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Is it possible that dark days are ahead for the third sector of society?

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Sadly, it seems likely.Although some of us believed that non-for-profit (NFP) organisations would never be in financial trouble, the 2015 Australian Charities Report shows that 42% of charities experienceda reduction in income since2014. There are two possible causes: decreases ingrantsand membership reduction.

Let's look at an example of the former case. Recently, NDIS (National Disability Insurance Scheme) has been implemented, meaning that organisations working with vulnerable people are no longer eligible for grant money. This is a significant change-previously organisations were solely responsible for disability care and thus given sizable funding. The NDIS may be good news for some, but such changes cause problems for the charities themselves.

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Why could big associations fail at their Executive level?

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The organisation CPA (Certified Practising Accountants) has recently terminated its CEO’s contract after the resignation of almost half its Board. In light of such an upheaval, a few difficult questions need to be asked. Here are some answers to the more interesting ones:

FAQs

Q: How can an organisation like CPA fail at an executive level?

A: Sadly, even as companies develop, management and board structures tend to remain unchanged. For a large-scale company like CPA, it is possible that the management systems were simply outdated and unable to keep up with community needs. The source of the problem may be an overly centralised and self-interested board and management team (see CEO Alex Malley’s $1.8 mil salary!). Perhaps membership organisations should use a local franchise model, giving incentive to provide valuable services.

Q: Is CPA producing anything of value for their members?

A: Honestly, probably not. The organisation has invested heavily in branding, promotion and overseas growth, instead of the training and guidance their members need. This decision could have serious repercussions for the company.

Q: How can the Board take better control of what is going on in the organisation?

A: Technology is the secret weapon for the modern business. Using integrated cloud software for sharing and reporting information, the management team can get an overall picture of the organisation almost instantly. Using technology, the board can gather member data, respond to it instantly, and prevent large-scale executive failure.

Q: Is CPA meeting members’ expectations?

A:The last ten years have brought significant changes in customer expectations, which have not been reflected in CPA’s structure or membership requirements. Businesses should be able to develop quickly to meet members’ needs.

Q: What leadership role or structure is best for organisations like CPA?

A: Member-led organisations should be at the forefront of industry. The days of professional bodies lobbying governments to change their own policies should be far behind us! Nowadays, members should be the voices and leaders of their own groups.

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International IT companies are now charging GST. So, what’s the damage?

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LinkedIn, the online network for professionals, began charging GST to its customers in early 2017. This is not an isolated incident-Other international IT companies now charges GST on intangible online purchases from the 1st of July 2017. All the companies with an annual turnover to Australian consumers above $75,000 will be subject to this tax, including international businesses.

Internationally sourced intangible goods include digital products, services or rights. These intangible goods were not previously subject to GST by international companies, however, they are now subject to GST under most of circumstances. For example, if a business sold a 12-month subscription in December 2016, the payment for products received after July 1st 2017 is taxable. Therefore, those international companies may need to charge GST for the July-December 17 subscription.

This GST on ‘intangible’ products and services impacts major off-shore competitors including Amazon, EBay, LinkedIn, etc. Its purpose was to give Australian firms competitive neutrality by ensuring fair and equal treatment of all goods and services. However, users now may have to pay 10% extra on the IT services, causing concerns for business owners.

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

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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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Exclusive Offer For You - Available Only Until 29 August 2017

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Cyber Security has become an essential component to business stability and longevity in today's business landscape. However, at Tailored Accounts, we know that it can be difficult to find reliable, relevant information about the must-knows of Cyber Security - and understanding I.T. jargon can be impossible!

Your security is important to us - so we have done the hard work for you and found experienced, reputable professionals in Cyber Security to bring the essentials to you.

We have partnered with QILA to give you, our valued clients, an exclusive insight to what cyber security means for businesses today. They will run you through the essentials of practicing good cyber hygiene in your workplace, leaving you less suseptible to cyber crime and malicious hackers, and better able to focus on what you do best!

QILA offers you a complete reputation safeguard package for only $300 AUD. The package will give you these benefits:

  • Website vulnerability assessment 
  • Website resilience recommendations
  • Physical security 
  • Information security audit 
  • Security recovery planning

Sign up today by simply contact QILA or Tailored Accounts:

  • QILA: This email address is being protected from spambots. You need JavaScript enabled to view it.
  • Tailored Accounts: This email address is being protected from spambots. You need JavaScript enabled to view it.

This offer is only available for Tailored Accounts client until 29 August 2017. 

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Errors and over-claiming for work related expenses and the Tax Gap (Part 1)

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Commissioner Chris Jordan AO

Address to the National Press Club, Canberra

5 July 2017

The ATO has expressed concerns about the numbers of incorrect work-related expense claims and the tax gap. Below is the key points extracted from the address of Commissioner Chris Jordan AO in early July at the NPA.

The Tax Gap:

  • The ATO will also continue with administrative reforms under our Reinvention Program, such as: earlier engagement, greater transparency and cooperation with clients and partners prevention and early warning, rather than correction and ‘gotcha’ more sophisticated use of data for both service and compliance purposes increased digital service offerings and streamlined interactions.
  • Now, let me share with you ‘what next’; the next big challenges we are facing: Influencing community perceptions and attitudes about tax; and, minimising tax gaps.
  • I want instead, to support mindsets where people feel more positive about their total tax experience – satisfied with their interactions and confident that the ATO is taking action against those who are not paying what they should. Let me turn to that now – paying the right amount and minimising tax gaps.
  • The tax gap is approximately $2.5 billion.
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Telstra Business Awards 2017 ACT Finalist

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Telstra Business Awards has announced Tailored Accounts to be the finalist for Small Business Award Category of ACT in 2017. Once again, we have an honour to become a Telstra Business Award finalist together with many other inspiring Australian companies.

The 2017 Telstra Business Awards recognition has encouraged us to reach for higher achievements in serving our clients and being committed to innovation in management accounting.

This is the third time Tailored Accounts was nominated to be the Finalist. These recognition have been unforgettable moments as they affirm the success of our teams dedication to support Australian businesses. 

Tailored Accounts is proudly listed on Telstra Business Awards Website

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Reconciliation of Your Payment Summaries

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The six important steps of payment summary reconciliation that employers often overlook. 

Payment summaries generation is a simple task, however the back end reconciliation does take half to a day of work. Here are list of 6 STEPS that our staff have to go through to ensure that your payment summaries are faultless!

1. Reconcile all staff payslips in the past 12 months with BASs submitted to ATO during the year. Incorrect payment summaries is the biggest trigger to an ATO tax audit...we understand how important it is to ensure our data is perfectly matched with ATO data;

2. Reconcile all staff payslips information: Gross Salary, PAYG withholding, FBT, Super payable, Salary sacrifice, Termination pays. A full reconciliation between payroll report vs General Ledgers are conducted for the full year to ensure your staff pays are agree with what coded into your accounting software for the last 12 months; 

3. Once ATO = Pay summaries = General Ledger (debit/credit), our staff will print payment summaries and re-check them with employee payroll setup to ensure their pays are in line with their contract/award;


4. Payment summaries to be email to business owner/HR manager/CEO to check before we email to your staff;

5. Payment summaries to be emailed to staff before 14th July;

6. After 1 week from sending staff payment summaries, if we don't need to do any amendment, we will send Annual Payment Summaries to ATO before the DUE DATE 14th August.

 

 

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Simpler BAS and implications on businesses

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Business Activity Statements (BAS) reporting has often been a time consuming and complex process for many small and medium enterprises (SMEs) since goods and service tax (GST) was introduced in 2010. The Australian Taxation Office (ATO) is introducing Simpler BAS for SMEs to reduce the reporting burden. If your annual turnover is less than $10 million, you will report GST on Simpler BAS (unless you report GST by installment).

SMEs who use Simpler BAS will be required to report for the following fields only;

  1. G1 Total sales
  2. 1A GST on sales
  3. 1B GST on purchases

In other words, SMEs are no longer required to report the following fields;

  1. G2 Export sales
  2. G3 GST free sales
  3. G10 Capital purchases
  4. G11 Non-capital purchases

This means that businesses will need only three GST codes instead of seven when reporting BAS. This will not only save time for business owner, accountant & bookkeeper but also reduce room for error….less is more!

However, please be aware that Simpler BAS only affects the GST field, that is, other BAS fields such as PAYG instalment, PAYG withholding and luxury car tax remain unchanged.  Also this does not change the frequency of BAS submissions.

Although this change will reduce the time to complete the BAS and simplifies recording GST information, the change will not significantly change the amount of work performed to get all GST number right! Please do not sacrifice the time that you spend on GST reconciliations as it mean creating more room for mistake. GST still has to be recorded in the correct manner as the underlying GST law has not changed, at Tailored Accounts, we are actually spending the time saving on report to build more layer of GST reconciliation to ensure that our quality assurance is maintained.

While the change is likely to only provide a small reduction in the reporting burden, this certainly has some effects on the setup & function of your accounting department. Not all the accounting software fully supports this change or will require some adjustments or variations. If you need any support in regards to Simpler BAS, please contact Tailored Accounts.

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

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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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