On Tuesday evening, the 2024-25 Federal Budget was handed down. The 2024-25 Budget is a pre-election budget for the people with everyone getting a little something to ease cost of living pressures.
The personal income tax cuts legislated to commence on
1 July 2024 will be realigned and redistributed under a proposal released by the Federal Government.
Published by HWOne in TAX
Tags: Income Tax
With the ATO shifting its focus on taxpayers with outstanding tax lodgements and debts, find out how to avoid being penalised at the increased penalty rates in 2023–24.
Announced as part of the 2023–24 Federal budget, increased funding has been provided to the ATO to scrutinise taxpayers who have high-value outstanding debts of over $100,000 and aged debts older than two years where those taxpayers are:
- Public and multinational groups with an aggregate turnover of over $10 million, or
- Privately owned groups or individuals controlling net wealth of over $5 million.
- Increased penalty rates
After a recent increase in January 2023 from $222 to $275, Commonwealth penalty unit rate has witnessed yet another hike from 1 July 2023 and currently sits at $313 per unit. This means that if you fall behind on your tax lodgements you can expect the financial penalties to increase substantially.
Penalties may be levied on late lodgements of returns and reports that include but are not limited to:
- Activity statements
- Income tax returns
- FBT returns
- PAYG withholding annual reports
- Single touch payroll reports
- Annual GST returns and information reports
- Taxable payment annual reports.
- With the increased rates now in effect, a small business can expect to pay base penalties for failure-to-lodge returns ranging anywhere between $313 (1 penalty units) to $1,565 (5 penalty units), one unit for every 28 days the lodgement is overdue.
Small business lodgement penalty amnesty
The ATO is encouraging small businesses that have overdue income tax returns, fringe benefits tax returns or business activity statements etc. to take advantage of a lodgement amnesty that will run until 31 December 2023.
Announced in the 2023–24 Budget, the amnesty applies to tax obligations that were originally due between 1 December 2019 and 28 February 2022 and has been available since 1 June 2023.
To be eligible for the amnesty, the small business must be an entity with an aggregated turnover of less than $10 million at the time the original lodgement was due.
Next steps
To avoid being penalised at the revised higher rates for failing to lodge returns and reports, ensure you collate and send us all necessary information well before the lodgement due date so we can complete your lodgements on time.
If you anticipate delays, best practice is to engage with the ATO and tell them your situation. We can assist you with requesting an extension in lodgement due date, applying for remissions or if necessary, taking out a payment plan to pay off your tax debts.
Small businesses can avail the lodgement penalty amnesty and lodge eligible overdue forms before 31 December 2023 and the ATO will automatically remit any associated failure-to-lodge penalties.
Should you have any queries in relation to this matter, please feel free to contact our office.
Positive cashflow is the beating heart of your business. Dive into our Plain English guide to cashflow and find out how to get in complete control of your cash position.
Why is cashflow so central to good financial management? Here's our plain English guide.
What is cashflow?
Cashflow refers to the movement of money into and out of your business over a specific period.
In the most basic terms, cashflow is the process of cash moving out of the business (cash outflows), and cash coming into the business (cash inflows). The ideal scenario is to be in a ‘positive cashflow position’. This means that your inflows outweigh your outflows – i.e. that more cash is coming into the business than is going out.
When you’re cashflow positive, the main benefit is that you have the liquid cash available to fund your daily operations and debt payments etc.
On the flip side, if you’re in a negative cashflow position, this can be a red flag that the business is facing some financial challenges – and that some serious cost-cutting and/or revenue generation is needed.
How does cashflow affect your business?
Not having enough liquid cash is one of the biggest reasons for companies failing. So it’s absolutely vital that you keep on top of your company’s cashflow position.
Five key cashflow areas to focus on will include:
- Monitoring your cash inflows and outflows – this means regularly tracking your cash inflows from sales, loans and investments, as well as managing your cash outflows from expenses, purchases and debt repayments.
- Managing your account receivables and payables – efficiently managing your customer receipts and supplier payments helps smooth out your inflows and outflows – and delivers stable cashflow that’s easier to predict and manage.
- Getting proactive with your budgeting and forecasting – creating realistic cashflow budgets and forecasts helps you predict your future cash position. By anticipating your future cash needs, you can actively plan for potential shortfalls or surpluses.
- Being in control of your stock inventory – having excess stock in your warehouse ties up cash. So, it’s a good idea to optimise your inventory levels and to only manufacture/order the items you need on a day-to-day basis.
- Investing in your cash reserves – with emergency cash reserves in the bank, you know you have the funds to handle unforeseen cashflow issues or sustain your operations during lean periods. This makes your whole cashflow position more stable.
How can our firm help you with cashflow management?
Positive cashflow is the beating heart of your business. Working with a good adviser helps you keep that cashflow healthy, stable and driving your key goals as a company.
We’ll help you keep accurate records, track your inflows and outflows and deliver the best possible cashflow position for the business.
Get in touch to chat about improving your cashflow.
On Tuesday evening, the 2023-24 Federal Budget was handed down. The 2023-24 Federal Budget boasts a surplus for the first time in fifteen years and new initiatives are focused on cost of living pressures, defence, the transition to renewable energies and, minor adjustments to existing tax initiatives.
Key measures from the budget include:
- Energy bill relief for some households and small business.
- Encouraging doctors to offer bulk billing by tripling the incentive for children under 16, pensioners and other Commonwealth card holders.
- Increases to Commonwealth rent assistance.
- Increases to JobKeeper and other income support payments.
- Expanding access to the single parenting payment.
- $20,000 instant asset write-off for small business.
A detailed guide of all budget announcements for your reference is available for download by clicking here.
Accounting tasks don’t have to eat into your business time. With the right cloud accounting software, you can save time and money – while also getting tighter control over your finances.
Keeping on top of your accounts is a big part of running a successful and profitable business. But you don’t want to spend ALL your time dealing with accounting tasks, especially when that time could be spent building customer relationships, or developing new products etc.
So, how do you keep your finances in check, while also spending less time on your accounts?
1. Bringing your accounting into the digital age
Switching to cloud accounting can be a revolutionary step for many business owners, especially when you look at the ways you can streamline and automate the basic accounting tasks. By using accounting platforms like Xero, QuickBooks, MYOB or Sage, you get all the basics of small business financial management, but with the benefits of smart automation.
With most modern cloud accounting software, you can:
- Automate the scanning and digitisation of your expenses and receipts
- Automatically reconcile your bank transactions with your invoices and bills
- Connect your accounts to other time-saving apps for mileage claims or staff expenses.
2. Getting paid faster and with less admin
With a cloud accounting platform driving your business, you also make it easier to send out e-invoices and get paid faster and more effectively. Improving your payment times and cash collection can make a huge difference to your cashflow position, and also sets the right expectations with your customers – making it clear that you require to be made on time.
Using the invoicing function in your business software, you can:
- Quickly send out electronic invoices as soon as a job is completed
- Set up automated invoices to be sent out at pre-agreed points in a project
- Include payment buttons on your invoice, so customers can pay via PayPal or card
- Remove the barriers to payment and speed up payment times.
3. Getting a better overview of your important numbers
Using cloud accounting isn’t just about automating the time-consuming financial admin tasks. By recording and tracking all the financial and non-financial data flowing through your system, your accounting platform can actually provide you with a goldmine of useful real-time information.
With cloud accounting providing your reporting, you can
- Access totally up-to-date real-time information, to improve your decision-making
- Track your performance against targets to see how well the business is performing
- Monitor spending and budgets to keep your cashflow under control
- Understand your return on investment when it comes to sales and marketing activity
- See how promotion has driven sales but reduced your profit, due to discounting.
Talk to us about setting up a more productive kind of accounting
If you want complete control of your finances and business decision-making, updating your accounting software and processes will be key to achieving that goal.
We can help you decide which accounting software is most suited to your business, and how to maximise the benefits you get from automation and real-time data.
Get in touch to talk through updating your accounting.
Want to know how to beat the most common business challenges? We’ve highlighted five common challenges and the simple ways to overcome them.
Founding, building and growing your own small business is a hugely rewarding experience for many entrepreneurs. But the road ahead isn't always smooth.
There are common challenges that crop up and ongoing issues that need to be factored into your business plan, your strategy and your own personal thinking.
So, what can you do to beat these challenges and make the journey as frictionless as possible?
5 proactive ways to overcome your business challenges
We’d all love to know what lies around the corner when it comes to the future path of your business. The truth is that every business journey is unique. But there are common challenges that every owner-manager or CEO will be faced with – and being prepared for these hurdles is the best way to leap over them and take each challenge in your stride.
We’ve highlighted five common challenges and the simple ways to overcome them:
- Uncertainty: No-one has a crystal ball to know exactly what's coming around the corner. But there are ways to be prepared for some unknown circumstances. You can't fully predict the main external threats like government policy, economic conditions or freak weather conditions. But you CAN use forecasting and scenario-planning tools to build up contingency plans so you have a Plan A, Plan B and even a Plan C. With forecasts of your business data, finances and industry trends, you can be ready to react, pivot and take positive action.
- Competition: Small businesses often face stiff competition from larger, more established companies. To stay ahead of the curve, it's important to be nimble and agile. It's also vital to find your niche and to know precisely why your customers value your offering. By ploughing a unique furrow and keeping your customers happy, you can give yourself an edge over larger, slower-moving corporate-size competitors.
- Access to capital: It can be a struggle to secure funding as a startup, particularly if you have limited financial resources or a poor credit history. Having a detailed funding strategy is a crucial way to overcome this problem. Keep your finances in order and make sure you have in-depth financial reports to show banks, lenders and investors. It's also helpful to focus on paying suppliers on time, keeping debt levels under control and ensuring your cashflow is in a positive position. These are all excellent ways to improve your business credit rating and show you're a stable, risk-free prospect for lenders.
- Hiring and retaining employees: Attracting and retaining talented employees is difficult, especially during the ongoing talent shortage. Offering competitive salaries or benefits packages can be one way to attract people. But it's also important to think about your brand reputation, your sustainability credentials and your CSR policy – all things that Millennial and Gen Z workers value alongside decent pay and benefits packages. Employees want to be proud of where they work, so make your company a progressive, satisfying and rewarding place to work.
- Keeping up with technology: Business technology is evolving at a rapid pace. It can be daunting keeping up with all the available apps, tools and software solutions that are aimed at your business. The trick is to be informed but selective about the apps you use. Start with the operational and financial needs of the business and look for apps that can automate, improve efficiency or provide improved data and management information. Talk to other business owners and your professional network to find out what the essential apps are in your industry. And do your research and homework before you choose any software solution to add to your app stack.
Talk to us about being an agile small business
Looking to the horizon for the upcoming pitfalls is essential as an ambitious and informed business owner. As your adviser, we can help you generate the most informative management information, to keep you agile and ready for what lies around the corner.
We’re also on hand to discuss your ongoing strategy, how to react to upcoming risks and the best ways to access capital and manage your company’s finances.
Arrange a meeting and let’s see what the future may bring for your business.
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