Sometimes less information can be a lot more informative. This is usually the case when it comes to producing meaningful reports from your accounting software.

Don’t get me wrong, detailed reporting can provide tremendous insights for management. However, for many small businesses, too much detail results in too little information that’s genuinely useful.

Just because your accounting software comes with a seemingly endless Chart of Accounts, does not mean you should use every one of them.

There’s a fundamental convention in accounting known as ‘materiality’. Typically information is material if its ommission or misstatement could influence the decision of users. Materiality ensures that information is sufficiently precise without including unnecessary detail. Of course, what’s material for one business may be incidental to another.

Here are a few examples of counter-productive (and time consuming!) practices that have crossed my desk in recent weeks.

Example #1.

Separating duties within insurance policies and then posting them to their own accounts.

While it is important to claim the right amount of GST (there’s no GST on the duty portion), having these listed separately on the Profit & Loss is not helpful at all. Remember, the whole idea behind these reports is to provide relevant and meaningful information.

Whether financial data is material or not depends not just on its users but on its purpose. Presumably, the first purpose here is to accurately monitor details of income and expenses for the owner to access easily.

The business has no control over the duty portion and it simply forms a part of the insurance cost. Being over-zealous in this way has made it impossible for the business owner to simply see what their actual insurance expense is. In order to get to this figure, they would need to add the Insurance and the Stamp Duty accounts together again. They have spent more time in making the report less useful.

Dissecting the data in this way has made what should be simple-to-access information, far less accessible.

Example #2

Separating the cost of a postage stamp from the envelope it was sent in and allocating costs between postage and stationery.

This might be relevant information for your business. In our own business, postage often represents several thousands of dollars and I do track it independently from any other expenses.

However, for many small businesses, it may be more useful to simply include the occasional postage stamp with stationery/office supplies.

I was trawling through a 4 page client-provided P&L the other day when I couldn’t help notice that postage of $1.80 for the year (representing less than 0.002% of total expenses) had a whole account of it’s own. If you’re a typical small business with a 4 page Profit & Loss, you’d benefit by consolidating some of those insignificant accounts.  Ditch the information overload and embrace the KISS principle instead…. you’ll get a lot more out of it.

There are times when pinpoint accuracy should take a backseat to common sense.

Example #3

Separating the florist’s delivery fee from the actual cost of the flowers and tracking the costs between a Freight account and a Customer Gift account.

If sending floral tributes is an important part of your client service strategy and you have some control over delivery costs, this might be materially relevant to you.  For the average business who occasionally sends a gift to a customer (and has little option but to use the delivery service provided by the florist), tracking freight on gifts in a whole other account is a pointless exercise.

Although it may be technically accurate,  it fails to simply provide the relevant information  - in this case, the cost to the business for client gifts. To get this information, the user would have to add back the Freight expense to the Gift expense.  Including the delivery expense in the Gift account with the cost of the flowers paints a far more accurate and clear picture. Management could then see at a glance the real cost of sending customer gifts.

Keep it simple. Use your judgement and consider whether it is really “significant” or “material” to your business to split accounts a certain way. After all, you don’t want to make extra work for yourself (or for the person you’re paying by the hour to do it for you). Most importantly, you want to produce information that’s accurate, fast to find and meaningful for you.

Remember that all employee superannuation guarantee contributions for the December quarter should be paid into funds by 28 January, 2012.

Employee super contributions actually paid by this date will be eligible for a tax deduction. It is important to meet the 28 January deadline in order to qualify for a tax deduction and avoid having to pay the super guarantee charge.

The December quarter covers the periods of October, November and December, 2011. Please note that the super guarantee applies to all employees; including directors in receipt of a wage.

The Tax Office is focussing much of their compliance efforts on uncovering instances of employers not understanding and meeting their super obligations. Common mistakes identified by the ATO include:

• paying insufficient super contributions for eligible employees
• missing the quarterly cut-off dates
• not understanding that in some circumstances super should be paid for contractors
• not keeping accurate records
• not passing on an employee’s tax file number to their super fund
• not lodging a Superannuation guarantee charge statement if employees’ super is not paid into to the fund by the due date or is not the correct amount.

If you have any questions or wish to speak with us about your obligations, please do not hesitate to contact our office on 1300 35 22 35.

Is debt ruling your life?

Student debts, credit cards and personal loans can be a source of unnecessary stress and prevent you from enjoying other things in life.

Clearing your debts doesn’t have to be hard work. With the right professional advice, it’s possible to get your finances on track sooner than you think. Which means you can get back to living the good life, guilt free.

Here are some tips to help you get out of debt.  

Plan your budget

Achieving your goal of being debt free doesn’t have to be daunting; a good way to start is with a budget. Try to keep a diary for your expenses and your spending. This will enable you to track where your money is going and how much spare cash you can use to attack your debt.

Pay extra

Try paying more than the minimum off your debts. Whether it’s personal loans or credit cards, paying the minimum will hardly make a dent as you will only be paying off the interest.

Prioritise

Prioritise all your debts by the interest rate you are paying. Try to get the balance down on high interest debts first, as paying these off first will save you a bit more money. The money you save in interest, you can then use to pay off your lower priority debts. This will get you to your debt free goal that little bit faster.  

Consolidate

Consolidate all your higher interest debts into one lower interest debt. This could be in the form of a low interest rate credit card or a personal loan. This strategy will also reduce your interest repayments.

Ensure you have the right card

There is no need for anyone to be paying 20 per cent interest on their credit cards. Due to the increased level of competition in the credit card space, many lenders are offering much lower interest rates and deals.

When doing your research, make sure you read the fine print, as cards offering low or zero interest rates on balance transfers, do so for a limited time only whereas other cards might offer a low interest rate for the life of the transfer.

Become card free

Once you have selected a low interest rate card to transfer your balance, make sure you don’t use that card for any new purchases until you have paid off the full amount from the initial transfer. The best way to do that is the old fashioned way – cut your card up and throw it away!

Take the first step

If you’re having difficulties repaying your debt, take the first step and speak to your lender. If you’re open and honest about your financial difficulties with your lender, you will probably find they are open to review your repayments and look at other solutions to help you out.

Speak to a professional

If you feel that you are in over your head and struggling with your finances, don’t ignore the situation. It won’t go away! Seek professional advice and take control of the situation.  

Contact our office today on 1300 352235 to book a completely free, no-obligation consultation with our financial planner.

The November edition of our Tax Update newsletter is now available for download from the main site.

This issue includes information on:

• Christmas Gifts
• Small Business Benchmarks
• Record-Keeping for Business
• ATO’s New Property Web Page
• Pacific Seasonal Workers’ Tax Rate Reduced

This particular newsletter is available for download exclusively for clients (a username and password is required).

If you are not a client and would like a copy of the November Tax Update – or you do not know your login details – simply email Christie (christie @ lewistaxation.com.au) and I will be more than happy to forward a copy on to you.

A new Bill has been introduced into parliament to establish a payroll tax rebate scheme which is intended to encourage the employment of people with disabilities (as opposed to the general dis-incentive payroll tax offers for employing people).

The Payroll Tax Rebate Scheme (Disability Employment) Bill 2011 will provide employers with a payroll tax rebate of up to $4,000 per eligible employee.

The $4,000 rebate will be paid in 2 equal instalments – $2,000 after 3 months of employment and a further $2,000 after 6 months of employment.

Eligible workers are new employees that have completed the Family and Community Services funded Transition to Work program and are working a minimum of 12 hours a week, on average.

More information on how to apply for this rebate will be available later in the year and so we’ll keep you updated.

Central Coast Accounting Firm seeks experienced office manager/ accountant.

Alas, our fabulous office manager/senior bookkeeper is leaving us shortly. Sharen is off to manage the expansion of her own successful family business. We’re thrilled for her, of course, but I did consider the possibility of chaining her to the desk in her office so she can’t ever leave (word of warning, Fair Work tends to frown on that kind of thing). 

Now, we’re a small team and so often each wear multiple hats. With the news that our current super-star is leaving us, I’m afraid I’ll be wearing so many hats I won’t be able to hold my head up.

So now the search is on for a multi-skilled candidate who can replace an irreplaceable team member (no pressure!) and support me in different administrative and business development tasks.

What I need right now more than anything is:

• someone who can assist in the preparation of BAS and quarterly reports (minimally, be able to take it to a stage where it just needs review and perhaps adjusting entries);
• someone who can liaise with clients, handle routine requests, follow through and follow up to ensure all client needs are being met, be proactive in developing relationships;
• someone who can manage and instruct the front office staff (delegate tasks, ensure database is maintained, monitor jobflow, implement/update procedures, generally watch over the day-to-day stuff);
• someone who can assist in the preparation of proposals/engagements and other client communications, including marketing materials and newsletter content.

In essence, I need someone who can see what needs to be done and does it.

I don’t expect to find a new and improved hybrid of Sharen and myself who can leap tall buildings in a single bound as they fly in to work on the first day. I do expect a confident all-rounder who can hit the ground running.

It is essential this individual is

• familiar with the accounting environment,
• proficient in fundamental accounts preparation (even better if you’re an experienced accountant who can prepare  business tax returns and financial statements to review stage),
• able to connect with people, and
• know their way around Office software (bonus if you’re already trained in Handisoft).

I need someone who can produce quality output with minimal supervision.

I anticipate the successful applicant would have a proven track record that demonstrates the above. 

Although I am primarily seeking a replacement for Sharen, I’m open to the possibility of an intermediate or senior accountant with a hands-on approach to clients and projects.

If we can get excited about you, and you’re excited to work with us, that’s a great first step… the rest are details to be worked later based on the skill set and expectations brought to the table. 

 If this sounds like a position that may interest you, look us up online (we have the blog, website, Facebook , Twitter, etc). Get an idea for yourself on who we are, what we are about and whether or not you see yourself as a fit.

Send a resume by all means, but only with a compelling reason to open it. Let’s face it, what I really want to  know is who you are, what you can do for us, and why we should hire you.

Your time is just as valuable as mine so if you have your own ‘hope-for’s’ or ‘must-haves’ feel free to share them also.  

We can be quite flexible when it comes to hours and working arrangements for the right person.

The question is, are you the person I’m looking for? 

Feel free to send any expressions of interest, questions or applications to christie@lewistaxation.com.au. You might want to check out one of my earlier posts titled Job Applications – What NOT to do for a couple of quick tips.

Exciting news this week with the much-anticipated self-managed super fund (SMSF) draft ruling from the ATO, SMSFR 2011/D1. 

Many people are probably aware by now that you can borrow and purchase properties within a SMSF (we’ll post more on this in coming weeks). What hasn’t always been clear are some of the issues surrounding capital improvements of the property within the fund. The draft views expressed by the ATO confirm the opinion our associates at the 2020 Group have always supported. In fact, the ruling provides quite a few positives for limited recourse borrowings in respect to real property, making the solution even more attractive than ever.

Principal of the 2020 Group, Nic Ellis, is continually striving to find new and unique strategies to create wealth for clients. After the release of the ATO’s ruling, Nic had this to say:

“The ATO have confirmed the 2020 Group’s opinion that SMSF’s can renovate investment properties. We’ve been the only firm who has stood by this concept.”

What does this mean for you? According to Nic, you can add value to your investment property by renovating or adding extentions. Best of all, all of this can be funded directly from the SMSF with no out of pocket costs to you. I’ll let Nic tell you more about it himself in the video below….

If the idea of investing in property through a SMSF has peaked your interest, or you’d like to know more, give the team of experts at 2020 Financial Solutions a call on 1800 46 2020. Their integrated service includes all advice, structures, legal work and Conveyancing needed to complete the deal. They’ll even project manage the entire process for you!

Anyone who reads the blog knows that I love online tools and calculators. I was very excited to hear of the launch of PayCheck Plus, an online tool provided by the Fair Work Ombudsman, designed for employers and employees to quickly calculate base pay rates, allowances, overtime and penalty rates under modern awards.

As an employer, you can also use ‘Check my payroll’ – a feature that allows you to match and calculate pay rates for multiple employees. 

I’m not sure how great the tool actually is when it comes to identifying which modern award an employee falls under. I test drive it by selecting details related to an entry-level receptionist (where the only option was Animal Care and Vet Services award) and an assistant accountant (where it offerred up several unsuitable options including the Black Coal Mining Industry Award). Why no mention anywhere of the popular Clerks (Private Sector) Award? It did, however, successfully find the right award for several other occupations.

If you already know the right award and want to check on base rates or penalties, the ‘check my payroll’ option could provide a quick and simple solution. I quickly played around with this feature with mixed results – mostly positive. 

All in all, it looks like it could be a handy little tool for employers to calculate various pay rates. A word of caution: double-check the award and rates before relying solely on the tool. 

Give it a spin yourself at Fair Work’s PayCheck Plus page.

TaxWise Business News is published each quarter. The September, 2011 issue of TaxWise Business is now available from the main site.

This quarter’s issue includes the following articles:

• ATO Compliance Target Areas 2011-12
• Taxing Carbon
• Managing Tax Debts
• Proposed Not-for-profit Reforms
• Car Fringe Benefits Rules Changed
• Excess Super Contributions Tax
• CGT Small Business Conscessions Tool

Remember that you can subscribe to the Enewsletter version of TaxWise Business News to have it emailed to you each quarter. Simply head to the newsletter sign up page or enter your details into the Subscription Box on your right.

Did you know you can still access previous editions of all our newsletters in our newsletter archive? Check them out below.  

TaxWise Individual News

TaxWise Individual News is currently published bi-annually and emailed (or snail-mailed) out to all interested personal tax clients. You can download each issue in PDF format or click the links to read through individual articles online.  

Go there >

TaxWise Business News

TaxWise Business News is produced quarterly and emailed (or snail-mailed) out to interested clients. Visitors to our site can access individual articles online by using the links provided or download complete issues in PDF format.  

Go there >

Business Plus+ Newsletter

The aim of this newsletter is to give you some useful articles, tips and pointers that will make a difference to your business, irrespective of it’s size or ownership structure. Follow the links to browse through individual articles or download the latest edition in PDF format.  

Go there >

Tax Update Monthly

Our monthly Tax Update newsletter is written in an easy and relaxed style to keep you up-to-date with important tax changes. This particular newsletter is available exlusively to clients for download. Please log in for download links.  

Go there >

On Father’s Day the Australian Government started public consultations on its plan to introduce two weeks of paid leave for dads to take time off work to spend with their newborn babies.

From 1 January 2013, the current Paid Parental Leave scheme will be expanded to include a dedicated payment for dads and other partners.  Eligible working dads and other partners will have access to two weeks Dad and Partner Pay at the national minimum wage, which is currently about $590 a week before tax.

The design of Dad and Partner Pay is based closely on the independent expert recommendations of the Productivity Commission.

The new payment will be available to eligible working fathers or partners (including adopting parents and parents in same-sex couples) who share the role of caring for a child born or adopted from 1 January 2013, and who meet the same income test and work test as the current Paid Parental Leave scheme. 

A family may receive Dad and Partner Pay either on its own or in addition to other family payments such as Paid Parental Leave, the Baby Bonus and Family Tax Benefit. The mother or other parent does not have to be accessing the Paid Parental Leave scheme for her partner to be eligible for Dad and Partner Pay.

Dad and Partner Pay will cost the Government a projected $188.5 million over 5 years (2010-11 to 2014-15).

A consultation paper on Dad and Partner Pay has been released to ensure that parents and employers can have their say on the new entitlement. Employer and employee groups, small business groups, family and community groups and individuals are invited to make their comments on the consultation paper. The consultation period finishes on 17 October 2011.

The September edition of our Tax Update newsletter is now available for download from the main site.

This issue includes information on:

• ATO Clamps Down on GST Fraud and Cash IncomeMeaning of ‘Cost Price’ of a Car for FBT Purposes
• ATO Data Matching: Flood and cyclone reconstruction levy
• Is an Investment Made by a Trustee Always on Capital Account?
• Government Committed to Superannuation Reforms
• ATO Warning About Illegally Accessing Super Early

This particular newsletter is available for download exclusively for clients and Facebook Fans (a username and password is required).

If you are not a client and would like a copy of the September Tax Update – or you do not know your login details – simply email Christie (christie @ lewistaxation.com.au) and I will be more than happy to forward a copy on to you.

The ATO will collect names and addresses of approximately 735,000 individuals who received the Australian Government Disaster Recovery Payment, and New Zealand citizens holding a special category visa who received an ex-gratia payment from Centrelink.

This latest data matching effort, called the Temporary Flood & Cyclone Reconstruction Levy Data Matching Project (what a mouthful that is!) will electronically match information with certain sections of ATO data holdings.

The program will allow the ATO to automatically exempt individuals from the Temporary flood and cyclone reconstruction levy and also identify non compliance with lodgment obligations under tax law.

The start of a new financial year is a great time to do some thinking and planning as to what is happening in your business. A good place to start is - What is the purpose of my business?

How much do you want to earn? How many hours are you prepared to work? What is your overall objective? 

It’s always a good idea to start out with the end in mind.

• Are you trying to build up the business to sell it?
• Are you wanting to franchise or open other similar offices/stores in other locations?
• Are you wanting to build a lifestyle whereby you can employ managers to run the business, but you don’t have to be there every day?
• Are you operating a business that you want to operate for the rest of your life… because you absolutely love what you’re doing in your business?

The strategies you develop to operate your business will be determined on which of these questions you’ve answered positively.

We’ll look at each of these in more detail in upcoming posts. Until then, give some thought to the question, “What is the purpose of my business?”

Periodic Financial Accounts – Each month we consider questions related to the preparation of a business plan. This time we’re looking at periodic financial accounts.

• Are periodic financial accounts prepared throughout the year?
• If so, how often?
• Are other periodic accounts prepared on a detailed management basis to assist management to “drill down” into the figures?
• Do you compare your performance for a month (or quarter) against budget expectations?
• Do you compare your emerging financial performance against benchmark organizations?
• Do you prepare Key Performance Indicators on the business’ performance?

There are over 50 questionnaires relating to the preparation of a business plan……… in the next post of this series we will consider Budgets/Cashflow Monitoring.

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).

Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

The August edition of our Tax Update newsletter is now available for download from the main site.

This issue includes information on:

• ATO Focus on SMSFs
• Warning: Investing in Overseas Property
• New This Year to Family Tax
• Superannuation: Common Mistakes Made by Employers
• Car Depreciation Limit for 2011/12
• Reasonable Overtime Meal Allowance Amounts 2011/12

This particular newsletter is available for download exclusively for clients (a username and password is required).

If you are not a client and would like a copy of the August Tax Update – or you do not know your login details – simply email Christie (christie @ lewistaxation.com.au) and I will be more than happy to forward a copy on to you.

Taxation - Each month we consider questions related to the preparation of a business plan. This time we’re looking at Taxation.

• Have adequate systems been implemented for recording transactions relative to income tax? 
•  Pay As You Go installments?
•  Pay As You Go withholding amount (withheld from salaries and wages)?
•  Pay As You Go withholding amounts from payments to businesses which have not quoted an ABN?
•  Fringe Benefits Tax?
•  Goods and Services Tax (GST)?
•  Has your system been reviewed to ensure that your organization would be able to satisfy a taxation audit?
•  Is your business conducting a research and development activity? If so, is the business operated as a company?
•  Have adequate systems been implemented for recording transactions relative to income tax?
•  Has the business instigated systems for a proper recording of research and development?
•  Have you had a review undertaken of any trust deed to ensure that the trust deed is up to date and still applicable with current laws and interpretation of the laws?
•  Has a complete review been made of all benefits that the business is paying staff, to ensure that the Fringe Benefits Tax return is being accurately prepared?
•  Are all employee packages properly documented so that you are aware of all fringe benefit requirements?
•  Has staff been made aware of their responsibilities relative to completing their motor vehicle log books, proper recording of expense claims, documentation of travel expenditure, documentation of entertainment expenditure, documentation of overseas travel expenses, recording of annual kilometers on the odometer on the 31 March each year?

 There are over 50 questionnaires relating to the preparation of a business plan……… in the next post of this series we will consider Periodic Financial Accounts.

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).

Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

It has been almost a year since I posted a Practice Update. We have a lot of  news to share. For now, let’s stick with a tax-time update.

Addition to the Team

First of all, we would like to welcome aboard Sharen Griffin.  

Sharen worked with Alan for many years at Trevor Tynan & Associates, Budgewoi.

Sharen brings to the team over 14 years of experience in public practice and has extensive experience in a range of accounting software programs, including HandiBiz, MYOB and Quicken. 

Sharen oversees the day-to-day jobflow of the front office and assists with data entry to ensure all client work is processed with accuracy and efficiency.

EFTPOS Available

For your convenience, EFTPOS and credit card payments can now be accepted at reception.

Of course, fee-from-refund is still available if you prefer.

Extended Hours

Due to the high demands for tax-time appointments, our office hours have extended to include Saturdays. In addition, in-office appointments can be taken until 6pm.

Please note that the first available appointment is not until the first week of August – cancellations do occur, however, and we’ll do our best to accommodate you if your preferred time slot opens up.

 Tax Return Processing

The ATO appear to be off to a good start this year and tax refunds are coming back within 14 days (often less).

The only hiccups we’ve noted thus far relate to clients whose TFN’s were compromised in the previous year. It appears that additional identity checks are being carried out on those particular returns.

Waiting Room Goodies

Yes, we still have Fantales! In fact, we’re currently going through a kilo of Fantales each week in the waiting room!  

If you’re in the area and running early, why not pop in ahead of time and enjoy a tea, coffee, or softdrink before your appointment.

You’ll find we have a selection of the latest magazines to browse over that cuppa.    

Website

The website is systematically being updated to reflect the latest tax rates and changes to legislation.  In the meantime, if you have any questions, feel free to ask them on the blog.

At the moment, my inbox is overflowing with questions from people who are self-preparing on eTax. I will try to respond to all emails, but it may take me a few days or more to get back to you at this busy time of year.

Clients of our firm with any tax-time questions are encouraged to phone the office on 1300352235 or email your accountant directly.

A new data matching initiative between Centrelink and the ATO is expected to claw back millions of dollars from welfare recipients who have debts with the Australian Government.

Beginning on July 1 this year, Centrelink and the ATO will automatically match data on a daily basis as a way of cross-checking former welfare recipients who have a debt with the Commonwealth. 

The new initiative is expected to recover more than $71 million over four years.

Those who are identified as having debts and who haven’t made repayment arrangements with Centrelink may have their tax refunds garnisheed when they lodge their income tax return.

Of course, this is nothing new in itself. More than $27.5 million was recovered from over 43,000 former Centrelink customers’ tax refunds in the 2009/10 financial year through the tax garnishee process.

Apparently this process has been handled manually every year for the past 15 years, involving a significant amount time and people-power. The process will now be automated and, according to Assistant Treasurer, Bill Shorten, will ”result in more people being referred to the tax garnishee process, retrieving more outstanding debt on behalf of taxpayers.”

Mr Shorten said ”The new data matching link is expected to increase the number of former customers identified for this process by an additional 65,000, above current detection levels, over the four years.”

Centrelink is currently writing to over 90,000 people with outstanding debts who aren’t currently receiving a payment from Centrelink or the Family Assistance Office.

To avoid losing a tax refund because of an old debt, people are advised to contact Centrelink to set up a repayment plan. Details on how to do this are in the letter or people can contact Centrelink on 13 6330.

We’re already receiving a few FTB supplement questions this year so it looks like time to update you on the current rates.

FTB Part A and FTB Part B both include a supplement payment. This gets paid after you (and your partner, if you have one) have lodged your tax returns for the income year.

If it turns out that you have been overpaid, the supplement will first be used to help offset any overpayment of Family Tax Benefit or Child Care Benefit.

For the 2010-11 financial year, the following rates apply:

The above table represents the maximum benefit;  your payment may be lower depending on your individual entitlement and circumstances.

You do not need to apply for the supplements. After tax returns are lodged, Family Assistance reconcile your payments for the year and make any necessary adjustments. The supplements are then automatically paid into the same account that you usually receive Family Tax Benefit payments.

If you are not required to lodge a tax return, you should notify Family Assistance as soon possible to avoid delays in receiving a supplement you might be entitled to (you can do this using their online services).

If you usually apply to receive a lump sum of FTB at the end of the financial year, the supplements will be included with your annual payment.