You must have heard that businesses need to lodge BAS, but what is BAS? Well, to begin with, BAS stands for Business Activity Statement. It contains details of GST that the business collected at the time of sales, and that the business will eventually pay or forward to the ATO. If your business is registered for GST, you will have to lodge the BAS to the ATO on a periodical basis. The Business Activity Statement comprises details about Goods and Services Tax (GST), Pay as you Go (PAYG) instalments, PAYG withholding tax, and other taxes as well. 

Tax components as reported in BAS and lodging criteria for businesses registered for GST 

1.Goods and Services Tax (GST) 

GST is 10% of the sales amount that is added to the total sales figure in your sales invoices. This amount needs to be paid to the ATO and doesn't form income for a business. While paying the GST, a business is allowed to deduct the GST that the business paid on its purchases and other expenses. 

2.Pay As You Go withholding (PAYG Withholding) 

The business activity statement also tells us about the withholding taxes deducted from wages i.e., detailed employee's wages and tax withheld thereupon. The PAYGW tax is calculated using a sliding scale of tax and a little complex process. You can take the help of a bookkeeper or ATO website for calculating it. 

3.Pay as you Go Instalment (PAYG Instalment) 

It is nothing but the instalment of tax payment that is calculated on your estimated taxable income of the current year. It helps you in planning and budgeting the payment of income tax and helps you maintain a regular cash flow. The paid instalment will be auto-populated on BAS when it becomes available; you can vary this instalment amount in the BAS. And when you lodge your BAS to the ATO, it will reflect in ATO report as instalment tax paid for the year. 

4. Other taxes 

Other taxes might include Fringe benefits tax, Luxury car tax (LCT), Wine equalization tax (WET), Fuel tax credit, and so on. 

Lodging criteria for Business registered for GST (unless advised otherwise by the ATO) 

• You need to lodge quarterly if GST turnover is less than $20 M and the ATO has not asked you to report monthly. 
• If your GST turnover is more than $20 M, you need to lodge BAS monthly. 
• If you have voluntarily registered for GST and the GST turnover annually is less than $75,000, then you can lodge it annually. 

To wrap it all, a Business Activity Statement (BAS) is an important piece of document, as it details the GST that your business owes to the ATO. It helps you in planning tax payments on due dates and it also helps in keeping track of all your business activity in one place. You can lodge your business activity statement online or take help from the tax agent if you do not want to do it yourself. Also, you can opt to lodge by email. Hope you have got a good idea regarding the business activity statement, lodging criteria, and ways to lodge it to ATO! 

If your business is covered under the definition of a small employer, then you must read this article. Until now small employers were not required to report the amounts paid to closely held payees through Single Touch Payroll (STP). But this exemption is no more valid with effect from 1st July! This means that any amount paid by employers to closely held payees shall be reported through STP 1st July onwards. Let us discuss this in detail now.

To begin with, let us see what is meant by closely held payees and how do you report them through STP.

Meaning of closely held payees and their STP reporting

A person is said to be a closely held payee of a paying entity if the person is a relative of such entity making payments. For instance, if amounts are paid to family members of a family–owned business, then such amounts need to be reported through STP.

Thus, all amounts you as an employer pay to closely held payees on and after 1st July shall be reportable.

How do you do STP reporting for closely held payees?

Now that we know what closely held payees mean, let us have a look at how we can report amounts paid to them via STP.

Reporting on or before the payment date

You can choose to report the amounts paid to closely held payees on or before each pay date.

Reporting on a quarterly basis

Instead of reporting on each pay date, you can choose to report the information quarterly. Every quarter you need to report the information at the time when your BAS (Business Activity Statement) is due.

Reporting on estimation basis

You can also report the amounts quarterly based on estimation. The estimation should be more than or equal to a percentage based on gross payments and tax withheld last year.

You can choose any one of the above three reporting methods as per your business circumstances.

Is there still any exemption from quarterly STP reporting?

Micro employers are still exempted from the requirement of quarterly STP reporting only when they meet some eligibility criteria. To avail this exemption, the employer must be facing exceptional circumstances.

If the business experiences exceptional circumstances as suggested by the ATO, then such employers can consider applying for quarterly exemption. Such exemption would allow the micro employers to carry out the reporting quarterly for two years with the help of a registered tax or BAS agent.

In short, not all small employers are now eligible for exemption from quarterly STP reporting for amounts paid to closely-held payees. Only those businesses that meet certain listed exceptional circumstances are now eligible for exemption. If your business is also covered under exemption criteria, then you can consider applying for the exemption through the deferral tool. For this, you can also take help from registered tax or BAS agents.

Honestly speaking, receipts are those important papers that should be kept safe but somehow get lost some day or other. If you are a small business owner and you also often misplace your business receipts, then you must read this article! Today we are going to tell you why proper management of receipts is necessary and how can you achieve this simple yet annoying task.

Business receipts are essential documents that help your small business in all financial matters. Starting from complex tax filing to keeping records of deductions, receipts come to your rescue. That's why all small businesses should start taking receipt management seriously.

Is keeping receipts really that important for a small business?

If you are still wondering why a small business owner keeps receipts, we must tell you why these receipts are really helpful at the time of tax filings. While claiming business expenses, you must have receipts to substantiate your expense claim. It becomes important to ensure that a proper system is there to manage business receipts. This would save your time in managing your small business, which otherwise you would be spending in finding receipts. If you want to learn some ways for effective receipt tracking, then here are some quick tips:

File receipts ASAP

As soon as you receive the receipts, move them into files. This is because there are high chances of misplacing the receipts if you get distracted by some work or the other. DON'T make it a habit to pile up the receipts to file later when you have time. First things first, file the receipts frequently before they stack up on your table.

It is also a great idea to keep noting the business purpose of each receipt. This would help you differentiate between business and personal expenses.

Classify receipts

In addition to noting the business purpose of every receipt, it's a good habit to make a classification of your receipts based on their expense type. For example, personal expenses can be further classified as rent, travel, entertainment, insurance, and so on. Similarly, business expenses can be classified as purchases, office rent, professional fees, etc.

Go digital

We all know managing the receipts physically is a difficult task with the possibility of misplacing them or ruining them. To avoid it, you can scan your receipts and feed them into your computer. You can also use your phones to scan the receipts and save them on a cloud. No more worries that receipts will get misplaced one day!

Use apps for receipt management

You can take help of various apps that will help to keep your business receipts digitally. Additionally, these apps can help you maintain expense reports based on receipts, making financial tracking somehow easier. If you ask us, Receipts Bank is one of the best among all apps.

At last, we would say don't just follow these tricks but obey them religiously. It is important to be consistent in your receipt management process as one miss or delay can make all your efforts futile. Trust us, effective receipt management can make your life easier!

Businesses owners often juggle multiple tasks and with so many things to do, auditing might feel like a burden. We understand your struggle is real, but then you need to know that auditing is a legal requirement that even small businesses must follow. 

What are audit requirements as per law? 

The Corporation Act 2001 requires that a business should get audited if: 

• Annual turnover exceeds $50 million 
• Assets worth exceeds $25 million 
• More than 100 employees are employed 

If your small business doesn’t fall into any of the above categories, even then it may be beneficial to get audited. Before we move to the benefits of audit, let us understand what an audit is all about. 

What does a business audit involve? 

The main idea behind business audits is to examine the financial records of a business to verify its accuracy. During the audit, an auditor analyses the financial statements as well as the ledgers and accounting records to ensure there is no gap in financials. There are two types of audits, namely internal and external audits.  

Internal audits are conducted by the business itself to ensure that there are no errors in the financial reporting. Internal audits are carried out by the employees of the business. These audits help businesses in meeting their goals. 

On the other hand, external audits are to be carried out by registered auditors, not being employees of the business. It is conducted keeping in mind the Australian Auditing Standards. Reports are issued by external auditors based on detailed analysis of evidence. 

Reasons for small businesses to conduct an audit 

• You can be sure that the financial statements that you lodge to the ATO represent a true and fair view. This means that your small business can avoid unnecessary penalties. 

• Regular audits ensure that your financial reporting is organized and accounts are clean. 
• Audits give you insight into your business finances which helps you to take important financial decisions. 
• Audit findings can help in bringing out any issues in business as well as internal controls and identifying financial frauds. 

Large businesses are required to get external audits done annually. However, for small businesses there is no such obligation; but it’s better to conduct regular audits to ensure smooth financial reporting. 

Top three situations when your business might require audits 

Sale of business 

If you are selling your small business, then the buyer would rely on audited financials only to understand the viability of buying the business. 

Obtaining grants 

If you are applying for obtaining government for your business, then you would require audit report to substantiate the amounts reflected in financial statements.  

Partnership and LLC agreements 

If you plan to enter into partnership or LLC agreements, then you must get your business audited. Investors would rely on the accuracy of financials only based on the audit report. 

Now that you know how important it is to get regular audits conducted, you should make sure you get your small business audited. After all, audits can help you to understand where your business is headed and how finances are being managed. 

BAS or Business Activity Statement needs to be lodged by every business that is registered for GST. In case you are delayed or overdue on your BAS lodgement, then hiding in the bush will not solve the matter. There are ATO payment plans that can help you in dealing with these debts. The ATO offers these plans to ensure the success of the small business – so get in touch with them early on to organise or negotiate a payment plan. At Auditax Accountants, we can do this on your behalf. Let us move ahead and see how you can manage your ATO payment plan for delayed or overdue BAS lodgement. 

Tips and tricks for managing the debt relating to delayed BAS lodgement 

Below tips and tricks that can help you out in managing the ATO payment plan debt for BAS delayed lodging with ATO: 

1. Ensure that you pay your first instalment of the payment plan on time. How you set yourself up for the first payment will impact the whole process! 
2. You can opt for an auto-debit facility from your bank account on a recurring basis so that you do not miss any future payments. 
3. It is always better to pay a little bit ahead of time. For this, you can schedule your auto-debit through net banking a few days before the due date. Because sometimes funds take time for clearance due to bank holidays or system issues. If you do this, you will always be able to pay on time and payment will not be delayed. 
4. This time you have got the leverage from ATO and your BAS lodgement is covered under the ATO payment plan, but for the next BAS lodgement, you will have to pay in full at the due date. If in case you want your next BAS lodgement to be included in your existing ATO payment plan, you will have to lodge it few days before the due date and contact ATO for adding the BAS lodgement to the payment plan immediately. 
5. Do not default on the ATO payment plan unless absolutely impossible because if you default on payment more than three times, then ATO will start the process of asking for information on the financial soundness of your business i.e., whether you would be able to pay in the future or not. Also, it will impact your business' credit rating and in rare situations, ATO can even 'garnishee' i.e., access funds from your account without asking for permission' your account. 

We would recommend that you deal with the delayed BAS lodgement issue as soon as it is possible. These plans are specifically created by the ATO to help the small businesses, so do not think you are alone, it happens now and then with every small business. The main thing is how you come out shining from the situation which you can definitely do if you follow the above tips and tricks. 

If you have hired additional eligible employees, would not you want to claim the jobmaker hiring credit? Well, there are several requirements that you as a business owner will have to fulfil to claim this credit. The very first job maker hiring credit claim period was announced for the additional eligible employees hired between 7 Oct 2020 to 6 January 2021.

Requirements to fulfil for claiming jobmaker hiring credit? 

1. You need to register your business through ATO online service or online service for business. Alternatively, you can register your business with the help of your registered tax agent or BAS agent by 30th April. 
2. You will have to nominate all the eligible employees by running the payroll event with the help of STP (single touch payroll) enabled software before 27th April. 
3. After taking the above two steps, you can claim your payments through ATO online services, or online services for business, and you can also go for help from a registered tax or BAS agent by 30 April. 
4. You can go for registration any time before the scheme ends, and you will have to do it only once. Just keep in mind that you do it before the claim period ends for the first jobmaker hiring credit. 

Key points regarding the registration 

Employers who want to claim the jobmaker hiring credit will need to register by the due date of the first jobmaker credit they are going to claim for. After the registration, employer can claim the jobmaker credit for each period; payments are made in arrears. For completing the registration, you will need to provide the following details: 

1. Baseline headcount of the employees 
2. Baseline payroll amount 
3. Contact details 

When can you not register for the jobmaker hiring credit? 

There are several scenarios where you can't register for jobmaker hiring credit, such as: 

1. If you do not have an Australian business number (ABN) for your business. 
2. A big amount bank levy was imposed on you or a member of your consolidated group for any quarter before 30 Sep 2020. 
3. You are an Australian government agency within the meaning of Income Tax Assessment Act, 1997. 
4. You are a local governing body or are wholly owned by a government agency or local governing body. 
5. You are a sovereign entity or are a company in liquidation or provisional liquidation.  
6. You are an individual who entered bankruptcy. 

Key dates for jobmaker hiring credit 

The Jobmaker hiring credit claim scheme started from 7 October 2020 and employers could claim their first claim payment relating to employees hired up to 6 October 2020. Employees that are hired after this date will not be eligible. 

Registration started on 6 December 2020; employers only needed to register once for this scheme, and the first claim period opened from 1 February 2021, and it closed on 30 April 2021. 

The end date of the job maker hiring credit scheme is 6 October 2022. 

If you run a business which may have a super guarantee shortfall, inadvertent or otherwise, be quick as time is running out to take advantage of the one-off government amnesty. The amnesty was passed by Parliament earlier this year and businesses could be forgiven if they missed the announcement which happened around the same time as COVID-19 started to take hold around the world.

To recap, the super guarantee amnesty allows employers to come forward to declare any super guarantee (SG) shortfalls and self-correct SG underpayments with reduced penalties. The employer can also claim a tax deduction for payments of SG charge or contributions made during the amnesty period. The amnesty applies to historic shortfalls as far back as 1 July 1992 up until the quarter starting on 1 January 2018 (inclusive).

Sadly, the amnesty is due to end on 7 September 2020, less than a month away. To take up the amnesty, businesses must come forward and disclose to the ATO before 7 September and either pay the unpaid amounts of super in full with interest or put a payment plan in place to do so in the future. Any payments made by that date will be tax deductible.

However, the ATO understands and acknowledges that the current economic situation caused by the pandemic may mean that some businesses are unable to fully pay their super guarantee debt by the legislated deadline. Instead, it is encouraging employers to still apply for the amnesty as it has put in place pathways to work with businesses and create payment plans to make good on unpaid super over time.

Meanwhile, the ATO has already released a draft law administration practice statement which outlines its potential approach to penalties after the conclusion of the amnesty. It notes that if an employer does not come forward and take advantage of the amnesty before 7 September 2020, they will face significantly higher penalties when they are caught by the ATO – a minimum 100% penalty on top of the SG shortfall.

In addition, the draft indicates that payments of SGC made after 7 September 2020 will not deductible, even if they relate to SG shortfalls disclosed under the amnesty. Employers may also be liable for Part 7 penalty (up to 200%) for failing to provide an SG statement by the time they were required to do so.

The ATO says it will take a very strict approach to penalties where an employer could have come forward voluntarily to disclose an SG shortfall and failed to do so. It will generally expect remission not to exceed 50% (100% of the SGC) where an employer did not come forward voluntarily and it took ATO compliance action for them to disclose, even for quarters where there is no legislated restriction on remission.

With many landlords around Australia doing their bit to help businesses by deferring rent during the ongoing pandemic, SMSFs that own property assets are no doubt also doing their part. However, trustees that defer rental income under an arm’s length lease to related parties may fall afoul of in-house asset rules. To prevent that outcome, the ATO has released a draft legislative instrument proposing to provide an in-house asset exemption for an asset that is attributable to the deferral of rental income measures implemented to provide financial relief as a result of COVID-19.

The instrument ensures that a SMSF asset will not be considered to be an in-house asset where the SMSF during the 2019-20 and 2020-21 financial years either:

• Allows a related party tenant a deferral of rental income under a lease (on arm’s length terms) due to the financial impacts of COVID-19; or
• Holds an interest in a related party which is exempt from being an in-house asset due to the operation of certain relations and that related party allows a tenant a deferral of rental income under a lease (on arm’s length terms) due to the financial impacts of COVID-19.

Under the current rules, where an SMSF trustee accepts a request for a deferral of rental income under a lease directly from a related party, the deferral results in the trustee acquiring an in-house asset that is not covered by any of the exemptions in current legislation. When the value of an SMSF’s in-house asset investments exceeds 5% of the total value of its assets, the SMSF trustee is required to prepare an implement a written plan to dispose of the excess by the end of the following year of income. The SMSF also cannot acquire further in-house assets and there are penalties for not complying with the in-house asset provisions.

Due to the likelihood of many SMSFs inadvertently breaching the in-house asset rules during the pandemic, the ATO said the Commissioner believes it is appropriate to exercise his powers to exclude the SMSF’s investment from being an in-house asset where the deferral of rental income Is provided during the 2019-20 and 2020-21 financial years, and only those years. It also means that SMSF auditors will not be required to report a contravention to the ATO or advise the trustees of the contraventions which would otherwise result for those years.

However, according to the ATO, the exclusion will only apply to situations where the SMSF trustee or interposed entity has acted in good faith and as a result of the financial impacts of COVID-19 has offered the tenant a deferral of rental income in order to ease financial hardship. It notes there should be contemporaneous documentation drafted reflecting the revised rental terms agreed to by the SMSF trustee and the tenant to ensure the parties continue to deal with each other at arm’s length and the lease remains enforceable.

The COVID-19 pandemic has presented some of the toughest challenges to businesses and the economy in recent memory. No surprises then that the superannuation industry has also been heavily impacted both in terms of early withdrawal of super and in investment opportunities. In the context of an uncertain future, ASIC has released information about what it expects from super funds including SMSFs, in order to provide a semblance of certainty to trustees.

Under ASIC’s interim corporate plan, it has listed protecting consumers from harm at a time of heighted vulnerability and continuing to identify, disrupt, and take enforcement action against the most harmful conduct as two of its priorities. It notes that while it has postponed a range of regulatory activities to allow trustees to focus their resources and attention on responding to the pandemic, trustees’ compliance with legal obligations remain unchanged.

Some of the issues ASIC has recently looked at including early release modelling, disclosure requirements, and insurance within super. In relation to insurance in super, it noted that trustees should communicate with member about the potential loss of insurance in certain circumstances where individuals accessed their super early. According to ASIC, in many cases it found there was little detail on how members’ insurance through their super may be affected. Therefore, ASIC encouraged super funds to direct clear and personal communication on how early access affects insurance cover including the options to reinstate cover.

To further support individuals making informed decisions about the early release of super, ASIC reminded Australians that it has made changes to facilitate access to free and affordable advice with either financial advisers or within super funds. This includes:

• Allowing advisers to give a Record of Advice (ROA) instead of a Statement of Advice (SOA) to clients when providing advice about the early release scheme;
• Permit registered tax agents to give advice to existing clients about the early release scheme without needing an Australian Financial Services (AFS) licence; and
• Take a no-action position to allow super fund to more readily provide “intra-fund” advice in relation to the early release scheme.

Note that while the no-action position allows for a broader range of matters to be considered in the context of advice, such as matters relevant to the member’s financial position and household circumstances, it can only be initiated by the member proactively seeking advice of this kind. ASIC says that trustees should not be the ones to initiate this conversation.

Further, ASIC notes that it will continue to work in conjunction with other agencies such as the ATO, ACCC, AFP, AUSTRAC and APRA to monitor the current environment where there is an increased risk of member harm from fraud and scams. Monitoring of this kind is not expected to be limited only to early release of super.