Proposed expansion of STP to smaller employers

Single Touch Payroll (‘STP’) commenced on 1 July 2018 for approximately 73,000 employers who have 20 or more employees.

There is currently legislation before Parliament to expand STP to all employers from 1 July 2019 and it is estimated that there will be more than 700,000 employers who will enter STP as a result.

Even though the proposed expansion is not yet law, the ATO recommends that smaller employers consider voluntarily opting-in to STP early.

The ATO acknowledges there is a large number of very small employers who have less than five employees (‘micro-employers’) who do not currently use a payroll product and has indicated that they are not looking to force them to take up a product to do STP.

Efforts are being made to work with industry to look at some alternate reporting mechanisms.

It is being reported that software developers, and even some of the larger banks, have shown an interest in developing some kind of product that would enable micro-employers to provide the necessary data to comply with STP at a low cost.

Employers who are in an area that has internet issues or challenges are reminded that there are potential exemptions available under STP.

The ATO is currently consulting with focus groups to look at flexible options to transition micro-employers to STP over the next couple of years.

Assuming the relevant legislation passes, the ATO does not realistically expect that everyone will start STP from 1 July 2019 and has indicated that it will be flexible with the commencement date, including the provision of deferrals to help stagger the uptake.

Tax Cuts for Small & Medium Businesses

The Government has fast-tracked the already legislated tax cuts to small and medium businesses by bringing them forward five years.

Companies with an aggregated turnover of less than $50 million will have a tax rate of 25% in the 2022 income year (instead of the 2027 income year based on the previously legislated timeline).

Similarly, the increase in the tax discount to 16% for unincorporated entities will apply from the 2022 income year, rather than the 2027 income year.

Grants Supporting Small/Medium Businesses

There are a wide range of government grants and programs available to support small and medium businesses to start, run and grow. These range from supporting businesses move into different markets, assistance to employ new staff, subsidies to grow businesses and advice, and funding to create healthy and safe workplaces.

 Current programs available to Victorian businesses to help offset business expenses include:

• Fuel Tax Credits - Provides businesses that have purchased fuel for their business with a credit for the tax that is included in the price of fuel.

• R&D Tax Incentive - Provides a tax benefit to companies to help offset some of the cost of conducting eligible research and development activities.

• Textile, Clothing and Footwear Corporatewear Register - Employers are also eligible for fringe benefit tax (FBT) concessions on any contribution they make towards the employee’s uniforms.

We’d encourage all businesses to find out more about the grants available relevant to your business by clicking here.

Financial Reports: Large Proprietary Companies

The Federal Government is proposing to reduce the financial reporting burden for proprietary limited companies by increasing the thresholds for the small/large proprietary company test.

Under current legislation, a company must prepare and lodge an audited financial report with the Australian Securities and Investment Commission if it meets two out of three “large” thresholds for revenues, gross assets, and employees.

The change to the company test proposes to increase the thresholds as follows:

• the consolidated revenue for the financial year of the company and the entities it controls from $25 million to $50 million;

• the value of the consolidated gross assets at the end of the financial year of the company and the entities in controls from $12.5 million to $25 million; or

• the company and the entities it controls having 50 employees to 100 employees at end of the financial year.

Any companies that are no longer “large” under the increased thresholds will not have to prepare financial reports unless they are directed to, either by five per cent of the shareholders, or by ASIC.

The proposed changes in thresholds will apply to financial years beginning on or after 1 July 2019, meaning that affected companies will not have to lodge accounts for years ended 30 June 2020 or subsequent years.

The exposure draft regulations is open for comment until the 14th of December. For more information or to submit a response click here

How Accountants Could Help Your Business

An accountant can support you to get maximum returns at tax time and ensure you fulfil your tax obligations, but they can also act as a trusted business adviser and use their expertise and foresight to help grow your business.

Your accountant can offer much more than just a tax return – If you are only seeking advice at tax time then you are not optimally utilising your accountants expertise and knowledge. Accountants can provide valuable support to businesses and help keep them on a positive growth trajectory.

Your accountant can set the direction for your business – Accountants can provide strategic advice on business structures and business plans that align with your specific business goals to ensure your business is built on a strong foundation.

Your accountant can help you implement your business goals - Accountants can provide support in an ongoing advisory capacity and assist in monitoring the implementation of your business plan to help you stay on track to achieving your business goals.

Your accountant can give you the best advice tailored to your business needs – A productive partnership with your accountant is formed by regular and transparent communication, your accountant is in the best position to offer business and finance solutions that meet your individual requirements.

Strong business financials are just part of what we do at Vawdrey Axton Turner. We believe effective partnering promotes better business, that’s why we deliver a full spectrum of financial solutions that are tailored to your specific business needs.

Contact us today to find out how we can support you and your business in setting and achieving your goals 9584 2277.

Adapted from https://www.smartcompany.com.au/partner-content/articles/seven-small-business-accounting-solutions/