Travel Diaries

Bookkeeping, Business Topics / By / / , , , / 2 minutes of reading

Finally, after the dark days of COVID-19 and endless lockdowns, etc., we are now seeing glimpses of opportunities to travel again (THANK GOD!). For business owners, this means work-related travel is once more on the table. Given it’s been a while between trips, I thought it might be useful to provide a refresher on travel diaries and when they are required.

When do I need to keep a travel diary and what do I record?

When you travel for work or your business, you are sometimes required to keep a travel diary as per the ATO to assist in working out which part of your travel is tax-deductible. I have outlined the circumstances below which would dictate when you should keep such a diary:

You should include the following in the diary:

  • Your location
  • The nature of the activity e.g. a conference
  • The day/s and time/s (start and end times)
  • The length of the activity e.g. 2 days
  • When you stopped for meals
  • Travel movements and activities before the activities end, or as soon as possible afterwards
  • The entries must be in English

What can I use as my travel diary?

The ATO has said that you can use a diary or journal of your choice for the purposes of keeping a travel diary. You can also use your digital calendar as well, making sure to attach receipts/invoices to each entry.

What other records do I need to keep?

It goes without saying, that you should keep all receipts and invoices related to your travel as well as the travel diary. This will make both the bookkeeper’s and tax agent’s jobs much easier 🙂 and make the ATO very happy!

Lastly, you need to remember that if you were required to keep a travel diary and you didn’t, then you may not be able to claim the relevant travel expenses on your tax return! Speak to your tax agent for further advice if this affects you. 

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Stapled Super Funds

Payroll & Superannuation / By / / , , , / 3 minutes of reading

In an attempt to protect and improve workers’ retirement savings, the Government announced super reforms “Your Future, Your Super”. This was passed into law on the 24th of June 2021.

As part of these new laws, how you, as an employer, deal with new employees’ super funds and subsequent payment into those funds, has changed.

From 1st November 2021, when a new employee starts working for you, you must pay their super into their “Stapled Super Fund” if he/she does not provide you with a choice of fund.

What is a Stapled Super Fund (SSF)?

An SSF is an existing super account that is linked or “stapled” to an employee so that it follows him/her around when he/she changes jobs.

Why do we need Stapled Super Funds?

In the past, it was common for employees to end up with multiple super accounts, especially when employers paid super into their default super funds. Having multiple accounts means that employees are unwittingly paying fees from each account which can add up to a lot of lost retirement savings. From the ATO, “the change aims to reduce account fees by stopping new super accounts being opened each time an employee starts a new job”.

How do you know when you need to use a SSF and how do you do it?

Currently, when a new employee starts working for you, you must provide him/her with a Super Standard Choice Form to complete. The form will provide you with the employee’s super details. If the employee fails to provide these details to you, you must then find out what his/her SSF is and pay super into that fund.

A request for an SSF for your employee is done via Online services for Business (or your Tax/BAS Agent can do it for you). If you cannot access Online Services, you can ring the ATO on 13 10 20 to make the request. When you log into your online account, go to the Business tab, then Employee Super Accounts, then click on “request”. Follow the prompts and you will be provided with the SSF within minutes.

Please note, that you will not be able to make an SSF request until the ATO has confirmed that you are the employee’s employer. This is done via either them receiving the Tax File Number Declaration details or by an STP lodgement event.

How is a SSF determined by the ATO?

The ATO will find the fund that has had the most recent contribution paid into it. This will become the employee’s SSF.

What if a SSF is not provided by the ATO?

If this happens and your employee has still not provided his/her super details, you may make payments into your default super fund.

What happens if the SSF rejects the payment?

If this happens, the ATO recommends that you make another request. If the same SSF is provided, then you must call the ATO on 13 10 20 for assistance.

Is there a transition period?

Yes! The ATO is providing a transition period. This will be between 01/11/2021 and 31/10/2022. After this period has ended, the ATO may apply penalties should you fail to comply with the Stapled Super Fund rules.

Summary – see our infographic below (free to download)

  1. Stapled Super Funds begin on 1st November, 2021.
  2. Only request SSF for employees who do not provide their super details to you.
  3. SSF requests are done via Online Services for Business or your Tax/BAS Agent can make the requests on your behalf.
  4. If an SSF does not exist, you may make super payments for the employee into your default super fund.
Stapled-Super-FundsDownload

Need more help? Here are 2 reference guides from the ATO

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Director ID

BAS Agent's Blog, Business Topics / By / / 1 minute of reading

In an attempt to make it easier for external administrators and regulators to trace directors’ relationships with companies over time, the government now requires every company director to obtain a Director Identification Number or Director ID. This will also prevent fraudulent and unlawful behaviour when a company is wound up e.g. illegal phoenix activities. This will begin in November 2021.

The ID is a unique identifier that is applied for once and is owned by a director forever.

A director will need to apply for his own ID number himself – this cannot be done by someone else on his/her behalf. Application instructions can be found on the Australian Business Registry Services (ABRS) website.

Once the director ID is created, the director will need to share it with his/her company corporation record-holder. This may be the company secretary, another director, contact person, or an authorised agent of the company.

To find out further details about obtaining a director ID, go to the ABRS website.

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New Work Mindset

BAS Agent's Blog, Business Topics / By / / , , , , / 3 minutes of reading
personal growth, becoming, changing-2268884.jpg

Over the last few weeks, I have completely turned my beliefs about work, upside down and inside out.

I don’t know if it’s because I’m getting older and starting to eye-off retirement, or if it’s a side effect of living the “Covid-19 lifestyle”, but I’ve changed my mind about how a work-week should look. In short, I’ve decided that for me, the “normal” work-week no longer exists.

I have stopped believing that Monday to Friday are days for work and Saturday and Sunday are days for relaxing or play. For me, there are no longer weekdays and weekends – there are just days. Each day is mine to use as I please. Relaxing can happen on any day. Working can happen on any day. A day may involve both work and play – it’s my choice!

I no longer have set working days or hours – I work when I want to, for as long as I want to, on any day that suits me, including weekends.

I do not subscribe to the “Monday to Friday are for work and weekends are for relaxing”, concept.

How is this possible?

I am well aware that working whenever you choose, is not possible for many people, for various reasons. This is only possible for me because I am self-employed so I can call the shots. I am very lucky in that regard and am very grateful.

But I haven’t written this blog to spruik some sort of new philosophy or to convince you to try it too!

All of this, including this blog, is just for me, but I wanted to share it with you because I have found that this new mindset has made me more relaxed and more focused when I am working. I feel more in control of my work and life in general. I now have a work-life_life-work balance. Cool huh! And, hey, if you do want to give it a try, well that’s up to you, but again, this is really just something I’m doing for myself and my well-being.

personal growth, becoming, changing-2268884.jpg
How does this make me feel?

This new mindset has given me pure flexibility in my life. On any given day, if I feel like working, then I will work. If I want to take a walk, then I will walk. If I am asked to look after my grandchild, then I will happily do so.

I used to feel guilty if I tried to do something non-work-related during the week, always thinking, “I should be working right now”. Really, I was letting work control my life and my choices. Since enacting my new mindset, I no longer feel guilty. I feel like I’m in charge!

Giving myself permission to work whenever I want to or can, has somehow empowered me. And how do I feel about this? I feel happy and free. Yeah, that’s it. I feel free (even in lockdown!)

Have you made any drastic changes to the way you are working now? Has Covid-19 forced you to work differently compared to pre-Covid days? What are the pros and cons for you? I would love to read your comments – please do leave them below!

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How to check your transactions before lodging a BAS in Xero

BAS Agent's Blog, GST & BAS, Uncategorised, Xero / By / / , , / 2 minutes of reading

Although there are several ways to check your transactions before you lodge your BAS in Xero, one way to do it is by using the “Detailed Account Transaction Report”.

NOTE! THE DETAILED ACCOUNT TRANSACTION REPORT NO LONGER EXISTS IN XERO (SINCE JULY 2023). YOU NOW NEED TO ACCESS THE GENERAL LEDGER DETAIL REPORT TO MAKE THIS PROCESS WORK!

Here are our step-by-step instructions for using this report:

  • Log into your Xero file.
  • To get to the Detailed Account Transaction Report (DATR), go to the “Accounting” tab, then “Reports”, then “Accounting”, then DATR.
  • Select “wide view”
  • Enter the date range of your BAS.
  • Sort by account code.
  • Choose “cash basis” if your BAS is cash-based.
  • Select “update”. Note that you will now see 2 columns – one for GST rate and one for GST name.
  • Export the report to Excel.
  • Sort the column for GST name by A to Z. Here is a link for how to do this if you aren’t sure.
  • Review the transactions, making note of any errors or issues.
  • Go back to Xero and amend any transactions as required.
  • Save and/or publish the report with your other BAS reports for your records. You can now complete your BAS, satisfied that the data is accurate.
  • Add the DATR to your favourites list so you can find it easily when you do your next BAS.

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Super Guarantee to increase to 10%

Payroll & Superannuation / By / / , , , / 4 minutes of reading

The minimum super guarantee (SG) percentage employers are required to pay, is set to increase to 10% on 1st July 2021. This should be considered in part, as a wage increase, and therefore an increase to the overall payroll budget.

There is a further sting in the tail to come for employers! The proportion of wages that must be contributed to employees’ superannuation, is legislated to increase half a percent a year, before reaching a final value of 12% by the 2025/26 FY. See the table below which outlines the rate increase schedule.

PERIODGENERAL SUPER GUARANTEE (%)SUPER GUARANTEE (%) FOR NORFOLK ISLAND (transitional Rate) (from 1 July 2016)
1 July 2002 – 30 June 201390
1 July 2013 – 30 June 20149.250
1 July 2014 – 30 June 20159.50
1 July 2015 – 30 June 20169.50
1 July 2016 – 30 June 20179.51
1 July 2017 – 30 June 20189.52
1 July 2018 – 30 June 20199.53
1 July 2019 – 30 June 20209.54
1 July 2020 – 30 June 20219.55
1 July 2021 – 30 June 2022106
1 July 2022 – 30 June 202310.57
1 July 2023 – 30 June 2024118
1 July 2024 – 30 June 202511.59
1 July 2025 – 30 June 20261210
1 July 2026 – 30 June 20271211
1 July 2027 – 30 June 2028 and onwards1212

What This Means for Your Small Business

  1. Your payroll budget will increase by 0.5%, per employee, every year until the 2025/26 FY.
  2. An employee on a minimum award wage cannot be paid less than the minimum rate already being paid, therefore the SG at 10% is to be calculated on top of, and without reduction to, the original base amount.
  3. Another factor to consider is if the employment agreement or other industrial relations instrument permits it, the components of an employee’s salary package can be altered to increase the SG to 10% and reduce the gross pay (before tax). This means that your employee’s take-home pay will be less than it is now and will continue to decrease each year until 2025. If this scenario affects you and your employees, we recommend that you review the appropriate agreements and seek HR advice before 1 July 2021.
  4. If you use an accounting software package, you won’t need to make any adjustments for the SG increase in your payroll – the developers will do that for you. If you process payroll manually, however, you will need to remember to change the percentage from 9.5 to 10 (and again by 0.5 % each year until you reach 12 % in 2025). Remember, if you don’t pay the correct rate of SG into your employees’ super accounts by the quarterly due date, you will have to pay the Superannuation Guarantee Charge (SGC).
  5. With regards to “when” the rate rise should be applied to your payroll, the rule is that it is applicable to any payments made on or after 1 July 2021 – this is regardless of the period in which the services were performed by the employee.

Managing your Payroll Budget & Cash Flow

Every employer’s obligation to pay superannuation will increase as of 1st July 2021 – there is no escaping this change. This is an increased cost to your business that must be considered for cash flow and budgeting purposes.

With the increases to compulsory super contributions coming out of the same business budget as wages, and all other on-costs such as workers compensation, payroll tax, PAYG, and superannuation, you need to be prepared. All future SG increases need to be built into a business budget and cash flow forecast to be considered part of wage increases over time. We recommend that you assess the total employment costs of your business and add a percentage on top of the total costs to cover not just the rise in superannuation, but also any miscellaneous expenses and unforeseen blow-outs. The best practice is that it is better to overestimate than underestimate. Accurate and up-to-date financial records will help a business manage cash flow.

By regularly reviewing your budget and cash flow forecast, you, your bookkeeper, and your Tax Agent can address financial problems immediately. By doing this, you will be empowered to make important and necessary decisions for your business when they are required.

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Casual Conversion

Payroll & Superannuation / By / / , / 2 minutes of reading

The Fair Work Act 2009 was updated on 26th March 2021 to reflect new workplace rights and obligations for casual employees. One of the main changes to the Act was the requirement for employers to provide their casual staff with a Casual Employment Information Statement. The statement brings to light several aspects of casual employment centered around “casual conversion”. So what is casual conversion and how will affect employers in Australia?

Casual conversion is when a casual employee moves to permanent part-time or full-time employment. The recent changes to the Fair Work Act enforce new casual conversion rules for employers. Some rules affect large employers, while others affect small employers (those with 15 or fewer employees). 

If you are a large employer, you must offer your casual employee the opportunity to move to permanent positions when/if s/he:

  • has worked for you for 12 months
  • has worked a regular pattern of hours for at least the previous 6 months
  • could continue to work the same hours (or more hours) as a part or full-time employee without too much disruption to himself or the workplace

You do not have to offer casual conversion if you have reasonable grounds to do so. These may include the following:

  • the employee’s position will cease within 12 months
  • the employee’s hours will be significantly reduced
  • the times and/or the days the work is to be performed will be significantly changed and those changes cannot be accommodated by the employee’s availability to work
  • making the offer would not comply with a State or Territory law

Please note, however, even if you have decided not to offer casual conversion to your staff initially, this does not mean that they cannot apply for it at a later date.

If you are a small employer, you are less likely to be affected by these new casual conversion rules. However, please note that this does not stop your casual employee from requesting conversion. If this occurs, you must act accordingly and attempt to accommodate the employee’s wishes.

If the employer decides not to make an offer for casual conversion, he must do so in writing as per the Fair Work website. However, I would say that it is best practice to ensure that all communication with your employees about changes to their employment, is in writing. So, if you are going to make an offer for conversion or decline an offer, always put this in writing and file the document with the employee’s records.

If you need further information about casual conversion, please visit the Fair Work website.

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Temporary Full Expensing Measure

Bookkeeping, Business Topics / By / / , / 2 minutes of reading

If you’ve been thinking of buying new equipment or a new vehicle for the business, now might be the time to do it. The instant asset write-off cost limit of $150K has been replaced by a new “temporary full expensing” measure (TFE) which effectively means you can fully deduct the cost of most assets, no matter how much they cost. This measure is in place to provide immediate tax relief and assist cash flow.

Who & what is eligible?

  • Businesses with an aggregated turnover of less than $5 billion.
  • Assets purchased and/or installed between 7:30 pm on 6 October and 30 June 2023.
  • Commercial vehicles, vans, buses and motorcycles.

Who/what is not eligible?

Fancy a new car?
  • Cars costing more than $59,136 (they can only be depreciated up to this amount).
  • Assets allocated to a low-value pool or a software development pool.
  • Certain primary production assets (water facilities, fencing, horticultural plants or fodder storage assets), unless you are a small business entity that chooses to apply the simplified depreciation rules to these assets.
  • Buildings and other capital works.
  • Assets that will never be located in Australia, or will not be used principally in Australia for the principal purpose of carrying on a business.
  • If your entity has an aggregated turnover of $50 million or more, you cannot TFE the cost of assets that are secondhand or that you purchased or installed prior to 7:30 pm on 6th October 2020.

While TFE sounds good on paper, it is imperative that you get advice from your tax agent or accountant about TFE and how it may impact your tax situation, especially if it results in creating a loss. As we are BAS Agents, we cannot advise you about this so please do speak to your tax advisor if you think you would like to use the TFE measure for your business.

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Simple Cash Flow Tool

BAS Agent's Blog, Business Topics, Useful Apps / By / / / 4 minutes of reading

In this blog, I am going to share a cash flow spreadsheet that I use in my business. This is my very “simple cash flow tool”. It’s not a forecast per se (but could be made into one), rather, it’s a reality check tool for your business, that tells you exactly how much you have to spend, as opposed to how much you think you have to spend!

We’ve all looked at our bank balance when it’s healthy and started having visions of new clothes, holidays and nights out etc. However, as business owners, we also know that we have business (and personal) costs that must be paid for before any of those enticing dollars can find their way into our pockets. Below is a list of those costs included in the spreadsheet. You may have different costs or extra ones – feel free to amend the list to suit your needs.

  • General expenses (operating costs)
  • Wages, superannuation and PAYG withholding
  • GST
  • PAYG income tax and/or previous years’ income tax repayments
  • Loans and credit card payments
  • Previous’ month/quarter BAS
  • Your own sundry spending (your drawings or director loan amounts)

How does the spreadsheet/tool work?This tool asks you to review a prior period such as last week, fortnight, month, quarter or year. For the purposes of the tool, we call these periods your “focus periods”. Before you begin using the tool, it is a good idea to choose your focus period. Of course, you can change the period type later as needed, but to begin the process, just choose one period of interest.

In summary, the spreadsheet is split into two sections. The first section takes your opening bank balance at the start of your focus period, adds any income from sales, deducts your operating costs and deducts the required minimum bank balance (that amount you know you need to leave in the bank for running costs). The result provided is the balance available for spending or saving as at the end of the focus period i.e. how much you have at your disposal TODAY. Here is an example of what section one looks like – the cells highlighted in green show your available balance:

You could decide to transfer some funds to savings, pay down debt, buy something special, give employees a bonus, buy new equipment – the choice is yours. While this information about available funds is extremely useful, our tool goes a step further!

The second section in the spreadsheet takes today’s available balance as above, then adds back any future income and deducts future bill or liability payments.

The final result is called your “true cash flow figure“, and is a more accurate representation of your financial position. Note the difference between the result in section one and that of section two in our example above! The true cash flow figure is less than half of the available funds as at the end of the focus period. This is often the case because section two takes all future cash transactions into account, whereas the figure in section one only looks at the here and now. Don’t get me wrong, knowing your available spending balance as of today is still necessary, however, in order to understand your true cash position, it is important to include all future spending/income. Doing this will ensure that you don’t inadvertently spend dollars that really should be saved for the long term.

Now that you can see your “true cash flow figure” you will be able to make a more informed decision about how much is really available for spending (or saving) today. Of course, if your figure is low or even negative, then perhaps you need to review your situation and work out why this is happening. Whatever the outcome, this tool will provide you with a snapshot of your overall financial position. One important aspect to note is that for this tool to work properly, your accounts need to be up to date. As a minimum, ensure that your bank accounts are reconciled up to the end of your focus period prior to using this tool.

I suggest running this cash flow tool on a regular basis to assist you in controlling and understanding your business finances. If you need assistance to use this tool or would like us to prepare it for you, please get in touch to discuss.

Getting started with the cash flow tool

Open the spreadsheet which is shared below. There are 3 tabs in the spreadsheet. The first tab of the spreadsheet is an example of how the tool works and includes notes and instructions. The second tab is a single-period cash flow to look at one focus period only e.g. one week, one month etc. The third tab is a multi-period tool that allows you to look at several periods at once. Follow the instructions provided in the first tab and then enter the figures as required into either the single or multi-period tab.

I hope you find this spreadsheet tool useful. Let me know if you have any questions about it or have some suggestions about how to improve it, by leaving your comments below.

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Simple Cash Flow Tool

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New year, new process – Job Requests!

BAS Agent's Blog, Business Topics, Useful Apps / By / / , , , / 2 minutes of reading

This year we are making some changes to our internal processes. As part of those changes, we recently moved to a new job management system called Clickup. The app allows for a lot of innovation and creativity in regards to business operations, including the ability to automate many processes. We have only just begun our journey with Clickup but are already very impressed. Our first “automation creation” via Clickup is a new way for clients to send us job requests.

We have created a form in Clickup which asks clients what their job request is about and it allows for document uploads too – here is a screenshot of the form:

Once submitted, the form is automatically turned into a task inside the client’s folder in Clickup. Clickup then notifies us that the job has been created. The due date supplied by client on the form is marked as the due date in the task by Clickup. Any documents supplied by the client are added to the task too. There is nothing for us to do here (except the job itself, of course!). Automation is a wonderful thing!

We have advised clients to add the link for the job request form to their favourites list for quick access at any time. We also put the form link into our email signature to give clients an alternative way to find the link quickly. Hopefully, the use of this new form will reduce the number of emails between us and our clients (and who doesn’t want less email clutter?). We may even investigate the idea of putting a button on our website for request submission…..who knows!

The Job Request form is the start of a few new processes coming out this year. I’ll blog about this as we go along.

Do you do something similar to the above with your clients? Does it work well? Do you use Clickup for your business? Let us know by commenting below.

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