Benefits provided to employees or their associates in addition to salary or wages are known as fringe benefits. These benefits are paid for by the employer from pre-tax earnings, making the provision of benefits attractive to employees as it may reduce their taxable income while receiving payment in other forms. 
Fringe benefits tax may apply based on the type of benefit provided. 
Tax is payable because the benefits are a different form of payment by an employer instead of salary and wages. The tax is calculated on the taxable value of the benefit, which reflects the grossed-up salary the employee would have had to earn to pay for the benefits from post-tax earnings. 
Employers can generally claim a tax deduction for the benefits and related FBT payable. 
Types of Benefits 
There are many different types of fringe benefits employers may provide to employees. These include: 

• Vehicle owned by the business provided for private use 
• Vehicle lease arrangements 
• Car parking 
• Entertainment, such as golf club membership or tickets to major events 
• Expense payments, such as credit cards or health insurance 

• Other types include debt waiver, living away from home allowance, or property benefits. 

Some benefits provided to employees don't attract FBT. If you pay for expenses that an employee would otherwise have been able to claim as a work-related tax deduction, FBT won't apply. For example, if you pay for employees to attend a professional development course, there won't be any FBT liability on this benefit. 
FBT Administration 
The fringe benefits tax year runs from April 1st to March 31st. You must then include the reportable amount for each employee on their Single Touch Payroll finalisation by July 14th, so it flows through to their annual income statement. 
As with all business transactions, keeping accurate records is essential to determining whether FBT applies, and how much needs to be included on the employee's income statement, if any. 
If you're interested in seeing how fringe benefits might apply to your business, talk to us about FBT registration and administration. We can advise on the types of benefits available, how much tax is payable or how to reduce the FBT liability. We can also help to get your bookkeeping software set up to make record keeping easy. 
Stay up to date with FBT news
Keep up-to-date on FBT public advice and guidance and other news with the ATO's quarterly FBT Bulletin. You can subscribe to the bulletin by emailing [email protected].

​Purchasing an existing business is a great way to expand your empire. You can buy out a close competitor, or dip a toe into a new industry and expand your reach as a business group. But whatever the reason for the acquisition, you need to ensure you’re not buying a lemon.
Doing your research is a crucial part of the purchase process. As is asking some probing and insightful questions to help you determine if this acquisition is a good (or bad) idea.
Questions to ask before you make an offer
Buying another business is a major decision that can be a large outlay of capital and a big responsibility to take on. If you’re going to take the leap, it’s important to make sure the company in question is stable, well-managed and has a good future ahead of it. Here are five vital questions to ask before entering into a purchase:

1. Why is the business for sale? There are many reasons why an owner might want to offload their business, not all of them good. Their sales may be dropping, they may have rising debts, there may be internal problems with staff or the market for their product/services may be coming to an end. Alternatively, they may be looking to retire after a successful run. Find out why, so you don't buy a clanger.
2. Is this a good industry to step into? Do your research on the industry, competitors, and marketplace that the business currently trades in. It's important that you step into an industry sector that has potential for sales, growth, stable revenues and potential profits. With volatile markets post-pandemic, looking at predictions and forecasts for your chosen industry niche makes good sense and helps you make an informed decision.
3. Have you done your due diligence into the business? Do your due diligence to make sure there are no financial, legal or HR skeletons in the cupboard that may jump out to surprise you. Is there an unpaid tax bill? Are there loans that are being defaulted on? Are there any legal cases being brought against the company? Has the business filed all its returns and accounts? As the new owner, any of these issues become your responsibility, so you want to check out their records and history in as much detail as possible. This will prevent some major headaches further down the line.
4. Does it have an existing business plan? You'll need a business plan that takes the venture forwards and gives you a pathway for your next steps as the owner. Is there a business plan you can use? When was the plan last updated? How well are they tracking against the milestones in that original plan? No business plan is written in stone, so you’ll almost certainly need to review, update and refine this strategy post-acquisition. Our business advisors can help you with this.
5. Are your management team and staff up to scratch? When you buy the business, you'll usually also be inheriting the team behind that company. Do you have a management team with the skills, experience and motivation that's needed? Are your employees engaged and do you have a big enough team to meet your own goals for the business? This team will be vital to your future success, so you want the best possible people and talent behind you as you steer a new course for the company. Consider any payroll liabilities that may be included in the purchase.

Talk to us if you’re considering buying a business
Purchasing an existing business can be a complex and protracted process, even once you’ve completed all your due diligence and background checks. If you’re in the market for a business acquisition, do come and talk to us, so we can help you sort the top deals from the big risks.
We’ll help you complete the relevant checks and will work with you to create a new business plan and strategy that’s designed to turn your new purchase into a business success.
Get in touch with us on (08) 9367 4199 to talk through your acquisition plans.

The end of the financial year is fast approaching. Below we have put together a few tips for you to help your business tax return.

Businesses

• The instant asset write-off threshold for small businesses applying the simplified depreciation rules will be $20,000 for the 2023-24 income year.
• An additional 20% deduction will be available for small and medium business expenditure supporting electrification and energy efficiency.
• FBT exemption for eligible plug-in hybrid electric cars will end from 1 April 2025.
• An increased capital works deduction rate and reduced withholding on managed investment trust (MIT) payments will apply to new build-to-rent projects.
• The clean building managed investment trust (MIT) withholding tax concession will be extended from 1 July 2025 to eligible data centres and warehouses, where construction commences after 7:30pm (AEST) on 9 May 2023.
• The start date of a measure to prevent franked distributions funded by certain capital raisings announced in the 2016-17 Mid-Year Economic and Fiscal Outlook has been postponed from 19 December 2016 to 15 September 2022.
• Deductible gift recipients list to be updated.

Superannuation

• Treasury has reduced the severity of the factor-based approach for SMSFs under the non-arm's length income (NALI) provisions. Under the new proposal, income will be taxable at twice the level of the general expense where there is a breach, instead of five times as previously proposed. 
• Fund income taxable as NALI will also exclude contributions.
• Revenue estimates for the $3 million threshold tax for super remain around $2.3 billion, suggesting that the government will proceed with its plan to tax unrealised gains. 
• Confirmation of move to payday super, instead of paying employee super quarterly.

​
View the full budget and related documents here.

The stresses of everyday life can often become overwhelming, particularly when you are trying to manage your small business efficiently and provide your customers with the best experience possible. 
The list of what you need to do, and all the ‘want to do’s’, can seem never ending at times.
 
We often write off the difficulties we may be facing as ‘tomorrow’s problem’, but it is essential that you take a step back and check in on your wellbeing and mental health during stressful periods. When stress at work is left unchecked, it can easily begin to affect your life and relationships outside of work. 
From deadlines to staffing issues and working long hours, you may sometimes feel that the world is on your shoulders. 
Watch out for the signs of stress getting on top of you: 

• Increased heartbeat 
• Feeling anxious 

• Headaches 
• Sleeping problems 
• Irritability 
• Inability to focus 

These signs are a good indicator that things may be beginning to get on top of you.
We have compiled a list of ways that you may be able to practically tackle your stress levels within the workplace. 

• Work-Life balance: Take time away from your business, even when just at home, where you can put your phone away and log-off mentally from work while spending time with friends and family. Try to eat a healthy, balanced diet and get plenty of sleep. 
• Manage your calendar: Schedule specific days or times for staff concerns, managing your accounts, and other tasks. Then – stick to them. If you manage your calendar well, you can easily see where you are able to take a moment to yourself when needed. 
• Prioritise your workload: Is this task urgent? Does it need doing right now, or can you add it to your calendar to complete later when you aren’t in the middle of something? 
• Communicate: Make your expectations known. Make sure you and your other employees are aware of when you are available for work-related issues and discussions, and that your private time is just that. 
• Practice relaxation techniques: Engage in relaxation techniques such as deep breathing, meditation, or yoga. 

Ask for Help 
Whether you run your own business or are an employee, there are always options and ways to seek help with your stress load in the workplace. 

1. Seek support from colleagues. Speak to your HR manager or supervisor and see what can change in your role or the support you receive for it. If you are the big boss; 
2. Consider hiring an assistant or virtual assistant to lighten the load of your day-to-day administrative tasks, leaving you more available to focus on what is important to your business. 
3. Think about outsourcing tasks like bookkeeping and payroll to your accounting firm. 

It is important to remember that asking for help is a sign of strength, not weakness. We all need it sometimes. If things are getting on top of you, don’t be afraid to reach out to services such as Beyond Blue: a national mental health organisation that provides support for individuals experiencing stress, anxiety, and depression. They offer a range of resources, including a helpline, online chat, and self-help tools. 

Think you need to lighten the load? We are here to help our clients – reach out to us to discuss what we can do to help with your bookkeeping needs. ​

The time has come for us to get into the nitty gritty of Single Touch Payroll (STP) Phase 2.

​What is Single Touch Payroll? 
If you missed the memo, Single Touch Payroll or STP, is a process of electronic data reporting that Australian businesses use to share data with the Tax Office.  
If you have STP-enabled payroll or accounting software, it easily sends the ATO vital reports on things like salaries and wages, pay as you go (PAYG) withholding and superannuation liability.  
The STP process began a few years ago and the reporting items have been expanded for mutually beneficial reasons. Below we’ll discuss some of the critical changes for phase two of STP.  

Does knowing about STP 2 matter to you? 
If you have already engaged Preston Corporate Accounting to process Single Touch Payroll on your behalf, you’re all set. We’ll take care of the Phase 2 process for you. The details below are just for your information. 
For those clients that prepare their payroll themselves, we hope this article is helpful. Please remember that we are here for you as a resource if you need assistance at any time. 
​
Phase 2 has already begun 
The purpose of STP’s second phase is to provide the different government departments with more detailed and current information to help improve the delivery of government services.  
The adoption of STP 2 is a compulsory government requirement and came into force on the 1st January 2022. However, users of Xero have until the 31st March 2023 and MYOB had an extension to the 31st December 2022.  
In summary, your accounting or payroll software (Xero, MYOB or QuickBooks) will provide you with the structure needed for the data input. However, you will need to increase your payroll skills to ensure the data you enter is correct. 

So many labels and codes! 
There are now many labels and codes to input for each employee. Understanding these codes is important; it will affect the employees’ government benefits and income tax basis. This includes things like child support and Services Australia entitlements. There are 86 codes to choose from and it is important that you choose the right one for each employee. 
There are quite a lot of labels and codes that need to be correctly selected to properly process payroll under STP 2.  
Here is the list: 

• Allowance types – 10 choices  
• Cessation Type – 7 codes  

• Deductions – 4 types 
• Eligible Termination Payments – 8 types  
• Employment Basis – 7 codes  
• Employment Category – 10 codes  
• Income Stream Types – 10 choices  

• Lump Sum – 6 types  
• Medicare Levy Exemption/Reduction – 2 codes  
• Medicare Surcharge – 3 tiers   
• Paid Leave Types – 6 choices  
• Reportable Fringe Benefits – 2 types  

• Salary Sacrifice – 2 types  
• Study & Training Support Loans – 2 codes  
• Tax Treatment – 9 codes  

These should be integrated into your software, but you may need to follow the STP 2 guides on the ATO website. You can also reach out to us if you need support. 
 
STP 2 implementation checklist 
If we aren't processing your STP, it is important that you approach the implementation of STP 2 in a structured manner and follow a checklist like the one below.

1. Set key milestones in an implementation plan. Set deadlines for each step in the process for your business based on the number of employees you have and your industry. Detail the key steps and when they need to be completed to ensure that you’ll be compliant by the due date. 
2. Keep on top of your payroll software notifications. Make sure you read the updates and the progress of your software provider. 
3. Decide the party responsible for the implementation of STP 2. Right at the start, assign the STP 2 payroll implementation role. Will it be yourself, your bookkeeper or Preston Corporate? Ensure they are aware of their responsibility. Training may be needed to ensure you have the proper resources. 
4. Inform your employees. Many employees will not be familiar with the changes. You may need their input in deciding the correct code to be used.  

Click on your software below for information to help guide you through the process:
Xero
MYOB
Quickbooks

​Where to from here? Don’t panic! Help is at hand.  
Now is the time to get an understanding of, and more detail on STP 2. Don’t wait until the last minute as there may be penalties. Your payroll software will determine the commencement date, so ensure you are on top of their progress. Our bookkeepers will be available to assist you in your setup, so don't hesitate to call us on (08) 9367 4199 if you need to.

Maintaining positive cash flow is essential for any business, big or small. Your business can experience some big problems when dealing with late payments, so it’s important to be proactive to stay on top of your invoicing.  
If you struggle with consistent late payments from your clients, here are some simple actions you can take that can really help.  
Don’t delay your invoices  
Your clients can't pay you if they don’t have your invoice. So be quick to send it to them. Customers are often more prompt in paying when they’ve just received the goods or services from you, so don’t delay. Cash in on that goodwill.  
Provide a detailed invoice 
Your invoice needs to have all the right information included. This includes your business details, their business details, payment instructions, description of the work or product, date of delivery, and any customer requirements like purchase order numbers. You also want to have a clear due date.  
Ask for prompt payment 
Many clients may be used to having weeks to pay invoices, but that’s changing. Over a third of businesses in Australia request payment within a week. It helps set an expectation of prompt payment.  
Make it easy to get paid 
Your clients will typically pay faster if they can use their preferred payment method. Consider offering various options, including cash, bank transfer, credit card or PayPal. You want as few barriers between you and your payment as possible.  
Don’t forget to chase payments 
You’re not done when the invoice is sent. You’ll still need to follow up with the client to ensure the payment has been processed. Have a system that lets you know when an invoice comes past due and give them a call. Don’t let them forget or think that you forgot.  
Withhold delivery until payment 
If you have new clients or clients with a history of late payments, consider switching up the process. Invoice them first, and don’t deliver the final service or product until you've been paid. This prevents the client’s ability to pay late or try to avoid paying completely, and it’s common practice for many businesses and services now.  
Consider direct debit arrangements 
If you have clients whom you work with or service on a regular basis, consider an agreement where you can charge their bank or card from your end. We do this with many of our clients because it makes it easier and faster for both of us.  
It’s important to remember that you provide a valuable service or product to your clients. And that should never be taken for granted. You deserve to be paid efficiently and professionally. 
​
And don’t forget, you can always talk to us about your invoicing system and business practices. We can help you streamline things and get you paid faster. ​

What are your business goals for the year ahead?
The beginning of a new calendar year is an excellent time to review the year just finished and reflect on what worked, what didn’t, what you’d like to change and new things you’d like to implement. 
Last year, there were inescapable impacts on businesses, with some thriving, others failing, and others just getting by. So, what kind of year was 2022 for your business? 
Take the time to review the year and acknowledge all that has happened, good, bad or indifferent. Examining the year with an objective perspective can provide valuable insights to prepare for the next business year. Planning and goal setting will help provide a focus for your business efforts. 
Your yearly business review 

• What were the most significant impacts on your business in 2022? How well did you meet the challenges? 
• What worked well last year? What systems, technology, products or services were successful? 

• What accomplishments can you celebrate? 
• What situation, event or experience provided the biggest learning opportunity? 
• What is the biggest challenge or frustration you face as you prepare for 2023? 
• What did you most enjoy during the year? Do more of it. What did you least enjoy? Do less of it! 
• Analyse your financial reports. Are you earning what you’d like to? Is the business sustainably profitable? 

Some considerations to think about

• Interest rates increasing - How will interest rates affect your mortgage? Will you need to increase your salary and put pressure on your business’s cashflow? Do you have an overdraft or loans for the business, how will you fund the increased repayments? Why not sign up to our Profit Improvement Workshop to find the cash in your business to help with funding. 
• Capacity issues - Do you still have a need to add good people to your team? How will you find them? How will you fund it with a tightening cash supply? 
• Cyber attacks - Would your business be at risk? How would you deal with a loss of funds? Do you have a plan in place to reduce your risk?  

Get ready for a great year 
While there are many metrics you could evaluate to track business performance, we’ve given you just a few ideas to inspire your business planning for 2023. 
If you’d like to chat about what you can do differently this year to enable your business to thrive, book a time with us today.

Common tax deductions for small business 
Are you claiming all the business tax deductions that you are entitled to? 
There are many expenses common to most small business, and there are other expenses that are specific to the nature of the goods or services that your business provides. ​​

• Operating expenses include accounting, administration, advertising and marketing, office premises, office running expenses, trading stock, legal fees, insurance and vehicle expenses. 

• Employment expenses include salary and wages, fringe benefits, superannuation and training costs. 
• Other operating expenses may include things specific to your business, for example point of sale systems, freight, professional membership fees, professional education, protective equipment, tools or specialised software. 
• Capital expenses include machinery and equipment, vehicles, furniture and computers. Depreciation for these assets may also be deductible if the expense was not written off immediately. 
• Repairs and maintenance to assets and business premises. 

Expenses must relate to the running of the business and providing the goods or services that your business offers. 

Some common expenses that are not deductible are fines and penalties, provisions for employee leave, donations to entities not registered as deductible gift recipients and entertainment. 
There may be some expenses you want to check with us such as private usage of business vehicles, prepaid expenses, bad debts, loss of stock and borrowing expenses. We’ll make sure to include all the deductions you’re entitled to. 
What’s on the ATO’s radar? 
This year the ATO will be taking a closer look at record keeping, work related expenses, rental property income and deductions and cryptocurrency transactions. 

• Keep records for all business transactions (income and expenses), activity statements and financial reports for at least five years. 

• Keep all records relating to employees, contractors and payroll for at least seven years. 
• If your business is a company, keep all records for at least seven years, including director meeting minutes. 

Other common tax return issues 

• Work-related travel expenses – travel fares, accommodation & meals. The travel should be directly related to income producing activities and you need records to verify the claims. 
• Motor vehicle expenses – keep records for fuel, repairs & servicing, finance arrangements, insurance and registration. Keep a logbook to record private travel. 

• Fringe benefits – have you captured all benefits provided to employees? Vehicle and entertainment benefits are often scrutinised. 
• Superannuation – have you paid the superannuation guarantee on time to employees’ super funds? The payment date is always due on the 28th of the mont following the end of the applicable quarter. The ATO will examine your Single Touch Payroll records including superannuation payments. There are severe penalties for late payment of superannuation. 
• Current temporary tax depreciation incentives - There are currently three temporary tax depreciation incentives available to eligible businesses: 

• Temporary full expensing - for assets you start to hold, and first use (or have installed ready for use) for a taxable purpose, on 6 October 2020 to 30 June 2023. 
• Increased instant asset write-off - if the asset was purchased by 31 December 2020, and first used or installed ready for use before 30 June 2021. The threshold remains at $150,000. 

• Backing business investment - accelerated depreciation for some assets in the 2020 and 2021 financial years. 

Maximise Your Business Deductions 
We can check your business’s eligibility for concessions, offsets, employer incentives and rebates and make sure your business is calculating taxable income correctly, so you don’t pay more tax than you need to! 
It’s important to get the allowable tax deductions right for your business and get in early for your tax return. This way you get more time to plan for payment, or if you are due a refund you will see it in your bank sooner. Talk to us to see what applies for your business. ​