CoSBA_Broadcast_31.10.14 - Wanneroo Business Association

Small Business News
The Week in Review
In this issue:
 SMEs need a unified voice on big
 Red tape war raises the bar for
 Shrinking your tax bill
 Liberals link productivity to pay
 Bosses baulk at ‘unfair laws' to tame
 International Business Council
 1001 Business Tips.pdf
 SCC Breakfast Meeting-Hon Mike
 SCC Networking-Colin Barnett.pdf
 JBA/Community Vision Premier Lunch
Series - John Symond "Success and
 WBA Business Awards.pdf
 JBA Charity auction 2014.pdf
STOP PRESS: Owing to
absence on leave of our
editorial staff next week’s
edition of the The
Broadcast will not be
Combined Small Business Alliance of WA Inc.
“Western Australia’s Voice for Small Business”
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SMEs need a unified voice on big issues
The small business sector has had some significant wins of late. DAVID Eaton accepted a togh
challenge when he agreed to become Western Australia's first small business commissioner in
2011. He faced a delicate balancing act - dealing with the concerns of small business operators
critical of the regulatory burden imposed on them, while also being sympathetic to government's
position that legislative change doesn't happen overnight.
Nearly three years on it appears the small business sector is getting a fair hearing - aided by the
resources sector coming off its peak - and things may be looking up. "Having small business
ministers and small business commissioners are relatively new things and I can only interpret it
as recognition of the importance of small business to the economy," he said.
Part of the change Mr Eaton has been working on is perception of an often-hostile regulatory
environment. "One of the consistent complaints that you hear from small businesses is not only
about the amount of compliance burden, but the attitude of an agency that's imposing the
compliance," Mr Eaton told Business News. "I feel sometimes like they're the 'parking inspector'
culture that is getting compliance by issuing fines."
For example, the sector had a win in the latest state budget, albeit small, with the government
agreeing to increase the payroll tax threshold from $750,000 to $800,000 with plans to increase
it again next year to $850,000. Mr Eaton said the very creation of his role as small business
commissioner was, in itself, proof that the government realised the need to 2ive the sector more
Mr Eaton said the relationship was improving, with government agencies beginning to be more
understanding of the struggles small business owners faced. "We're seeing the beginnings of a
shift in state and federal government where more of the agencies are seeing that their role is to
help the small businesses comply through education rather than through penalties," he said.
(SOURCE/EXTRACT: Business News, 21.10.14)
Red tape war raises the bar for regulators
THE Abbott government will today unveil a sweeping blueprint to improve the performance and
accountability of the nation's federal regulators, including imposing mandatory annual audits
forcing them to explain how they are complying with tough new performance benchmarks.
The government’s response to a Productivity Commission report on regulator engagement with
small business will detail six new performance indicators against which the 150 federal
regulators will be benchmarked each year. The audits will be required to be independently
validated and subjected to the scrutiny of a new ministerial advisory council that will be
representative of a wide range of parliamentary portfolios, including small business.
(SOURCE/EXTRACT: The Australian, 29.10.14)
Liberals link productivity to pay
WORKERS and management will be required to consider productivity improvements when
bargaining for new enterprise agreements, while employees will have to meet anew test before
they can take legal industrial action.
Employment Minister Eric Abetz yesterday said the government would introduce the changes
into parliament before Christmas as part of its next tranche of amendments to the Fair Work Act
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DISCLAIMER: The information appearing in
The CoSBA BROADCAST is for affiliates of the
Combined Small Business Alliance of WA
(CoSBA). The information is sourced from various
sources including public records. Whilst every
effort is made to ensure the probity of the
information, CoSBA accepts no liability for
accuracy, errors or omissions, or for any injury to
any user of the information.
NECA Board Room, Unit 18, 199 Balcatta Road,
5.00pm, Monday 20 October 2014
Combined Small Business Alliance of Western Australia Inc. (CoSBA)
PO Box 2237, MIDLAND DC. WA 6936
President: Les Marshall, Vice President: Stephen Knight, Secretary/Treasurer: Terry Bright
Chief Executive Officer: Oliver Moon. Phone: 9250 3549/0408 957 381
CoSBA website: Email: [email protected]
THE CoSBA BROADCAST - 7 February 2016
Page 2
The Nifnex [Business] Review, go to:
Under the proposals, the Fair Work Commission would have to be satisfied that workers and management had discussed productivity
before an enterprise agreement was approved. However, they would not be required to reach agreement on improving productivity, and
they could agree that there were no further improvements to be made.
The Coalition is also seeking to require the commission to be satisfied that bargaining claims are “realistic and sensible” before the tribunal
can approve an application to take protected industrial action. (SOURCE/EXTRACT: The Australian, 29.10.14)
Bosses baulk at ‘unfair laws' to tame unions
ONE of the nation's leading employer groups is urging the federal government not to use corruption within some unions as an excuse to
impose "unfair laws" that would treat officials the same as company directors. Firmly against regulating unions and employer
organisations like companies, the Australian Industry Group says the roles of officials working for them cannot be compared with directors
of publicly listed companies.
The Ai Group's case is set out in a response to the royal commission into union corruption, which this year suggested corporate style
regulation following evidence of union illegality and excess. The Abbott government is considering amendments to federal laws on
registered organisations, and could use royal commissioner Dyson Heydon's anticipated support to justify changes. (SOURCE/EXTRACT:
The Australian, 29.10.14)
Shrinking your tax bill
Running a small business is hard enough without paying the taxman more than needed. Small business owners are generally their own
CEO, CFO, HR department - and the workforce. If you have at least a basic knowledge of some of the issues, you can help ensure you
are set up and operating (and possibly exiting) your business with maximum tax efficiency
Small business entities for tax purposes
Entities carrying on a business with an aggregated turnover of less than $2 million qualify for a range of concessions in income tax law.
Related entities are grou for the purposes of testing aggregated turnover.
The concessions include simplified depreciation rules, the ability to deduct prepayments when paid, and some concessional rules relating
to trading stock. The simplified depreciation rules allow an entity to deduct 15 per cent of the cost of an asset acquired during the year regardless of when during the year the asset was purchased. There is no apportionment for the number of days held. In subsequent
years, entities can deduct 30 per cent on a diminishing value basis.
From July 1, 2012 small businesses were able to deduct assets costing less than $6500 in full in the year of acquisition, and the first $5000
of the cost of a motor vehicle. This concession was repealed in September 2014 as part of a package of measures associated with the
repeal of the mining tax. From January 1, 2014 only assets costing less than $1000 can be deducted in full in the year of purchase.
Small business capital gains tax concessions
There are very generous tax concessions available to small businesses making a capital gain from the disposal of an "active" small
business asset. Goodwill is considered to be an active asset, as are shares in companies or interest in trusts which are carrying on a
business, *in certain circumstances.
For the purposes of these concessions, a small business is one satisfying the $2 million aggregated turnover test, or alternatively a $6
million net asset test. The application of the $6 million net asset test is relatively complex and generally requires a degree of analysis of
related and connected entities.
The concessions are:
 A 15-year exemption, where if the asset was held for 15 years or more any CGT is disregarded. There are many conditions to be
satisfied to be eligible for this particular concession.
 A CGT 50 per cent reduction, providing a 50 per cent discount on the assessable capital gain. This discount applies over and above the
general 50 per cent discount available to all taxpayers holding an asset for at least 12 months, meaning only 25 per cent of the gain is
 The CGT retirement exemption, allowing taxpayers to reduce any remaining assessable gain by an amount contributed to
superannuation (if the taxpayer is under 55), or by a payment to the taxpayer (where the taxpayer is over 55).
 A CGT rollover, allowing an assessable capital gain to be offset against the cost of a replacement business or business asset.
If a business is being conducted through a company, it can often be more attractive from a tax point of view to sell the shares in the
company rather than the business owned by the company. In the latter case, though the company can benefit from the small business
CGT concessions, the shareholders may still have to pay extra tax when extracting the proceeds from the company.
Loans and payments from private companies
If you operate through a private company and make a payment or a loan to a shareholder or associated party, the amount can be deemed
to be a dividend and assessable income of the recipient. Worse; such a deemed dividend is generally not able to be franked by the
company, effectively leading to income being taxed twice - once at the company level and again when deemed to be an unfranked
It is not uncommon to see private business owners treating company money as their own, and.this is dangerous. Technical noncompliance with Division 7A (the relevant division of the tax law) is easily and often inadvertently triggered when proprietors take cash out
of private companies. The rules can also extend to provision of an asset by the company for the use of the associated party, and the
provision of security by the company for third-party Ioans to the associated party.
There are quite complex rules that deal with the situation where a trust makes a distribution to a private company and the amount remains
unpaid to the company (referred to as an "unpaid present entitlement"). Division 7A can also apply in this situation.
Personal services income
Individuals who are earning income from their own personal services, who purport to treat that income as coming from another entity such
as a company or trust, can have that income deemed to be assessable to themselves personally. There are several tests dealing with this
area of taxation, and the general anti-avoidance rules - in the tax law can also possibly apply to such a situation in some circumstances. It
is not enough to set up an entity and account for the income through that entity - if you are in this situation discuss the personal services
income regime with your tax agent.
TrustsCoSBA BROADCAST - 7 February 2016
Page 3
It is not uncommon for businesses to be conducted through a trust, but the tax issues relating to trusts are often underestimated. Trusts
are attractive because they provide the ability to distribute business income to beneficiaries of the trust at the discretion of the trustee,
potentially leading to less tax payable on the business income.
However, any income retained in the trust and not validly distributed at the end of the financial year can be subject to tax in the hands of
the trustee at the top personal rate of income tax. Dealing with the distribution of trust income is not always straightforward due to
differences, between the income of the. trust according to the trust deed and the "net income" of the trust according to tax law.
In addition, the Australian Taxation Office is increasing its scrutiny of arrangements involving discretionary trusts. A trust may provide a
useful structuring opportunity for your business but you need to be aware of the compliance issues associated with this structure. There
are substantial compliance obligations on businesses with employees. Those engaging contractors need to ensure that the contractors are
not in fact employees, otherwise there is an obligation to withhold income tax and pay superannuation.
Laws dealing with superannuation contributions for employees is particularly strict, with quite severe consequences if contributions are
late. There is also a need to consider fringe benefits tax and payroll tax in the case of bigger employers.
Bill Keays is a director of Hales Keays Chartered Accountants, which provides tax advice to businesses. (SOURCE: The West Australian,
International Business Council Activities/Information
For IBC activities/information go to the IBC web site at: or contact them at: E-Mail: [email protected]
Fax: 9356 9437 Tel: 9451 9449 Mob: 0413 437 708
PO Box 691, BENTLEY WA 6982
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