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Do you provide your employees with a ute believing it’s Fringe Benefits Tax (FBT) free? It is generally believed that where an employer provides an employee with a utility type of vehicle, it will be exempt from FBT, in fact, eligible vehicles are only exempt from FBT where private use of the vehicle is ‘minor, infrequent and irregular’.
Read MoreThe ATO have introduced a new 12.5% withholding tax (foreign resident capital gains withholding or FRCGW) on the sale of Australian properties where the contract price is $750,000 or more to capture capital gains tax on non-resident investors. The withholding tax applies on all sale contracts above $750,000, previous legislation was $2 million, unless the vendor is provided with a clearance certificate from the ATO showing you are an Australian resident. These new rules apply to transactions under contracts entered into from 1 July 2017.
This means that if you are purchasing or selling Australian property for $750,000 or above from now onwards, you will have an obligation to either withhold tax (unless you are provided with a clearance certificate) or apply for a clearance certificate. SALO. is able to guide you through the application of this tax in your personal situation and apply for the clearance certificate on your behalf. The ATO issues clearance certificates within 28 days of receiving the application, therefore it is important to apply for a clearance certificate well before the settlement date of the property.
Foreign residents are not eligible for a clearance certificate, however they are able to apply for a withholding tax variation if the actual tax they pay on the capital gain will be less than 12.5% of the sale proceeds.
As always, if you have any questions about the withholding tax or any other tax related matters, please contact us.
At SALO we send out regular emails to our clients, partners and associates when there has been a significant change in the tax legislation. If you want to be added to our email list feel free to send our tax specialist Lauren a quick note at lauren@salostrategic.com.au.
Want to get more out of your accounting software but don't know how? Read on...
Read MoreFor many business owners the term cash flow is one that conjures up mixed emotions. When cash flow is strong, things generally feel good but when there is a cash flow crisis, this can bring about worry, fear and frustration. Not to mention opportunities that may be missed. It is worrying that a common statics promoted is that over 60% of businesses that go bust are still profitable, but just run out of cash. So it is not necessarily that their business or industry isn't viable, but more cash is going out than coming in.
Typically a business owner does not have an accounting degree, but they do have fantastic ideas, an entrepreneurial spirit and a love for their business. This very common knowledge gap can pose a challenge because without understanding the financial performance of the business, uneducated decisions can be made that result in a cash flow crisis.
So what steps can be taken to minimise a cash flow crisis? There is no one hard and fast rule to managing a business cash flow, but putting it into the too hard basket will not make these challenges go away. There are tools and approaches that can assist, and certainly reduce the risk of an unexpected cash shortage. A simple cash flow forecast can be a valuable tool to a business owner to help in understanding the current and future cash position of the business. This can bring about some peace of mind as it is much more comfortable knowing that an unfavorable cash position is temporary. In addition a cash flow forecast can also provide information of an upcoming cash shortfall that then enables strategies to be put in place to mitigate this.
There are a number of variables that will impact the cash flow of a business. As a business owner do you understand the amount of working capital that your business will need each day/week/month to operate? Have you assessed your pricing and operating costs? Is your strategy to grow the business, which typically will consume cash? Have you established what is the required stock to be holding, because your stock sitting on the shelves or in the warehouse consumes your cash flow. What about the invoicing process? Is this efficient and effective, allowing your customers to pay their accounts quickly and easily for your products or services supplied? And then there is tax, and by tax I mean company tax, payroll tax, land tax. personal income tax and PAYG as well as GST.
The definition of cash flow is quite simple. It is the total amount of money being transferred into and out of a business. Managing and understanding factors that can impact your business cash flow is not quite as simple. If you feel you want to look at taking control and understand your business cash flow take the steps to do so. If you want someone to discuss this in simple terms then we can have a look together.
By Felicity Cheeseman