We are writing to advice you of some exciting news! We have moved our business to a new location in Narre Warren.

Our new business address is Level 1, 64 Victor Crescent Narre Warren VIC 3805.

We are still happy to meet you in our Dandenong or Narre Warren North offices if that’s of convenient to you.

Our postal address however, will remain the same as, PO Box 815 Endeavour Hills VIC 3804

Please note: With the current COVID-19 restrictions, we will be conducting phone appointments throughout the 2020 tax season, until further notice.

STAY SAFE!!

Our 2020 tax return checklist is now available in our website. Please go to https://www.atpartners.com.au/wp-content/uploads/2020/08/Check-List-Personal-2020.pdf

Hello Everyone,

Hope you are all well and keeping safe .

Please find below details of the most recent incentive introduced to employers & individuals.

JobKeeper Payment

The Government has announced temporary scheme called a “JobKeeper Payment” for employers, employees and sole traders. Businesses impacted by the coronavirus will be able to access a subsidy from the Government to continue paying their employees. Affected employers will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum period of 6 months.

Self-employed people and sole traders with or without employees, may be eligible to receive the JobKeeper Payment if their turnover has reduced.

Please click below for more details.

https://www.business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/jobkeeper-payment-for-sole-traders

Find more details and to check your eligibility, please click this link.

https://www.business.gov.au/risk-management/emergency-management/coronavirus-information-and-support-for-business/jobkeeper-payment

If you are eligible, please register your interest asap using this link.

https://www.ato.gov.au/general/gen/JobKeeper-payment/

JobSeeker Payment-Individuals

The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months.

To see your eligibility, please click the link below

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Income_Support_for_Individuals_0.pdf

Victorian Business Support Fund

The Victorian Government has launched the $500 million Business Support Fund to help small businesses survive the impacts of the coronavirus (COVID-19) pandemic and keep people in work. Funding of $10,000 per business is available and will be allocated through a grant process.

To see your eligibility and to apply, please click the link below. Applications close on 01 June 2020.

https://www.business.vic.gov.au/support-for-your-business/grants-and-assistance/business-support-fund

Should you have any questions, please do not hesitate to contact me.

Stay Safe!!

Kind Regards,

Tharanga Pathiranage CTA

Partner

Message from A.T. Partners Accountants & Business Advisors Pty Ltd

Due to the COVID-19 Outbreak, our office is temporally closed for the public.

Our usual business services are still continuing as normal via phone and online.

Should you have any questions, please contact us on 03 9794 7058 or email [email protected]

Please visit https://www.dhhs.vic.gov.au/coronavirus if you require more information about COVID-19

STAY SAFE EVERYONE!!

Director – Tharanga Pathiranage

Dear Valued Client,

In these unprecedented times, we wanted to reach out to let you know what we are doing to support our team, our clients, and our community to get through the uncertainties we all face.

In accordance with our Business Continuity Plan, we have already taken measures to ensure that we are able to provide the same level of service with as little impact as possible to our clients and employees.

Being healthy and safe

Our priority is to make sure we’re focused on the health, well being and safety of our team and our clients. We’ve also deferred any non-essential travel for the foreseeable future.

Ways we can support you

Most of the data and communications are stored in the cloud and currently all of our staff are set up with the appropriate technological infrastructure to work from home.

The Australian Government’s position and the advice of health organisations is that most infectious diseases can be controlled with improved social distancing, therefore we have implemented the following measures:

• Encouraging working from home arrangements (as implemented above)
• Encouraging meetings via teleconference or via Zoom (inclusive of both Staff and Client meetings).
• Ensuring all staff are aware of how to protect themselves and others as per the guidelines listed on the Australian Government Department of Health’s website.

Our lines of communication will remain open and we will continue to operate during business hours.

In the event of any lock down or isolation measures being enforced by the government, we believe A.T Partners will be well-equipped to continue assisting our clients with little to no disruption.

We do note that some services such as registered post mail or face-to-face meetings may be impacted by Government regulations.

Advising clients in troubled times

The Australian Taxation Office (ATO) has introduced various stimulus packages to support the Australian Businesses, during this crisis. We will be actively reviewing client eligibility against their criteria. Below is the government issued fact sheet about cash flow assistance for businesses.

https://treasury.gov.au/sites/default/files/2020-03/Fact_sheet-Assistance_for_businesses.pdf

The Australian Taxation Office (ATO) will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak. More information can be find in below ATO web link.

https://www.ato.gov.au/Media-centre/Media-releases/Support-measures-to-assist-those-affected-by-COVID-19/

We hope this advice provides you with clarity on our continued professional services and we will continue to monitor this situation and keep our clients updated accordingly.

Should you have any questions or concerns, do not hesitate to contact me directly, or alternatively you may wish to contact our office.

Stay safe everyone!

Thanks

Kind Regards,

Tharanga Pathiranage CTA

1. TS 1: Salary Packaging Private Motor Vehicles
   Makes private motor vehicles tax deductible (average $3,000 tax saving pa).
2. TS 12: Concessional Super Contributions
   $25,000 deductible contributions cap (per taxpayer).
3. TS 32: Change Ownership of Assets
   Can create upfront or ongoing tax deductions (or both).
4. TS 85: $30,000 Asset Write-Off
   Upfront deduction for depreciating assets.
5. TS 86: Employee Meal Expenses on Business Premises
   Makes private meals tax deductible (average $5,000 pa).
6. TS 101: Reducing Super Guarantee Payments
   Eliminates super guarantee payments to contractors (saving the 9.5%).
7. TS 114: Share Buybacks
   Enables shareholders to access companies paid up capital and retained earnings.
8. TS 131: Companies
   27.5% company tax rate (and reducing to 25%).
9. TS 146: Transferring Business Premises into SMSF
   Provides asset protection benefits plus tax savings on rental payments made.
10. TS 190: Utilise Business Goodwill to Pay Out Your Private Mortgage
    Saves the average business owner $10,000 pa in tax.

Profit Improver Strategy | Raise Your Prices 10%

Raising your selling prices will increase sales when your product or service has an inelastic demand curve i.e. when you raise prices and there is minimal or no change in volume sold. This is a profitable strategy when higher prices produce greater gross profits due to increased profit per unit, even if volume has fallen.

Additional benefits of increasing prices include:

• Raising your prices can move you to a more upmarket clientele.
• Allows you to distinguish yourself from your competition.
• Increases the perception of quality so can actually lead to increased sales volumes (in some cases).
• Eliminates low quality price sensitive customers.
• Allows you to sustain your desired profit margins.
• Price increases may position your product or service as a ‘premium product’.

Factors to consider:

• Determine whether your product or service has an inelastic demand curve – there is no point increasing your selling prices if it results in a substantial decrease in volume sold.
• Find out what your competitors are offering and their current pricing.
• Determine your objective in increasing prices – i.e. to increase sales, increase gross profits, increase the perception of quality, etc.
• Calculate the financial effect of higher prices and lower volumes on your gross profit and net profit.
• Increasing selling prices often requires the business to increase their service levels at the same time.
• Consider the effect of increasing prices on business reputation, brand quality, and credibility.

Case Study | Small Business Saves $8,108 Tax

Peter is a small business owner who wants to save tax and reduce his child maintenance payments.

Facts:  

• Peter’s business has a taxable income of $77,000 and is growing (taxable income is expected to double next year).
• Peter is divorced and pays child support of $12,000 per year.

Accountant’s Advice:

• Tax Strategy 2: Home office occupancy costs – business operated from home (seeing clients, administration, etc.).
• Tax Strategy 105: Rollover from sole trader to company – Move to company structure for asset protection purposes and to take advantage of the 27.5% company tax rate.
• Tax Strategy 123: General pool balance less than $30,000 – Write-off the $30,000 general pool balance.
• Tax Strategy 161 – Gift to clients.

Results:

• Peter saves $8,108 tax (taxable income reduced by $23,501).
• Child support payments are reduced by $6,000 pa.
• Accountant receives tax planning fees of $1,700 (20% of the tax saved).

If you would like to reduce the amount of tax you are paying, please give us a call. 90% of the time, we can legally reduce your tax liability.

Tax Savings Strategy 221 | Employee Remuneration Trusts

An Employee Remuneration Trust (ERT) arrangement involves a trust being established to facilitate the provision of payments and/or other benefits to employees of an employer. The trustees provide the benefits at the direction of the employer. This strategy is useful to retain and reward employees that are critical and important to the business’s success.

A contribution is deductible to an employer where:

• It is an irrevocable payment of cash.
• The employer reasonably expects their business to benefit from the contribution via an improvement in employee performance, morale, efficiency or loyalty, and
• The contribution is intended to be entirely dissipated in remunerating employees of the business within a relatively short period of time (less than 5 years).

The contributions to an ERT will not be deductible when the contribution is applied for the benefit of owners, controllers or shareholders or when the contribution is capital in nature. The prepayment provisions also need to be considered.

Business Structure Strategy | Limited Partnership

A limited partnership is one where the liability of one or more partners for the debts and obligations of the business is limited. A limited partnership consists of one or more general partners (whose liability is unlimited) and one or more limited partners.

In a limited partnership:

• The general partners manage the business and have the power to enter binding agreements on behalf of the partnership; their liability for the debts and obligations of the limited partnership is unlimited.
• The limited partners are passive investors; they must not manage the business and their liability for its debts and obligations is limited in proportion to the amount they have agreed to contribute to the partnership.

Implementation process:

1. Depending upon the state, limited partnerships are either regulated by the relevant state’s Partnership Act or Limited Partnership Act. Where a Limited Partnership Act applies then limited partnerships generally only come into existence when the partnership is registered with the state government body (and the applicable fee paid).
2. Limited partnership agreements should be drafted by a solicitor.

Profit Improver Strategy | Upselling

Upselling can involve marketing more profitable services or products, or just exposing the customer to other options that were not considered. Upselling is more successful when the up-sellers know more about the individual customer and understand what the customer values and wants. This information includes the customer’s background, budget, preferences, interests, and previous buyer history.

Research shows that approximately 25% of customers will purchase the recommended upsell product or service. Most companies teach their employees to upsell products and services and to offer incentives and bonuses to the most successful personnel. Care must be taken with upselling as a poorly trained employee can offend a regular and loyal customer and damage their trust and credibility. Also, with some businesses, such as car sales, the customer’s perception of the attempted upsell can be viewed negatively and impact on the desired result.

The secret to successful upselling is:

• Make the upsell after the original purchase.
• Make the upsell relevant to the customers original purchase.
• Limit upselling recommendations. i.e. only one or two.
• Discount the products/services in the upsell.
• Successful upselling begins with a solution to the customer’s problems – always add value.
• Never try and upsell items that are more than 25% of the original order.

If you would like to reduce the amount of tax you are paying, please give us a call. 90% of the time, we can legally reduce your tax liability. 

Smartwatches are wearable computers in the form of wristwatches. Their functionality is similar to smartphones and includes:

• Mobile apps.
• Mobile operating systems.
• Wi-Fi/Bluetooth connectivity.
• Portable media players, with FM
  radio and playback of digital audio and video files.
• Making and receiving phone calls.
• Sending and receiving emails.
• Digital cameras.
• Heart rate monitors.
• MicroSD cards (which are recognised as storage
  devices by many other kinds of computers).

The ATO deems smartphones to be portable electronic devices and as such they are an exempt fringe benefit when used primarily for the employee’s employment. Businesses can provide these devices to employees under salary sacrifice arrangements.

Even when employees salary sacrifice the cost of the items with their employers, they still benefit from saving the GST and having an upfront tax saving (instead of purchasing the item and depreciating it over several years in their tax return).

Business Structures Strategy | Limited Company (Limited by Shares)

Proprietary limited companies are the most common company structure in Australia and account for 98.5% of all companies. Generally, they are the most appropriate company structure for small businesses.

A proprietary limited company (also known as a Pty Ltd company), cannot raise capital from the public, and is restricted to a maximum of 50 non-employee shareholders.  Shareholders personal assets are protected due to the companies limited liability status.

The advantages of operating a business through a proprietary limited company include:

• 30% tax rate (standard company tax rate).
• 27.5% tax rate for companies with a turnover less than $50m pa (falling to 25% in 2021/22).
• Limited liability – this ensures shareholder liability is limited to the capital invested in the company.
• Ability for investors to pool their investment funds together.
• Ability to introduce new shareholders, and change current shareholders.
• Easier succession planning (as companies have perpetual succession).
• Extra tax saving opportunities/strategies. For example, the owners’ private motor vehicles can be salary packaged by a company, but not a sole trader.
• Privacy – the ability to keep the company’s owners (shareholders) secret.

The main disadvantages of operating through a company are:

• It doesn’t receive the 50% general capital gain discount like individuals.
• Extra compliance and regulatory costs (i.e. annual ASIC fee of $263).
• Directors legal obligations and duties need to be considered.

Profit Improver Strategy | Lower Your Prices by 10%

Lowering your selling prices will increase sales when your product or service has an elastic demand curve i.e. when you slightly lower your prices, volume goes up substantially. This will be a profitable strategy if lower prices produce greater gross profits due to increased sales volume even though the profit per unit has fallen.

Additional benefits of lowering prices include:

• Pricing lower than your competition demonstrates to customers seeking value and affordability that you are a bargain.
• If you have a large share of the market and can survive on low margins, lowering your price makes it more difficult for your competitors to compete.
• Prevents new competitors from entering the market, as they will have start-up costs that increase their overheads and lower their profit margins at a time when they have low sales volumes.
• Attracting new customers without a large marketing plan.

Implementation process:

1. Determine whether your product or service has an elastic demand curve – there is no point lowering your selling price unless it substantially increases volume sold.
2. Find out what your competitors are offering and their current pricing.
3. Determine your objective in lower prices – i.e. to increase sales, increase gross profits, wipe out the competition, prevent new competitors entering the market, etc.
4. Calculate the financial effect of lower prices and higher volumes on your gross profit and net profit.
5. Lowering selling prices often requires the business to reduce costs at the same time.
6. Consider whether reducing prices will reduce the business’s reputation, brand quality, or credibility.

Limit the initial selling price reduction to 10%, and monitor the effect on sales, gross profits, and net profit.