Important News for You

June Workshop Resources Webpage

Thanks to all who attended our June End of year Workshops this year. We had 503 people attending in 6 locations: Melbourne, Brisbane, Adelaide, Perth and Sydney were run by ICB staff, Newcastle was presented by local network meeting facilitator Jo Threlfo for the first time, and we thank her for her efforts to provide the workshop to her local ICB Members.

We had great interaction and questions from attendees. Questions and answers from the workshops have been posted here.

We have now released the resources and references used in the June workshop, you will find these resources here. These are member only resources - click here to upgrade your membership for full access to all ICB resources.

Please complete the survey that has by now been emailed to you by 30 June - this gives us valuable feedback and helps us plan for next year.

The June 2016 End of Year Workshop manual is available for Members ($55.00 including GST) and Non-Members ($110.00 including GST) to purchase, stock is limited so click here to secure your copy.

Also a reminder that ICB is running various End of Year technical webinars which, we will make available to Members.

Upcoming End of Year webinars:

• ICB Technical Webinar - End of Year Financials and Accountants
• ICB Technical Webinar - Taxable Payments Annual Report Review

Recently run End of Year webinars (which are available for you do download or stream on the ICB website):

• ICB Presents: Preparing for End of Year
• ICB Presents: 2016 End of Year - Payroll, Payment Summaries and Superannuation
• ICB Presents: End of Year - Business Activity Statement (BAS)

All End of Year resources are available at ICB End of Year Resources. All checklists and templates are available at ICB Templates, Checklists and Authorities.

SuperStream Delayed till October

SuperStream compliance deadline has been deferred until 28 October 2016. Which actually means January 2017 for most SMEs.

Further details from the ATO are available here.

We Are Asking Why?

Our community has been working hard to get their clients to comply. You have incurred time and cost and system upgrades to bring your businesses to be compliant by the advertised date. Now the businesses are seeing the deferral and you are already asking, "Why should we do these system changes to employer at cost to the employers only to have the requirement turned off / delayed".

We have expressed that the next time the ATO sets a deadline you are going to have less enthusiasm and takeup.

What Does it Mean?

We read this to mean that SGC payments can be made by whatever means people like for both the June quarter and also the September quarter where the payments are due by 28 July and 28 October respectively.

So in reality nobody needs to be using a SuperStream compliant gateway until January 2017 when they are making the payment for December 2016 quarter. For monthly payers it will mean your October SGC payments being made in November would need to use a SuperStream gateway.

Our Advice

ICB strongly recommend that the correct implementation of a SuperStream solution now absolutely makes sense.

The use of appropriate payroll software that has embedded SuperStream payment and message solutions is efficient and should be implemented ASAP. Not because of the deadline not because of compliance, but because it is a far more efficient and cost effective way for employers to meet their SGC payment obligations.

TPB Chases Unregistered BAS Service Providers

The TPB has already commenced pursuing unregistered agents. They have made a list of 134 suspect unregistered BAS service providers based on:

1. Complaints
2. Google
3. Gumtree
4. Yellow pages
5. Websites
6. And other sources

They have targeted areas where the most complaints have come from. This is only the tip of the iceberg. These sources are what they are using to trial their approach.

The TPB reviewed over 1,000 bookkeepers to find their suspect list and they will be taking action to modify the bookkeepers' behavior or take them to court if justified. The TPB located anybody advertising BAS preparation type work and checked whether they were registered. If not they will be contacted.

All in all we were pretty impressed that they had taken such positive action. Further outcomes from the conversation will be posted shortly.

For the full letter from ICB to TPB click here.

Unregistered BAS Providers Cannot Advertise

Unregistered BAS service providers who are acting under "supervision" in any form cannot advertise that they can provide BAS services according to our discussion with the TPB.

The TPB does not accept loose comments like "reviewed by a registered agent", or even "supervised by a registered BAS agent".

In order for a bookkeeper who is not yet registered to get those hours and advertise their services, the actual supervising agent would have to be named, according to the TPB chairman Ian Taylor. For example, something like "BAS services are provided by ABC Bookkeeping, BAS Agent number 1234567". In this case, the supervising agent would have to consent to their name being quoted in the ad.

So there in no "P" plate system and no exceptions for being supervised. Only a registered agent can advertise BAS services; if a bookkeeper is not yet registered they cannot advertise BAS services under their own name.

Note: I do think it is acceptable to advertise that you are supervised and am pleased that the TPB agrees with our view that the supervisor has to be specifically named.

Further Information

• ICB Mentoring Program
• ICB - TPB Code of Conduct - Competence
• TPB - Supervisory Arrangements Information Sheet

Minimum Wage Increase From 1 July 2016

Annual Wage Review - Get Set for a 2.4% Wage Increase

The Fair Work Commission has announced a 2.4% increase to minimum wages. The increase will apply from the first full pay period starting on or after 1 July 2016.

What Do I Need to Do?

Nothing for now. FairWork are working on updating their pay tools with the new pay rates. It usually takes the Commission 2-3 weeks to update the pay rates in each award.

Who Does the Increase Apply to?

The increase only applies to employees that get their pay rates from the national minimum wage, a modern award or in some cases a registered agreement.

The new national minimum wage will be $672.70 per week or $17.70 per hour. The national minimum wage applies to employees who aren’t covered by an award or agreement.

Most employees are covered by an award. Award rates will increase by 2.4%. If you’re not sure which award applies to you, check our list of awards.

Already Have Pay Rates Saved in My Account?

If you’ve saved an award, calculation or pay guide into My account in FairWork, they will automatically be updated once the new rates are available. FairWork will send you an email notifying you when this happens.

They’ve also introduced new features in My account to help you find what you need, when you need it. To access the new features, you’ll need a complete My account profile. Complete or update your profile now.

Bookkeeping

The wage increase takes effect from the first full pay run after 1 July 2016.

Example: If employees are paid on the 5th of July for the pay week 27 June to 3 July, this would be at the old rate. The new rate would apply from the pay run that starts on 4th July.

Scam Emails from the Boss

The next wave of scams are emails that pretend to be from the client or the boss. They demand payment of an account immediately.

You must get specific authority from the person checking the payment. If you do that by email don't reply to the request, it will probably go to the scammers email, create a new email.

If you think it sounds strange or feels wrong, ring them as well and just check. If the payment is out of cycle or a new supplier etc etc then you should check.

If the email demands you just pay it and you will get authority later then it should be smelling bad!

Source: IT News article

An ICB member was caught with exactly this scenario this year. Email from the boss demanded prompt payment. It felt strange!

Best Practice Bookkeeping

Legal PDF of the TFN Declaration Form

ATO Releases a New PDF Version of the TFN Declaration

Your business client informs you they have a new employee and it is payday and there are no TFN declarations to be found.

• No more ringing up the ATO to order a delivery of Paper TFN Declarations. (Silly process anyway).
• No more hassling the newsagency to find their old pile that they aren’t allowed to give you anymore.
• No more illegal photocopies.

Smart PDF

Instead, you can download the new smart PDF version of the TFN declaration form.

• Information at ATO - TFN Declaration
• Download available at ATO - TFN Declaration Form

But Not Quite Digital Yet

It is a great logical step forward, however, based on the current rules, you will still need to print it out, obtain ink (wet) signatures of the employee and the employer and then mail it (yes remember that non-digital solution) to the ATO.

Also you still need to keep this paper copy in the employer’s records.

ICB believe these latter steps are ridiculous and we have called on the ATO to be consistent. Digital First is their stated policy therefore they must:

• Allow us to use current Electronic Signature solutions to obtain Digital Signatures
• Allow us to only retain the digital copy
• Failing that, allow us to retain a scanned copy
• Definitely allow us to lodge this PDF using the BAS agent portal mail system or file upload system.  The ATO allows EMPDUPE and TPAR file upload, why not TFN Declarations in this form?

Thank you ATO we are very pleased to have the PDF, but now give us a logical efficient way to give it to you.

Computer TFN Declaration Process

The better solution is using your payroll software to prepare and lodge it. The ATO is now says they are accepting TFN declarations via online lodgement or through the business, BAS agent or tax agent portals.

We are aware of the online lodgement ability of some software.

• MYOB - in development
• Xero - Yes
• Reckon - in development
• GovReports - Yes
• QBO - Yes

Recent changes have meant that if you are using these “Electronic” TFN declarations, produced properly by the software, you can use their digital signature solutions, store the digital form only and lodge from the software. Please note, we have not tested each of the software platforms to establish whether their process is ATO compliant. The concept is correct: No paper, no wet signatures, no filing cabinet.

Alternatively the ATO website talks about submitting a TFN declaration form through the file upload facility of the Business, BAS Agent, Tax Agent Portals. The form must be generated by software in a compatible format. Scanned images or forms, MS office documents and PDFs are not acceptable.

We do not know of any software that allows the production of the file in the approved format and frankly it shouldn’t.

We expect to see further developments to this process as Single Touch Payroll evolves.

Single Touch Payroll includes an employee commencement process through myGov and through Business Management Software which will be totally digital and incorporates the Superchoice process. It’s a good development.

References

• ATO - Lodging TFN Online
• ATO - TFN Declaration PDF Download

Payslips for Casuals - The Law

ICB Support continues to receive calls about payslips for casual workers. The Fair Work Regulations 2009 outline an employer's obligations in relation to payslips.

Employer obligations in relation to employee records and pay slips, Division 3 of the Regulations

Extract from 3.33:

If the employee is entitled to be paid:

1. an incentive-based payment; or
2. a bonus; or
3. a loading; or
4. a penalty rate; or
5. another monetary allowance or separately identifiable entitlement.

The record must set out details of the payment, bonus, loading, rate, allowance or entitlement.

Pay slips must include all of the information set out in regulation 3.46, which details all content to be included in a payslip, including:

1. the gross amount of the payment; and
2. the net amount of the payment; and
3. any amount paid to the employee that is a bonus, loading, allowance, penalty rate, incentive-based payment or other separately identifiable entitlement...

There is no getting around it - you must report all types of payments to casual workers separately on the payslip!

References

• Fair Work Commission – Fair Work Regulations 2009
• ICB – Payroll Records and Payslips
• ICB – What is Required on a Casual Worker’s Payslip?

Materiality Decisions

Bookkeeper’s Approach to Making Materiality Judgements

Bookkeepers often get stressed about amounts that don’t fit… should you worry? What is a “material” amount that you need to get an answer on? What is an “immaterial” amount or transaction and what do you do with it in the accounts? When is it a tax agent decision and when can you make a judgement about it?

The general principle of materiality is to ensure that “financial statements include all the financial information that could influence users’ investment decisions”. This also means that financial statements do not require “excessive disclosure of immaterial information that can obscure useful information”.

Materiality rules apply to all entities governed by the Corporations Act 2001, Government entities, and other entities governed by general purpose financial reporting requirements.

From the IFRS Practice Statement Practice Statement ED 2015/8 Application of Materiality to Financial Statements, the stated aim is to provide guidance to assist management in applying the concept of materiality to general purpose financial statements prepared in accordance with International Financial Reporting Standards (IFRS).

Information is material if omitting or misstating it could influence decisions that users make on the basis of financial information about a specific reporting entity.

Example

Car insurance companies make a commercial decision based on likely outcome, time and cost to pursue any action.

When the circumstances of the crash are in dispute and each car has $2,000 damage, would they continue to take action to chase compensation from the other party? They would probably do enough to ascertain that there is going to be a dispute rather than a simple one way outcome.

In case of a dispute, then maybe a little more time is invested to ascertain if each party is likely to be at least partially at fault. If so, then they would assess if there was going to be an outcome that means it is worth the time and cost of the action.

If it is $2,000 damage for each and both are at fault, then the commercial decision, (or the application of the principle of materiality), might result in them not investing time to pursue an action against the other person but to walk away and fix the car.

However, what if it was $10,000 damage one way and $2,000 the other? Then the potential outcome may be quite different. The “material” difference means further action would be taken.

Cost vs Benefit vs Outcome

Bookkeeping isn’t the same as an insurance claim. What is the standard of materiality for bookkeepers? How do we apply or determine the “cost” or the “benefit” or the “outcome” of some bookkeeping decisions?

Ultimately the decision is that of the business owner! How much are they prepared to pay you to invest in any action in order to get the bookkeeping right?

There is some bookkeeping that should have no application of “materiality” in the decision about whether something should be investigated or fixed or processed differently. It simply should be fixed and be 100% correct.

Despite this “requirement” there is always a cost to being 100% correct. That cost can easily outweigh the benefit of being correct.

What if it is 10 cents out?

A bank reconciliation is 10c out. Your educated view is that it is likely to be a typo, so you allocate it to bank charges and make it go away. That is an application of the principle of materiality: you have assessed the time (cost) to find the error, the likely outcome, (10c into an expense of some type), and the benefit of doing the correct fix, (10c in repairs and maintenance instead of bank charges). It is not worth the investment.

What if it could easily be $9,999.90 out one way and $10,000.00 out the other way? In your professional educated opinion is this possible? How long would it take you to determine it that is likely to be the case? What difference will it make to the report or the end user of the information?

If the entity turns over $20m, then the decision points and the cost vs benefit may not justify the work required to achieve the different, (or more correct), outcome. For 10c certainly not; for $10,000 maybe.

If the entity turns over $100k then a potential misstatement of $10k on both revenue and expenses should certainly be investigated.

The assessment of whether information is material or not depends on the size and nature of the entity, the transactions and amounts involved. The decision is judged in the particular circumstances of that entity against qualitative and quantitative factors.

What is the Information Being Used for?

“Information is material if omitting or misstating it could influence decisions that users make on the basis of the financial information…”

This is a recurring theme in all the standards and requirements about applying materiality judgements.

Who is using the information and for what purpose? What is the potential impact of the information? Therefore what is the potential impact if the information is incorrect?

A bookkeeper processes and prepares information, therefore it is about producing a correct business process outcome, but also about producing information that correctly and accurately informs the users of the information.

If the information is never used for anything, think about not providing the report. If nobody looks at the graphs, don’t produce them. If an error in the information or the report will mean the business will make a decision that is not correctly informed, then the accuracy of the information needs to be considered.

If the time allowed to provide the information doesn’t permit 100% accuracy, then you should provide a note to any reports produced noting what has and hasn’t been done in providing the information; i.e., provide details about the areas of risk or doubt so that the users of the information can make their own assessment of any material doubt.

Materiality Concepts

• Materiality helps management decide what information should be included or excluded or aggregated with other information.
• Materiality helps decide how information should be presented and to ensure that information is clear and understandable.
• Information is material if omitting it or misstating it could reasonably be expected to influence decisions.
• Materiality is also a filter to ensure that the information being provided is an effective and understandable version of all the information detail that is in an entity’s accounting records.

What not to do?

• Don’t aggregate too much.
• Don’t provide too much detail.
• Don’t necessarily provide the same information to everyone. Assess the level of detail differently for the different audiences/users of information.

General Purpose Financial Statements - Who is Reading What?

Much of the “Standards” discuss General Purpose Financial Statements as the context that “materiality” decisions are required.

General Purpose Financial Statements are those that are prepared for users of information that typically cannot obtain the information from any other place and typically cannot influence the report or the information or interrogate the information any further than what is provided in the report.

Existing and potential investors, lenders or other creditors may not normally be able to require an entity to provide information directly to them. The General Purpose Financial Statements therefore need to be prepared with regard to materiality, considering the impact the information has on such users of the reports.

Estimated Amounts

As a result of the uncertainties inherent in business activities, many items in financial statements cannot be measured with precision but can only be estimated. Estimation involves judgements based on the latest available and reliable information.

For example, estimates may be required for:

• Bad debts
• Inventory obsolescence
• Fair value of financial assets or liabilities
• Useful lives of, or expected pattern of consumption of the future economic benefits embodied in depreciable assets
• Warranty obligations

The use of reasonable estimates is an essential part of the preparation of financial statements and does not undermine their reliability.

Frequent vs One-off Issues

It is an expectation of bookkeeping that the system will measure, record, allocate and apply GST etc 100% correctly. For recurring transactions and frequently recurring items, the system should be designed to get bookkeeping correct.

This is different to the one-off error. Systematic errors should be fixed, at least for the future occurrence of those transactions.

Misstatements

Omissions, errors, ambiguity or obscuring information are collectively called misstatements.

In assessing whether misstatements are material you should consider how precisely transactions can be measured.

In some circumstances correcting an immaterial misstatement may be unduly costly or delay publication of information. In such cases you should evaluate whether in relation to individual items, subtotals or totals will failure to correct those misstatements result in an incorrect decision.

AASB 108 defines “material”: Omissions or misstatements or items are material if they could, individually or collectively, influence the economic decisions that users make. Materiality depends on the size and nature of the omission or misstatement judged in the surrounding circumstances. The size or nature of the item or a combination of both could be the determining factor.

ATO and Errors

“If you realise you have made an error on an earlier BAS you must correct it. You need to work out the amount that has been over claimed or under claimed.”

This would lead you to believe you need to be 100% correct in each reporting period. However, even the ATO applies materiality principles to their amendment rules:

“Our practical compliance approach explains the circumstances when we are unlikely to take action against generally compliant employers for lodgment of SGC statements. The compliance decision will be based on all the relevant facts and circumstances of each case.”

“Employers who make a one-off late super contributions payment, within one month of the contribution cut-off date, are considered low risk, so we are unlikely to take compliance action against them, especially if the additional contribution to 'top up' the employee’s super fund account includes a reasonable amount of interest.”

A four year time limit applies to claiming credits and refunds on a BAS but…..there is a value limit to correcting an error, which allows you to fix the error on a later BAS.

• Turnover less than $20m and the correction is less than $10,000 then fix it in the current period. Note there is still an 18 month restriction.

Errors You Must Correct

If the law requires you to report transactions in a certain way, then you must do this and you must fix errors accordingly.

Examples

• BAS reporting errors resulting in over claimed GST
• BAS reporting not including correct PAYG withholding or instalment amounts
• Clerical errors, for example, double entry of certain transactions that would result in incorrect GST claims
• Using incorrect rates, for example, in the calculation of Fuel Tax Credits, if an incorrect rate was used resulting in extra credits claimed, an adjustment should be made using the correct rate

Expectations of the Business

What is your engagement for this business? If you are engaged to correct all errors in a file going back to an agreed historical date, and the client is willing to pay you for your time, then go ahead. But if you take on a new client and you pick up errors, omissions or misstatements, and it is not clear whether the client wants anything historical fixed, then check with the owner. Do not spend the time on fixing errors you are not engaged to fix.

It may be that you have picked up some errors that you would like to fix…but do they really matter? Will the errors affect the amount of GST liability for example? If you have used GST free instead of not reportable or BAS excluded, does it really matter?

Assess the cost of your time taken to fix the problems and the benefit or outcome to the business before taking action, and report to the owner.

Bookkeeping Considerations

How precisely can transactions be measured? If an entity has effective internal controls and accounting systems in place, there should be little issue with incorrect amounts being reported. For example, payments to suppliers and income from customers are transactions that are generally capable of being measured precisely.

However, errors do occur. For example, a transaction may have been entered twice, there could be an incorrect adjusting journal entered, or incorrect stock value recorded. Also, there could be additional information that is revealed after financial statements have been drafted, such as funds held in other bank accounts, funds held in foreign currency and so on.

As a bookkeeper, if you pick up errors or misstatements or omissions, you may need to assess whether it’s worth worrying about and advise the business owner accordingly.

What Should a Bookkeeper do?

Is the error worth fixing?

• GST free vs not reportable or BAS excluded = No damage, no loss = don’t fix
• $1 not claimed but cost $65 to fix it = cost vs benefit vs outcome
• $1 every time that type of transaction is processed = fix the system

Business management may wish to make an assessment of the cost to fix a discovered BAS error as compared to the penalty and consequence of not fixing it. It is not the bookkeeper’s decision. Any such issues should be raised with the business for their determination.

PAYG Withholding Errors

There is no margin for error. It affects too many things and the employee’s tax return such that any errors should be fixed once detected. Again, the business owner should direct you in relation to any errors discovered, but equally you should make your recommendations for action based on your understanding of the relevant law and your code of conduct as a bookkeeper and / or BAS agent.

Materiality Strategy for Bookkeepers

• Risk areas and errors should be discussed with the business owner
• Your recommendation on the solution should be given
• System issues should be fixed for the future
• Sometimes you may fix the error, (maybe at your own cost), so it doesn’t reflect badly on you
• Sometimes you may just move on, as the cost to fix overstates the benefit to anybody
• Sometimes the extra work to claim the GST credit or the expense is too much therefore not claiming is only the loss to the business; it’s their call!
• For any materiality decisions put to the owner, do it in writing
• Remember the principle of Cost vs Benefit vs Outcome

References

• Australian Accounting Standards Board - Materiality
• International Financial Reporting Standard - Practice Statement Application of Materiality
• ICB - Technical Webinar, How to Determine Materiality

BAS Agent World

Expanding the Services that BAS Agents can Provide

The Tax Practitioners Board (TPB) has expanded the scope of services Business Activity Statement (BAS) agents can provide beyond existing BAS services, as defined in the Tax Agent Services Act 2009.

BAS agents can now:

• provide services under the Superannuation Guarantee (Administration) Act 1992 to the extent that they relate to a payroll function or payments to contractors,
• determine and report the superannuation guarantee shortfall amount and any associated administrative fees,
• deal with superannuation payments made through a clearing house,
• complete and lodge the Taxable payments annual report to the ATO, on behalf of a client,
• send a tax file number declaration to the Commissioner, on behalf of a client, and
• apply to the Registrar for an Australian Business Number, on behalf of a client.

Chair of the TPB, Mr. Ian Taylor, said, “We know there are services that are commonly provided by BAS agents that do not necessarily fall within the definition of a BAS service.”

“This legislative instrument now allows these to be included in the services that BAS agents can provide, without the requirement to be a registered tax agent.”

Download the full Legislative Instrument and Explanation statement.

TPB Gets Another $2m in the Budget

The TPB were allocated an extra $2m in the budget to enhance their impact and efficiency in regulating our registered agent space.

An excellent allocation by the government. Let's hope the budget gets passed by whoever is in government in July.

ATO Email Notifications in the BAS Portal

Email Notifications - Portal Mail

Email notifications need to be set up for both your practice inbox and your personal inbox so you don't miss any portal messages the ATO sends you.

Note that this is separate to the Client Communication List. If you wish to see communications the ATO has sent your clients, you will need to check the CCL.

Setting Up Your Email Notification

Once you have logged into the portal:

• go to Mail in the left menu and select Inbox
• find Email notification on the right side of the Inbox and select Setup
• check the email address entered is correct, or update it
• select Submit.

You can also update your email address, by selecting Setup when you:

• reply to a message
• create a new message.

For more information from the ATO click here.

Continued Professional Education

This Month From the ICB Continued Professional Education Webpage

ICB Network Meetings

Question For You to Discuss This Month - Treatment of a Commission Payment

This month's question for you all to debate at your network meeting is:

A real estate salesperson left before her sales commission came through and the employer did not pay it. She pursued the employer for the commission payment after leaving. The court ruled that the business pay $25,000. The solicitor has instructed the payment should not have any PAYG withheld. Do I classify the payment as OTE for SGC purposes? And how should I classify the payment, is it an ETP or a bonus or something else?

What advice would you have for this Member?

   Let us know your thoughts here.

Last month we asked you:

An employee makes a significant salary sacrifice to superannuation. The employer has been paying Superannuation Guarantee Contribution on the gross wages. The accountant has advised that the difference between the 9.5% SGC and the amount paid in total is Reportable Employer Superannuation Contributions. Is he right?

ICB's Response:

An amount of super paid to the fund is considered RESC only when the employee has influenced the decision. In this situation, it sounds like the employer has paid a default amount of 9.5% on gross wages without negotiation with the employee. Therefore it would be considered as “employer additional” contribution, not “employee additional”, and therefore not RESC.

It is true that when part of the salary is sacrificed to super, the employer is obliged to pay SGC only on the reduced salary. However, this is defined as the “minimum” amount of SGC required. The ATO does not state that SGC paid on gross wages when there is a salary sacrifice arrangement is automatically reportable.

It would be reportable if the employer advised the employee they would reduce their SGC obligations to the minimum required, and the employee then specifically negotiated to have the employer continue to pay SGC on the gross wage. The difference between the total amount and the minimum required would then be considered as RESC.

Either way, the employer is not losing out, because they would have calculated SGC on the full wage and this would have been budgeted for already.

Related References

• ICB – Reportable Employer Superannuation Contributions
• ATO – Employer Guide for Reportable Employer Super Contributions

Upcoming Network Meetings

Join a network meeting, not just to share, but to also network and keep informed.

All ICB Network Facilitators volunteer their time to assist ICB in keeping you up to date and informed and without the help of these fantastic people these valuable meetings would not happen.

If you are unable to attend your local meeting due to time restraints or there isn't a meeting in your area, why not join us via webinar on the 2nd week of each month.

Other Things Happening in the World

Cancelling ABNs

The Australian Business Register (ABR) has provided ICB with information about cancelling ABNs.

There are two ways in which ABNs are cancelled by ABR.

The first, an automatic ABN cancellation program, involves cancelling ABNs which have shown no signs of life in the last two years. Tax agents and BAS agents, regardless of entity type, are excluded from this automated process. This is because their AUSkey is connected to their ABN in order to have portal access.

The second method involves targeted reviews of ABNs identified as being high risk of non-entitlement. In these reviews, ABR asks the ABN holder to provide evidence of their entitlement. From time to time, the ABNs of tax agents and BAS agents may be included in this process. In fact, ABR is currently investigating a small group of tax agents who run their business through a company or trust, but also have a sole trader ABN which has shown no business activity. These tax agents receive salary and wages or distributions from the tax agency business. In such circumstances, the tax agents do not need, nor are entitled to, the sole trader ABN.

When reviewing such tax and BAS agent ABNs, ABR will first notify these agents of their intention to cancel their sole trader ABN and ask them to provide evidence that they still require the ABN. If they cannot provide this evidence, the ABN will be cancelled. If there is an AUSkey associated with the sole trader ABN, it will also be cancelled. The tax agent may need to apply for another AUSkey and link it back to the ABN of their trading business to ensure they do not lose access to online services.

The Tax Practitioner Board does not require tax professionals to have an ABN in order to be registered.

Situations in which a BAS agent may cancel a client’s ABN:

• When the business has been sold or closed
• The business is no longer operating in Australia
• The owner of the ABN is deceased
• In some circumstances of business structure change an ABN may need to be cancelled and replaced.

If you are cancelling an ABN for a client, check that all lodgements are up to date and cancel PAYG registration before cancelling the ABN. Cancelling an ABN will automatically cancel registrations for GST, LCT, WET and FTC. It will also cancel any AUSkeys linked to that ABN.

Note that with the recent expansion of BAS services, BAS agents can deal with the ABR on behalf of a client; the ABR website has yet to be updated to include reference to BAS agents as well as tax agents.

References

• ABR - Cancel Your Client’s ABN
• ICB - Check Supplier ABN and GST Status

Business.gov.au Promotes BAS Agents and Bookkeepers

While you're responsible for the financial wellbeing of your business, it's important to use professional advice and services when needed. Whether it's getting your financial statements in order or seeking financial advice to get your business on the right track, there are a number of services available.

Financial Professionals

Financial professionals can help you maintain your books, create and stick to a budget, monitor your cash flow and help you make decisions about opportunities like buying new equipment, expanding your business and leasing or buying a commercial space.

Some of the financial professionals you might consider using include:

• Accountant - accountants can help with a number of your business’s financial needs including preparing financial statements, managing your tax and providing you with financial and business advice.
• Bookkeeper - bookkeepers can keep track of your day-to-day financial transactions, look after your banking, chase overdue payments, pay wages and prepare some financial statements.
• Business Activity Statement (BAS) agent - BAS agents can help you prepare and lodge your BAS to ensure you get it right the first time. They're registered professionals who are specialists in their field. You can find registered BAS agents on the Tax Practitioners Board (TPB) register.

Accountants

An accountant can provide a range of services including preparing financial statements, managing your tax affairs and lodgement, and providing you with financial and business advice.

However, if you want your accountant to lodge your BAS on your behalf, you should check that they're also a registered BAS Agent. Whether you use an accountant depends on your own business needs and budget.

If you decide an accountant is out of your budget, there are alternatives which include:

• hiring a bookkeeper to maintain your day-to-day financial records
• hiring a tax specialist specifically for your tax returns
• managing your own financial records and tax affairs using financial and accounting software and online lodgement services.

The Australian Taxation Office provides comprehensive information on keeping records. Visit their Record keeping for small business page.

Bookkeepers

Bookkeepers can record and maintain your day-to-day financial transactions. They can also look after your banking, chase up payments, organise staff wages and even prepare your financial statements. However, bookkeepers can't prepare or lodge your Business Activity Statement (BAS) unless they are also a registered BAS agent.

BAS Agents

BAS Agents are registered professionals that specialise in providing BAS preparation and lodgement services. To find a registered agent or to check the registration details of a particular agent, you can search the Online BAS Agent Register.

Free Tax Assistant Visit

You can organise a free tax assistance visit if you need help with your Australian Business Number (ABN), Goods & Service Tax (GST), Pay as you go (PAYG), Fringe Benefits Tax (FBT), activity statements, record keeping and superannuation.

On the business.gov.au website you will also find information on other Financial Professionals such as:

• Financial Counsellors
• Rural Financial Counsellors
• Small Business Credit Complaints Clearing House

What to do...

• Visit the MoneySmart website for help with choosing an accountant.
• Find a business advisor on our Advisory Services.
• Check the Online BAS Agent Register to check the credentials of your agent.
• Contact the Australian Taxation Office on 13 28 66 if you wish to organise a free tax assistance visit or if you are having trouble paying off your tax debts.
• Find your nearest Financial counsellor on the AFSA website.
• Find your nearest Rural Financial Counselling Service on the Department of Agriculture website.
• See how to manage your finances in your state or territory.

This Month From the ICB

June 2016 eBrief Newsletter for Your Business

From the ATO

ICB Contributes to ATO Future Projects

From the ATO

On behalf of our Assistant Commissioner Jennifer Moltisanti and our team, we would like to thank you for your participation and the invaluable contribution made at the workshop last week in Melbourne. We have started to receive very good feedback from internal and external workshop participants.

We achieved the outcomes of the two day workshop in confirmation of the intent statement, principles and a commitment to work together through the three syndicate groups to enable the production of pilot blueprint and prototypes for the three services to pilot on 1 July 2016.

The three services to Pilot on 1 July 2016 with the key messages are:

Tailored Lodgment Program

• I will have flexibility to lodge individual income tax returns for my clients by 15 June and receive lodgment program concession for new clients added after 31 October.

Reengagement Of Non Lodgers

• I will have access to advance remission of failure to lodge penalty where I re-engage clients to bring outstanding income tax and activity statement lodgments up to date.

Client View

• I will be able to see all debt and lodgement activity for my clients including notification of outstanding lodgments.

ATO Advises on Super Changes Following on from Budget

The ATO Tax Practitioner Advisory Group meeting was held on Friday 20 May 2016.

The information provided below is to assist professional associations to communicate key messages to members.

Proposed Superannuation Reforms

If the proposed reforms are legislated:

• The lifetime cap will take effect from 7:30pm on 3 May 2016, taking into account all non-concessional contributions made since 1 July 2007.
• The Budget 2016 superannuation fact sheet 04 highlights that this change is only expected to affect a relatively small number of individuals, contributing more than $500,000 non-concessional amounts.
• We do not currently publish information on superannuation fund members who have contributed more than $500,000 in non-concessional contributions to their superannuation fund.
• We can calculate the non-concessional contribution amount for all superannuation fund members (from 1 July 2007 to 30 June 2015) where individuals and superannuation funds have met their lodgment obligations.

The contact details to obtain this amount are:

• Tax Practitioners 13 72 86 (Fast Key Code 4 4) or via the portal
• Individuals 13 10 20
• Written requests or bulk requests (greater than 10 clients) - GPO Box 9990 in any capital city

For phone contact a response will be provided through a call back service within 48 hours. Written and bulk request will take longer.

To ensure we can provide this information to clients who have a critical need to understand their position, we ask you to prioritise your requests for balance information as we work towards a more streamlined process that will be in place before the 1st July.

We will be using the data and information in our holdings to work with super funds and their members to inform them when members are likely to be approaching or exceeding their contribution limit.

If the remaining reforms proposed for superannuation are legislated:

• They will take effect from 1 July 2017.
• The Budget 2016 superannuation fact sheets provide further detail about the proposed measures.
• We recognise the need to provide visibility and certainty for tax practitioners to enable individuals to make informed decisions about their superannuation contributions.
• We will be using the data and information in our holdings to work with super funds and their members to inform them when members are likely to be impacted by the proposed measures.

ATO Supports the Dairy Industry

Communique for Tax Practitioners Association

We recognise that individuals and businesses can experience financial difficulties due to challenging economic conditions or unexpected events, and take an empathetic approach to working with them to get back on track.

Falling milk prices have directly affected the dairy industry.

We are offering supportive repayment arrangements and remission of interest to those in the dairy industry who can’t meet their tax payment obligations.

You can phone 13 72 86, Fast Key Code 1 2 2 from 8.00am to 6.00pm weekdays and from 10.00am to 4.00pm Saturday to discuss your client’s situation.

We encourage you to lodge BAS for your affected clients on time, even if they can’t pay, so that we understand how much support they need. Payment terms can be worked out later.

We look forward to working with you to get the best possible outcome for your clients during these challenging times.

For more information, refer to Help with Paying.

David Mendoza
Assistant Commissioner
Service Delivery (Debt)

Upcoming Portal Maintenance

See this link for scheduled times for the full guide to system maintenance and issues.

The portals will be unavailable at the following times for scheduled system maintenance.

For more details regarding portal maintenance, click here.

ICB Membership Statistics as at 31st May, 2016

6,239

3,383 Members maintain Fellow, Member, Associate, Affiliate and Educator membership.

ICB also has 21 Accredited Training Provider Members and 2,835 Student Members.

ICB Supporters and Sponsors

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The monthly Newsletter for members of the Institute of Certified Bookkeepers.

A selection of those articles listed are accessible by ICB Members only - ICB Members, you will need to be logged onto the ICB website to view all the articles in full.

The newsletter of ICB is designed as information and resources for Bookkeepers with clients and also bookkeepers in employment.

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Kind regards,

ICB Newsletter Team

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