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Sky Update – November 2018

Sky Update – November 2018

In this Sky Update, we bring you all the latest tax news along with some other items that may pique your interest.

Shutting down over Christmas & New Year

The holiday period is a time when many businesses look to shut down and take a well earned break.

If you are looking to shut down this year, it is important that you understand the rules around directing employees to take annual leave during the period of closure.

Most Awards have rules about how and when an employer can direct employees to take leave.  For example, a period of notice may be required.

The Fair Work Ombudsman’s website includes useful information to assist employers in planning their holiday shut down.

If you need assistance, please get in touch.

Top reasons for SME failure

The Australian Centre for Business Growth at the University of South Australia’s Business School has undertaken a four year longitudinal study of the top reasons for business failure in the Small & Medium Enterprise (SME) market.

The most common reasons for failure include:

  • Insufficient leadership and management (13%) or planning and execution (12%) – 25%
  • Inadequate market research, marketing, sales – 17%
  • Poor financial management – 14%
  • Underestimating the impact of externalities – 13%
  • Poor governance structures re partners, family – 11%
  • Product or service problems – 7%
  • Poor management of people – 6%
  • Inexperienced CEO – 4%
  • Wrong strategy or poor implementation – 3%

Understanding the reasons for failure is important for SME’s as it helps them to avoid those issues and to maximise the potential of their business.

ATO annual closure

The ATO annual closure will run from 24 December 2018 to 2 January 2019.  During this period, the ATO will not be processing tax returns or issuing refunds.

If you are expecting a tax refund and would like to receive it before Christmas, we recommend that you take action to lodge your tax return as soon as possible.

We note that the “ATO service standard” for processing tax refunds is 28 days from the date of lodgement.  Whilst processing times are often much shorter, they can slow down during peak periods like the lead up to the annual closure.

If you need assistance, please get in touch.

Peak summer trading & penalty rates

Penalty rate changes started on 1 July 2017 and 1 November 2018 under a number of Awards including the Restaurant AwardHospitality AwardFast Food Award and Retail Award.

With the summer period being the traditional peak season in the retail and hospitality industries, many businesses will be exposed to penalty rates.

It is important that they do their homework to ensure that they fully understand how penalty rates apply so that they can plan their rosters and pay staff correctly.

Fringe Benefits Tax (FBT) & Christmas Parties

Did you know that your business may be required to pay FBT on its staff Christmas party?

Under the FBT legislation, non-cash benefits provide to employees can trigger an FBT liability.  This can include entertainment by way of food & drink at a Christmas party.

Whilst there may be an exemption that applies (eg minor benefits exemption), it is important that businesses understand the rules in order to ensure that the Christmas party does not become a whole lot more expensive than intended.

The ATO have some useful guidance on how FBT applies to Christmas parties.

If you need assistance to understand how FBT may apply to your Christmas party, please get in touch.

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