NEWSLETTER - HFK Limited

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HALL CHADWICK ASSOCIATION
NEWSLETTER
Spring 2015
INSIDE:
2
A
message from
our Chairman
3
Employee Share
Plans and other
alternatives for
incentivising
your employees
without costing
the bank
4
new style of
A
Audit report
6
A
TG (Ahead
of the Game)
Sports Wealth
Advisors
7
S
unshine
Coast Practice
Acquisition
7
H
all Chadwick
Association –
Our People
2
Hall Chadwick Association
Newsletter
A message from
our Chairman
As we move to the last quarter of the
year, spring in Queensland makes
us turn our mind to football finals.
The flowering of jacaranda trees is a
reminder to students that exams are
around the corner.
In Australia we have seen another
change in Prime Minister. Malcolm
Turnbull tells us we need to be
technologically savvy. There is a need to
adopt technology to be part of the everchanging world.
There is a push from various sectors for
tax reform to be a major plank of the
government’s new innovation agenda.
A recent summit referred to the need to
adapt new innovation and productivity to
compete in the new world.
Many of our clients are in business in
different parts of the world. In days
past, our New Zealand clients often took
investment positions and branch offices
within Australia. Much of the Australian
property boom a decade ago was fuelled
by New Zealand funds.
Today, we have many clients doing
business in New Zealand and other
parts of the world. There is a need for
accountants to have an understanding
of domestic and international tax, tax
residence and practical guidance.
Hall Chadwick is a member firm of AGN
International: a worldwide association
of separate and independent accounting
and advisory businesses, providing
services in audit, accounting, tax and
corporate advice. AGN International
has 188 members in 89 countries
worldwide.
In this newsletter, we refer to employee
share plans and other alternatives for
incentivising employees. An existing
employee trained to the systems and
practices of your business is a valuable
commodity. Keeping them happy, both
financially and through a challenging
and rewarding career path is essential
in creating a good work culture and
efficiencies within business.
Recently, I was speaking with a client
who referred to the challenges of
employing and maintaining their 60
employee professional practice. The
need to maintain a positive culture
and opportunities for advancement are
paramount for profitable business.
Football finals are now complete. We are
reminded of the economic significance
of sport. Our sports men and women
now command huge pay packets and
compete around the world. Our various
offices have capability to guide these
people to assist them in their financial
decision making. This specialty was
established to provide assistance in
the area of taxation, accounting, legal,
investment and structuring advice.
The Hall Chadwick Association
continues to expand with the recent
opening of offices in Darwin and
Caloundra on the Sunshine Coast. We
have a philosophy of taking our services
to clients in all parts of Australia and
New Zealand.
Recently, Kieran Bowden of our Sydney
office was nominated for Young
Accountant of the Year (Under 30)
in the 2015 Australian Accountant
Awards. Kieran works in Business
Services with Sally Saad and David
Kenney and has been with the firm for
almost six years since he started as a
cadet in 2010. Hall Chadwick will be
attending the event with full support
and best wishes for Kieran.
Australia and New Zealand are still
regarded as two countries with the
highest standard of living in the world.
Recently, George Megalogenis of ABC
radio referred to these two countries
reaching a critical moment in history.
For much of the nineteenth century,
our countries thrived on the back of
agriculture and then mining.
But this long boom was followed by
30 years of less prosperous times.
No doubt things have been difficult
but he has forecast our two countries
to emerge again as prosperous and
efficient due to the adoption of the
new digital age. Tourism, professional
services and property investments
along with agriculture and mining will
lead the way with new opportunities
for investment.
I hope you enjoy reading our spring
newsletter and enjoy the run home to
Christmas and the end of 2015.
Brendan Vaughan,
Williams Hall Chadwick, Brisbane
Employee Share Plans and other
alternatives for incentivising your
employees without costing the bank
Contributed by:
Craig Torry,
Director at Williams Hall Chadwick,
Brisbane
Do you own a private Australian
resident company that has been
operating for less than 10 years that
has less than 50 Million Turnover?
If so, the recent changes in the
Income Tax Assessment Act 1997 to
make employee share Plans more
tax effective may be of interest to
you.
Recent start-up concessions were
announced for companies satisfying
the above criteria so that shares
can be offered to employees
without causing any adverse tax
consequences for the employees.
Employment Condition
Ordinary Share Condition
Integrity Rule
Minimum Holding Period
The basic conditions for satisfying
the start-up concessions are as
follows:
• T he discount given to employees
can be no more than 15% of the
market value of the share
• W
here the Employee Share Plan
interest is a right to acquire
shares (e.g. options) the exercise
price of the option must be equal
or greater than the market value
of a share in the company at the
time the Employee Share Plan
interest is granted.
Obviously this raises the question,
what is the market value of the
company and how is it calculated?
The legislation provides guidance
on two approved methods being
Maintainable Earnings and Net
Tangible Assets (we can assist you
with these calculations).
Other general conditions that must
be satisfied to issue an Employee
Share Plan under the new legislation
are as follows:
Employee required to be employed or contracted.
Employee Share Plan Interest must be ordinary shares or the right to acquire
ordinary shares.
Employee of trading company.
3 years (Commissioner may exercise discretion)
Broad available of Plan
Must issue to 75% of employees that have been employed for 3 years or
more. (Note: if no employee has been employed for 3 years – ok).
Maximum Holding Rule
No employee can hold greater than 10% of shares and control more than
10% of the vote at a general meeting.
20/12
The Corporations Act requires further disclosure to be made if you offer the
Plan to more than 20 employees (excluding senior management) in any 12
month rolling period.
continued next page ...
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Hall Chadwick Association
Newsletter
Employee share plans may be
structured so that the shares/
options are issued either directly to
the employee or issued indirectly
through an employee trust. Issuing
shares/options to an employee trust
may be advantageous if you are
concerned about providing financial
statements and other financial data
to employees.
Employee Share Plans can be
useful if you want employees to
share in the growth of the company.
However, if the objective is so that
the employee simply shares in the
profit of the business there may
be alternative options that are
more flexible, less costly and more
appropriate, such as:
• D
ividend Shares – Similar
financial outcomes as paying a
bonus except that employees
may also get the benefit of
franking credits. However, due
to dividends being paid out of
after tax dollars the employer
will forgo the tax deduction. (Be
mindful of dividend streaming in
this situation).
• P hantom Plans – Employee get
a cash bonus based on what
would have been received had
he/she owned a percentage of
shares in the company
• R
emuneration Trust – The
employer contributes a
percentage of profits to a trust in
which participating employees
are beneficiaries/unit holders.
It is also important to point out
the management structure when
issuing employee shares, as having
a number of employee shareholders
may change the dynamics of the
business.
Another alternative when
considering an Employee Share
Plans may be that the existing
owners simply sell a portion of
shares directly to the employee.
If an Employee Share Plan sounds
right for the company it is important
the correct documentation is put in
place, covering such things as:
1) Eligibility criteria
2) How the employee will pay for
the shares
3) Will financial assistance be
provided by the company (if so,
watch Division 7A).
Should you wish to discuss
Employee Share Plans further
or other alternative ways to
remunerate staff members, please
call Craig Torry of
Williams Hall Chadwick.
A new style of Audit report
Contributed by:
Graham Webb, Partner, Hall
Chadwick, Sydney
Audit reporting will never be the
same again.
The Australian Auditing and
Assurance Standards Board (AUASB)
proposes to revise and amend five
standards and issue a new one
on ‘Key Audit Matters’ (KAMs).
Eight other standards contain
consequential amendments. Boards
and management will be surprised
as to the extent of the changes and
implications for them.
The amendments will match
recent changes by the International
Auditing and Assurance Standards
Board (IAASB) that are aimed
at promoting enhanced auditor
reporting throughout the world.
The proposed new and revised
standards lay the foundation
for the future of global auditor
reporting and improved auditor
communications.
Consistent with counterpart
international standards, the new and
revised Australian standards will
be effective for audits of financial
reports for periods ending on or
after 15 December 2016.
These new and revised standards
represent significant changes
in practice. Collaboration by
all participants in the financialreporting supply chain will be
needed to ensure that the objectives
of enhanced auditor reporting are
realised.
The proposed revised standards are:
• A SA 700 ‘Forming an Opinion
and Reporting on a Report’
• A SA 705 ‘Modifications to the
Opinion in the Independent
Auditor’s Report’
• A SA 706 ‘Emphasis of Matter
Paragraphs and Other Matter
Paragraphs in the Independent
Auditor’s Report’
• ASA 570 ‘Going Concern’, and
• A SA 260 ‘Communicating
with Those Charged with
Governance’.
The proposed new standard is ASA
701 ‘Communicating Key Audit
Matters in the Independent Auditor’s
Report’.
The most notable enhancement is
the new requirement for auditors
of listed entities to communicate
KAMs, that is, matters that the
auditor views as most significant,
together with an explanation of how
they were addressed in the audit.
The introduction of KAMs is a
significant enhancement that will
change not only the auditor’s report
but is also expected to improve
the quality of financial reporting,
and, therefore, the informative
value to investors and other key
stakeholders such as analysts.
The AUASB has also taken steps
to increase auditors’ focus on
going-concern matters, including
disclosures and transparency about
an auditor’s work.
This includes:
• D
escription of the respective
responsibilities of management
and the auditor for going concern
• A separate section when a
material uncertainty exists, and
is adequately disclosed, under
the heading ‘Material Uncertainty
Related to Going Concern’
(previously included in an
Emphasis of Matter paragraph),
and
• New requirement to challenge
the adequacy of financial-report
disclosures for so-called ‘close
calls’ in view of the applicable
financial-reporting framework
when events or conditions
are identified that may cast
significant doubt on an entity’s
ability to continue as a going
concern.
Other proposed changes include:
• A n affirmative statement about
the auditor’s independence
and fulfilment of relevant
ethical responsibilities and
the identification of relevant
Australian ethical requirements,
and
• Enhanced description of the
auditor’s responsibilities and key
features of an audit.
These ‘long form’ audit reports
may also become best practice in
Australia and required for all audits
under the Corporations Act, not just
listed entities.
Audit reporting
will never be the
same again.
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Hall Chadwick Association
Newsletter
ATG (Ahead of the Game)
Sports Wealth Advisors
Contributed by:
William Tuffley, B. Bus, Chartered
Accountant, Manager at Williams Hall
Chadwick, Brisbane
The professional sports industry
continues to prosper at an
extremely rapid rate. Ever since the
sporting landscape shifted from an
amateur level to the highly tuned,
billion dollar professional industry
it is today, we have continued to
see the levels of income earned
by our professional athletes rise,
both in Australia and overseas.
Nonetheless, we continue to hear
stories of professional athletes going
bankrupt post career. The question
must be asked as to why this is
so, despite lucrative sponsorship
deals and salaries being well above
the national average during their
sporting careers. How effectively are
these potentially ‘once in a lifetime’
incomes being managed?
Professional athletes have often
not been able to take advantage of
these high incomes due to:
• P oor investment decisions
• L ack of industry specific related
financial knowledge
• O
verspending
• C
areer duration
• P oor choices in obtaining
industry specific financial
advisors
As a result of this, Williams Hall
Chadwick have teamed up with
Williams Hall Chadwick SMSF &
Financial Advisors (Toby Winton),
UBS Wealth Management (Don
Chandler) and Mohr Keddy Lawyers
(Scott Keddy) to deliver a Sports
Wealth Advisory division under the
name ATG (Ahead of The Game)
Sports Wealth Advisors.
ATG Sports Wealth Advisors aims
to provide sports players with
a broad range of services and
advice (including accounting, legal
and financial) during and beyond
their sporting careers, tailored to
their particular sporting industry.
ATG is a move away from the
traditional managerial style of sports
management, with the focus purely
on providing strong, objective and
independent accounting, legal and
financial advice, and not acting
in any ‘managing’ capacity for
the players. The aim is to provide
independent, fee for service, rather
than commission driven advice,
to sports people at any level and
at any stage of life. The parties
involved have a real and keen
interest in the sporting world.
If you have any queries in relation
to the division or if you know any
professional sports people who may
be interested in obtaining these
services, please do not hesitate to
contact William Tuffley (wtuffley@
wpca.com.au) or Michael Williams
(mwilliams@wpca.com.au).
Sunshine Coast
Practice Acquisition
We are pleased to announce the
acquisition of a long established
accounting practice owned by
Chartered Accountant Gordon
Hogarth at Caloundra, Sunshine
Coast. Home to several iconic
beaches Caloundra is some 90
km north of the Brisbane CBD and
is part of a vibrant business and
tourism region. The new world
class hospital construction and
continued relocation of major
corporate head offices to the
area will only serve to strengthen
this already vibrant business and
professional hub. The area is also
home to a major University which
strengthens the diversity of the
region’s present and future success.
Gordon Hogarth is the father of WHC
manager Ken Hogarth who works
with Director Greg Kelly. Gordon
has long been established on the
Sunshine Coast and the practice
is a great fit with our practice both
client and culture wise. The full
time existing office at Caloundra
is being maintained with Gordon
and staff remaining on site with
weekly visitations form Greg, Ken,
Brett Gilles and Tom Gray. Gordon
will remain in our employment as
he works towards a well-deserved
retirement to ensure the orderly
transfer of the practice goodwill. We
look forward to a long association
with this prosperous & vibrant area
of Queensland.
Hall Chadwick Association – Our People
NSW
Inala Rugby World Cup
Charity Lunch
legend Laurie Lawrence was MC
and approximately $200,000 was
raised throughout the day.
The proceeds of the 2015 luncheon
will be put towards transport
options for Inala’s Community
Access Program.
On June 19th 2015, Hall Chadwick
was the Major Event Sponsor of
the annual Inala Rugby World Cup
Charity Lunch held at Four Seasons
Hotel in Sydney CBD.
Hall Chadwick has now been the
Major Event Sponsor of the Inala
Charity Lunch for the last 5 years.
The luncheon was a huge success
with the theme being ‘Rugby World
Cup”. The Australian coaching
7
Hawkesbury
Race Day
In June Hall Chadwick welcomed
its guests for an afternoon of racing
and networking in raising funds
for the White Ribbon ‘Say No to
Violence’ Race Day.
All funds raised support prevention
programs aimed at changing
attitudes and behaviours that result
in men’s violence against women.
NEW SOUTH WALES
WESTERN AUSTRALIA
QUEENSLAND
NORTHERN TERRITORY
Sydney
Hall Chadwick
sydney@hallchadwick.com.au
Level 40
2 Park Street
Sydney NSW 2000
Tel: +61 2 9263 2600
Perth
Maxim Hall Chadwick
info@maximgroup.com.au
255 Hay Street
Subiaco, Perth WA 6008
Tel: +61 8 9489 2555
Brisbane
Williams Hall Chadwick
general@wpca.com.au
Level 19
144 Edward Street
Brisbane QLD 4000
Tel: +61 7 3221 2416
Darwin
Hall Chadwick – Business
Recovery and Insolvency
jgawlak@hallchadwick.com.au
Level 1
48-50 Smith Street
Darwin NT 0800
Tel: +61 8 8943 0645
VICTORIA
Melbourne
Hall Chadwick
melbourne@hallchadwick.com.au
Level 10, 575 Bourke Street
Melbourne Vic 3000
Tel: +61 3 8613 0000
Hall Chadwick – Business
Recovery and Insolvency
perth@hallchadwick.com.au
Level 11, 16 St Georges Terrace
Perth WA 6000
Tel: +61 8 6557 6200
Caloundra
19 Mayes Ave
Brisbane QLD 4551
Tel: +61 7 54916711
Hall Chadwick – Business
Recovery and Insolvency
brisbane@hallchadwick.com.au
Level 19
144 Edward Street
Brisbane QLD 4000
Tel: +61 7 3211 1250
NEW ZEALAND
Christchurch
HFK Limited
info@hfk.co.nz
567 Wairakei Road, Russley
Christchurch 8053 NZ
Tel: +64 3 352 9189
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