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Errors and over-claiming for work related expenses and the Tax Gap (Part 2)

In case you missed it, Tax Commissioner Chris Jordan made a public address on the 5th of July 2017 in which he spoke about the ATO’s plans moving forward, especially concerning tax gaps. Let’s take a brief rundown of the situation as it stands:

  • The ATO, for the first time is going to publish estimates for corporate tax and income tax gaps for different segments. They were previously publishing estimates for GST based gaps.
  • Their first release of these numbers was for the corporate tax gap calculated based on 2014-15 data, which is approximately $2.5 billion (a tax gap is the difference between what the ATO has collected and what it should have collected, were everyone compliant with the existing laws.)
  • This $2.5 billion tax gap shows that the ATO has collected about 94% of the corporate tax they should be receiving, 91% voluntarily declared and 3% through compliance intervention. While this is around global best practice, the ATO will continue to closely watch the 1400 businesses in that segment.
  • Their current aim for corporate tax is to work with taxpayers to encourage voluntary compliance and move away from the necessity for increased intervention.
  • The ATO is now dedicating more resources to other markets they believe, from their initial findings to have higher tax gaps. Namely; small businesses, the black economy (the cash economy) and the individuals market.

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End of Financial Year Preparation: Magical touch on your books!

With end of financial year (EOFY) fast approaching, the Tailored Accounts team is counting down to the last day of the financial year! Offices of accountants and bookkeepers will be filled with the hustle and bustle of time-critical challenges. You may wonder why EOFY often becomes such a hectic time for us. I hope this article can shed light on the inner processes of EOFY preparation.

Having worked in the accounting industry for more than a decade, I consider EOFY preparation as a chance to place extra effort to ensure accurate, up-to-date numbers as well as presentable reporting. These outputs are the results of, what I call, a magical touch on your books.

The following list articulates the main examples of magical touches that we exert to ensure your books are in the best order:

1.      The year-end payroll

During the financial year, we process 12 – 52 payrolls for our clients subject to their pay cycles. At the end of each month or quarter, our team reported the payroll information to Australian Taxation Office (ATO), including Gross Wage and Tax details. In addition to the accurate reports regularly lodged to the ATO, payroll reconciliations at year-end takes care and attention to ensure all requirements are met. Here are the core tasks that our team has been undertaking in the process of EOFY preparation:

  • Final super payment runs must be done before 25th June each year to ensure the last super payment is eligible for a tax deduction in the current financial year. Final salary sacrifice payment runs must happen on or before the same date to ensure all salary sacrifice arrangements are captured in the current year’s payment summary for employees. These particular tasks will require a few extra hours of work during the EOFY period.
  • Payment summaries are to be communicated to employees via email/post before 14th July. We ought to undertake a full year payroll reconciliation to ensure the accuracy of the information in payslips, Business Activity Statements (BAS), and payment summaries. This significant task requires half a day at a minimum, depending on the number of employees and complexity of the payroll structure.
  • Payment summary reports must be submitted to the ATO before 14th August in the following year. The task usually takes an hour to complete. To illustrate, 300 clients at Tailored Accounts are interpreted into a budget of minimum 300 hours for all payment summaries with no mistakes allowed.

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Telstra Business Awards 2016 celebrates the success of Canberra Airport Group

This year, Canberra Airport Group has won a prestigious Telstra Business Award to represent ACT for the National judging in Sydney. This remarkable achievement of Canberra Airport Group has inspired many other businesses to increase the quality of their customer services.

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Canberra Airport – the gateway to business opportunities 

This is the year that an airport organisation has stood out amongst all the ACT award finalists, strengthening the importance of airport business on local environment and economy. The achievement of Canberra Airport reflects its efforts in continuing improvement for innovation, environment sustainability, and business growth.

Canberra Airport is a gateway to the world of many local businesses. Its contribution to the business community is significant in both local and international aspects.  In 2016, Singapore Airlines will be operating regular international flights from Canberra. This is an opportunity for local businesses to easier experience overseas markets.

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Tailored Accounts reviews “NDIS Readiness Report 2016” by BDO Australia

Are Not-For-Profit Organisations ready for NDIS new model?

Over the past three years, and particularly since the NDIS Rollout arrived at all states in Australia, there is a projection of a fundamental change to support the NDIS new model. The new model allows NDIS participants to gain control over the funding without going through disability service providers.

Not-For-Profits Organisations have experienced challenges in adapting with the new NDIS model. They will have to change their fund reception structure from government block grants to individually funded clients. The major concerns of Not-For-Profit organisations are reflected in “NDIS Readiness Report 2016” by BDO Australia.

 

Key findings of the research consider the uncertainties of Not-For-Profit organisations in adapting with the NDIS change. Concerns regarding standard of service delivery and re-position of “Not-For-Profit” status are mentioned as an evidence of change resistance amongst Not-For-Profit organisations. Technology, financial, and human resource have now become crucial to enhance the “readiness” of these organisations.

In the complex and highly individualised system of NDIS, prominent challenges are identified as long term organisational survival and financial sustainability. It is clear to realise the Not-For-Profit organisations have yet had their strategy to adapt their service scheme and finance reform to serve Australians with disabilities under the new NDIS model.

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Tailored Accounts becomes 2016 Telstra Business Awards finalist

The judges of 2016 Telstra Business Awards have shortlisted Tailored Accounts to be the finalist for Small Business Award Category. Once again, we have an honour to become a Telstra Business Award finalist together with many other inspiring Australian companies.

The 2016 Telstra Business Awards has encouraged us to reach for higher achievements in serving our clients and being committed to innovation in bookkeeping practice. The news comes to us when we are working hard to improve our service bundle.  July is the beginning of an exciting yet challenging financial year for many of us. Being the finalist of this prestigious award gives us a great inspiration to pursue our goal in the year 2016/2017.

The achievement that we have today comes from the endless contribution and support from our staffs and clients. We are grateful to have amazing team members who never fail to deliver the best quality of work. Our clients have always been supportive of us. The clients’ queries and concerns give us many ideas to design business solutions that answer their needs. Seeing our clients become successful businesses in town is a source of joy.

 

Let us together celebrate this exciting moment as it is another milestone to mark our growth and success.  

Tailored Accounts is proudly listed on Telstra Business Awards website

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Our Talks at CPA Australia

On June 28th, our team members delivered two presentations on cloud-based integration tools and techniques. We raised the awareness of CPA accountant community on the new generation of financial management.

Presentation at CPA

Key takeaways of our talks at CPA are SMEs need not to purchase expensive business accounting software programs or spend hours and hours in complicated financial reports. Cloud-based accounting services—with the features of having data stored and accessed online—is an ideal option for SMEs.

Presentation at CPA

When applying cloud-based accounting services, time-consuming tasks such as version upgrades and data backup are managed by the application provider. It gives your business a freedom to allocate more of your resources on your expertise. 

At Tailored Accounts, we understand the need of your business and thus our services are customised to meet your demand in an innovative approach and maximise your business sustainability. 

 

Photo Credit: Fuzuki Nishimura

 

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End of Financial Year Note

Most business owners do not know that the SME sector in Australia has wasted millions of dollars due to inefficient cost, most of which can be attributed to the complex bookkeeping process. As the financial year is coming to an end, here is a guide to help business owners save the unnecessary cost and improve the company performance in a period when financial management is very much needed.

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To improve the existing financial management process, you will first have to evaluate the system. Take a minute and think about how you control your financial process right now. Most SMEs have the same mistakes listed below:

  • They fail to realise how important financial management is. Businesses with poor financial management tend to suffer from poor cash flow and profit margins, ineffective debtor control, and an inability to meet their business’ commitments;

  • They are unaware of alternative solutions such as hiring an accountant or implementing an accounting system. If crunching the numbers is not your strength, either hire or outsource to an accountant or bookkeeper who will deliver regular and reliable information and advice that you can use to manage your financial position;

  • While many businesses are in the field of IT, it is surprising how backward their accounting systems are. Stacks of receipts, manual ledger books, simple Excel sheets, messy financial transactions and reports, and overdue BAS and tax returns are common among start-ups with bad financial management;

  • Businesses owners tend to focus on their products, ideas, and clients, often neglecting the fundamentals of their business. I have never seen a successful business that does not have strong financial management.


As a matter of fact, most people fails to realize their mistakes until it’s too late. If you are a small business, it is highly likely that you need to do everything to manage your business, from administration, marketing to bookkeeping. It is seemingly running well and you believe you are able to manage it until the end of financial year approaches. One client shared with us that EOFY used to be her nightmare and she was always lost with massive paperwork. Only until the end of financial year does your disorganized bookkeeping system come back to bite you. To avoid this scenario, though, here is the EOFY to-do list from our executive director.

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