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Expert Bookkeeping and Accounting for the Building and Construction Industry

Are you looking for expert accountants and bookkeepers in the building and construction industry?

We know it’s a complex industry, and it’s been hit hard recently. Getting professional help to get your business finances under control will help ease the stress of pressures that many in your industry are facing. Engaging advisors who are specialists in your unique industry can help you to sustain your business and even thrive in difficult times.

There are many areas of bookkeeping for the building and construction industry that we often see could be managed better (and more profitably) with sound advice and the right software.

• Tracking work in progress
• Applying customer and supplier deposits
• Allocating progress payments
• Accounting correctly for retentions
• Complex payroll and contractors
• Accurate job costing
• GST and BAS payment planning
• Managing the fixed asset register
• Control of inventory stock levels and costs
• Taxable payments annual report
• Accounts payable and receivable management
• Cash flow forecasting and budgeting

Just like your construction work, using the right administration tools always makes the job easier. Businesses often start with simple accounting and business management software but don’t upgrade the admin, payroll and accounting tools in line with business changes or growth.

Talk to us if you’re ready to review or upgrade your current bookkeeping and business systems. We can advise on the best accounting software and related add-on solutions for your business and help implement best practices to streamline the administration and accounts.

Let us help your business to thrive.

Fringe Benefit Tax at Christmas Time

It is a time of the year when giving is encouraged. As a business owner, you may want to make sure you have all the information available to you, so that you are fully aware of your tax obligations this Christmas.

Christmas parties

The cost of food and drink associated with a Christmas party is exempt from fringe benefits tax (FBT) if they are provided on a working day on your business premises and consumed by current employees. This exemption is only available for employees, not associates.

The provision of a Christmas party held off your business premises may also be exempt from FBT under the minor benefits rule if the cost of the party is less than $300 per employee. The FBT exemption also applies to an associate of your employee, as long as the benefit remains under $300 per employee.

Christmas gifts

Under the minor benefits rule, providing a gift to an employee is also exempt from FBT as long as the value of the gift is less than $300 under the minor benefits rule.

Tax deductibility of a Christmas party

The cost of a Christmas party can only be claimed as a tax deduction if it is subject to FBT. Therefore, if your party is less than $300 per employee, then you cannot claim the cost as a tax deduction.

Inviting clients or customers?

Generally speaking, inviting clients or your customers to a Christmas party is not subject to FBT. However, as the Christmas party is considered to be providing entertainment, the cost of clients attending the party is not income tax deductible.

Here’s an Example

You decide to hold a Christmas party for your 60 employees, along with 20 of the employees’ partners and 10 clients. The overall cost of the Christmas party totals $9,000 including gifts.

• The cost of the party is not subject to FBT as the cost is considered a minor benefit to your employees and their associates. Also, the cost associated with your clients attending does not attract FBT.
• The average cost of your employees and their associates is $100 per person, being under the FBT limit. As no FBT applies, this cost ($8,000) is not tax deductible.
• The $1,000 of cost allocated to clients is also not tax deductible as it is considered the provision of entertainment which is specifically denied as a deduction.

Talk to us about your entertainment and gifting plans this Christmas. We can advise on the tax deductability or your obligations.

Have you applied for your Director Identification Number yet?

The Director Identification Number (DIN) regime has been passed by parliament and is now law. Under the new law, all directors of companies registered under the Corporations Act will need to have one unique identifier.

The DIN is a measure that will limit the opportunities for a company and its directors to engage in phoenixing activities. This new measure requires all directors to confirm their identity before receiving a DIN, and there will be civil and criminal penalties for system misuse. This includes intentionally applying for more than one DIN.

From 1 November 2021, this register will be open for applications at Australian Business Registry Services (www.abrs.gov.au).

Confirming your identity

A key component of the DIN register is to be able to separately identify different directors by giving them a unique identifer.

Therefore, part of the application process will be verifying your identity. The easiest way to do this will be to set up a myGovID account if you do not already have one (mygovid.gov.au).

When do I need to apply?

As mentioned above, the commencement of the DIN register on the ABRS website will be 1 November 2021. This date will be the start of the transitional period, in which different rules apply based on when you became a director of a company. The transitional period is due to end on 4 April 2022, being one year since the Australian Taxation Office took over the operation of the DIN registration system.

If you were appointed as a director of your company on or before 31 October 2021, you are required to get a DIN before 30 November 2022.

If you are appointed to a new directorship role between 1 November 2021 and 4 April 2022, then this is during the ABRS transitional period. You will be required to get a DIN within 28 days of your appointment.

From 5 April 2022, it is expected that you will apply for and receive your DIN prior to your appointment as a director of a company.

If you have any questions about the process, please contact our office.

Wishing you a safe and relaxing Christmas

We wish you a safe and relaxing Christmas, and an abundant New Year!

Thank you for working with us this year – we appreciate you!

Below are the key compliance dates coming up. If you have questions or need help with any of the following, we are here to help.

KEY TAX DATES – DECEMBER 2022/JANUARY 2023

• 21 December 2022 – GST & PAYG withheld – Monthly Activity Statement and payment for November
• 21 December 2022 – PAYG instalment – Activity Statement payment for monthly reporters for November
• 15 January 2023 – Income tax return – 2021-22 lodgment for large companies, including the taxable head company of a consolidated group. Payment is due 1 December 2022
• 21 January 2023 – GST – Monthly Activity Statement and payment for December
• 21 January 2023 – PAYG withheld, FBT instalment and PAYG instalment – Monthly Activity Statement and payment for December, if you lodge the BAS yourself
• 21 January 2023 – PAYG instalment – October to December quarterly instalment payment if you do not lodge through us
• 21 January 2023 – Large companies – PAYG instalment Activity Statement for December is due for head companies of consolidated groups
• 28 January 2023 – Superannuation guarantee – The due date for payment of superannuation guarantee contributions for the October to December 2022 quarter.

Anything keeping you up at night?

If you’re facing operational issues, tackling people challenges, or have health and safety questions, give us a call, email us or text us. We are here to help.

Check Your Business Performance Against the ATO Small Business Benchmarks

Are you interested in comparing your business performance against the ATO Small business benchmarks? It can be a useful exercise to see whether your business is performing well, on average, or lower than the benchmark figures.

Each year the ATO publishes industry-based data to highlight specific ratios of financial and other types of performance.

For example, you can compare your cost of sales to turnover, total expenses to turnover, or labour cost to turnover. Comparing to average data gives you an idea of how your business performs compared to others in your industry.

It’s no problem if your ratios are different – but it can be a helpful starting place to look if you want to improve financial performance or reduce costs. If your ratios are very different from the ATO’s, then it could be worth diving deeper into your financial reports to see if you have problems that can be addressed. For example, a hospitality business might realise that its food cost is much higher than average and then take action to change suppliers and manage wastage.

The ATO benchmarks are based on your business industry code used in your activity statements and tax returns. If you’re not sure what industry you fall under, check the ATO Business industry code tool to find the correct code for your business.

To start comparing your business, you’ll need some information from your accounting software financial reports.

• Gross sales income
• Salary and wages expenses, including superannuation
• Vehicle expenses
• Interest on credit cards and loans
• Cost of sales
• Total other business expenses, including all running costs, administration, contractors, suppliers, rent, freight, training and website fees.

Once you have these totals, either from your software or your last tax return, you can compare your figures to the ATO benchmarks

Want to learn more? We can analyse your business performance using the ATO benchmarks as a starting place for comparison and discuss areas you can target to increase profitability, reduce costs and streamline operations.

Holiday cashflow for your small business

Whether you’re heading into a holiday period, or just planning to take a break (and congratulations, because a healthy business means work-life balance), it’s important to keep your cashflow under control. This means pre-planning and being proactive.

When you’re not in the office, there are still overheads and salaries that need to be sorted. If taking time off means that less cash will be coming in, it’s essential to plan for this period to make sure that these costs can be comfortably covered. Make sure you have a clear picture of your payroll, and any other planned expenses that will need to be accounted for.

If there’s even a possibility that there could be a shortfall, it’s essential to meet this head-on. Whether this means talking to your supplier or creditors to figure out an arrangement, or compromising on other business outgoings, you must make a plan to ensure that the business, or your staff, won’t suffer.

Tips to minimise the stress of cash-flow over the holiday period

Invoice early – Send any invoices that you can, and in advance if possible. Perhaps consider whether you have any regular clients or customers that you could offer a retainer or similar deal to if they book services or make a purchase from you in advance.

Chase payment – use this opportunity to chase up any outstanding payments. Strong communication and relationships matter – talk to clients and chase invoices.

Talk to suppliers – a little honesty can go a long way. Perhaps they can extend a line of credit for your payments to them. In most cases, a good supplier would rather offer a little flexibility to keep an ongoing business relationship.

Review your costs – it’s also a good idea to do a general review of expenses. Business costs can creep up, and it’s a great idea to make a time to check on your expenses regularly, no matter what your financial situation. Review all of your regular payments and subscriptions as well as upcoming costs. There may be travel, functions or purchases which you can decide on an alternative approach to.

Talk to the bank or tax department – if cashflow is tight, make sure you have conversations early so you have everything in place to see you through.

When you’re planning for a break, book an appointment with us. We can help you navigate the holiday period and help you alleviate cashflow worries. So you get a well deserved break.

Christmas Parties and Presents – and Tax!

Christmas is a great time to acknowledge and reward your employees and other associates by celebrating and giving gifts. But don’t get caught out by entertainment rules! Claiming entertainment and gifts as business expenses is not always straight-forward, as there are implications for GST, income tax and fringe benefits tax (FBT).

Is it Entertainment?

Entertainment is generally not a deductible business expense. Entertainment rules can be tricky, but in general, the more lavish the meal or event, the more costly, the later in the day and if alcohol is involved then it will generally be called entertainment.

Fringe benefits tax may apply to entertainment benefits provided to employees, and if an event or gift is considered to be entertainment then you cannot claim a business deduction or GST.

A Christmas party for employees, spouses, suppliers and customers may or may not be classed as entertainment. Check with us to see if any of the party costs can be claimed.

Keep it Free From FBT

• If you give gifts to your employees keep them under $300 each. Benefits provided which have a value of less than $300 are exempt from FBT.
• Give gifts to employees that they otherwise would have claimed as a tax deduction. For example, you could pay for a professional development course or give new tools.
• Give gift cards or vouchers up to the value of $300. (Vouchers are not considered to be entertainment).
• Avoid giving ‘entertainment’ gifts over $300, such as membership to clubs, tickets to events or travel.
• Pay a Christmas bonus. Process through payroll like any other wage payment and withhold tax. Remember that superannuation applies to bonus wages.

Enjoy the Party

Talk to us when planning your Christmas gifts and events to check how much may be claimed as business expenses. Once you know the costs of throwing a party and giving gifts and bonuses, you can put your feet up and enjoy your own party!

Working from home deduction from 1 July 2022

The Australian Taxation Office (ATO) has issued new guidelines to help you in making a claim for running expenses while working from home from 1 July 2022.

Under this guidance, the ATO will allow you to make a claim of 67 cents per hour for time spent working from home. This claim is a simplified method which includes expenses for:

• energy expenses (electricity and/or gas) for lighting, heating/cooling and electronic items used while working from home
• internet expenses
• mobile and/or home telephone expenses, and
• stationery and computer consumables.

This amount is different from the previous couple of years where an amount of 80 cents per hour was available if you were required to work from home due to COVID-19.

However, under the revised fixed-rate method you can now make a separate claim for depreciation on furniture and equipment that you use when you work from home.

In order to make this claim, you will need to keep a diary of the days you work from home. This can be backed up by evidence such as your timesheet or a roster.

If you require any more information about calculating this deduction, please let us know and we will be happy to assist you further.

October 2022 Federal Budget highlights

The Federal Treasurer, Dr Jim Chalmers, handed down the Labor government’s first Federal Budget on 22 October 2022. Here are the highlights of the tax and accounting measures announced.

Businesses

• Electric vehicles under the luxury car tax threshold will be exempt from fringe benefits tax and import tariffs.
• A number of Victorian and ACT based business grants relating to the COVID-19 pandemic will be non-assessable non-exempt income for tax purposes.
• Grants will be provided to small and medium-sized businesses to fund energy efficient equipment upgrades.
• The tax treatment for off-market share buy-backs undertaken by listed public companies will be aligned with the treatment of on-market share buy-backs.
• The 2021-22 Budget measure to allow taxpayers to self-assess the effective life of intangible depreciating assets will not proceed.
• Heavy Vehicle Road User Charge rate increased from 26.4 to 27.2 cents per litre of diesel fuel, effective from 29 September 2022.
• Australia has signed a new tax treaty with Iceland.
• Additional tariffs on goods imported from Russia and Belarus have been extended by a further 12 months, to 24 October 2023.
• Ukraine goods are exempted from import duties for a period of 12 months from 4 July 2022.
• Technical amendments to the taxation of financial arrangements (TOFA) rules proposed in the 2021-22 Budget will be deferred.
• Amendments to simplify the taxation of financial arrangements (TOFA) rules proposed in the 2016-17 Budget will not proceed.
• The proposed measure from the 2018-19 Budget to impose a limit of $10,000 for cash payments will not proceed.
• Proposed changes in the 2016-17 Budget to amend the taxation of asset-backed financing arrangements will not proceed.
• The new tax and regulatory regime for limited partnership collective investment vehicles proposed in the 2016-17 Budget will not proceed.
• The Pacific Australia Labour Mobility (PALM) scheme will be expanded and enhanced.

Individuals

• The amount pensioners can earn in 2022-23 will increase by $4,000 before their pension is reduced, supporting pensioners who want to work or work more hours to do so without losing their pension.
• To incentivise pensioners to downsize their homes, the assets test exemption for principal home sale proceeds will be extended and the income test changed.
• The income threshold for the Commonwealth Seniors Health Card will be increased from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.
• The Paid Parental Leave Scheme will be amended so that either parent is able to claim the payment from 1 July 2023. The scheme will also be expanded by 2 additional weeks a year from 1 July 2024 until it reaches 26 weeks from 1 July 2026.
• The maximum Child Care Subsidy (CCS) rate and the CCS rate for all families earning less than $530,000 in household income will be increased.
• The current higher Child Care Subsidy (CCS) rates for families with multiple children aged 5 or under in child care will be maintained.
• Legislation will be introduced to clarify that digital currency (or crypto currencies) will not be treated as foreign currency for income tax purposes.

Superannuation

• Eligibility to make a downsizer contribution to superannuation will be expanded by reducing the minimum age from 60 to 55 years.
• The 2021-22 Budget measure that proposed relaxing residency requirements for SMSFs and small APRA-regulated funds (SAFs) from 1 July 2022, has been deferred.
• The 2018-19 Budget measure that proposed changing the annual audit requirement for certain self-managed superannuation funds (SMSFs) will not proceed.
• A requirement for retirement income product providers to report standardised metrics in product disclosure statements, originally announced in the 2018-19 Budget, will not proceed.

Multinationals

• Thin capitalisation rules for non-ADIs will be amended from 1 July 2023, with tests relating to ratios replaced by earnings-based tests.
• Significant global entities will be denied a tax deduction for payments to related parties in relation to intangibles held in low- or no-tax jurisdictions.
• Significant global entities and public companies will have additional reporting requirements for income years commencing from 1 July 2023.
• Proposed amendments to the debt/equity tax rules mentioned in the 2013-14 MYEFO will not proceed.

Tax administration

• Penalty unit increase to $275 from 1 January 2023.
• Personal Income Taxation Compliance Program extended a further 2 years to 30 June 2025.
• Shadow economy compliance program extended to 30 June 2026.
• The ATO tax avoidance taskforce will receive additional funding and is being extended to 30 June 2026.
• Financial penalties for breaches of foreign investment compliance to double from 1 January 2023.
• Access to refunds of indirect tax, including GST, fuel and alcohol taxes, under the Indirect Tax Concession Scheme has been expanded to the diplomatic and consular representations of Bhutan.
• The proposed extension of reportable transactions relating to the sharing economy deferred by 12 months to 1 July 2024.

Tax agents

• Funding to be given to the Tax Practitioners Board to increase compliance investigations.
• Additional funding will be provided to support the delivery of government priorities in the Treasury portfolio.

Not-for-profit

• Deductible gift recipients list to be updated.
• The 2021-22 MYEFO measure to establish a deductible gift recipient category for providers of pastoral care will not proceed.

If you would like to know more information about any of these measures, please do not hesitate to contact our office.

Are you making the most of your business data?

Are you recording, measuring and analysing enough of the data being generated by your business?

With so many apps and digital solutions now available to businesses, there’s a wealth of useful data to trawl through – and plenty of hidden insights for you to benefit from.

Here are 5 ways to get more insights from your business data

1. Track your business finances

Managing your business accounts used to be something you left to your finance director. But with cloud accounting now the norm, every business now has 24/7 online access to detailed information about its financial position and performance. Deeper analysis and insights are usually available at the click of a button, helping you spot the pitfalls and potential opportunities.

Your accounting platform can show you:

• Profit & loss reports and balance sheets, with real-time data to help decision-making
• Cashflow forecasts and projections, to help plan your future cash position
• Budget tracking and spending reports, to stay in full control of your expenditure.

2. Review your credit score

The credit risk rating your company is given by the big credit agencies can have a huge impact on your ability to borrow. A high risk-rating will mean that banks and other lenders will be reluctant to offer you funding. And suppliers will be less open to offering you trade credit.

Some credit bureaus, like Experian, now offer ways to check your business credit score. With a better understanding of your credit data, you can take action to improve your score.

To get in control of your credit position, you should:

• Find out your current credit score and how this is impacting on your ability to borrow
• Check out your payment history and take action to improve performance
• Regularly check this credit data to track improvements or drops in your score

3. Monitor your sales and marketing data

Steady sales revenues are a must for any business that wants to grow, but how much oversight do you have over your historic and future sales data? Using a sales and marketing platform like Salesforce helps you track your sales, campaigns and customer relationships – giving you a goldmine of data to sift through and analyse:

Key data areas to analyse will include:

• Which products and/or services are making the most sales, and why
• Which customer demographic is the biggest spender, and why they’re advocates
• Which campaigns are delivering the best return on investment (ROI)

4. Track your staff performance

Your people are one of the company’s most important assets. But do you really know how well your employees are performing, or how engaged they are with the goals of the business? Today’s HR software makes it easy to set core skills and capabilities and track how each team member is performing over the course of the year.

As an employer, you can:

• Set performance and training targets, and see how your employees are tracking
• Run satisfaction surveys and staff feedback to check in on team engagement
• Use your data to drive improved performance and happiness in your workforce

5. Measure your performance against targets

One of the big benefits of tracking your business data is the ability to measure your performance against a given target. Whether it’s a budget target for a new department, or a sales target for a new marketing campaign, you have the performance data at your fingertips. This helps you motivate the team, work towards a common goal and ‘gamify’ your progress as a business.

If you share these targets and performance data with your people at monthly team meetings, this transparency can work wonders for motivation. When your employees, management team and executive team are all aiming for the same goals, you’re a more effective team.

Talk to us about getting more from your data

Transforming your company into a digital business may seem like the end of the process. But the reality is that getting in control of your data sharing, analytics and performance tracking is the genuine goal for any ambitious business in 2022.

We can help you connect up your app stack and focus on analysing the most important data for business success.