GST fraudsters caught out

Goods and service tax (GST) fraudsters are more than likely than ever to be caught out this year, as the ATO plans to increase its audits on GST refund claims by small businesses and investigate cases of serious evasion. As a result of government funding, an extra 11,500 cases will be completed in the 2011-12 financial year. Last year, 28 people were prosecuted for more than $17 million worth of GST-related fraud offences.

Tax deductible expenses

Not all purchases made by a business will be tax deductible. Those that are must be related to the earning of income, but even then there are some exceptions.

Some costs have a private component, such as motor vehicle expenses, that must be apportioned between business and private use. Other costs may be totally related to a business, such as the registering of a patent or trademark, but are classed as a capital and therefore not tax deductible.

Some examples of expenses that could be claimed however, include employee salaries and super contributions, advertising, rent or leases, bank fees, interest on loans, freight and insurance, repairs, promotions and giveaways, depreciation of assests and the costs of a registered tax agent.

For more information on what expenses are tax deductible for your business and what records you should be keeping for these, please feel free to contact our office.

Aussie customers lost to overseas stores

Big businesses like Myer and David Jones are considering new ways of attracting customers after The Commonwealth Bank released information showing a massive turn in the way Australians are doing their shopping.

It is estimated that last year, Australians spent $9.5 billion on online shopping sites, $4.2 billion of this on overseas sites. The ease and widespread access of the internet, coupled with a growing trust for online retailers, is seeing shoppers take advantage of the high Australian dollar and reap bargins from overseas stores.

While slashing prices hasn’t seemed to stem this flow, department stores are reviewing their pricing policies and trying other strategies, such as offering their online customers free shipping, in order to regain the nation’s retail loss.

With these changes in shopping trends and the growing popularity of online webstores, Australian small businesses are being encouraged to modernise their business structures to help bring some of the $5.3 billion, currently being spent overseas, back to our shores.

Support for women in small to medium businesses

The Minister for the Status of Women, Kate Ellis and the Minister for Small Business, Nick Sherry have announced that the Australian Government will contribute $20,000 to a project promoting greater participation of women in Australian trade and business.

With more than 700,000 female business operators in Australia, businesswomen make a powerful contribution to the Australian economy.

The Australian Women’s Chamber of Commerce, an organisation which was established in 2010 to advocate on behalf of women in business, will manage the National Businesswomen Research Project to help promote women’s participation in more small to medium enterprises.

Do you have to pay the Flood Levy?

As of 1 July 2011, the government’s new flood levy will be put in place and will be used to assist communities to recover from recent natural disasters. The levy will apply for the 2011-12 income year and will be paid by all taxpayers earning over $50,000 who were not affected by a declared natural disaster. Tax rates are as follows:

• Income of $0 – $50,000 = exempt.
• Income of $50,001 – $100,000 = 0.5 cent for each $1 over $50,000.
• Over $100,000 = $250 + 1 cent for each $1 over $100,000.

Carbon tax and your business

The Federal Government’s Carbon Tax Scheme will, provided that legislation is passed, come into effect from 1 July, 2012 and could hurt businesses nation-wide.

Under the scheme, any facility that produces at least 25,000 tonnes of carbon dioxide equivalent per year will face a levy of $23 per tonne on emissions. Although aimed at the country’s top polluters, price increases passed on to consumers by large gas and electricity companies will mean that Australian businesses will suffer a hit.

Small businesses need to start work to reduce their energy footprint in order to pay their future power bills.

Changes to unfair dismissal

On 1 January 2011, the definition of what constitutes a small business changed. Businesses must now have fifteen or less employees – including full time, part time and regular casual employees – to be considered a small business.

Companies no longer regarded as ’small business’ will not be able to rely on the small business unfair dismissal exemption. this means that employees will now qualify for such coverage after six months of employment, as opposed to the previous twelve.

Understanding employment contracts

A recent decision in the New South Wales Court of Appeal is a reminder for businesses throughout the country to ensure that bonus provisions in contracts of employment properly reflect the intent of both parties.

• It may now be considered breach of contract to not set performance criteria and not assess employee performance, when a contract states that you will do so.
• Making a bonus ‘discretionary’ will not excuse an employer from other obligations to consider how a bonus might be assessed.
• If a bonus is able to be withheld at the discretion of the employer, even if the performance objectives have been achieved, the contract must clearly state that as the case.

Paid parental leave obligations

As of 1 July 2011, businesses which fail to fulfill the Federal Government’s new ‘paid parental leave’ obligations will receive penalties imposed by the Fair Work Ombudsmen.

Businesses should update their payroll systems to make sure they are fulfilling all relevant obligations. These include:

• Withholding tax from Parental Leave Pay under the usual PAYG withholding arrangements.
• Include Parental Leave Pay in the total amounts on their employee’s annual payment summaries.
• Provide bank details, employee’s usual pay cycle and pay cut off details to the Department of Human Services Family Assistance Office.

Super contributions due

This tax year the ATO will be targeting employers who fail to pay super for contract workers. Many employers fail to realise that some contractors are considered employees under super guarantee law.

If employers fail to pay their super obligations, they will have to lodge a Super Guarantee Charge Statement. This will pay the super guarantee charge to the ATO.

Employers should seek advice in order to determine whether their contractors are eligible for super contributions.