The effect of exponential technology on the GP practice

Two years ago, the global market for wearable medical devices and portable patient monitoring systems was valued at $4 billion and is forecast to grow a staggering 28% per annum over the next 8 years. Australians are renowned worldwide as early adopters of technology, with 80% of us having smartphones. In this article we discuss the effects of the exponential growth in health technology, and the way we see that impacting on general practice.

What is mHealth?

Electronic health, or eHealth as it is familiarly known, was a term coined to encapsulate healthcare practices involving electronic processes and communication.

But what is mHealth and why do practices need to know about it?

mHealth, or mobile health, is the new buzzword which has emerged to describe the practice of medicine, supported by mobile devices.

What kinds of technology are currently available?

While there has been significant improvement in existing technology, for example digital stethoscopes and portable scanners, the real growth is seen in the area of mobile phone apps.

There are apps in the market which can detect, count and time pregnancy contractions and allow parents to listen to the heartbeat of their unborn baby, and apps which provide medical grade ECGs and test blood pressure, blood sugar and lung capacity.

While some may consider these to be gimmicks, what’s more important to consider is where the information might be heading. The obvious next step for patients wearing medical devices, and extracting that information via companion apps, will be those patients wanting to see that information used in personalising their healthcare plans and helping them to monitor and manage chronic healthcare conditions and improve their overall wellness.

What does this mean for general practice?

Practices need to consider what it will mean when they start receiving a constant flow of information from a patient’s device; how is that information going to be measured and monitored? If a semi-urgent or urgent condition arises, who will monitor the condition? Where does the duty of care rest for that information and any action that needs to be taken as a result?

Even if practices resist this form of remote monitoring, they need to consider what other technological advancements will mean for them. Technology will enable GPs to consult with their patients via tablets, laptops and other wireless devices, which technically means that patients will not need to be physically present for consultations. Practices now have the opportunity to become a kind of centralised medical hub, collecting data from mobile technology worn by patients and from other healthcare providers, to provide a centralised model of care. Innovative opportunities exist for practices in areas such as shared electronic health services, telehealth or patient portals. These technologies could allow practices to operate far more efficiently, by allowing administrative staff to be redirected to other opportunities.

But even if practices aren’t interested in pursuing some of these current opportunities, technology growth raises other issues that they need to consider. So what other issues may arise for general practices? To date, we know general practices have been quite slow in adopting some of this new technology. There are quite valid concerns in areas such a confidentiality, privacy and patient security. Even an issue apparently simple as communicating test results with a patient via email raises all kinds of issues around patient security, privacy and technology. Finally, in an era of digital communication, the whole issue of managing patient expectations and patient/doctor boundaries becomes far more problematic.

With bodies like RACGP saying that mobile technology presents significant innovative opportunities for the healthcare sector, mHealth is a fascinating area and practices should be abreast of what is happening in this space and be prepared for it to cause a wave of development in the industry.

Recent case highlights the need for diligence when it comes to Service and Facility Arrangements and the interaction with payroll tax for Medical Practices

It’s common place for medical practices to use a Facility Fee arrangement where a Practitioner derives an income and the practice charges them a Facility Fee for the use of the premises, support staff, etc. This is typically excluded from payroll tax. A recent decision in NSW highlights the challenges for practices in getting this approach right and the implications if they get it wrong, or don’t follow the agreement in practise.

Written in conjunction with Prosperity Health BS&T Manager, Moien Khan

A recent and important decision given by the New South Wales Civil and Administrative Appeals Tribunal, in the case of Winday International Pty Ltd vs Chief Commissioner of State Revenue, sought to impose payroll tax on Winday’s service agreement with its practitioners.

We want to share with you the outcomes of this case and what it means for medical and dental practices when it comes to payroll tax obligations.

What is payroll tax and what payments are subject to payroll tax?

Payroll tax is a state imposed tax on wages paid to employees and certain deemed employees if the wages paid by the tax payer exceed a threshold amount which currently is set at $750,000 in NSW and $1,100,000 in Queensland.

What happened in this case?

Quick facts about the Winday International Pty Ltd case:

  1. Winday provided fully operational radiology facilities to radiologists who then provided radiology services to the public.
  2. Each of the radiologists entered into a service agreement with Winday for the use of its facilities.
  3. The practitioners had access to the following provided by Winday:
    1. Place to conduct their services
    2. Specialist plant and equipment required to perform their service
    3. Medical supplies
    4. Staff to assist the practitioner
    5. Administrative staff
  4. Winday collected all the patient fee on behalf of the practitioners and made a net payment to each practitioner after withholding the service fee.

The Tribunal’s decision challenges the agreements from a payroll tax perspective in that the agreement indicated that this was a typical arrangement that would not attract payroll tax, however the Tribunal thought otherwise, and ruled that Winday is incorrect and should be liable for Payroll Tax on its payments to practitioners.  Here are some of the key points that led the tribunal to think the practitioners were actually employees for payroll tax:

  1. Contrary to the agreement, the practitioners were obliged to provide locum cover if they were unable to attend the facility on any day.
  2. Winday ensured that the amount payable to the radiologists would be no less than $2,000 for each day services were provided.
  3. Winday referred to the radiologists as “our staff” on the website they advertised their services.
  4. Winday’s actions and procedures differed from the terms of the agreements.

The Tribunal’s decision has since raised a number of points not usually present in service arrangements in the healthcare space.

What does this mean for medical and dental practices?

It is prudent for practice owners to carefully consider the wording of any contractual arrangements between themselves and their associate practitioners, with all potential tax consequences carefully considered with an accountant and a lawyer. This could help your practice to avoid potential payroll tax consequences down the track.

Further words of caution

If it has been a while since you have reviewed your service agreements, we would recommend that you undertake a review to check that these agreements reflect what they are intended for, and also ensure the clauses in the agreements are being followed in practise. Please note that payroll tax is a state based tax and the specific rules for payroll tax do vary state by state, but are similar.  Also Payroll tax has interaction with income tax, however they are governed by different rules and being assessed as an employee for payroll tax will not necessarily be the same for income tax.

If you are in doubt about whether your processes are compliant or if you change your business model and need assistance to determine how you should deal with payroll tax, please contact a Prosperity Adviser to discuss your circumstances.

 

^Details of the decision in the Winday International Pty Ltd case can be found here.

Part 3: tax tips for your small business

First published in Kochie’s Business Builders

In the third of our three-part series, we look at actions small businesses can consider to reduce their tax for 2017.

This article is all about income. As with accelerating deductions, deferral of income can result in a slightly lower personal top marginal tax rate next year and provide a cash flow benefit. Of course, deferring a taxable profit only works if the relevant entity is paying tax.

Owner remuneration
Income of family members from a business depends on the ownership structure (e.g. sole trader, partnership, trust or company). Wages, dividends or profit share may, in certain circumstances, have different tax outcomes to the recipients. It is therefore worthwhile to ensure you are aware of what your personal tax position is likely to be and plan appropriately.

Where wages or other forms of income are being paid to other family members, it’s worthwhile considering if a minor under 18 years can commence a full-time occupation prior to 30 June as this can provide them with the lower adult tax rates.

Owners should also consider repayment of any “Division 7A” loans (these are borrowings from a company) prior to year-end. Repayment this year can avoid a dividend (and resultant personal tax) that is usually required under the relevant rules. And if you have a discretionary trust involved, distribution resolutions should be completed prior to year-end.

Income deferral
Income deferral could be as simple as delaying the issue of invoices, however it is often necessary to review customer contract terms to determine when income becomes assessable. The general rule is that income becomes assessable when it is “derived”, typically meaning non-refundable or a present debt exists.

Despite being derived, income may also be non-assessable if it is not “properly referrable” to an income year. In practice this usually means that where services have been paid for but are yet to be performed they can be considered non-assessable “unearned income”.

Such amounts should be accounted for in a separate balance sheet account, which can be made as an adjustment after year end but they need to be identified. This can include a proportion of a receipt where a service is only partially performed. So, if you receive 20% of a contract up front but will not start work on it until July, that amount will be excluded from this year’s taxable income.

Income from the sale of goods is generally not assessable until the goods are delivered.

Be careful however when dealing with an associate. Schemes designed to provide an immediate deduction to one party but defers income to another may result in the deduction being denied.

Certain businesses may want to consider if they can use a cash accounting method for determining income, this may be possible for micro-businesses providing services relating to professional skill and personal work that does not rely on capital items such as plant and machinery.

Other areas to consider
Many businesses have multiple entities with transactions occurring between them. End of year is a time when you should ensure the appropriate invoices and other paperwork has been prepared. It is good practice to get a handle on what taxable profits are being made in each entity to ensure you don’t end up with, for example, profits in one entity and losses in another.

In terms of non-business investments, any term deposits may want to be commenced in early July if on an annual maturity cycle. Any investments sitting in a loss may want to be sold before year-end if other capital gains exist. Avoid repurchasing the same asset as anti-avoidance provisions may apply. Similarly, the sale of investments with an underlying capital gain may want to be deferred until July so the tax payable is effectively delayed for a year. The same principals can apply to depreciable assets if you are not using a small business pool method.

Finally, if you are expecting a refund, get your affairs in order and lodge your returns early. Your accountant will also love you for it!

Payroll risk & lessons learned from celebrity chefs

If you have watched the news over the last month you will no doubt have heard about the payroll compliance woes of George Calombaris and Adriano Zumbo (both of MasterChef fame). The media surrounding these issues gives rise to some key questions for businesses – especially ones which grow quickly, employ staff across multiple locations, and have staff on many different contracts or employment bands.

While payroll is never an easy task, it certainly can be managed so it’s accurate every time, on time and with minimal fuss for the employer and employee. The good news is that payroll complexity can be navigated and mistakes avoided by being aware of your responsibilities and acting appropriately.

In the case of Calombaris, the Fair Work Ombudsman identified major discrepancies in employee payments. What seems to have started as a simple administration oversight has resulted in back payments to employees amounting to approximately $2.6 million, with potentially massive penalties still to be determined.

As we head towards the end of another financial year, this is a timely wake-up call to all business owners who employ staff – payroll risk is a real and important consideration for your business.

The major areas of risk in your payroll are:

Compliance with awards and EBAs

It’s imperative that you are identifying and adhering to the relevant industry awards for your employees. A simple misinterpretation of the award or an unaddressed change can result in significant over/under payments.

Superannuation obligations

The ATO received over 10,000 employee complaints in the 2015-16 year related to incorrectly paid superannuation with many of these triggering audit or review actions. Regardless of the size of your business, you need to be compliant with superannuation. This involves not just paying the mandatory 9.5%, but making sure it is paid on-time, via the prescribed superstream method, dealing with superfund choice and salary sacrificing arrangements and reporting correctly in your annual PAYG payment summaries.

Payroll Tax

Payroll tax is a state specific tax, charged on the total wages of a business over a prescribed threshold. Like super obligations, payroll tax can attract penalties and fines if payments are made late (monthly, quarterly or annually). This is an area which is often overlooked, and should be reviewed annually to ensure ongoing compliance. Businesses which operate across multiple States and Territories will need to be mindful to account for the differences in their payroll processes and keep up to date on local changes.

Are you on top of your payroll?

It’s common practice for SME businesses to rely on their payroll staff or bookkeepers to administer and manage the payroll function. Taking this approach blindly can result in increased risk of under or overpayments, non-compliance, and the risk of ATO audit and penalties.

Prosperity Advisers has a dedicated payroll team that can help you to minimise risk and simplify the reporting burden. Key benefits of outsourcing your payroll include:

  • Focus on your core business – time spent on payroll administration doesn’t increase sales or customer reach.
  • Reduce your risk – access the knowledge bank of experts who will ensure you are ATO & industry award compliant.
  • Free up your staff and reduce administration overload.
  • Access the most up to date systems & processes.
  • Increased security – protect your staff and assets from payroll fraud.

We recommend that you review your procedures and systems ahead of 30 June and if you are at all concerned about your payroll obligations and want to ensure you are minimising your risks we suggest that you get in touch with your Prosperity Adviser to discuss your situation.

Help for your payroll

A large number of businesses are discovering that outsourcing payroll can eliminate a very time consuming and risky function.

Prosperity offers an outsourced payroll service that ensures your payroll is managed efficiently and employees’ salaries and wages are accurately calculated and paid on time.

A successful partnership is easy to get started:

  • We work with you to streamline your systems so your data reaches us easily and with minimal fuss.
  • You nominate a relationship manager who will partner with our team to ensure the best outcomes.
  • We constantly update our knowledge and notify you when a change in process or pay rate is required.
  • We provide annual summaries and compliance documentation to your staff.

Contact your Prosperity Adviser to find out more.

Part 2: tax tips for your small business

First published in Kochie’s Business Builders

It’s that time of year when small businesses can benefit by considering strategies to minimise tax burden. In this second article of our three-part series for year-end tax tips we look at accelerating deductions and how small businesses can reduce their tax for 2017.

With the individual tax rate set to reduce by 2% for those in the top bracket, a tax deduction is worth a little bit more in 2017 than 2018. The mere deferral of a tax liability for one year can provide some welcome cash flow relief when it comes time to paying your tax. Indeed you never know what the future will bring, so a tax deduction taken in a year when you know tax will arise is like a mid-year gift.

Incur necessary expenses including prepayments
A business deduction does not necessarily need to be paid in order to be claimed. You often just need to have been issued an invoice. So for all those expenses (excluding inventory) you know you will need to outlay for, it may be better to order it this financial year. Suppliers who offer generous terms of settlement are ideal but even paying the cash before year-end can also be a good idea. Repairs and maintenance is a good example. Simply ensuring all invoices received have been accounted for is also something that can sometimes be neglected.

Small Businesses have the advantage of not having to spread out a deduction into a future year for prepayments where the service period is less than 12 months. Prepayments do not necessarily need to be “paid” however it is often necessary to trigger the deduction in the first place. Prepaying rent and interest are obvious big ticket items that can provide an early deduction.

Depreciable Assets
We raised the $20,000 Instant Asset Write-off in the last edition, which means depreciable assets are usually limited for small business for old and expensive assets. Even these assets can be added to a “pool” providing a 30% depreciation rate (15% in the first year). But for those who have not pooled, it can pay to have a look at your depreciable assets prior to year-end to determine if any assets are no longer being used. These can be written off and their remaining depreciable balance claimed as an immediate tax deduction if they have been “scrapped”.

Bad debts
To get a deduction for a bad debt in the current year it needs to be “written off” in the ledger, before year end. There also needs to have been reasonable attempts to recover the debt and an argument can be made that there is limited likelihood of the debt being recovered. It can pay to review your debtors list and identify defiant customers.

Pay super
While super for the final quarter is not payable until 28 July, it will not be deductible in the current year if not paid before year end. So you might as well pay it. Also be wary of paying after 28 July, you will not receive a deduction at all.

For both staff and owners, additional concessional contributions into super should be considered both to take advantage of the cap ($30k or $35k if 49 years of age or over in 2017 then reducing to $25k next year) and to reduce taxable income.

Bonuses
In order to claim a deduction for bonuses the amount needs to have been determined before year-end and documentation should exist to prove that the decision to pay it was made, usually by way of a minute or communication with the recipient.

Analyse inventory
The value of closing stock is usually added back to taxable income and therefore the lower the value the better. An exception is where the simplified trading stock regime is chosen which avoids the need to make an adjustment if the movement in value is reasonably estimated to be less than $5,000. Either way it can be beneficial to carry out a detailed stocktake. The value of trading stock is reduced where stock can be argued to be obsolete or damaged, so the nature of the stock and trading history for each item can be relevant in minimising taxable income.

Cyber Security and WannaCry

In the news recently there has been coverage of a large global computer attack, infecting computers with a ransomware program called WannaCry. This attack has raised questions for SME businesses on what can be done to protect against these types of attacks.

Ransomware attacks can cause unnecessary stress and affect productivity, in addition to hurting your wallet. It’s important your business responds quickly if affected, and you make sure your systems are protected from these types of attacks.

What is ransomware?

Ransomware blocks access to a computer system or files until a sum of money is paid. It works by encrypting your data and demanding payment for its release, threatening the deletion of the data if the payment is not made.

How is ransomware deployed?

Ransomware can be deployed via phishing emails, attachments to emails and by exploiting weak network defences. Once a machine has been infected, the ransomware will attempt to spread to other computers.

How do I protect against an attack?

While it depends on the strain of ransomware, you can help to protect your system by:

  • Keeping your systems up to date – this attack takes advantage of a critical hole in older versions of Windows. Microsoft released a patch to cover the vulnerability in March 2017, so businesses with up to date software will not be affected.
  • Backing up your files – ransomware encrypts your data and demands payment for its release. An attack will be less concerning to those businesses who frequently back up their data. SMEs backing up their own systems need to ensure those systems can’t also be compromised if an attack spread.
  • Educating yourself and your staff – small businesses lost over $2 million to scams in 2016, so it’s important to educate yourself and your staff on cyber security.

Do you have your cyber security under control?

Prosperity Advisers can assist you to develop and implement a cyber security plan, which covers:

  • Conducting regular scheduled system checks, including penetration testing and using your external auditor to assist.
  • Changing your security levels as required.
  • Identifying cyber security and forensic experts that you can call on when the need arises.
  • Implementing a breach plan, including a cyber security incident response plan which involves law enforcement agencies and regulators, and a press release statement.
  • Considering limiting the impact by putting in place cyber insurance cover which can provide both indemnity and liability cover.

For further reading on managing your cyber security risk, please refer to the Australian Cyber Security Centre (ACSC).

We recommend that you review your procedures and systems and if you are at all concerned about your cyber security, please get in touch with your Prosperity Adviser. To receive our Free Cyber Security Checklist and request one of our directors contact you to discuss your situation, please send an email by clicking here.

Bring in the new financial year with a clear plan for success

As another financial year comes hurtling to an end it’s a great time to pause and reflect on what you can do to ensure FY 2018 is all you want it to be. Here are my top 5 tips in preparation for a new year. Tackle one a week and you will be on track to start the year with confidence and a recipe for success.

  1. Set a budget for the year

Assessing financial performance is subjective. To know whether you have succeeded you need to be able to measure your results against an agreed plan (or budget). Having a budget also allows you to make financial decisions around setting revenue budgets and sales strategies, making decisions to invest in capital expenditure and team development. Importantly, it enables you to allocate personal remuneration and drawings without fear of unexpected bills or a cashflow crisis you didn’t see coming.

Most SME owners start with a good idea, an identified market niche and a tremendous amount of enthusiasm to drive their vision to succeed. But to what end? Having a clear financial goal in mind assists in shaping your broader business strategy for the year and also provides a sense of purpose to your company.

  1. Set your top 5 priorities 

Setting clear and concise goals gives you focus and direction. By identifying the 5 most important things to get done for you to be able to meet or exceed your financial budget you will ensure that your hard work pays rewards as your activity and efforts are directly linked to factors which contribute to your goals.

Of your 5 priorities it is also great practice to identify the number 1 priority – the one goal which is the most important thing for the business to achieve. You may also find that your top 5 priorities contain longer term projects, if so, identifying shorter term milestones or actions related to each one can keep it achievable and ensure you are making progress with steps in the right direction.

What you focus on gets done. 

  1. Use an advisory board

Being in business can be lonely, and being busy can mean time passes by without stopping to check on your progress. Implementing an Advisory Board provides owners a sounding board, guidance, and an outside perspective to hold you personally accountable. It is a great way to break the dynamic from working IN the business, to working ON the business.

I recommend at least a quarterly cycle of meetings, including a meeting agenda and financial reports (compared to your budget).

The Advisory Board team may be limited to one or two individuals (depending on the size and complexity of the business and the internal skills in the business) and meetings should be kept to 2 or 3 hours maximum. In my experience, businesses with an Advisory Board more often meet their financial targets and stay on track with their strategic priorities than those without one.

  1. Streamline a process 

Like decluttering your house during a spring clean, finding an inefficient process in your business and streamlining it can reap great rewards. For business efficiency as well as staff satisfaction.

We live in an age where technology can provide solutions for all sorts of problems and you might be surprised to find an “off the shelf” solution to your process inefficiency.

Are you spending too much time entering receipts and filing them? Try Receipt Bank to snap a photo of your receipts and bills and watch it load itself into your accounting system – and no more need to file the paper. Perhaps you are sick of entering and remembering too many passwords for the multiple applications you use each day? Try LastPass and save yourself time (and frustration) every day. 

Creating a culture of continuous improvement has immense benefits. Start now with one change and see where it leads. 

  1. What to stop doing!

Time is a limited commodity. To do new things and create new habits, you need to find some stop doing activities and bench old habits. To identify some things you can stop doing, consider the following questions:

  • Do you say ‘yes’ too often?
    • Next time, pause and consider “does it need to be done?”, “can someone else do it”, “if I need to do it, how urgent is it?”.
  • Do you do things that others could do?
    • Focus on delegation. Leverage the time of others to get tasks progressed and only get involved when they are advanced to a stage where they need your input.
  • Stop being a perfectionist.
    • Ensure the time spent is commensurate with the value of the task.
  • Cease & desist from doing repetitive tasks.
    • Take advantage of technology and start automating repetitive processes.

Help is close by. Your accountant should be a sounding board for your ideas or feel free to contact Prosperity Advisers if you want a fresh approach.

Essential 2017 year end tax tips

First published in Kochie’s Business Builders

It’s that time of year when businesses can benefit by considering strategies to minimise their tax burden.

This is the first of a three part series on tax we are doing to help prepare you for tax time. Here, we look at some actions small businesses can consider in order to reduce their tax for 2017.

When evaluating these strategies you should always keep in mind that spending money for the pure purpose of gaining a tax deduction can be counter-productive if the expenditure is not necessary for the business or expected to create a net improvement in profitability. With all transactions, the business decision should be made first with taxation considerations a secondary influencing factor.

The specific circumstances of each business can also impact on tax planning. For example, if a business is not currently making taxable profits it is of no use bringing forward tax deductions into the current year.

A welcome change for 2017 is the increase in the small business turnover threshold from $2m to $10m. This significantly extends access to a range of concessions, however unfortunately the Small Business CGT Concessions remain limited to $2m.

Ready to get more bang for your buck at tax time?

$20,000 Instant Asset Write-off
This has been a big attraction for a few years now but as it currently stands this is the last year it will be available. An immediate deduction is available for business acquisitions less than $20,000 and depreciation pools that fall below $20,000 can also be written off. The threshold is a GST-exclusive amount if registered for GST (therefore $21,999 maximum total spend on any one asset). The asset needs to be installed ready for use prior to 30 June. Excluded assets are those leased out to another party, capital works and certain in-house software.

Avoid a Credit Reference from the ATO
This is not really a tax tip as such, but could avoid enormous headaches. From 1 July 2017 the ATO will commence reporting outstanding tax debts of businesses to credit reporting agencies. This will only occur where the debt is in excess of $10,000, unpaid for over 90 days, not in dispute and no payment plan has been established (or an existing one has been defaulted).

We are informed that the ATO will notify businesses prior to referring a debt to credit bureaus however it’s strongly advised to contact the ATO promptly if any tax debt arises and arrange a payment plan. If a plan is defaulted, contact them again. It would also be prudent to review the ATO business portal, to ensure no overdue tax debts exist.

Consider restructuring
Restructuring can achieve various goals including asset protection, estate planning, income splitting and commercial objectives. It is often critical to complete these transactions while a business remains eligible for benefits such as the Small Business CGT Concessions and Restructure Rollover. It is also usually ideal to complete the transaction at the end of the financial year to simplify the accounting processes required.

To ensure sufficient time to analyse cost/benefits of restructuring and plan for implementation now is the time to be speaking with your accountant if anything is to occur this year.

The business of hospitality – using data for growth

(First published in Business First Magazine)

Tourism is on the rise in Australia against a backdrop of unease in other key tourism locations, and it’s shaping up to be a boom for the hospitality sector writes Steve Gagel, Director, Prosperity Advisers Group.

Fresh from a European holiday and close to the Nice attacks, I had a good opportunity to discuss holiday destinations with many locals in countries across Europe. The tension is palpable in the major cities. From the moment we stepped off a plane or train, we were met with multiple army personnel carrying machine guns and walking in formations up to six at a time. Understandably, citizens are nervous, and react to anything out of the ordinary in fear of another terrorist attack.

Europeans seem to be in awe of our watery boarders and in-the-main tend to like Australia’s “turn back the boats” policy. The Australian policy of not letting anyone in does disadvantage the many legitimate refugees trying to escape oppression and to make a better life from themselves, with some thinking it might keep out the extremists at the same time.

TOURISM ON THE UP
With the above in mind and the Australian dollar a long way under our previous highs of $1.10 to the US Dollar (currently A$ buying around US$0.76) there is effectively a 31% increase in buying power that international visitors now have in deciding to visit Australia.
Tourism Research Australia tells us there’s a healthy increase in total expenditure on international overnight visitors across all three eastern seaboard states – with the average for Australia up 17%. Perhaps the combined effects of safety and lower cost (due to the dollar dropping) is indeed creating more in-bound hospitality for Australia?

Domestically, it appears that Australians are turning their noses up at overseas destinations with domestic overnight spend increasing by 4.7% and domestic day trips also up by 4.6%. The scene is certainly set for growth among hospitality operators if they can leverage the current climate to their advantage.

HOW TO CAPITALISE ON THE INFLOWS
Further analysis of the data from Tourism Australia confirms the hotspot is with holiday makers who are up 20.7% year on year to June 2016, whilst the convention and conference market seems to have suffered a downturn of 10.7%. For the actual month of June 2016 these two markets seem to be gathering speed in opposite directions with holiday makers up 29.4% and convention and conference visitors down 17.7%.

So what can participants in the hospitality sector do to capitalise on the swinging tide of tourism? Data can be your friend here. Getting to know the local Hotels Association representatives in your area and getting closer to Tourism Australia and the local “destinations” organisations in your district can give you the information you need to anticipate tourism flows and to appeal to the type of visitors expected.

For example, if there are delegations from specific nations expected in your area then getting to know the organisers and promoting a tailored option to attract them to your venue may be appealing – such as a special menu, entertainment or drink. Then capitalising on these visits through social media can help reinforce your venue as a destination for that type of visitor going forward.

Data can also help you in other ways. It could be as simple as asking visitors to your venue what postcode they come from or their home country. After collecting data for a given period you can analyse to see if you could tailor aspects of your offer (food, beverage, gaming, entertainment, special events) to the standout groups.  Again, using social media to promote these changes and how you appeal to specific groups can help you target your advertising at very little cost.

Above all, briefing your staff and engaging them in what you are trying to do and why is going to have a significant impact. Frontline staff can collect valuable data at each shift such as approximate ages and gender of your visitors. They will also have ideas for how you can make the most of tourism flows in your area. If you want to make your area more attractive to local or overseas visitors, getting together with other publicans or venues in your area and jointly approaching delegation organisers or tourism operators could see a step change in the type and quality of visitor you experience.

Competing for the consumer dollar is never easy but with a lower exchange rate on your side and a greater number of visitors to our shores it certainly makes it more interesting and exciting.

‘Backpacker Tax’ Back-Pedal

Sad businessman pushing hand truck with taxes. Tax time and taxpayer finance concept

Jacqui Lambie’s push for a reduction in the ‘backpacker tax’ to 10.5% has won senate approval yesterday. The 10.5% rate is in line with New Zealand. The pressure is back on the coalition in the lower house to agree to lower its proposed 19% rate to 10.5%, or the impending 32.5% rate will apply from January 2017.

The requirement for employers to register with the ATO as employers of working holiday makers (WHMs) to withhold at the new rate appears likely to remain. This is despite some concern raised in the senate report issued on 9 November about the regulatory burden, particularly on smaller employers. The ATO are describing it as a simple, once-off registration, so it is hoped that the ATO will make the process relatively straight-forward.

The 19% rate to be applicable to incomes up to $37,000 was included in a bill that was passed in the lower house last month. This aligns with the tax rate for residents for incomes between $18,200 and $37,000.  It applies to Subclass 417 (Working Holiday) and Subclass 462 (Work and Holiday) visas that allow people aged between 18 and 30 years of age from 38 partner countries to work in Australia for up to 12 months (Subclass 417 visa holders can apply for a second year visa).

The debate has dominated question time with both sides of parliament arguing that the other is threatening to make Australia internationally uncompetitive. Malcolm Turnbull stating that the backpackers affected may be considered non-residents, so the 19% represents a benefit to them which labour was effectively blocking by demanding 10.5%. Scott Morrison further arguing that under the 10.5% rate backpackers could be better off than Australian residents in certain circumstances. Barnaby Joyce pointing to the loss of revenue under a 10.5% rate.

Labour are arguing that the 10.5% supports Australian tourism and agriculture, backpackers spend their income in Australia and if the government does not agree it will force the 32.5% rate to apply.

It is humbly proposed that perhaps a 10.5% rate applying only up to 18,200 may be a compromise both sides could swallow, however we could very well end up with a 12 – 15% rate based in part on comments by Pauline Hanson.