Archives for November 2017

Research reveals critical risk concerns for SME business owners

Understanding and managing risks sits squarely at the centre of this year’s annual SME Research Report covering the attitudes, practices, ideas and concerns of more than 500 SMEs operating across Australia.

Now in its third year, the Report provides a comprehensive picture on the core concerns for SME owners with Business Planning (#1), Protecting the business and family assets (#2) and Stress and lifestyle (#3) as the standout areas of greatest concern.

Click here to access the 2017/18 SME Research Report provided by Prosperity Advisers Group.

98% of business owners believe there are opportunities to grow their business however many cite barriers to growth which make realising this opportunity highly stressful.

Only 20% of those researched have any form of business plan and perhaps more concerning is that 73% of SME owners believe that their business could not continue to operate without them. So while business owners haven’t labelled succession planning as a core concern (perhaps due to a lack of understanding about what it means), the fact they don’t believe their business can exist without them is stressful, affects their lifestyle and importantly presents problems for protecting the sustainability of their business as well as their family assets.

All three of the top concerns in this year’s Report are strategic issues which are intrinsically linked and are associated with identifying and managing risk. This is in stark contrast to the issues identified by the research three years earlier where SMEs cited cashflow and profitability among their top business concerns.

CEO and Founding Partner of Prosperity Advisers Group, Allan McKeown says, “We should all be concerned about the future of SMEs in this country. At Prosperity we are helping hundreds of business owners to address their risks – whether financial or strategic – so they can shore up the sustainability of their business and reduce their stress. As the largest employer in Australia, SMEs are the lifeblood of this country so if we don’t help this sector to succeed for future generations then the flow on will directly affect the economy as a whole.”

Unsurprisingly business disruption through technology, the changing buying practices and preferences of consumers, and access and retention of the right resources are all factors which have contributed to the changing needs and issues for SME business owners.

Providing the ‘how’ for SMEs is a key feature of this year’s Report with ideas for what business owners can do to gain greater control, and to grow and improve their business so they can transition and exit on their terms.

Strategic business adviser for SMEs and Director of Prosperity Advisers Group, Siobhan Sellick says, “Embarking on a ‘better business program’ immediately eases the pressure on business owners and their families because it deals with the top three issues raised by the SME Research Report. When I work through strategic planning with my clients there is a sense of relief and a new found enthusiasm for the business and for their future. Not only this, but my clients experience far better financial outcomes too – so it works on many levels!”

For more information please contact:

Siobhan Sellick, Director Prosperity Advisers Group, 02 8262 8700

Allan McKeown, CEO Prosperity Advisers Group, 02 4907 7222


About Prosperity Advisers Group
Prosperity Advisers Group is an award winning chartered accounting, business advisory and wealth management practice. Clients partner with Prosperity for strategies and techniques to minimise taxes, maximise profit, drive growth and build or protect their personal wealth.

About the 2017/18 SME Research Report
Businesses valued at between $500k and $10 million are classified as SMEs for the 2017/18 SME Research Report. The Report draws on insights from face to face interviews and surveys with SME business owners across Australia.

Individual tax update

2017 has been largely about housing. On the good news front, we finally had the removal of the 1.5% budget repair levy from 1 July 2017 for those with taxable incomes over $180,000.  It is worthy of note that there is currently a proposal to reintroduce the temporary budget levy for high income earners.

The government has also announced that the Medicare levy will increase from 2% to 2.5% from 1 July 2019.

Also of note are the upcoming changes expected regarding super guarantee and employee wage reporting.

Residential Property Investors

There have been a host of changes around the way that properties are taxed following the budget. Most are now legislated or in the process of being passed without significant dissent.

Of note, with application from 1 July 2017 is the denial of travel costs to visit residential rental properties and limiting of deductions for depreciation of residential property fixtures, plant and equipment by property investors.

Prior to 9 May 2017, a deduction for depreciation is available when an investor purchases plant & equipment and fixtures as part of a residential property. Usually the deduction becomes available with the release of a quantity surveyors report.  From 1 July 2017 an investor can only claim a depreciation deduction for expenses actually outlaid for new items or acquired as part of a new property. Deductions for capital works are not affected by these changes.

Work Related Car Expenses

Individuals who claim the maximum allowable deduction on the cents per kilometre method are likely to get an ATO review based on a recent media release warning by the ATO.

The key message of the media release is to make taxpayers aware that the claim for motor vehicle expenses is not an entitlement. You must be able to prove that you were required to use your car for work purposes (not for travelling from home to work and back).

$1.6m Super Transfer Balance Cap

The new superannuation regime is now in place involving the $1.6m cap on contributions and commuting into pension phase, along with reductions to annual contribution limits. This will continue to involve some compliance and planning headaches during completion of the June 2017 accounts and Tax Returns as many pension phase SMSFs need to commute amounts back into accumulation phase.

Of particular note for many is the way the new rules apply to borrowing arrangements (LRBAs), borrowings by the super fund do not offset the asset value and payments to the loan from a non-pension phase source can count towards the contribution cap. This may make borrowings in super less appealing for those closer to the caps. 

Contributing the proceeds from downsizing into super

A motivation to sell property is created by the new downsizing super incentive, allowing significant contributions into the super environment.

From 1 July 2018, a person aged 65 years or older will be able to make a contribution into superannuation of up to $300,000 from the proceeds of selling their main residence. This contribution will be outside the current non-concessional rules.

To be eligible, the individual must have owned their main residence for at least 10 years.

Most likely less motivating is the new First Home Super Saver Plan, allowing certain withdrawals from super and the new CGT incentive when investing in low-rent affordable housing.

CGT and Land Tax Changes for Foreign Residents

Non-residents with property in Australia have also been attacked with the new charge for vacant properties and also the removal of the main residence exemption from 1 July 2019 (and any properties purchased post budget).

Following the lead of Victoria, NSW has also significantly increased the stamp duty and land tax surcharges on foreign persons, at least doubling the surcharges to 8% for stamp duty and 2% for land tax.  Complications can arise for companies and trusts where ownership exists overseas. In particular, trusts can be found to be a foreign person where a non-resident is a potential beneficiary. This has forced many to consider whether to amend the trust deed to remove certain beneficiaries.

CGT Withholding Clearance Certificates

All Australian resident vendors are now likely to need clearance certificates from the ATO to certify residency when selling a property. The foreign resident capital gain withholding regime now applies to properties worth $750,000 or more (it was previously $2m). The rate of withholding has also increased from 10% to 12.5%.

Don’t forget that the obligation rests with the purchaser to withhold the tax a remit the funds to the ATO at the time of settlement where no clearance certificate has been provided.

First Home Buyers

NSW has revamped stamp duty exemption for first home buyers of properties worth up to $800,000, with a zero stamp duty rate up to $650,000 (vacant land thresholds are between $350,000 and $450,000).

First home buyers lose access to the $10,000 grant for properties worth over $600,000 (or owner builder up to a total value of $750,000).

Proposal to change superannuation guarantee rules

The government has proposed to change the superannuation guarantee rules so that compulsory super is payable on salary sacrificed amounts. Currently if you sacrifice into super, unless the employment contract stipulates otherwise, employees may lose a portion of the super guarantee amount. The proposed changes seem fair enough and perhaps overdue. These changes should be kept in mind when reviewing any new contracts with employers.

Single Touch Payroll is coming

Employers with 20 or more staff will be required to commence using the new automated reporting system from 1 July 2018. The remaining employers will need to start using the system from 1 July 2019. If affected, employees will then be able to access their payroll and super contribution information from their MyGov account. This will include payment summaries.

For those remaining taxpayers who have not yet registered with MyGov, it will be an additional reason to do so. Keep in mind registration with MyGov can impact on where ATO notices are sent, so your tax agent may inadvertently cease to be the initial recipient of correspondences. Contact your tax adviser if you are unsure.