Paving the way for women in finance

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We all know there is a large gender gap in the finance and accounting sector. A recent report showed that in financial institutions, women are holding only 19% of senior positions, 14% of board seats, and a shocking 2% of CEO roles.

Many firms are struggling to reach appropriate levels of diversity, even though gender-diverse workplaces have been shown to perform better. While this gap has been shrinking in recent years, it is still an issue when looking at leadership positions. At Prosperity Advisers, you wouldn’t be able to tell by looking at our senior roles. Over 47% of our leadership team are women.  We sit squarely within the finance sector, and hold a total staff count of 60% women.

We have celebrated rapid growth within the company across our offices in Sydney, Newcastle and Brisbane. With this growth, there has been a strategic shift in management and staffing requirements. Prosperity is proud of our eight recent internal promotions, of which five went to women within the company – from accounting to the management team to Human Resources. The current promotions will bring the leadership team to almost 50% female.

Chief Executive, Allan McKeown said, “Our goal at Prosperity has always been to foster an environment that supports the growth and involvement of our people. We provide challenging professional experiences and deliver the right tools and support to assist our people to drive their careers forward.”

We are proud to have created a working environment in the financial sector that builds women and men up equally. Our unique work environment fosters the growth of the individual and business together.

One of the recipients of the new internal promotions is Kelly Chard. Kelly has elevated from the Business Services and Tax team to become a new Associate Director. Having worked for the firm for 10 years, Kelly is a role model to others, representing Prosperity’s equal love for mentoring others and promoting the firm’s vision.

Kelly’s career has evolved over time: “At the start of my career I thought a great accountant would just get the numbers right or find the best tax outcome. With the internal training and mentoring through Prosperity I was able to extend this mindset and focus on getting to know my clients on a more personal level so that I now advise them in far broader areas including growth planning, managing their time efficiently and financially protecting their families.”

Stephanie McCauley is another great example of the career diversity evident in Prosperity. Having worked for the firm for many years, Stephanie initially started in administration, and then moved through marketing before landing in Human Resources. She has just been promoted to Manager within the HR team. She was able to test her strengths and support our growth plans across many different departments. Highly capable, Stephanie has earned her promotion through dedication and a strong work ethic.

Katrina Brooker has been promoted to Team Leader within the firm’s Smart Drive group. Her expertise and management prowess ensures efficiency and high quality service to our clients. Kerry Kreutzer in the SMSF team has been promoted to Supervisor, and Ashley Read from our Outsourced Payroll team has been promoted to Payroll Officer. These promotions show the range and extent to which we are dedicated to raising all of our employees to their best potential selves.

When considering where to work, flexibility is a big part of the equation for professionals in today’s world. Prosperity strives to make this possible for both women and men. Kelly said, “I’ve worked part time and at times remotely to juggle my study and family commitments during my time with Prosperity which has been really important to me and my family.”

Prosperity’s Director of Human Resources, Tanya Craft says “the right cultural fit is integral to our success. We have clearly articulated our Prosperity DNA so we closely align values and beliefs with those of our team and prospective team. This alignment supports our high standards of performance and ethics and a strong culture of learning, development and achievement.”

Women are thriving in all offices at Prosperity Advisers, proving that the gender gap within the financial sector will hopefully soon be a problem of the past.

International Players are not just for Professional Sport!

Alex Bol

International transfers or secondments for accountants are nothing new. But as attraction and retention of quality staff is one of the top 5 challenges of the profession, international secondments are an increasingly important component of a firm’s HR strategy.

Step aside Jarryd Hayne, accountants are the new sports stars when it comes to international transfers. As Alex Hardy, Senior Manager at the Prosperity Advisers Group explains, there are as many benefits to firms and clients as there are to the individual at the centre of the transfer.

Having recently returned from a secondment to Prosperity’s affiliate, Bol Adviseurs in the Netherlands, I have seen first-hand the benefits to both firms. The thought of being paid to travel overseas appeals to every professional at some stage in their career, however international secondments have traditionally been on a case-by-case basis, infrequent and carried out by the larger firms. Times have changed. Through Prosperity’s membership of the Leading Edge Alliance (LEA), the frequency of secondments appears to be increasing. Just this month, Prosperity will welcome two colleagues from Burr Pilger Mayer (BPM), San Francisco and we have fielded a number of other expressions of interest in secondments during the 2017 peak audit season.

So why the sudden rise in popularity?

Firms committed to evolving into the “Firm of the Future” understand the need for innovation across their business. In an industry that sells advice, attracting and retaining quality professionals must be central to any business strategy.

The benefits

  • Scaling of the local work-force during periods of peak demand

For Australian accounting firms, the peak audit season typically runs from July to October each year. In the past, firms have often relied on contract labour or driving increased output from existing resources. There are a number of challenges with both of these approaches. Contract staff are often not incentivised to deliver on client outcomes leading to a poor client experience whereas overworking existing staff may lead to burnout and decreasing team morale. Secondments can also assist with solving local skill shortages.

  • Boost to local team morale and outcomes for clients

A secondee’s interaction within their new team encourages learning across cultural boundaries. Sharing experiences is always fun and provides motivation to the secondee and local team. Development of communication skills and adapting to new working environments provides a different form of team engagement. When teams are engaged they usually produce better outcomes for clients!

  • Impress clients and demonstrate the firm’s commitment to a global footprint

For firms that don’t have a recognised global brand, bringing an international secondee to client meetings demonstrates the firm’s commitment to being a truly global business. My interaction with an international client based out of Ireland during my stint in the Netherlands was really well received and a valuable experience for all involved.

  • Improving the local team’s language skills

English dominates as the language of choice for the international business community. Countries where English may not be the first language usually are seeking to improve their language skills. Placing a native English speaking secondee into a non-English team will encourage all staff to practice their English on a daily basis and likewise the secondee will learn or develop their own language skills. Better communication will also lead to better client experiences for firms with international clients.

  • Development of firm systems and methodologies

Firms generally compare systems and methodologies at conferences and seminars, but this often occurs at Partner level. Understanding and comparing methodologies at other career levels on-the-job creates additional opportunities for teams to immediately implement efficiencies or enhancements which drive better outcomes.

  • Attraction and retention of quality staff

Keeping staff engaged and innovating is a must for all firms. Constantly competing for the best talent in the market is a priority for accounting firms and firms like Prosperity who recognise the value of international secondments will continue to have it as part of their HR arsenal. If done well, the ability to keep staff learning and engaged plus broadening their personal international networks in an increasingly globalised business environment helps to attract and retain the best talent.

  • Facilitate client engagements across geographies

Importantly, there is also the potential for new relationships with clients of the other firm should they be active or considering expansion to the secondee’s home country. Facilitating advisory relationships across borders becomes smoother with the familiarity that working shoulder to shoulder provides.

Things to consider!

Select the right team members to be involved:

  • Will the employee best represent the firm?
  • Has the employee experienced overseas travel previously?
  • Does their skill set provide opportunities for the other firm?
  • Are they a confident communicator?

Get the right people involved in making it happen:

  • Encourage the HR leaders from both firms to build a relationship to ensure the secondment is seamless.
  • Ensure there is adequate on-boarding for work and team building but also living arrangements, getting around and integrating with the host Country.

Working visas:

  • These are often not difficult to obtain between most OECD countries.
  • Some up front commitment will be required to assess each specific jurisdiction.
  • Leverage each firm’s HR resources for the best outcomes.

Accommodation:

  • Depending on the length of the secondment, services such as AirBNB may offer a solution should a local host be unavailable.
  • The remuneration of the employee may need to be negotiated during their secondment to factor in the difference in living costs between countries.

International secondments significantly add to the secondee’s professional and personal development, they are fun and the benefits to both firms involved shouldn’t be underestimated. Smart firms are increasingly taking advantage of this strategy and providing exciting opportunities for their staff and business.

Thank you very much for your enthusiasm, professionalism and open mind. You have been a real “asset” and inspiration for Bol.

Pascal Graat (Managing Partner, Bol Adviseurs)

Attention practice owners! Now is the time to see if your practice is well positioned to provide you with a healthy retirement.

Senior couple meeting financial adviser for investment

We all know that by establishing regular health and dental checks we’ve got a greater chance of preventing problems throughout our lives.

It’s the same reason for establishing regular financial and strategic reviews of your professional practice. Done regularly, this will help you keep focused on identifying key value drivers to maximise the value of your hard earned business investment and to effectively manage risks, potential weaknesses and/or threats.

Effective strategic and succession planning will help you position your practice to maximise value and make your business investment work for you during retirement. What exactly is succession planning? It’s a strategic process which allows you to transition your equity ownership by way of whole or part sale to fund your ongoing income during retirement.

When to do succession planning?

To be successful, it’s about starting early and preparing for the long term. You need to formulate a plan to assess your current position, set out what you want to achieve and develop and implement a plan for getting there.

A new financial year is a great time to reflect on previous year performance, to assess your progress towards achieving your retirement goals and provides an opportunity to identify new strategies for optimal growth, profitability and performance.

Working ‘on’ vs ‘in’ your practice

The first step is investing time to work on your practice, reviewing key business performance measures and industry trends:

  • Review financial performance including key performance indicators and use this to compare and benchmark with other successful and leading practices in your industry.
  • Review key trends in relation to government, industry, technology, staffing and resources, client/ patient needs and innovation.
  • Identify opportunities, strengths, weaknesses and threats.

Step by step plan

The next step is to plan ahead, to identify and prioritise key initiatives for the next 12 months aimed at driving revenue growth, improving profitability, cash flow, performance and ultimately increasing the equity value of your practice.

Some key initiatives include:

  • Reduce reliance on your own personal exertion and knowledge, make the business worth more without you. How? Consider leveraging from other professionals and team members, increasing the scale of your business, training key staff, investing in professional development to enhance level of care and maximising leveraging within the organisation by introducing an effective structured team. Introducing incentives and rewards to encourage performance improvements would also assist.
  • Establish client relationships linked to the practice and its brand; not just the individual.
  • Develop systems and processes to reduce reliance on key people within the practice.
  • Reduce potential threats (including the Medicare freeze, changes to pathology rent agreements etc.) by increasing the range of services offered, introduce private billing, select the right service mix to maximise profits and identify cross service opportunities.
  • Introduce new technology to improve client service and build effective client relationships.
  • Enhance patient services utilising data analysis and management tools to identify patients who would benefit from proactive collaborative care.
  • Effectively use debt to provide capital to expand and grow your practice by acquiring other practices. This strategy can potentially lead to increased revenue growth, profitability and a higher return on investment. It’s important to seek advice and manage the risks, especially during the due diligence process.
  • Review the gap between the value the practice is worth now and the value it needs to be when you plan to retire. Consider which of the activities in this article will help you maximise the value of your practice, to ensure it’s sale ready and easily transferable to the new owners when the time comes.
  • Make it easier for the purchaser to finance goodwill. Banks will generally support finance funding for goodwill when there is evidence of a comprehensive business and succession plan, financials to support future maintainable profits and an accountant report which assesses key risk and value drivers for the business.
  • Increase the tax effectiveness of your invested capital by planning ahead to ensure you maximise the use of available small business capital gains exemptions. Structure the sale contract to favour your after tax outcome and direct the proceeds of sale to an appropriate structure (superfund, family trust, next generation trust etc.) to protect your wealth and maximise after tax returns.
  • Prepare your estate planning. Having a professional will, powers of attorney and superannuation binding nominations is a big part of succession planning. Make sure your wishes are well known by those around you to ensure your estate is managed in the way you want.

Break down the activity

Take charge of your business to ensure it’s well positioned for the road ahead. Select and focus on 5 key initiatives for the next 3 months, reflect and measure the benefits achieved and prepare for your next strategic planning cycle.

Too many times we see professionals retire who haven’t spent the time during their career to determine how they will fund their retirement years. This can mean having to work well into their later years just to get by. If you start early, you can make the most of your business so it can be a big nest-egg for your future.

Are you hungry, smart and humble?

Team player

Image source: The Ideal Team Player: How to Recognize and Cultivate The Three Essential Virtues Hardcover – April 26, 2016 by Patrick M. Lencioni

 

An organisation is only as successful as the great people that go above and beyond to see the company succeed and to make clients happy.

Success is a team sport and there are various theories on what makes a great team player.

As our old friend Verne Harnish says those who don’t read barely have an advantage over those who can’t – one of the latest books he has recommended The ideal team player“ (by Patrick Lencioni) reminds us of the key attributes that we should look for when we are recruiting new members to the team.

Lencioni explains it like this ….

The Concept
An ideal team player embodies three virtues: humility, hunger and people smarts. The power this combination yields drastically accelerates and improves the process of building high-performing teams.

Hungry
Ideal team players are hungry. They are always looking for more. More things to do. More to learn. More responsibility to take on. Hungry people almost never have to be pushed by a manager to work harder because they are self-motivated and diligent. They are constantly thinking about the next step and the next opportunity.

Smart
Ideal team players are smart. They have common sense about people. Smart people tend to know what is happening in a group situation and how to deal with others in the most effective way. They have good judgment and intuition around the subtleties of group dynamics and the impact of their words and actions.

Humble
Ideal team players are humble. They lack excessive ego or concerns about status. Humble people are quick to point out the contributions of others and slow to seek attention for their own. They share credit, emphasize team over self and define success collectively rather than individually.

We have a great team here at Prosperity and this also resonates with our Prosperity DNA (Passion = Hungry and Team/Integrity= Humble) and our Brand promise of One Team, One Plan, Smart Advice.

Do you know if you have the ideal team players in your business? Do you agree with the ideal team player attributes that Lencioni discusses?

Did you know that Prosperity Advisers Group has business consulting services that can benchmark your business performance against others? Benchmarking is a great way for SMEs to measure the effectiveness of their team and their business against their competition in order to improve internal processes and ensure they stay one step ahead of the game.

Growing our team for 2016

Growing Our Team for 2016 FINAL Small

Prosperity Advisers are on a quest for talent, with exciting new roles on offer. Take the next step in your career and benefit from true team culture and work/life balance – click here for more information on the roles available & how to apply.

Our roles are also on the careers section of our website prosperityadvisers.com.au/careers.

Our Gift to You this Christmas

Seasons Greetings 2015 V2

The team at Prosperity are very grateful for your support in 2015. We appreciate the opportunity we have to help create stronger financial futures for our clients. We are also acutely aware of the difficulties being encountered by so many Australian Families. So instead of Christmas cards and the usual trappings this year, we have donated $5,000 to the Kids with Cancer Foundation. This organisation assists doctors, nurses, families and support groups involved with caring for the youngest of children suffering from brain tumours, leukaemia and all other childhood cancers. 100% of our donation has been passed on your behalf to struggling families of kids with cancer and to the children’s hospitals where they are treated.

Christmas comms - Kids with cancer photo

Kids with Cancer Foundation Director, Peter Bodman accepts our donation from Lynley Hukins

A Strong Community Focus

This year we have undertaken an extensive program of giving back to our community through a combination of fundraising, sponsorship and pro-bono work. We are proud to have given support to the following organisations:

  • Kids with Cancer Foundation
  • Canteen
  • Ronald McDonald House
  • Surfest
  • Hunter Medical Research Institute
  • Hunter New England Health Local Health District
  • Youngcare Charity – Brisbane
  • Calvary Mater Pink Precinct
  • Cooks Hill Surf Club
  • Hunter Wetlands Centre Australia
  • Re-New Newcastle Limited
  • Friends of the University of Newcastle

Award Winning Year for the Firm of the Future

It has been a successful 2015 for us at Prosperity. Our firm has continued to display a willingness to grow and innovate to set Prosperity apart from our competitors.

This year Prosperity won the prestigious ‘Fast-Growing Firm of The Year’ award at the Australian Accounting Awards.

The success followed us winning a prestigious Edge Award for HR and Cultural Innovation in Miami, USA. The award was conferred by the Leading Edge Alliance, the second largest international association of accounting firms with 220 member firms globally.

Christmas comms - awards photo

Australian Accounting Awards Presentation

Our People Make the Difference

We were delighted to welcome the addition of Siobhan Sellick and Steve Gagel to our Shareholder Group at the firm this year and add Brendan Campbell and Ruby Cheung to our Associate Director team.

We are investing in our skills and capability to serve our clients. Carefully selected this year we have added an additional 12 new people to our team and celebrated seven internal promotions. Staff amenity and client meeting space in Brisbane has been enhanced with a recent move to larger premises. We are delighted to announce we are also moving to larger, better equipped premises in Kent Street Sydney in February and will upgrade our Newcastle premises during 2016.

Thank you for your much appreciated support and we look forward to working with you again next year.

All the very best to you and your families for the festive season.

The Prosperity Advisers Team

 

Our Prosperity Advisers Group offices will be closed from 5.00pm Wednesday 23rd December 2015 until 8.30am Monday 4th January 2016. For urgent matters during this time, a priority message service is in place.

Prosperity Salary Packaging and Prosperity Smart Drive clients, please note our office will be open all days excluding public holidays.

Prosperity feature in Australian Accounting Awards

Fast-Growing firm of the year 2East Coast accounting and financial firm, Prosperity Advisers has won the prestigious ‘Fast-Growing Firm of The Year’ award at the Australian Accounting Awards 2015.

AAA_SEAL_2015_Fast-Growing-WINNERThe Australian Accounting Awards are the only industry awards designed to showcase excellence right across the accounting profession. With a broad range of categories that examine excellence across the breadth of the profession, the Australian Accounting Awards provides a platform for all industry leaders to be recognised.

Prosperity recognises that the rate of business change continues at an increasing pace and invests considerable time and resources in a disciplined planning process that keeps them at the forefront of those changes. Prosperity regards its vision as ‘true north’ as they continue to evolve their advice offering. Prosperity’s innovative approach to advice have resulted in two year revenue growth of 29% in a period where research house IBIS have reported accounting firm growth to average just over 3% per annum.

Prosperity Director of Business Services and Taxation, Megan Faraday-Bensley accepted the award on behalf of the 150 strong team. She thanked Prosperity’s clients for their continued support and added “Our strategy of embracing industry change and disruption as well as developing a culture that has enabled us to attract and retain good people has enabled us to continue our double digit growth.”

The success comes just after winning a prestigious Edge Award for HR and Cultural Innovation in Miami, USA last month. The award was conferred by the Leading Edge Alliance, the second largest international association of accounting firms with 220 member firms globally.

Prosperity CEO, Allan McKeown said “We are very proud of the collective efforts of our people across our Newcastle, Sydney and Brisbane offices. The Fast-Growing Firm of the Year Award is a wonderful recognition for the tremendous effort our team has put in supporting our five point growth strategy. Our focus is on value added service rather than number crunching tasks means our clients receive advice that is more holistic and forward looking to assist them to drive innovation and make better decisions.

Prosperity recognised for Cultural and HR Innovation at Leading Edge Alliance Global Conference

ProspHside-001Prosperity Advisers Group has been awarded a prestigious Edge Award at the Leading Edge Alliance (LEA) Global Conference being held in Miami, Florida this week.

Prosperity was recognised for its Cultural and HR innovation that highlighted the firm’s ‘Lightning Rod for Talent’ program.

Launched during 2014 the program’s goals were to improve Prosperity’s brand recognition, increase the number of candidates, secure several key partner level hires and provide enhanced opportunities for our rising stars.

Prosperity CEO, Allan McKeown said, “It was important to have appropriate programs in place not only to attract the best and the brightest of the profession but also to ensure that we retain our good people.

“We are a people business and accordingly succeed or fail on the strength of our team.”

The Edge Award was conferred by LEA Global, an International alliance of independently owned accounting and consulting firms with more than 200 member firms worldwide.
“The firm’s membership of LEA has been invaluable in providing our clients with personal contacts and a global reach to assist with their International business expansion and career secondments for our employees.” Allan said.

Prosperity is also delighted to be acknowledged as dual Finalists in the Accountants Daily, Australian Accounting Awards 2015 that highlights the impressive work undertaken by our industry professionals, demonstrating the continued value of accountants as trusted advisers. Winners will be announced at a Gala evening on 30 October 2015.

“Have-a-Go” (…and don’t sack Joe)

2015 Federal Budget Overview

The Federal Treasurer wants mums and dads, small business owners, farmers and the young to “get out there and have a go” in a budget targeted at stimulating activity at the grass roots.  It is a carrot and stick affair, incentivising people in the heartland but penalising the “dirty thirty” multinationals at the “top end of town” who the Government does not believe are playing the tax game fairly.  This budget is not a sequel to last year’s budget.  This is a completely new plot with a new script. Families, particularly on lower incomes, were already winners with pre-budget expansions of childcare concessions examined below.

But the heartland should celebrate the fact that – finally! – we have a budget that provides targeted measures and incentives for micro and small businesses.  Small businesses with a turnover of less than $2 million benefit from a range of measures.  The company tax rate will drop to 28.5% (but the franking rate will remain at 30%!)  There is also the “hire a hubbie” 5% tax discount for unincorporated small businesses that get a tax discount of up to $1,000.  But the signature measure must be the immediate deduction for fixed asset purchases of less than $20,000.

The Treasurer wants to trigger a 2015 year end small business spend-a-thon as SME’s lower their tax this year by upgrading their businesses before year end.  This is the only measure to commence from budget night.  You can commence the spending frenzy from now (subject to Senate approval).

Also on offer is tax free rollover relief for a change of business structure – removing obstacles for selecting the most appropriate operating structure for business.  Next FBT year go crazy with FBT free gadgets.  You can have as many tax free iPhones as you like in a year (– look after mum, dad and the kids). Whereas your mates at the top end of town can only have 1 gadget with a distinct function per year (their kids will have to put up with hand-me-downs!).

Start ups will be able to write off professional fees related to commencing business as an outright tax deduction in the year incurred.  This reverses a manifest injustice which required such costs to be written off over 5 years when the cash outflow occurred in year 1.

Health and PBI organisations will need to rethink salary packages with a new FBT exempt meal entertainment expenditure cap of $5,000 to apply from 1 April 2016 (doctors, you have just under 1 year to hammer that credit card hard).

From 1 July, start up businesses will enjoy the improvement of tax rules for employee share schemes – extending access to the CGT discount where share options are converted to shares and the total ownership period is 12 months.  Previously, the acquisition date was argued by the ATO to “reset” when the options converted to shares creating perverse outcomes.  Farmers get a 3 year write-off for drought proofing measures for fodder and grain storage.

The 30-odd multinationals that have displeased the Government by not paying enough tax get a punch kick approach with a significant tightening of tax avoidance rules while at the same time raising the standard of documentation that must be maintained to substantiate transfer prices that shift profits out of the country.  The most practical effect of this targeted approach on the rest of us is the so called “netflix” tax that will impose GST on supplies of digital content by 1 July 2017.  Fly-in/ Fly-out workers are also penalised with the zone tax rebate being removed where the worker does not genuinely live in a remote area but flies to the remote area for work and then returns to their inner city apartment at Barangaroo.

Alas, the next generation of working holiday seekers will not be able to claim the tax free threshold from 1 July 2016 by extending their visa to spend more than 1/2 the year in Australia, thereby “tipping” themselves into local “tax residency”.  The Government is going to hunt down and recover HELP debt repayments for debtors residing overseas. KaPOW – take that foreign baddies.

Perhaps this is the best budget one could hope for from a Government so hopelessly blocked by a hostile Senate.  Let us hope common sense prevails and that petty politics does not block a much needed boost to a small business community that has long been ignored by successive Governments.

 

Individuals and Family

The key focus of the Government in relation to individuals and families is two-fold. The first is about saving money where possible, and secondly getting greater numbers of people to participate in the workforce. This involves proposed changes to the child care rules.

 

Child Care Changes and Family Tax Benefit

In a pre-budget announcement the Government has highlighted that it proposes to replace the child care rebate and child care benefit, with a new single means tested child care subsidy. The subsidy would commence on 1 July 2017 and is proposed to work as follows:

  • Families earning up to $65,000 will receive 85 per cent of the childcare cost per child, or a designated benchmark price, whichever is lower. That will reduce to 50 per cent for families with incomes of $165,000 and above.
  • Hourly benchmark prices will be $11.55 (long day care), $10.70 (family day care), $10.10 (out-of-school hours care) and $7.00 (in-home care nanny pilot program due to begin in January 2016).
  • There will be no cap on subsidies for families with an income below $180,000, while those who earn beyond that will receive an increased cap of $10,000 per child, up from $7,500.
  • If the family income is more than $65,000 and both parents are not working, then the child care subsidy will not be available. This will prevent stay at home mothers from accessing the subsidy.

The above changes are very generous for families on lower incomes, and are therefore expected to cost $3.2 billion over 5 years. These changes have therefore been linked by the Government to previously proposed changes to the family tax benefit. These changes will be necessary to pay for this increased cost. These previously proposed changes have been noted below.

 

Family tax benefits (“FTB”) Part B changes

As previously flagged by the Government, from 1 July 2015, the FTB Part B primary earner income limit will be reduced from the current $150,000 p.a. to $100,000 p.a.

Additionally, the income threshold for the Dependent (Invalid and Carer) Tax Offset (“DICTO”) will also be reduced to $100,000. The reduced limits will apply from 1 July 2015.

From 1 July 2015, the FTB Part B payments will be limited to families whose youngest child is younger than six years of age to encourage workforce participation amongst parents. A transitional arrangement will be in place to ensure that families with a youngest child aged six and over on 30 June 2015 will remain eligible for the payments for two years.

In the 2014-15 year the maximum benefit payable under the FTB Part B was $4,274.15.

 

Family tax benefits Part A changes

From 1 July 2015, the FTB Part A per child add-on to the higher income free threshold for each additional child will be removed.

 

GST – ‘NETFLIX TAX’

After many previous attempts, the Government has introduced GST to digital downloads, commonly referred to as the ‘Netflix tax’, which is to apply from 1 July 2017.

Currently, digital products and services imported by customers are not subject to GST. The proposed application of GST however does not have a threshold and GST should apply straight away on all Australian purchases of digital goods from overseas suppliers.

 

Other Changes

Other changes proposed that impact families are as follows:

  • If an employer offers a paid parental leave scheme to employees then those employees will not be able to access the taxpayer funded paid parental leave scheme as well.
  • Pension eligibility rules are to be tightened.
  • The Zone Tax Offset (“ZTO”) is concessional tax offset available to people who reside and work in a specified remote area. Changes will be made to exclude fly-in-fly-out and drive-in-drive-out workers from the concession.
  • Residency rules will be changed to treat most people who are temporarily in Australia for a working holiday as non-residents for tax purposes irrespective of how long they are in Australia.
  • The Medicare low income thresholds will be increased to $20,896 for singles and $35,261 for couples with no kids.
  • From 1 July 2015, removal of the 12% of cost method and the one third of the actual expenses method for motor vehicle deductions.
  • From 1 July 2015, replace the different cents per KM rates with a single rate of 66 cents per KM.
  • The Government has proposed that from the 2016-17 income year, Higher Education Loan Programme (“HELP”) debtors residing overseas for six months or more will be required to make repayments on their HELP debt if their worldwide income exceeds the minimum repayment threshold at the same repayment rates as debtors in Australia.

 

Superannuation

One of the pleasing changes in the budget is that no changes have been made to the superannuation rules. There will however be a root and branch review of superannuation as part of the overall review of the Australian tax system.

 

Small Business

As expected, the Government has released a number of measures which have been tailored towards Small Businesses with a view to innovate, grow, and create jobs.

 

Small business tax cuts

The Government has delivered on its promised 1.5% tax cut for incorporated small businesses reducing the company tax rate from 30% to 28.5% for those with an aggregate annual turnover of less than $2 million. For those above $2 million, the current 30% company tax rate will continue to apply on all their taxable income.

Despite the shift in the company tax rate for some, the current maximum franking credit rate will remain unchanged at 30% for all companies.

To extend the tax cut to unincorporated small businesses such as those operating through partnerships or trusts, the Government has delivered a 5% discount (to be delivered as a tax offset) on income tax payable for those with an aggregate annual turnover of less than $2 million up to a cap of $1,000 per individual for each income year.

These tax cuts will be available from the 2015-16 income year.

 

Increased deductibility 

The Government has made two key changes which are intended to increase business expense deductibility and provide cash flow improvements for businesses.

From the 2015-16 income year, the Government will allow businesses to immediately deduct a range of professional expenses incurred in relation to starting a new business rather than write them off over five years. Expenses include those in relation to professional, legal, and accounting advice.

Furthermore, businesses with an aggregate annual turnover of less than $2 million will broadly be able to immediately deduct assets that cost less than $20,000 and are acquired between 12 May 2015 and 30 June 2017. These rules will revert back from 1 July 2017.

Assets costing more than $20,000 can be placed into small business simplified depreciation pool and depreciated at 15% in the first year and 30% in each following year until the balance is less than $20,000 at which time it can also be immediately deducted

The ‘lock-out’ laws which prevent small businesses from re-entering the simplified depreciation regime will also be suspended until 30 June 2017.

Additionally, small businesses will be able to access accelerated depreciation for the majority of capital asset types with only a small number of assets not eligible.

 

Employee Share Schemes

Following the Employee Share Scheme (“ESS”) Bill introduced to Parliament in March 2015, the Government has announced additional changes to the ESS rules following further consultation.

Minor technical changes that could be made to the Bill include:

  • Excluding eligible venture capital investments from the aggregated turnover test and grouping rules (for the start-up concession);
  • Providing the capital gains tax discount to ESS interests that are subject to the start-up concession where options are converted into shares and the resulting shares are sold within 12 months of exercise; and
  • Allowing the Commissioner to exercise discretion in relation to the minimum three-year holding period where there are circumstances outside the employee’s control that make it impossible for them to meet this criterion.

These changes, along with those announced in March 2015, will make the ESS regime more accessible for all Australian businesses and their employees with an expected effective date from 1 July 2015.

 

Restructure Opportunities

The Government has recognised that new small businesses may choose an initial legal structure that may not suit them at a later more established stage.

Where a small business has an aggregate annual turnover of less than $2 million, the Government will allow a change of legal structure without exposure to a capital gains tax (“CGT”) liability.

This opportunity will be available to small businesses that change their entity type from the 2016-17 income year.

 

FBT Concessions

For FBT exemption will be available to small businesses with an aggregate annual turnover of less than $2 million from 1 April 2016 that provide employees with more than one qualifying work-related portable electronic device (even where the items have substantially similar functions).

Under current rules, the FBT exemption can only apply to more than one portable electronic device used primarily for work purposes where the devices perform substantially different functions.

This measure will remove confusion with respect to whether functions overlap between different devices.

 

Corporates and Business

Unless you’re one of thirty global companies that the Government is seeking to target in a bid to protect its tax revenue, this is a “no news” budget.

 

Fringe Benefits Tax

For hospitals, charities and PBIs an annual grossed up limit of $5,000 for salary sacrificed meal entertainment and entertainment facility leasing expenses for employees (meal entertainment benefits) has been introduced where previously unlimited. This effectively makes all use of meal entertainment benefits reportable.

As such, meal entertainment benefits will constitute as a separate cap however amounts which exceed the grossed-up cap of $5,000 can also be considered when determining whether the employee has exceeded their FBT exemption or rebate cap.

These measures will apply prospectively from 1 April 2016 to coincide with the start of the FBT year. 

prosperity blog

 

R & D Tax Incentive

The Government has introduced a cap of $100 million on the amount of eligible R & D expenditure for which companies can claim a tax offset at a concessional rate under the R & D tax incentive.

The rate of the R&D tax offset will be reduced to the company tax rate for the part of a company’s eligible R & D expenditure that exceeds $100 million for an income year.

This means that R&D expenditure above $100 million will provide no greater benefit to an entity than it would receive from a normal deduction. R&D expenditure below $100 million will not be affected by a rate reduction.

Furthermore, the Government has interestingly continued to endorse a reduced refundable (43.5%) and non-refundable (38.5%) offset rate, despite the proposal being rejected by the Senate in March 2015.

 

GST

The Government has provided additional funding to the ATO to extend the ATO GST Compliance Program.

In addition to the above the Government has also announced that it will not be proceeding with previously proposed changes regarding the replacement of the GST-free treatment of going concerns and farmland with a reverse charge mechanism.

 

Primary Production Deductions

From 1 July 2016 changes will be implemented to allow primary producers an immediate deduction for capital expenditure related to fencing and water facilities.

Accelerated depreciation will also be available in relation to fodder storage.

 

Large International Corporates and Business

To deal with the perceived avoidance of Australian tax by 30 large international groups the Government has proposed to strengthen the anti-avoidance provisions. This will include strengthening the Part IVA general anti-avoidance provisions and also strengthening the penalty provisions. The changes to the penalty provisions will enable a maximum penalty of 100% of the tax plus interest to be imposed.

 

Part IVA Changes

As noted above the Government has proposed changes be made to Part IVA to prevent large international groups avoiding tax in Australia.

In conjunction with the announced changes the Government released an exposure draft Bill.

The Draft Tax Laws Amendment (Tax Integrity Multinational Anti-avoidance Law) Bill 2015 aims to target the reduction of the Australian tax base by multinational entities using artificial or contrived arrangements to avoid the attribution of business profits to a taxable permanent establishment in Australia.

According to the proposed measure, the anti-avoidance rules will apply if in connection with a scheme:

  • A non-resident entity derives income from the making of a supply of goods or services to Australian customers, with an entity in Australia supporting that supply, and
  • The non-resident avoids the attribution of the income from the supply to a permanent establishment in Australia.

For this anti-avoidance law to apply, it must be reasonable to conclude that the division of activities between the non-resident entity, the Australian entity, and any other related parties has been designed to ensure that the relevant taxpayer is not deriving income from making supplies that would be attributable to an Australian permanent establishment. It will also be necessary that the principal purpose, or one of the principal purposes, was the tax benefit.

These measures will apply from 1 January 2016, and only apply to non-resident entities that have annual global revenue of over AU$1 billion.

 

Increased Penalties

Following on from the above the Government will also increase the penalties that can be applied to companies with global revenue of greater than $1 billion. These changes will double the penalties that can be applied to these groups from 1 July 2015.

 

Transfer Pricing Changes

For large corporates with a turnover of greater than $1 billion, the OECD’s new transfer pricing documentation standards will come into play from 1 January 2016.

Under the new documentation standards, the ATO will receive the information on large companies that operate in Australia. These reports will provide the ATO with a global picture of how multinational entities operate, assisting it to identify multinational tax avoidance.

 

 

No glass ceiling at Prosperity

directors

Prosperity Advisers salute International Women’s Day and acknowledge the tremendous contribution of our female team to the growth and success of our firm.

With a majority female workforce many have benefited from the combination of flexible working practices, a supportive team based environment and excellent role models to advance their careers.

Prosperity is proud of our female Directors who have become leaders in their fields and who have been recognised individually for their contribution and success in their profession.

Our Director numbers are more than twice the national average for professional service firms. We are also delighted that their leadership continues to inspire others with our Lilian Luu’s recent recognition as Accountant’s Daily, Young Accountant of the Year.