UPA Newsletter

In this issue:

• Bookkeeping & Incorrectly Reporting GST
• Modern Awards
• Mortgage & Business Loan Health Check
• Tax Incentives for Saving
• Payroll & HR Services
• Class Action Against Banks
• 2010 Budget Results
• The Importance of Stocktakes
• The Australian Tax Office Crack Down On Fraud

Bookkeeping & Incorrectly Reporting GST

UPA’s Bookkeeping services include assistance with processing and maintaining debtors or creditors, bank reconciliations, MYOB or QB file maintenance, completion, lodgment and payment of monthly, quarterly or annual BAS & IAS; the services even extend as far as general administrative duties.

It is important to remember that the Tax Agent Services Act 2009 stipulates that bookkeepers must be a registered tax agent or BAS agent in order to provide BAS services for a fee. UPA are registered tax agents and our bookkeeping team is backed up by many qualified Accountants.

The importance of employing the services of qualified staff is further backed up by the ATO having identified that there are a significant number of businesses at risk of incorrectly reporting GST.

Common Errors:

• Claiming GST credits without a valid tax invoice
• Incorrectly classifying sales or purchases
• Incorrectly offsetting GST credits against the GST on taxable sales

Common Causes:

• Changes in business structures
• Changes in reporting / accounting systems
• Use of poorly equipped software

Reduce the Risk

• Review current business systems and controls
• Have a second set of eyes review documentation and processing of significant one-off transactions
• Assess employee understanding of reporting systems

If you would like further information on the services provided by UPA, please contact Lianne Shepherd.

Modern Awards

Did you know that ‘Modern Awards’ do not apply to employees who have a guaranteed* annual income of more than $108,300, even if a Modern Award covers the industry in which they work?

* Payments for amounts that cannot be determined in advance (commission, incentive based payments etc), standard superannuation and reimbursements are not taken into consideration when calculating the guaranteed income for the year.

Mortgage & Business Loan Health Check

Several of the major banks have passed on interest rate increases above the Reserve Bank increases in official cash rates over the past year. Is it time you had an experienced lending consultant look at the rate you are paying to see if it is competitive in today’s market?

Wayne Spelleken at UPA is an accredited Finance Broker with several lenders and can review your current borrowings to ensure you are not paying too much. Wayne can also accommodate any new borrowing you may have in mind and in most instances there is no additional cost to you the borrower. It is also important to note that Wayne works for you whereas a Bank Manager works for a particular bank and is unlikely to refer you to another lender who may have a better deal.

Wayne would be pleased to discuss your individual situation and can be contacted at UPA on
(07) 5591 1661.

Tax Incentives for Saving

Taking the lead from the recommendations set out in the Henry Review, the Government has announced a new tax incentive to encourage Australians to save and to boost our national savings.
From 1 July 2011, “individuals” will be provided with a tax discount equal to 50% on up to $1,000 of interest earned on deposits held with any bank, building society or credit union, as well as bonds, debentures or annuity products.

The Government estimates that under this reform in 2011 -2012 approximately 3.3m taxpayers will receive the full benefit, with another 2.2m taxpayers receiving some benefit.
The Government will consult on further details for the incentive including the scope of the discount and whether the discount can apply to interest earned indirectly by individuals, such as through a trust or managed investment scheme. If you want to start saving, now is a great time to start! Consult one of our financial planners to map out an achievable savings plan which will maximise the results gained from this incentive.

Payroll & HR Services

With Payroll and Human Resources administration becoming an increasingly complex role that requires a high level of expertise and no room for error, UPA can now offer their services to assist you through this area of business management.

We can work with you to develop a relationship in which you consider us to be an extension of your own team. Our services not only decrease your ongoing administration duties, but provide you with peace of mind in knowing that your Payroll and Human Resources processes are compliant and that your staff are being taken care of.

1. Focus On What You Do Best

   In most cases businesses owners despise their administration tasks the most! And let’s face it; it’s probably not your area of expertise anyway. Your skills can be far better utilized working in your business.

   If one of your staff members is currently processing your payroll, transferring these duties to UPA will mean that person has significantly more time to work on other tasks. This transfer of duties may even mean that the employment of additional staff can be delayed.

2. Highly Trained Specialists

   Our Payroll Specialists attend multiple training events each year that focus specifically on payroll. In addition, they are continually keeping abreast of legislation changes and requirements placed on employers. This expertise is generally not available internally to small businesses as training and research can be a significant drain on resources.

3. Compliance with Current Legislation

   Aside from keeping your employees satisfied, fines of $33,000 per contravention mean compliance with government legislation should be taken seriously. Outsourcing your Payroll and Human Resources to an expert ensures you meet your obligations as an employer.

4. Ability to Offer Your Employees Online Access

   Employees have access to their pay slips including leave balances and superannuation information and the ability to update personal information via their computer or i-phone at a time that suits them.

5. Maintain Confidentiality of Employee Salaries

   When a business does not have a dedicated payroll person, maintaining employee confidentiality becomes an issue. It can lead to employees comparing themselves with one another which may end in employees feeling undervalued, low morale or increased staff turnover. Outsourcing the service completely solves this problem.

DID YOU KNOW?

1. You have to supply all new employees with a ‘Fair Work Information Statement’ on employment
2. The Fair Work Act is 672 pages and in most cases needs to be read in conjunction with the applicable Award
3. At least 10,000 small businesses in Queensland will be visited by the Fair Work Ombudsman in 2010 as part of their small business focus. This will be on top of investigations conducted by the Fair Work Ombudsmen relating to individual complaints.
   Gold Coast Business News February 2010 – Tim Capelin
4. The courts may order the employer to pay a penalty of up to $33,000 (& the responsible person $6,600) per contravention
   People First Solutions e-Newsletter 5th March 2010

Contact Samantha Pollock or Lianne Shepherd for further information on how UPA can lighten your workload.

Class Action Against Banks

Until very recently, some banks charged up to $60 if your account became overdrawn, went beyond an agreed limit, or if you made a late payment. The true cost might only have been a few dollars at most on each transaction.

As you may be aware, there is now a class action lawsuit starting against banks that have charged these un-necessary fees over the past 6 years. If you have been charged exception fees during this time then you may be able to claim some or all of this money back by signing up to the class action.

It will not cost you anything to join, but lawyers will take a 25% cut of any of the money that is owed to you if the case is successful. You can join the class action by going to the following website address;
http://www.financialredress.com.au and registering your contact details or by calling 1300 473 373 to gain further information.

2010 Budget Results

The 2010 Budget was largely an “unremarkable” Budget for small businesses. Most of the proposed changes will not be implemented for some time but here are some of the relevant Budget highlights:

• The GST margin scheme provisions will be simplified, with effect from 1 July 2012
• The Tax Office will be given $107.9m to focus on stopping the cash economy
• The company tax rate will be reduced to 29% from 2013/14 and to 28% from 2014/15
• The company tax rate for “eligible small business companies” will be reduced to 28% from 2012/13
• From 1 July 2011, individuals will be entitled to a 50% discount on up to $1,000 of interest earned
• The immediate write-off for assets of small businesses will be extended to assets valued at less than $5,000 from 1 July 2012
• The superannuation guarantee charge (SGC) will be increased by annual increments until it reaches the plateau level of 12% by 2019/20
• The entitlement to the SGC will be broadened by lifting the maximum age threshold from 70 to 75 years of age
• The concessional contributions cap will be raised to $50,000 per year for workers who are 50 and over and who have superannuation balances of under $500,000
• Changes to the Superannuation Contributions “10% Rule”

  The general rule is that if you are an “employed” person, you are not eligible to make deductible personal superannuation contributions. However, there is a rule that allows persons whose wages and reportable fringe benefits total less than 10% of their gross assessable income to make deductible personal contributions. In previous financial years, employed persons would often salary sacrifice their salary/wages (“income”) into superannuation in order to reduce their “income”. The benefit of this was that if their income from salary/wages was less than 10% of their gross assessable income then they would be eligible to make deductible personal contributions under “the 10% rule”. For the current financial year this rule has changed and now reportable superannuation contributions are added to the “income” amount (in addition to wages and reportable fringe benefits), thus making the 10% rule a lot harder to satisfy.

• Superannuation Contribution Limits

If you are aged 50 or more you have a total deductible contribution limit of $50,000. If you are aged 49 or younger then you are restricted to a deductible limit of just $25,000. Please note that these limits are from all sources and include any contributions made to satisfy obligations under the Superannuation Guarantee legislation (the 9% paid on wages).If you would like to discuss any of the above mentioned budget results or if have any questions as to how these may impact your financial matters please give us a call so we can discover the best options available to you.

The Importance of Stocktakes

Inventory (stock) is the most valuable monetary asset of a business. While it is the most tangible, it is also the hardest to control/account for. Stocktaking, particularly at the end of the financial year, is essential in order to evaluate the business’s balance sheet, operating profit/loss and overall performance. It is the best way to ascertain the true financial cash position of your business. The ATO requires all inventory to have an accurate value, a rough estimate is not acceptable. Ongoing and cyclic stocktaking of high turnover items will provide you with the benchmarking and milestones that determine your management capacity in regards to shrinkage and spoilage. Valuing closing stock at cost, replacement or market value is also a ‘must do’ before the EOFY.
The net movement in stock between the start and end of the financial year is assessable/(deductible) for income tax purposes.

• If closing stock is > opening stock, the difference is treated as assessable income;
• If closing stock is < opening stock, the difference is taken as an allowable deduction.

We take this opportunity to remind all valued UPA clients that have trading stock to carry out an in-depth stocktake before June 30 as the EOFY stocktake is the basis for taxation reporting and the most accurate assessment for profit and loss reports.

The Australian Tax Office Crack Down On Fraud

Tax Commissioner Michael D’Ascenzo has said 489 people were convicted between 1 January and 31 March 2010 for tax and superannuation offences. The prosecutions range from offences such as failing to lodge forms to serious fraud such as GST refund fraud.

A head sentence of 3 years 3 months has been handed down to a Perth accountant in the Supreme Court of Western Australia, after pleading guilty to committing a $27 million tax fraud. Trevor Thomson, was sentenced for conspiring to dishonestly cause a loss to the Commonwealth between the 1999 and 2001 financial years. The case forms part of the Operation Wickenby taskforce aimed at dealing with abusive secrecy haven schemes.

“These prosecutions demonstrate our commitment to protect honest citizens from those that seek to abuse Australia’s tax and superannuation systems,” Mr D’Ascenzo said. “People who commit serious fraud, don’t declare all their income or fail to meet their obligations, cheat the majority of the community who do the right thing.”

The ATO use various methods of detection including data matching, comparing third party information and analysing industry norms as well as audits, reviews and investigations. This financial year the ATO have invested in new technology designed specifically to help identify sophisticated, organised activities through to the most basic of scams.

Although systems are becoming more sophisticated in the early detection of non-compliance, the ATO have a strong focus on helping honest taxpayers. If you are struggling to meet your tax obligations the ATO advises people to contact them directly or to have your tax agent make contact to arrange flexible payment options.

For more information on the ATO’s crack down on fraudulent behaviour visit www.ato.gov.au.