If your business primarily sells products or is not considered a “professional firm,” you may be affected by the new guidelines published by the ATO regarding profit allocation arrangements. These guidelines will take effect on July 1, 2022, and will have a two-year transition period.

Professional firms include but are not limited to accounting, law, medical, engineering, architecture, management consulting, financial services & stockbrokers, businesses in building & construction (e.g. builders, plumbers, electricians), real estate agents and services such as waste removal and funerals.

Inspire accountants will provide detailed guidance to their professional firm clients on the new guidelines during the Annual General Meeting or during tax planning sessions.

We suggest that you speak to your accountant in the next couple of months to see how the new guidelines could affect your current arrangements.

Reference: shorturl.at/TUY01

To claim rent expenses under the company or trust, you will need to have a genuine market rate rental agreement between the owner of the property and your business. If you do not own your property, you will need a contract with your landlord. Alternatively, you may claim occupancy expenses (subject to eligibility) in your personal tax return against your salary. 

Examples of occupancy expenses are mortgage interest or rent, council rates, land taxes and house insurance premiums. Homeowners will need to consider capital gains implications should they sell their property in the future.

We’ve previously invited Colin O-Loughlin, Director and Mortgage Broker of Arch Brokerage on the topic, “Buying A Commercial Property In SMSF”.

In this video, he talks about typical properties for SMSF loans.

Here’s what he said – 

What sorts of things usually get funding?

There are a few options:

• Shops
• Factories
• Warehouses
• Offices

People might be seeking funds for various reasons, like investing or finding a new space for their business.

Effective 1 February 2023, employees working for non-small business employers (15 or more employees on February 1, 2023) are entitled to 10 days of paid family domestic violence leave. Both part-time and casual employees are also eligible for the leave.

For small business employers (less than 15 employees on February 1, 2023), paid leave will be accessible from August 1, 2023. Until then, they can still take unpaid family and domestic violence leave. 

Per Fair Work, Family and domestic violence mean violent, threatening or other abusive behaviour by certain individuals known to an employee that both:

• Seeks to coerce or control the employee
• Causes them harm or fear

Please visit the Fair Work website for additional information on who can access paid Family and domestic violence leave.

Sean says that your ‘Vision’ isn’t just a couple of lines or a quick blurb about what you want in life. When he looked at how we come up with these visions, he realised it’s often pretty messy. It doesn’t really give you a clear target. It’s like aiming for a summit, and everything has to fall into place perfectly to get there.

So, what he did is break these visions down into 12 different parts of our lives. Stuff like:

• How we see ourselves
• Money and wealth
• Investments
• Giving back
• Being charitable
• Hobbies and passions
• Health and well-being
• Our relationships, especially the intimate one
• Our kids, family, and friends

These are the big areas that matter most to people. We think six of them are kinda like the basics everyone should have. The other six, you get to pick and choose what you want to go with. See, if there are 12, you might already achieved six of them. So, what’s left is just figuring out the other six and what you need to do in your business and personal lives to be able to feel like you’re living your vision. 

This vision thing isn’t just a checklist of goals. It’s more about how you feel and experience life and the world around you. But to make sense of it all, we break it down into pieces so it’s crystal clear.

The ATO will likely scrutinise business transactions in the event of an audit. If your business uses accounting software like Xero, you can attach a receipt/invoice to every transaction and leave a clear description of the expense. That’ll save you hours, including the accountant fees, which can easily range between $10,000 and $20,000 per audit event. Audit insurance will cover the accountant’s fees, but it doesn’t include the time you will spend providing evidence or information to your accountant or auditor.

In addition, when reconciling transactions, you want to avoid using generic account names such as General Expenses. You want to reconcile transactions to specific accounts that accurately reflect the type of expense. With a clear overview of your income and expenses, you can seamlessly review to cut costs, streamline operations, and, most importantly, maximise profit.

A well-organised financial record enhances your business’s credibility with lenders, investors, and potential business partners. Lastly, when it comes to tax time, you’ll have all the necessary information readily available, reducing stress and allowing your accountant to provide accurate advice.

The Australian government is offering a new tax break for small businesses that make energy-efficient investments. The Small Business Energy Incentive (SBEI) provides a bonus 20% deduction for eligible expenditure on assets that support electrification and more efficient use of energy.

The SBEI is available to businesses with an aggregated annual turnover of less than $50 million. Eligible expenditure includes the cost of:

On a recent webinar, we had the pleasure of hosting Sean Soole on the topic, “Transitioning from Stagnation to Empowerment in Your Business.”

Here’s what he said – 

My favourite thing is to stop doing $25-an-hour tasks. And for those of you who rely on notifications, consider giving them a little break. Trust me, they can be a $25-an-hour distraction. Whether it’s your phone, computer, or any other device chiming in, those constant dings and buzzes have a way of pulling you away from the important stuff. So, think about switching off those alerts for a while and regain your focus. We should only use notifications for their intended purpose, which is to serve as tools that enhance our task-execution abilities.

There are a few people that I’ve come across, who have the time, but not enough money yet. And that’s great because you’ve got the time to invest in other things that can produce the money. 

One of the issues people often face is that they don’t have any time and don’t have any money. That’s the worst scenario that you can be in. You’ve built this machine that you need to keep running, but it’s not producing enough money for you. That tipping point is where we need to apply some of the lessons such as stepping away from $25 an hour of work and doing the stuff that’s worth $500 an hour or more. What strategically could you do if you had more time?

We can appreciate that receiving a BAS from your accountant can be overwhelming, especially if you do not have the required funds to pay by the due date. You may opt not to sign the BAS because it’s less stressful than the ATO, knowing you have to pay $XXX, potentially adding to existing debt.

As tax agents, we work with the ATO daily, and they have a far softer approach with clients that lodge on time and have debt compared to late lodgers. Lodging your BAS on time demonstrates compliance and provides transparency to the ATO about your financial situation, making it easier to negotiate payment plans. It can also help you avoid additional penalties and interest charges for late lodgement.

This applies to BASs and other returns, so always opt to lodge your ATO obligations on time.

Picking a winning team in business requires a combination of art and science. Selecting a team with diverse skill sets and experiences and individuals who can work well together and communicate effectively is vital.

Choosing individuals that are great in their roles will only take you so far.