Fact 1: Modern Awards Apply by Law, Not by Choice

Australia’s 122 modern awards contain mandatory terms and conditions of employment that must be provided to any employee who is ‘covered’ by a modern award. The modern award entitlements apply in addition to the ten basic entitlements set out in the National Employment Standards (NES). If an employee is covered by a modern award, you can’t ‘choose’ not to comply with award – the award applies as a matter of both law and fact and irrespective of whether the employer or employee want the award to apply.

Fact 2: Modern Awards are Legally Enforceable

If a modern award applies to an employee, his or her employer must ensure that all award entitlements are provided at all times. For example, many modern awards may impose an entitlement to annual leave loading or other additional allowances. Similarly, most modern awards contain limits on the ‘daily span’ of working hours and detail when overtime rates must be paid and how these are to be calculated. Employers are legally responsible for providing these entitlements and penalties are steep.

Fact 3: Paying ‘Over the Award’ Doesn’t fix Everything

Many employers mistakenly believe that if they pay an employee a basic rate of pay that is higher than the minimum rate in an applicable modern award they don’t have to worry about award conditions or provisions. Unless the contract of employment makes it clear which modern award entitlements have been incorporated into the ‘over award’ rate of pay then it is more than likely the higher rate will simply be treated as the ‘base rate’ upon which all of the loadings, penalties and allowances in the award must then be calculated. This means the employee will benefit from a higher base rate as well as higher loadings, penalties, and allowances.

Fact 4: Only a Judge can tell you which Award Applies

The Fair Work Ombudsman (FWO) – the Commonwealth Agency responsible for investigating employers for breaches of award entitlements – has no ability to definitively tell anyone what award applies to a particular employee. They can only give you ‘general advice’, which is no more or less useful than expensive legal advice or the opinions offered by ER consultants. It’s still a very good idea to get the Ombudsman to provide their ‘general advice’ in writing for future reference but nothing can protect employers from future claims that are caused by them applying an incorrect award.

Fact 5: Modern Award Rates Increases Annually

Finally, it’s important to note that modern award rates are generally increased on 1 July each year. This means you need to check the rates currently being paid to ensure they are at least equal to the new minimum rates in the award. Remember too that it is essential that all award-covered employees are allocated to one of the award’s classifications. If this is not done, it will be impossible to determine whether the correct rates of pay and other entitlements have been or are being provided.

Related References

• Fair Work – Awards and Agreements
• Fair Work – Modern Awards Fact Sheet
• Fair Work – National Employment Standards
• Workforce Guardian

The post Modern Award Facts for Employers appeared first on QCIBookkeeping.

Early results from the Inquiry – which is being conducted by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) in partnership with state-based Small Business Commissioners (SBCs), the Council of Small Business Australia (COSBOA), the Australian Institute of Credit Management (AICM) and the Institute of Public Accountants (IPA) – has found almost 50 per cent of small businesses experience late payments on at least half of the bills owed to them.

The Inquiry has also found the practice of late payments is getting worse, with around 60 per cent of small businesses reporting an increase in the trend over the past 12 months. Almost 70 per cent report that the practice has reduced business profitability, with many business owners acknowledging it has a serious impact on their mental health given the added stress and anxiety late payments – and the associated cash-flow problems – can trigger.

Based on the Inquiry survey data, it’s becoming quite clear that big businesses – particularly large multi-nationals – are exploiting the power imbalance that exists in their relationship with small business people who simply aren’t in a position to argue for better payment terms – or to demand immediate payment – for fear of destroying their relationship with the larger company.

The Inquiry has also found the practice is not limited to one sector, with the impact of extended and late payments rippling through the entire economy.

Small businesses have until the end of February to have their say. Those who would like to contribute to the Inquiry can do so by completing a survey which can be found at: www.asbfeo.gov.au.

An Inquiry Issues Paper is also available on the website. Those wishing to provide feedback on the Issues Paper can do so by emailing: inquiries@asbfeo.gov.au or by contacting the SBC in their state.

The post ASBEFO Inquiry into Payment Times to the Small Business community appeared first on QCIBookkeeping.

This is the minimum amount a worker must receive as net pay, that is, after the tax and child support has been deducted. It is calculated on the basis of 75% of the basic Newstart Allowance.

The PEA is adjusted on 1st January each year.

The new weekly rate for 2017 is $358.05

The post Protected Earnings for 2017 appeared first on QCIBookkeeping.

The ATO has simplified the GST reporting system to make it simpler for a business to conduct its trading with less complexity in applying the GST law.

To trade in Australia a business must:

1. Obtain an ABN.
2. Decide whether to register for GST, (compulsory once your turnover is more than $75,000pa for a business, or $150,000 for Not-for-Profit entities. Transport providers must register regardless of turnover).
3. Understand what sales the business makes and how GST is to be applied to those sales.
4. Understand what GST the business pays on its expenses and know how much GST it is allowed to claim back.

Tax Codes and Reporting Fields

It will no longer be required to report export sales, GST free sales, capital purchases or non-capital purchases on the BAS.

You will still need to report PAYG Withholding, PAYG Instalments, Wine Equalisation Tax, Fringe Benefits Tax, Fuel Tax Credits and Luxury Car Tax if required for your business.

Who Does it Apply to?

Under the new “Small Business” definition, any business with turnover below $10m will lodge the new Simpler BAS.

When?

Simpler BAS system starts on 1 July 2017.

The post Simpler Business Activity Statements appeared first on QCIBookkeeping.

Many businesses have a scheduled period of closing business operations during the Christmas and New Year period. How an employer must treat this depends on the award or agreement the employee is governed by. These guidelines apply to permanent employees – casual employees do not have to be paid during a scheduled shut down.

Award or Agreement allows employer to direct leave

If the award or agreement provides for the employer to direct leave to be taken at specific times, then the employer can do this so long as they follow the guidelines about how much notice is required. Example: The Clerks Private Sector Award does allow employers to direct employees to take leave during an annual shutdown, and they must be given at least 4 weeks’ notice (before the first day of leave), in writing.

What if the employee doesn’t have enough leave?

The employer can agree to pay annual leave in advance or the employee can take unpaid leave. However, from FairWork: “If an employee doesn’t agree to either, they have to be paid their ordinary pay rate for the shutdown. They can’t be forced to take unpaid leave”.

Award or Agreement is silent

If the award or agreement is silent on the issue, then the employer may not force an employee to use their leave during a scheduled closure. The employer can negotiate with the employee to take paid or unpaid leave, or half pay leave if the award/agreement allows this.

The employee is not covered by an award or agreement

Note that this is rare – the majority of employees are governed by an award. If there truly is no award or agreement governing the employee, then the employer can direct the employee to take leave if the direction is ‘reasonable’. See below for detail on what is ‘reasonable’.

Public holidays during leave

Public holidays that fall during a period of paid leave are always paid as normal work days; they should not be taken as annual leave days. If an employee usually works a given number of ordinary hours and overtime hours, then they will be paid only for the ordinary hours on a public holiday, they will not be paid for the usual overtime hours. If a public holiday falls during a period of agreed unpaid leave, the public holiday is not paid.

What is ‘Reasonable’?

From FairWork Best Practice Guidelines: “What is ‘reasonable’ will depend on factors such as the kind of business run by the employer, the nature of the work performed by the employee, the employee’s personal circumstances (including family responsibilities) and how much notice was given to the employee”. An employer can refuse a request from an employee if they do not feel it is reasonable; this applies also to the employee refusing a request from an employer they do not feel is reasonable. This will be governed by factors such as: the effect on the workplace and the employer’s business of approving the request, including the costs of doing so and negative impacts on efficiency, productivity or customer service; the inability to organise work among existing staff; and, the inability to recruit a new employee or the practicality or otherwise of the arrangements that may need to be put in place to accommodate the request.

The post Christmas Annual Leave and Payroll obligations – confused? We can help! appeared first on QCIBookkeeping.

Take a look at the fixed costs, the operating expenses, of running your business. We call these fixed costs because they don’t tend to change as the volume of business increases but that doesn’t mean they are locked in.

It’s good practice to review your fixed costs once or twice a year to ensure you are getting good value for what you pay. You don’t have to go to the extremes of Zero-based budgeting where people have been known to estimate in advance how many staplers and reams of paper they will use, but at least review the major items like rent, motor vehicles, insurance, phone and utilities.

What are your Direct Costs?

Direct costs (also known as Cost of Sales or Cost of Goods Sold) vary as the volume of business changes – things like the cost of the goods you sell, commission payments to sales people and so on. If you double your sales, your direct costs are likely to double – unless you can negotiate volume discounts. Understanding the ratio of your direct costs to revenue is important in running any business.

Calculate the Revenue you Need

Gross Profit = Net Profit + Fixed Costs. You now have the information to calculate this.

Revenue = Gross Profit + Direct Costs. This will tell you the income you need to achieve. Knowing the relationship between your direct costs and revenue, you can calculate the income you need to reach your dream.

Do the Reality Check

The next check is to compare this with what you actually achieved in the previous year. If you didn’t earn anywhere near this amount of revenue last year, what are you going to do differently to achieve it this year?

Putting numbers in a budget doesn’t make them happen.

Add in the Strategy

This is where the fun starts and the real brain power is needed. What would be required to earn that revenue? Would you need more staff? A bigger office? Or just to work smarter?

Build the strategy and then revise the budget to incorporate any additional costs. And, remember that is likely to involve revising the revenue target again.

This method of formulating a budget will make you think hard and deep about your business and how you operate it. But the good stuff never comes easily, does it?

PS: Once your budget is up-and-running, make sure to track actuals against it to give you a view of where your journey is at.

The post Building Budgets – Let us show you how. appeared first on QCIBookkeeping.

The ATO continues its path of “reinvention”. Below we provide a relevant extract that applies to our interactions with the ATO.

This extract and the associated vision statements on the website outline how the ATO is saying it wants to behave and the type of interactions it is aiming to have with us.

“We want to give you the best possible experience of the tax and superannuation systems, so we’re changing the way we work.

Every Year Counts – Small Business

We’re working to improve your experience of the tax and superannuation systems based on what you told us you needed. The blueprint outlines how the ATO is reinventing the experience you have.

Some changes will happen in the near future and others will take longer. We want to make every year count, so you’ll see a program of improvements being delivered now and in the years ahead.

Improvements in 2016 – 17

Here are key initiatives you’ve told us are important that have been or will be delivered in 2016 – 17:

• Improving access to government online services – you can now use online services more easily to do your tax and super by logging in with your myGov account to access services on behalf of your company, partnership or trust.
• If you’re new to excise or wine equalisation tax (WET), you receive additional support when you start to have excise or WET obligations, including regular contact to help you stay on track in the first year.
• A simpler BAS experience – you or your agent may be asked to test the simpler BAS. This is designed to reduce your GST record keeping by having fewer GST labels to complete.
• Managing your cash flow – you or your agent can use a cash flow management education package to help you better plan and manage your business commitments, including tax and super.
• Improving access to government online services – you can use online services more easily to do your tax and super by nominating others to interact with government online on behalf of your business, in full or limited capacity.
• Small business record keeping – you can use the ATO app to record your business income and expenses on the go. You can provide this information to your agent or upload it to us.
• Registering a new business – you can go to a single location to apply for an ABN and complete a number of other government registration obligations. This initiative is being delivered with the Department of Industry.

In addition to the experience outlined above, you may be involved in consultation and co-design activities on key improvements, such as:

• Contemporary online excise – we are working with excise payers and representatives to co-design a contemporary online excise experience.
• New credentials – we will continue our work on new ways to enable you to access online services securely, such as using your mobile device to manage your tax and super.

You can download a timeline of this information in Portable Document Format (PDF). Download the Every year counts timeline for small businesses

Improvements in 2015 – 16

In 2015 – 16, we focused on fixing the basics and delivered new, tailored services to transform how you deal with us and give you certainty about where you stand.

You now have access to more online information, services and tools that make it easier to manage your tax and super obligations and keep your business on track. Here are some of the improvements we delivered in 2015–16:

• extended hours for after-hours web chat for extra help at a time that suits you
• a personal services income tool
• a Fuel tax credit (FTC) calculator and Practical Compliance Guidelines
• a business performance check tool on the ATO app so you can see how your business is tracking compared to similar businesses in your industry
• for sole traders, the ability to lodge, view and pay activity statements online through myGov
• more support for new businesses to help you get it right from the start.

The post ATO continues its program of Reinvention appeared first on QCIBookkeeping.

• the changes are already in full legal effect
• non-compliance may result in prosecution and penalties, and
• existing annual leave policies and procedures may now need to be updated

The key changes are explained in detail for you below:

Cashing Out Annual Leave

For the first time, all Modern Award-covered employees are now able to cash-out a portion of their accrued annual leave. However, cashing-out is subject to four very strict rules which must always be followed:

1. Employees can only cash out a maximum of two weeks’ annual leave every 12 months
2. An employee must always have a remaining balance of at least 4 weeks after the cashing-out has been processed
3. Each agreement to cash-out annual leave must be recorded in writing, and
4. The amount paid to the employee must be no less than the amount they would have received had the leave been taken

All Employers should also note:

• Employees under 18 years of age will also need their parent / guardian to sign the cashing-out agreement, and
• Employers remain strictly prohibited from coercing or misleading employees into cashing-out their accrued annual leave.
• A small number of Modern Awards are still subject to variation to permit cashing-out of annual leave. Always check the applicable Award carefully.

Employees who are not covered by either a Modern Award or an Enterprise Agreement remain free to cash-out annual leave, subject to the separate rules imposed by section 94 of the Fair Work Act 2009. These rules are the same as those listed above, except that there is no restriction on the amount of annual leave which can be cashed-out in each 12 month period.

Excessive Annual Leave

Many business find it difficult to effectively manage unwieldy annual leave balances. Fortunately, these latest changes by the Fair Work Commission now make it much easier to direct employees to take annual leave and thereby reduce – or eliminate – excessive leave balances. Firstly, it’s important to note the definition of ‘excessive leave’:

• If the employee is not a Shiftworker: 8 weeks’ annual leave
• If the employee is a Shiftworker: 10 weeks’ annual leave

Most – but not all – Modern Awards now contain a ‘model directed leave term’. This new clause will allow your business to direct an employee to take annual leave. As is the case with cashing-out of annual leave, very strict rules apply:

1. The employee and employer must firstly meet with one another and discuss ways of reducing the excessive leave balance. If they’re unable to reach agreement on when or how annual leave should be taken, your business can then direct the employee to take some of their annual leave. This is referred to as ‘directed annual leave’.
2. The directed annual leave period must begin:
   • no earlier than 8 weeks, and
   • no later than 1 year from the date the annual leave direction is issued by your client
3. The directed annual leave period must be at least one week long, and
4. The employee must have at least six weeks of annual leave left after the directed leave period has been completed
5. The Employer’s direction must not be inconsistent with any leave arrangements already in place. This includes any annual leave policies or procedures which apply in their workplace
6. An employee may subsequently request annual leave despite the employer’s prior direction for it to be taken. If this happens, the employer must disregard their previous direction when considering the employee’s new annual leave request, and

If an employee has had an excessive leave balance for more than 6 months and the employer has not issued a direction for the leave to be taken, the employee can unilaterally take some of their leave. In this situation the same rules as mentioned above for employer-directed leave will also apply.

Leave in Advance

Most Modern Awards now expressly allow employers to provide their employees with annual leave in advance of that leave having been accrued by the employee. Importantly, the new ‘model clause’ also expressly allows employers to deduct any subsequent ‘annual leave debt’ from the employee’s final pay if their employment ends before their accrued annual leave has returned to a positive balance. The following rules apply to annual leave provided in advance of accrual:

1. The mutual agreement must be recorded in writing
2. The agreement must confirm the amount of leave in advance being provided, the date when that period of leave will commence
3. The agreement must be signed by both the employer and the employee, as well as the employee’s parent or guardian if they’re under 18 years of age, and
4. A copy of the agreement must be kept in the employee’s records

Payment of Annual Leave

A number of Modern Awards have historically required employees to be paid their full wage or salary in-full and up-front when then begin a period of annual leave. Most Modern Awards imposing this obligation have now been amended to allow employees who are paid via EFT to continue receiving their wage or salary payments ‘as usual’ during their period of annual leave.

The post Important Changes to Annual Leave appeared first on QCIBookkeeping.

Taxis Drivers, Chauffers and other ‘Ride-Sourcing’ Providers
If you provide “ride sourcing or sharing services” (taxi etc) then you MUST register for GST. No $75k threshold – you are in!
ATO – Ride Sourcing and GST
Pre-Establishment Costs (before the company exists)
Any costs that a person incurs before setting up the legal company may include GST. You can claim that GST back (in the company) after registering the company for GST once it is registered.
ATO – Special Rules for Pre-Establishment Costs

Second Hand Goods
Perhaps it’s not fair to call it warped because to me it sort of makes sense. If you buy second hand goods to then on-sell, you can (in effect) claim back GST on the purchase even if the person you bought them off didn’t charge you GST.
ATO – Second Hand Goods

Grants
If you are registered for GST and another entity is registered for GST and they “grant” you funds then there is no GST on that transaction if you do not supply anything to the giver.
ATO – Grants and Sponsorship

Insurance Settlements
If you are able to claim GST credits for the item of insurance you are now being paid for, i.e., it was all related to your GST turnover business activities, and you have informed the insurer that you are able to claim GST credits THEN you DO NOT have to pay GST on the amount of the insurance settlement
ATO – Insurance Settlements

Car Insurance Settlements/Payments
It depends on who the insurer pays and whether the insurer has a contract with the repairer. Generally, no GST is claimable for payments the insurer makes directly to the repairer when they have a contract with that provider, as the policy holder has not made any payment. BUT if the insurer pays a provider on your behalf, then you can claim GST.
ATO – Car Insurance Settlements

GST Groups
If your entities are in a GST group then transactions between them do not have GST on them
ATO – GST Groups

Non-profit Sub-Entities
A non-profit entity can have one set of GST registrations and set up a GST sub-entity which is NOT treated the same for GST. That is, the sub-entity might choose not to be registered and therefore NOT charge GST.
ATO – NFP Sub-Entities

Concessional GST for Commercial Accomodation
If an individual stays 28 days or more in eligible commercial accommodation, they pay 5% GST instead of 10%.
ATO – GST and Property

Restaurant Tips
Voluntary tips do not attract GST if the tips are passed on to the staff…if they are not paid to the staff, then GST must be declared. Non-voluntary tips do attract GST.
ATO – GST and Restaurant Tips

Water and Bread Sold in Restaurant or Venue
Water and bread are normally GST free items, but if sold in a restaurant they attract GST. In fact all food that is normally GST free attracts GST if it is consumed in the place of purchase. BUT if the place of sale is a not-for-profit entity involved in fundraising or similar activities, GST does not need to be charged.
ATO – GST and Food

GST Free Food Delivered
Similarly, retail food that is normally GST free if it is delivered with prepared food, attracts GST. The whole supply is considered to be catering and therefore the whole order attracts GST. This does not apply to wholesale deliveries, where mixed supply may be delivered.
ATO – GST and Food

Voluntary Withholding for Contractors
If the contractor is registered for GST, then whether they charge GST or not is governed by whether or not the paying business is entitled to a GST credit. If the business IS entitled to a GST credit then the contractor should NOT charge GST.
ATO – PAYGW Voluntary Agreements

Property Bought Before GST
If you are selling property that was bought before 1 July 2000, GST applies, even though it didn’t when you bought it. What’s more, there are two different methods you can choose between in calculating the GST amount.
ATO – Margin Scheme

Expenses On-Charged to Client or Reimbursed
Financial supplies, property water and rates are generally GST free, but may have GST added if another entity pays for these services. Office supplies, contractors, materials and travel costs may already have GST in the price, and may have GST added again on top if it is deemed that a service has been supplied. BUT is it a reimbursement or is it an oncost? Have you paid for something on behalf of another (reimbursement), or have you provided a service, (oncost)? Often the decision will come down to the agreement between the parties.
ATO – Principal and Agent

Agents Charging for Performing Artists
Even though a performing artist may engage an agent to bill on their behalf, the artist is still the entity who is making the supply to the end user and can therefore charge and claim GST if registered, assuming the supply is not subject to PAYG withholding. If PAYG withholding applies then GST does not apply. BUT the name on and ABN on the tax invoice to the customer can be either the agent’s or the artist’s.
ATO – Performing Artists

Simplified Accounting Method
The simplified accounting method (SAM) for food retailers is meant to be simple…but we’re not so sure. There are five methods to choose from, based on an average percentage, “snapshot” sample of business, or standardised percentages (“business norms”). But you have to know whether you are a “reseller” or a “converter” or both. What’s more, the SAM can only be used for the food part of the business, so if the business has other aspects to it then GST must be calculated as usual; SAM does not apply. Whichever method you choose, you must stick to it for a year, so if it turns out you pay more GST too bad.
ATO – Simplified Accounting Methods for Food Retailers

The post Warped Versions of GST appeared first on QCIBookkeeping.

• Some email accounts, (typically free accounts or those as part of a wider service like gmail, Hotmail even Bigpond, Optus etc), are routinely and systematically scrutinised and analysed for what you are doing and what you are sending and who to.
• Email bounces via of a number of servers and through various services between leaving you and reaching the recipient. This creates numerous points of vulnerability.
  • Points of weakness are the sender’s device, the network, (i.e., the internet provider), the servers and the recipient’s device.
• Not all email clients are equal. Some are more secure than others.
• Webmail is the least secure – but you can take precautions like using strong passwords, enabling two factor authentication and enabling notifications for new sign-in locations or devices

Important Security Issues

• You should never have a Tax File Number (TFN) written in the body of an email
• You should never have a TFN written in an attachment within an email unless it is encrypted (password protected)
• If you are using a webmail based email address, look at upgrading and getting your own domain name with a secure provider – it is more professional and costs very little to activate an email address. You don’t need an active website in order to have your own email address. At the very least, make sure you have enabled the highest possible security available for that service.
• Consider using encryption software for sensitive documents or information being sent by email

In effect, there is no security of identity-sensitive information like a TFN in an email, and any one of the people with access to your or the recipient’s devices, email servers or intercepting emails could obtain the TFN that you have sent.

This opens up a can of worms for the sending of Income Tax Return by email (it contains the TFN), and for sending the end of year payment summaries directly from the software.

It is not limited to TFNs. The sending of any information that could be used to compromise someone’s identity, including credit card details, bank account details and other private information are all questionable.

Recommendations

• Use a password manager application like 1Password or Last Pass. This not only securely manages all your passwords but can generate very strong passwords randomly.
• Always use strong passwords
• Regularly change passwords
• Regularly check settings and preferences to make sure you are still using the optimum security setting available for your email application
• Always update your operating system, software and applications when prompted
• Enable two factor authentication on anything you can
• Back up everything

The post How Secure is your Email appeared first on QCIBookkeeping.