Proposed Land Tax Changes for South Australia

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On the 9th September, the SA government released their proposed land tax changes for a very rushed period of consultation and feedback from the community. The government released the draft Bill indicating that they have no interest in conflicting views or consultation regarding their new aggregation measures, which have caused so much angst among investors and are at the heart of the changes.

Having read through and analysed the proposed changes, it seems the government has left in a partial grandfathering rule for discretionary trusts owning property the day prior to the day the bill is introduced to the House of Assembly.

 

So how does this work?

  • For each trust holding land, the trustee can nominate a designated beneficiary under section 13A (1) which then means the Commissioner will treat that designated beneficiary as the final land tax assessee.
  • The trustee cannot change the designated beneficiary unless the person dies or loses capacity.
  • Thus, if that designated beneficiary withdraws, the Trustee has no choice but to withdraw the notice and must then pay trust surcharge rates of Land Tax with a threshold of only $25,000 before the land is assessible, as opposed to the $450,000 proposed threshold available for individuals.
  • Land holdings in discretionary trusts cannot be split between multiple designated individuals.

 

So let’s look at a practical scenario:

  • A family with two adult children owns five properties in five trusts, with $300,000 of land value each.
  • Each of the children and the husband are assigned as the designated beneficiary of one of the trusts. As all three are under the $450,000 threshold the net land tax payable on those properties will be NIL.
  • The wife is the designated beneficiary of the remaining two trusts, meaning she will have $600,000 of total land holdings assessed to her and thus be above the $450,000 threshold and be liable for land tax.
  • So in practice, for many families there will be a way to restructure the land holdings to minimise land tax being aggregated for existing properties.
  • Keep in mind, these rules don’t allow for further properties as this provision will not apply to land held, or beneficiaries added to a trust after the bill is introduced to the House of Assembly.
  • So, for future investments, we would recommend investors look at interstate land holdings which are not currently aggregated between states, or, where possible, holding land through self managed superannuation funds (which are exempted from the new land tax rules) if they want to increase their land holdings.

 

Other Items of Interest

  • Only an adult over the age of 18 years can be a designated beneficiary.
  • There does not seem to be any risk to the parent in making a child a designated beneficiary, but as the child gets older and buys his or her own properties, this may cause issues as there is no means of amending a designation once made.
  • There is also no concession for divorce or relationship breakdown, so in a family break up there will be additional land tax considerations that will need to be taken into account.

You can download the complete Draft Bill here.

If you want to know more about the proposed land tax changes and how you can structure your property portfolio to minimise your total exposure, Bartley Partners is here to help as Adelaide’s specialist Business and Property accountants.

Simply get in touch online or give us a call on (08) 8338 1033.

 

About the Author
Written by Christopher Overton 
Partner at Bartley Partners Accounting

Christopher is a Chartered Tax Adviser and an admitted solicitor in the Supreme Court of South Australia. He is also an experienced property investment adviser working with investors on portfolio planning, property selection and feasibility studies. He is an avid property investor and has completed numerous development projects, both in South Australia and nationwide.

South Australian Labour Hire Licence Changes

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If you’re a small business operating in South Australia, there’s a chance that you’ve heard of the Labour Hire Licensing laws and how they seem to be continuously changing. And it’s that time of year again and time for another change.

The Consumer and Business Services (CBS) announced that they will recommence accepting applications for labour hire licences.

What is the Labour Hire Licensing Act?

Simply put, the Labour Hire Licensing Act 2017 requires anyone who provides labour hire in South Australia to be licenced.

This law first started operation on 1 March, 2018. However, as the government changed following the 2018 election, the Marshall government indicated the intention to repeal this legislation and the CBS ceased accepting applications.

Since then, the government hasn’t been able to secure sufficient numbers to repeal this legislation. So that means the original legislation is back in place.

With the recommencement of applications, this means that labour hire providers who operate in South Australia will need to lodge their applications by 31 August, 2019.

Who Will the Labour Hire Licences Affect?

If you’re a labour hire provider in South Australia, you need to know about this Act and how it’s going to affect your business.

You will need a licence if…

  • Your business provides labour workers to complete work for someone else as part of their business
  • You have an arrangement with your workers to supply them to another person to complete work
  • Your workers, while completing work for another business, are paid in part or in full by your business

However, a licence is not required if…

  • You hold a current building, plumbing, gas fitting or electrical contractor licence
  • You hold a current security or investigation agent licence that is not restricted to being an employee only
  • You operate as a company or body corporate with no more than two directors, and the worker provided to another business is a director of the company who participates in the management of the company or shares in its profits
  • You provide workers to another business where both businesses are part of the same franchise
  • You provide workers to work in another business that collectively operates using the same banner, brand or trading name

If you provide labour services, it will become unlawful for you to provide labour hire services. 

However, if you’re looking to hire labour services, it also becomes unlawful to accept labour hire services from an unlicensed provider. So it’s imperative to obtain this licence for all parties to stay above the law and avoid financial penalties.

How to Apply for a Labour Hire Licence in South Australia

Applying for the licence is easy and can be done through the CBS website. Your application must be lodged by 31 August. 

You’ll need to provide the following information:

  • The details of at least two responsible persons in your business
  • A letter, no older than 6 months, from your licence application confirming that your business is solvent. This must be provided by a Chartered Accountant, Certified Practicing Accountant or IPA Public Accountant
  • Proof of completion of an approved business pathway
  • National Police Certificate less than 12 months old

The cost of your Labour Hire Licence application is based on the application type: 

  • Natural person application fee $590 + $236 (first year’s fee)
  • Body corporate application fee $590 + $1287 (first year’s fee)
  • Application to change a responsible person $129
  • Application to apply for substitute responsible person $129

If you miss the 31 August deadline, you must have completed one of the four business pathways before you can apply:


Pathway 1
You must successfully complete:

  • BSBSMB401 – Establish legal and risk management requirements of small business
  • BSBHRM505 – Manage remuneration and employee benefits

You can apply for recognition of prior learning if you believe that your past work experience or other qualifications can be assessed against any of the above qualifications. You’ll need to contact a Registered Training Organisation to arrange this. The Real Estate Training Academy offers both of the required units.


Pathway 2
Successful completion of an accounting, business, economics or human resource-related degree or diploma from Australia or New Zealand. 

Equivalent degrees or diplomas from other countries may be considered.


Pathway 3

You hold a current equivalent interstate labour hire licence.


Pathway 4

Your company is listed on the Australian Stock Exchange.

While it may seem confusing and that there’s a lot of information to digest – it is pretty simple to know if you’re required to apply.

If you need help with any documentation or applying for your Labour Hire Licence, please give Bartley Partners a call today on (08) 8388 1033 or get in touch online to learn how we can help you.

Cryptocurrency and Tax

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Unless you have been locked away on a desert island for the last few years, chances are you’ve heard of cryptocurrencies. Cryptocurrencies are digital currencies operating independently from central banks or governments. Using encryption techniques to generate and regulate production, these currencies were developed to reduce fraud and increase security, the success of which is a hotly debated topic.

While Bitcoin is the most popular, there are more being created nearly every day – there’s Ethereum, Dash and Zcash, just to name a few. Now the ATO is actively tracking these schemes via your banking transactions to and from online wallets, and you know that they want a piece of the action!

What are the ATO rules on Cryptocurrency?

When it comes to cryptocurrency, ATO guidelines state that it is an asset, rather than an actual currency. This is due to the volatile nature of these assets and how they can change in value so rapidly.

Due to this economy, the way to declare these cryptocurrencies to the ATO may not be so straightforward.

When you declare the AUD value of your coins at the end of the financial year, you must declare the value they were at the time they were received. So if you were to receive Bitcoin to the value of $250,000 in January, their value could drop to $20,000 by the end of the financial year. When you are declaring this income, you must declare at $250,000.

If value does decrease, it means you’ll be paying taxes on money that you no longer have. It seems unfair, and in many ways it is. But the ATO is simply trying their best to navigate this new form of currency.

Cryptocurrency & Capital Gains Tax

When you sell, trade, exchange from one cryptocurrency to another or use your cryptocurrency to obtain goods or services, a CGT event occurs.

If you are turning a profit from the disposal of your cryptocurrency, your gain may be taxed, just as if you were to sell a property or other valuable asset for a higher value than it was purchased at.

So, if you purchase $1,000 of a cryptocurrency, and sell 3 years later for $10,000, your gross capital gain can be eligible for the CGT discount. However, if you’re buying and selling cryptocurrencies regularly for a profit, the ATO will treat you as a trader, and you won’t be eligible for the CGT discount.

Accepting Cryptocurrency as Payment

If you’re a business who accepts a cryptocurrency instead of AUD, the ATO sees this as being paid with goods or services. The AUD value of cryptocurrencies is the taxable amount of the non-cash consideration for your goods or services at the time of the transaction.

However, if you use cryptocurrencies to pay for goods and services, the AUD value of the payment would be used for tax purposes as if you had paid with cash.

4 Top Cryptocurrency Tax Tips

In short, these are the top things you need to remember before you dive into crypto:

  1. You must pay tax on the value of the cryptocurrency when it was received.
  2. Unless you sell immediately upon receipt of the funds, you can end up with an asset worth less than the tax you’ll have to pay.
  3. The receipt of the asset in exchange for your work is standard ordinary income. As if a client was to buy you a car, rather than paying an invoice, the value of the car is taxable as if it was paid via standard invoices, so there is no incentive for a contra system where the ATO doesn’t get their cut.
  4. The capital loss or decline in value of the asset after you have received it is quarantined against future capital gains, so it is not usable to offset ordinary income.

This is a standard part of our tax system and is unlikely to change, so proactive tax planning and proactive advice driven accountants (as opposed to compliance driven) are more important than ever.

Ultimately, when you’re dealing with something that’s grown globally and so quickly, without a governing body to liaise with tax offices and central banks, there will often be grey areas and confusion.

Just as the public is trying to work out the best ways to use cryptocurrencies, the ATO is also trying to ensure this asset is fair for all parties involved.

If you’re worried about the tax effect of your cryptocurrencies, call Bartley Partners today on (08) 8388 1033 or get in touch online to learn how we can help you.

Business Accounting Employee Management Services

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True business accounting is about so much more than just tax returns and compliance. It’s about looking beyond the numbers to ensure that while your business is meeting its full potential, both you and your employees feel safe and enjoy being at work.

As we enter a new financial year, we’re working closely with our clients to ensure that their businesses are meeting all the new ATO regulations for the year, including Pay Rates and Single Touch Payroll. While this does fall under ‘compliance’, it leads us down the path to explore employee contracts, working with Adelaide’s best commercial lawyers to provide you the best legal advice for the future.

Throughout the years, we’ve seen a number of issues with employee contracts, the biggest being the use of templated contracts. Using these templates without customising them to your particular industry or award conditions can leave an employer vulnerable when working with a staff member who may need to be reprimanded for indecent actions.

 

Your Business Needs Customised Employee Contracts

As society shifts to a stronger online presence with more and more social media platforms in use, it’s important to make sure you can control what’s being uploaded about your business. Once it’s up there, it’s nearly impossible to take back. 

Gone are the days of having a whinge about your job at the pub with a mate. This used to be an isolated chat between 2 people, who would often check first to make sure they didn’t know anyone else around and couldn’t be heard. Nothing was written down, and it would stay between those few people and that would be the end of it.

We all need to vent our frustrations every once in a while. It’s only natural, and you’ll never be able to stop your employees getting annoyed at certain things about their jobs. But now these complaints have gone digital, and employees are posting slanderous comments about you and your business on social media for everyone to see.

And this is one of the biggest issues we’re facing with our clients: how to rein this behaviour in to make it unacceptable and a grounds for formal warnings or even dismissal.

If you’re using a templated employee contract, it’s very likely that it doesn’t include a social media clause. Without that clause it can be very difficult and messy for you when you’re trying to control a situation when an employee disparages your business online.

Social media isn’t going away – it’s just going to be bigger. And while people are starting to get much more savvy with privacy and understanding their consequences, we can’t assume that your employees will always do the right thing.

More Ways Business Accountants Can Help With Employee Management

As we said before, at Bartley Partners, we’re so much more than numbers. We review a full range of employee management issues and needs that directly affect businesses like yours and offer viable and efficient solutions.

 

Employee Contracts and Policies

We work closely with you to learn about your business and employees. From there, we set up your employment contracts, employer policies and human resource processes and procedures. Always customised to your business needs, these can help you manage your employees with ease. 

When it comes to small businesses who are not large enough to need an entire human resource staff member or department, it’s still important to have a firm understanding of how your business will handle anything that would normally fall into this category.

 

Employee Management & Dispute Resolution

Creating a team of people in a work environment and expecting everyone to get along and be best friends is a naive expectation. Just because your team are all working in the same industry, doesn’t mean their goals, backgrounds and demeanor will all be the same. You’ll always have times when your team will butt heads – and that’s okay.

It’s when things between particular staff members start to get serious that you need a plan in place to help everyone cool off, find a way to work together, and shift focus back to the work at hand.

We provide an outsourced complaints handling process for your employees, giving them an avenue outside their direct chain of command to make serious complaints about misconduct, harassment or other breaches.

 

Payroll Management

As with any business, there are still numbers to be taken care of at the end of the day.

The team at Bartley Partners are experts in setting up your payroll system, automated super payments, single touch payroll, TOIL capture system, portable long service leave for the construction industry and workcover registrations. 

We’re on top of all ATO regulation to make sure that you meet the award conditions and any industry specific issues. 

Ensuring that you’re paying your employees correctly and on time is fundamental in keeping them happy and positive in the workplace. It also means you won’t find yourself in any hot water with the ATO and can avoid additional financial penalties.

If you’re a small business who’s looking to team up with an accounting and employee management firm with experience and focus on your business, call Bartley Partners today on (08) 8388 1033 or get in touch online to learn how we can help you.

What Does Single Touch Payroll Mean for Small Businesses?

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If you’re a small business, you know that Single Touch Payroll (or STP) is the new way for businesses to report tax and super information to the ATO.

As of 1 July 2019, all small business employers with more than four employees are now required to report through STP, as well as employers with 20 or more employees who should already be using this system.

This means that each pay run must be electronically filed with the ATO. Previously, you didn’t have to report wages and withholding until annual PAYG payment summaries were submitted. So this is a big change.

What Does This Mean For You?

If you’re unsure of why this change is happening in the ATO, you’re not alone. While the ATO tells us that STP is simply to make reporting easier, regular reporting means that annual PAYG payment summaries are no longer required.

So in a nutshell, STP means that the ATO now knows, on a live and up-to-date basis, whether an employer is making payments to employees compliantly.

The ATO is also changing deductibility rules for non-compliant payments (which they can now see in real-time).

Businesses will only be able to claim deductions for payments that are made to workers when the employer has complied with the PAYG withholding and other tax reporting obligations for that payment.

This presents a problem to many small businesses, as when you’re running at a smaller capacity, keeping 100% compliant all the time can fall by the wayside.

So if you’re only doing your super and tax deductible once a month, or even once a quarter, it’s time to rethink the way you work – and fast!

What Can Get You In Trouble With STP?

There are a lot of examples as to what small business owners are doing which have been perfectly fine in the past, but can now land you in hot water. These are just some examples, but tend to be the most common:

  • Paying yourself a one-off directors fee at the end of the year to reduce a loan account to prevent Division 7A issues.
  • Not withholding any tax at the required rates.
  • Not paying super on the Director’s Fee, which is a breach of Super Guarantee Charge obligations.

Now that the ATO will know about the above on a live basis, the directors fees are not classified as wages and thus must be reported via STP. If taxes are not withheld correctly, then the income is still taxable for the director individually, but the expense is not deductible for the company – so it’s a double whammy! Not to mention that the ATO will now know about that super issue straight away.

  • Not paying super on time – if super is paid late it becomes non-deductible (this means it must be paid within 28 days from the end of the quarter). But the Super Fund will still pay standard superfund tax rates on the funds, generally 15% but not always depending on members taxable income)

What Happens If You Do Get It Wrong

Getting your STP reporting wrong can mean that you’ll have to answer to the ATO and face potential fines and audits.

  • Because reporting is now live and completely visible, you WILL be caught.
  • You will lose deductibility in the company of the wage and super. Based on the average Director’s fee of $80k+Super, this means an average loss of $99k*30% lost deduction. So you could lose $26,500 cash to the ATO.
  • The individual will still need to pay standard tax rates on income and superfund on super earnings despite the company losing deductions.

Getting onto the STP can be intimidating – particularly when you focus on the money that you could potentially lose if you get something wrong. But it doesn’t have to be a warzone. To give the ATO some credit, they are trying to make it easy, and it can even be integrated with certain cloud-based accounting systems like Xero! So once you’ve got STP set up and you get in the rhythm, it’ll become second nature.

But you have to have a thorough understanding of the changes to make sure you’re getting all that you can out of the system and not making any mistakes.

If you’re concerned that your small business might need some help running Single Touch Payroll, or you just want someone to double check what you have set up, call Bartley Partners today on (08) 8388 1033 or get in touch online to learn how we can help you.

5 Reasons to Hire an Accountant for Your Business

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If you’ve started your own business, you know the highs and lows already: the great feeling from getting more clients, doing the work you really want to be doing and being your own boss. But there’s always another side to that coin: late nights, stress, financial insecurities. The thing that’s often not talked about is all the administration work that needs to be done and that seemingly never ends.

Working on the books for your business is an important, and often time-consuming, job that needs to be done for legal and taxation purposes. And it needs to be done correctly or you could be up for financial penalties and severe audits.

There are two options for this work – do it yourself or hire a pro. When doing it yourself you’re not paying for a professional, but you are paying in time. And is it worth it?

We’ll explore the top 5 reasons that hiring a business accountant is the right choice for your business.

 

1. It Saves You Time

Just because you’re able to do your own accounting and financial reporting doesn’t mean that it’s the best use of your time. If it takes you 10 hours a month to manage your books, and you charge yourself out to clients at an hourly rate of $150, you’re actually losing $18,000 in revenue a year. Is that an expense that you’re willing to pay for?

Hiring an accountant means that you’ll be freeing yourself up to focus on what you do best and can develop the business to generate more revenue. And a business accountant will rarely cost you $18,000 a year!

 

2. Reduce Your Risk

Working on your own accounts, at 11pm after a full day of work, is not the best way to go about things. Mistakes can be made when you’re running on empty. And when it comes to accounting and tax returns, a mistake can really cost you!

At Bartley Partners, it’s our job as business accountants to know not only your business, but the current government and ATO regulations. We provide a service that will always be compliant with the most current laws and regulations, so you can rest assured that everything submitted is correct and on time. At 11pm, you can go to bed and sleep easy know you’ve made the right choice for your business.

 

3. Save Money

It’s not just the job of a business accountant to simply follow a formula and submit your tax returns. One of the highs of our job is finding a way to save you money, whether it’s through tax claims, business structure or cash flow management.

Keeping more money in your pocket is what we live for.

At Bartley Partners, we base our success on yours. If we can help your business grow, build revenue and operate more efficiently, we count that as a win. If we’re simply submitting paperwork to the ATO without a deeper look…well, that’s something that we just don’t do.

We can help you grow your revenue and profits by being smarter, not by working harder.

 

4. Find a Business Structure that Works

There are many business structures that you can follow – and not finding the right one can mean that you’re paying for what you don’t need or even stifling your growth.

When you work with the experienced business accountants and financial advisers at Bartley Partners, we take it upon ourselves to learn the ins and outs of your business and future goals. This means we can set you on the right path as soon as possible to help you get there.

 

5. Growth Strategy & Management

Growing your business to more staff, more clients and more offerings doesn’t always mean more profits. There are costs associated with making your business bigger. So when it’s time to grow, you need to know the best way to go about it to remain profitable.

We specialise in growth strategies for Adelaide businesses, and know how hard it can be for a business owner to be able to step back and look at their situation from a clear perspective. We love working closely with our clients to identify when it’s time to grow and the best way to get there.

Because your business accountant knows your books so well, it’s easy for us to make call on what’s achievable and identify the best way for you to move forward.

Are you ready to save time and money and grow your profits without having to put in those extra hours? We’re ready! Call Bartley Partners today on (08) 8388 1033 or get in touch online to learn how we can help you.