BUSINESS T h e - Velocity Accounting

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BUSINESS T h e - Velocity Accounting
The
   BUSINESS
   A C C E L E R A T O R
                 MAGAZINE

June 2021
BUSINESS T h e - Velocity Accounting
The
                                                                  BUSINESS
                                                                  A C C E L E R A T O R
                                                                                                                   MAGAZINE

 IT’S TIME TO WORK ON THE BUSINESS,
     NOT JUST IN THE BUSINESS
Most business owners are
familiar with Michael Gerber’s
1986 book, The E-Myth
(Entrepreneurial          Myth)
Revisited. Gerber suggests that
people think businesses are
started by real entrepreneurs,
however, in reality, the majority
of businesses are started by
‘technicians’.
A tradesman might be skilled
at building or re-wiring a
house, however, they might
lack the essential marketing,
bookkeeping       or    financial
management skills to grow
a successful business. An
exceptionally talented motor
mechanic might know very little
about people management,
social media, lead generation
or how to convert those leads
into customers. One of the key
messages for entrepreneurs in
the book is, business owners
need to work ON their business,
not just IN the business.
The challenge for every business
owner is to create a business
that     works      independently
of them. In other words, a
business that doesn’t rely on
their technical skills to produce
the necessary outcomes and
financial results. A lot of small
business owners genuinely
believe that nobody else can
perform certain technical tasks
better than they can and while
there may be an element of           be flexible and multi-task which    that could be delegated to team   can’t be in 10 places at once.
truth in that belief, there are      means you may have to fill the      members or outsourced.            By systemising all the operating
lots of skilled technicians in the   roles of receptionist, recruiter,                                     procedures and documenting
                                                                         The fact is, most businesses      them for others to follow,
marketplace. Of course, the vast     cleaner and bookkeeper. The         stay small for a reason but
majority of these technicians        workload can be overwhelming                                          you can create a business
                                                                         working ON the business can       model that works without your
are not suited to running their      but working longer hours            have a profound impact on         technical input. Trained staff
own business because they            is generally not productive,        your growth and profitability.    provide leverage to help grow
lack the necessary marketing,        sustainable or healthy. Working     The franchise model is a great    the business, the profits and
sales, HR, social media or           smarter not harder is the           example because you can           the business value.
bookkeeping skills.
                                     answer and that includes not        open 10 branches of your
As an entrepreneur you need to       wasting time on low level tasks     business when you obviously              - continued over page
BUSINESS T h e - Velocity Accounting
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                                                                   BUSINESS
                                                                   A C C E L E R A T O R
                                                                                                                           MAGAZINE

 IT’S TIME TO WORK ON THE BUSINESS,
     NOT JUST IN THE BUSINESS
- continued from previous page                   converts those leads into new customers,
                                                 tracks the important key performance
SYSTEMS & PROCEDURES                             indicators (KPI’s) and produces financial
Systemisation involves identifying every         reports without your hands on involvement.
repeatable process or task performed in          The challenge is to develop a business
the business and documenting how to              where the results are systems-driven, not
perform them. In addition, systemisation         people-driven.
also includes listing who is responsible for     Only a small percentage of entrepreneurs
each step in the process, what tools or          succeed in removing themselves from the
resources are to be used and when these          operational side of their business. The
tasks should be performed.                       majority are overwhelmed by the ‘job’ they
To bring this business model to life you need    have created and unfortunately, in many
                                                 cases, the financial rewards don’t justify the
to remove yourself from the day-to-day
                                                 long hours, pressure and stress. Put simply,
operational tasks and focus on developing
                                                 you could already be working incredibly long
systems. By documenting all the procedures
                                                 hours so it might not be possible to work any        characteristics can devalue the business
for your team to follow ensures that the
                                                 harder. If that is the case, it’s time to work
business continues to produce the same                                                                and potential buyers don’t want to buy a
                                                 smarter not harder because in business,
quality products and awesome customer                                                                 ‘job’ where the revenue is capped based on
                                                 the definition of insanity is doing things the
service. The objective is to have the business                                                        the hours the solopreneur works.
                                                 same way and expecting a different result.
run on autopilot so you are free to work on
developing and growing the business. The         How is it that some business owners seem             Having systems in place means you can be
true entrepreneur is focused on strategic        to be working less hours and lack the                more hands-off so you can focus on working
planning, marketing plus research and            marketing skills of their competitors, yet           on the business. You can delegate or
development so you continue to innovate          they are still able to scale and grow their          outsource the repetitive tasks to your team
and implement the latest technology to           business? You will find these entrepreneurs          members in the knowledge that they are
create more efficient processes. In turn,        have simplified, systemised and automated            following the precise processes you put in
this will help you motivate and retain the       large parts of their business ‘machine’. The         place. This produces consistent outcomes
right people to implement your systems.          business doesn’t rely on them to crank               irrespective of who is completing the task.
                                                 up the engine every day which reduces
It sounds simple in theory, however,             the risk for potential buyers because the            Systems also mean when you hire new
creating a business ‘machine’ that works         business is not totally reliant on the owner.        staff (or commence outsourcing tasks) the
like clockwork to produce consistent returns     Too often a business run by a technician             process is much easier. Every business
without your daily involvement takes a lot       grinds to a halt when they aren’t ‘on the            owner should aim to reduce the time it
of planning and hard work. The reward is         tools’ or are sick. They find it difficult to take   takes to train new staff and streamline the
the freedom to work the hours you want           time off and rarely have a decent holiday.           induction process. This means you don’t
and still generate an income to support          They build strong relationships with their           have to spend a lot of time explaining
your lifestyle. Imagine having an automated      key customers which might prove difficult            their role and responsibilities or answering
business engine that generates leads,            to transition to the new owner. All these            repetitive questions about the tasks. You
                                                                                                      or a team member can simply walk them
                                                                                                      through a document (or video) that outlines
                                                                                                      the relevant processes to follow. This will
                                                                                                      save time, money and plenty of angst but
                                                                                                      it won’t completely remove the need for
                                                                                                      some instructional training. No doubt it will
                                                                                                      speed up the process and you won’t have
                                                                                                      to micro-manage your team because they
                                                                                                      know exactly what they need to do, how to
                                                                                                      do it, what tools to use and when to do it.
                                                                                                                         - continued over page
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 IT’S TIME TO WORK ON THE BUSINESS,
     NOT JUST IN THE BUSINESS
- continued from previous page
GETTING STARTED
The starting point in systemising your
business is identifying all the processes
you use. Begin with the repetitive tasks
and document all the steps you follow.
The more detail the better and we
recommend you prioritise the list of tasks
and focus on the ones that soak up the
most time or have the biggest impact on
your business. Think about everything you
do and checklists can prove very useful.
                                             If you can simplify some of the tasks then    One area you can focus on automating is
Break down the tasks into the various                                                      your marketing including growing your list
                                             you might be able to systemise them
components of your business that might
                                             or even better, automate them using           of customers.
include:
                                             technology. Email software tools (like
                                                                                           Technology can automatically add new
   Finance - invoicing, bookkeeping and      Mail Chimp) can automatically generate a
                                                                                           contacts into your CRM system and given
   accounting reports                        series of emails based on a certain trigger
                                                                                           your customer database is a key business
                                             event.
   Human Resources - recruitment,                                                          asset, this can make your business more
   employment agreements, induction,         An online calendar can let your customers     valuable and saleable. For example, visitors
   training etc.                             or clients book their own appointments        to your website should be encouraged to
   Marketing - website maintenance,          and then automatically send out               exchange their contact details for a lead
   social media, newsletters, blogs,         appointment reminders by text or email        magnet that could be a valuable piece
   emails, etc.                              which can reduce no-shows and late            of your content that could be an e-book,
                                             cancellations. This type of software can      guide, checklist or even a free sample.
   Operations - answering calls and          let customers reschedule, cancel or book
   emails, onboarding new customers,                                                       Their email address is automatically added
                                             regular or recurring appointments without
   customer database management,                                                           to your CRM (Customer Relationship
                                             interrupting you or your team.
   follow up of leads and customers                                                        Management) system and you can then
                                             They can potentially accept payments          segment your database by areas of
   Information Technology - software         without interaction with staff and you can    interest and target your customers with
   and systems
                                             integrate appointment scheduling into your    tailored offers. You can then nurture the
   Sales & Purchasing Procedures             website and Facebook page that can save       relationship by sending regular newsletters
                                             a huge amount of time and administration.     and offers.

SUMMARY
A business without systems         dog’s breakfast and are you      improvement means adopting        Given we are all adapting to
and      automation       won’t    using the right technology to    new technology to create          the new post COVID normal,
achieve its full potential.        automate some of the tasks?      a more efficient business.        there has never been a more
What is holding you back from                                       Remember, systems and             important time to work ON
systemising your business          Entrepreneurs are always         technology are constantly
                                   looking for new ways to do                                         your business, not just IN the
processes? Is it time to let go                                     changing so your ‘procedures
of the invoicing, bookkeeping,     things and innovation can        manual’ will always be a work     business. If you need help to
cleaning or some of the            improve processes and drive      in progress. People’s roles       systematise your business
administrative     tasks?     Is   better financial outcomes.       also change so your manual        we invite you to contact us
your customer database a           Striving   for   continuous      will be under constant review.    today.
BUSINESS T h e - Velocity Accounting
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THE               FEDERAL 2021/22
The Treasurer Josh Frydenberg
released the Federal Budget
                                                     BUDGET
on Tuesday May 11 and the
focus is on recovery and
investment to support job
creation to drive economic
growth.      The     Treasurer
announced an expected deficit
of $161 billion, $36.7 billion
lower than the $197.7 billion
estimated in the Government’s
December Mid-Year Economic
and Fiscal Outlook (MYEFO)
which suggests our economy
is recovering at a much faster
rate than expected.
Australia’s GDP growth is
expected to come in at 1.25
per cent this financial year and
while some sectors such as
recreation and personal service
businesses have returned to
operating at pre-COVID levels,
other sectors impacted by the
ongoing border closure face
significant challenges. With       to get the unemployment            depreciating assets (first    a new airport in NSW.
Australia’s borders unlikely       rate below 5 per cent. The         used or installed ready
to re-open until at least                                             for use) for entities with    A    range    of     welfare
                                   focus is on large spending on
mid-2022, immigration and                                             aggregated turnover of less   spending         initiatives,
                                   infrastructure and targeted                                      including $13.2 billion
international tourism are still                                       than $5 billion.
                                   support for industries that                                      allocated to the National
off the agenda, as are most
international student arrivals.    will continue to suffer while      12-month extension of         Disability       Insurance
Immigration and international      our borders remain closed.         the Loss Carry-Back Offset    Scheme and $17.7 billion
students are important, not        Some of the key measures           introduced in the 2020/21     for new aged care funding.
only for the industries and        announced in the Budget            Budget, allowing corporate
                                   include:                                                         Consumption       stimulus
businesses       they    support                                      entities to carry back
                                                                                                    through the extension of
through their spending, but                                           tax losses for the 2022/23
                                     12-month extension of                                          the low and middle-income
they also supply labour in                                            income tax year for up to     tax offset (LITMO) for a
                                     the      temporary        full   four income years.
many industry sectors.                                                                              further year.
                                     expensing         measures
Much of the spending in this         (instant asset write off)        $15 billion in additional     A $1.7 billion investment
Federal Budget is focused            introduced in the 2020/21        infrastructure commitments    in childcare to drive
on short-term measures for           budget to allow a deduction      including a new intermodal    workforce participation and
continued economic recovery          for the full cost of eligible    terminal in Melbourne and
                                                                                                    women’s economic security.
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PERSONAL
INCOME TAX   Tax Rate                        Tax Payable
                                                                                2021/22                     2024/25 Previously
                                                                           (Per 20/21 Budget)                  Announced

               0%                                 $0                           $0- $18,200                      $0 - $18,200

               19%                                $0                        $18,201 - $45,000                $18,201 - $45,000

               30%                          Not Applicable                    Not Applicable                 $45001 - $200,000

              32.5%                             $5,092                     $45,001 - $120,000                  Not Applicable

               37%                             $29,467                     $120,001 - $180,000                 Not Applicable

               45%                             $41,667                          $180,001+                       $200,001+

The Government will maintain       the Low and Middle Income Tax       income between $37,000            personal income tax plan
changes to reduce personal         Offset (LMITO) will be retained     and $48,000, and taxpayers        remains unchanged and should
income tax. This measure           for the 2021/22 income tax          with taxable incomes between      commence from1 July 2024.
is designed to continue to                                             $48,000 and $90,000 will          The table below summarises
                                   year. It provides a reduction in
stimulate the economy by                                               receive the full $1,080. For      the resident personal tax rate
increasing the disposable          tax of up to $255 for taxpayers
income available to individuals.   with a taxable income of            taxpayers with a taxable          and thresholds (excluding the
                                   $37,000 or less. The LMITO          income over $90,000, the          2% Medicare levy).
Income Tax Offsets                 will increase at a rate of 7.5      LMITO will phase out at a rate
                                                                       of 3 cents for every additional   Medicare Levy Low-
The Treasurer confirmed that       cents for every dollar of taxable                                     Income Thresholds
                                                                       dollar of taxable income. It
                                                                       will phase out completely at a    For the 2020/21 income year,
                                                                       taxable income of $126,000.       the Medicare levy low income
                                                                       The Low Income Tax Offset         threshold for singles will be
                                                                       (LITO) will also continue to      increased to $23,226 (up from
                                                                       apply for the 2021/22 income      $22,801). For couples with no
                                                                       tax year. For taxpayers with      children, the family income
                                                                       taxable incomes of less than      threshold will be increased to
                                                                       $37,000, the offset is $700.      $39,167 (up from $38,474).
                                                                       The offset then reduces at a      For each dependent child or
                                                                       rate of 5 cents for each dollar   student, the family income
                                                                       of taxable income to $45,000      threshold will increase by
                                                                       and at a rate of 1.5 cents for    $3,597 (up from $3,533).
                                                                       each subsequent dollar of         For single seniors and
                                                                       taxable income, completely        pensioners eligible for the
                                                                       phasing out for taxable           seniors and pensioners tax
                                                                       incomes above $66,668.            offset, the Medicare levy
                                                                       Personal Tax Rates                low income threshold will be
                                                                                                         increased to $36,705 (up
                                                                       There have been no changes to     from $36,056). The family
                                                                       the personal income tax rates     threshold for seniors and
                                                                       for the 2021/22 income year.
                                                                       Stage 3 of the Government’s              - continued over page
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                                                                       are only entitled to deduct the    Simplifying Employee
                                                                       excess of the expenses incurred    Share Schemes
                                                                       over $250. This exclusion
                                                                       of the first $250 of eligible      Leaving an employer will no
                                                                       self-education expenses is to      longer be a taxing point for
                                                                                                          employee        share   scheme
                                                                       be removed. This measure
                                                                                                          entitlements. This means that
                                                                       will take effect from the first    tax deferral for the employee
                                                                       income year after the date the     share scheme entitlements
                                                                       amending legislation receives      will continue until forfeiture
                                                                       Royal Assent.                      conditions have passed and
                                                                                                          shares held are able to be freely
                                                                       Simplifying the Australian         sold, subject to the maximum
                                                                       Residency Rules                    15-year tax deferral period.
                                                                       The existing tests for the tax     Currently, forfeiture conditions
                                                                       residency of individuals will      and sales restrictions are often
                                                                                                          lifted at the time employments
                                                                       be replaced by a primary           ends. The value of shares
 - continued from over page       Simplifying Deductions for           “bright line” test. Any person     that a company can issue to
                                  Self-Education Expenses              who is physically present in       an employee under simplified
                                                                       Australia for 183 days or more     disclosure requirement will
pensioners will be increased to   Currently, individuals undertaking   in any income year will be an      also increase from $5,000 to
$51,094 (up from $50,191).        a prescribed course of education     Australian tax resident.           $30,000 per year.

BUSINESS TAX
The Government has provided       be extended until June 30,           budget will be extended by a       previously being in a taxable
further support for capital       2023 providing additional            further 12 months, allowing        position.
investment by businesses and      time for eligible entities to        corporate entities to carry
assistance with cash flows by     make capital investments and         back tax losses for the            The loss carry-back offset
extending the “temporary full     benefit from accelerated tax         2022/23 income year for up         is limited to a company’s
expensing” measure as well        depreciation.                        to four income years, as far       franking account balance and
as the loss carry-back offset                                          back as the 2018/19 income         this limitation may prevent
                                  All other features of the                                               entities from accessing the
for an additional income year.                                         year. The loss carry-back
                                  measure remain unchanged                                                measure where they have paid
Important changes to the          including the alternative test for   offset is available to corporate
minimum threshold for the                                              tax entities with aggregated       out franked dividends during
                                  entities that have aggregated                                           the year.
superannuation       guarantee    turnover of $5 billion or            turnover of less than $5 billion
charge (SGC) have also been       more, the ability to opt-out         and is intended to complement      Removal of Minimum
announced.                        on an asset-by-asset basis,          the temporary full expensing       Income Threshold for
                                  availability of full expensing       measure where tax losses are       Superannuation Guarantee
Extension of Temporary
                                  on capital improvements to           generated through significant
Full Expensing                                                                                            Currently,   employers     are
                                  existing depreciating assets         capital investments that give
The temporary full expensing      and the ability to write off the     rise to immediate deductions.      not    required     to    make
measures introduced in the        entire balance of a general          The measure allows for cash        superannuation contributions
2020/21 budget provided a         small business pool for              refunds with the lodgement         under the superannuation
deduction for the full cost of    small business entities using        of the tax return rather than      guarantee     legislation   for
eligible depreciating assets      simplified depreciation.             future tax savings from            employees in receipt of
(first used or installed ready                                         carrying forward tax losses to     salary and wages of less
                                  Extension of Loss Carry-
for use before June 30, 2022)                                          later years and can provide        than $450 in any calendar
                                  Back Provisions
to entities with aggregated                                            additional cash flow to support    month.     Many      employers
turnover of less than $5          The loss carry-back offset           working capital for companies
billion. The measure will now     introduced in the 2020/21            who make tax losses after                 - continued over page
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 - continued from over page         change to ensure their payroll    $250 million. They must also         and         Entrepreneurship
                                    systems are correctly set up to   have been recipients of the          Facilitators Program, to
                                    meet their obligations once the   JobKeeper payment between            support people who want to
have configured their payroll       measures take effect.             January 4, 2021 and March            start, run and grow their
systems to accommodate this                                           28, 2021 or were affected            own business.
threshold. The Government has       Extending the SME                 by the floods in eligible Local
announced that this threshold       Recovery Loan Scheme              Government Areas in March         3. A 30% Digital Games Tax
is to be removed with effect,                                         2021.                                Offset       for      eligible
                                    The Government is extending                                            businesses that spend a
most likely from 1 July 2022.
                                    the SME Recovery Loan             Industry Specific                    minimum of $500,000 on
This measure will mean that
superannuation support must         Scheme. It includes an            Business News                        qualifying Australian games
be provided to all employees        increased          government                                          expenditure. This excludes
                                    guarantee of 80 per cent, a       1. Small craft brewers and
regardless of the level of                                               distillers will receive an        unclassified games, or
income in any one month and is      higher maximum loan size of                                            those that involve gambling.
                                    $5 million and a maximum loan        increase in the cap for
designed to ensure low income                                            claims on the Excise Refund
earners are not disadvantaged.      term of 10 years, with interest                                     4. Aged Care scored a huge
                                                                         Scheme from $100,000 to
The proposed changes will           rates capped at roughly 7.5                                            boost with $17.7 billion to
                                                                         $350,000 from July 1,
primarily impact employers with     per cent. Borrowers may                                                be spent over 5 years
                                                                         2021.
casual and part-time employees      also be offered repayment                                              including          80,000
such as those in the retail and     holidays of up to 24 months.      2. Almost $130 million is            home care packages and
hospitality industries. Employers   The Scheme is available to           going to the New Enterprise       a supplement of $10 per
will need to keep track of this     SMEs with a turnover of up to        Incentive Scheme (NEIS)           resident, per day.

SUPERANNUATION
Superannuation changes announced in            increasing access to the bring-forward rule   Downsizer contributions do not count
the Budget provide increased contribution      for non-concessional contributions. The       towards superannuation contribution caps
opportunities for individuals over age 60.     bring-forward rule can allow an individual    and are permitted irrespective of a total
                                               to make three years of non-concessional       superannuation balance. Contributions
Removal of Work Test for Non-                  contributions in one year (e.g. up to         under the measure are available to an
Concessional Superannuation                    $330,000 from July 1, 2021). However,         individual and their spouse even if only
Contributions                                  the ability to make non-concessional          one of them was the owner of the property
The Government announced it proposes           contributions will continue to be subject     (i.e. both may contribute up to $300,000
to permit individuals aged 67 to 74            to an individual’s total superannuation       each from the sale if they each satisfy the
to make non-concessional (after-tax)           balance being less than the transfer          conditions). The measure is a targeted
contributions to superannuation on the         balance cap (currently $1.6m increasing       reduction in super restrictions that should
same terms as those currently applying to      to $1.7m from July 1, 2021) at June 30        provide increased incentive for older
individuals under age 67 by removing the       of the prior year.                            individuals to downsize sooner, thereby
work test for contributions made from 1                                                      increasing the supply of family homes.
                                               Reducing the Age of Eligibility
July 2022. Currently, individuals aged 67      From 65 to 60 Years for Downsizer             Increase in Maximum Releasable
and over are subject to a work test, which     Superannuation Contributions                  Amount for First Home
requires the individual to have worked a                                                     Superannuation Saver Scheme
minimum of 40 hours over a consecutive         The Government announced that it
30-day period in the financial year in         will reduce the eligibility age where         The Government announced an increase
order to make a voluntary superannuation       downsizer contributions can be made into      in the amount of superannuation savings
contribution that year (either concessional    superannuation from 65 to 60 years of         a first home buyer can access to purchase
or non-concessional).                          age, with the changes expected to come        a first home. Under the current First Home
                                               into effect from July 1, 2022. These          Superannuation Saver Scheme, up to
Although the work test will be removed         measures will allow a person aged 60 or       $15,000 of voluntary superannuation
for non-concessional contributions from        over to make a one-off non-concessional       contributions a year can be accessed early
July 1, 2022, the test will be retained for    contribution to their superannuation of       for the purchase of a first home, with a
personal deductible (i.e. concessional)        up to $300,000 from the proceeds of           total withdrawal amount of up to $30,000
contributions. The removal of the work         selling their principal residence owned
test for older Australians also includes       for ten years or more prior to the sale.                        - continued over page
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              - continued from over page         where ordinary marginal tax rates would     Currently, these pensions can only be
                                                 apply on earnings. Most first home buyers   converted into another pension where
permitted. Under the revised scheme, the         would benefit from using the scheme and     access to the underlying capital is
annual $15,000 voluntary contributions           the Government announced some further       generally restricted, with significant tax
amount remains, but eligible individuals         technical changes to reduce complexity      and estate planning issues arising on
will be able to withdraw up to $50,000           and unintended outcomes which should        such a restructure. The Government
in total of eligible super savings for a first   make the scheme more accessible to          also stated that the social security and
home purchase. This revised scheme               first home savers.                          tax treatment will not be grandfathered
is expected to commence from July 1,                                                         for new pensions commenced with
2022.                                            Self-Managed Superannuation
                                                                                             commuted funds and that commuted
                                                 Funds and Legacy Pension
Contributions and associated earnings                                                        reserves will be taxed as an assessable
                                                 Conversion
that are withdrawn under the scheme                                                          contribution. Accordingly, the detailed
are taxed at the individual’s marginal           The Government stated it will permit        rules and individual circumstances will
tax rate, less a 30 per cent tax offset.         individuals to exit legacy pension          need to be examined before deciding
In most circumstances, the net tax paid          products, together with any associated      whether conversion of a legacy pension
on contributions and earnings withdrawn          reserves, for a limited period of two       under this measure is optimal for those
under the scheme would be in the order           years. The measure is stated to apply       who may become eligible to do so. The
of 15%. As such, this is likely to be a          to market-linked pensions, lifetime         measure is stated to apply from the first
better outcome compared to the first             pensions and life-expectancy pensions       financial year after the date of Royal
home deposit being saved personally              in self-managed superannuation funds.       Assent of the enabling legislation.
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                                       2021 TAX RETURN
– HOME EXPENSE CLAIMS

As we approach the end of           those related to a child’s        method has been extended          The shortcut is all-inclusive
the 2020/21 financial year,         education. These include          to June 30, 2021. Taxpayers       and can’t be supplemented
the Australian Tax Office has       online learning courses and       can claim a rate of 80 cents      by    additional,   individual
indicated that several types        laptops.                          per hour to cover all their       expense claims on items like
of costs associated with                                              running expenses rather than      phone and internet costs.
                                    The ATO also warned that          calculating specific costs for
working-from-home will not                                                                              Taxpayers don’t need to have
                                    working from home doesn’t         running expenses. Taxpayers
be eligible as a tax deduction.                                                                         a dedicated work-from-home
                                    make it a place of business       simply need to record the         area to claim under this
With so many people working         for tax purposes. Employees       hours they worked at home         method and multiple people
from home through 2020 and          generally can’t claim rent,       on timesheets or have diary       in a household can claim
beyond, the ATO have issued         mortgage interest, property       notes. The rate of 80 cents per   using the shortcut method.
a reminder that personal and        insurance or rates. The Tax       hour covers costs including:
occupancy expenses cannot           Office also warns that claiming                                     The shortcut method is
be claimed. Personal expenses       occupancy expenses could             Electricity for lighting,      optional, and individuals can
like tea, coffee and toilet paper   potentially expose the home to       cooling,    heating    and     elect to claim based on the
that are typically supplied         capital gains tax on sale.           running electronic items       actual expenses incurred but
by employers, aren’t directly                                                                           they would need to comply
                                    Home Office Expenses                 Phone and internet costs
related to earning income and                                                                           with the more complex,
therefore cannot be claimed         Last year the ATO announced          The decline in value of a      record-keeping requirements
by taxpayers who were forced        a simplified method of               computer, laptop home          Taxpayers should choose the
to work from home. Other            calculating   home     office        office     furniture  and      appropriate method for their
ineligible expenses include         expenses and this ‘shortcut’         furnishings.                   circumstances.
The
                                                                BUSINESS
                                                                A C C E L E R A T O R
                                                                                                                    MAGAZINE

              ATTENTION
 ALL COMPANY DIRECTORS
                                                                                              identity and receive their unique DIN. This
                                                                                              includes a driver’s licence (or learner’s
                                                                                              permit), passport, birth certificate,
                                                                                              Australian visa and Medicare card. The
                                                                                              Registrar may also request the director’s
                                                                                              tax file number (TFN) and the Registrar
                                                                                              can ask the ATO to provide the TFN of an
                                                                                              individual who has applied for a director ID
                                                                                              to verify the identity of the individual.

                                                                                              As the DIN system will be administered
                                                                                              by the Commonwealth Registrar operating
                                                                                              under a separate statutory function of
                                                                                              the ATO, bad director behaviour should
                                                                                              come to the attention of the ATO more
                                                                                              often and more quickly. Any insolvency
                                                                                              practitioner who enables directors in their
                                                                                              phoenixing activity will also come to the
                                                                                              ATO’s attention faster.

                                                                                              The DINs Will Benefit Almost
                                                                                              Everyone Involved in a
                                                                                              Company
                                                                                              In addition to helping deter and identify
                                                                                              illegal phoenix activity, and with it reduce the
New Director Identification                     So What Impact Will the DINs                  number of creditors left unpaid, the DINs
Number                                          Have on Company Directors,                    will also benefit investors, shareholders
The Government has introduced a                 Aside From More Form Filling?                 and company directors by giving them
Director Identification Number (DIN) to         For most directors, the impact of the         access to better background knowledge
provide greater transparency around             new Director Identification Number will       of a director, particularly their relationships
the background of company directors to          be minimal. For those who comply with         with companies past and present, and help
combat illegal phoenix activity that leaves     Australia’s corporate laws and regulations,   prevent them appointing fictitious directors,
creditors unable to recover debts. The          the DIN is simply a unique identification     i.e., those with false identities.
introduction is very timely given the number    number issued by the government that
                                                they retain for life.                         Directors must apply for their DIN by
of financially distressed companies on the
                                                                                              November 30, 2022 and penalties will
verge of insolvency due to the COVID-19         There’s no fee and the government             apply for falsifying identity information or
pandemic.                                       administers the system through the new        applying for multiple DINs. New company
The Director Identification Number is           Australian Business Registry Services
                                                                                              directors registered under the Corporations
designed to deter Directors from engaging       (ABRS), which is consolidating ASIC’s
                                                                                              Act must apply for a DIN within 28 days of
in illegal phoenix activity and will help       31 business registers and the Australian
                                                Business Register.                            becoming a director. With the legislative
regulators detect phoenix activity. Directors                                                 changes, now more than ever, directors
need to be aware of their obligations and       All directors will be required to provide     need to be aware of their obligations.
the penalties of such activity include large    a number of documents to the
fines and up to 15 years’ imprisonment.         Commonwealth Registrar to establish their
2021 Tax Return
                                                 Client Checklist
                                                             June 2021

                      2021 - Individual Tax Returns
Income                                     Deductions                                Rebates
• Gross salary, wages, allowances,         • Investment and property expenses        • Private health insurance annual
  benefits, earnings, tips, Directors        (carefully detail interest and repair     statement (request from Health Fund)
  Fees and Insurance for lost wages.         claims), supply statements.             • Details of superannuation
                                           • Work-related subscriptions or             contributions where no tax deduction
• Income from business activities.                                                     can be claimed.
                                             memberships (not including sporting
• PAYG Payment Summaries or                  or social clubs).                       • Any changes in dependants,
  Income Statements from MyGov                                                         children’s details, DOB and
                                           • Employment related expenditure            any Centrelink benefits
• Details of any non-cash benefits           such as self-education, protective        applicable(income of spouse should
  received including discount(s) on          clothing, tools, union fees, uniform      also be provided).
                                             and laundry expenses.
  employee shares or rights.                                                         • Details of any income received in
                                           • Motor vehicle expenses, car finance       a lump sum which was accrued in
• Lump sum and termination                   lease statements (include petrol,         earlier income years (e.g. assessable
  payments. All documentation                repairs, parking and maintain a           pensions).
  should be provided including an            Motor Vehicle Log Book where
  ETP Payment Summary from the               necessary).                             • Details of any remote work
  employer or fund.                                                                    performed for 183 days or more.
                                           • Donations of $2 and over.
                                                                                     • HECS-HELP Debt details.
• Government Social Security               • Income Protection Insurance
  payments, including pensions,              Premiums.
  unemployment and sickness
  benefits.                                • For Self-Employed persons, details
                                             of any Superannuation Contributions
• Details of any CGT asset sales             made.
  (e.g. shares, business and real          • Home office expenses where
  estate). Please include dates of, and      employment requires use of your
  costs associated with, acquisition         computer, phone or other device.
  and disposal (You can save tax if
  you qualify for the variety of CGT       • Tax Agent Fees and other
  concessions).
                                             accounting/tax audit fees.                 8 Most Common Errors
                                           • Special deductions (Australian             in Income Tax Returns
• Annuities, including allocated             films, investment shelters and
  pensions or superannuation income          agribusiness-type schemes).                1. Omitting Interest Income
  streams.
                                           • Unrecouped prior year losses.              2. Incorrect or Omitted Dividend
• Income from trusts and partnerships.                                                     Imputation Credits
  Statements of distribution should be                                                  3. Capital Gains/Losses are
  provided where appropriate.                                                              Incorrect or Omitted
• Rental income.                                                                        4. Understating Income
• Interest and dividends received from                                                  5. Home Office Expenses
  any source including life insurance or
  friendly society bonuses and any tax                                                  6. Depreciation on Rental
  deducted. Include details of franked                                                     Property Fixtures and Fittings
  dividends (i.e. imputation credits).                                                  7. Depreciation on Income
                                                                                           Producing Buildings
• Foreign source (employment and           New Clients
  pension) income and details of           • Last year’s Notice of Assessment           8. Borrowing Costs associated
  any foreign tax credits, assets or         and Tax Return (if available)                 with Negative Gearing
  property.
2021 - Companies, Partnerships,
Trusts and Other Businesses
Income                                                            • Superannuation contributions.                                  Assets
• Trading Income.                                                 • Subscriptions.                                                 • Details of depreciable assets
• Other Income (e.g. Rent, Interest,                              • Car expenses (remember to                                        acquired and/or disposed of during
  Royalties).                                                       include petrol, repairs and parking                              this income year, including:
                                                                    and maintain a log book where                                  • type of asset;
• Stock on Hand at June 30, 2021                                    necessary).
  (and basis of valuation) – note any                                                                                              • date of acquisition;
  obsolete stock.                                                 • Tax agent’s fees and other
                                                                    accounting and tax audit fees.                                 • consideration received/paid.
• Work-in-Progress at June 30, 2021                                                                                                • Lease commitments.
                                                                  • Royalties paid.
• Primary Producer subsidies (if                                                                                                   • Debtors at June 30, 2021.
  assessable).                                                    • Details of the destination and
                                                                    purpose of any interstate or                                   • Commercial debts forgiven.
• Details of CGT assets (e.g. shares                                overseas trip. Expenses must be fully
  and real estate) sold, including                                  documented where travel involves                               Additional Information Required
  dates of, and costs associated with                               at least one night away from home.
  acquisition and disposal.                                                                                                        • Franking account details/
                                                                    Travel diaries should be included                                movements.
• Dividends, including details of                                   where travel exceeds five nights.
  franking credits.                                                                                                                • Overseas transactions, exchange
                                                                  • Research and development                                         gains/losses.
• Income from foreign sources                                       expenditure.
  including details of any foreign taxes                                                                                           • Private companies – remuneration or
                                                                  • Bank fees (where the credit or                                   loans to directors, shareholders and
  paid.                                                             deposit represents assessable                                    their relatives.
                                                                    income).
Deductions                                                                                                                         • Changes to the capital of the
                                                                                                                                     company.
•    Repairs and maintenance.                                     Liabilities
                                                                                                                                   • Whether family trust elections have
•    Salaries, including fringe benefits.                         • New loans taken out during the                                   been made in relation to trusts.
•    Fringe benefits tax paid.                                      year and their purpose, including
                                                                    any new lease or chattel mortgage
•    Rates, land taxes and insurance                                agreements on vehicles, equipment
     premiums.                                                      or machinery.
•    Advertising expenses.                                        • Statements from the lending
•    Interest on borrowed monies.                                   authority detailing the opening and
•    Deductions relating to foreign-source                          closing balances of existing loans                                  Note:
                                                                    during the financial year.                                          To ensure that you obtain the
     income.
                                                                                                                                        maximum deductions to which you
•    Prepaid expenses (subject to                                 • Provisions for long service and
                                                                                                                                        are entitled and in consideration of
     transitional rules).                                           annual leave.
                                                                                                                                        the penalty provisions, FULL DETAILS
•    Retirement payments and golden                               • Creditors at June 30, 2021.                                         of any claim should be provided and
     handshakes.                                                  • Details of loan accounts to directors,                              supporting documentation made
                                                                    shareholders, beneficiaries and                                     available. For employee taxpayers
•    Bad debts actually written off during
                                                                    partners.                                                           and for travel and motor vehicle
     the year.
                                                                                                                                        claims by self-employed taxpayers,
•    Donations of $2 and over depending                           • Accrued expenses (e.g. audit fees,
                                                                                                                                        documentation must be a receipt,
     on the recipient.                                              interest payments).
                                                                                                                                        tax invoice or similar document
•    Commissions.                                                 • Commercial debts forgiven.                                          which contains certain details. For
                                                                                                                                        other taxpayers, documentation
•    Legal expenses.
                                                                                                                                        may comprise receipts, dockets,
•    Lease or Chattel Mortgage payments                                                                                                 diary notations or reasonable and
     on motor vehicles and equipment.                                                                                                   supporting estimates.
•    Losses of previous years

    IMPORTANT DISCLAIMER: This document contains general advice only and is prepared without taking into account your particular objectives, financial circumstances and needs.
    The information provided is not a substitute for legal, tax and financial product advice. Before making any decision based on this information, you should speak to a licensed financial
    advisor who should assess its relevance to your individual circumstances. While the firm believes the information is accurate, no warranty is given as to its accuracy and persons
    who rely on this information do so at their own risk. The information provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.
The
             BUSINESS
             A C C E L E R A T O R
                                                                                                                MAGAZINE

                                        Unit 1, 21 Spring Park Road, Midland WA 6056
                                                  Phone: (08) 9250 4048
                                        Email: accountant@velocityaccounting.com.au

IMPORTANT DISCLAIMER: This newsletter is issued as a guide to clients and for their private information. This newsletter does not constitute advice. Clients
should not act solely on the basis of the material contained in this newsletter. Items herein are general comments only and do not convey advice per se. Also
changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of these areas. The information
provided in this bulletin is not considered financial product advice for the purposes of the Corporations Act 2001.
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