiple locations can offer more opportunities and profitability. However, managing one location can be challenging enough, so it is crucial to examine and prepare for the implications of opening up a second store. Here are some considerations that business owners need to keep in mind before deciding to open up a new branch.
How successful is your current business?
Your current business should be stable and successful before you open up multiple stores. If your business is struggling in key areas such as cash flow, sales, employee skill sets, and customer retention, then it’s a good idea to address these needs first, otherwise, your new locations are likely to face the same issues. Assess your current store’s shortcomings and consider whether they will also put your new locations at risk.
What are the characteristics of the new locations?
Choosing the right business location plays a key role in the success of your business. Before branching out, research potential locations and consider how areas could affect your business due to factors such as popularity, business competition, demographics, transport accessibility, rent prices, and attractiveness to employees. Assess whether the differences between your current and potential new locations will require you to make any changes to your business – perhaps you will have to adjust your marketing strategy, prices, or products/services depending on your new demographic.
Do you have the resources to expand?
Expanding your business will require extra financial commitments for rent, utility bills, more inventory and equipment, employees, insurance, and extra advertising. While your income may increase with your new location, remember that it may take months to make the returns required for expansion. It is therefore important that you are already financially secure before opening up a new store to avoid overextending your funds and putting your business at risk. If you don’t have the assets required, a business loan is an option provided that you can prove your financial ability to repay the loan.
Opening up a new location also means that you will have to manage your time between the two branches. This may require delegating business responsibilities, hiring managers, or promoting current employees to management positions. To keep your new business on track and identify early risks, you may also have to initially spend more time at your new location.
Posted in: super
Self-managed super funds can carry on a business providing the business is allowed under the trust deed and operated for the sole purpose of providing retirement benefits for fund members.
Carrying on a business through an SMSF does have restrictions that other businesses do not have, such as entering into credit arrangements or having overdrafts.
SMSF trustees that carry on a business through their fund must adhere to the sole purpose test. The ATO looks for cases where:
- The trustee employs a family member.
- The ‘business’ is an activity commonly carried out as a hobby or pastime.
- The business carried on by the fund has links to associated trading entities.
- There are indications the fund’s business assets are available for the private use and benefit of the trustee or related parties.
The same regulatory provisions still apply to funds that carry on a business, i.e, SMSF investments must be made on a commercial ‘arm’s length’ basis, business activities must be conducted in accordance with the SMSF’s investment strategy, collectables and personal use assets cannot be displayed at the business premises and so on.
The SMSF cannot be involved in the following business activities:
- Selling an SMSF asset for less than its market value to a member or relative of a member.
- Purchasing an asset for greater than its market value from a member or relative of a member.
- Acquiring services in excess of what the SMSF requires from a member or relative of a member.
- Paying an inflated price for services acquired from a member or relative of a member.
Posted in: tax
New car threshold amounts will be implemented from 1 July 2020. Understanding the new thresholds and how they may affect your small business operations and vehicle usage will be important in preparing you for the financial year ahead.
There is an upper limit on the cost you use to work out the depreciation for the business use of your car or station wagon (including four-wheel drives). The maximum value you can use for calculating your depreciation claim is the car limit (irrespective of any amount you were paid for a trade-in) in the year in which you first used or leased the car.
For the 2020-21 financial year, the upper cost limit is $59,136 including GST.
Goods and services tax (GST):
Businesses registered for GST with motor vehicles used solely for business purposes are entitled to claim a credit for the GST included in the price of the vehicle, provided they have a tax invoice.
In the event that you purchase a car and the price is more than the car threshold, the maximum amount of GST credit you can claim is one-eleventh of your car limit amount. Keep in mind that you cannot claim a GST credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.
Luxury car tax (LCT):
You are required to pay LCT if you’re registered or required to be registered for GST and you sell or import a luxury car.
LCT applies to motor vehicles designed to carry a load of less than two tonnes and fewer than nine passengers. LCT also applies to a car purchased by a person with a disability even if the car is GST-free. However, disability-related modifications are not subject to LCT. The LCT value of a car includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.
Cars with LCT over the LCT threshold attract an LCT rate of 33%. From 1 July 2020, the LCT threshold will increase to $68,740. Additionally, the LCT threshold for fuel efficient cars will increase to $77,565 for the 2020-21 financial year.
Posted in: money
Running a business is challenging enough, and having to deal with bad debts can add an unneeded layer of stress for you and your team. The easiest way to handle bad debts is to avoid them in the first place – here’s how.
Do a background check:
Before you enter into an agreement with a client or other businesses, make sure that you know who you’re dealing with and do some research. Make sure they are legitimate, still in operation and look for any bad reviews and feedback concerning other people’s experiences with them. Take into consideration whether they ask you for discounts or complain that your fees are too high. If you get the idea that the client may not pay, it might be safer to avoid the job instead.
Have clear payment terms:
In your client agreement or contract, include payment terms that clearly state payment dates penalties for late payments. Both parties should agree on these payment terms prior to entering into a contract. Conditions for late payments could include interest fees, fines, or the cessation of supplying your goods and services to them within a specified time period.
Ask for a deposit:
When you ask for a deposit and the client does not want to pay, it shows that they are probably not trustworthy and may not be willing to make a full payment. If the client does pay you a deposit or but does not make a final payment, then at the very least you will not have lost as much money as you would have without an initial payment.
Setting up an automatic payment system for your clients eliminates the chances of them forgetting to pay or refusing to pay unless they actively cancel their payments. Automatic payments can work well if you have instalment fees or a subscription-based service that requires periodic payments.
Follow up quickly:
Making contact with clients soon after a missed payment will demonstrate your expectations to be paid in a timely manner. Often, this means that clients managing cash flow problems are more likely to prioritise payments to your business rather than their other creditors who have more relaxed payment systems.
Posted in: business
Businesses working from home due to social distancing restrictions can take the opportunity to learn from the experience and consider new work structures coming out of COVID-19. This could mean increased flexibility for employees when it comes to working remotely and adaptable hours. Here’s why flexible work arrangements with your employees may be beneficial for your business in the long term.
Flexible work arrangements can increase the productivity of employees by allowing them to work when they feel most motivated. Some people may naturally be more productive at night time and do their work then, which would not be possible with regular office hour restrictions. Remote work also saves time on excessive staff chatter and workplace distractions, such as ringing telephones and colleague drop-ins. Offering flexible work arrangements can show your employees that their lives are valued, which can lead to higher levels of performance and hard work to justify the flexible arrangements.
When employees are working from home more frequently, it means that your office doesn’t have to sustain as many people and you can reduce rent and utility expenses. This doesn’t mean that your employees have to pay too much more; the ATO has introduced an easier way of deducting work from home costs during the COVID-19 period called the ‘shortcut method.’ This allows employees to deduct 80c per hour they work from home to compensate for running expenses.
Businesses that exclusively depend on employees being physically present may be missing out on ideal workers who live too far or require more flexible arrangements. Modern job seekers are often on the lookout for positions that offer greater flexibility, rather than the regular 9 to 5 in the office. Highlighting workplace flexibility in your job advertisements can attract more prospective talent as physical barriers are eliminated.
Remote work can improve the overall physical and mental wellbeing of your employees. One perk is that they may be able to be better rested and eat a proper breakfast in replacement of the morning commute. Work flexibility will also enable them to work around family commitments, which can boost their quality of life and happiness. This can raise morale and improve their quality of work by reducing the risks of fatigue and burnout.
Workplaces that allow employees to maintain a healthy work-life balance are more likely to retain their employees for long terms. This can benefit businesses by reducing the frequency of hiring and training periods, which can save a lot of money and productivity while continuing to grow corporate knowledge in existing employees.
Posted in: super
Employers with a self-managed super fund (SMSF) looking to protect their business assets can consider transferring their business real property into their SMSF.
Transferring business property into your SMSF is useful to protect your assets in the event of your business failing or facing litigation. It is possible for SMSF members to transfer business real property (land and buildings used exclusively for the business) to their SMSF by using a combination of methods.
An in-species transfer in the context of a business property refers to the ownership transfer of a property from one entity to another without the need to convert it into cash. During an in-species transfer, the value of the property is considered a contribution to your SMSF and is restricted by CGT regulations and contribution caps.
Cashing in your SMSF
You can use the cash available in your SMSF to buy your business property at market value as a normal cash purchase. The property must first be valued by an independent and qualified party before this is allowable. SMSFs that do not have enough sufficient capital to do this may consider using their non-concessional contributions cap to cover the outstanding balance.
Limited recourse borrowing arrangement (LRBA)
In the event that you do not have enough cash in your SMSF to outright buy your business property, you can apply for a loan using an LRBA. An LRBA can be obtained through a third-party lender, including your own business. You can borrow funds for your SMSF under an LRBA from your own business. However, before applying for an LRBA, consider its legal complexities and whether your SMSF will be able to maintain loan repayment fees on top of existing fees you may have, such as member pensions and accounting and auditor fees.
CGT retirement concession
The CGT retirement concession allows business owners exemption from CGT on business assets up to $500, 000 over a lifetime. If you are over 55, there are no associated conditions, however, if you are under 55, then you must place the money into a superannuation fund to receive the exemption.
This means that if you are under 55 and wishing to transfer a business real property into your SMSF, you can potentially do so without incurring any CGT liability (up to $500, 000).