January Non-Members Newsletter

• Stepping out in 2011 - ICB's Professional Development Conference - March 2011 - REGISTER NOW
  
  
• Floods, and what a bookkeeper needs to know - With some ICB help
  
  
• Daily Travel Allowance - What you need to know
  
•    ICB Bookkeepers Forum - You asked, we listened
  
  
• Matthew's RANT - Well.............
   
  
• What is covered by your PI Insurance? - You really need to know
  
  
• Products of 2010 - Products and Solutions Catalogue
  

The PDF version of this newsletter is available here 

Stepping out: 

How to comply and standout as a BAS Agent How to be in the creditable, professional sector of Bookkeepers How to be excellent beyond competent in what we do How to make money from being in a practical real world profession How to be resourced, networked & supported and To know what needs to be known  “Stepping out in 2011” will bring to you information, training and resource sessions on:  Today’s Professional; what and how you agree to engage with a client (includes a walk through of issues to be covered in a real engagement letter) A Practical Approach; checking, reviewing and making money The need to know about Professional Indemnity Insurance The need to know about Cert IV and other education for Bookkeepers Things to think about when you are relied on and the TASA applies to you (competence, supervision, sufficient numbers, when do I tell) ATO tools & techniques; what to do when the tax man rings, or you do The future of the profession; structure, relevant experience, renewing registration  Full Agenda details available here Major software solution providers and Certificate IV educators will be avail able for discussion and information during the breaks on:  Tools, Techniques and Training to be competent in the software you use The Education opportunities available to you  ICB are very happy to have major sponsors of “Stepping out in 2011” contributing and participating in this conference
Click on the location link below for detailed information and to book securely online - Members, do not forget to logon first to obtain the Member pricing
Launceston Tuesday March 1, 2011 Hotel Grand Chancellor 29 Cameron Street Launceston  7250	Canberra Wednesday March 2, 2011 Rydges Capital Hill Crn National Cct & Canberra Ave Canberra  2600	Sydney Thursday March 3, 2011 Menzies Hotel 14 Carrington Street Sydney 2000
Melbourne Tuesday March 8, 2011 The Sebel Albert Park 65 Queens Road Melbourne  3004	Adelaide Wednesday March 9, 2011 The Sebel Playford 120 North Terrace Adelaide  5000	Perth Thursday March 10, 2011 Novotel Perth Langley 221 Adelaide Terrace Perth  6000
Brisbane Tuesday March 22, 2011 Novotel Brisbane 200 Creek Street Brisbane  4001	Cairns Wednesday March 23, 2011 Cairns Novotel 122 Lake Street Cairns  4870	Darwin Thursday March 24, 2011 Crowne Plaza Darwin 32 Mitchell Street Darwin  0800
Click on the links above for detailed information and to book securely online
Sessions from 9.30am until 3pm ICB Members information session until 4pm (Morning Tea, Lunch and Afternoon Tea Included) $200.00 - Full Members $225.00 - Student Members $270.00 - Non  Members Early Bird discount - $20.00 off until January 31, 2011 To complete a paper registration form click here
When you register and pay securely online you do not need a PayPal account, click on the "Continue" link you will see on the payment screen.
Major Sponsors:

(Details provided by Insurance Made Easy - ICB's preferred PI Insurance provider) 

There are a lot of instances where Independent Bookkeepers are often called upon by their clients to perform Business Services that fall outside the standard duties of a bookkeeper. Sometimes your standard business also includes services that would not be considered “bookkeeping”.

Don’t get in trouble because of “uninsured” services!!!!

It is important to be aware that you are insured for your “business”. A PII policy should be established with the business description being written for you.

ICB & Chubb have worked together to establish a standard PII product that will suit most Professional Independent Bookkeeper businesses without any enhancements. This “product" is based on what ICB and Chubb the insurer agree the duties and description of a “typical” bookkeeper are. Any other services performed outside of the recognised duties may not be covered and may require additional information and possibly incur an additional premium to be paid.

The following are the agreed duties and description of a Bookkeepers services in the “typical” policy.

The Professional Business Practice of Bookkeeping services; including but not limited to:

• Bookkeeping: processing, reconciling, reporting,
• Payroll: processing, reconciling, reporting, calculation
• Accounting and financial management or related software packages; installation, set up, configuration, training and use
• BAS Agent Services: as defined in Tax Agent Services Act 2009
• Consulting and Advice in relation to the foregoing data file management (including backup management & file location management) in relation to the above
• Services may be provided at the clients site utilising the client systems or the bookkeepers system or at a different location or via remote access software
• Provision of information to third parties when authorised.

If the services you supply are outside the above, please let us know and we will consult with the insurers as to the best way to provide additional coverage.

It is possible something else you do, should be, or is already, automatically included in this description. ICB & Chubb have to communicate further about what is "typical" and what would be an extension.

One such duty that we have received several enquiries on is training on the use of Microsoft products such as Office Word, Excel, Power point etc. Currently these sit outside the scheme; to safeguard you we can provide cover at a nominal additional cost.

The policy includes various other provisions that will apply to most businesse such as; Employees and contractors working under your business umbrella are covered.

For further information, contact Helga or Sam on 03 9757 8181

The ATO have sent a broadcast to those in flood affected areas advising them that a range of support strategies is available to help people/businesses affected by the floods.

These strategies include:

1. Additional time to lodge Business Activity Statements
2. Additional time to pay tax debts without incurring interest
3. Providing a choice to pay tax debts by instalments
4. Remitting penalties that were automatically imposed during the disaster
5. Fast tracking of refunds
6. Refunding amounts credited to existing debts where the client has entered into a deferral to pay, or an arrangement to pay their tax debts
7. ATO field visits offered to help reconstructing tax records and making reasonable estimates. 

BAS Agent/Bookkeeper practical approach for clients

1. Review ATO website to check if your client/s are on the list of postcodes/areas that the ATO have listed to be flood affected areas. The ATO will continue to update this list.
   
2. Discuss with client the additional time needed to complete the BAS. Note: Currently December Monthly Lodgement date has been extended to 21st February 2011.
   
3. If additional time is required you after the additional time already given to 21st February 2011 then you will need to fill out the ‘Request for additional time to lodge’ for EACH client and lodge this on the BAS Agent Portal. The form will ask for client name and ABN and a Referred Lodge date. This lodgement date will be at you and your client discretion. http://www.ato.gov.au/taxprofessionals/content.asp?doc=/content/76122.htm&page=3#P53_3139  
   

Further assistance and advice for those affected by flooding

Exempting Taxes, Fees and Charges from GST

The following information has been released by the Hon Bill Shorten MP, Assistant Treasurer

As part of the Gillard Government's ongoing efforts to simplify Australia's tax laws, the Assistant Treasurer is proposing new legislation to change how we determine which taxes, fees and charges are exempt from the Goods and Services Tax (GST).

To read the full article, click here

ICB comment: Note that bank charges stay as they are.

If an employee needs to travel to a conference, client or other business matters that includes a night away from home, then they are entitled to a Daily Travel Allowance. (If you are an employee of your own entity - not a sole trader - then this may also apply to you.) 

This allowance is a ‘reasonable’ amount set by the ATO that an employee can claim for travel expenses incurred. The daily travel allowance is NOT required to be substantiated with receipts to prove the expenses and is exempt from PAYG as long as the amount does not exceed the ‘reasonable travel amount’ set by the ATO.

How much is the allowance?

The ATO provide guidelines for the use of the allowance and the reasonable amount is outlined for places within and outside of Australia in the below ATO websites.

The ATO guidelines outlines the daily travel allowances into three categories – accommodation; food and drink (breakfast, lunch, and dinner); and incidentals (including laundry; hotel extras; phone calls). Often, the employers will pay for accommodation direct - this leaves the food and drink and incidentals part of the ATO reasonable allowances available to be paid to the employee. Example: An employee living in Melbourne and travelling to Adelaide and the accommodation is paid for; the employee can receive a Daily Allowance of $110.35 per day away from home.

Who is eligible to be paid?

To receive the Allowance the person has to be paid by an employer. Equally, the Allowance has to be paid to an employee – that is a person receiving taxable wages, therefore a contractor charging a fee or a director of the business who is not an employee cannot claim the allowance. It is important to note too, that the employee does not have to under an award to received the allowance.

A small business owner (for example) that operates as an employee of the business can pay themselves a daily travel allowance for the non-accommodation component rather than claiming the costs as a business expense.

“The advantage of this is that the business receives a tax deduction for the travel allowance, and the business owner can claim a tax deduction against the full amount of the allowance”

If the travel is for more than six days, a travel diary, showing items such as dates travelled, appointments and places visited must be kept to prove the business purpose of the travel. Any private travel must be excluded from the claim.

Note: The main point about claiming travel and accommodation as tax deductions is understanding whether the travel was necessary to earn an income. For a small business, this means there needs to be a link between the travel expenses and the earning of business income.

(Reference:’ My Small Business’ article)

How much to pay and claim?

An employer does not have to pay the maximum reasonable allowance. They can only pay what they can afford, and therefore may pay a significantly lower figure (subject to minimum union rates where applicable).

The ATO states “the Commissioner does not determine the amount of allowance an employee should receive or an employer should pay their employees. The amount of an allowance is a matter to be determined between the payer and the payee.

Reference sites: 

ATO Website: http://www.ato.gov.au/businesses/content.asp?doc=/content/70617.htm

or

ATO Legal Website: http://law.ato.gov.au/atolaw/view.htm?Docid=TXD/TD201019/NAT/ATO/00001&PiT=99991231235958

Changes to Superannuation Guarantee

The 2010/11 Federal Budget announced changes to the superannuation guarantee %. At this stage this change is not law but it is tabled for royal assent. The plan is to:- 

• the superannuation guarantee (SG) rate will gradually increase from 9% to 12% between 1 July 2013 and 1 July 2019
• the SG age limit will be raised from 70 to 75 on 1 July 2013
  

Year	Rate (%)
2013 - 14	9.25
2014 - 15	9.50
2015 - 16	10.00
2016 - 17	10.50
2017 - 18	11.00
2018 - 19	11.50
2019 - 20	12.00

Changes to the super co-contribution   

The super co-contribution is a government initiative to help eligible individuals to boost their super savings. The government is prepared to match up to $1000 of personal superannuation contributions.

From 1st July 2010 and later income years the scheme has the following changes:-  

• Permanently maintain the
  • Super co-contribution matching rate at 100%
  • Maximum super co-contribution that is payable on an individual’s eligible personal non-concessional super contributions at $1000
• Freeze the indexation of the super co-contribution income thresholds for 2010-11 and 2011-2012 at
  • $31,920 (the lower income threshold)
  • $61,920 (the higher income threshold)

Reference: ATO Website:

http://www.ato.gov.au/individuals/content.asp?doc=/content/00200258.htm

http://www.ato.gov.au/individuals/content.asp?doc=/content/42616.htm

It is absolutely vital for you to know that the previous owners are no longer in control of even 1c of the businesses money. The “owners” or “Directors” are no longer in control – the liquidator/administrator is.

Therefore ANYTHING in relation to the business needs to be performed only with express permission and instruction in writing from the liquidator. Separate engagement letter, separate quote, separate understanding. You can do quite well out of working for the liquidator if you are both on the same page.

Spend some time convincing the liquidator you are worth keeping on as their key assistant in understanding the books of the business that they are now responsible for.

Please be careful, it has been known for the newly appointed liquidator to convince the contract bookkeeper they are responsible for providing information and it is to be at the owners expense. DON'T GO THERE. Either get paid in advance or get the authorisation from the liquidator that your fee will be paid, otherwise you  WILL be out of pocket.

In Short

From 1 July 2011 each BAS Agent (and each Tax Agent) must be covered by a PII Policy. If you have a policy in place at 1 July that policy will be ok until the policy is renewed BUT then you must meet the boards requirements.

If you will be starting a new policy to meet this purpose (after July 2011) it will need to meet the TPB’s requirements/

From 1 July 2012 any PII policy in place must meet the TPBs requirements.

The Requirements:

1. You must have “adequate” cover. Forget the minimum amounts set – what is an appropriate level of cover you should have so that your clients can be compensated from any damage of your mistake or error.
2. You must be covered for what you do. The TPB can only require you to have cover for your BAS Service work. You DO NOT need a separate cover for BAS Service work. One PI policy for your business that covers the BAS Service work you perform as well as your other duties is acceptable.

   The scope of cover must include “civil liability arising from any act, error or omission in the provision of tax agent and BAS services as defined in the TASA”

3. The excess must not be too large. The TPB may require you to prove you can pay any excesses under the policy yourself. The TPB states that your excess can not be more than 4% of your turnover but $1000 is acceptable if your turnover is below $25k.
4. Agents, directors, partners, employees must be covered by the policy
5. contractors that work for you must be covered by the policy unless their own policy provides the PII cover to the consumer.
6. The insurer must be APRA approved or there are a couple of exceptions (refer TPB paper)

The TPB Recommendations:

1. include fraud/dishonesty/fidelity insurance
2. that legal and defence costs be “in addition” to the level of cover
3. that at least one reinstatement is included
4. that an agent obtain ”run-off” cover which provides PI after the business ceases

ICB BAS Agent team
29 December 2010

ICB's preferred PI provider - Insurance Made Easy

ICB response to TPB’s PI Insurance requirements

ICB has and continues to fully support the requirement for service providers (which includes bookkeepers, BAS Agents, Accountants and Tax Agents) to have PI Insurance. Service providers make mistakes and errors, sometimes they just get it wrong and it should not be to the financial detriment of the consumer who has engaged that service provider.

ICB supports and welcomes the TPB’s position on PII.

We at ICB have, to our mind, been required to spend too much time on understanding and establishing acceptable PI Insurance positions for Bookkeepers. It just shouldn’t be that hard to get a policy that is creditable, that covers you for what you do, is priced appropriately and gives you and for that matter your clients a level of security.

ICB has reviewed over 50 PI suppliers and prefer the policy made available through Insurance Made Easy as broker to a Chubb Insurance program. As many of you are aware, we previously worked with another broker and policy however the customer service levels and the constant push to increase the premiums led us to change our preference.

Insurance Made Easy has provided these comments following their review of the TPB’s requirements:

The ICB Preferred policy (directly referring to the TPB’s requirements) provides:

1. adequate cover – however you MUST have the discussion with the broker about what you do and your levels of risk to ensure that you are covered if that mistake is made
2. appropriate business description – the preferred policy describes and includes all bookkeeping, BAS service work, accounting software installation, software training and software use. We believe most of you will be covered automatically. Again you should discuss your situation with the broker to ensure you are covered and there is no quirks in what you do that would cause a problem.
3. excess is $1000
4. agents, directors, partners, employees, contractors are all covered
5. Insurer “Chubb” is APRA approved
6. The minimum level of covers are already exceeded as part of the existing Chubb program. In reference to the TPB’s recommendations we advise that the ICB Preferred policy provides:
   • includes the recommended fraud/dishonesty, fidelity insurance
   • legal and defence costs are in addition to the $250k + levels of cover which means you more than meet the minimum requirements and the recommendation
   • one reinstatement, which in effect means you have double the minimum cover required already
   • the Chubb program INCLUDES automatically WITHOUT FURTHER COST 3 years run-off cover. So once you cease business your PI cover continues for up to 3 years.

TPB Issued an exposure draft information sheet in relation to “Letters of Engagement”

In this transitional period the “thing” (be that your company etc or you personally) that must be registered is the entity that issues the bills to the clients (herein called the billing entity).

The law required any entity providing BAS Agent services to be registered. The entity is the 'thing' that engages with the client, therefore, typically the one that is billing the client.

After 28 Feb 2012 the billing entity must be registered but the thing that changes is the entity MUST have an individual who is a registered BAS / TAX Agent being responsible for the BAS Service work. So after this date both the entity and an individual must be registered.

But I am registered personally and the company isn’t?

A very common discussion we are having is that people have a partnership or a company and they now try to register that entity with the TPB for its own status.

The discussion with the TPB has made people aware of what is the correct strict interpretation of the law; that the entity CANNOT BE providing BAS Services unless it is registered, even now – therefore the TPB have told people that you MUST stop doing the work.

This is correct but it is NOT the full picture.

Unfortunately, what has happened is many individuals registered using the notification method and “forgot” or “omitted” to register the entity as well. The law does allow the unregistered entity (your company or partnership) to use a “third party” (ie you, if you have the personal registration) to provide BAS Services to the companies clients. What you MUST do is inform the client that BAS Services are being provided by the individual and any invoice etc must specifically recognize and state the name of the registered party.

The Board guidelines (Draft) are available at:
http://www.tpb.gov.au/TPB/board/Exposure_drafts/TPB/TheBoard/Exposure_Drafts.aspx

Copy of which is downloadable here

You should then proceed immediately to doing a "Standard Registration" for the entity ASAP.

My company is registered but I am not?

This is ok for now but by 28 Feb 2012 the company will not be able to keep its registration unless there is a Registered BAS Agent supervising the work performed by the company. So YOU MUST PERSONALLY REGISTER.

An individual with Cert IV and the “approved course” can do a full registration now or Apply under the remaining transitional registration “Competent Standard” for 700 hours over the last 2 years.

But I work through a trust?

The first approach is to ignore the fact that there is a trust. The real approach is that the “thing” that must be registered when your business is conducted through a trust is the TRUSTEE.

If the trustee is an individual then that individual must qualify as a BAS Agent in their own right and register – you would however identify in your registration the ABN of the Trust.

If the trustee is a company or partnership then it is that entity that must be registered, again identify the ABN of the trust.

Upcoming Meetings:

Actions for you to think about over the next few weeks

Reality is that our world keeps getting smaller.

Internet orders from overseas suppliers with shipping costs being received in Australia within days of making the order all make it very easy to buy cheaper.

It’s not just the GST in Australia that makes it more expensive, but it is a contributor.

See governments recent announcement and response to the retailers - details here. We support MP Shorten view that it isn't just the GST – it is our whole business environment.

Services are being provided off shore because it's cheaper, goods are coming from offshore because it's cheaper. We have a great standard of living but if we don't consider how we are going to generate the income to pay for anything then the cheaper is going to win out and the standards will drop and we won't be earning anything because we are too expensive. There are many factors to consider.

It has been announced that we are headed for 12% superannuation guarantee contributions. How does an Australian manufacturer cover that cost, how does a retailer cover that cost – the margin on goods has to increase.

I think we have some big issues to consider!

I am sick of fake advertising to bookkeepers and BAS Agents. The fake websites that claim to be “the biggest” “the most searched” “top of all search engine hits” bookkeeper directories – yet all they are is a free telephone book to their domain so they can attempt to then sell you advertising space or a $12000 domain name. Check out their directory and notice that you will quickly become only one of 1000’s and hence no real wins for you.

You can read the full rant here.

   As announced in the December 2010 Special What's New For Members Update, the ICB Forum is now up and running. You have had time to build up those muscles 

One central web forum for all your support and questions and information and hassling needs.  We hear the frustration with others and also that you want only one place to go.

Well....... it is time to get yourself online and in touch with the newest addition to the ICB's online resources, the ICB Forum. Australian bookkeepers can now take advantage of this fantastic online discussion area for bookkeepers:

www.icb.org.au/forum

The ICB Forum has been set up to help members take advantage of the great network of bookkeepers that are part of the Institute. Students are encouraged to use the forum to seek help and encouragement from members, and to share tips and experiences with fellow students.

The ICB Forum is not just for discussing bookkeeping matters, and will provide a useful platform for discussing issues you may have and for putting you in touch with other members in your area.

Forum users will be asked to log in to the forum using their usual ICB website login, and will then be free to set up an onscreen username and profile picture.

Some notes on using the forum:

Where to Post a new Question/ Discussion Subject

The forum has been divided into sections which are shown on the Forum Homepage with a brief one-line description.

If you want to start a new 'Topic' (aka Thread) you should do this inside the relevant section of the forum.

Users should familiarise themselves with the various sections before posting a Topic to ensure that no other similar Topic exists and that their Topic is posted in the most relevant section.

Please do not post the same Topic in more than one section.

When starting a new Topic please choose a suitable subject so that the nature of the Topic is clear. Instead of starting a Topic with the subject Advice Needed Urgently choose something more descriptive like Advice on Finding Clients Needed. Using a more descriptive Topic subject increases the likelihood that others will contribute and the Topic will be valuable to the Forum community as a whole.

Community Courtesy

Put simply, users should respect each other, and the forum, and conduct themselves in the appropriate manner. Any inappropriate content may be removed by the Forum Moderators.

My husband retired today and we plan on travelling in the later part of next year. I’m in the process of handing my clients over to another ICB member. So I should have everything tidied up by the end of Jan/Feb.

I plan to write a book: The book is the story of the McMillan family who came to Darwin in 1916 from the Nhill area of Victoria. They stayed in Darwin for a number of years and purchased quite a lot of land (including where my house is although it was a 320 acre block when they had it) and had a number of businesses. They seem to have left as a result of the bombings and evacuations of Darwin in World War 2 and decided not to return.

One of the major roads in the Darwin area is named after them as it runs through the 1600 acres they used to own. Another street in the Darwin CBD is named after the husband of the eldest daughter.

Kind regards,
Rosemary
 

The ICB Products & Solutions Catalogue is a specifically identified and selected set of solutions that we believe our Members may benefit from or have need of at some point either in their own business or in the business of their employers/businesses.- click here

Products and Solutions

Calxa - animating budgets & cashflow forecasts	MYOB products and resources	Xero products and resources
Reckon products and resources	Bookkeeping for Dummies, written by an Australian bookkeeper for Australian Bookkeepers	"e-Books" (delivered by PDF) -  * Managing Employee Superannuation  * Starting a New Payroll Year  * Understanding Employee Entitlements
Thomson Reuters - reference books and tools for the bookkeeping industry

Why is our TFN to be kept a secret?

Identity crime is a serious problem in Australia. The Australian Bureau of Statistics estimates that identity crime costs the economy over $1 billion per year.

Evidence suggests that tax agents are being used to unknowingly lodge fraudulent income tax returns on behalf of clients – both living and deceased – whose identities have been stolen, borrowed or bought.

This year we have expanded our use of risk models to help detect potentially overstated or fraudulent claims for refunds which has added two days to the processing time for all returns. As of 14 November, we had identified over 25,000 returns worth more than $113 million that we believe are potentially fraudulent or include overstated refund claims. These figures include nearly $26 million in claims that are potentially related to identity crime. Last year 93% of returns stopped for further review were confirmed to be over-claimed or fraudulent.

If you notice suspicious behaviour from a new client, we recommend you take extra precautions to ensure they are legitimate, such as: 

• confirming their identity by conducting your own proof of identity checks
• checking any irregularities with their employer – for example, that they issue hand written payment summaries to their employees. 

If you can’t confirm the client’s claims are authentic, you should explain your responsibility as a tax agent and decline to prepare or lodge their tax return.

You can report suspicious behaviour to us confidentially by phoning us on 13 72 86 and using Fast Key Code 3 4 (between 8.00am and 6.00pm, Monday to Friday).

For more information, refer to Identity crime and fraudulent tax returns. 

Well............... we wanted to know WHY?

http://www.ato.gov.au/distributor.asp?doc=/content/Content/00259162.htm

Published: 16 Dec 2010 

Changes to adopting the general ruling system for indirect taxes and excise.

http://www.ato.gov.au/distributor.asp?doc=/content/Content/00248998.htm

Published: 25 Nov 2010
 

• Apply for ICB Membership here
• Renew your ICB Membership here
• BAS Agent updates and information

Optus         MYOB           Xero                ICB Global            Cengage

Optus are supporting ICB and offering unbeatable plans to all ICB Members.

MYOB has sponsored the ICB Network meetings as a direct support of the need for members of the ICB and other bookkeepers to get together for development and networking.

XERO has come on board as a direct support of the production of quality information and enhanced communication within the bookkeeping community.

ICB Global continues to support ICB Australia through the provision of web resources, database infrastructure, bookkeeping resources, information and IT support.

Cengage Education supports ICB in the dissemination of quality information about the education environment including information of Cert IV providers and total education programs.

MYOB has engaged ICB to provide the assessment knowledge and expertise behind the MYOB Approved Bookkeeper program

Please note that, in between newsletter issues, articles may be published straight to the Latest News section of the website.   Please check the headlines which can be found in the top right of the website homepage, to ensure you stay up-to-date.

The Institute of Certified Bookkeepers complies with the Spam Act 2003 and we have a documented Spam Policy on our website

ICB's Newsletter contains news articles, links and regular sections that we feel will be of interest. If there is anything that you would like to see, whether a regular feature or a one-off, please let us know. Email your ideas to admin@icb.org.au