Wrights Chartered Accountants | Blog

Repairs vs Capital on Rental Properties (Residential & Commercial): Getting the call right

Mon, 23 Mar 2026 00:33:05 GMT

For property owners and managers, the line between a repair and a capital expense is more than semantics; it drives whether you claim a deduction now, claim it over time, or add it to cost base for CGT. The ATO has issued clearer guidance and fact sheets, and the expectation is that claims match what the work actually does , not how an invoice is labelled.

Key principles in plain English

Repairs & maintenance : Fixing damage or deterioration that occurred while you were earning income (wear-and-tear, weather, tenant damage). Usually deductible in the year incurred.
Initial repairs : Fixing defects that existed at purchase (even if unknown). These are capital - part of acquisition cost or treated under capital works/depreciation rules.
Improvements / capital works : Alterations, extensions, or upgrades that enhance function or extend life beyond merely restoring condition. Typically claimed at 2.5% p.a. over 40 years (with exceptions).
The “entirety” concept : Replacing a whole, separately identifiable asset is capital (e.g., replacing the entire roof vs patching leaks; replacing a whole air-con system vs repairing a component).
Depreciating assets : New assets are generally claimed over their effective life. Residential rules restrict deductions for second-hand assets; commercial can differ.
Significant renter damage : If damage arises from tenant actions during an income-producing period and you restore to original condition, that’s typically a repair .

Residential vs commercial: same rules, different outcomes

The framework is consistent, but the facts and fit-out often differ. A commercial refit might involve more distinct depreciating assets and different leasing structures; residential rules can be stricter around second-hand assets. Never assume a treatment from one setting automatically applies to the other.

Why accuracy matters to owners

Cash flow timing: Immediate deduction vs 40-year write-off changes your tax profile.
Audit readiness: The ATO’s guidance is public; incorrect claims are easier to spot.
Valuation and CGT: Capital items affect cost base and future tax on sale.

How to position your claim

Describe the substance of the work : “Restored to watertight condition” vs “upgrade.” Words matter when matching facts to tax treatment.
Split mixed projects : Many jobs contain both repair and improvement - apportion on a reasonable basis and document your method.
Keep evidence : Before/after photos, inspection reports, lease/tenant notes, invoices with itemised descriptions, and a short internal note about purpose.
Map to the correct category : Immediate deduction (repair), capital works (rate over time), depreciating asset (effective life), or acquisition cost (initial repairs).

Practical scenarios we see

Storm or tenant damage restored to original function - often a repair.
Replacing an entire system or structure - commonly capital works or a depreciating asset.
Buying a property with existing defects - initial repairs are capital, even if you discover them later.
Refurbishment that improves amenity beyond the original - capital works.

Unsure how to classify recent works? Send the scope, invoices and photos. We’ll classify, apportion if needed, and align your claim with current ATO guidance.

Important notice: This article provides general information only and does not take your objectives, financial situation or needs into account. Seek professional advice before acting.

FBT: What the ATO Is Watching and How to Get Ready

Sat, 28 Feb 2026 21:00:00 GMT

Fringe Benefits Tax (FBT) has moved firmly onto the ATO’s radar. Over the past year we’ve seen more data-matching, sharper guidance, and “nudge” letters landing with employers, especially around cars, reimbursements, entertainment, and employee benefits that blur the line between business and private use. This shift was widely anticipated, and highlights that FBT is now a standard year-end obligation, not a “maybe.”

Why lodge an FBT return - even if you think your exposure is small

Certainty beats ambiguity: Lodging a return starts the amendment clock and gives you a clear, defensible position if questioned.
Lower audit risk: A clean return with supporting records sends the right signal; “we didn’t look” does not.
Better cost visibility: Allocating costs per vehicle and per person exposes real benefit costs, which helps you tighten policies, set contribution levels, and make smarter fleet/remuneration decisions next year.
Consistency with payroll and income tax: A documented FBT process keeps treatment aligned across payroll, director/shareholder accounts, and your general ledger.

What typically triggers FBT attention

Vehicles with private use (including home-to-work travel in many cases), fuel, rego, insurance and upkeep.
Reimbursements to employees for personal or mixed expenses.
Entertainment (meals, functions, staff vs client spend).
Allowances that mask private benefit.
No evidence (e.g., missing logbooks, absent employee declarations).

Start now: the April deadline comes fast

FBT year runs 1 April to 31 March , which means April preparation is tight, especially if you’re reconstructing records. The heavy lifting is in the admin, and that’s where we can help. Begin gathering:

A single FBT ledger/worksheet: Capture all potential benefits - cars, fuel, tolls, rego/insurance, reimbursements, entertainment - as they occur , not at year-end.
Allocate by employee/vehicle: Per-person and per-vehicle allocation is where time disappears; get this right upfront.
Choose and evidence your method: Operating cost vs statutory formula for cars, valid logbooks, employee contributions, and “otherwise deductible” support.
Entertainment split: Staff vs clients, on-premises vs off-premises, per-head cost and dates - note details while they’re fresh.
Policies and declarations: No-private-use policies (where realistic), living-away-from-home declarations, tool-of-trade usage, etc.

Tip: If a logbook is required, ensure it’s valid, representative, and current. A “best guess” later won’t withstand scrutiny.

Quick wins we often implement

Standard coding rules in your accounting/payroll system for motor vehicle, entertainment, and reimbursements helps items land in the right place automatically.
Monthly exception reports (e.g., unusual reimbursements, fuel without odometer readings).
Employee contributions where private use is clear can reduce FBT and create better behaviour.

What “good” looks like by April

A populated, reconciled FBT ledger with costs sensibly allocated.
Evidence attached (or linkable) to each claim type.
A short FBT position paper (one pager) noting methods used, assumptions, and any employee contributions.
A return lodged on time and next year’s process already simplified.

Need help setting up your FBT ledger and allocations? We can implement a simple, repeatable framework now so April is preparation, not reconstruction.

Important notice: This article provides general information only and does not take your objectives, financial situation or needs into account. Seek professional advice before acting.

Payday Super Is Coming: What Employers Should Know Now

Mon, 23 Feb 2026 01:34:36 GMT

Payday Super is one of the biggest practical changes to employer superannuation in years. The intent is simple: super payments will move from a “set-and-forget” quarterly rhythm to a process that runs alongside your normal payroll cycle. For most businesses, the key is not “more work” - it’s making sure your payroll setup, cash flow planning and employee fund details are ready so payments can flow through cleanly and on time.

What is “Payday Super” in plain English?

From 1 July 2026, super contributions will need to be paid much closer to each payday, rather than quarterly. In practice, this means super will become part of your usual pay-run routine (much like wages, PAYG and payroll reporting), rather than a separate quarterly task you deal with later.

Why this change matters (even if payroll software does most of it)

Most employers will rely on payroll software or a clearing house integration to handle the processing. The risk isn’t usually “clicking the buttons”, it’s the downstream issues that create delays, failed payments, or compliance headaches, such as:

employee fund details that are missing or incorrect
a payment method that isn’t built for frequent super runs
a process that relies on one person’s memory (instead of being automated)
cash flow not being planned for the new timing

The businesses that have the smoothest transition will be the ones that treat this as a system setup project, not an admin task.

Cash flow: the part to think about early

When super aligns more closely with payday, the “timing” of cash out can feel different, especially if you’re used to keeping funds aside and paying quarterly. Many businesses will want to:

adjust cash flow forecasts so super outflows match payroll patterns
build a buffer so the first months of the change don’t feel tight
review pay-cycle choices (weekly/fortnightly/monthly) with the new cadence in mind

The goal is for super to become a predictable, routine outflow - not a surprise that collides with other monthly commitments.

Your “self-serve” readiness checklist (keep it simple)

You don’t need a complex project plan. Start with these practical checks:

1) Check your payroll system is Payday Super-ready
Confirm your payroll software (or clearing house) can process super in line with the new timing and that it’s SuperStream-enabled. ( smallbusiness.nsw.gov.au )

2) Confirm employee fund details are correct
Most processing issues start here. Make sure TFNs, member numbers and fund details are current and complete. ( smallbusiness.nsw.gov.au )

3) Decide how super will be paid once the SBSCH is phased out
If you currently use the Small Business Superannuation Clearing House (SBSCH), plan your transition path early (for example, payroll-integrated clearing house or a commercial clearing house). ( smallbusiness.nsw.gov.au )

4) Automate where you can
Aim for a workflow where super is triggered automatically as part of payroll, with clear internal checks (so it doesn’t depend on someone remembering). ( smallbusiness.nsw.gov.au )

5) Update your cash flow forecast and create a buffer
Even a small buffer reduces stress while you adjust to the new timing. ( smallbusiness.nsw.gov.au )

SBSCH is being phased out - plan for it

A key practical point for many small businesses: the SBSCH is expected to be phased out ahead of Payday Super, with a transition period expected. If your business currently relies on SBSCH, it’s worth deciding now what you’ll replace it with, so you’re not forced into a last-minute change. ( smallbusiness.nsw.gov.au )

What to do next

If you want this to be easy on your business, aim for one outcome: super payments become a routine part of payroll, supported by a system that runs consistently even when your team is busy or someone is away.

Preparation is what turns a compliance change into “business as usual.”

Sources

Australian Government — Treasury: Payday Super reform overview and related material.
NSW Small Business Commissioner summary of ATO guidance and SBSCH transition information. ( smallbusiness.nsw.gov.au )

**Important notice:** This article provides information rather than financial advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation, or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information.

One Powerful Way to Lift Profit: Take a Fresh Look at Your Overheads

Mon, 26 Jan 2026 21:00:00 GMT

When profit feels tight, many businesses jump straight to chasing more revenue. Growth matters, but so does the quality of each dollar you keep. A practical way to improve your profit and loss (P&L) without disrupting sales is to take a fresh, focused look at your overheads .

Overheads have a habit of creeping over time. Contracts auto-renew, add-ons slip in, and ways of working change while pricing doesn’t. A periodic review can surface savings, remove clutter, and make your costs better match the way you operate today.

Why overheads deserve your attention

Overheads compound quietly. A few percentage points across freight, electricity, insurance, software, or merchant fees can erode margin just as surely as a single large expense - only it’s harder to spot. The flipside is encouraging: unlike market demand or input prices, many overheads are controllable . You can renegotiate, right-size, or switch. Tightening these areas doesn’t only lower spend; it also builds resilience so you’re steadier in slower months and sharper in busy ones.

Good places to look (examples)

Start with the everyday costs that sit behind your operations. Freight and logistics, electricity and utilities, and insurance programs are common candidates because usage and risk profiles shift over time while the settings stay put. Merchant fees and payment processing are another quiet leak if you haven’t reviewed your pricing model recently. The same is true of software subscriptions and telecoms - licenses and plans tend to linger after projects end or teams change. Waste, packaging, and consumables also drift, particularly as product mixes evolve. You don’t need to tackle everything; choosing one or two areas each quarter keeps the work manageable and the wins visible.

What “good” looks like

A useful review is less about cutting for cutting’s sake and more about realignment . Costs should reflect how you operate now - your current volumes, locations, seasonality, and service levels. Suppliers and plans should fit how you actually work rather than how you worked two years ago. And you should have one or two simple measures that show whether the change has stuck. For example, tracking freight per order , insurance as a percentage of revenue , electricity per $1,000 of sales , software per FTE , or merchant fees as a percentage of takings makes improvement visible and comparable month to month.

How to get started

Begin with a calm, high-level scan and pick one overhead that matters and is easy to influence. Compare the last 6–12 months of invoices with how you operate today and ask, “If we were setting this up now, would we choose the same plan, supplier, or settings?” Make one or two sensible changes - nothing heroic - and watch the result for a month. If the metric improves, formalise the change in your processes and budget so the saving doesn’t evaporate. Then move on to the next area.

Pitfalls to avoid

Trying to fix everything at once is the fastest way to stall. Focus beats frenzy. Another trap is chasing price only; some savings come from how you work - packaging, schedules, load profiles - not just what you pay. And finally, even good wins can disappear if you don’t embed them. If you leave budgets, system settings, and buying rules unchanged, old habits return and with them, old costs.

Where your accountant adds value

A diligent accountant turns this into an easy, repeatable habit. They’ll build clean baselines from reconciled data and help design fair metrics you can actually track. They can benchmark your numbers against prior periods or peers so targets are realistic, and model scenarios - new carrier tiers, tariff options, deductible levels, fee structures - before you commit. Most importantly, they’ll ensure improvements are captured in forecasts and monthly reporting so the gains last.

Bottom line: A periodic, focused look at your overheads is one of the most reliable ways to improve your P&L. Start small, choose one area, realign it with how you operate today, and keep what works. Over a year, those quiet gains add up to stronger, more resilient profit.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au.

Mid Year Check In - Is Your Business on Track?

Mon, 22 Dec 2025 07:23:56 GMT

The halfway mark is the perfect moment to pause, review, and reset. A calm, honest look at the first six months helps you protect profit, steady cash flow, and focus your team on what matters for the rest of the year. Think of it as a service for your business: check the gauges, make small adjustments, and keep moving confidently.

Start with the scoreboard

Begin with a short, sharp view of the numbers:

Revenue & gross margin: Are you where you expected to be? If revenue is fine but margin is slipping, look for discount creep, input cost rises, or scope changes.
Operating expenses: Overheads drift. Compare the year-to-date run-rate with budget and last year. Trim or realign, don’t slash.
Net profit & cash: Profit is the plan; cash is the reality. Make sure both tell a coherent story.

Cash flow: the next 90 days

Map inflows and outflows month by month. Confirm:

Debtors: Are invoices out on time? What’s truly collectible in the next 30 days?
Payroll & super: Lock in dates; remember January/April patterns later in the year.
Tax/BAS: Put likely payments into the forecast now so they don’t surprise you later.

If there’s a gap, act early - tighten collections, stage purchases, or line up a buffer.

Customers, pipeline, and pricing

Ask three practical questions:

What’s driving wins and losses? Double down on what’s working; fix or drop what isn’t.
Is the pipeline real? Age, probability, and timing matter more than headline value.
Are prices still fit for today’s costs and service levels? Small, well-explained changes can restore margin without hurting relationships.

Capacity and delivery

Match your promise to your resources. If demand is strong but delivery is stretched, adjust lead times, sequence work, or refine scope. If there’s slack, repurpose capacity into service add-ons, customer success, or process improvements that cut cycle time.

Budget vs actuals: learn, then revise

A budget is a living document. Identify the handful of variances that explain most of the gap (positive or negative). Update the forecast so the next six months reflect what you now know - this turns insight into action and avoids wishful thinking.

A 60-day plan

Keep it simple and focused:

Three priorities (one each for revenue, margin, cash).
One owner per priority, with a weekly metric.
Quick reviews to keep decisions moving.

Small, visible wins create momentum; momentum compounds.

Make improvements stick

Document the change (rates, terms, processes) and update your systems and budget so gains don’t evaporate. Add one or two “unit metrics” to your monthly pack - cost per order, margin per job, debtor days - so progress stays in view.

Bottom line: The mid-year review is not a post-mortem, it’s a tune-up. A clear read on performance, a realistic forecast, and a short, focused plan will carry you into the second half with confidence.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au.

Closing Over the Holidays? Here’s Your Small-Business Shut-Down Plan

Wed, 17 Dec 2025 02:58:45 GMT

If you’re closing over Christmas/New Year, a little prep now means you can actually switch off, and reopen without a scramble. Use this simple plan to line things up before you lock the door, and to be ready for the first week back.

Pick your dates and tell people

Confirm shut-down dates (last day open, first day back).
Tell customers and suppliers via email, website banner, socials, and your voicemail.
Nominate an emergency contact for truly urgent issues (and define what “urgent” means).

Set up out-of-office (that actually helps)

Email OOO: include dates, who to contact, and when accounts/payroll will be actioned.
Phones/voicemail: mirror the same info.
Handover notes: one page for whoever is on call - open jobs, key deliveries, passwords/access (stored securely), and important phone numbers.

Money & deadlines: the Jan/Feb pair (and the April squeeze)

Two key dates apply to the same Oct–Dec quarter:

Superannuation (Q2) is due 28 January - contributions must arrive in funds by that date. If you’re only back a few days before, queue the payment now (payroll file + clearing house + cash).
BAS (Q2) is due 28 February - the ATO gives an extra month because of holidays. Helpful, but the next BAS (Q3, Jan–Mar) is still due 28 April , so there’s only two months between February and April lodgements. Plan cash flow so those don’t collide.

Do before you close:

Raise/send all December invoices; schedule friendly reminders.
Reconcile banks to month-to-date; start a draft BAS folder.
List January pay runs and supplier payments; pre-schedule anything that falls while you’re closed.

Cash flow over the break

January receipts are often slow while expenses keep ticking.

Forecast Jan–Apr : wages, rent, super (28 Jan), BAS (28 Feb & 28 Apr), big supplier bills.
Line up a buffer (overdraft/working capital) in case debtors pay later than usual.
Offer multiple payment options now (card, PayTo, BPAY) to speed collections.

Operations: pause cleanly, restart smoothly

Last orders/dispatch : set cut-offs and stick to them.
Suppliers : confirm their closures and lead times; place any critical orders now.
Plant/vehicles/refrigeration : service if due; set monitoring alerts (who gets the message if something trips).
Security & premises : check alarms, lights, timers, and waste pickups.

Team: clarity beats availability

Publish a simple who’s on / who’s off plan and escalation steps.
Lock in rosters for the first two weeks back so you’re not juggling on day one.
If staff can be contacted, set reasonable boundaries (e.g., one check-in window every few days).

Systems, logins, and scams

Make sure at least two people can access banking, payroll, ATO/ASIC portals (MFA tested).
Backups run and a quick restore tested.
Remind the team about phishing and invoice-change scams , which spike over holidays.
Remove any temporary or old user access.

First week back: a short checklist

Super (Dec quarter) : confirm it’s paid/queued to land by 28 January .
Debtors : chase December invoices; issue statements.
BAS (Q2) : start compiling (bank recs, payroll summaries, GST checks) for 28 February .
Q3 BAS plan : pencil key dates now, noting the 28 April due date.
Reopen huddle : safety, priorities, urgent customer follow-ups, and a light production/booking plan.

Actually switch off

Choose a small window for any essential check-ins - then log out.
Turn off push notifications; let your nominated contact triage.
Keep your messaging consistent everywhere so expectations match reality.

The wrap-up

If you’ll be shut for a week or two, line up the essentials now: tell people your dates, set helpful out-of-office messages, pre-schedule key payments, and prepare for the 28 January super deadline and the 28 February BAS , with 28 April close behind. Do that, and you’ll come back rested, ready, and not racing the calendar on day one.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au.

Employees vs Contractors: What’s the Real Difference for Your Business?

Thu, 13 Nov 2025 04:14:44 GMT

Getting the “employee vs contractor” call wrong can be expensive. It affects how you pay people, what taxes and super you owe, your workers comp and payroll tax, and your risk if the ATO or Fair Work take a closer look. Here’s a practical guide to the key differences, the hidden traps, and how a diligent accountant helps you stay on the right side of the rules.

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Audit Season, Board Governance, and AGMs

Mon, 13 Oct 2025 00:50:01 GMT

What You Need to Know and Do

As the end of financial year rolls into boardrooms, many organisations - particularly not-for-profits , associations , and governed entities - begin preparing for annual audits , AGMs , and board reporting .

Whether you're a board member, executive, or internal finance lead, now is the time to get ahead of your obligations , sharpen your governance practices, and ensure your organisation is fully compliant and ready for review.

Key Focus Areas for This Season

1. Audit Preparation: Don’t Leave It Too Late

An audit-ready organisation is one that:

Has finalised reconciliations and journals
Can quickly provide documentation to support financial activity
Understands its funding or grant reporting obligations

Start early. Engage your auditor, prepare working papers, and make sure your internal accounts have been reviewed for errors or anomalies.

2. Board Governance: More Than a Tick Box

Strong governance adds value. This is a great time to:

Review your board’s skills matrix
Confirm that compliance registers are up to date
Revisit strategic risks and evaluate performance frameworks

Even small organisations benefit from regular governance refreshers.

3. AGMs and Annual Reporting: Deadlines Are Looming

Most organisations must hold their AGM within 5 months of the end of their financial year. That means:

Finalising financial reports
Drafting your annual report
Preparing messaging for stakeholders and members

This is your chance to showcase achievements and reflect on progress.

Practical Tips to Stay on Track

Set a calendar reminder for key dates like ASIC/ACNC lodgements
Pre-schedule meetings to approve reports
Use templates for board minutes, resolutions, and notices
Communicate with your accountant and auditor early — not when the deadline is a week away

Beyond Compliance: A Governance Opportunity

Annual cycles shouldn’t feel like a burden. Instead, they’re a chance to:

Build stakeholder trust
Demonstrate transparency
Align board and management on key issues

Whether you’re a community organisation or a large NFP, good governance = good business.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au.

ATO Interest Charges Are No Longer Deductible: Here’s What That Means for Your Business

Wed, 03 Sep 2025 04:54:03 GMT

From 1 July 2025 , interest charges applied by the Australian Taxation Office (ATO) are no longer tax deductible .

While it may seem like a small policy tweak, this change has wide-ranging implications for business owners, especially those who manage tight cash flow cycles or rely on flexible payment terms with the ATO.

Let’s unpack what this means - and how your business can adjust.

What’s Changed?

Before 1 July 2025, if you missed a tax deadline or had to enter into a payment plan, any interest charged by the ATO - including the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) - was tax deductible . These charges could be claimed as a cost of doing business.

Now? That’s no longer the case. The government has effectively reclassified ATO interest as a penalty , rather than a business expense.

Why the Change?

This adjustment was first announced in the 2023 Federal Budget and is designed to:

Deter businesses from using the ATO as a line of credit
Encourage timely tax compliance
Help plug revenue gaps without introducing new taxes

In other words, if you run up tax debts, you now pay more - and get no tax relief in return .

What Does This Mean for Your Business?

Depending on your size and systems, the impact could be small or significant:

Cash flow planning becomes more important - budgeting for timely tax payments is now a must.
Interest payments now hit harder - not just as a cost, but as a non-deductible one.
Your tax planning will need to evolve - especially for businesses that previously built in deductible interest as part of their strategy.

If you had overdue PAYG, BAS, or income tax amounts in previous years, those associated interest costs may have reduced your tax bill. That benefit is now gone.

How to Respond

The goal is to avoid ATO interest altogether , and that means being more proactive:

Pay on time where possible
Prioritise tax obligations as part of your monthly or quarterly payment schedule.
Review your systems
Ensure your accounting software tracks due dates and alerts you to approaching obligations.
Work with your accountant or bookkeeper
If cash flow is tight, discuss ways to better spread out expenses so tax isn’t left until last.
Use payment plans wisely
If you do need to use a payment plan, factor in the full (non-deductible) cost and avoid recurring reliance.

Looking Ahead

While it’s never fun to lose a deduction, this change can be used as an opportunity to tighten your tax governance, improve cash flow management, and build more resilient financial habits.

Talk to your accountant or advisor now to ensure your systems are adjusted - especially if you're forecasting upcoming tax obligations or budgeting for the new financial year.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au.

Super on Payday from 1 July 2026

Sun, 27 Jul 2025 11:41:47 GMT

What These Changes Mean for Your Business – and How to Prepare Now

From 1 July 2026 , the way your business pays superannuation will change significantly. All employers will be required to pay super within seven calendar days of each payday , regardless of how often you pay staff - weekly, fortnightly, or monthly.

This shift from quarterly to payday-aligned super contributions is designed to improve outcomes for employees, giving them faster access to their entitlements and reducing the risk of unpaid super. But for employers, it’s not just a tick-the-box compliance change—it’s a change that will affect your payment cycle, payroll setup, and cash flow .

Super Payments Will Match Your Pay Cycle

From July 2026, every time you pay wages, your super contributions will also be due—within seven calendar days. That means:

If you pay weekly , you’ll need to pay super weekly.
If you pay monthly , super will be due monthly.
There’s no more quarterly buffer —your super cycle will match your wage cycle.

This change may not require additional admin, as most modern payroll systems (like Xero) will support automated super payments . But you’ll still need to ensure your system is set up correctly well before July 2026.

Double Dipping: Prepare for the Cash Flow Squeeze

Here’s where it gets tricky: when the new rules kick in, you’ll still owe your June quarter super , and you’ll also need to start making more frequent super payments from 1 July. This will create a 3-month overlap where you’re effectively paying double.

�� June quarter super is still due by 28 July 2026
�� New super rules begin 1 July 2026 , meaning your first payment under the new cycle could be due as soon as 7 July

That first 2–3 months will create cash flow pressure, especially for small and medium businesses.

What Can You Do Now?

While 2026 might seem a way off, you need to be planning now. Here’s how:

1. Check your payroll system now
Most payroll software providers will support the changes, but make sure you’re using a system that can handle automated super payments on a regular cycle. If you're not sure, check with your provider or book a review.

2. Start setting funds aside
Build a buffer now by setting aside additional super contributions during the next 12 months. This helps spread the cash flow impact and avoid a financial crunch when July 2026 hits.

3. Map out your payment cycles
Talk to your accountant or payroll advisor about what payday super means for your specific cycle and whether you need to adjust processes or reporting routines.

4. Educate your team
Let your payroll staff (or whoever manages your super obligations) know the changes are coming so there are no surprises.

In Summary

Super must be paid within 7 days of each payday starting 1 July 2026
Most software will handle this automatically— but check your setup
Expect a cash flow squeeze during the first three months
Use this time to start preparing so the transition is smooth

The good news? Once you’re through the initial adjustment period, aligning super with wages can actually make cash flow more predictable and super compliance easier to manage.

If you haven’t already, now’s the time to start planning.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au.

Looking Ahead: Why Now’s the Time to Set Profit Goals and Build a Budget for Next Year

Wed, 25 Jun 2025 04:30:11 GMT

What do I want next year to look like - and how much profit do I want to make?

As the end of the financial year approaches, now is the perfect time to stop and ask: What do I want next year to look like - and how much profit do I want to make?

It’s a question every business owner should be asking. And the good news is, the steps to answer it are more straightforward than you might think.

Start With the Profit You Want to See

Rather than waiting to see what happens next year, start by setting a realistic profit target . This gives you a clear goal to work towards and helps drive every decision you make in the business - from how you price your services to how you manage your team and expenses.

Ask yourself:

What would a successful year look like - financially?
What level of profit would allow me to reinvest, pay myself well, and build stability?

Set a Few Simple Goals

You don’t need a 30-page business plan to get clear on your next steps. By setting just three to five practical goals , you’ll create direction and focus for your team - and yourself.

Examples might include:

Increasing revenue by 10%
Reducing overheads by $500/month
Hiring one new team member by December
Boosting profit margins by improving efficiency

These goals become your decision-making compass for the new financial year.

Why a Budget Makes It All Clearer

Creating a budget is often put in the too-hard basket - but once it's done, most business owners say the same thing:
“That was actually easier than I thought. And it makes things so much clearer.”

A simple budget gives you:

Clear monthly targets for income and expenses
A realistic view of where you can cut back or invest more
Insight into what needs to change to hit your profit goals

Using tools like Xero , you can even pin key income and expense lines, track progress in real time, and quickly identify where things are off track.

From Budget to Action

When you build a budget around your profit target, you’re not just reacting to numbers - you’re driving them.

With a clear plan in front of you, you can:
✅ Make informed hiring and pricing decisions
✅ Monitor spending with purpose
✅ Check progress each month and adjust early if needed

And most importantly, you’ll feel more in control of your business.

Why It Matters

We’ve worked with businesses across many industries to help clarify goals, plan for growth, and make budgeting a more useful part of their financial toolkit.

A budget doesn’t need to be perfect or overly detailed to be valuable - it just needs to give you a clear line of sight to the numbers that matter. Taking the time to step back and think about where your business is heading, how much profit is realistic, and what needs to change to get there is time well spent.

If nothing else, we hope this serves as a prompt to start thinking ahead - and to see budgeting as a strategic tool, not just a once-a-year task.

Get in touch with our team today - we’ll make the process simple and valuable from the start. To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au.

Why It’s Time to Rethink Your Payment Cycles

Thu, 01 May 2025 23:32:10 GMT

What the New Super Changes Mean for Your Business

From 1 July 2026 , employers will be required to pay superannuation at the same time they pay wages —a significant shift from the current quarterly system. This change, part of the government’s plan to improve retirement outcomes and transparency for employees, will have far-reaching implications for how businesses manage their payroll, cash flow, and compliance.

While it might sound like a future problem, businesses that prepare early will be in a much stronger position to manage the transition smoothly—and without disruption.

Here’s why this change matters now, and what you should be doing to prepare.

Why This Matters for Your Business

1. Impact on Cash Flow

Shifting from quarterly to payday super means you’ll need to have funds available more often. This can have a significant effect on your cash flow management—especially for businesses used to holding onto super for up to three months before paying it out. By the time July 2026 rolls around, you’ll need systems in place to cover super every pay cycle, whether that’s weekly, fortnightly, or monthly.

Now is the time to forecast what this looks like for your business and start building a cash flow buffer to accommodate more frequent outgoings.

2. Payroll Process Adjustments

The change will also impact your internal systems. Payroll software, reporting procedures, and staff workflows may need to be updated or retrained to meet the new timing requirements. Businesses that begin integrating payday super processes into their payroll cycle now will be well ahead of the game when the rules come into effect.

This is also a great opportunity to streamline or automate your systems using Single Touch Payroll (STP)-enabled software.

3. Compliance and Penalties

The ATO is increasingly using real-time data and automation to monitor employer compliance. Once super is required to be paid on payday, there will be far less leeway for delays or errors. Non-compliance could quickly lead to penalties, interest charges, and even audits.

The best defence? Preparation. Reviewing your processes early helps reduce the risk of missing deadlines once payday super becomes law.

4. Opportunities to Improve Financial Practices

While this change introduces new compliance requirements, it also presents an opportunity to improve your business operations. You might consider adjusting your pay cycles, refining your cash flow reporting, or simplifying your financial systems so they better align with ongoing obligations.

It’s also a great time to revisit your budget, team structure, and payroll costs—especially if your business is growing.

How to Prepare Now

Even though the change doesn’t take effect until July 2026, the sooner you start reviewing your processes, the better.

Here’s how to get ahead:

✔️ Review your current payroll cycle and assess whether more frequent super payments will cause cash flow strain.
✔️ Speak with your accountant or bookkeeper to understand what changes may be needed in your systems.
✔️ Explore your payroll software options —many already support payday super functionality.
✔️ Start forecasting now so you know what your super obligations will look like under a new cycle.

The move to payday super is one of the most significant changes in employer obligations in recent years—and it’s not just about compliance. It’s about rethinking how you manage payments, plan cash flow, and run your business day-to-day.

By preparing early, reviewing your payment cycles, and ensuring your systems are ready, you’ll be setting your business up for a smooth transition and ongoing success.

Need support understanding what these changes mean for your business? Don’t leave it until it’s too late—start preparing now.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au.

Mid-Year Business Check-In: Is Your Budget on Track?

Tue, 18 Mar 2025 02:50:12 GMT

We’re now over halfway through the financial year, making it the perfect time to pause and assess how your business is tracking.

We’re now over halfway through the financial year, making it the perfect time to pause and assess how your business is tracking. The start of the year often comes with big plans, but now is the moment to check whether your budget is still working for you—or if it needs some adjustments to keep your business on course.

Taking stock now can help you stay financially stable, improve cash flow, and ensure you’re set up for success in the next six months. Here’s how to review your progress and make smart adjustments moving forward.

1. Review Your Budget vs. Reality

Start by comparing your budgeted figures with your actual income and expenses. Ask yourself:

Have revenues met expectations, or have they fallen short?
Are expenses in line with projections, or have they crept up unexpectedly?
Is cash flow stable, or are you experiencing shortfalls?

Looking at these numbers can help you identify any gaps between what you planned and what’s actually happening.

2. Assess Your Cash Flow

Cash flow is one of the biggest indicators of financial health. Even if profits look good on paper, cash flow issues can create major headaches. Consider:

Are there months when cash flow is tight?
Have late payments from customers caused disruptions?
Do you have enough buffer for upcoming expenses, such as tax payments or seasonal fluctuations?

If cash flow is becoming a concern, now is the time to refine your invoicing processes, set up payment reminders, or adjust spending to improve stability.

3. Identify Where Adjustments Are Needed

If your budget isn’t on track, that doesn’t mean you’ve failed—it just means it’s time to adapt. Here are some key areas to review:

Revenue Growth: If sales aren’t where you expected, consider revisiting your pricing, marketing efforts, or product/service offerings.

Expense Control: Have costs increased beyond your budget? Look at where you can trim expenses, negotiate better deals, or find efficiencies.

Profit Margins: Are you charging enough to cover costs and maintain a healthy margin? If not, it may be time to adjust pricing or cut non-essential spending.

4. Plan for the Next 6 Months

Once you’ve identified areas for improvement, set a clear plan for the rest of the financial year. Adjust your budget where needed and set realistic goals based on what you’ve learned. Consider:

Do you need to increase savings to prepare for tax obligations?
Should you adjust spending in response to slower revenue months?
Are there opportunities for growth that require financial investment?

By making these tweaks now, you can finish the financial year in a stronger position.

5. Seek Professional Advice

If you’re unsure where to start or need a second opinion, talking to your accountant can help. A fresh perspective on your numbers can uncover opportunities to improve profitability, manage tax obligations, and refine your financial strategy.

A mid-year budget check-in is a smart way to ensure your business stays on track. By reviewing your financial position now, making adjustments where needed, and planning for the months ahead, you can reduce stress and set yourself up for a successful second half of the financial year.

To find out more about how we can help you manage your business growth, please contact one of our team at admin@wrightsca.com.au.

Starting the New Year Off Right: Key Accounting Tasks to Tackle Early in the Year

Tue, 28 Jan 2025 02:02:33 GMT

The start of a new year offers a clean slate—an opportunity to reset, refocus, and ensure your business is on solid financial footing.

The start of a new year offers a clean slate—an opportunity to reset, refocus, and ensure your business is on solid financial footing. January, in particular, is the perfect month to get your accounting house in order. With the holiday rush behind you, now is the time to revisit your financial records, reconcile accounts, and align your business strategy with any upcoming changes and obligations.

Below are some essential accounting tasks to prioritise this month, along with insights into regulatory changes on the horizon for 2025 that you should keep on your radar.

1. Update Your Financial Records

Begin by making sure your financial records are current and accurate. This includes updating your balance sheet, income statement, and cash flow statement with any outstanding transactions from the previous year. Having these documents in order will give you a clear starting point for the new year and make tax season smoother down the line.

Action Steps:

Enter all unpaid invoices, bills, and receipts.
Confirm that all transactions from December have been recorded.
Identify any discrepancies and correct them promptly.

2. Reconcile Your Accounts

January is the ideal time to reconcile your bank, credit card, and loan accounts. Ensuring these figures match your internal records helps you catch errors, spot fraudulent transactions, and maintain a clear view of your financial position.

Action Steps:

Compare your financial records with bank and credit card statements.
Investigate and resolve any differences immediately.
Keep documentation of reconciliations for your records and for any future audits.

3. Review Your Cash Flow Forecasts

Cash flow is the lifeblood of any business, and forecasting helps you anticipate future needs. By assessing your cash flow projections now, you can identify potential shortfalls and plan accordingly. Maybe you need to adjust payment terms with clients, renegotiate vendor contracts, or explore financing options for upcoming projects.

Action Steps:

Update your cash flow forecast with current data.
Consider seasonal fluctuations and planned investments.
Make necessary adjustments to ensure you have the liquidity to meet obligations and seize opportunities.

4. Set Financial Goals for the Year

Once you have a clear picture of where your business stands, use this information to set realistic financial goals. Whether it’s boosting revenue, cutting costs, improving profit margins, or expanding into new markets, having defined targets gives you something to measure against as the year progresses.

Action Steps:

Identify short-term (3-6 months) and long-term (12 months or more) financial goals.
Ensure these goals are specific, measurable, achievable, relevant, and time-bound (SMART).
Regularly review your progress and adjust your strategies as needed.

5. Review Tax Deadlines and Compliance Requirements

With tax season on the horizon, it’s essential to confirm your key deadlines and ensure you’re up to date with any changes in tax legislation. Check if your reporting requirements have shifted and make note of important filing dates. Staying on top of compliance now helps prevent surprises and penalties later in the year.

Action Steps:

Mark critical tax deadlines on your calendar.
Consult with your accountant about any recent or upcoming tax law changes.
Organise relevant documents to streamline the tax filing process.

6. Look Ahead to Regulatory Changes in 2025

While January is about setting yourself up for immediate success, it’s also wise to look further ahead. The regulatory landscape can shift over time, and changes scheduled for 2025 might affect your business’s reporting obligations, tax strategies, or other financial operations. By keeping an eye on what’s coming, you can adapt your plans early and stay compliant.

Action Steps:

Research upcoming regulatory changes that may impact your industry.
Discuss potential changes with your accountant or financial advisor.
Incorporate these considerations into your long-term financial planning.

7. Consider Professional Guidance

If the thought of tackling these tasks feels overwhelming, remember that you don’t have to go it alone. Working with a trusted accountant or financial advisor can help you navigate the complexities of accounting, compliance, and strategic planning.

Action Steps:

Schedule a meeting with your accountant to review last year’s performance and set goals for the upcoming year.
Ask for guidance on specific industry-related compliance issues or regulatory changes.
Explore tools or software your accountant may recommend for more efficient financial management.

The first months set the tone for the rest of the year. By updating your financial records, reconciling accounts, reviewing cash flow forecasts, and preparing for both immediate tax deadlines and longer-term regulatory changes, you set the stage for a more confident, informed, and successful year ahead.

Don’t let this opportunity to start strong pass you by. Embrace January as your month to refresh and refocus your financial strategy. With the right steps now, you’ll be well-positioned to meet whatever challenges and opportunities come your way in the months ahead.

Ready to get started? Reach out to our team for personalised guidance on making the most of your January financial checklist.

To find out more about how we can help you manage your business growth, please contact one of our team at admin@wrightsca.com.au.

Beat the February Cash Flow Crunch: Tips to Stay Ahead of Your BAS and Super Obligations

Tue, 31 Dec 2024 01:12:41 GMT

For many businesses, February can feel like a perfect financial storm.

For many businesses, February can feel like a perfect financial storm. With everyone taking time off in January, invoices often go unpaid, leaving your cash reserves looking lean. At the same time, crucial obligations—like your Business Activity Statement (BAS) and superannuation payments—fall due in February. The result? A month that’s notorious for putting pressure on your cash flow.

The good news is that, with a bit of forward planning, you can weather February’s financial challenges without unnecessary stress. Here’s how:

Understand Why February is Tough

During the holiday season, many customers and clients take a well-deserved break. This often means delays in invoice payments and fewer funds coming into your account at the start of the new year. Combine that with the fact that BAS and super payments are due, and it’s no surprise February is often cited as the worst cash flow month for many businesses.

Plan Ahead

The key to a stress-free February starts months in advance—specifically, in December. While you may be winding down for the holidays, it’s a great time to set aside extra funds. Having a financial buffer earmarked for those February obligations ensures you aren’t scrambling for cash when the bills come due.

How to Build Your December Buffer

Forecast Your Obligations: Estimate your BAS, super contributions, and any other regular payments coming up in February. Having a ballpark figure allows you to set a clear savings target.

Trim Unnecessary Expenses: December can be a month of increased spending due to holiday celebrations. Look for areas where you can cut back, and put those savings toward your upcoming obligations.

Adjust Your Invoicing Cycle: If possible, adjust your invoicing schedule in December to encourage earlier payments. Offering a small discount for early settlement might motivate clients to pay before the holiday lull.

Set Up a Separate Savings Account: Move the funds you set aside into a dedicated account. This prevents you from accidentally dipping into those reserves for other expenses.

Staying on Track in January

Come January, keep an eye on your accounts receivable and follow up on overdue invoices early. While customers may still be on holiday mode, gentle reminders can prompt earlier payment. The goal is to keep bolstering your cash position so that, by February, you’re confident you can meet all obligations comfortably.

Reap the Benefits in February

By having a financial cushion ready, you’ll enter February prepared. This means you can settle your BAS and super on time without resorting to emergency measures, like drawing on a line of credit or putting off other important expenses. Ultimately, planning ahead helps maintain your financial stability and peace of mind, turning what could be the most stressful month into just another routine billing cycle.

While February might be known for its cash flow challenges, proactive planning can turn the tide in your favour. By saving ahead in December, staying on top of invoicing, and managing your expenses wisely, you’ll be ready to face February’s financial obligations head-on—no stress required.

To find out more about how we can help you manage your business growth, please contact one of our team at admin@wrightsca.com.au.

Navigating the Five Stages of Business Growth

Wed, 09 Oct 2024 00:54:05 GMT

Here’s a closer look at the five key stages of business growth and how strategic financial planning can support success at every step.

Growing a business is an exciting journey, filled with opportunities and challenges that require careful planning and strategic decision-making. As a business owner, understanding the stages of business growth is essential to provide the right financial guidance at each phase. Here’s a closer look at the five key stages of business growth and how strategic financial planning can support success at every step.

Startup Stage

Focus: Launching the Business

The startup stage is where the journey begins. At this point, the primary focus is on transforming an idea into a viable business. Entrepreneurs need to secure funding, develop a business plan, and start building a customer base. Financial planning during this phase involves:

Business Planning: Creating detailed financial projections and budgets.
Securing Financing: Exploring funding options, such as loans, grants, or investor capital.
Setting Up Operations: Allocating resources effectively to establish operations.
Initial Marketing: Investing in marketing to attract the first customers.

Growth Stage

Focus: Expanding the Business

As the business gains traction, it enters the growth stage. Revenues increase, and the company begins to expand its market presence. This stage requires scaling operations, improving products or services, and hiring additional staff. Financial considerations include:

Scaling Operations: Managing cash flow to support increased production or service delivery.
Hiring Staff: Budgeting for new hires and understanding the associated costs, such as wages and benefits.
Expanding Customer Base: Allocating funds for marketing and sales initiatives to reach more customers.

Maturity Stage

Focus: Optimising Efficiency and Maximising Profits

During the maturity stage, the business enjoys steady growth and has established itself in the market. The focus shifts to optimising processes, enhancing efficiency, and maximising profits. Key financial activities at this stage involve:

Process Optimisation: Investing in technology and systems that improve efficiency and reduce costs.
Profit Maximisation: Analysing financial statements to identify areas for cost reduction and profit improvement.
Market Maintenance: Continuing to invest in marketing to maintain the business's market position.

Expansion Stage

Focus: Exploring New Markets and Opportunities

In the expansion stage, the business looks to grow further by entering new markets or diversifying its product or service offerings. This stage involves significant investment and strategic decision-making. Financial planning is crucial for:

Diversifying Offerings: Analysing the financial viability of new products or services.
Entering New Markets: Assessing the costs and potential returns of expanding into new geographic or demographic markets.
Strategic Partnerships: Evaluating partnerships or acquisitions that can drive growth.

Renewal or Decline Stage

Focus: Innovation or Decline

At the final stage, the business either renews itself through innovation or faces the risk of decline if it fails to adapt to changing market conditions. Financial strategies are vital to:

Innovation and Reinvention: Investing in research and development to innovate and stay competitive.
Addressing Market Changes: Responding to market shifts with strategic pivots and reallocation of resources.
Strategic Pivots: Making tough financial decisions to steer the business in a new direction if necessary.

Understanding the stages of business growth is key to providing effective financial guidance. Each stage presents unique challenges and opportunities, and a strategic approach to financial planning can help ensure that a business not only survives but thrives as it grows. Whether it’s securing funding during the startup phase or optimising profits in the maturity stage, accountants play a crucial role in supporting businesses at every step of their journey.

This blog provides an overview of the critical stages in a business's lifecycle, emphasising the importance of tailored financial strategies to navigate each phase successfully.

To find out more about how we can help you manage your business growth, please contact one of our team at admin@wrightsca.com.au.

How Do You Know the Time is Right to Grow Your Business?

Tue, 20 Aug 2024 02:09:06 GMT

As accountants, we often see businesses at various stages of growth, and one of the most common questions we encounter is: "When is the right time to grow?"

As accountants, we often see businesses at various stages of growth, and one of the most common questions we encounter is: "When is the right time to grow?" While every business is unique, several key indicators can help you determine if your business is ready to take that next step.

Steady Cash Flow

A consistent and robust cash flow is crucial for supporting growth. If your business is generating enough cash to cover its operational costs and still has surplus funds, it might be the right time to consider expansion. Growth often requires significant upfront investment in inventory, equipment, and staffing, so a stable cash flow ensures you can manage these expenses without straining your finances.

Strong Market Demand

Before expanding, assess the market demand for your product or service. If you notice a growing demand or if your business regularly reaches its capacity and turns away customers, it could be a sign that the market is ready for your growth. Conduct market research to validate this demand and ensure it is sustainable in the long term.

Solid Financial Health

Your business should be in good financial health before considering growth. This means having a strong balance sheet, manageable debt levels, and positive profit margins. Review your financial statements to ensure your business can withstand the financial pressures of growth. If your financials are stable, you are better positioned to handle the risks associated with expansion.

Clear Strategic Plan

Having a clear, strategic plan is essential for successful growth. Your plan should outline specific goals, actionable steps, and measurable milestones. It should also include a detailed financial forecast, identifying the resources required for growth and the expected return on investment. A well-thought-out plan will guide your expansion efforts and help you stay focused on your objectives.

Strong Operational Capacity

Evaluate your current operations to determine if they can support growth. This includes assessing your supply chain, production capacity, and internal processes. If your operations are already stretched thin, growth could exacerbate existing issues and lead to inefficiencies. Ensuring you have the infrastructure in place to handle increased demand is critical.

Available Capital

Growth often requires a significant capital investment. Whether it's for new equipment, additional staff, or expanded facilities, having access to capital is essential. Explore your financing options, such as business loans, investor funding, or reinvesting profits. Ensure you have a solid plan for how you will finance your growth and a clear understanding of the costs involved.

Competitive Advantage

Consider your competitive position in the market. If your business has a strong competitive advantage - such as unique products, superior customer service, or a loyal customer base - you may be well-positioned to expand. Leveraging your strengths can help you capture more market share and grow more effectively.

Deciding to grow your business is a significant step that requires careful consideration and planning. By ensuring you have steady cash flow, strong market demand, solid financial health, a clear strategic plan, strong operational capacity, available capital, and a competitive advantage, you can increase the likelihood of successful growth. As accountants, we're here to help you analyse these factors and provide the financial insight needed to make informed decisions about your business's future.

To find out more about how we can help you manage your business growth, please contact one of our team at admin@wrightsca.com.au.

Pros and Cons of Business Growth

Fri, 26 Jul 2024 00:19:25 GMT

Growing your business is an exciting journey filled with opportunities and challenges.

Growing your business is an exciting journey filled with opportunities and challenges. While scaling up can lead to increased revenues, market share, and influence, it also comes with financial and operational complexities that need careful consideration. Let’s delve into the pros and cons of business growth to help you navigate this crucial phase effectively.

Pros of Business Growth

Increased Revenue and Market Share

One of the most compelling reasons for business growth is the potential for increased revenue. Expanding your operations, entering new markets, and attracting more customers can significantly boost your income. A larger market share can also enhance your brand’s reputation and competitiveness.

Economies of Scale

As your business grows, you can benefit from economies of scale. This means that the cost per unit of production decreases as you produce more, due to factors like bulk purchasing of materials, more efficient production techniques, and spreading fixed costs over a larger number of goods.

Enhanced Market Presence

Growth often translates to a stronger market presence. This can improve your negotiating power with suppliers and distributors, attract better talent, and create more opportunities for strategic partnerships.

Diversification and Innovation

Expanding your business can lead to diversification of products or services, which can reduce risk and open new revenue streams. It can also foster innovation as you explore new markets and meet evolving customer needs.

Cons of Business Growth

Cash Flow Challenges

Growth kills cash flow, so where’s the money to do that? One of the biggest hurdles is managing cash flow. As your business expands, you will face increased expenses such as wages, rent, and inventory costs upfront, while the income might come later. This imbalance can strain your cash reserves and create liquidity issues.

Upfront Costs

Wages up front, rent up front, income comes later. Expanding a business requires significant upfront investments in new hires, larger premises, additional equipment, and marketing efforts. These costs need to be managed carefully to avoid overextending your financial resources.

The Rule of 72

The Rule of 72 is a useful formula for estimating the time it takes for your business to double in size. If you divide 72 by your annual growth rate, you’ll find the number of years it will take to double. For example, growing at 10% per year means your business will double in 7.2 years. This growth necessitates planning for increased capacity, whether it’s larger premises, more staff, or additional vehicles.

Securing Capital

Where to get capital? Financing growth can be challenging. Whether you seek loans, investors, or reinvest profits, each option has implications for your business. Loans require repayment and can affect cash flow, while investors might want equity and influence over business decisions.

Financial Priorities and Risk

Are you putting all your eggs in your business basket? Concentrating all your resources on business growth can be risky. If your business is your sole source of income, its success or failure directly impacts your financial security. Diversifying your investments and having a clear exit strategy can mitigate this risk.

Saleability of the Business

Growth can increase the value of your business, making it more attractive to potential buyers. However, if not managed well, it can also create operational complexities that make the business harder to sell. Ensuring sustainable growth with strong financial health and efficient processes can enhance the saleability of your business.

Business growth presents a mix of exciting opportunities and significant challenges. While the potential for increased revenue, market share, and innovation is enticing, the financial and operational hurdles require careful planning and strategic decision-making. By understanding the pros and cons, you can prepare effectively and navigate the growth phase with confidence, ensuring long-term success and stability for your business.

To find out more about how we can help you manage your business growth, please contact one of our team at admin@wrightsca.com.au.

Expanding Your Team? Here’s How to Adjust Your Targets Effectively

Tue, 25 Jun 2024 05:59:49 GMT

Expanding your team is an exciting step towards growing your business, but it also comes with its own set of challenges and considerations.

Expanding your team is an exciting step towards growing your business, but it also comes with its own set of challenges and considerations. One of the most crucial aspects is adjusting your financial and productivity targets to accommodate the new hires. Let's delve into the key factors you need to consider to ensure a smooth transition and continued success.

Understanding Productivity

When you employ more people, it's essential to understand the actual productivity you can expect. While employees are typically paid for 52 weeks a year, the reality is that they might only work around 44 weeks due to sick leave, public holidays, and other forms of leave. This difference can significantly impact your business’s output and needs to be factored into your planning.

To manage this, you should:

- Track attendance and leave patterns to predict actual working days.

- Set realistic productivity expectations based on these patterns.

- Ensure that your operational plans are aligned with the true availability of your workforce.

Accounting for On Costs

Hiring additional employees isn't just about their salaries. There are several on costs associated with employment that you must account for. For example, if you hire someone with a $50,000 salary, you also need to consider:

- Superannuation contributions, which are typically around 11%.

- Workers' compensation insurance.

- Additional equipment and resources, such as computers, software, and potentially even another vehicle.

These additional costs can add up quickly, so it's crucial to calculate them accurately and include them in your budget. Overlooking these expenses can lead to financial shortfalls and affect your profitability.

Adjusting Revenue and Profit Targets

With the increase in your workforce, your revenue and profit targets will need to be adjusted accordingly. More employees should ideally lead to higher productivity and, consequently, higher revenue. However, the additional costs must be balanced against this increased revenue to ensure that your profit margins are maintained or improved.

To effectively adjust your targets:

- Reevaluate your revenue goals to reflect the enhanced capacity and productivity of your team.

- Analyse your profit margins to ensure they are realistic considering the new costs.

- Consult with a financial advisor or business consultant to help you accurately project these new targets and develop strategies to achieve them.

Implementing Efficient Training Programs

Another critical factor when expanding your team is ensuring that new hires are integrated smoothly and quickly become productive members of your workforce. Effective training programs can significantly reduce the ramp-up time for new employees and improve overall productivity.

Consider the following steps:

- Develop a comprehensive onboarding program that covers company policies, job-specific training, and cultural integration.

- Invest in ongoing training and development to keep your team updated with the latest skills and knowledge.

- Assign mentors or buddies to new hires to provide guidance and support during their initial period.

Maintaining Company Culture

Expanding your team can impact your company's culture, especially if not managed carefully. Maintaining a strong, positive culture is essential for employee satisfaction and retention.

To preserve your culture:

- Communicate your company values clearly and consistently.

- Foster an inclusive environment where all employees feel valued and heard.

- Encourage collaboration and team building activities to strengthen relationships among team members.

Get Help from the Professionals

Adjusting your targets to reflect the changes in your workforce can be complex. It often requires a deep dive into your financials, an understanding of market conditions, and strategic planning. Engaging a professional can provide you with the expertise and perspective needed to navigate this process smoothly.

Financial advisors or business consultants can help you:

- Assess your current financial position and future projections.

- Develop a comprehensive plan to integrate new employees without compromising your financial stability.

- Identify potential risks and opportunities associated with expanding your team.

Expanding your team is a positive step towards business growth, but it comes with its own set of financial and operational challenges. By understanding productivity, accounting for on-costs, adjusting your revenue and profit targets, implementing effective training programs, and maintaining your company culture, you can ensure that your business continues to thrive as you grow. Remember, seeking professional help can provide valuable insights and guidance, making the transition smoother and more effective. With careful planning and strategic adjustments, you can successfully expand your team and achieve your business goals.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au

*Important notice: This article provides information rather than financial advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation, or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information.

The Importance of Budgeting for Your Business

Thu, 06 Jun 2024 02:32:07 GMT

Budgeting is not just a mundane task relegated to the realm of accounting; it's a strategic imperative that serves as the cornerstone of financial management for businesses of all sizes.

Budgeting is not just a mundane task relegated to the realm of accounting; it's a strategic imperative that serves as the cornerstone of financial management for businesses of all sizes. So why is creating a budget not only necessary but essential for the success and sustainability of your business?

Strategic Planning and Goal Setting

A budget provides a roadmap for your business, outlining your financial goals and the strategies needed to achieve them. By setting clear revenue targets, expense limits, and investment priorities, a budget helps you align your resources with your business objectives and track progress toward your goals.

Financial Control and Decision Making

Budgeting empowers you to take control of your finances and make informed decisions based on a clear understanding of your financial position. By monitoring actual performance against budgeted targets, you can identify variances, pinpoint areas of overspending or inefficiency, and take corrective action as needed to stay on track.

Cash Flow Management

One of the most critical aspects of budgeting is managing cash flow effectively. A well-designed budget allows you to forecast cash inflows and outflows, anticipate seasonal fluctuations, and ensure that you have sufficient funds to cover expenses and meet financial obligations. By proactively managing cash flow, you can avoid cash crunches, minimise borrowing costs, and maintain financial stability.

Resource Allocation and Prioritisation

Budgeting helps you allocate resources wisely and prioritise investments that offer the greatest return on investment. By evaluating the potential ROI of different projects and initiatives, you can make strategic decisions about where to allocate your limited resources, whether it's investing in new equipment, expanding your team, or launching a marketing campaign.

Performance Evaluation and Accountability

A budget serves as a benchmark for evaluating performance and holding yourself and your team accountable for achieving financial targets. By regularly comparing actual results to budgeted projections, you can identify successes, address challenges, and make adjustments to improve future performance.

Budgeting is not just a financial exercise; it's a fundamental business practice that drives strategic planning, financial control, and performance improvement. By creating a budget for your business, you gain clarity, control, and confidence in your financial decisions, setting the stage for long-term success and prosperity. So, don't overlook the importance of budgeting - embrace it as a powerful tool for achieving your business goals and securing a positive financial future.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au .

What's Your Money Mindset?

Tue, 30 Apr 2024 05:02:31 GMT

Navigating Financial Perspectives for Businesses

In business, success isn't solely determined by practical strategies and market trends; it's also shaped by the mindset driving financial decisions. As an accountant serving businesses across various sectors, we recognise the profound impact that mindset can have on financial outcomes. Let's look at the concept of "money mindset" and its significance for businesses navigating the complexities of finance and business accounting.

Understanding Money Mindset

Money mindset encompasses the beliefs, attitudes, and behaviours surrounding money that influence how businesses approach financial matters. From perceptions of wealth to attitudes toward risk and spending habits, a business's money mindset plays a pivotal role in shaping its financial trajectory.

The Power of Mindset in Business

For businesses, fostering a positive and proactive money mindset is essential for long-term success. A growth-oriented mindset, characterised by resilience, adaptability, and a willingness to embrace calculated risks, empowers businesses to overcome challenges, seize opportunities, and achieve sustainable growth.

Conversely, a scarcity mindset, rooted in fear, doubt, and a focus on limitations, can stifle progress and hinder potential. Businesses must recognise and challenge limiting beliefs around money to unlock their full potential and thrive in today's competitive landscape.

Shifting Perspectives for Financial Success

Changing a business's money mindset requires intentional effort and commitment, but it's a transformative step toward achieving financial success. Here are some key strategies to help businesses cultivate a positive money mindset:

Embrace Abundance : Instead of fixating on scarcity and constraints, cultivate a mindset of abundance. Focus on opportunities, possibilities, and the potential for growth and success.

Prioritise Financial Literacy: Invest in financial education and equip yourself with knowledge. Understanding financial concepts and strategies empowers businesses to make informed decisions, manage risks effectively, and optimise financial performance.

Set Clear Goals: Define clear financial goals and develop a strategic plan to achieve them. Setting specific, measurable, and achievable goals provides direction, motivation, and a roadmap for success.

Focus on Resilience: Build resilience in the face of adversity and setbacks. View challenges as opportunities for growth and learning, and approach setbacks with a mindset of perseverance and determination.

Empowering Businesses with the Right Mindset

We're dedicated to empowering businesses with the tools, resources, and support they need to cultivate a positive money mindset and achieve their financial objectives. Our team of experienced professionals provides tailored solutions and strategic guidance to help businesses thrive in today's dynamic business environment.

By understanding and embracing the power of mindset, businesses can unlock their full potential, transform their financial futures, and build resilient organisations that stand the test of time. Let's work together to cultivate a positive money mindset and chart a course toward lasting financial success.

To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au .

The Overall Principle in Business - Debt is Always Repaid on After-Tax Money!

Mon, 01 Apr 2024 22:32:12 GMT

In the world of business, the management of debt is a fundamental aspect that can significantly impact an organisation's financial health and long-term success. However, amidst the myriad of financial principles, one overarching truth often remains overlooked: "Debt is always repaid with after-tax money." Understanding this principle is paramount for businesses aiming to navigate the complex landscape of finance effectively. Let's delve deeper into this concept and explore why grasping it sooner rather than later is crucial for businesses of all sizes.

What Does "Debt is Repaid with After-Tax Money" Mean?

At its core, this principle emphasises that any debt incurred by a business must eventually be repaid using profits that have been subjected to taxation. Unlike pre-tax earnings, which can be reinvested into the business or used for various purposes before taxation, the funds allocated for debt repayment have already been taxed. This distinction has significant implications for businesses, particularly in terms of financial planning, budgeting, and decision-making.

Why Understanding This Principle Matters

Accurate Financial Planning: Recognising that debt repayment relies on after-tax profits enables businesses to develop more accurate financial forecasts and budgets. By factoring in tax obligations when planning for debt repayment, businesses can avoid overextending their financial resources and ensure sustainable growth.

Optimised Tax Strategies: Understanding the tax implications of debt repayment allows businesses to implement tax-efficient strategies to minimize their overall tax burden. From leveraging tax deductions to optimising debt structures, businesses can strategically manage their finances to maximize after-tax profits and drive long-term success.

Informed Decision-Making: Armed with the knowledge that debt is repaid with after-tax money, business leaders can make more informed decisions regarding capital allocation, investment opportunities, and risk management. By considering the true cost of debt repayment, businesses can assess the feasibility of potential investments and prioritise initiatives that yield the highest returns.

Mitigated Financial Risks: Failing to acknowledge the impact of taxation on debt repayment can expose businesses to financial risks and cash flow challenges. By proactively managing debt obligations with an understanding of after-tax implications, businesses can mitigate risks associated with excessive debt and maintain financial stability even in volatile economic environments.

Partnering with a Trusted Accounting Firm

At Wrights, we understand the importance of aligning financial strategies with overarching principles like "Debt is always repaid with after-tax money." Our team of experienced professionals is dedicated to providing personalised guidance and support to help businesses navigate the complexities of finance with confidence and clarity. From tax planning and compliance to financial analysis and strategic advisory services, we are committed to empowering businesses to achieve their goals and thrive in today's competitive landscape.

In conclusion, grasping the principle that debt repayment relies on after-tax profits is essential for businesses seeking to optimise their financial performance and achieve sustainable growth. By embracing this truth and partnering with a trusted advisor, businesses can unlock new opportunities for success and build a solid foundation for a prosperous future. Let's work together to turn financial challenges into opportunities and pave the way for lasting success.

At Wrights, we're committed to empowering businesses with accurate and actionable financial information. Our team of experienced professionals is dedicated to providing comprehensive accounting services tailored to your unique needs. To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au .

Dispelling Common Accounting Myths: Separating Fact from Fiction

Thu, 07 Mar 2024 23:23:21 GMT

In the realm of finance, few things are as misunderstood as accounting. Despite its pivotal role in driving business success, accounting is often surrounded by myths and misconceptions that can lead to confusion and costly mistakes. As a trusted accountancy firm committed to clarity and accuracy, at Wrights we believe it's essential to dispel these myths and provide businesses with the knowledge they need to navigate the financial landscape confidently. Join us as we debunk some of the most pervasive accounting myths and shed light on the truth behind them.

Myth #1: Accounting is Only About Numbers

While it's true that accounting involves a significant amount of number crunching, its scope extends far beyond simple arithmetic. Modern accounting encompasses a wide range of disciplines, including financial analysis, strategic planning, and compliance with regulatory standards. Accountants are not just bean counters; they are strategic advisors who help businesses make informed decisions based on financial data.

Myth #2: Small Businesses Don't Need Professional Accounting Services

Many small business owners believe that they can manage their finances effectively without professional assistance. However, this misconception can be costly in the long run. Professional accountants bring expertise and insights that can help small businesses optimise their financial processes, minimise tax liabilities, and identify growth opportunities. Investing in professional accounting services is an investment in the future success of your business.

Myth #3: Accounting Software Can Replace Human Accountants

The advent of accounting software has led some to believe that human accountants are becoming obsolete. While accounting software can automate certain tasks and improve efficiency, it cannot replace the expertise and judgement of a skilled accountant. Human accountants offer valuable insights, interpretation of financial data, and strategic advice that software alone cannot provide. By combining the power of technology with human expertise, businesses can achieve optimal results.

Myth #4: All Accountants Are the Same

Contrary to popular belief, not all accountants are created equal. There are various types of accountants, each with its own specialisation and expertise. From tax accountants to forensic accountants to management accountants, the field of accounting offers a diverse range of skill sets tailored to different needs and industries. Choosing the right accountant for your business requires careful consideration of your specific requirements and objectives.

Myth #5: Accounting is Boring and Incomprehensible

Accounting is often unfairly labelled as dull and incomprehensible, but nothing could be further from the truth. At its core, accounting is about telling the story of a business through its financial data. It's a dynamic field that requires analytical thinking, problem-solving skills, and attention to detail. By demystifying accounting concepts and making them accessible to everyone, we can help businesses harness the power of finance to achieve their goals.

At Wrights, we're committed to debunking accounting myths and empowering businesses with accurate, actionable financial information. Our team of experienced professionals is dedicated to providing comprehensive accounting services tailored to your unique needs. To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au .

How to Build Wealth in Your Small Business

Wed, 10 Jan 2024 06:08:53 GMT

Navigating the financial landscape of a growing business demands more than just celebrating the inflow of cash; it requires a thoughtful approach to expenditure and investment. Making purchases with the allure of 'tax benefits' might seem advantageous at first glance, but without practical utility, such assets can become liabilities, depreciating both in value and utility.

To achieve long-term wealth creation, you must use strategic decision-making to ensure that your business not only thrives today but also builds a solid foundation for the future, culminating in a legacy you can retire on.

Below we provide the pivotal financial steps that we believe are necessary for sustainable business prosperity and wealth building.

Assess the True Cost of Tax-Incentivised Purchases

Before making large purchases for the sake of potential tax deductions, evaluate the actual financial benefit to your business. For instance, buying a $50k excavator may offer a tax write-off, but if it’s only used twice and then loses value, it's not a sound investment. Weigh the tax advantage against the asset's utility and depreciation.

Avoid Reckless Spending

Frivolous expenditures can quickly erode your profits. It’s important to distinguish between essential spending and wastefulness. Implement a rigorous financial review process for all spending, especially when it comes to significant outlays that don't directly contribute to increased revenue or operational efficiency.

Embrace Tax Payments as a Sign of Success

Paying tax is indicative of a profitable business, which is attractive to banks and investors. It's a validation of your business's success, so don't shy away from it. Instead, focus on smart tax planning to manage liabilities without compromising your company's profitability profile.

Resist the Lure of Immediate Gratification

When your business starts seeing an uptick in cash flow, resist the urge to spend on luxury items like high-end vehicles or unnecessary equipment. Such purchases may offer short-term satisfaction but can be detrimental to your business's long-term financial health. Always prioritise investments that offer tangible returns.

Make Decisions with Longevity in Mind

Every financial decision should be made with an eye towards the future, particularly when it comes to exit strategies. If you wish to sell the business upon retirement, ensure that its assets are valuable and its financial records are attractive to potential buyers. Invest in building wealth within your business that will pay off in the long term.

Build Wealth, Not Just Income

Our aim at Wrights is to support those who are committed to building wealth through their businesses. This means making strategic decisions that increase the net worth of your business, rather than just drawing a higher income from it. Wealth accumulation should be the goal, ensuring you have a solid financial foundation for the future.

If you would like to know more about how you can use your small business to build wealth, we have a team of strategic accountants who can combine their specialist knowledge and expertise in commercial finance, audit and compliance to provide you with effective solutions for growth. To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au .

Which Small Business Accounting Software Do I Use?

Sat, 11 Nov 2023 00:29:25 GMT

An Accountant's Review of Xero & MYOB

Managing the financial health of your small business is essential to its success. Fortunately, there are two accounting software that offer an array of features, streamlining processes and ensuring the accurate tracking of every dollar.

Below, we delve deeply into the two accounting solutions that we recommend for our small business clients: Xero and MYOB and we review the pros and cons of each one.

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Xero

Overview:

In our experience, Xero is the cloud-based accounting platform that most small (less than $10M turnover and less than 20 staff) find more comfortable to use. Its user-friendly interface and a vast ecosystem of integrations make Xero an easier and more versatile platform for people to navigate.

Pros:

1. Cloud-Based: Access your finances anytime, anywhere, and on any device.

2. Ecosystem: With 800+ third-party apps available for integration, Xero can be tailored to specific business needs.

3. User-Friendly: Its intuitive design makes it easy even for those with minimal accounting knowledge.

4. Automated Features: Bank feeds, invoicing, and reconciliation are automated, saving time and reducing manual errors.

5. Multi-Currency: Ideal for businesses operating internationally.

Cons:

1. Pricing: Higher cost for the premium features, especially for businesses that only need basic functionality.

2. Inventory Management: Its built-in features may be limited for businesses with extensive inventory needs.

MYOB

MYOB (Mind Your Own Business) is an Australian multinational corporation that offers tax, accounting, and other services to small and medium businesses. It provides both cloud-based and offline solutions and we generally tend to recommend this software to larger businesses.

Pros:

1. Diverse Range: Products vary from basic bookkeeping to more advanced business management solutions.

2. Local Support: Strong Australian roots ensure that its support and features are catered specifically for the Australian market.

3. Offline Access: Unlike some cloud-only solutions, MYOB offers offline products.

4. Payroll Integration: MYOB has strong payroll capabilities built into its software.

5. GST and Tax Compliance: Designed to be compliant with Australian tax requirements.

Cons:

1. Learning Curve: Some users report a steeper learning curve compared to other alternatives.

2. Interface: The interface is sometimes considered less modern than competitors like Xero.

3. Costly Add-Ons: Many advanced features require additional purchases.

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A proactive approach to selecting the right accounting software for your business is to test out each platform's trial version, gauge its fit for your operations, and make an informed choice.

While both Xero and MYOB are great options, our primary advice is to ensure proper setup (both platforms offer excellent training videos) and consistent use of whichever software you select, avoiding any shortcuts.

Initially, using either of the platforms may seem daunting, but we have noticed that as our clients familiarise themselves with them, their confidence grows, and they leverage them effectively.

For assistance with small business accounting, including transitioning to accounting software, our team is here to help. Find out more about our services by reaching out to us at admin@wrightsca.com.au .

Below, we delve deeply into the two accounting solutions that we recommend for our small business clients: Xero and MYOB and we review the pros and cons of each one.

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Xero

Overview:

Pros:

1. Cloud-Based: Access your finances anytime, anywhere, and on any device.

2. Ecosystem: With 800+ third-party apps available for integration, Xero can be tailored to specific business needs.

3. User-Friendly: Its intuitive design makes it easy even for those with minimal accounting knowledge.

4. Automated Features: Bank feeds, invoicing, and reconciliation are automated, saving time and reducing manual errors.

5. Multi-Currency: Ideal for businesses operating internationally.

Cons:

1. Pricing: Higher cost for the premium features, especially for businesses that only need basic functionality.

2. Inventory Management: Its built-in features may be limited for businesses with extensive inventory needs.

MYOB

Pros:

1. Diverse Range: Products vary from basic bookkeeping to more advanced business management solutions.

2. Local Support: Strong Australian roots ensure that its support and features are catered specifically for the Australian market.

3. Offline Access: Unlike some cloud-only solutions, MYOB offers offline products.

4. Payroll Integration: MYOB has strong payroll capabilities built into its software.

5. GST and Tax Compliance: Designed to be compliant with Australian tax requirements.

Cons:

1. Learning Curve: Some users report a steeper learning curve compared to other alternatives.

2. Interface: The interface is sometimes considered less modern than competitors like Xero.

3. Costly Add-Ons: Many advanced features require additional purchases.

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A proactive approach to selecting the right accounting software for your business is to test out each platform's trial version, gauge its fit for your operations, and make an informed choice.

Initially, using either of the platforms may seem daunting, but we have noticed that as our clients familiarise themselves with them, their confidence grows, and they leverage them effectively.

Assessing Your Business’s Profit: Everything a Small Business Owner Needs to Know

Thu, 26 Oct 2023 03:55:11 GMT

In the fast-paced realm of business, having your finger on the pulse of your financial health is more than just good practice; it's vital. The Profit and Loss (P&L) or Income Statement is a powerful tool.

Your P&L offers insights into how much your business has earned and spent over a particular period, acting as a beacon for informed decision-making, trend spotting, and strategic planning. Regular assessments of your business's P&L enable swift adaptations to changing circumstances, aid in managing cash flow, ensure compliance with tax obligations, and provide a framework for future forecasting.

Above all, monitoring your P&L regularly provides accountability, risk management, and assuring stakeholders of the business's health. We’ve developed this guide to help small business owners understand and efficiently assess their P&L to help ensure financial sustainability.

What is a Profit and Loss (P&L) Statement?

A Profit and Loss (P&L) statement, sometimes known as an Income Statement, outlines a company's revenues, costs, and expenses over a specific period to show its net profit or loss, reflecting operational performance. It provides a snapshot of your business's financial health.

What’s the difference between a P&L and a Balance Sheet?

A P&L tells you how much your business has made and spent over a specific period. In contrast, a balance sheet provides a snapshot of a company's assets, liabilities, and equity at a particular point in time, illustrating its overall financial position.

Why is it important to monitor your P&L Statement regularly?

Monthly or quarterly profit reviews are essential for maintaining a pulse on a business's financial well-being. They act as both a diagnostic tool and a guide, ensuring that companies remain agile, informed, and proactive in their financial management.

Here are nine reasons to ensure that you are regularly assessing your P&L:

1. Timely Decision Making

Monthly or quarterly reviews allow businesses to adapt to changing circumstances quickly. With up-to-date information on profitability, you can make informed decisions regarding expenditures, investments, and strategic shifts.

2. Spotting Trends

Regular assessments let you identify both positive and negative financial trends earlier. This frequent check can help you spot a decline in profits before it becomes more severe or recognise and capitalise on emerging growth patterns.

3. Cash Flow Management

Understanding your monthly profitability is key to managing cash flow. If profits are declining or are negative, you'll need to ensure you have enough liquidity to cover expenses.

4. Operational Adjustments

Regular profit review can highlight operational inefficiencies. For example, if certain expenses consistently affect profits, you may need to renegotiate supplier contracts, adjust pricing, or re-evaluate overhead costs.

5. Stakeholder Assurance

If you have investors, partners, or shareholders, they'll appreciate frequent updates on the business's health. Regular profitability reviews can provide them with confidence or alert them to potential issues.

6. Goal Setting and Monitoring

Businesses often set profit targets. Monthly checks ensure that you're on track to meet these goals, and, if not, allow you to adjust strategies accordingly.

9. Increased Accountability

When you know that you'll be examining the numbers each month, there's an increased sense of accountability throughout the business to meet financial targets.

Key Numbers to Look For in Your P&L

1. Revenue (Sales)

This is the total amount of money taken in from selling your product or service.

If this number is growing month-on-month, it's a positive sign. If it's declining, you'll need to dig deeper to find out why.

2. Cost of Goods Sold (COGS):

These are the direct costs related to producing your products or delivering services.

A sudden spike in COGS might indicate supply issues, increased raw material costs, or inefficiencies in production.

3. Gross Profit

Gross Profit is calculated as Revenue minus COGS. It shows how much money you have left after paying for the goods you've sold.

A consistently high Gross Profit indicates strong control over production or service costs. A declining Gross Profit might suggest rising COGS or falling prices.

4. Operating Expenses

These are the costs involved in running your business that aren't directly tied to making a product or service, like rent or salaries.

Rising expenses without an increase in revenue might indicate inefficiencies, unnecessary costs, or potential areas to streamline.

5. Net Profit

This is the bottom line. It's what's left after you subtract all costs (both COGS and operating expenses) from your revenue.

This is a clear indicator of your business's profitability. A consistent or growing net profit is a good sign, while a declining net profit necessitates a deeper review.

Top Tips For Reviewing Your P&L Statement

Consistency is Key

Make it a monthly ritual. Regular review helps spot trends, anomalies, and areas of concern early on.

Compare with Previous Months

Look for patterns. Is there a specific time of the month when costs spike? Do you see seasonal trends in your revenue?

Ask Questions

Why did COGS increase this month? Why was there a spike in operating expenses? Questions lead to answers and actions.

Look Beyond the Numbers

For instance, if revenue is down, consider external factors – was there a significant event, like a holiday or local festival, that could have affected sales?

Seek Expert Advice

If there are numbers you need help understanding or something feels off, consult with an accountant or business advisor from the team at Wrights Chartered Accountants.

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Understanding your P&L statement is akin to checking the vital signs of your business's financial health. It provides crucial insights that can help in making informed decisions. So, even if numbers aren't your forte, embrace your P&L. After all, knowledge is power, and in business, it's also profitability.

If you would like help with your small business accounting, we have a team of strategic accountants who can combine their specialist knowledge and expertise in audit, compliance and commercial finance to provide you with effective solutions for growth. To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au .

Annual Audit Checklist for Not For Profits (NFPs)

Sun, 10 Sep 2023 23:41:04 GMT

Annual audits are crucial for maintaining the financial integrity and accountability of Not-for-Profit organisations. By following this checklist, Non-Executive Directors can ensure a thorough and effective audit process, enhancing transparency and trust among stakeholders.

To download our Annual Audit Checklist for Not For Profits, click here .

Wrights Chartered Accountants Auditors utilise the latest technical software which benefits our clients as it allows us to deliver a cost-effective, risk-based, paperless audit and ensure that our team have the latest and most up-to-date knowledge of the International Accounting Standards, Australian Accounting Standards, and the Australian Auditing Standards.

If you would like more information about our internal and external audit services, please contact us on 02 6566 2200.

Navigating the 5 Stages of Business Growth: A Roadmap for Small Business Owners

Sun, 10 Sep 2023 23:23:37 GMT

Starting a small business is like planting a seed and watching it grow. The journey is filled with ups, downs, and countless surprises along the way. If you've ever felt like your business is evolving at a pace you can't quite grasp, you're not alone. Understanding the stages of business growth can be your compass on this exciting journey.

In a classic Harvard Business Review article by Neil C. Churchill and Virginia L. Lewis , the authors break down the growth journey into five stages. The original article is quite lengthy and we know that most small business owners are a bit short on time, so we have included a summary of the five stages, a key tip for each stage and our key takeaways below.

Stage 1: Existence

This is where it all begins - the birth of your business. You're focused on survival. Every day feels like a battle to attract customers, make sales, and keep the lights on. Resources are tight, and you're wearing many hats. It's a stage of high uncertainty, where the main question is, "Can we make it?"

Tip: Stay lean and focus on the essentials. It's about keeping your head above water and establishing a customer base.

Stage 2: Survival

In this stage, you're still focused on survival, but it's a bit less precarious. You're generating consistent revenue, and your customer base is growing. It's a stage where you need to fine-tune your operations, manage cash flow wisely, and ensure you're not just surviving but thriving.

Tip: Keep a close eye on your finances, and invest in what's working to ensure steady growth.

Stage 3: Success

Success is sweet, but it comes with its own set of challenges. You're experiencing consistent profitability, and your customer base is loyal. At this point, you can start thinking about expansion. It's crucial to maintain what's made you successful while exploring new opportunities carefully.

Tip: Don't lose sight of what got you here. Continuously innovate and adapt to changing market dynamics.

Stage 4: Take off

This is the stage where your business experiences rapid growth. You've hit your stride, and demand for your products or services is soaring. To keep up, you'll need to scale your operations, hire more staff, and expand your market presence. It's an exciting but often overwhelming phase.

Tip: Invest in efficient systems and processes to handle the increased workload. Keep a sharp eye on your finances as you grow.

Stage 5: Resource Maturity

In this final stage, your business has reached a level of maturity. Growth may slow down, but you've achieved stability and a strong market position. You're now looking at optimising your operations and possibly diversifying your product or service offerings.

Tip: Focus on innovation and efficiency to stay competitive. Explore new markets or product lines to sustain growth.

Of course, not all businesses follow this growth path precisely. Some may skip stages, while others may linger in one for an extended period. The key is to recognise where your business currently stands and make strategic decisions accordingly.

Here are a few essential takeaways for small business owners:

1. Be Adaptable

The business landscape is ever-changing. Be ready to pivot and adapt as your business grows.

2. Financial Management

Your financial health is critical at every stage. Keep a tight grip on your finances, especially during the earlier phases.

3. Customer Focus

Customer satisfaction is your North Star. Happy customers are more likely to stick with you through all stages of growth.

4. Innovation

Don't get complacent. Keep looking for ways to innovate and improve your products or services.

5. Seek Guidance

Don't hesitate to seek advice from mentors or professionals who've been through the stages of growth. Their insights can be invaluable.

The journey of business growth is an exhilarating one. By understanding these five stages, you can navigate the road ahead with confidence. Remember that success is not just about reaching the final stage but about maintaining and continuously improving your business at each step of the way. Stay focused, stay agile, and your business can flourish, no matter where you are on this growth path.

If you would like to explore the growth opportunities for your business, we have a team of strategic accountants that can combine their specialist knowledge and expertise in audit, compliance and commercial finance to provide you with effective solutions for growth. To find out more about how we can help you, please contact one of our team at admin@wrightsca.com.au .

Why an Audit Committee Matters for Not-For-Profit Organisations

Thu, 03 Aug 2023 03:33:24 GMT

Effective governance forms the backbone of any thriving not-for-profit organisation. Transparency, accountability, and long-term sustainability are vital pillars for any not-for-profit organisation's success. The establishment of an audit committee can play a significant role in ensuring these pillars are upheld. By diligently overseeing financial practices and internal controls, an audit committee can strengthen your organisation's financial integrity and protect against potential risks like fraud.

Moreover, the presence of an audit committee can foster greater confidence with your organisations key stakeholders. It demonstrates your commitment to sound financial management and responsible stewardship of resources, potentially leading to increased support (such as funding) for your cause.

Below, we delve into the key reasons why setting up an audit committee is a strategic move for your organisation. We also explore the critical responsibilities of an audit committee and how it can bolster your governance practices.

Why an Audit Committee Matters

At the heart of every not-for-profit organisation lies the commitment to a noble cause. Whether it's supporting communities, championing environmental causes, or advancing education, your endeavours positively impact society. To safeguard the trust of stakeholders, the presence of an audit committee is crucial.

Here are some compelling reasons why setting up an audit committee should be a priority:

1. Enhancing Financial Integrity

An audit committee acts as a cornerstone for financial integrity. It ensures that your organisation's financial reports are accurate, free from errors, and comply with applicable regulations and accounting standards. This provides credibility to your financial information, reassuring stakeholders that their contributions are used wisely and transparently.

2. Detecting and Preventing Fraud

No organisation is immune to the risk of fraud. An audit committee plays a pivotal role in detecting and preventing fraudulent activities. Its independent and objective review of financial transactions and internal controls act as a deterrent to potential wrongdoers, protecting the organisation's reputation and resources.

3. Strengthening Governance Practices

Sound governance is the backbone of any successful not-for-profit organisation. An audit committee brings together experienced professionals who possess financial acumen and industry knowledge. Their collective expertise enhances the board's oversight capabilities, ensuring adherence to best practices and regulatory requirements.

4. Risk Assessment and Mitigation

In today's dynamic environment, not-for-profit organisations face various risks, including financial, operational, and reputational risks. An audit committee's regular risk assessments help identify vulnerabilities and develop strategies to mitigate them. By proactively addressing these risks, you safeguard the organisation's future and mission.

5. Building Donor Confidence

Donors and funding agencies want assurance that their contributions are utilised efficiently to create a positive impact. The presence of an audit committee demonstrates your commitment to transparency and accountability. This, in turn, instils confidence in your donors, potentially leading to increased support for your cause.

As you can from the reason above, the establishment of an audit committee could be a critical step towards ensuring the long-term success and sustainability of your not-for-profit organisation. By enhancing financial integrity, detecting fraud, strengthening governance practices, and building donor confidence, an audit committee acts as a safeguard for your mission-driven endeavours.

If you would like more information about our internal and external audit services, please contact us on 02 6566 2200.

Demystifying Accounting Professionals: CA vs. CPA vs. Tax Accountants

Thu, 03 Aug 2023 03:28:50 GMT

For many small business owners, managing finances can be a daunting task. To ensure financial stability and compliance, most seek the expertise of accounting professionals. However, the world of accounting offers various designations, leaving business owners perplexed about which professional to choose.

Below, we will unravel the differences between three prominent accounting designations: Chartered Accountant (CA), Certified Practicing Accountant (CPA), and Tax Accountant. Understanding their unique roles and qualifications can help you to make informed decisions when seeking accounting assistance.

1. Chartered Accountant (CA)

Chartered Accountants (CAs) are qualified professionals recognised globally for their expertise in various financial disciplines. They undergo rigorous training and examinations provided by recognised institutes, such as the Institute of Chartered Accountants Australia (ICAA) or the Chartered Accountants Australia and New Zealand (CAANZ).

Education and Qualifications:

To become a CA, candidates must possess a university degree in accounting or a related field and then complete the CA program, which includes three years of practical work experience under the guidance of a registered CA. Additionally, they must pass a series of challenging examinations to obtain their designation.

Areas of Expertise:

Chartered Accountants possess a broad range of skills, including financial reporting, auditing, tax advisory, budgeting, and strategic financial planning. Their comprehensive knowledge makes them valuable assets in navigating complex financial scenarios and providing valuable insights for business growth and sustainability.

2. Certified Practicing Accountant (CPA)

Certified Practicing Accountants (CPAs) are another distinguished group of accounting professionals, known for their proficiency in accounting, finance, and business management. The CPA designation is granted by the Certified Practicing Accountants Australia (CPAA) or CPA Australia.

Education and Qualifications:

To become a CPA, individuals typically need a degree in accounting or a related field, followed by completing the CPA program, which involves rigorous study and practical experience. Similar to CAs, they must pass a series of examinations to obtain their CPA title.

Areas of Expertise:

CPAs are well-versed in accounting, finance, and business principles. They offer valuable insights into financial management, budgeting, and cost analysis. With a strong focus on business strategy, CPAs can assist small business owners in making informed decisions and implementing sustainable financial practices.

3. Tax Accountant

A Tax Accountant specialises in providing tax-related services and advice. They play a crucial role in helping businesses comply with tax regulations and minimise their tax liabilities, ultimately maximising their financial resources.

Education and Qualifications:

There are no specific designations for tax accountants in Australia. Some tax accountants have backgrounds as CAs or CPAs and some may also have completed specialised tax courses and hold memberships in professional tax organisations.

Areas of Expertise:

Tax Accountants excel in tax planning, preparation, and compliance. They keep themselves updated with the latest tax laws and regulations, ensuring that businesses meet their tax obligations efficiently. Moreover, tax accountants can assist small business owners in identifying potential tax deductions and credits, optimising tax returns, and minimising the risk of audits.

Choosing the Right Professional for Your Business

The decision of hiring the right accounting professional depends on the unique needs and goals of your small business. Here are some considerations to help you make an informed choice:

1. Business Strategy and Management

If your business requires a wide range of financial services, such as strategic planning, financial advice, assistance in decision making auditing and financial reporting, a Chartered Accountant or a Certified Practicing Accountant will be the ideal choice due to their extensive expertise.

2. Tax Compliance and Planning

If your primary concern is complying with tax regulations and optimising tax returns, a specialized Tax Accountant can help you navigate the complexities of the tax landscape and ensure tax efficiency.

Navigating the world of accounting professionals can be challenging, however, understanding the distinctions between Chartered Accountants (CA), Certified Practicing Accountants (CPA), and Tax Accountants can make the decision-making process more manageable.

By considering their unique qualifications and areas of expertise, you can select the accounting professional who best aligns with your business needs. Whether it's managing your financials, devising tax strategies, or obtaining valuable financial advice, the right accounting professional will play a crucial role in the success and growth of your small business.

Our team at Wrights CA include a mix of Certified Practicing Accountants and Chartered Accountants. If you’d like to benefit from our wide range of financial services, such as strategic planning, financial advice, assistance in decision making auditing and financial reporting, please contact one of our team at admin@wrightsca.com.au .

Six Key Responsibilities of an Audit Committee

Thu, 03 Aug 2023 03:17:02 GMT

A robust governance structure is essential for fostering transparency, accountability, and the long-term success of not-for-profit organisations. At the core of this structure lies the indispensable role of an audit committee. As independent directors, you play a vital part in ensuring the efficacy of these committees and their impact on organisational integrity.

Below we explore the six key roles of an audit committee and how these responsibilities contribute to safeguarding financial well-being, preventing fraud, and upholding ethical standards within your not-for-profit organisation.

1. Financial Statement Review

One of the primary responsibilities of an audit committee is to review the organisation's financial statements thoroughly. This review process goes beyond merely examining numbers; it involves ensuring the accuracy and completeness of financial data while also verifying compliance with relevant accounting standards. By meticulously overseeing financial statements, the audit committee provides crucial insights that contribute to the organisation's financial transparency and credibility.

2. Independent Auditors Engagement

Selecting an independent auditor is a critical task for the audit committee. An independent auditor brings objectivity and impartiality to the annual audit process. The audit committee's responsibility here is to engage a reputable and qualified auditor who possesses the necessary expertise to perform an unbiased assessment of the organisation's financial statements. The independent audit instils confidence in stakeholders, donors, and the public, as it ensures an unbiased and accurate evaluation of the organisation's financial health.

3. Internal Controls Assessment

Effectiveness in internal controls is vital for safeguarding the organisation's assets and preventing potential fraud. The audit committee plays a crucial role in assessing the strength of these internal controls. By conducting regular assessments, the committee identifies weaknesses or vulnerabilities in the system and makes recommendations for improvement. Strengthening internal controls bolsters the organisation's ability to protect its resources and maintain financial integrity.

4. Risk Management

Every not-for-profit organisation faces various risks in its operations. The audit committee takes on the responsibility of identifying and evaluating these risks. This process involves a comprehensive risk assessment to understand potential challenges that may impact the organisation's mission. By identifying these risks, the committee can develop effective risk mitigation strategies and monitor their implementation. This proactive approach ensures the organisation is better prepared to navigate uncertainties and safeguard its long-term viability.

5. Compliance Oversight

Compliance with legal and regulatory requirements is crucial for maintaining the organisation's credibility and reputation. The audit committee provides oversight to ensure the organisation adheres to all applicable laws, regulations, and industry standards. Additionally, the committee ensures that the organisation's internal policies and procedures align with these requirements. A strong focus on compliance not only mitigates legal risks but also reinforces the organisation's commitment to ethical practices.

6. Whistleblower Protection

Establishing procedures to protect whistleblowers is a crucial function of the audit committee. Encouraging a culture of openness and accountability, the committee ensures that employees and stakeholders feel safe when reporting potential fraud or misconduct within the organisation. Whistleblower protection not only uncovers issues that require attention but also demonstrates the organisation's commitment to addressing concerns transparently and responsibly.

The establishment of an audit committee plays a crucial role in enhancing financial transparency, accountability, and long-term sustainability. By diligently reviewing financial statements, engaging independent auditors, assessing internal controls, managing risks, ensuring compliance, and protecting whistleblowers, the audit committee becomes an invaluable asset for your organisation's success.

If you would like more information about our internal and external audit services, please contact us on 02 6566 2200.

Important notice: This article provides information rather than financial advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. The body content of your post goes here. To edit this text, click on it and delete this default text and start typing your own or paste your own from a different source.

Navigating End-of-Financial-Year Obligations: A Guide for Australian Company Directors

Tue, 06 Jun 2023 07:04:59 GMT

As the end of the financial year approaches, Australian company directors are faced with important financial obligations that require their attention. Ensuring compliance with these obligations is not only a legal requirement but also crucial for maintaining the integrity and reputation of the company.

Below, we provide an overview of the key financial obligations that directors need to address at the end of the financial year.

1. Financial Statements: Directors must ensure the preparation of accurate and complete financial statements for the company. This includes the Profit and Loss Statement, Balance Sheet, and Cash Flow Statement. The financial statements should adhere to accounting standards, provide a true and fair view of the company's financial position, and be available for audit if required.

2. Audit and Review Requirements: Depending on the size and type of the organisation, directors may be required to engage an independent auditor or have the financial statements reviewed. Public companies, large proprietary companies, and certain other entities typically require an annual external audit. Smaller proprietary companies may have the option of conducting a review instead of a full audit.

3. Lodgement of Financial Statements: Directors are responsible for ensuring the timely lodgement of the company's financial statements with the Australian Securities and Investments Commission (ASIC). Public companies are generally required to lodge their financial statements within four months after the end of the financial year, while proprietary companies have six months to lodge. Extensions may be available in certain circumstances.

4. Tax Compliance: Directors must ensure the company's compliance with various tax obligations. It is important to accurately report the company's taxable income, claim eligible deductions, and pay any outstanding tax liabilities. This includes lodging the company's income tax return with the Australian Taxation Office (ATO) by the specified due date.

5. Payroll Obligations: Directors must ensure compliance with payroll obligations, including payment of employee wages, PAYG withholding tax, and superannuation guarantee contributions. The company should provide employees with accurate payment summaries and lodge the annual payment summary report with the ATO.

6. Dividend Declarations: If the company declares dividends, directors need to comply with the requirements for dividend declarations and distributions. This includes ensuring that dividends are paid out of profits, maintaining proper records, and lodging necessary documentation with ASIC.

7. Compliance with Corporations Act: Directors must comply with various provisions of the Corporations Act 2001. This includes maintaining proper financial records, disclosing relevant information to shareholders, and acting in the best interests of the company.

8. Other Obligations: Depending on the nature of the company's activities, directors may have additional financial obligations. This can include compliance with industry-specific regulations, licensing requirements, and reporting obligations to regulatory bodies.

It is important for directors to seek professional advice from accountants or legal experts to ensure compliance with their specific financial obligations at the end of the financial year. Non-compliance can result in penalties, legal issues, and reputational damage for both the directors and the company.

Wrights Chartered Accountants Auditors utilise the latest technical software which benefits our clients as it allows us to deliver a cost-effective, risk-based, paperless audit and ensuring that our team have the latest and most up to date knowledge of the International Accounting Standards, Australian Accounting Standards, and the Australian Auditing Standards.

If you would like more information about our internal and external audit services, please contact us on 02 6566 2200.

Key Tax and Superannuation Lodgement Dates For Small Business

Tue, 06 Jun 2023 02:29:36 GMT

The start of a new financial year is the perfect opportunity to get your ducks in a row to ensure that you are organised to meet your compliance obligations for the year ahead.

Taking proactive steps to ensure compliance with tax and superannuation lodgement dates can save you from potential costly penalties. By simply setting up reminders for these important dates in your diary or calendar now, you can avoid the last-minute rush or, even worse, missing the deadlines altogether.

Below is a general overview of important lodgement dates that Australian small business owners should be aware of. However, it's important to note that specific lodgement requirements may vary based on individual circumstances, so consulting with a professional accountant or the Australian Taxation Office (ATO) is always recommended for accurate and up-to-date information.

Monthly Business Activity Statement (BAS) Lodgement

If you lodge your BAS monthly, the due date is generally the 21st day of the month after the taxable period. For example, August monthly BAS will be due on 21 September.

We note that in the last few months the ATO has changed some of our clients to monthly lodgement for PAYGW. This due date will apply to these businesses.

Quarterly Business Activity Statement (BAS) Lodgement

If you lodge your BAS quarterly, the due dates are generally:

28 October (for the July-September quarter) – or 25 November if Wrights lodges your BAS

28 February (for the October-December quarter)

28 April (for the January-March quarter) – or 24 May if Wrights lodges your BAS

28 July (for the April-June quarter) – 25 August if Wrights lodges your BAS

Annual Income Tax Return Lodgement

The due date for lodging your annual income tax return is typically 31 October . However, if you use Wrights as your registered tax agent, you may have an extended due date. This date is typically 15 May the following year.

Fringe Benefits Tax (FBT) Return Lodgement

The FBT year runs from 1 April to 31 March so the due date for lodging your FBT return is generally 21 May each year.

Superannuation Guarantee (SG) Contributions

28 October (for the July-September quarter)

28 February (for the October-December quarter)

28 April (for the January-March quarter)

28 July (for the April-June quarter)

You can also make payments more frequently than quarterly, for example fortnightly or monthly. If you do, ensure you pay your total super guarantee (SG) contribution for the quarter by the due date.

Pay As You Go (PAYG) Withholding

PAYG withholding tax must be reported and paid to the ATO by the due date, which depends on your reporting frequency. For most small businesses, this is monthly or quarterly. If it is quarterly, the dates are the same as your quarterly SG contributions – i.e. the 28 ^th day of the month following the FY quarter.

Single Touch Payroll (STP) Reporting

STP reporting is generally done each time you run payroll. The information is sent to the ATO either on or before each payday.

Business Activity Statement (BAS) Annual Reconciliation

The BAS annual reconciliation should be completed and lodged by 28 July each year.

Please note that these dates are general guidelines, and certain circumstances or exemptions might affect the deadlines for your business. It is crucial to stay informed and consult with a professional accountant or the ATO to ensure compliance with your specific obligations.

If you have any concerns or questions about your tax obligations, it's always best to seek advice from a qualified professional. If you’d also like to benefit from our tax planning advice, please contact one of our team at admin@wrightsca.com.au .

Year-End Finalisation with STP – What You Need To Know

Tue, 06 Jun 2023 02:12:11 GMT

As the end of the financial year draws near, now is the perfect opportunity to organise your payroll processes in preparation for 30 June. Similar to previous years, employers are once again required to complete the finalisation of their annual payroll using the Single Touch Payroll (STP) system.

Below we have include the seven key details that you need to know about your STP finalisation.

Important Dates for STP Finalisation Events

Depending on your specific circumstances, the deadline for completing your STP finalisation may vary. Here are the key dates to keep in mind:

Employers with no closely held employees

· End-of-year STP finalisation due date: 14 July 2023

Employers with a combination of closely held and arm's length employees, having a total of 20 or more employees

· End-of-year STP finalisation due date for closely held employees: 30 September 2023

· End-of-year STP finalisation due date for all other employees: 14 July 2023

Small employers (19 or fewer employees) exclusively with closely held payees

· End-of-year STP finalisation due date: It will align with the payee's income tax return due date.

Making a Finalisation Declaration

To ensure your employees can access their information and complete their income tax returns accurately, be sure to finalisation your declaration by 14 July. Timely finalisation enables your employees to lodge their tax returns promptly, avoiding any unnecessary delays. Before making your finalisation declaration, double-check that your Single Touch Payroll (STP) information is accurate. If, for any reason, you cannot meet the deadline, you must apply for a deferral.

Benefits of Early Finalisation

If your data is ready before the deadline, you have the option to finalise it earlier. By doing so, you allow your employees to access their income information sooner, speeding up the process of lodging their tax returns.

Exemption from Providing Payment Summaries

Once you have reported and finalised your employees' information through STP, you are exempt from providing payment summaries to your employees and lodging a payment summary annual report. However, for payments not reported through STP, you still need to provide payment summaries to your employees and submit a payment summary annual report to the Australian Taxation Office (ATO).

Making Amendments

If you discover the need to make amendments after submitting a finalisation declaration, it is crucial to do so promptly. Amendments to finalised STP data can be made through your accounting software. It is advisable to inform your employees about any adjustments that will impact their income statements. If they have already lodged their tax returns, they may need to file an amendment.

Informing Your Employees

Communication with your employees is key to ensuring they understand the changes and processes involved. The ATO recommends providing the following information to your employees:

1. Employers are no longer required to provide payment summaries for information reported and finalised through STP.

2. Employees can access their year-to-date and end-of-year income statements online via myGov or consult their registered tax agent.

3. The term "income statement" replaces "payment summary."

4. Advise employees to wait until their income statement is marked as "Tax ready" before lodging their tax returns.

5. Encourage employees to review and update their personal details both with you and the ATO, as incorrect information may hinder their access to STP data.

6. If they don't have a myGov account, guide them through the process of setting one up.

What Your Employees Will See

Through the STP system, your employees can view their payment information at any time via the myGov online services. On 1 July, the status of their information will change from "year-to-date" to "not tax ready," indicating that the data is pending finalisation. Once you make the finalisation declaration, the status will change to "tax ready," allowing employees to proceed with lodging their tax returns.

Upcoming Changes to PAYG Withholding: What You Need to Know

Tue, 09 May 2023 03:33:57 GMT

Recently, the ATO announced a change that will take effect from July 2023. It involves using salary and wage data from Single Touch Payroll (STP) lodgements to pre-fill the employer's PAYG withholding amounts in their activity statements.

What is Changing?

Starting from July 2023, the ATO will use salary and wage data from Single Touch Payroll (STP) lodgements to pre-fill an employer's PAYG withholding amounts in their activity statements. The pre-filled data will be available for:

Label W1: Total salary, wages, and other payments and

Label W2: Amount withheld from payments shown at W1

However, employers must still check the data and make any necessary adjustments.

Recommendations:

To comply with this new requirement, we recommend that you take the following actions:

When lodging your BAS, don't just accept the ATO pre-filled amounts. They need to be checked against wages reports.

Check to see if your wages accounting software is up to date to reflect this change. If you are using online versions of MYOB and Xero, these software providers are aware of this change and will update the software.

Make sure that wages and STP are being processed on time.

This will ultimately lead to PAYGW being paid to the ATO whenever wages are processed, rather than each quarter on the BAS; however, we have no timeframe for this expected change.

The ATO's new requirement to use salary and wage data from STP lodgements to pre-fill an employer's PAYG withholding amounts in their activity statements is a significant change you should prepare for. By following our recommendations, you can ensure that you comply with this new requirement and avoid any issues with the ATO.

If you require further assistance or have any questions, please contact one of our team at admin@wrightsca.com.au .

ATO's FY23 Target List: Are You Ready?

Tue, 09 May 2023 03:29:55 GMT

Every tax year, the Australian Tax Office (ATO) focuses on specific areas where taxpayers tend to make errors, either intentionally or unintentionally. This year, the ATO will be focusing on two primary areas: work-related expenses and claims made by investment property owners.

Work-related Expenses

In terms of work-related expenses, the ATO will be looking closely at;

deductions for working from home
mobile phone and internet costs
claims for work-related clothing, e.g. dry cleaning, and laundry expenses
overtime meal claims,
union fees and subscriptions,
motor vehicle claims, and
incorrectly claiming deductions.

Property-related Deductions

Property-related deductions that the ATO will focus on include;

excessive interest expense claims,
Incorrectly dividing rental income and expenses between owners.
Holiday homes that are not legitimately available for rent.
incorrect claims for newly purchased rental properties.

To maintain accurate records, property owners should retain documents such as invoices, receipts, and bank statements for all property-related expenses. Additionally, they should provide evidence that their property was genuinely available for rent, such as rental listings.

The ATO will also be keeping a close eye on those who invest in cryptocurrencies such as Bitcoin and the sharing economy (such as ride-sourcing and renting a room out via platforms such as Airbnb). It is essential to ensure that you have the necessary proof of your expenses and that you are aware of what you can and cannot claim.

By being proactive and ensuring you have the necessary proof of your expenses and claims, you can avoid any potential issues with the ATO. If you have any concerns or questions about your tax obligations, it's always best to seek advice from a qualified professional.

If you’d also like to benefit from our tax planning advice, please contact one of our team at admin@wrightsca.com.au .

Which Tax Structure is Best For Your Business?

Mon, 24 Apr 2023 04:33:27 GMT

As an Australian business owner, one of the most critical aspects of managing your business is understanding the various tax structures that apply to your business. If you understand the different structures that apply to your business, you can ensure that you comply with all relevant laws and regulations. You will also be in a position to make informed decisions about the most cost-effective way to structure your business and how to shield your assets from liability.

Below we take a closer look at the different structures for Australian businesses, including sole traders, partnerships, companies, and trusts.

Sole Trader Tax Structure

If you're running your business as a sole trader, you'll be taxed as an individual and required to complete an individual tax return. As a sole trader, you'll be responsible for paying income tax on all your business profits. You'll also pay the Medicare levy and other relevant taxes.

One of the advantages of running your business as a sole trader is that you'll have complete control over your business, and you won't be required to share your profits with anyone else. However, one of the main disadvantages of this structure is that you'll be personally liable for any debts that your business incurs.

Partnership Tax Structure

If you're running your business in partnership with one or more individuals, you'll be taxed as a partnership. A partnership is not a separate legal entity, which means that the profits and losses of the partnership are divided amongst the partners according to the partnership agreement.

As a partner in a partnership, you'll be required to pay tax on your share of the partnership profits. You'll also be required to complete a partnership tax return and provide each partner with a copy of their share of the partnership's profits.

While running your business as a partnership allows you to share the workload and expenses of the business with your partners, a potential disadvantage in this structure is that you'll be personally liable for any debts that your partnership incurs.

Company Tax Structure

If you're running your business as a company, your company will be taxed as a separate legal entity. This means that your company will be required to complete its own tax return and pay tax on its profits.

As a shareholder in the company, you'll be taxed on any dividends you receive from the company. However, you won't be taxed on any profits that the company retains.

A significant advantage of running your business as a company is that you'll have limited liability, which means that your personal assets will be protected in the event that your company incurs any debts. The downside of this structure is that it can be more complicated and expensive to set up and run.

Trust Tax Structure

A trust is a legal arrangement where a trustee holds property or assets for the benefit of the beneficiaries. If you're running your business as a trust, your business will be taxed as a separate legal entity.

As a beneficiary of the trust, you'll be taxed on any income you receive from the trust. The trustee will be required to complete a trust tax return and pay tax on any income the trust earns.

An advantage of running your business as a trust is that it can provide flexibility in how you distribute your profits to your beneficiaries. However, like the company structure, a trust can be more complicated to set up and run.

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Each structure listed above has its advantages and disadvantages, and it's essential to understand the tax and asset protection implications of each structure before deciding which one is right for your business. If you're unsure which structure is best, our team would be happy to provide you with further advice.

If you’d also like to benefit from our advice for growth, please contact one of our team at admin@wrightsca.com.au .

Why Tax Losses Are Not A Good Thing

Tue, 14 Mar 2023 00:11:40 GMT

Tax losses occur when a business’s expenses exceed its revenue for a given period, resulting in a negative net income. While tax losses may seem like a relief for businesses at the end of a financial year, they are not a good thing in the long run. To build a sustainable business you need to be financially stable, with sound financial management practices and sufficient access to capital to support your growth and development.

Below we outline six reasons why tax losses are definitely not a good thing for your business.

1. Tax losses indicate that a business is not profitable.

If your business consistently reports tax losses, it will not be able to attract investors or lenders, as they will not be interested in investing in a business that is not generating profits. An inability to attract investors or lenders may result in reduced access to capital, which can limit your business’s ability to grow or even continue operating.

2. Tax losses limit a business’s ability to pay dividends.

Dividends are payments made to shareholders as a return on their investment in the business. When a business reports tax losses, it does not have any profits to distribute to shareholders as dividends.

3. A lack of profit hinders your opportunity to accumulate assets.

When a business incurs tax losses, it means that they are not generating enough income to offset their expenses for tax purposes. This can result in reduced cash flow as the business will need to pay out of pocket for expenses that would otherwise be offset by income. This reduced cash flow may limit your business's ability to invest in assets.

4. Rising interest rates will affect your debt ratio.

When interest rates rise, the cost of borrowing money also increases. If your business has outstanding debt, you will have to pay more in interest expenses, which can increase your debt ratios. Higher debt ratios can increase your vulnerability to further interest rate hikes or market changes and further reduce your creditworthiness.

5. Tax losses can result in increased scrutiny from the Australian Tax Office.

If a business consistently reports tax losses, it may be seen as engaging in tax avoidance or evasion, which can result in penalties and even legal action. This can damage your business’s reputation and lead to a loss of customers and revenue.

6. Tax losses result in either higher debt or reduced capital.

By their nature, tax losses result from more money leaving the business than is coming in. This needs to be funded. This funding either comes from increased debt or by owners putting their own funds into the business to keep it operating.

While tax losses may seem like a relief for businesses, they are not a good thing in the long run. Tax losses indicate that a business is not profitable, limit a business’s ability to pay dividends and accumulate assets, can result in increased scrutiny from the ATO, and can result in higher debt levels. Therefore, it is important for businesses to focus on generating profits and minimising losses to ensure long-term success.

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Our team love helping our clients to review and forecast their numbers each month or quarter to ensure they are informed about their financial status. If you’d also like to benefit from our advice for growth, please contact one of our team at admin@wrightsca.com.au .

The Devil is in the Detail – How Boards Can Ensure Audit Best Practice

Tue, 28 Feb 2023 06:34:55 GMT

Selecting an auditor is a critical decision for any organisation, and it requires careful consideration. An auditor is responsible for reviewing and providing an independent opinion on an organisation's financial records, compliance with regulations, and internal controls.

To ensure the auditor's expertise and suitability, Dan Wade , Director, and Registered Company Auditor at Wrights Chartered Accountants recommends that organisations take specific steps, to both select the ideal auditor for your organisation, as well as best practices for getting the most out of your auditor.

How to select the ideal auditor for your organisation

While the decision of who to select as your auditor is an important one, it does not have to be a complex one.

Here are the some of the key steps that Dan recommends an organisation can take to select an auditor:

1. Identify the needs and scope of the audit.

Before selecting an auditor, identify the specific needs and scope of the audit for your organisation. This includes determining the type of audit required (financial, operational, compliance, etc.), the time period to be audited, the industry knowledge required.

2. Develop a list of potential auditors.

Once the scope of the audit is identified, you can develop a list of potential auditors. This can be done by asking for recommendations from other organisations or industry associations, conducting online research, searching ASIC, or contacting accounting or auditing firms directly.

3. Evaluate the qualifications and experience of potential auditors.

It's important to evaluate the qualifications and experience of potential auditors to ensure they have the necessary expertise to conduct the audit. This may include reviewing their credentials, industry experience, and previous audit work.

4. Request proposals

After identifying potential auditors and evaluating their qualifications, the organisation should request proposals from a shortlist of candidates. The proposal should include details such as the scope of work, the fees, the timeline, and the auditor's approach to the audit. It’s a good idea to also request to speak to referees at this point.

5. Conduct interviews.

When conducting your interviews with the potential auditors, be sure to ask more detailed questions about their approach to the audit and to get a sense of their communication style and fit with your organisation. Also, make sure that they have the capability to take on your audit and that they won’t be stretched for resources around key times of year.

6. Make a selection and formalise engagement.

After completing the evaluation process, you can select an auditor based on the criteria that are most important to your organisation and formalise the engagement by signing an engagement letter that outlines the scope of work, the fees, and the terms and conditions of the engagement.

How to get the most out of your auditor

An auditor is employed on behalf of the entity, not on behalf of management and for this reason the Board of Directors of any organisation have an obligation to obtain reasonable assurance that the financial report of the organisation is free of material misstatement.

This means that at a minimum, the board should meet with auditor for signing off the accounts. Ideally the board will have already come together to have discussed the findings of the audit report and financial performance prior to singing off the accounts.

If you are meeting with your auditor annually to sign off the accounts, be sure to ask questions about anything that is not clear to you. As a director, it is your duty to focus on the need for audit quality due to the nature of your direct accountability and fiduciary responsibilities to the company.

If your organisation is large enough to warrant interim audits, we recommend that your auditor present the findings of these interim audits at a regular board meeting for discussion.

Selecting an auditor is a significant decision that can impact an organisation's financial stability and reputation. By taking the steps outlined above, organisations can ensure that they choose the right auditor for their needs.

Additionally, it's important to get the most out of your auditor by meeting with them regularly and asking questions, especially during the signing off of the accounts. By following these best practices, you can have confidence in your auditor and ensure the integrity of your financial reporting.

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Wrights Chartered Accountants Auditors utilise the latest technical software which benefits our clients as it allows us to deliver a cost-effective, risk-based, paperless audit and ensuring that our team have the latest and most up to date knowledge of the International Accounting Standards, Australian Accounting Standards, and the Australian Auditing Standards.

If you would like more information about our internal and external audit services, please contact us on 02 6566 2200.

How to avoid Director Penalty Notices

Tue, 17 Jan 2023 23:03:19 GMT

One of the responsibilities of being a Director of a company is that your organisation meets its corporate governance obligations such as paying the correct amount of tax (namely GST and Pay As You Go (PAYG) withholding) and Superannuation Guarantee Contributions (SCGs) on time.

If you fail to meet your obligations, then the ATO could issue you a Director Penalty Notice and hold you personally liable for the unpaid amount.

There are two types of Director Penalty Notices. The first acts as a warning and allows the Director 21 days (from the date the notice is posted) to either pay the debt, or at worst, take steps to wind up the company in order to avoid liability. Alternatively, a Director may also make an arrangement for a payment plan with the ATO. It is important to note that this payment plan will no longer avoid personal liability for the debt, however the ATO are unlikely to pursue you if the payment plan is being complied with.

The second type of Director Penalty Notice is not as forgiving and is called a Lockdown Penalty Notice. A Director may be issued with a lockdown penalty notice if they have unpaid SGC or PAYG amounts and fail to lodge their company returns within three months. This notice is effective as soon as it is served to the Director and the Director must pay the debt in full. The debt cannot be avoided by placing the company into liquidation or voluntary administration.

Any current Director of a company can receive a Director Penalty Notice. In addition, a Director that has resigned may also receive a notice if they are deemed liable for unpaid PAYG or SGC amounts before they resigned.

During COVID, the ATO put a hold on chasing most overdue tax to cut businesses some slack during this challenging period. However, this gratuity is well and truly over now and the ATO is now once again issuing Director Penalty Notices.

How you can avoid a Director Penalty Notice

Use technology and automations to set up payment plans.

Prepare financial forecasts to understand how much PAYG, GST and SG’s you will owe each quarter. Set up a separate bank specifically for tax and superannuation savings and transfer the correct percentage of funds to cover your obligations each week. By collecting these funds (and not touching them for anything other than Tax and Super), you’ll easily have enough money to meet your tax and super obligations each quarter.

Ensure the companies BAS is lodged and paid on time.

Ensure that all of your bookkeeping is up to date and reconciled in time for each quarter end (31 March, 30 June, 30 September and 31 December).

Ensure SGC’s are paid by the 28 of January, April, July and October.

If you are using an accounting software such as Xero, it’s a very easy process to calculate the amount of SG owed and submit the payment. Be sure though to allow for at least ten days for the superannuation house to clear the funds.

If you are an incoming Director, do your due diligence.

Incoming Directors are urged to perform their due diligence on companies before joining to ensure that they are not issued with. Directors Penalty Notice. If an incoming Director has been in office for more than 30 days, they can also be issued.

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Wrights Chartered Accountants Auditors utilise the latest technical software which benefits our clients as it allows us to deliver a cost-effective, risk-based, paperless audit and ensuring that our team have the latest and most up to date knowledge of the International Accounting Standards, Australian Accounting Standards and the Australian Auditing Standards.

If you would like more information about our internal and external audit services, please contact us on 02 6566 2200.

Financial Review - How are you tracking in FY 22/23?

Wed, 07 Dec 2022 05:08:54 GMT

December is often a busy time for many businesses as they prepare to either wind up the calendar year and take some time off over Summer and enjoy the festivities or, get ready to tackle their busiest time of year.

Either way, one activity that should not be overlooked this month is reviewing your financial year to date progress.

The 31 ^st of December marks the six month point of the financial year and this is the perfect time to evaluate how you are tracking with your business goals.

When it comes to reviewing your financial goals, there’s more to review than just sales. If you want to gain a comprehensive understanding at how you are tracking against your budget, we also recommend reviewing your major expense lines and then your overall profit.

If you have not prepared a budget for the financial year, then here are three high-level metrics to review:

Sales – year on year

When assessing your sales, compare them to the previous year. Are they higher or lower? If your sales are higher, then what percentage are they higher? To do this, divide this year’s sales by last year’s sales.

If you can, provide some commentary around why you think sales may be different to last year. Have you increased / decreased your marketing? Are there economic factors at play that might affect your sales? Understanding why there is a variance can help you make decisions for next year’s planning.

Major expense categories

How do your major expense categories like wages and materials/COGS compare to last year? Are they higher or lower? Once again, divide this year’s result by last year’s results to calculate your percentage increase or decrease. Then review if this variance in line with the increase or decrease in sales.

Profitability

Once you have compared the sales and expenses and their variances, you can calculate the difference in profit.

The review points can be illustrated in the example below:

In the example above, if you just compared sales this year versus sales last year, then it appears that this business has had a very good six months as it is up 14.5% on last year.

However, when you drill down, costs have actually risen faster than sales and this has resulted in a lower profit than last year.

In a high inflation environment, it is vital to regularly review all factors of your business, not just sales. It might feel like you are working harder and perceive that you are achieving more, however, it could be the case that you are actually working harder for less.

What You Need to Know About 2023 Fringe Benefits Tax

Mon, 14 Nov 2022 21:30:34 GMT

On 31 March each year, the Fringe Benefits Tax (FBT) year ends. While this seems like a long way away at the moment, it is worth considering how FBT impacts you now.

With the ever-increasing budget deficits, the ATO will be reviewing whether all employers who should be paying FBT are paying it, and that they are paying the right amount. The ATO has recently announced that the ‘FBT gap’ is over

$1 billion and will be deploying resources for FBT compliance to close this gap.

To help you meet your FBT obligations, we’ve put together a list of essentials every employer needs to know about FBT and review every year, such as:

Should I be registered for FBT?
Should I lodge a FBT Return even if no FBT is payable?
Key things you MUST do on 31 March 2023
What is exempt from FBT?
How can I reduce my FBT liability?

These questions are all answered for you below. We also have a number of specially prepared FBT Factsheets that you can request from us to help you better understand your FBT obligations as a business owner.

1. SHOULD YOU BE REGISTERED FOR FBT?

Generally, if you have employees (including Directors) and you provide them with cars, car parking, entertainment (food and drink), employee discounts, loans, or reimburse private expenses, then you are likely to be providing a fringe benefit and we will need to register your business for FBT.

2. SHOULD YOU LODGE AN FBT RETURN EVEN IF NO FBT IS PAYABLE?

Where no FBT is payable there is legally no need to lodge an FBT return, but should you lodge one anyway?

Our strong recommendation to you is yes, you should lodge an FBT Return if you provide benefits to employees, even if no FBT is payable.

This restricts the ATO’s audit window to only 3 years from the date of lodgement. Otherwise, the ATO is entitled to go back an unlimited number of years and audit your business and possibly find areas where they will charge you FBT and penalties.

We have compiled an FBT Factsheet that outlines some of the simple points that the ATO will review if you are selected for audit – How the ATO identifies potential audits. We have also prepared an FBT Factsheet that outlines why an FBT return is a good idea even where no FBT is payable – Why should you lodge a return.

3. KEY THINGS YOU MUST DO TO PREPARE FOR YOUR FBT RETURN

Whilst we strongly recommend that you register for FBT and if applicable lodge a Nil FBT Return, if you decide not to there is still key information that we need you to record as at 31 March. We will then rely on this when we complete your annual Financial Statements. Here’s a summary of what you need to do:

During the year, ensure that all logbooks for all company vehicles are up-to-date and completed per ATO requirements. On 31 March, when the employees have finished their travel for the day request your team each take a photo of their vehicle odometer readings using their phones and email it the photo to you, or to a nominated person in your business to collate them all for you. Having these vehicle odometer readings for all business vehicles is vital to us being able if your FBT can be reduced by using the ‘operating cost’ method instead of the ‘statutory formula’ method.
Carefully manage the private use of business cars, including the travel between home and work. The ATO is conducting a data matching program aimed at motor vehicles to capture benefits that aren't currently being reported through FBT. If significant variances are identified a full ATO audit may follow.
During the year, keep a logbook of all meal entertainment expenses provided to employees, associates and clients and prepare a register that outlines the following for every event:

The total cost (GST inclusive)
How many employees were present and their names
How many employees’ associates were present and their names
How many clients were present (names not needed)
The nature of the event (dinner, lunch, coffee, drinks, etc.)

4. WHAT ITEMS ARE EXEMPT FROM FBT?

The following items are unlikely to be subject to FBT: mobile phones, laptops, tablets, portable printers, protective clothing, tools of trade etc, or minor and infrequent benefits that are less than $300 in value.

To find out if you are eligible for the minor and infrequent benefit exemption – please ask us to send you our Applying the Minor & Infrequent Benefits Exemptions factsheet.

5. WAYS YOU CAN REDUCE YOUR FBT LIABILITY

Here are some ways in which you can reduce your FBT liability:

replace your fringe benefits with cash salary;
provide benefits that your employees would be entitled to claim as an income tax deduction if they had to pay for the benefits themselves;
look at providing benefits that are exempt from FBT; and
use employee contributions, for example, an employee paying for some of the operating costs of car fringe benefit such as fuel that you don't reimburse them for. You need to be aware that employee contributions will be deemed assessable income to you and subject to GST.

ASSOCIATE LEASES

If you would like further information on associate leases and whether they would be beneficial to your family to reduce your overall family level of tax, please contact us and we can help you.

FBT FACTSHEETS

Please let us know if you would like us to send you any or all of the following FBT Factsheets:

· What is a Car Fringe Benefit?

· Employee Business Cars – Tips & Traps

· Entertaining, Meals & FBT – Tips & Traps

· Using an Associate Lease to boost family income

· Minor and Infrequent Benefits

· How the ATO identifies potential audits

· Why you should lodge a FBT Return

· Workhorse Vehicles and new Safe Harbour provisions

Our team are looking forward to helping our clients meet their FBT obligations. If you’d like any further advice for growth, please contact one of our team at admin@wrightsca.com.au .

So, you want to be a Company Director?

Sun, 09 Oct 2022 21:30:40 GMT

Three things to consider before accepting the role as a Board Director

Becoming a Board Director can be an extremely fulfilling role. A board appointment can provide you with the opportunity to enhance your personal skills in governance, decision making and strategic planning. If you join a not-for-profit board as a volunteer this can present the perfect opportunity to give back to your community.

However, what a lot of first-time board directors are unaware of is that even as a volunteer board director, you hold the same level of legal responsibility as a paid director serving on an ASX listed company board.

This is because a board of directors collectively has ultimate responsibility for the success of an organisation.

As Director and Registered Company Auditor at Wrights CA, Dan Wade works with many for-profit and not-for-profit organisations all over the Mid North Coast performing internal and external audits.

As a result, Dan has been exposed to many of the scenarios that Directors can face as a board, and warns that a board director role is not for the faint hearted.

If you are thinking of becoming a director, here are three considerations that Dan strongly suggests thinking about before accepting that appointment.

1. Understand your role and responsibility as a Board Director, including your legal duties

A board has significant power within an organisation as they are making strategic decisions that will affect financial and cultural outcomes. Because of this, each Director has a legal obligation to act in the best interest of the organisation. This relationship is described as fiduciary and can be likened to that of a trustee of someone else’s money. When standards set by legal duties are not met, penalties can apply for individual directors.

One important legal responsibility for a director is to act with reasonable skill, care and diligence. This means ensuring that you have enough time to attend each board meeting, the capacity to read the board papers in preparation for each board meeting and having the required financial literacy to be able to ensure that the organisation remains a going concern.

2. Perform due diligence on the organisation’s financials

One of the most important roles as a director is to ensure that the organisation has adequate cashflow and financial resources to ensure their financial stability.

To ensure that directors are acting with the required level of skill, care and diligence for this, it is necessary for them to regularly review financial reports and analyse trends and outlooks.

The Australian Tax Office states that “under certain circumstances, directors may be liable for debts incurred by the company when the company is unable to pay those debts, as and when they fall due (the company is insolvent).”

To ensure that you are joining an organisation that is not on the brink of insolvency, you can request to review their past five years of financial reports before making a decision to join as a director.

3. Perform due diligence on the Chair, other board directors and the CEO

Achieving board effectiveness will largely come down to having an effective Chairperson. The overarching role of a chairperson is to provide leadership. An effective Chair will preferably have excellent governance skills, be experienced as a director, and be an effective facilitator of group discussion.

A good chairperson will ensure effective board composition and director development.

They will lead each board meeting in an orderly and efficient manner and have a good working relationship with the CEO.

Without the strong leadership of an effective chair and the governance and compliance of fellow board members and the CEO, an organisation is at risk of reputational damage, creating internal confusion or not being able to achieve its strategic objectives.

By ensuring that you perform an appropriate level of due diligence before accepting an appointment to a paid or volunteer board, you will increase your chances of being able to make a positive difference to an organisation and mitigate the risk of personal liability.

If you would like more information about our internal and external audit services, please contact us on 02 6566 2200.

STP Phase Two – What do you need to know

Tue, 27 Sep 2022 22:13:34 GMT

Under Single touch Payroll Phase Two, the Australian Government will require all employers to report additional information such as income or payment type through STP on or before each payday.

The main changes set out in STP Phase two are as follows:

1. Employee tax information will be incorporated via STP reporting, thus eliminating the need for employees to submit tax file declarations to the ATO as a separate process.

2. The requirement to divulge specific information concerning payments made to employees that might incur specific tax consequences.

3. Specifying a reason that an employee leaves your organisation will now be mandatory.

4. Paid leave won't be included as part of gross earnings when reporting earnings via STP

5. You’ll need to report all allowances separately (as opposed to some being reported as gross) in your Phase Two STP report.

6. Directors’ fees must be reported separately in your STP Phase 2 report.

7. Lump sum return to work payments need to be individually identified.

8. Your STP Phase 2 report includes a six-character tax code for each employee. This code tells the tax office about payments that can be withheld from employees.

9. Bonuses and commissions will now be reported separately as opposed to with gross payments.

10. Lump Sum E (back pay) payments need to be reported in the year that they originated in before finalising an employee’s records.

What you need to do:

Ensure your existing employee profiles are STP compliant.

If you are using Xero or MYOB, click on the relevant link below for instructions on how to set your employees up for STP Phase 2 reporting.

Xero – watch here

MYOB – click here

If you would like more information about how ensure that your business is compliant with STP Phase Two, please contact us on 02 6566 2200.

How will the new super rules affect your short- and long-term financial plans?

Tue, 30 Aug 2022 22:28:50 GMT

The new super rules that took effect on July 1, 2022 present an opportunity to review your financial plans and assess how these rules may affect you both in the short- and the long-term. This consideration may help to alleviate any unwelcome surprises down the track.

For example, many of our clients have been surprised to learn that superannuation left to adult children on their passing could attract a 17% tax rate.

Here are just a few of the superannuation rules that may require your attention.

The increase in age limit for voluntary super contributions

From 1 July 2022, anyone aged 67 to 74 who wishes to make a non-concessional, voluntary super contribution is no longer required to meet the work test (or work test exemption) to be eligible to make the contribution.

There is one exception for people wishing to make a personal contribution into their super account and then claiming a tax deduction for the contribution. This type of personal concessional contribution still requires the contributor to meet the work test.

The new work test specifies that you must have worked at least 40 hours over 30 consecutive days in the financial year. This work test can be met any time in the financial year the contribution was made.

This presents a potential planning opportunity if you are looking to leave your funds accumulated in superannuation to your adult children upon your passing.

We recommend that you contact your superannuation fund to enquire about how this tax would affect you in the scenario that you do pass and leave your superannuation to your adult children.

The increase in age limit for salary-sacrifice contributions

From 1 July 2022, the age limit for making salary-sacrifice contributions into super without needing to meet the work test has been increased from age 68 to 74. This means eligible salary-sacrifice arrangements into super are available to anyone aged under 75 without the need to meet a work test.

The increase in Super Guarantee percentage

The percentage rate for the Super Guarantee (SG) increases from 10% to 10.5% from 1 July, 2022. This rate will continue to rise 0.5% each year until it reaches its final rate of 12% on 1 July 2025.

We recommend reviewing your employment contracts and ensuring that your payroll settings and systems are in place to ensure that the SG rate is increased appropriately each financials year.

The removal of $450 monthly SG threshold

As of 1 July 2022, the $450 monthly minimum wage threshold to qualify for employer Super Guarantee contributions was abolished. This means that as an employer, you are now required to make super contributions for all your employees (including casual and part-time) regardless of how much they earn.

The only exceptions to this are employees aged under 18 and working less than 30 hours per week.

If you would like us to help review your short or long term financial goals in line with these super changes, please contact us on 02 6566 2200.

New Year, New You

Wed, 15 Jun 2022 10:11:11 GMT

Five tips to getting your finances in order for FY 22/23

The start of a new financial year is always a great time to review and refresh your business practices to optimise efficiency and effectiveness.

Here are five financial activities that you can review in your business to help you review and forecast and your small business financials in FY 22/23.

Update your chart of accounts

Your chart of accounts allows you accurately analyse your business by listing your income streams and expenses. The beginning of a new financial year is a great time to review your chart of accounts and add in any additional income streams or expenses that will allow you to analyse your business more accurately. Be careful not to add too many items in your chart of accounts otherwise you might face paralysis by analysis when it comes to your reporting.

2. Make sure your vehicle logbooks are up to date

If you have purchased a new car you will need to create a new logbook for this. Also, if your car is more than five years old, you will also need to create a new logbook.

3. Review your tax receipts

We often get asked how long businesses need to keep tax documentation. The documentation that the Australian Taxation Office requires you to keep are things such as bank statements, invoices sent to customers, invoices received from suppliers, payroll records and Business Activity Statement workings. While the Australian Tax Office requires you to keep copies of this documentation for five years, we recommend that you keep them for seven years. Just in case. The beginning of the new financial year presents a great opportunity to review all your kept receipts and discard any that are older than seven years.

4. Update your financial forecasts

Ideally you will have completed your financial forecasts for FY 22/23 in May 22. Ensure that your forecasts are added into your accounting software so that you can incorporate these into your monthly reporting and analyse your actuals with your forecasted numbers. Be sure that your annual forecasts have catered for commercial loan interest rate rises as well as hikes in staff wages.

5. Archive terminated employee records

Tidy up your payroll information by archiving any terminated employee records that are older than seven years. Once again, the Australian Tax Office recommends that you keep these records for five years. We recommend that you keep them for seven. Just in case.

By tidying up your financials and getting them in good working order, you will ensure that you can more accurately measure your impact and create realistic budgets and forecasts.

If you would like help preparing financial forecasts for your small business, please get in touch with one of the Wrights team at admin@wrightsca.com.au or 02 6566 2200

Expanding Single Touch Payroll Phase 2

Tue, 24 May 2022 09:09:59 GMT

What We Think You Should Know

The Australian Taxation Office (ATO) recently announced that they would be getting in touch with businesses with information about transitioning to Single Touch Payroll (STP) Phase 2 , where they have not already done so. They will exclude those who have started reporting or have an employer deferral.

To help you prepare for the transition, we have summarised some of the key things we think you should know, including:

What Single Touch Payroll Phase 2 is
When it comes into play
What the main changes are
What is not changing
What is next

What Single Touch Payroll Phase 2 is

Single Touch Payroll (STP) Phase 2 will reduce the reporting burden for employers who need to report information about their employees to multiple government agencies. It will also help Services Australia's customers, who may be your employees, get the right payment at the right time.

When STP Phase 2 starts

Phase 2 came into effect on 1 January 2022 for all organisations using Digital service providers (DSPs) software that was already enabled to offer Phase 2 reporting.

If your software was not enabled at this time, then your DSP should have filed for a deferral. Then, when your phase 2 enabled solution is ready, your DSP will let you know what you need to do.

Key changes

Most of the additional information you need to report should already be captured in your current payroll software.

The key changes to the STP report include:

What isn't changing

While you'll need to report additional information in your STP report, many things will stay the same, such as:

the way you lodge
the due date
the types of payments that are needed
tax and super obligations
end-of-year finalisation requirements.

What's next

There are some things you can do now to prepare, such as:

review the STP Phase 2 employer reporting guidelines
consider how some of the information you already report through STP is changing
find out what new information you'll need to report and consider where you capture and store some of this information now if it's not in your payroll system
review your business and payroll processes, and plan f or how and when you'll need to do this.

How we can help

If you have any questions or concerns about STP Phase 2 and the key changes, then please get in touch with our team, who would be happy to advise you.

Self-Managed Super Fund Changes

Tue, 03 May 2022 05:18:19 GMT

2021 - 2022 Financial Year Period

In the last 12 months, there have been some changes to the SMSF annual returns process, which we would like to inform you about and remind you about some SMSF obligations.

SMSF Changes

2021 - 2022 Financial Year Period: 1 July 2021 to 30 June 2022

· Directors of a corporate trustee of self-managed super funds. (SMSFs) must apply for their Director ID Number ( read more here )

· SMSF Audits need to be conducted by an approved SMSF auditor outside of Wrights.

· SMSF Auditors are placing more reliance on original documentation. Therefore, please ensure that these are kept on file to be easily accessed when required.

SMSF Trustee Obligations

As an SMSF Trustee, it is your responsibility to manage investments prudently and in the best financial interests of all the members. You must ensure the fund's investment strategy is reviewed regularly and takes into account the retirement goals of its members.

Please review your current investment strategy to see if it fits with the current investment in your fund.

If you need assistance with this documentation, please call our office.

Valuation

Asset valuation is a key component in preparing meaningful SMSF financial reports. It has an impact on the returns for members and, ultimately, SMSF sector performance as a whole. A valuation of assets is required to confirm your SMSF has complied with relevant super laws.

Assets must be valued at market value. In some circumstances, a qualified independent valuer may be required.

General Valuation Principles

You must be able to demonstrate that the valuation has been arrived at using a 'fair and reasonable' process. Generally, a valuation is considered fair and reasonable where it meets all the following.

· it takes into account all relevant factors and considerations likely to affect the

· value of the asset

· it has been undertaken in good faith

· it uses a rational and reasoned process

· it is capable of explanation to a third party.

In addition, some classes of assets must be valued and reported in a specific way.

Click here to download the ATO's Valuation Guidelines for Self-Managed Super Funds

We recommend that you obtain a current valuation for any property held by your SMSF now to comply with the 2021/2022 valuation obligations.

How We Can Help

At Wrights, we understand the complexities of Self-Managed Superannuation Fund administration. Our partners, Dan and Anthony, and our Accountants, Kelly, Nichole, and Matthew, are here to help you navigate the SMSF landscape.

2022-23 Federal Budget

hello@gemsocials.com.au (Gem Socials) — Thu, 31 Mar 2022 04:15:55 GMT

'Don't Rock The Boat Budget'

The 2022-23 Federal Budget is being dubbed the 'Don't Rock The Boat Budget'. As expected, it is a safe, ballot box-friendly budget with a focus on the cost of living, home ownership, and health.

Key Initiatives Include:

A 6 month, 50% reduction in fuel excise with effect from midnight Budget night
A $420 cost of living tax offset for low and middle income earners from 1 July 2022
A one-off $250 economic support payment to some social security payment recipients
For small business, a $120 tax deduction for every $100 spent on training employees and digital adoption

But, it is also a Budget that drives digitisation. Not just to support innovation but to streamline compliance, create transparency and more readily identify anomalies. Single touch payroll was the first step, the PAYG instalment system, trust compliance, and payments to contractors are next.

As always, we'll keep you up to date as the detail of these measures and the impact they will have on your business comes to hand.

Director ID Registration (DIN)

Mon, 08 Nov 2021 22:00:00 GMT

Director ID Registration

From 1 November 2021, Australian Company Directors are required by law to verify their identity with the Australian Business Registry Service (ABRS) and obtain a Director ID.

What is a Director ID?

A Director Identification number (Director ID) is a unique 15-digit identifier you will keep forever. It will help to prevent the use of false or fraudulent director identities.

Directors will only ever have one director ID. They'll keep it forever even if they:

Existing Directors need to apply for their Director ID by 31 October 2022.

Why you need a Director ID

Shareholders, employees, creditors, consumers, external administrators, and regulators are entitled to know the names and certain details of the directors of a company.

All directors are required by law to verify their identity with us before receiving a director ID. This is important because it will help to:

Illegal phoenix activity is when a company is liquidated, wound up, or abandoned to avoid paying its debts. A new company is then started to continue the same business activities without the debt. When this happens:

Apply for your Director ID

To apply for your Director ID, you will need to do the following:

Step 1: If you haven't already, register for a myGovID with a Standard or Strong identity strength.

We would recommend that you apply for myGovID by phone.

You can apply by phone if you have:

If you are in Australia, phone 13 62 50 between 8.00 am and 6.00 pm Monday to Friday.

Step 2: Gather the following documents to verify your identity:

Step 3: Complete your application:

Once you have a myGovID with a Standard or Strong identity strength and information to verify your identity, you can log in and apply for your Director ID. The application process should take less than 5 minutes through the myGovID app.

Get the myGovID app

How to Manage your Director ID

If you have a myGovID, you can log in to ABRS online to view your Director ID or update your details whenever you need to:

If you don't meet your obligations:
There may be civil or criminal penalties, and you may be issued with an infringement notice.

We hope this article has been of assistance to you.

Warm wishes,

The Wrights Chartered Accountants Team

Closing Your Business

Sat, 23 Oct 2021 22:00:00 GMT

Closing Your Business Checklist

When you're facing the possibility of closing your business permanently, it can be a very emotional and overwhelming time. There are many things to consider when winding up your business, such as GST, Capital Gains Tax, Division 7a loans, Employee and Contractor Obligations, plus more. We understand this can seem like a daunting task ahead, which is why we've put together a checklist to help you through the process.

Download our Closing your business checklist.pdf here.

For further information or advice on how to wind up and close your business, contact our office today!

Phone: 02 6566 2200

Email: admin@wrightsca.com.au

Website: wrightsca.com.au

Avoid Super Guarantee Charges

Tue, 28 Sep 2021 23:00:00 GMT

Recently, we have noticed more activity around the enforcement of employers' superannuation obligations by the ATO.

We'd like to remind you that to avoid the super guarantee charge, payments must be made at least four times a year. This applies from the day an employee starts working for you.

Payment due dates occur quarterly, as follows:

Quarter 1:

Period: 1 July – 30 September

Payment due date: 28 October

Quarter 2:

Period: 1 October – 31 December

Payment due date: 28 January

Quarter 3:

Period: 1 January – 31 March

Payment due date: 28 April

Quarter 4:

Period: 1 April – 30 June

Payment due date: 28 July

We believe the stricter enforcement falls in line with the ATO's movement towards Single Touch Payroll (STP). STP means that the ATO now receives each employers' superannuation obligations for their employees whenever a business's payroll is completed and wages are paid to employees. This, coupled with increased data matching capabilities, mean that the ATO is more easily able to match which employers are not meeting their superannuation obligations and who are not paying these on time.

Super obligations for employers checklist

Source: ATO

Paying super is an important part of being an employer.

Here's how to run a quick check of your super, to make sure you've got everything sorted.

1. Check you're paying for the right people. You need to pay super for all of your eligible workers. Most employees and some contractors are eligible for super.

2. Check you're paying the right amount.

3. Check you're paying on time. At a minimum, you need to pay super quarterly. Some super funds, awards or agreements, may require more frequent payments.

4. Check you're paying to the right place. You must pay super into a complying super fund or Retirement Savings Account.

5. Check you're paying the right way.

6. And of course, you need to keep records, to show you've met your obligations, including how much you paid, when you paid, and that you offered a choice of fund.

The ATO has a range of online tools and calculators, to help you understand your super obligations in more detail. Visit ato.gov.au/superquickcheck to find out more information.

As always, if you have any questions please feel free to contact the Wrights team.

2021 Tax Deduction Checklist

Sun, 22 Aug 2021 23:00:00 GMT

Is it tax deductible?

Everyone wants to pay less tax, right? To do that you need to know what you can claim… and what you can't.

It's not about cheating the system, or creative accounting. It's all about claiming what you're entitled to. That's why we've developed the "Is it Tax Deductible?" checklist designed for the individual taxpayer.

CLICK HERE TO DOWNLOAD YOUR CHECKLIST

If you'd like more information on any of the above items, please feel free to contact us today.

COVID-19 Business Support & Grants

Mon, 16 Aug 2021 03:57:32 GMT

The NSW Government are providing financial assistance, support measures and tax relief to help businesses and people across the state impacted by the current COVID-19 restrictions.

Currently, there are three business support grants available. These include:

COVID-19 Business Grants. This is a one-off payment to help businesses with cashflow support for the first 3 weeks of lockdown. It is available to all business with turnover greater than $75,000, and who have experienced a 30% plus decline in revenue. Depending on your decline in turnover, you can expect to receive $7,500 to $15,000. Please visit: https://www.service.nsw.gov.au/transaction/2021-covid-19-business-grant
Jobsaver Payment. This is a fortnightly payment to help maintain employee headcount (as at 13 July) and provide cashflow support to businesses. It is available to all business with turnover between $75,000 - $250 million, and who have experienced a 30% plus decline in revenue. What you can expect to receive varies greatly depending on several factors. Please visit: https://www.service.nsw.gov.au/transaction/jobsaver-payment
2021 Covid 19 Micro Business Grant – This is a fortnightly payment for businesses with a turnover between $30,000 and $75,000. Eligible businesses can receive $1,500 per fortnight. Please visit: https://www.service.nsw.gov.au/transaction/2021-covid-19-micro-business-grant

Please note that each of these packages has different eligibility criteria, 'decline in turnover tests', and slightly different dates where the decline in turnover can be experienced. These details are subject to change, which is why we're advising you to visit the sites directly, for the most up to date information.

To apply for any of these grants, please follow the relevant links above. The applications need to be made through your Services NSW account. Whilst the website says that accountants can apply on your behalf, there are a number of road blocks to allowing us to do so.

To avoid any delays in your application, we're advising all clients to create their Services NSW accounts and submit the application themselves.

However, there are still ways we can help you. Once you have reviewed the grant options and determined which criteria you believe you qualify for, please get in touch.

BUSINESS TAX RELIEF

Other measures to support NSW businesses during this time, include:

INDIVIDUALS & HOUSEHOLDS

Help is available for people who have lost their job or cannot pay their rent, and for homeowners struggling with their mortgage repayments. There are several forms of support, including Services Australia: COVID-19 Disaster Payment.

Please visit this page to review all the support options available to you:

LANDLORDS & TENANTS

Eligible tenants will be protected from eviction if they have been financially impacted by COVID-19. Concessions will be available to landlords who pass on rent reductions to their tenants. Please visit this page to review the information.

As we learn more information from the NSW and Federal Governments, we will do our best to keep you informed about the updates and what they mean to you.

If you are struggling to make sense of what support is available to you and your organisation, then do reach out to us for help.

Stay safe,
The Wrights Chartered Accountants Team

The Balancing Act Budget 2021-22

Wed, 19 May 2021 23:00:00 GMT

THE BALANCING ACT BUDGET 2021-22

The 2021-22 Federal Budget is a balancing act between a better than anticipated deficit ($106 bn), an impending election, and the need to invest in the long term.

The key initiatives we believe are relevant to you, our clients, include:

The low and middle income tax offset will be extended to the 2022 tax year – provides an offset up to $1,080 for individuals earning up to $126,000, which is in place for the current year;
The temporary full expensing of assets purchased has been extended to 30 June 2023, meaning that eligible businesses can continue to claim a full deduction in the year of purchase for eligible assets.

We have a full guide available to you which breaks down the budget. You can access it for free here .

If we can assist you to take advantage of any of the Budget measures, or to risk protect your position, please contact us .

ACNC reports more than $195 million in revenue errors in 2018

Tue, 02 Mar 2021 22:00:00 GMT

ACNC REPORTS MORE THAN $195 MILLION IN REVENUE ERRORS FOR 2018

The Australian Charities and Not-for-profits Commission has disclosed errors totalling $195,522,440 in 2018 information statements and financial reports.

The faults were catalogued in the commission's R eporting statistics for the 2018 reporting period .

Amendments to the ACNC register have corrected $195,522,440 in revenue and $614,226,373 in assets.

Key findings included:

The commission stressed that it would continue to review charities' reports to ensure compliance with ACNC requirements. It would ensure that financial information charities provided matched the information in their formal statements.

Know to whom you must report

Tue, 02 Mar 2021 22:00:00 GMT

KNOW TO WHOM YOU MUST REPORT

An ACNC objective is to 'promote the reduction of unnecessary regulatory obligations on the Australian not-for-profit sector'.

The commission has produced a table-by-charity structure summarising annual reporting obligations and fundraising licence requirements by state.

For information go to https://www.acnc.gov.au/about/red-tape-reduction .

The federal government is continuing to support philanthropic work by announcing a further extension of the ACNC's transitional-reporting arrangements.

They aim to reduce the burden on charities required to report to several regulators.

The ACNC may use its discretion to accept documents that were originally prepared for another regulator.

'The extension will reduce red tape for over 7000 charities and allow them to focus on philanthropy and giving,' said assistant minister for finance, charities, and electoral matters Zed Seselja.

It will be in place for five financial years from 2019-20. The previous extension of the arrangements applied until the 2018-19 financial year.

Since 2012, the ACNC has streamlined reporting requirements for incorporated associations with several states and territories, including the Australian Capital Territory, New South Wales, Northern Territory, South Australia, Tasmania, and Victoria.

It has streamlined requirements for charitable fundraisers in the ACT and South Australia and is continuing to work with the remaining states and territories on similar moves.

ACNC releases annual report

Tue, 02 Mar 2021 22:00:00 GMT

ACNC RELEASES ANNUAL REPORT

The ACNC has tabled its 2019–20 annual report, revealing insights into the charity sector and the commission's activities.

To allow charities to focus on relief and recovery efforts for bushfires, the commission paused most compliance activity for charities in bushfire-affected areas unless there was a significant ongoing risk of non-compliance.

The commission provided annual information statement extensions for around 7000 affected charities and prioritised charity-registration applications related to bushfires.

'A critical part of our work is to provide information about charities to the public,' ACNC commissioner Gary Johns said.

'We have seen the ACNC charity register visits significantly grow year on year, with more than 3.2 million searches last financial year.'

When COVID-19 hit Australia, the commission helped charities with their governance and operations by publishing news, information, and guidance on its website. It also adjusted its approach to regulation, deferring information-statement due dates for more than 18,000 charities and suspended some investigations.

The ACNC has continued to work with other government agencies to streamline reporting requirements across jurisdictions.

Highlights include a new law passed to relieve Queensland charities of duplicated annual financial reporting, and bilateral negotiations with several states to reduce red tape for fundraisers.

'The importance of the charity sector should not be underestimated. It is crucial to supporting the Australian community and it employs 10 per cent of Australians,' Dr Johns said.

'We directed a substantial proportion of our efforts this year to helping charities navigate through these tough times and to reducing the burden on them as much as we can.'

Key statistics include:

The ACNC's 2019-20 annual report is available at https://acnc.gov.au/tools/reports/acnc-annual-report-2019-20 .

Targeted funding critical for NFP's survival

Tue, 02 Mar 2021 22:00:00 GMT

The Australian Institute of Company Directors annual NFP Governance and Performance Study reveals that many organisations' future was under threat even before the challenges of COVID-19.

While most NFPs expected to make a loss this financial year, almost 40 per cent had made a loss in the previous three years.

COVID-19 unsurprisingly dealt a huge financial blow to the NFP sector. However, the study reveals that many organisations were facing considerable financial challenges even before the crisis.

AICD managing director and CEO Angus Armour said: 'Many organisations entered the pandemic already facing serious financial challenges and COVID-19 intensified that pressure, pushing boards and organisations to their limits.

'Just when demand for NFP services increased, their revenue took a huge hit. The government's JobKeeper program has been nothing short of a lifeline for many, but significant concerns remain about how organisations will manage when the current scheme ends.

'These organisations need to be able to continue their vital work through the pandemic and on the other side, but unless issues of funding are addressed, it is likely some will be forced to wind up.

'Given the vital role these organisations play in our society, targeted assistance is required to ensure [they] survive over the long-term.'

The study highlights the disparity of differing NFP categories to navigate the crisis. Arts, sports, and health NFPs, as well as the aged-care sector see greater impacts than those operating in other areas.

Sources of funding play a significant role, organisations reliant on government funding faring better than those depending on philanthropy and face-to-face fundraising.

Key findings from the study are:

In FY20 the number of respondents expecting to make a profit dropped to 48 per cent, with over half expecting to make a loss, break even or come close
55 per cent of survey respondents noted that their organisation was receiving JobKeeper payments. However, more than a third of organisations were ineligible
With boards focused on the survival of their organisations, merger activity and discussions on mergers reduced considerably. Only three per cent of directors reported that they were in the midst of a merger, down from five per cent last year
One-third of respondents stated that their financial positions were unaffected by COVID-19
The onset of COVID-19 brought immediate change, 77 per cent reporting that their organisation significantly changed the way it operated
Directors were particularly proud of their NFP's response to COVID-19, 90 per cent agreeing or strongly agreeing that their organisation had responded well to the crisis
When asked to rate the effectiveness of their organisation in achieving its stated purpose, sentiment was higher (94 per cent) than in previous years
87 per cent of directors said they were worried about the Australian economy, and there was a high degree of uncertainty about the future, and
44 per cent of respondents expected client numbers to increase and 45 per cent predicted that service volumes would increase. Twenty-seven per cent expected a decrease in clients.

Report reviews NFPs’ service-performance reporting

Tue, 02 Mar 2021 22:00:00 GMT

REPORT REVIEWS NFP'S SERVICE-PERFORMANCE REPORTING

Under the Australian reporting framework, disclosure of service-performance information is mostly unregulated for NFPs.

Due to a general lack of emphasis on non-financial information in both national and state legislations, efficiency information being reported by NFPs is insufficient to meet users' need.

For charities, stakeholders compare their overall objectives with service-performance disclosures.

Appropriate guidance is required on mandatory disclosures about linking efficiency information to mission-related objectives and long-term goals.

AASB research report 14 Literature Review: Service Performance Reporting for Not-for-Profits reviews both Australian and international literatures. It suggests that the introduction of a tiered service-performance reporting framework could assist in alleviating operational and cost pressures on smaller NFPs.
The report supports the AASB's Management Commentary and Service Performance Reporting project to determine whether the International Accounting Standards Board's practice statement 1: Management Commentary being updated by the IASB can be adequately adapted to become mandatory.

New SPFS disclosures take effect

Tue, 02 Mar 2021 22:00:00 GMT

NEW SPFS DISCLOSURES TAKE EFFECT

Under AASB 2019-4 Amendments to Australian Accounting Standards – Disclosure in Special Purpose Financial Statements of Not-for-Profit Private Sector Entities on Compliance with Recognition and Measurement Requirements , new disclosure requirements take effect for the first time for financial years ending 31 December.

NFPs will need to make new disclosures about their compliance with recognition and measurement requirements in Australian accounting standards'

They apply to:

Your SPFSs will need to disclose:

ACNC sets up a COVID-19 webpage

Tue, 02 Mar 2021 22:00:00 GMT

ACNC SETS UP A COVID-19 WEBPAGE

The ACNC has recognised that a charity's usual operations might be affected by COVID-19 and has set up a dedicated web page https://www.acnc.gov.au/node/5781959 to help.

Topics covered include:

https://www.acnc.gov.au/for-charities/manage-your-charity/obligations-acnc/keep-charity-records

ASIC focus areas for 31 December

Tue, 02 Mar 2021 22:00:00 GMT

ASIC FOCUS AREAS FOR 31 DECEMBER

Under COVID-19 conditions, ASIC expects directors, preparers of financial reports and auditors to pay particular attention to asset values, provisions, solvency and going concern assessments, events occurring after year-end and before completing a financial report, and disclosures in financial reports and operating and financial reviews.

Assumptions underlying estimates and assessments should be reasonable and supportable. Assumptions should be realistic, and not overly optimistic or pessimistic.

Disclosures about uncertainties, key assumptions and sensitivity analysis are important to investors.

OFRs should complement the financial report and tell the story of the pandemic's effects on a business. Underlying drivers of results and financial position should be explained as well as risks, management strategies, and prospects.

Appropriate experience and expertise should be applied in reporting, particularly in more difficult and complex areas such as asset values and other estimates.

Directors and auditors should be given sufficient time to consider reporting issues and to challenge assumptions, estimates, and assessments.

Directors should make appropriate enquiries of management to ensure that key processes and internal controls have operated effectively during periods of remote work.

ASIC has also extended by a month the deadline for lodging financial reports for certain balance dates up to and including 7 January.

Thoughts on paying NFP boards

Tue, 02 Mar 2021 22:00:00 GMT

THOUGHTS ON PAYING NFP BOARDS

Chartered Accountants Australia and New Zealand has released Remunerating Not-for-profit Directors , which covers key factors NFPs should consider in determining whether those charged with governance should be paid.

The paper includes a checklist highlighting aspects to be considered when contemplating the move.

Among factors are an entity's constitution, funding constraints, potential tax implications, and key agreements. An analysis of the pros and cons of remunerating boards is outlined.

The case for remunerating boards centres on a need to attract skilled and diverse people and recognise their time and effort.

The argument for not remunerating them is focused on reducing potential liability risks associated with being a director.

Paying directors might also be contrary to the spirit of the NFP sector. Many believe that all of an NFP's resources should go to furthering the organisation's purpose.

Download the paper .

Proposals for transition between reporting tiers

Tue, 02 Mar 2021 22:00:00 GMT

PROPOSALS FOR TRANSITION BETWEEN REPORTING TIERS

Exposure draft 306 Transition Between Tier 2 Frameworks for Not-for-Profit Entities proposes limited comparative-information relief for NFPs adopting AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities .

Currently, NFPs cannot access the same comparative-information relief that is available to for-profit private-sector entities.

The draft proposes limited relief for NFPs that adopt AASB 1060 for reporting periods beginning before 1 July. No comparative information in the notes to financial statements are required if an entity had not previously disclosed the comparable information in its most recent Tier 2 general-purpose financial statements.

IIA issues helpful governance tools

Tue, 02 Mar 2021 22:00:00 GMT

IIA ISSUES HELPFUL GOVERNANCE TOOLS

The Institute of Internal Auditors in Australia has issued the following publications, which should interest boards and management:

In its '20 critical questions' series, the institute has examined what directors should ask of risk management.

Questions are posed under headings such as risk-management foundations, risk assessment, risk registers and review.

The first is 'Does the organisation have (a) risk management framework aligned to an appropriate standard such as ISO 31000:2018 'Risk management – Guidelines' (b) defined risk appetite ideally encapsulated in a risk appetite statement?'

And a 'killer question' is posed. 'How does management, audit or risk committee and board of directors clearly know the organisation has identified and is effectively managing its risks in a timely way?'

Revised definition of materiality operative

Tue, 02 Mar 2021 22:00:00 GMT

REVISED DEFINITION OF MATERIALITY OPERATIVE

The definition of 'material' in AASB 101 Presentation of Financial Statements has been amended and applies to the 31 December balance date for the first time. The changes made by AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material are subtle but significant.

As materiality drives accounting standards' recognition, measurement, and disclosure, the revised definition and application guidance should significantly influence how boards, accountants and auditors make their financial-reporting decisions and disclosures.

The revised definition: 'Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make based on those financial statements, which provide financial information about a specific reporting entity .' (Emphasis added.)

Materiality depends on the nature or magnitude of information, or both. An entity assesses whether information, either individually or in combination with other information, is material in the context of its financial statements taken as a whole.

Information is obscured if it is communicated in a way that would have a similar effect to omitting or misstating the information for financial-statement primary users.

Following are examples of circumstances that may result in material information being obscured:

Assessing whether information could reasonably be expected to influence decisions made by primary users requires an entity to consider users' characteristics and its own circumstances.

Many existing and potential investors, lenders, and other creditors cannot require reporting entities to provide information direct to them and must rely on general-purpose financial statements for much of the financial information they need. Consequently, they are the primary users to whom general-purpose financial statements are directed.

Practice statement 2 Making Materiality Judgements and the Framework applicable to NFPs should help in making materiality decisions.

COVID-19 and going concern

Tue, 02 Mar 2021 22:00:00 GMT

COVID-19 AND GOING CONCERN

COVID-19 is having an unprecedented impact on the economic outlook for Australian and global economies.

For 31 December balance date, many NFPs for the first time will be required to consider in more detail their solvency and ability to continue operating as a going concern.

Surprisingly, there are only two paragraphs in AASB 101 Presentation of Financial Statements that directly address the going-concern basis:

'25 When preparing financial statements, management shall make an assessment of an entity's ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern, the entity shall disclose those uncertainties. When an entity does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern.'

'26 In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period. The degree of consideration depends on the facts in each case. When an entity has a history of profitable operations and ready access to financial resources, the entity may reach a conclusion that the going concern basis of accounting is appropriate without detailed analysis. In other cases, management may need to consider a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing before it can satisfy itself that the going concern basis is appropriate.'

To help with this assessment, the Australian Accounting Standards Board and the Auditing and Assurance Standards Board have released a new 27-page publication The Impact of COVID-19 on Going Concern and Related Assessments . It provides an overview of directors' and management's responsibilities. They are:

https://www.aasb.gov.au/admin/file/content102/c3/AASB-AUASB_TheImpactOfCOVID19_05-19.pdf

disclosure standard for Tier 2

Tue, 02 Mar 2021 22:00:00 GMT

NEW DISCLOSURE STANDARD FOR TIER 2

Disclosures relevant to Tier 2 entities have been detailed in a new standard – shading will no longer be used to show which disclosures in other standards may be omitted.

AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities will apply for financial years beginning on or after 1 July 2020.

It aims to reduce the reporting 'burden' of for-profit and not-for-profit entities using current Tier 2 requirements for preparing general-purpose financial statements. Some existing disclosures have been removed and new disclosures required.

AASB 1060 does not change which entities are permitted to apply Tier 2 reporting requirements nor Tier 2's recognition and measurement requirements, which are the same as for Tier 1 entities.

If you have to step up from special-purpose to general-purpose financial reports you will see an overall increase in disclosures (for example, in related parties, tax and financial instruments), but you will also be able to remove some disclosures because of not having to comply fully with:

Early adoption of AASB 1060 is encouraged via special transitional relief (provided in AASB 2020-2) from disclosing certain comparative information in the first year.

Sanctions for National Redress Scheme non-joiners

Tue, 02 Mar 2021 22:00:00 GMT

SANCTIONS FOR NATIONAL REDRESS SCHEME NON-JOINERS

The federal government plans to introduce sanctions for charities that fail to join the National Redress Scheme for victims of institutional child sexual abuse.

The changes include a new governance standard and an amendment to the Australian Charities and Not-for-Profits Commission Act 2012 .

Under the new standard, registered charities will be required to take all reasonable steps to become a participating non-government institution in the scheme if a claim has been, or is likely to be, made against them.

The amendment to the ACNC act will mean that religious institutions will fail classification as 'basic religious charities' and exemption from ACNC governance standards if they have been named in an application but have not joined the scheme.

'Affected charities risk losing charity registration and access to a range of Commonwealth charity tax concessions, which is a serious penalty', ACNC commissioner Gary Johns said.

He added that no action would be taken until these changes became law.

Minister for Families and Social Services Anne Ruston said the ACNC would be given the power to deregister a charity that did not take reasonable steps to participate in the scheme.

Senator Seselja said a new ACNC governance standard would require registered charities to take all reasonable steps to become a participating non-government institution in the scheme if a claim had been, or was likely to be, made against them.

'The Government will also introduce legislation this year which amends the definition of a basic religious charity in the Australian Charities and Not-for-Profits Commission Act 2012 to remove a religious institution's eligibility to be classified as a BRC if it has been named in an application but refuses to join the Scheme,' he added.

Charities failing to join the scheme will be subjected to ACNC compliance powers, including deregistration. Deregistration would result in the entity losing access to a range of Commonwealth benefits, tax, and other concessions.'

Relevant legislation was introduced into parliament through the Treasury Laws Amendment (2020 Measures No. 6) Bill 2020 to give effect to changes to the BRC definition.

A consultation period closes on 8 January.

About 80 institutions which provided an intent to join before the 30 June 2020 deadline are reminded that they have until 31 December to complete the steps to sign on or they will be named and face sanctions.

To date, the federal, state and territory governments, and 358 non-government institutions are participating.
Further information about the National Redress Scheme is available on the website: www.nationalredress.gov.au .

ACNC urges charities to prevent fraud and cybercrime

Tue, 02 Mar 2021 22:00:00 GMT

ACNC URGES CHARITIES TO PREVENT FRAUD AND CYBERCRIME

The ACNC has urged charities to take steps to prevent fraud and cybercrime.

Commissioner Johns said charities were vulnerable to fraud and cybercrime, especially as fraudsters try to exploit national and global crises.

'As I meet with Australian charities it is clear many are affected by the global COVID-19 crisis,' said Dr Johns. 'It is perhaps more important now than it has ever been to safeguard against the risk of fraud and cybercrime as charities face unprecedented challenges.'

In 2019-20, the ACNC received 2102 concerns about charities, most received from the public or members of a charity. The most common were about perceived mismanagement of funds or individuals obtaining a private benefit from a charity.

'It takes time and hard work for charities to build their reputations but falling prey to fraud and cybercrime can quickly dent or damage it, particularly if a charity failed to put in place preventative measures', said Dr Johns.

'It's better to get on the front foot by establishing good governance […] to prevent fraud rather than take remedial action after it happens.'

The ACNC provides many resources to equip charities to increase awareness and to implement measures to prevent fraud. The resources are of value to everyone involved in the sector including directors, board members, trustees, staff, and volunteers, as well as accountants, auditors and solicitors acting as professional advisers.

A Governance Toolkit includes resources to help charities manage risks, including financial abuse, cybersecurity, and working with partners. Access the toolkit at the ACNC website.

Check your NFP’s purpose

Tue, 02 Mar 2021 22:00:00 GMT

CHECK YOUR NFP'S PURPOSE

Many charities' operations are affected by COVID-19. This might mean that some or all of them might need to be modified or even temporarily halted.

The ACNC has stressed the importance of charities keeping stakeholders informed about what they are doing and why. Regular communication about charities' changed activities should be a priority.

The commission has stressed that if charities' activities change, they need to match their charitable purpose – what the charities were set up to achieve.

Charities need to consider financial moves that might include:

Responsible persons should speak to their charity's accountant and auditor in preparation of budgets, forecasts, and financial statements.

A charity that has decided to cancel or postpone a fundraising event might need to decide what to do with money already committed (for example, through ticket sales or other purchases).

Questions needing answers might include:

The ACNC emphasises that transparency is paramount.

It is important that a charity communicates clearly with supporters and other stakeholders on why it made the decision as well as measures it has in place to ensure that funds are properly refunded or used in line with donors' original intent and the charity's charitable purpose.

‘In Australia’ defined

Tue, 02 Mar 2021 22:00:00 GMT

'IN AUSTRALIA' DEFINED

Taxation ruling TR2019/6 Income tax: the 'in Australia' requirement concerning certain deductible-gift recipients and income-tax-exempt entities has been issued.

It sets out the ATO commissioner's view on what the phrase 'in Australia' means in divisions 30 and 50 of the Income Tax Assessment Act 1997 .

The divisions set out rules for working out whether certain funds, authorities, and institutions are eligible to be deductible-gift recipients and whether the income of certain NFPs is tax exempt.

The DGR 'in Australia' condition refers to the special condition that NFPs must be in Australia to be entitled to DGR endorsement. The ruling provides examples of when an entity is established or legally recognised in Australia and makes operational or strategic decisions mainly in Australia.

The 'in Australia' condition for exempt entities refers to special conditions that certain NFPs need to meet to be tax-exempt. The ruling provides examples of how an entity meets the physical-presence requirement and demonstrates that it incurs expenditure and pursues objectives principally in Australia.
The finalised ruling is consistent with guidance published in draft taxation ruling TR 2018/D1d d in July 2018.

Court rules on new rights for casual employees

Tue, 02 Mar 2021 22:00:00 GMT

COURT RULES ON NEW RIGHTS FOR CASUAL EMPLOYEES

Earlier this year the Federal Court ruled in WorkPac Pty Ltd v Rossato [2020] FCAFC 84 that some casual employees working regular shifts have the right to certain benefits such as annual and personal leave and public holidays usually enjoyed only by permanent staff.

The court also ruled that topping up workers' pay through casual loading does not offset leave liabilities. This essentially means that some casual employees could be entitled to both paid leave and casual loadings, typically worth 25 per cent of their pay.

ASIC has issued an FAQ on accounting implications of clarified casual-employment rules.

Companies should consider whether they should provide for additional employee entitlements (including annual leave, personal and carer's leave, compassionate leave, public holiday pay, and redundancy payments) for past and present 'casual employees' who were employed in circumstances covered by the recent court ruling.

CPA Australia has collaborated with CA ANZ and the Australian Institute of Company Directors to develop and publish a guide to provide further guidance and background.

Companies may wish to seek legal advice.

Charity risk review program introduced

Tue, 02 Mar 2021 22:00:00 GMT

CHARITY RISK REVIEW PROGRAM INTRODUCED

The ACNC has welcomed the federal government's announcement of $2.9 million in the budget to conduct risk reviews of charities.

The funding, which will roll out over three years, will enable the ACNC to undertake field-based compliance reviews to assess charities' governance risks, intervene before significant issues arise, and where possible and appropriate provide assurance to the public to maintain confidence in the sector.

A total of $474,000 will be allocated in 2020-21 to review charities at risk of failing to meet governance standards.

The program's aim is to strengthen assurance that charities have appropriate governance in place and use their incomes for charitable purposes, including when responding to natural disasters.

Acting commissioner Anna Longley said it was a positive move to help charities comply with their obligations.

'We intend to conduct reviews of charities based on risks and issues that we identify through our engagement with the sector, compliance work and intelligence analysis. How we select each cohort will depend upon the risks that we seek to address,' she said.

'In future we may decide to produce educational resources for the sector to improve governance more broadly. We may also undertake further compliance activity if significant issues are identified.'

Registration of hundreds of charities revoked

Tue, 02 Mar 2021 22:00:00 GMT

REGISTRATION OF HUNDREDS OF CHARITIES REVOKED

The ACNC has revoked the registration of 303 charities for twice failing to submit their annual information statements.

The organisations have been referred to the Australian Taxation Office, as they are no longer eligible for certain Commonwealth tax concessions.

Whistleblower policy reminder

Tue, 02 Mar 2021 22:00:00 GMT

WHISTLEBLOWER POLICY REMINDER

Public companies, among others, were required to have a whistleblower policy by 1 January last year.

This is a reminder to act if your policy is not yet up and running and made available to officers and employees.

Large charities that are companies limited by guarantee are required to have a whistleblower-protection policy that meets requirements set out in the Corporations Act .

Small and medium-sized charities that are companies limited by guarantee do not need a policy but are required to manage whistleblowing in line with the act.

Check your tax-deductible gift status

Tue, 02 Mar 2021 22:00:00 GMT

CHECK YOUR TAX-DEDUCTIBLE GIFT STATUS

The bushfire crisis has seen an unprecedented number of donations to a range of NFPs. As a result, the need for good governance and record-keeping are as important as ever, the ATO has stressed.

Make sure that your NFP is operating for purpose. If it is a deductible-gift recipient, you can use tax-deductible gifts only for the purpose of the DGR category in which you are endorsed.

You must also keep records relevant to your organisation's status as a DGR. Records must show that gifts and deductible contributions are being used for your principal DGR purpose.

Good records help you to manage your obligations and make it easier to report and pay on time. Some of the basic records you may need to keep include:

Your records must be kept for five years and be in English or easily converted to English. You should regularly review your circumstances and entitlement to DGR.

The ACNC has several useful resources for charities, including a record-keeping checklist (https://www.acnc.gov.au/for-charities/manage/keep-charity-records/record-keeping-checklist) and self-evaluation checklist (https://www.acnc.gov.au/for-charities/manage-your-charity/governance-hub/governance-standards/self-evaluation-charities).

Recognising a superannuation liability for contractors

Tue, 02 Mar 2021 22:00:00 GMT

RECOGNISING A SUPERANNUATION LIABILITY FOR CONTRACTORS

A recent decision by the full Federal Court will result in many contractors previously considered to be outside the scope of compulsory superannuation payments being entitled to them.

In Dental Corporation v Moffet , Dr David Moffet provided his services as a dentist to Dental Corporation under an agreement. Upon termination of the agreement, Dr Moffet brought proceedings asserting that he was an employee of Dental Corporation and was entitled to be paid annual leave, long-service leave and superannuation.

The Court found that Dr Moffet was not an employee of Dental Corporation but was an independent contractor conducting his own business. He had no entitlement to annual leave or long-service leave. However, on the issue of superannuation the Court was required to consider section 12(3) of the Superannuation Guarantee (Administration) Act 1992 .

Section 12(3) defines an 'employee' to include a person working under a 'contract that is wholly or principally for the labour of the person'. Section 12(3) can therefore apply to an independent contractor.

The court found that Dr Moffet was entitled to superannuation and this finding was upheld on appeal by the full court.

Bill proposes DGRs to be registered as charities

Tue, 02 Mar 2021 22:00:00 GMT

BILL PROPOSES DGR'S TO BE REGISTERED AS CHARITIES

Federal treasury is seeking submissions on the draft bill Treasury Laws Amendment (Measures 4 for a later sitting) Bill 2020: Requiring all DGRs to be registered charities .

It requires non-government item-1 deductible-gift recipients to register as charities.

The reform will strengthen the transparency and oversight of DGRs and help to ensure that tax concessions are appropriately targeted.

Deductible gift recipient reform – strengthening governance and integrity and reducing complexity is part of the government's 2017-18 Mid-Year Economic and Fiscal Outlook measure.

The move is being implemented through an amendment to the Income Tax Assessment Act 1997 .

DGR status allows an entity to receive gifts of $2 and more that donors can claim as income-tax deductions. The arrangement is intended to encourage philanthropy and provide support for the not-for-profit sector.

The draft bill, explanatory memorandum and FAQs can be downloaded from https://treasury.gov.au/consultation/c2020-113633.

Submissions were sought by 4 December.

ACNC urges PBIs to check their details

Tue, 02 Mar 2021 22:00:00 GMT

ACNC URGES PBI'S TO CHECK THEIR DETAILS

The ACNC is urging charities with deductible-gift-recipient endorsement to check their registration details.

The commission has begun reviewing DGR reforms announced by the federal government in 2017.

The review is designed to strengthen governance arrangements and bolster confidence in the NFP sector by ensuring that tax concessions are held only by eligible charities, that the integrity of the ACNC register is protected, and donors are confident that donations are used for a charitable purpose.

The commission will review about 500 charities a year to assess whether they are still eligible to be registered as a charity, charity subtype, and for DGR status. An initial focus will be on public benevolent institutions.

PBIs are the biggest demographic in the DGR population (about 11,000), they can access the highest rate of tax concessions, and, because they service such a diverse section of the community, have a substantial impact on trust and confidence in the sector.

They will be reviewed according to a risk profile, which will include that they were registered as a charity and PBI before 3 December 2012, that they are not regulated by the Office of the Registrar of Indigenous Corporations, and have no, or only one responsible person listed or no governing document.

'[There] should be no impact on charities under review unless an issue is identified,' ACNC commissioner Gary Johns said.

In line with its commitment to transparency and education and to ensure procedural fairness, the ACNC is encouraging charities to self-assess using an online tool available at https://www.acnc.gov.au/for-charities/charity-tax-concessions/deductible-gift-recipients-dgrs-and-acnc/deductible-gift.

'By using our self-assessment tool, charities will be able to identify and rectify most issues, such as nominating responsible persons and uploading their governing document to the register,' Dr Johns said.

'Charities don't need to notify us of those changes or send us their self-assessment. They can make changes easily through the ACNC charity portal.

'To promote good practice, we encourage charities to assess themselves periodically.'

Casual workers’ overtime updated

Tue, 02 Mar 2021 22:00:00 GMT

CASUAL WORKERS' OVERTIME UPDATED

The Fair Work Commission has issued its final determination on overtime for casual workers in its four-yearly review of awards.

Under this determination, the overtime clause for casuals has been varied in 97 modern awards. As a result, the way that overtime for casuals is calculated might change.

Any changes to overtime calculations for casuals will come into effect from the first full pay period on or after 20 November for 96 of the affected awards.

Changes to the remaining award (Aged Care Award 2010) will not come into effect until 1 March.

Under these clauses, overtime for casuals may be calculated in one of the following ways:

To view further details, visit the Fair Work Australia website.

Amendments to reporting thresholds on the way

Tue, 02 Mar 2021 22:00:00 GMT

AMENDMENTS TO REPORTING THRESHOLDS ON THE WAY

Treasurer Josh Frydenberg and assistant finance minister Zed Seselja have announced the easing of a regulatory burden on charities by moving towards lifting financial-reporting thresholds.

Australian charities hit hard by the pandemic's impacts will receive relief from burdensome financial-reporting requirements under an agreement signed by federal, state and territory treasurers.

The Council on Federal Financial Relations, consisting of the Commonwealth, State and Territory Treasurers, reports to National Cabinet agreed to develop a framework by mid-2021 to lift the financial reporting thresholds to benefit more than 5000 small and medium charities.

The CFFR oversees the financial relationship between the Commonwealth and the States and Territories, including the Intergovernmental Agreement on Federal Financial Relations.

More than 3000 charities will no longer need to produce reviewed financial statements, saving each around $2400 in annual accounting expenses. Around 2000 charities will no longer be required to produce audited financial statements, saving around $3000 annually.

New AASB FAQs on initial recognition of an asset

Tue, 02 Mar 2021 22:00:00 GMT

NEW AASB FAQS ON INITIAL RECOGNITION OF AN ASSET

Staff FAQs for NFPs have been extended to assist with accounting for transactions relating to AASB 1058 Income of Not-for-Profit Entities .

They may be grants for activities that an NPF has partially but not yet fully performed. Equally, grant funding in cash or another asset has not yet been fully received.

In circumstances such as accrued grants a non-cash asset might exist (for example, a financial asset under AASB 9 Financial Instruments representing a contractual right to receive cash) and should be recognised and appropriately described in the statement of financial position.

The focus is on initial recognition of this type of asset, although consequential matters relating to the recognition of associated income are also addressed.

The FAQ includes a simple practical example to illustrate the accounting.

Why February 2021 May Be a Tough Month for Small Business and What You Can Do To Avoid This

Sat, 28 Nov 2020 22:00:00 GMT

Things may seem busy now up until Christmas, however we urge all small businesses to think beyond this point. The point we are referring to is February 2021.

February 2021 will be a particularly important month for small businesses in Australia. Why? February is traditionally the worst cashflow month for small business.

This is because:

Do not ignore these facts and plan ahead now.

One simple way you can plan ahead is by putting funds aside now, while times are busy and cashflow is good. It will make it easier to get through February, a typically tight month for everyone.

If you require accounting support to help you plan ahead for 2021, please contact the Wrights team today .

FAQs on accounting for government support

Wed, 23 Sep 2020 23:00:00 GMT

FAQs on accounting for government support

The Australian Accounting Standards Board has released staff-paper FAQs on Accounting for Government Support to identify standards that might be applied by for-profit and not-for-profit entities in accounting for COVID-19 government support.

To stimulate the economy and support entities affected most by the pandemic, governments are providing a range of financial support.

For many entities, accounting for it will be new (see https://www.aasb.gov.au/admin/file/content102/c3/Staff_FAQs_Gov_Grants_07_20.pdf ) .

Release of The Australian Charities Report 2018

Wed, 23 Sep 2020 23:00:00 GMT

Release of The Australian Charities Report 2018

Australian charities' revenue grew by more than 6 per cent in 2018, more than triple the Australian economy's counterpart figure.

This is a key finding of the just-released ACNC's Australian Charities Report 2018 .

The report documents the contribution of Australian charities to the economy and communities both at home and abroad. It analyses information in charities' annual information statements.

Key findings include:

The Australian Charities Report 2018 , the sixth edition, provides fascinating insights.

New SPFS disclosures apply for 30 June

Wed, 23 Sep 2020 23:00:00 GMT

New SPFS disclosures apply for 30 June

New recognition and measurement disclosures are required by charities registered with the ACNC reporting on 30 June that have an annual revenue of $250,000 or more.

The disclosures apply to charities preparing special-purpose financial statements, and those (for example, companies limited by guarantee) lodging SPFSs with the Australian Securities and Investments Commission.

ACNC and COVID-19

Wed, 23 Sep 2020 23:00:00 GMT

ACNC and COVID-19

The Australian Charities and Not-for-profits Commission has recognised that a charity's usual operations might be affected by COVID-19 and has set up a dedicated web page https://www.acnc.gov.au/node/5781959 to help charities.

Topics covered include:

The ACNC has also updated its guidance on record-keeping, including more information on keeping records when working remotely and from home ( https://www.acnc.gov.au/for-charities/manage-your-charity/obligations-acnc/keep-charity-records ).

Understanding NFP standards

Wed, 23 Sep 2020 23:00:00 GMT

Understanding NFP standards

NFP preparers of financial statements may use the 46-page AASB-staff Modifications to Australian Accounting Standards for Not-for-Profit Entities to understand the extent and rationale of standards modifications.

The updates were made to reflect changes since May 2017.

The AASB uses IFRS standards as a base in developing standards for NFPs such as charities and public-sector entities. Where necessary, they are modified to address user needs and specific issues that would cause undue cost or effort to apply.

The publication helps NFP preparers and auditors to understand modifications to IFRS standards and Australian standards that apply to NFPs as well as the AASB's rationale for the modifications.

It should also assist the transition from IFRS standards for those first encountering the Australian Financial Reporting Framework for NFPs.

STP ‘finalisation declaration’ due soon

Wed, 23 Sep 2020 23:00:00 GMT

STP 'finalisation declaration' due soon

As part of NFPs' single-touch-payroll obligations, they are required to finalise employees' 2019–20 end-of-financial-year payroll information by 31 July if they have 19 or fewer employees and 4 July if they have 20 or more.

NFPs will need to make a 2019-20 'finalisation declaration' through STP-enabled software. Payment summaries to employees and lodging a 'payment summary' annual report to the ATO are no longer required.

DGR reforms delayed, but not for long

Wed, 23 Sep 2020 23:00:00 GMT

DGR reforms delayed, but not for long

Assistant minister for finance, charities and electoral matters Zed Seselja has announced that the government remains committed to reforming the administration and oversight of the deductible-gift-recipient status.

But given legislative delays brought on by the COVID-19 pandemic, three reforms that were scheduled to be implemented from 1 July have been delayed. The reforms will instead begin three months after royal assent.

They relate to:

DGRs that are not yet registered as charities are encouraged to do so ahead of the legislative amendments.

Good-governance guides released

Wed, 23 Sep 2020 23:00:00 GMT

Good-governance guides released

The Governance Institute ( https://www.governanceinstitute.com.au/ ) has released three new good-governance guides that explore key challenges.

Topics examined include:

Technology governance :

Emerging risk :

Compliance guide (revised) :

ATO warns on COVID lurks

Wed, 23 Sep 2020 23:00:00 GMT

ATO warns on COVID lurks

The ATO says it will stamp down on anyone engaging in illegal behaviour or developing contrived schemes to take advantage of COVID-19 stimulus packages.

The office will resolve genuine mistakes.

To date, the tax office has refused more than 6500 applications for JobKeeper due to either ineligibility or fraudulent behaviour, but more businesses can expect to see their payments suspended as 3000 officers are tasked with compliance activity.

'We also encourage applicants to review their applications and ensure they are complying with all their obligations. Failure to do so can result in overpayment as well as significant penalties. This is particularly so if we contact you and you do not take any action to rectify', says an ATO spokesperson.

Superannuation-guarantee amnesty closing

Wed, 23 Sep 2020 23:00:00 GMT

Superannuation-guarantee amnesty closing

The federal government has introduced a superannuation-guarantee amnesty. The amnesty allows employers to disclose and pay previously unpaid super-guarantee charges, including nominal interest, that they owe their employees, for quarters starting from 1 July 1992 to 31 March 2018, without incurring the administration component ($20 per employee per quarter) or Part 7 penalty.

The amnesty finishes on 7 September and cannot be extended. Apply now for this one-off opportunity to correct past unpaid super, avoiding administration charges and penalties.

For further information see this website here .

COVID-19 causes Leases amendment

Wed, 23 Sep 2020 23:00:00 GMT

COVID-19 causes Leases amendment

AASB 16 Leases has been amended to exclude rent holidays caused by COVID-19 from being assessed as lease 'modifications'.

The amendment provides a practical expedient that permits lessees not to assess whether rent concessions such as rent holidays and temporary rent reductions that occur as a direct consequence of the COVID-19 pandemic and meet specified conditions are lease modifications.

The standard amends AASB 16 to:

AASB 2020-4 Amendments to Australian Accounting Standards – Covid-19-Related Rent Concessions applies to annual periods beginning on or after 1 June. Earlier application is permitted, including in financial statements not authorised for issue at the date this standard was issued (15 June).

ATO helps NFPs to comply

Wed, 23 Sep 2020 23:00:00 GMT

ATO helps NFPs to comply

The Australian Taxation Office has compiled a list of online resources that aims to help NFPs in their annual reviews of tax compliance.

Included are an online guide on exemptions for sporting clubs and an income-tax-status review worksheet that most NFPs should be able to use.

The tax office encourages charities to review annually their Tax Concession Charities endorsement concessions and deductible-gift-recipient status.

NFPs with DGR status should also review their organisations to ensure that they still operate for the purposes for which they were granted DGR endorsement.

Two worksheets will assist you in reviewing DGR endorsement:

For further information see www.ato.gov.au/Non-profit/Newsroom/General/Have-you-completed-your-annual-review-/

COVID-19 and going concern

Wed, 23 Sep 2020 23:00:00 GMT

COVID-19 and going concern

COVID-19 is having an unprecedented impact on the economic outlook for Australian and global economies.

For the first time, many entities will be required to consider in more detail their solvency and ability to continue operating as a going concern.

Surprisingly, there are only two paragraphs in AASB 101 Presentation of Financial Statements that directly address the going-concern basis:

'25 When preparing financial statements, management shall make an assessment of an entity's ability to continue as a going concern. An entity shall prepare financial statements on a going concern basis unless management either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When management is aware, in making its assessment, of material uncertainties related to events or conditions that may cast significant doubt upon the entity's ability to continue as a going concern, the entity shall disclose those uncertainties. When an entity does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern.'

To help with this assessment, the AASB and the Auditing and Assurance Standards Board have released a new 27-page publication The Impact of COVID-19 on Going Concern and Related Assessments that provides an overview of directors' and management's responsibilities. They are:

The publication is available at https://www.aasb.gov.au/admin/file/content102/c3/AASB-AUASB_TheImpactOfCOVID19_05-19.pdf .

Amendments to encourage increased grants

Wed, 23 Sep 2020 23:00:00 GMT

Amendments to encourage increased grants

Assistant Minister for Finance, Charities and Electoral Matters Zed Seselja has announced that the federal government is creating an incentive for philanthropic funds to support charities in times of need.

A recent JBWere report estimated that charitable giving might decrease by 7.1 per cent in 2020, and by a further 11.9 per cent in 2021 because of the pandemic.

'I will be amending the ministerial guidelines for public and private ancillary funds to provide a credit for funds that make total distributions in 2019-20 and 2020-21 that are at least four percentage points above the minimum required distributions. The credit – equal to half the percentage points by which the distributions exceed the minimum – may be used to reduce the minimum distribution by up to one percentage point in 2021-22 and future financial years until [it] is exhausted,' the minister said.

Mr Seselja also declared COVID-19 a disaster for the purposes of establishing Australian disaster-relief funds as DGRs, allowing them to receive tax-deductible donations.

'This declaration will allow funds that are established for the relief of people affected by the COVID-19 pandemic to receive tax-deductible donations, and greater assist their communities.'

Donations to the funds will be tax-deductible when made within two years.

Disaster-relief funds will need to apply for formal endorsement with the ACNC.

For further information see https://www.legislation.gov.au/Details/F2020L00684 .

Treasurer clarifies JobKeeper

Wed, 23 Sep 2020 23:00:00 GMT

Treasurer clarifies JobKeeper Treasurer Josh Frydenberg has clarified JobKeeper payments, perhaps affecting whether certain charities and NFPs may access the scheme. The clarifications include: Charities and the treatment of government revenue: Changes will allow charities (other than schools and universities) to elect to exclude government revenue from the JobKeeper turnover test. This will allow employing charities receiving revenue from government to use either their total turnover, or their turnover excluding government revenue, for the purposes of assessing eligibility for the JobKeeper payment. This will help to ensure that the eligibility of charities is not adversely affected where they are delivering significant services that are funded by government. Religious practitioners: Changes will allow JobKeeper payments to be made to religious institutions in respect of religious practitioners (with the exception of those who are only students), recognising that many religious practitioners are not 'employees' of their religious institutions. International Aid Organisations: Changes will allow entities that are endorsed under the Overseas Aid Gift Deductibility Scheme or for developed-country relief to meet the requirement that NFPs pursue their objectives principally in Australia. The current requirement that employees must be Australian residents to be eligible under the JobKeeper program would remain in place. Universities: Changes will clarify that the core commonwealth government financial assistance provided to universities will be included in JobKeeper turnover tests.

DGR information updated

Wed, 23 Sep 2020 23:00:00 GMT

DGR information updated

The ATO has updated and clarified home gifts and donations under the headings:

See this website here .

Bingo boost

Wed, 23 Sep 2020 23:00:00 GMT

Bingo boost

Effective from 1 July, the NSW Community Gaming Act 2018 and Community Gaming Regulation 2020 has replaced the Lotteries and Art Unions Act .

The legislation covers low-risk games involving an element of chance played for charitable, social, not-for-profit and trade-promotion purposes, such as art unions, lotteries, sweeps, club bingo, and raffles.

Key changes include:

Bodies coordinate philanthropic response

Wed, 23 Sep 2020 23:00:00 GMT

Bodies coordinate philanthropic response

The Australian Communities Foundation and Philanthropy Australia have partnered to provide a national funding platform to coordinate the philanthropic response to COVID-19.

NFPs are encouraged to register their COVID-19-related funding needs so that philanthropic funders can understand the granting opportunities available and respond to the critical needs of the sector (register at https://communityfoundation.org.au/covid-19 ) .

National regulatory approach to charitable fundraising

Wed, 23 Sep 2020 23:00:00 GMT

National regulatory approach to charitable fundraising

State and territory NFP regulators have issued a statement about the enforcement approach they will take in the light of COVID-19.

The COVID-19 Statement of Regulatory Intent responds to laws made because of the pandemic.

Regulators across Australia recognise that COVID-19 has created an exceptional set of circumstances that will have significant effects on charitable fundraisers.

They might, for instance, need to comply with many fundraising laws (including several registrations) if they intend to raise money in more than one state or territory.

For fundraisers that cannot comply with relevant legislative requirements due to the impacts of COVID-19, regulators will take a supportive and educative approach when assessing compliance.

Regulators will continue to monitor the situation and provide advice and help, they say.

NSW Fair Trading, for instance, recognises that due to the pandemic many authority holders may experience difficulty in complying with their statutory obligations under the Charitable Fundraising Act 1991 .

Charitable 'fundraising authority' holders unaffected by the pandemic are expected to honour their existing obligations under the act.

Where an authority holder cannot comply due to factors outside its control associated with the pandemic, NSW Fair Trading will take a supportive and educative approach to assessing compliance. The approach will be implemented provided that authority holders have made genuine documented attempts to comply.

Requirements that might be affected by the pandemic include:

NSW Fair Trading reserves the right to vary its approach as appropriate, particularly in circumstances that might involve a significant risk of harm to the community.

If organisations are experiencing difficulties in complying with their statutory obligations as a result of COVID-19, they may contact NSW Fair Trading.

Several AASBs operative for 30 June

Wed, 23 Sep 2020 23:00:00 GMT

Several AASBs operative for 30 June

Under AASB 15 Revenue from Contracts with Customers , revenue is recognised so that promised goods and services are transferred in an amount that reflects the consideration to which their provider expects to be entitled.

AASB 15 requires the application of a five-step model:

AASB 2016-8 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Entities inserts Australian requirements and authoritative implementation guidance for not-for-profit entities into AASB 15 and AASB 9 Financial Instruments . The guidance assists NFPs in applying those standards to particular transactions and other events.

The amendments to AASB 15 address the identification of a contract with a customer and its performance obligations. It also examines the allocation of transaction price to performance obligations.

Amendments to AASB 9 address the initial measurement and recognition of non-contractual receivables arising from statutory requirements, including taxes, rates and fines.

AASB 1058 Income of Not-for-Profit Entities is likely to have a significant impact on NFPs' income recognition.

They should consider how assets received below fair value, transfers received to acquire or construct non-financial assets, grants received, prepaid rates, and volunteer services and leases entered into at below market rates are likely to affect them.

AASB 2018-4 Amendments to Australian Accounting Standards – Australian Implementation Guidance for Not-for-Profit Public Sector Licensors amends AASB 15 to add requirements and authoritative implementation guidance for application by NFP public-sector licensors to transactions involving the issue of licences.

The amendments include:

The amendments to AASB 16 clarify that licences that are in substance leases or contain leases, except licences of intellectual property, fall within the scope of AASB 16.

AASB 16 Leases introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for leases with a term of more than 12 months unless the underlying asset is of low value.

A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset, and a lease liability representing its obligation to make lease payments.

A lessee recognises depreciation of the right-of-use asset and interest on the lease liability. In the statement of cash flows, a lessee separates the total amount of cash paid into principal (presented within financing activities) and interest (presented within either operating or financing activities).

Assets and liabilities arising from a lease are initially measured on a present-value basis. The measurement includes non-cancellable lease payments (including inflation-linked payments), and payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease.

Right-of-use asset falls within the scope of AASB 136 Impairment of Assets .

AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-Profit Entities amends five standards to provide a temporary option for NFPs not to apply the fair-value initial-measurement requirements for right-of-use assets arising under leases with significantly below-market terms and conditions principally to enable the entity to further its objectives.

The standard requires an NFP that elects to apply the option (that is, measures a class or classes of such right-of-use assets at cost rather than fair value) to include additional disclosures in the financial statements to ensure that users understand the effects on the financial position, financial performance and cash flows of the entity arising from these leases.

AASB 2019-8 Amendments to Australian Accounting Standards – Class of Right-of-Use Assets arising under Concessionary Leases amended AASB 16 to specify for NFPs that right-of-use assets arising under concessionary leases can be treated as a separate class of right-of-use assets from those arising under other leases for the purposes of AASB 16.

These accounting standards are complex and necessitate changes to reporting systems and related internal controls. Detailed accounting policy papers will need to be prepared by management and approved by governance. Financial statements will require significant revisions.

Ethical conflicts revised

Tue, 14 Apr 2020 23:00:00 GMT

ETHICAL CONFLICTS REVISED

The APESB has issued a revised APES GN 40 Ethical Conflicts in the Workplace – Considerations for Member in Business to replace the 2015 version.

The key changes include:

The revised APES GN 40 is effective as of date of issue.

Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Reminder – New SPFS disclosures for 30 June

Tue, 14 Apr 2020 23:00:00 GMT

REMINDER - NEW SPFS DISCLOSURES FOR 30 JUNE

You will need to make new disclosures about your compliance with the recognition and measurement requirements in Australian Accounting Standards'

They apply to:

Your SPFS will need to disclose:

AASB 2019-4 makes amendments to AASB 1054 Australian Additional Disclosures . Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Extension of transitional reporting arrangements

Tue, 14 Apr 2020 23:00:00 GMT

EXTENSION OF TRANSITION REPORTING ARRANGEMENTS

The Federal Government is continuing to support philanthropic work in Australia by announcing the further extension of the ACNC transitional reporting arrangements.

These transitional reporting arrangements aim to reduce the reporting burden on charities that are required to report to multiple regulators by allowing the ACNC to use its discretion to accept documents that were originally prepared for another regulator.

'The extension will reduce red tape for over 7,000 charities and allow them to focus on philanthropy and giving,' said Assistant Minister for Finance, Charities and Electoral Matters, Zed Seselja.

This additional extension will be in place for the next five years, covering the 2019-20, 2020-21, 2021-22, 2022-23 and 2023-24 financial years. The previous extension of the transitional reporting arrangements applied until the 2018-19 financial year.

Since 2012, the ACNC has streamlined reporting requirements for incorporated associations with a number of States and Territories, including the Australian Capital Territory, New South Wales, Northern Territory, South Australia, Tasmania and Victoria.

It has also streamlined reporting requirements for charitable fundraisers with the ACT and South Australia, and is continuing to work with the remaining states and territories on similar requirements.

"The additional five-year extension reduces red tape for charities while the ACNC continues to work with the states and territories to harmonise reporting requirements," Assistant Minister Seselja said. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

FAQs on research grants updated

Tue, 14 Apr 2020 23:00:00 GMT

FAQs on research grants updated

The AASB staff FAQs for not-for-profit entities on accounting for research grants have been updated.

The updates include:

Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Recognising volunteer services

Tue, 14 Apr 2020 23:00:00 GMT

RECOGNISING VOLUNTEER SERVICES

Under AASB 1058 Income of Not-for-Profit Entities , local governments, government departments, general government sectors and whole of governments must recognise an inflow of resources in the form of volunteer services as an asset (or an expense, when the definition of an asset is not met).

There are two conditions for recognition:

Any other not-for-profit entity may, as an accounting policy choice , elect to recognise volunteer services, or a class of volunteer services, if the fair value of those services can be measured reliably, whether or not the services would have been purchased if they had not been donated.

Volunteer services must be measured at fair value.

Disclosure is required of income recognised from volunteer services. Disclosure is encouraged of qualitative information, about the nature of the entity's dependence arising from volunteer services it receives, including those not recognised.

AASB 1058 applies to 30 June year-ends for the first time.

New disclosure standard for Tier 2

Tue, 14 Apr 2020 23:00:00 GMT

NEW DISCLOSURE STANDARD FOR TIER 2

Disclosures relevant to Tier 2 entities have been detailed in a new standard – shading will no longer be used to show which disclosures in other standards may be omitted.

AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities will apply for financial years beginning on or after 1 July next year.

It aims to reduce the reporting 'burden' of for-profit and not-for-profit entities using current Tier 2 reporting requirements for preparing general-purpose financial statements. Some existing disclosures have been removed and new disclosures required.

AASB 1060 does not change which entities are permitted to apply Tier 2 reporting requirements and Tier 2's recognition and measurement requirements, which are the same as for Tier 1 entities.

Early adoption of AASB 1060 is encouraged via special transitional relief (provided in AASB 2020-2) from disclosing certain comparative information in the first year. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Liabilities classification amended

Tue, 14 Apr 2020 23:00:00 GMT

LIABILITIES CLASSIFICATION AMENDED

The new AASB 2020-1 aims to promote consistency in Australian financial reporting.

Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-current aims to help companies determine whether debt and other liabilities with an uncertain settlement date should be classified as current (due, or potentially due to be settled within a year) or non-current.

The amendments include clarifying the classification requirements for debt an entity settles by converting it into equity.

The amendments aim only to clarify, and therefore do not change any existing requirements. They are not expected to affect an entity's financial statements significantly.

Entities might, however, reclassify some liabilities from current to non-current, and vice versa, affecting loan covenants.

The standard applies to annual reporting periods beginning on or after 1 January 2022, early application permitted. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Extension of time to hold AGM

Tue, 14 Apr 2020 23:00:00 GMT

EXTENSION OF TIME TO HOLD AGM

The impact of COVID-19 will most likely affect newly registered corporations that are required to have a general meeting within three months of registration and corporations with a financial year ending on 31 December (calendar year) who are required to hold their AGM by 31 May.

The Registrar has determined that all new corporations, registered from 1 January 2020, will be granted an extension of six months to hold the corporation's first meeting (under s. 201-145). A corporation registered on 20 January, which was due to hold its first general meeting by 20 April, will now have until 20 October to hold the meeting. The Registrar will review the extension in July. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Annual reporting deferrals

Tue, 14 Apr 2020 23:00:00 GMT

ANNUAL REPORTING DEFERRALS

A small number of corporations with a financial year that ended on 31 December 2019 are required to report to the Registrar of Indigenous Corporations by 30 June. The range of reports vary depending on corporation size and income – all corporations are required to lodge a general report, some are required to provide a financial report and directors' report.

The Registrar has approved that corporations with financial year ending on 31 December 2019 will have an extension of time to lodge their reports until 31 August. The Registrar has also approved that corporations affected by bushfires that had previously been granted an extension of time for lodging reports receive a further extension of time to 31 August. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

New research reviews NFPs’ service-performance reporting

Tue, 14 Apr 2020 23:00:00 GMT

NEW RESEARCH REVIEWS NFPs' SERVICE-PERFORMANCE REPORTING

Under the Australian reporting framework, disclosure of service performance information is mostly unregulated for NFPs.

Due to a general lack of emphasis on non-financial information in both national and state legislations, efficiency information being reported by NFPs is insufficient to meet users' need.

For charities, stakeholders compare their overall objectives with service-performance information disclosures.

Appropriate guidance is required on mandatory disclosures about linking efficiency information to mission-related objectives and long-term goals

AASB research report 14 Literature Review: Service Performance Reporting for Not-for-Profits reviews both Australian and international literatures on the topic. It suggests that the introduction of a tiered service-performance reporting framework could assist in alleviating operational and cost pressures on smaller NFPs.

Findings in the report support the AASB's Management Commentary and Service Performance Reporting project to determine whether the International Accounting Standards Board's practice statement 1: Management Commentary being updated by the IASB can be adequately adapted to become a mandatory standard.

Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .
Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

DGR endorsement requirements for animal welfare charities

Tue, 14 Apr 2020 23:00:00 GMT

DGR ENDORSEMENT REQUIREMENTS FOR ANIMAL WELFARE CHARITIES

Animal welfare charities may be eligible for DGR endorsement if they meet certain requirements.

For DGR purposes, animal welfare charities must be registered with the ACNC and their principal activity must be either: providing short-term direct care to animals that have been lost, mistreated or without owners rehabilitating orphaned, sick or injured animals that have been lost, mistreated or without owners.

The ATO stated that animal welfare charities cannot solely focus on native wildlife. Charities that assist native wildlife also need to provide care to other animals. 'It is important to note animal welfare charities can only be DGR endorsed by us if they meet these principal activity requirements.' Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Annual Information Statement extensions

Tue, 14 Apr 2020 23:00:00 GMT

ANNUAL INFORMATION STATEMENT EXTENSIONS

The ACNC Commissioner granted a blanket extension to charities with a 2019 Annual Information Statement due between 12 March and 30 August 2020. These charities will now need to submit their AIS by 31 August 2020. This advice will be monitored as the COVID-19 crisis progresses. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

COVID-19 financial reporting considerations

Tue, 14 Apr 2020 23:00:00 GMT

COVID-19 FINANCIAL REPORTING CONSIDERATIONS

COVID-19 poses significant business risks that need to be effectively managed – a top priority.

Unfortunately, major financial-reporting and auditing consequences will follow the virus's economic impact and social distancing. These need to be understood by boards and CFOs and processes put in place to deal with them. Such plans are unlikely to be set and forget.

Financial-reporting issues that immediately come to mind are the uncertainties associated with the going-concern basis of accounting, trigged impairment indicators for non-financial assets, impairment of financial assets under the expected-credit-loss model, changes to estimates and judgements, increased provisions, and more disclosures required in financial reports and statements.

These will require extra attention in times of constrained resources and unavailability of staff.

Also, as business processes change due to strategies such as working from home, internal controls can be weakened, increasing the risks of non-compliance with laws, regulations, and fraud.

Act now of your assessment financial reporting and related considerations to minimise your risks.

Going concern revisited

AASB 101 Presentation of Financial Statements is the reference on going concern basis of accounting for preparers and will require much more consideration in the COVID-19 environment.

The rules are:

In assessing whether the going concern basis is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the end of the reporting period.

The degree of consideration depends on the facts in each case.

When there has a history of profitable operations and ready access to financial resources, management may reach a conclusion that the going concern basis is appropriate without detailed analysis.

In other cases, management may need to consider a wide range of factors relating to current and expected profitability, debt repayment schedules and potential sources of replacement financing before it can satisfy itself that the going concern basis is appropriate.

In the current environment, management will need to have made a more detailed assessment of the suitability of the going concern basis than would have otherwise been the case. The disclosures in the financial statements will have to be more extensive, such a management plans to address the uncertainties with the application of the going concern basis. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

500 PBI to undergo review under DGR Reforms

Tue, 14 Apr 2020 23:00:00 GMT

500 PBI TO UNDERGO REVIEW UNDER DGR REFORMS

Charities with deductible gift recipient endorsement are being encouraged by the ACNC to check their registration details, ahead of its reviews commencing in July 2020. The reviews are part of DGR reforms announced by the Government in 2017.

The DGR review is designed to strengthen the DGR governance arrangements and bolster confidence in the sector by ensuring that tax concessions are only held by eligible charities, that the integrity of the ACNC register is protected and donors have confidence that donations are applied to a charitable purpose.

Approximately 500 charities will be reviewed by the ACNC per year to assess if they are still eligible to be registered with the ACNC as a charity and subtype of charity and for DGR status. The initial focus will be on Public Benevolent Institutions.

PBI are the largest section of the DGR population (approximately 11,000), they can access the highest rate of tax concessions and, because they service such a diverse section of the community, have a substantial impact on trust and confidence within the sector.

PBIs will be identified for review based on a risk profile, which will include that they: were registered as a charity and PBI prior to 3 December 2012, are not regulated by the Office of the Registrar of Indigenous Corporation, have no, or only one Responsible Person listed or no governing document.

'We will conduct reviews of 500 Public Benevolent Institutions that match our risk profile, but there should be no impact on charities under review, unless an issue is identified,' ACNC Commissioner Hon Dr Gary Johns said.

In line with its commitment to transparency and education, and to ensure procedural fairness, the ACNC is encouraging charities to self-assess, using an online tool available on the ACNC website (https://www.acnc.gov.au/for-charities/charity-tax-concessions/deductible-gift-recipients-dgrs-and-acnc/deductible-gift).

'By using our self-assessment tool, charities will be able to identify and rectify most issues, such as nominating Responsible Persons and uploading their governing document to the Register,' Dr Johns said.

'Charities don't need to notify us of those changes or send us their self-assessment. They can make changes easily through the ACNC Charity Portal.'

'To promote good practice, we encourage charities to assess themselves periodically,' said Dr Johns. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Insights into reporting statistics

Tue, 14 Apr 2020 23:00:00 GMT

INSIGHTS INTO REPORTING STATISTICS

Each year, the ACNC analyses a proportion of each of Annual Information Statement and financial reports to test the integrity of the data provided, and where necessary seeks corrections to errors.

The ACNC has released a report R eporting statistics for the 2018 reporting period which described major reporting statistics identified from its 2018 Annual Information Statement and Annual Financial Report review process – including the most common errors found.

Based on review, amendments made to the ACNC register to correct errors totalling $195,522,440 in total revenue $614,226,373 in total assets.

Key findings included:

The commission will continue to review AFRs that charities submit to ensure compliance with the ACNC reporting requirements. It will also focus on ensuring that the financial information charities provide matches the information in their AFRs. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Whistleblowing Policy Reminder

Tue, 14 Apr 2020 23:00:00 GMT

WHISTLEBLOWING POLICY REMINDER

Reminder public companies, amongst others, are required to have a whistleblower policy and make it available to their officers and employees by 1 January 2020.

Large charities that are companies limited by guarantee will need to have a Whistleblower Protection Policy which meets the requirements set out in the Corporations Act.

Small and medium charities that are companies limited by guarantee are exempt from meeting the requirement to have a whistleblower policy but are required to manage whistleblowing in accordance with the Corporations Act. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Charity operations in COVID-19 environment

Tue, 14 Apr 2020 23:00:00 GMT

CHARITY OPERATIONS IN COVID-19 ENVIRONMENT

Many charities' operations are affected by COVID-19. This may mean that some or all of your charity's activities may need to be modified or even temporarily halted.

The ACNC stated that is important for charities to keep everyone informed of what it is doing, and why. Regular communication about a charity's changed activities should be a priority.

The commission stressed if your charity's operations do change, it is important it remains consistent with its charitable purpose – what it was set up to achieve.

The ACNC has advised also that each charity needs to consider the financial effects These can include:

Responsible Persons should speak to their charity's accountant and auditor in preparation of budgets, forecasts and financial statements.

For a charity that has decided to cancel or postpone a fundraising event there may be questions raised over what to do with any money already committed (for example, through ticket sales or other purchases). For example,

The ACNC stressed that it important that a charity is transparent about what it is going to do:

It is important that it communicates clearly with supporters and other stakeholders the reasons why it made the decision, as well as the measures it has in place to ensure the funds are properly refunded or used in line with donors' original intent and the charity's charitable purpose. Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Free Procurement Integrity Paper from the IIA

Tue, 14 Apr 2020 23:00:00 GMT

FREE PROCUREMENT INTEGRITY PAPER FROM THE IIA

The Institute of Internal Auditors in Australia have issued a helpful white paper on procurement integrity. The purpose of this white paper is to discuss the importance for organisations to have a formal approach to transparency and accountability in the procurement process, and to outline how this can be achieved.

View the full paper here .

Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

ACNC legislation review

Tue, 14 Apr 2020 23:00:00 GMT

ACNC LEGISLATION REVIEW

The review report, Strengthening for Purpose: Australian Charities and Not-for-profits Commission Legislative Review 2018 , made 30 recommendations, which centred on the ACNC's objects, functions and powers, the overall regulatory framework, and red tape reduction for charities.

In its response to the ACNC Legislation Review, the federal government has responded to each of the 30 recommendations, agreeing with 18 of them.

Key recommendations supported by the government:

Topic	Recommendation
Supporting ACNC as an effective regulator	· Enabling swifter decision making through expanded delegation powers · Enhancing ACNC powers to detect breaches of governance standards and deal with misconduct · Allowing ACNC to continue its strong focus on education and research
Reducing Red Tape	· Adjusting the reporting thresholds for registered charities · Streamlining and harmonising the regulatory requirements across all jurisdictions · Simplifying reporting requirements for small entities · Sharing data on charities between Commonwealth agencies
Strengthening Trust	· Mandating the disclosure of related party transactions and for large charities, aggregated remuneration paid to responsible persons · Sharing information on ACNC investigations, when in the public interest · Disqualifying responsible persons who have certain criminal convictions

The report is available to download here .

Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Board remuneration considerations for NFPs

Tue, 14 Apr 2020 23:00:00 GMT

BOARD REMUNERATION CONSIDERATIONS FOR NFPs

The Chartered Accountants Australia and New Zealand (CA ANZ) has released a business insight Remunerating Not-for-profit Directors covering key factors to be considered by not-for-profits in determining whether those charged with governance should be remunerated.

The paper includes a checklist highlighting aspects to be considered when contemplating remunerating Boards including an entity's constitution, funding constraints, potential tax implications and other key agreements. A pros vs cons analysis for remunerating Boards is also outlined.

The case for remunerating Boards is centred around the need to attract a skilled and diverse group of individuals and provide recognition for their time and effort.

The argument for not remunerating those charged with governance is focused around the fact that is reduces the potential liability risks associated with being a director and it may also be perceived as being against the spirit of the sector, based on a belief that all of a NFP's available resources should go directly to furthering the purpose of the organisation.

Download the paper from CAANZ website here . Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Know your fundraising laws

Tue, 14 Apr 2020 23:00:00 GMT

KNOW YOUR FUNDRAISING LAWS

Each Australian state and territory have its own rules regulating fundraising activities – frustrating.

These laws are complicated and don't cover fundraising activities using the internet and online platforms. A donation made online is not necessarily received in the same state or territory where the donation was made. So, online donations are often made and received in different places.

This means fundraisers must make sure they comply with the laws of every individual state and territory where a fundraising appeal is made and funds transferred.

Help is at hand – download a copy of the NFP Law Guide to Fundraising Laws in Australia here . Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

20 Critical Questions – What to ask yourself during a pandemic lockdown

Tue, 14 Apr 2020 23:00:00 GMT

20 CRITICAL QUESTIONS - WHAT TO ASK YOURSELF DURING A PANDEMIC LOCKDOWN

Awareness

1. Are you keeping abreast of changes in the economic, health and professional landscapes through national and state government websites, media reports and other occasional updates? And doing so within reason but avoiding getting overwhelmed by information overload and scaremongering?

2. Are you aware of your personal health risk factors? Do you have the knowledge and means to address any concerns in a well-informed manner that might arise quickly? Readiness

3. Do you have an updated list of contact details for ambulance, your doctor, pandemic testing sites, hospitals and pharmacies in case of need?

4. Are you maintaining contact with others in higher-risk health categories such as immediate family members, relatives especially the elderly, friends, neighbours and professional colleagues? Are you looking out for people under stress or potential instances of domestic or family violence? At times of crisis instances of domestic and family violence can spike, so be aware of hotlines and services that could potentially help others.

5. Are you keeping abreast of changes to your personal financial circumstances, maintaining an adequate cash flow, seeking government benefits that may be on offer, informing your bank of any liquidity challenges, paying bills and other commitments on time, and maintaining your taxation obligations?

Personal wellbeing

6. While these are highly disrupted times, are you maintaining a 'normal' routine as much as possible including keeping on top of household tasks such as cleaning, shopping, washing, mowing, gardening, home maintenance, etc? Are you maintaining a healthy well-balanced diet, following your faith, and maintaining personal hygiene and grooming? If these things lapse it can be detrimental to your mental health and wellbeing.

7. If your anxiety levels are increasing do you have someone sensible and well-balanced to talk to openly, frankly and meaningfully to put your mind at ease?

8. Are you taking the time to catch up on things you put off because you are normally 'time poor' such as time with family, reading, watching the latest movie, watching favourite TV show re-runs, playing board-games and cards, volunteering and charity work, or taking up a new hobby like painting? Are you maintaining regular exercise within the confines of your own home or within your local community while keeping recommended distances from other people?

If you are an Internal Auditor - The basics

9. Have you established a new routine with your manager and work colleagues to maintain regular contact daily or at least several times weekly through videoconferencing, teleconferencing, e-mails, social media or personal telephone contact?

10. Does your partner, a family member or friend have details of professional contacts for your manager and stakeholders so they can inform them of your situation if you are suddenly unavailable due to illness or hospitalisation?

11. Are you networking effectively including reaching out to stakeholders and customers to keep them informed of impacts on your services and completion of the internal audit plan and what it means for them? Are there former friends or professional colleagues you might wish to reconnect with at this time?

12. Are you offering advisory and consulting expertise to internal clients so they know who to call to discuss difficult operational issues, business changes, new products or services, or proposed or enforced changes to the business control environment?

13. Have you considered the impact on the audit committee agenda and meeting arrangements during the lock-down period by identifying opportunities to focus the agenda to essential time critical items, introducing videoconferencing or teleconferencing options, optimising other technologies such as board portals, confirming the availability of audit committee members to form a quorum, and ensuring availability of presenters?

Challenging the status quo

14. Can you and your colleagues undertake research projects on priority topics that inform the way your internal audit function may adapt to operate in the future? Have you considered the opportunity to review and update the internal audit manual, auditing methodology and associated templates?

15. Have you reviewed and updated the internal audit plan to factor in changes to management strategies, objectives, risks and priorities? Have you reviewed the internal audit plan to identify different ways of working such as more forward looking internal audit services and increased advisory services? Or researching a broader range of audit technology tools and techniques including computer assisted audit techniques (CAATs), robotics and artificial intelligence?

Professional opportunities

16. Is there an opportunity in your downtime to write a professional article, essay or book you have always wanted to do?

17. Is there an on-line webinar or short course you could take to further develop your skills in line with your performance plan, or perhaps there is an on-line postgraduate course you always wanted to pursue?

18. Can you enrol in an auditing certification on-line program through a professional body such as the IIA, ISACA, or the Association of Certified Fraud Examiners (ACFE) to advance your credentials through professional certifications such as CIA, CISA, CFE or one of their speciality designations?

The new normal

19. Are you keeping notes of practices that worked well and those that didn't during the lock-down that you can factor into new ways of working when normal business operations resume? Might these include adoption of integrated internal audit services, working from home protocols and reviewing your personal home-based work setting – was technology, computer hardware and software and bandwidth sufficient; was your work-space quiet, safe, well-lit and appropriate?

20. Have you considered sharing your insights on 'the new normal' with your peers in other organisations for instance through a professional body such as the IIA?

The Institute of Internal Auditors in Australia issued the above publication, view the original version here . Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

20 Critical Questions – What directors should ask of compliance

Tue, 14 Apr 2020 23:00:00 GMT

20 CRITICAL QUESTIONS - WHAT DIRECTORS SHOULD ASK OF COMPLIANCE

Compliance foundations

1. Does the organisation have a comprehensive compliance framework? Does it include a specific compliance policy including charter or terms of reference for the compliance activity and is the policy approved by the board of directors? Are there approved critical success factors or performance measures (KPIs) for the compliance activity?

2. Does positioning within the organisation give the compliance activity reporting avenues independent of line management?

3. Is there a specified person or activity in the organisation responsible for compliance? Are the people working on compliance skilled and suitably qualified specialists rather than generalists?

4. Is the organisation conforming with the standard ISO 19600:2014 'Compliance management systems – guidelines'?

5. Is there an awareness program to assure people inside and outside the organisation know their legal obligations and policy requirements? Is this reflected in (a) internal – job descriptions, performance measures, etc (b) external – tenders, contracts, etc?

6. Is there a risk-based compliance work plan approved by the audit committee that aims to assure legal obligations and policy requirements are met? Does the compliance work plan extend to subsidiaries, and controlled and associated entities?

7. Are compliance non-conformances recorded, allocated to appropriate management for corrective action, and regularly followed-up? Are breaches reported to the audit committee and regulators where necessary on a transparent and timely basis? Is corrective action progress regularly reported to the audit committee?

8. Are compliance obligation results regularly reported to executive management for (a) legal compliance (b) policy compliance? Are compliance obligation results regularly reported through independent assurance activities to the audit committee and board of directors? Does this include a compliance annual report that contains performance measure results and an attestation statement from the compliance activity?

Legal compliance

9. Does the organisation have a compliance register listing all laws and parts of those laws it needs to comply with? Is it risk-rated, contain existing controls, and also planned further controls where risk needs to be reduced in line with the organisation's approved risk appetite?

10. Does the organisation have a process to make sure new and changed legal requirements are brought to the organisation's attention and promptly reflected in the compliance register?

11. Are there review activities in place to periodically confirm the organisation complies with applicable laws and maintains its related policies and procedures up-to-date?

12. Is executive management required to provide a sign-off to the audit committee and board of directors each year that the organisation is complying with all applicable laws?

13. Does the organisation record and actively follow-up all legal proceedings involving the organisation?

14. Is the organisation engaged in joint ventures that introduce compliance risk? How does the organisation ensure that joint ventures understand and apply the corporate values? How does the organisation know it is in compliance with joint venture agreements, especially where operations of the joint ventures extend across international borders?

15. Is there exposure to international laws? If so, how is compliance assured and reported?

16. Is there compliance with public disclosure and whistle-blower law requirements? Are there review activities in place to periodically examine compliance with other external obligations such as (a) anti-corruption law (b) anti-money laundering and counter-terrorism financing law (c) foreign bribery law (d) privacy law (e) modern anti-slavery law?

17. Is management confident that suitable training and awareness programs are in place so that staff and suppliers are familiar with their compliance obligations, including changes as they arise, and that these obligations are reinforced periodically?

Policy compliance

18. Is there a formal organisation process for policies including a 'policy on policies' to assure policies are consistently developed, risk rated, implemented, applied, reviewed and maintained up-to-date?

19. Is there a risk-based process to ensure policy compliance is periodically assured and audited?

20. Is there a risk-based process to ensure policies are periodically reviewed and maintained up to date? Are results reported to executive management and the audit committee?

The killer question

How does management, the audit committee and board of directors clearly know the organisation is complying with all legal obligations and policy requirements across its operations and its broader remit?

The Institute of Internal Auditors in Australia issued the above publication, see original version here .
Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

20 Critical Questions – What directors should ask of business continuity

Tue, 14 Apr 2020 23:00:00 GMT

20 CRITICAL QUESTIONS - WHAT DIRECTORS SHOULD ASK OF BUSINESS CONTINUITY

Business Continuity – The overarching arrangements to be enacted when a business disruption, disaster situation or crisis has a major impact on business operations that flows to service delivery. It is the process an organisation puts in place so essential activities can continue during and after an unforeseen event or disaster situation. Business continuity planning seeks to prevent interruption to critical services and re-establish operations as quickly and smoothly as possible.

Business Continuity

1. Has the organisation formally assessed risk of potential business disruptions, disaster situations or crises? Does this include a range of potential disruptions and disasters including disease pandemic?

2. Are business continuity management arrangements sufficiently dynamic and do they include scenario analysis at three levels – (a) optimistic 'best case scenario' (b) expected 'likely scenario' (c) pessimistic 'worst case scenario'? Are variables factored into the scenario analysis such as (i) time elapsed before normal operations can resume (ii) economic markers covering severity of the event (iii) workforce health, wellbeing, readiness, and connectability (iv) commercial arrangements?

3. Has business impact been assessed should a business disruption, disaster or crisis situation occur? Does it include formal business impact analysis? Does it (a) establish maximum tolerable disruption limits (b) consider certainty of the supply chain (c) consider capacity management including ICT bandwidth?

4. Does the organisation have a business continuity plan independent of the emergency response plan and the ICT disaster recovery plan? Does the business continuity plan span multiple horizons in the event of a serious national or global crisis including (a) initial emergency management response – care, maintenance, survival (b) standing down and ultimately reestablishing business-as-usual (c) adapting to the new normal?

5. Do business continuity management arrangements cover all major risk areas such as (a) people – safety, wellbeing, availability, capability, remote support (b) customer experience (c) supply chain (d) operations (e) financial stewardship including cashflow and solvency (f) communications (g) continuity of critical control arrangements (h) cyber risk management?

6. Is there a specified person or group responsible for business continuity and crisis management, with measurable performance measures in place to continually assess their performance against critical success factors? Is a business continuity annual report prepared for senior management and the audit committee to tell the business continuity story for the year, including results of periodic testing and an assertion on overall preparedness?

7. Does the organisation have a specified crisis management team and defined trigger points that will escalate an incident for the team to stand up? Is there a stepped escalation process to manage an unforeseen event or disaster situation that gets progressively worse or takes a long time to fix?

8. Does the organisation have a designated crisis centre where the crisis management team will meet if organisation facilities are damaged or destroyed? Are there alternative sites if required?

9. Are there designated recovery teams for the various parts of the organisation? Do recovery teams maintain crisis kits of important information and resources? Do storage arrangements mean these will be available should a disaster mean the primary site cannot be accessed? Will these be available if the organisation's ICT environment and systems are unavailable?

10. Is there an up-to-date contact list of key management, employees, suppliers and stakeholders? Does it include contractual requirements of suppliers that specify agreed call-out response times and effort?

11. Is there a fit-for-purpose media plan to deal with the media following an unforeseen event, crisis or disaster situation?

12. Is there a formal schedule of business continuity testing and is this actually carried out? Does this include a range of activities from desktop testing through to realistic crisis scenario testing?

13. Are post-test reports written, disseminated throughout the organisation to relevant management and provided to the audit committee?

14. Are improvement actions from business continuity tests recorded, remediated by management in a timely way, and actively followed-up to ensure the actions get properly done?

ICT Disaster Recovery

15. Does the organisation have an ICT disaster recovery plan to support the business continuity plan? Does this include a priority list for restoration of the inventory of ICT services following an unforeseen event that disrupts ICT? IS the priority list based on formal business impact analysis?

16. Has the RTO been defined? (recovery time objective – the maximum tolerable duration of time within which a business process must be restored after an ICT disruption in order to avoid unacceptable consequences associated with a break in service continuity).

17. Has the RPO been defined? (recovery point objective – the maximum tolerable amount of data that must be recovered from backup storage for normal operations to resume following an ICT incident).

18. Is there a formal schedule of ICT disaster recovery testing? Has the testing been carried out? Does this include a range of activities such as desktop testing, configuration testing, platform testing, multi-platform testing, service testing and realistic crisis scenario testing? Are ICT maintenance activities and ICT disaster recovery activities kept separate as they should be? Does the organisation count real-life ICT incidents and disaster occurrences as testing which they should not?

19. Are post-test reports written, disseminated throughout the organisation to relevant management, and provided to the audit committee? Are improvement actions from ICT disaster recovery tests recorded, remediated by management in a timely way, and actively followed-up to ensure the actions get properly done?

Review and Audit

20. Are regular reviews and audits of business continuity and ICT disaster recovery arrangements and testing performed and reported to senior management and the audit committee?

The killer question

Does the organisation clearly know how its business continuity activities fit together, how effective they are, whether they are likely to be successful if a need arises to stand them up, and whether the customer experience sits at the heart of decision-making?

The Institute of Internal Auditors in Australia issued the above publication, see the original version here . Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Compliance changes in response to COVID-19

Tue, 14 Apr 2020 23:00:00 GMT

COMPLIANCE CHANGES IN RESPONSE TO COVID-19

In recognition of the unique challenges brought about by COVID-19, the ACNC has decided that the ACNC will not investigate certain breaches of the Governance Standards and the External Conduct Standards that occur from 25 March until 25 September 2020.

This approach is explained below:

Standard	Circumstance	Conditions on which action will not be taken
Governance Standard 1 and External Conduct Standard 1 – A charity cannot operate outside its charitable purposes.	A charity seeks to operate outside its purposes.	All activities align to the charity's purpose or purposes on a broad interpretation, or are incidental or ancillary to its charitable purpose or purposes. If a charity takes on activities in response to COVID-19 that do not clearly align with its charitable purpose or purposes, it: · Reasonably shows that its members would approve of the activity · Documents how it believes the new activities align with its charitable purpose or purposes, or are incidental or ancillary to its charitable purpose or purposes.
Governance Standard 5 – The charity requires Responsible People to ensure it does not operate while insolvent.	The charity incurs debts such that it becomes insolvent.	The Commissioner's approach to this issue will follow the amendments made to the Corporations Act 2001 by the Coronavirus Economic Response Package Omnibus Act 2020 , except that it will apply to all charities and not just those that operate as companies limited by guarantee. The debt is incurred: in the ordinary course of business, during the relevant period, and before the appointment of an administrator or liquidator. The charity must ensure that its Responsible People are aware of the issue and have an achievable aim to return to viability when the crisis has passed. The charity must inform its members and the ACNC if it is trading insolvent.
External Conduct Standard 1 – A charity is required to obtain and keep records for its operations outside Australia	The charity is unable to obtain reporting from its overseas operations or partners	The charity should: · Record the reasons it is unable to obtain reporting, and · Obtain reporting as soon as practicable.

The ACNC believes this short-term position is appropriate to allow charities to operate effectively and to enhance public trust and confidence in the sector.

If the ACNC identifies significant breaches that harm the public interest, even if it involves activities related to COVID-19, the commission may still investigate the issue and take regulatory action.

The importance of good governance

Tue, 14 Apr 2020 23:00:00 GMT

THE IMPORTANCE OF GOOD GOVERNANCE

The bushfire crisis has seen an unprecedented amount of donations made to a range of not-for-profit organisations. As a result, the need for good governance and record keeping practices are as important as ever stressed the ATO.

You need to make sure your NFP is operating for purpose. If your organisation is a DGR, you can only use tax-deductible gifts for the purpose of the DGR category you are endorsed under.

You must also keep records relevant to your organisation's status as a DGR. Your records must show that all gifts and deductible contributions are being used for your principal DGR purpose.

Good records help you manage your obligations and make it easier to report and pay on time. Some of the basic records you may need to keep include:

Your records must be kept for five years and be in English, or easily converted to English.

You should review your circumstances and entitlement to DGR endorsement regularly.

The Australian Charities and Not-for-profits Commission also has a number of useful resources for charities including the record-keeping checklist and self-evaluation checklist . Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

7 ways to financially safeguard your business during COVID-19

Sun, 15 Mar 2020 22:00:00 GMT

7 WAYS TO FINANCIALLY SAFEGUARD YOUR BUSINESS DURING COVID-19

As we brace for the impact that the global pandemic COVID-19 may have on our businesses and our economy, we urge you to take a deep breath and to focus your energy and attention on the things that you can control – rather than the things you cannot.

Below, we've compiled a list of seven financial priorities that you can review now to help maintain the financial sustainability of your business during these uncertain times.

click here

Stimulus Package

get in touch with us today

The Stimulus Package: What You Need To Know

Sun, 15 Mar 2020 22:00:00 GMT

THE STIMULUS PACKAGE: WHAT YOU NEED TO KNOW

The Government has announced a $17.6 billion investment package to support the economy as we brace for the impact of the coronavirus.

The yet to be legislated four part package focuses on business investment, sustaining employers and driving cash into the economy.

For business

1. Business investment

2. Cash flow assistance for small and medium sized business

3. Targeted support for severely affected sectors, regions and communities

For individuals

4. Household stimulus payments to drive cash into the economy

Parliament sits on 23 March. The Prime Minister has stated, "we have no plans to change the parliamentary sitting schedule.". Here is what we know so far:

Business investment

Increase and extension of the instant asset write-off

From 12 March 2020, the instant asset write-off threshold will increase from $30,000 to $150,000, and access to the write-off will be expanded to include businesses with aggregated annual turnover of less than $500 million until 30 June 2020.

The instant asset write-off is a tax deduction that reduces the tax liability of your business. It enables your business to claim an upfront deduction for depreciating assets in the year the asset was purchased and used (or installed ready to use). For example, if your business is a base rate entity (turnover under $50m) in a company structure you will get back 27.5% in your 2019-20 company return if the company acquires an asset that is used by 30 June 2020. If your business is likely to make a tax loss for the year, then the instant asset write-off is unlikely to provide a short-term benefit to you.

This is the fourth increase or extension to the instant asset write-off and businesses will need to be wary of what they are claiming and when:

Instant asset write-off thresholds	Small Business*	Medium business**	Large business***
1 July 2018 - 28 January 2019	$20,000	-	-
29 January - 2 April	$25,000	-	-
2 April - 12 March 2020	$30,000	$30,000	-
12 March - 30 June 2020	$150,000	$150,000	$150,000

* aggregated turnover under $10 million
** aggregated turnover under $50 million
***aggregated turnover under $500 million

Assets will need to be used or installed ready for use from when the changes were announced on 12 March 2020 until by 30 June 2020 to qualify for the higher threshold. Anything previously purchased does not qualify for the higher rate but may qualify for one of the other thresholds. Similarly, anything purchased but not installed ready for use by 30 June 2020 will not qualify.

The instant asset write-off only applies to certain depreciable assets such as a concrete tank for a builder, a tractor for a farming business, and a truck for a delivery business. You will also need ensure that there is a relationship between the asset purchased by the business and how the business generates income. You can't for example just go and purchase multiple television sets if they have no relevance to your business.

There are some assets that don't qualify such as horticultural plants, capital works (building construction costs etc.), assets leased to another party on a depreciating asset lease, etc.

What businesses can access the instant asset write-off

To access the instant asset write-off, your business needs to be a trading business (the entity buying the assets needs to carry on a business in its own right). It also needs to have an aggregated turnover under $500 million. Aggregated turnover is the annual turnover of the business plus the annual turnover of any "affiliates" or "connected entities". The aggregation rules are there to prevent businesses splitting their activities to access the concessions. Another entity is connected with you if:

Accelerated depreciation deductions

In addition to the increased instant asset write-off rules, accelerated depreciation deductions will apply from 12 March 2020 until 30 June 2021. This will bring forward deductions that would otherwise be claimed in later years.

Businesses with a turnover of less than $500 million will be able to deduct 50% of the cost of the asset in the year of purchase. They can also claim a further deduction in that year by applying the normal depreciation rules to the balance of the asset's cost. This will presumably only be relevant if the business cannot already claim an immediate deduction for the full cost of the asset.

For example, let's assume that a business purchases a new truck for $250,000 (exclusive of GST) in July 2020. In the 2021 tax return the business would claim an upfront deduction of $125,000. The business would also claim a further deduction for the depreciation that would have arisen on the balance of the cost. If the business is a small business entity and using the simplified depreciation rules, this would mean an additional deduction of $18,750 (i.e., 15% x $125,000). The total deduction in the 2021 tax return would be $143,750. Without the introduction of this investment incentive the business would have claimed a deduction of $37,500 (i.e., 15% x $250,000).

This incentive will only be available in relation to new assets that are acquired after 12 March 2020 and are first used or installed ready for use by 30 June 2021. It will not apply to second-hand assets or buildings and other capital works expenditure.

Cash flow assistance for small and medium sized business

Tax-free payments up to $25,000 for employers

Tax-free cash flow support between $2,000 and $25,000 will be available to eligible businesses with a turnover of less than $50 million that employ staff between 1 January 2020 and 30 June 2020.

This is not a direct cash payment but a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees. The employer will need to lodge an activity statement to trigger the entitlement. If the credit puts the business in a refund position the excess amount will be refunded by the ATO within 14 days.

If a business pays salary and wages to employees but is not required to withhold any tax then a minimum payment of $2,000 will still be made.

Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements. The minimum $2,000 payment will be applied to the first lodgement.

Eligibility for the measure will be based on prior year turnover. We will have to wait for the legislation for the finer details.

Wage subsidy of up to 50% of an apprentice or trainee wage

Eligible employers can apply for a wage subsidy of 50% of the apprentice's or trainee's wage for up to 9 months from 1 January 2020 to 30 September 2020. The payments are accessible to businesses with less than 20 employees. Employers will receive up to $21,000 per apprentice ($7,000 per quarter).

Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

In order to qualify for this payment the apprentice or trainee must have been in training with the business as at 1 March 2020. Employers of any size and Group Training Organisations that re-engage an eligible out-of-trade apprentice or trainee will also be eligible for the subsidy.

It is expected that employers will be able to register for the subsidy from early April 2020. Final claims for payment must be lodged by 31 December 2020.

Targeted support for severely affected sectors, regions and communities

$1 billion has been committed to support sectors, regions and communities disproportionately affected by the economic impact of the coronavirus. Tourism, agriculture and education are specifically mentioned.

Initial measures include:

1. Waiver of fees and charges for tourism businesses that operate in the Great Barrier Reef Marine Park and Commonwealth National Parks

2. Additional assistance to help businesses identify alternative export markets or supply chains

3. Measures to promote domestic tourism

Further plans and measures will be developed with the affected industries and communities.

Administrative relief for certain tax obligations will also be provided, including deferred tax payments up to four months. The ATO will establish a temporary shop front in Cairns within the next few weeks to support the region's small businesses. Other initiatives to bring support to the communities are being considered.

Household stimulus payments to drive cash into the economy

Tax-free $750 payment to social welfare recipients

A one-off, $750 cash payment will be made to pensioners, social security, veteran and other income support recipients and eligible concession card holders. Payments will be from 31 March 2020 on a progressive basis, 90% are expected to be made by mid-April.

The payment will be tax-free and will not count as income for Social Security, Farm Household Allowance and Veteran payments.

There will be one payment per eligible recipient even if they qualify in multiple ways.

Casual employees able to access the Newstart 'sickness payment'

While not part of the stimulus package, the Prime Minister has stated that casual employees required to self-isolate or who contract the coronavirus will be eligible for a sickness payment (jobseeker payment) through Newstart. The normal waiting period for this payment will be waived.

We'll bring you more details as soon as they become available.

More information:

AASB staff post FAQs for NFPs

Sun, 23 Feb 2020 22:00:00 GMT

AASB STAFF POST FAQs FOR NFPs

Australian Accounting Standards Board staff have posted eight new frequently-asked questions that will help NFPs.

They concern AASB 15 Revenue from Contracts with Customers , AASB 1058 Income of Not-for-Profit Entities and AASB 16 Leases .

They cover the standards' scopes and effective dates, performance obligations under research grants, and identifying and recognising performance obligations in NFP schools.

View here .

Study spotlights NFP crime threat

Sun, 23 Feb 2020 22:00:00 GMT

STUDY SPOTLIGHTS NFP CRIME THREAT

Thousands of crimes targeting Australia's NFPs are going unreported, a detailed study into not-for-profit governance has revealed.

The Institute of Community Directors Australia's latest Spotlight Report examines the impact of fraud and cybercrime on NFPs.

Informed by a nationwide survey of nearly 1900 community leaders, ICDA Spotlight Report: Fraud & Cybercrime shows that one in five organisations suffered a crime of some sort in the year leading up to the survey.

Applying those figures to an estimated 600,000 Australian NFPs – many of them small organisations with limited resources – would suggest that as many as 114,000 organisations have been affected by fraud or cybercrime.

Yet nearly two-thirds of those crimes are not reported to police, according to survey results, and just one in five is reported to an insurance company.

According to the study, asset theft and cyber-hacking are the most common crimes, followed by credit-card fraud and cash thefts.

In about a quarter of asset theft cases, the perpetrator was either a staffer or a volunteer.

Cash thefts were the most likely to be reported to police.

Other serious crimes, such as payroll fraud, bribes, data theft or ransom, or expenses fraud were reported by less than 3 per cent of organisations.

Most credit-card fraud (59 per cent) and cyber attacks (53 per cent) were perpetrated by online criminals.

In a concerning result, the study found that up to 20 percent of crime-affected organisations reported suffering several criminal incidents in a year.

The largest proportion of uncovered fraud comes from staff whistleblowers.

Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

ACNC extends AIS due date for bushfire-affected

Sun, 23 Feb 2020 22:00:00 GMT

ACNC EXTENDS AIS DUE DATE FOR BUSHFIRE-AFFECTED

The ACNC has issued a blanket extension of the due date for the 2019 AISs for charities with an 'address for service' in designated fire-affected areas. They will now be due on 31 March 2020.

If you are in an area affected by bushfires, your postcode is not listed, and you require an extension of time to lodge, please contact Advice Services via advice@acnc.gov.au and request an extension.

Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

NFPs move to STPs

Sun, 23 Feb 2020 22:00:00 GMT

NFPs MOVE TO STPs

If your NFP has 19 or fewer employees you will need to start reporting through Single Touch Payroll from 1 July.

It means that you report your employees' tax and superannuation information to the ATO each time you pay them.

The tax office has made several resources available to make the change, including a guide for small employers, a list of STP software providers and a news, events and resources page

If your NFP has between one and four employees and doesn't use payroll software, other ways to report STP information are:

For more information visit www.ato.gov.au/Non-profit/Newsroom/Lodgment-and-concessions/Single-touch-payroll-for-small-employers/ .

Internal auditors pose NFP governance questions

Sun, 23 Feb 2020 22:00:00 GMT

INTERNAL AUDITORS POSE NFP GOVERNANCE QUESTIONS

The Institute of Internal Auditors – Australia has released a new guide for directors of NFPs, drafting 20 critical questions they should be asking.

IIA-Australia CEO Peter Jones said the questions were a quick and easy reference for an estimated 257,000 Australian NFPs.

The Australian Charities and Not-for-profits Commission reported that charities' annual revenue in the 2016 financial year was more than $142 billion, said Mr Jones. They remained among Australia's most significant employers.

'Good governance structures are [as] important in the charity and NFP sectors as it is in the financial-services sector,' he added.

Mr Jones said that following investigations in 2017–18, the ACNC revoked the charity registrations of 22 organisations, the highest ever.

Charities had corrected more than $20 billion in revenue and $354 million of assets to improve the accuracy of the charity register.

The 20 critical questions include:

And a killer question: How does the NFP board know that its governance and assurance is operating effectively to ensure the organisation's long-term sustainability?

They're available at www.iia.org.au/technical-resources/20-critical-questions-series .

ASIC guidance on whistleblower policies

Sun, 23 Feb 2020 22:00:00 GMT

ASIC GUIDANCE ON WHISTLEBLOWER POLICIES

The Australian Securities & Investments Commission has released guidance on writing a whistleblower policy for employees.

Public companies, big proprietary companies and proprietary companies that are trustees of registrable superannuation entities were to have a policy available for officers and employees by 1 January.

Regulatory guide 270 Whistleblower policies helps these companies establish policies that support and protect whistleblowers. The guide sets out legally binding components of a policy.

They include:

The guide also helps companies develop and implement policies that are tailored to their operations.

'Robust and transparent whistleblower policies are essential to achieving sound risk management and corporate governance,' said Commissioner John Price.

'Whistleblower policies will influence behaviour and corporate culture in positive ways – for example, by encouraging greater disclosures of wrongdoing and by deterring people from doing the wrong thing. They play a crucial role in achieving a more fair and accountable corporate environment.'

ASIC does not require public companies that are not-for-profits or charities with annual revenue of less than $1 million to have a whistleblower policy.

'We […] understand that these entities may face a compliance burden that outweighs the benefits a policy might otherwise offer,' said Commissioner Price.

All companies are bound by whistleblower protections in the Corporations Act from 1 July 2019, regardless of whether they are required to have a whistleblower policy.

ASIC plans to survey the policies of a sample of companies next year to review compliance.
Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

Review of the CATSI Act

Sun, 23 Feb 2020 22:00:00 GMT

REVIEW OF THE CATSI ACT

Minister for Indigenous Australians Ken Wyatt has announced a comprehensive review into the Corporations (Aboriginal and Torres Strait Islander) Act 2006 to ensure it is still fit for purpose and that it continues to support more than 3000 indigenous corporations.

The review will be led by the National Indigenous Australians Agency and is expected to be completed by 30 November 2021.

(Image credit: NIAA )

DGR reforms postponed

Sun, 23 Feb 2020 22:00:00 GMT

DGR REFORMS POSTPONED

On 5 December 2017, the federal government announced reforms of the administration and surveillance of organisations with deductible-gift recipient status.

Changes were designed to strengthen governance arrangements, reduce administrative complexity and ensure continued trust and confidence in the NFP sector.

Initially planned for introduction on 1 July last year, reforms have been postponed until the same date this year.

They will require non-government organisations with DGR endorsement to be registered charities (unless specifically exempted).

The reforms will also result in the transfer of four DGR registers to the ACNC. They are the:

Year-enders must apply new standards

Sun, 23 Feb 2020 22:00:00 GMT

YEAR-ENDERS MUST APPLY NEW STANDARDS

This year is big for NFPs that report in compliance with accounting standards.

The following complex accounting standards apply for annual reporting commencing on or after 1 January. Year-enders on 31 December are first cabs off the rank. The standards to watch out for are:

AASB 15 Revenue from Contacts with Customer is operative for NFPs for financial years that began on 1 January 2019. Implementation guidance and illustrative examples may be consulted.

The Australian Accounting Standards Board late last year issued amending standard AASB 2018-8 Amendments to Australian Accounting Standards – Right-of-Use Assets of Not-for-profit Entities , which affects leases.

AASB 2018-8 provides a temporary option for NFP lessees to elect to measure a class (or classes) of right-of-use assets arising under 'concessionary leases' at initial recognition, either:

There are important disclosure requirements where the 'cost' option is chosen.

This extra information helps financial-statements users to assess:

Information must be provided separately for each material lease that has significantly below-market terms and conditions principally to enable the entity to further its objectives or in aggregate for leases involving right-of-use assets of a similar nature.

You will need to consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the various requirements.

Remember to aggregate or disaggregate disclosures so that useful information is not obscured by either the inclusion of a large amount of insignificant detail or the aggregation of items that have substantially different characteristics.

If you are looking for application of accounting standards, they are identified in AASB 1057 Application of Australian Accounting Standards . Its objective is to specify the types of entities and financial statements to which Australian Accounting Standards (including Interpretations) apply.

Dan Wade is the audit expert at Wrights Chartered Accountants, make an appointment to speak with him here .

When your Will is not enough

Mon, 17 Feb 2020 22:00:00 GMT

WHEN YOUR WILL IS NOT ENOUGH

It goes without saying that having an up-to-date Will in place is paramount to ensure that your personal property is distributed in the way that you wish when you die.

However, many people assume that because you have a Will in place, that this will also decide how your Superannuation is dealt with upon your passing.

It doesn't.

When it comes to the death benefits associated with your Superannuation, there are additional procedures that you must have in place to gain certainty and control of your preferred beneficiaries after you pass away.

The specific procedures we're talking about include the Binding Death Benefit Nomination (BDBN), which must match up with the requirements of superannuation law.

If you have a Self-Managed Superannuation Fund (SMSF) it must also match up with the Trust Deed for this.

If you do not have the above documentation in place, you could be at risk of:

Upon your passing, the remaining trustees of your SMSF or your nominated legal personal representative have the final say to whom your superannuation death benefits are paid, unless you have taken the appropriate steps.

Case Study - SMSF

Wendy and Michael are a married couple both aged 65 and both members and trustees of their SMSF. Wendy has one adult child from a previous marriage and in her Will has nominated for Michael and her adult child to have her Estate and death benefits equally split. Michael is Wendy's nominated legal personal representative.

Wendy unexpectedly dies, leaving Michael to act on her behalf as trustee of the SMSF. Despite what Wendy's Will states, as sole trustee of the SMSF, Michael allocates all death benefits to himself.

There is nothing legally that her adult child can do with the absence of any other documented measures and as sole controller of the SMSF. Wendy's Will is irrelevant when it comes to distributing SMSF benefits.

To avoid these risks, you must ensure your SMSF Trust Deed and BDBN both match and comply with superannuation law.

Wrights Chartered Accountants understand the complexities of SMSF set up and ongoing management. Our partners, Dan, Anthony and Chris are all approved SMSF Auditors and are here to help you navigate the SMSF landscape .

Wrights SMSF Advice Pty Ltd (ASIC No. 1260151) ABN 49 0622 867 770 is a Corporate Authorised Representative of SMSF Expert Pty Ltd ABN 17 155 686 356, Australian Financial Services Licence Number 445113

New NSW guidelines on fundraising

Tue, 10 Dec 2019 22:00:00 GMT

AUDIT UPDATE - NEW NSW GUIDELINES ON FUNDRAISING

Fair Trading NSW has published updated guidelines that explain the requirements and obligations of NSW fundraisers.

The guidelines should help to reduce red tape and increase compliance by making legislative requirements clearer and easier to understand.

They explain the regulatory framework that governs charitable fundraising and provide guidance on what can be considered a charitable purpose and what people should do before conducting online appeals and crowdfunding.

The guidelines cover topics such as the scope of fundraising activities, organisational requirements and the type of record-keeping and reporting that is required.

Find out more at www.fairtrading.nsw.gov.au/news-and-updates/news/new-guidelines-for-charitable-fundraising .

Protect yourself from scams

Tue, 10 Dec 2019 22:00:00 GMT

AUDIT UPDATE - PROTECT YOURSELF FROM SCAMS

Scams can undermine the good work of genuine charities and take advantage of Australians' generosity.

Fake charity scammers will steal by posing as a genuine charity, either in person or online. Scams can cost individuals a lot, but they also divert funds and donations away from legitimate causes and charities.

In 2018-19, the federal government's Scamwatch received 996 reports of fake charity scams. More than $300,000 was lost.

Telephone scams were reported 394 times, emails 169 and in-person 146. Those contacted on the internet suffered the highest losses, totalling more than $105,000.

To avoid scams, donors should:

If you have been the victim of a scam or you are suspicious about a request to donate, report it to Scamwatch. Reporting a scam helps the Australian Consumer & Competition Commission to monitor trends and disrupt scams. It also helps in warning others.

For more information about scam activity or to report a scam, visit www.scamwatch.gov.au .

‘Double defaulter’ charities revoked

Tue, 10 Dec 2019 22:00:00 GMT

AUDIT UPDATE - 'DOUBLE DEFAULTER' CHARITIES REVOKED

More than 1200 charities have had their registrations revoked for repeatedly failing to submit two successive annual information statements.

The ACNC can impose financial penalties for lodging statements late or revoke charity registration when charities become 'double defaulters' for failing to lodge two successive statements.

Submitting an annual statement is a requirement to maintain charity registration. Charities without registration are ineligible for Commonwealth tax concessions.

Dr Johns said: 'We are committed to maintaining an accurate, up-to-date [register] that provides a transparent source of charity information that the public can trust.'

The ACNC will continue to work with charities to help them meet their obligations. When charities fail to comply with the ACNC Act and governance standards the commission takes action.

'The public can rest assured that charities who have been revoked will clearly show 'revoked' on their […] listing so the public can donate with confidence to charities that meet their obligations,' Dr Johns said.

Revoked charities must submit overdue statements and can apply to re-register through the charity portal.

Charities may check the register to identify which statements are overdue. To search the register, visit www.acnc.gov.au/charity .

New disclosure standard might replace RDR

Tue, 10 Dec 2019 22:00:00 GMT

AUDIT UPDATE - NEW DISCLOSURE STANDARD MIGHT REPLACE RDR

The AASB is proposing to replace reduced-disclosure requirements with a new disclosure standard.

Exposure draft 295 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities proposes that the standard would apply to entities that report under Tier 2 of the differential-reporting framework set out in AASB 1053 Application of Tiers of Australian Accounting Standards .

The simplified-disclosure standard is based on international counterparts and adapted for differences in recognition and measurement requirements. It will also accommodate NFPs' specific circumstances.

The proposals in draft 295 will not change which entities are permitted to apply Tier 2 reporting requirements and their recognition and measurement requirements, which are the same as for Tier 1.

Draft 295 is proposed in conjunction with a forthcoming draft on the proposed removal of special-purpose financial statements. The result will reduce disclosures required and therefore the cost for entities that have to transition from SPFSs to general-purpose counterparts if the AASB's proposal to remove SPFS is implemented.

The proposals will also provide some immediate relief for public-sector and NFP private-sector entities that are currently reporting under the reduced-disclosure regime.

They are not intended to replace the AASB's separate project of reshaping financial-reporting frameworks for the NFP private and public sectors, and further changes might be suggested following AASB consultations with other NFP regulators.

Five charities lose status

Tue, 10 Dec 2019 22:00:00 GMT

AUDIT UPDATE - FIVE CHARITIES LOSE STATUS

The ACNC has revoked the charity status of five organisations following separate investigations.

They are Kaizen Synergy College, White Coats Charity Incorporated, The Trustee for Storybook Angels for Disabled Animals, Australian Community & Health Foundation Limited, and Beyond Community & Health Inc.

Without charity status, these organisations will be ineligible for Commonwealth tax concessions.

Dr Johns said: 'Following investigations […] we had no alternative but to revoke the registration of these charities […]'.

Dr Johns said the ACNC had an 'education-first' approach to compliance that aims to help charities get back on track.

'We work with charities to help them establish procedures to protect their charity and ensure it is well run. However, if charities fail to display a commitment to their governance, transparency or accountability, then we will take the appropriate regulatory action,' Dr Johns said.

The ACNC governance standards require charities to operate lawfully and be run in a responsible manner.

Charities have 60 days to object to an ACNC revocation.

The commission is unable to disclose further details about the investigations due to secrecy provisions.

Possible NFP whistleblower exemption

Tue, 10 Dec 2019 22:00:00 GMT

AUDIT UPDATE - POSSIBLE NFP WHISTLEBLOWER EXEMPTION

The Australian Securities & Investments Commission has been in consultations on proposed guidance for companies on new legal obligations regarding whistleblower policies.

ASIC sought feedback on exempting public companies (companies limited by guarantee) that are small NFPs or charities from the requirement to implement a whistleblower policy. It also sought to know the most appropriate threshold that should apply.

Prison term for false BASs

Tue, 10 Dec 2019 22:00:00 GMT

AUDIT UPDATE - PRISON TERM FOR FALSE BAS

An Adelaide woman has been given a year-long prison term after being convicted of a criminal offence for submitting false business activity statements on behalf of her charity.

An ATO audit found that she had overstated the GST input-tax credits the organisation was entitled to, gaining a financial advantage of more than $34,000.

The woman was ordered to pay reparations of $34,265. Her prison term was commuted to a two-year good-behaviour bond.

The charity was stripped of its ABN and tax concessions.

Aussie Helpers commits to improving governance

Mon, 09 Dec 2019 22:00:00 GMT

AUDIT UPDATE - AUSSIE HELPERS COMMITS TO IMPROVING GOVERNANCE

Aussie Helpers has confirmed a compliance agreement with the ACNC to address concerns raised about the charity's governance.

Aussie Helpers was established in 2007 to aid Australian farmers. It has been responding to increasing demands on its services.

The ACNC investigation found that Aussie Helpers did not have adequate policies and procedures for managing financial controls and conflicts of interest. It also identified a need for greater awareness by the charity's responsible persons of their duties under the commission's governance standards.

Aussie Helpers CEO Natasha Kocks said that the charity had fully cooperated with the ACNC's investigation.

She added: 'It is important to us that Aussie Helpers delivers support to those who need it, while also being well-managed with all the appropriate procedures and controls in place. We will continue to work with the ACNC to ensure the best outcomes for the charity and the rural families we support.'

Aussie Helpers quickly grew into a major rural charity. Its governance practices and policies failed to keep up with the growth in its size and complexity.

Ms Kocks said: 'We have been working with the ACNC to address the issues identified. All board members have now had governance training, the Aussie Helpers' constitution has been updated, and we are implementing financial controls and updating our policies and procedures.'

ACNC commissioner Gary Johns said that a compliance agreement was appropriate if a charity had cooperated with an investigation and made obvious attempts to comply with its obligations.

Dr Johns said: 'Aussie Helpers has fully cooperated with our investigation. The compliance agreement is evidence of the charity's commitment to increased accountability and transparency to donors and the public.'

For ACNC compliance decisions visit www.acnc.gov.au/raise-concern/regulating-charities/action-taken-against-charities .

Help with AGMs

Sun, 08 Dec 2019 22:00:00 GMT

AUDIT UPDATE - HELP WITH AGMs

The ACNC has developed a handy self-evaluation tool that charities may use to assess whether they are meeting governance obligations.

With the AGM season in full swing, self-evaluation gives you a chance to see if your charity is meeting ACNC standards.

Download the tool at www.acnc.gov.au/for-charities/manage-your-charity/governance-hub/governance-standards/self-evaluation-charities .

The ACNC does not require charities to hold an AGM, however they should check their rules and legislation that applies to them to find out whether they are required to do so.

You must notify the ACNC of certain changes that your charity may make at its AGM (such as its legal name, responsible persons or governing documents).

The ACNC has developed a range of resources to help charities with their AGMs.

Check them out at www.acnc.gov.au/tools/other-resources/annual-general-meetings and www.acnc.gov.au/tools/templates/annual-general-meetings-templates .

Online AIS submission available

Sun, 08 Dec 2019 22:00:00 GMT

AUDIT UPDATE - ONLINE AIS SUBMISSION AVAILABLE

This year's annual information statement may be submitted online via the charity portal. Charities operating on a July-June financial year have until 31 January to submit the statement. By submitting early, charities can ensure avoiding delays should they need to contact the ACNC for help. Read the commission's 2019 annual-information guide at www.acnc.gov.au/tools/guides/2019-annual-information-statement-guide .

Free child-safe software for small charities

Thu, 05 Dec 2019 22:00:00 GMT

AUDIT UPDATE - FREE CHILD-SAFE SOFTWARE FOR SMALL CHARITIES

Melbourne-based organisation Duty of Care is donating to small charities new software on child-safe accreditations.

The software is designed to support charities in their safeguarding obligations, including monitoring staff and volunteer child-safe accreditations and maintaining records of accreditation checks.

The software is free for charities that have an annual turnover of less than $250,000 and fewer than 20 staff. You may find out more at www.dutyof.care .

New ACNC governance toolkit

Mon, 02 Dec 2019 22:00:00 GMT

AUDIT UPDATE - New ACNC governance toolkit

The ACNC has launched its 'Governance Toolkit', a collection of resources to help charities manage financial abuse, cybersecurity, working with partners and safeguarding vulnerable people.

Each topic within the toolkit contains a comprehensive guide, useful templates, policy outlines, interactive checklists and more.

ACNC commissioner Gary Johns urged charities to focus on good governance.

'The resources are tools for charities and their responsible persons to use to assess their policies and management procedures, and consider where improvements can be made,' Dr Johns said.

'[It's] our view that a well-governed charity is better able to meet its purpose and achieve its goals.'

Charities may adapt the material for their own circumstances. Short quizzes on each topic help you to determine if your charity is well-governed.

'The assessments provide an opportunity for charities to test their own understanding of key risk areas,' Dr Johns said.

'Some charities may want to use these assessments as part of inducting new staff members or volunteers [into] their organisation.'

See the toolkit at www.acnc.gov.au/for-charities/manage-your-charity/governance-hub/governance-toolkit .

It's part of a governance hub – a dedicated home for key resources on charity governance. Hub users may find guidance on ACNC Governance Standards and External Conduct Standards and consult the small-charities' resource library.

The governance hub is at www.acnc.gov.au/for-charities/manage-your-charity/governance-hub .

Get your NFP starter pack

Sat, 30 Nov 2019 22:00:00 GMT

AUDIT UPDATE - GET YOUR NFP STARTER PACK

The Governance Institute has released its Not-for-profit Sector starter pack .

The pack includes guidance on:

The pack can be obtained at www.governanceinstitute.com.au .

Fraud Guide Released

Tue, 13 Aug 2019 23:00:00 GMT

AUDIT UPDATE - FRAUD GUIDE RELEASED

The Australian Charities and Not-for-profits Commission has released Protect your charity from fraud – the ACNC guide to fraud prevention .

It's opportune – fraud and financial crime are among charities' biggest worries. The guide highlights some of the risks charities face and provides practical steps that can be taken to reduce and manage them.

Aimed at board and committee members, trustees and charity managers, it should also interest employees and volunteers.

The guide covers the following:

The commission's top tips to protect charities from fraud are:

Tip	Action
Clear, written financial procedures and delegations	Have staff and volunteers follow proper financial controls. For example, always have two people involved in handling money and cheques. Establish clear financial-delegation guidelines.
Robust HR procedures	Ensure recruitment processes are sound and provide training and communication to staff and volunteers about fraud prevention.
Establish a code of conduct	Demonstrate and encourage ethical behaviour. Display codes of conduct prominently and embody it.
Define financial responsibilities	Ensure people with financial responsibility are competent and understand their roles. Have written role descriptions that set out what to expect from staff, including financial responsibilities.
Develop a fraud-prevention policy	Fraud-prevention policies should specify the steps a charity takes to prevent, identify and respond to fraud, as well as who is responsible for them.
Be secure when banking online	Ensure accounts and online banking passwords are secure, and limit who has access to them. Regularly change passwords.
Limit cash handling	The presence of large amounts of cash can encourage theft and fraud. Limit the amounts staff and volunteers may handle.
Monitor bank accounts, budgets and grant funding	Monitor your accounts and budget, and identify variations and things that don't make sense. Ask questions about variations. Keep track of how grant funds are used.
Ask questions	Board members should feel comfortable asking questions about their charity's finances, and managers should make sure that staff are accountable.
Understand the importance of reporting fraud	Ensure staff and volunteers understand the importance of reporting fraud and that there is a clear process on how to report to senior management, the police and the ACNC.

Reforms to the Whistleblower Protections Regime

Sun, 11 Aug 2019 23:00:00 GMT

AUDIT UPDATE - REFORMS TO THE WHISTLEBLOWER PROTECTIONS REGIME

The ACNC has advised that several charities will be affected by upcoming changes to whistleblower protection laws.

From 1 July, whistleblower protections in the Corporations Act 2001 will be expanded to provide greater shielding for whistleblowers who report misconduct about companies and company officers.

The reforms, which will be enforced by the Australian Securities & Investments Commission, are designed to broaden the definition of whistleblower, extend whistleblower protections and create provisions for civil penalties.

Changes in the Corporations Act will apply to companies registered with ASIC (public companies, including companies limited by guarantee). It will also apply to incorporated associations that are significantly or principally engaged in trading or financial activities. Charities that are incorporated associations will therefore need to decide if this applies to them.

Whistleblower protection provided for persons who make eligible disclosures about the tax affairs, including tax avoidance, of another entity. Separately administered by the Australian Taxation Office, the protections are detailed on the ATO website at ato.gov.au .

The ACNC encourages charities to consider whether they have an appropriate plan for managing whistleblower disclosures. It encourages public companies and incorporated associations to make themselves familiar with the requirements and obligations of the new rules.

The commission will soon publish more information about whistleblower protections.

Latest Charity Sector Insights

Thu, 08 Aug 2019 23:00:00 GMT

AUDIT UPDATE - LATEST CHARITY SECTOR INSIGHTS

The ACNC has released its fifth annual report, which provides invaluable insight into Australia's charity sector.

There are now more than 57,500 charities registered with the ACNC. The Australian Charities Report 2017 analyses annual information statements from about 47,000 charities - those that were submitted by 13 February this year.

Key findings include:

The report corroborated many findings from previous years:

The commission noted some significant changes, for example:

The full report can be downloaded at acnc.gov.au/charitiesreport .

SPFSs to Disclose New Compliance Measures

Sun, 04 Aug 2019 23:00:00 GMT

AUDIT UPDATE - SPECIAL PURPOSE FINANCIAL STATEMENTS TO DISCLOSE NEW COMPLIANCE MEASURES

The AASB has issued exposure draft 293 Amendments to Australian Accounting Standards – Disclosure in Special Purpose Financial Statements of Compliance with Recognition and Measurement Requirements .

It proposes that entities preparing special-purpose financial statements disclose explicitly whether accounting policies they applied comply with all the recognition and measurement requirements of Australian Accounting Standards.

Draft 293 proposes that for-profit entities lodging SPFSs with ASIC and NFPs lodging them with the ACNC disclose compliance in an explicit statement.

Information about whether entities have subsidiaries or investments in associates or joint ventures and how they have accounted for them would also be required.

AASB contends that although users of SPFSs should be able to demand any information they need; this not always happens. The proposals in draft 293 are aimed at addressing concerns that the quality of disclosures in a significant number of SPFSs fails to enable users to determine what additional information they might need.

Draft 293 proposes that entities lodging SPFSs with either ASIC or the ACNC (that is, entities required to comply with AASB 1054 Australian Additional Disclosures ), disclose:

Where an entity's accounting policies fail to comply with recognition and measurements, the AASB is not proposing, and does not expect, a quantification or reconciliation of the extent of non-compliance.

The proposed standard is an interim measure intended to provide greater transparency for users of publicly-lodged SPFSs and to improve their comparability with other financial statements.

A broader project proposes to remove the ability of certain entities to prepare SPFSs when they should comply with Australian Accounting Standards and replace them with general-purpose financial statements.

The draft proposes that the disclosures apply to annual reporting periods ending on or after 30 June 2020. Entities are encouraged to adopt early the proposed disclosures.

AASB 16 Leases is Live – Act Now

Wed, 31 Jul 2019 23:00:00 GMT

AUDIT UPDATE - AASB 16 LEASES IS LIVE - ACT NOW

AASB 16 Leases became operative on the first of January. If you haven't thought about it it's time you did. Implementing Leases isn't easy.

More than 340 pages of authoritative material and four related interpretations replace the 30-year-old AASB 117 forerunner. Ninety pages cover the standard itself, and 57 give examples. There are 90 pages of bases of conclusions and 103 of effects analyses.

To say the least, the new Leases presents a significant challenge for CFOs.

Simply put, AASB 16 eliminates the classification of leases as either 'operating' or 'finance' for lessees. There is now a single lessee model, which requires a lessee to recognise on the statement of financial position a right-of-use asset and a liability for leases with terms of more than 12 months unless the underlying asset is of low value.

Simple in theory but not in practice.

Some basic questions will get you thinking. What is a lease under AASB 16? Where is my lease documentation? Is it complete? What other agreements are there that could be a lease? What data do I need to capture? What does a 'make good' liability mean? What practical expedients are there? What is the lease term? How are separate components identified and accounted for? Which transitional method should I use? What discount rates should be used? Do I have to account for my sub-lease as a lessor? Do 'peppercorn' leases for not-for-profits have transitional relief? What software options are available?

The questions abound.

The CFO to-do list includes:

Don't forget that AASB 15 Revenue from contracts with customers and AASB 1058 Income for Not-for-profit entities also apply to 31 December balance dates for the first time.

None of them is easy nor are they set and forget. They will pose ongoing challenges at reporting dates.

New NFP Definition and Guidance Proposed

Tue, 23 Jul 2019 23:00:00 GMT

AUDIT UPDATE - NEW NOT-FOR-PROFIT DEFINITION AND GUIDANCE PROPOSED

The Australian Accounting Standards Board has issued exposure draft Not-for-Profit Entity Definition and Guidance that proposes to replace the existing NFP definition.

This draft proposes to:

The classifications 'for-profit' and 'not-for-profit' are important as the application of the Australian accounting standards can differ. Different recognition, measurement, presentation and disclosure requirements may also apply.

The distinction might become even more significant if the AASB develops a separate NFP-entity financial-reporting framework with simplified recognition and measurement requirements and several NFP reporting tiers.

Submit your comments to the AASB by 9 September.

Not-For-Profits move to Single Touch Payroll

Sun, 14 Jul 2019 23:00:00 GMT

AUDIT UPDATE - NOT-FOR-PROFITS MOVE TO SINGLE TOUCH PAYROLL

If your NFP has 19 or fewer employees you will need to start reporting through Single Touch Payroll between 1 July and 30 September. This means you report your employees' tax and superannuation information to ATO each time you pay them.

The ATO has made several resources available to assist with transition to STP, including a: guide for small employers, a list of STP software providers and a news, events and resources page

If your NFP has between one and four employees and doesn't use payroll software, other ways to report STP information are:

For more information visit https://www.ato.gov.au/Non-profit/Newsroom/Lodgment-and-concessions/Single-touch-payroll-for-small-employers/ .

Reporting Changes for Charitable Associations

Sun, 30 Jun 2019 23:00:00 GMT

AUDIT UPDATE - REPORTING CHANGES FOR CHARITABLE ASSOCIATIONS

New South Wales associations registered as charities should remember that they no longer need to lodge an annual summary of financial affairs with NSW Fair Trading and pay the lodgement fee.

The change occurred on 1 October 2018.

Charities must, however, lodge an annual information statement (and financial statements if required) with the ACNC each financial year. The information previously provided to Fair Trading will be collected by the ACNC and sent securely to the former.

The ACNC's annual information statement for NSW organisations has been updated to include extra questions that Fair Trading want answers to.

All questions must be answered, including providing an association's NSW registration number and name so it can be correctly identified as being exempt. If the association chooses not to answer one or more of the questions, it will need to lodge its annual summary with Fair Trading and pay the fee.

Incorporated associations must continue to notify Fair Trading of any changes to names, details, constitutions and public officers.

If an association is not on the ACNC charities register it must report to Fair Trading and a lodgement fee must be paid.

Associations must hold their AGMs within six months of their financial year-ends. Financial statements must be submitted to members at the meeting.

Visit the https://www.fairtrading.nsw.gov.au/associations-and-co-operatives/associations/running-an-association for more information about reporting obligations.

Change do not apply to charities approved by the ACNC to withhold details (for example, revenue or address) or financial reports from the ACNC register.

Single Touch Payroll - All Your Questions Answered

Mon, 15 Apr 2019 23:00:00 GMT

We recently ran some sessions with information about how to prepare for and implement Single Touch Payroll (STP) in your business.

To help you ensure that your business is ready to meet the 1 July deadline (for employers with 19 or less employees), we have compiled some frequently asked questions about STP with our answers below:

What is single touch payroll? A new law that requires employers to electronically submit YTD wages, YTD PAYGW and YTD super at the end of every pay run.

Is it compulsory?

Yes, it is a new law that you need to comply with as of the July 1, 2019. In fact, large employers have been complying with it this year.

What are the ATO using it for?

Data matching. The ATO are collecting super and PAYGW information so that they can make sure that employers are paying it. They are collecting gross wages so that they can ensure that employees are complying with any Centrelink obligations they have.

If I don't have payroll software can I complete it manually?

No. In some circumstances, you may get more time to comply, but essentially this law is making you purchase some form of electronic software to run your business's payroll.

If I do have software , what do I do?

There is a 3-step process that you need to follow.
1. Make sure the software is compliant. Note that only cloud-based / online versions are compliant.
2. Register the software with the ATO. Follow the prompts in your software and then call the ATO 1300 number and register. From discussions with people that already have registered this is a 2-minute process.
3. Make sure your payroll is set up correctly.

Does this mean that each time I do a pay run super and PAYGW is paid?

No. You still need to pay your super each quarter through your relevant clearinghouse and you still need to report your PAYGW on your BAS and pay it then.

Can I start doing the STP reports now?

Yes. Once you have gone through the relevant steps you can start sending STP reports to the ATO. We recommend that you do this so that you know how this works well before July 1.

What if I do it wrong?

Essentially you can't. Because it is reporting year to date figures, you will always be up to date. If you are paying your employees correctly (and they usually tell you if you aren't) then you will comply with STP.

How does it change my pay run?

It doesn't. At the end of your pay run, your software will ask if you now wish to submit your STP report? Click yes and the information will be submitted electronically.

If there is anything we can help you with your transition to Single Touch Payroll, please call us on 6566 2200.

Could your subbies be classified as staff?

Wed, 13 Dec 2017 22:00:00 GMT

This is a topic that's relevant to any organisation however due to the nature of the construction industry it's one that we often see Builders get in to trouble with.

If you hire a subbie as a contractor as opposed to as an employee, you have less obligations in terms of payroll tax, superannuation, workers' compensation and annual leave.

However, if the ATO or relevant state government department deem that your subbies actually classify as employees you may be faced with some unexpected payments. And it's not just one financial year's worth either.

To avoid any costly surprises that may be unearthed in an audit, we recommend having a system in place that will help tidy the lines between what is and isn't considered an employee.

The ATO will look at the following conditions to determine if your subbie is under a legit contract arrangement.

Are they under your direction?

Is the work performed regularly – do they have set hours of work?

Does the subbie use your tools or theirs?

Who is ultimately accountable for the outcome of the project?

An independent contractor runs their own business and they are hired to do a set task or tasks based on certain terms within a contract.

There are other measures you can take to ensure clarity around this matter such as ensuring you employ a subbie that has their own proprietary limited company. This will mean they will pay their own super and have their own Workers comp (always check this is the case by asking to see a Certificate of Currency), as opposed to hiring a contractor who is a Sole Trader.

Of course, this is an issue that doesn't necessarily have a black and white answer. We recommend that if you are unsure about whether your subbies could be considered as staff that you contact your Accountant or HR Consultant for advice around this.

What are your tax obligations for your AirBNB?

Sun, 10 Dec 2017 22:00:00 GMT

So you've found a way to add some extra pocket money to your bank accounts by hiring out your family home via AirBNB?

This can mean a great little injection of cash now, however beware of the potential hidden costs that may be lurking for you down the track. By renting your house out on AirBNB, you are generating an income. And just as any other income, this is assessable by the Australian Tax Office. This particular stream of income can also have implications that could see you charged capital gains tax on what you thought was deemed as your primary place of residence.

For example, if you are renting out 50% of your house as AirBNB accommodation, the Tax Office will treat this as income generation. Technically, half of your house is no longer deemed as your primary place of residence. It's 50% business.

This means that the ATO can deem that any increase to the value of your house could be assigned to income you were earning from your AirBNB listing.

And if you are thinking the ATO will never know. Think again. ATO have the ability to data match. They have just as much access to the AirBNB platform as the next person. It won't take them long to be able to access listing details for individuals and their properties.

Tax is essentially a self-assessment scenario. The ATO believe you, until they audit you. If you are not keeping accurate records of your taxable income and outgoings, the tax office will come up with an estimate. In our experience these estimates can be pretty hefty and unless you can prove why that estimate is incorrect, you may be up for a significant tax bill.

So our advice? Keep records of everything.

The kick in the tail

Your income assessment opportunity will be based on the period of time that your house was listed as available. NOT on your listings actual earnings. The ATO are assessing your properties Income earning capacity, not your income realised.

So what is deductible?

Operating costs are deductible. These costs are best defined by thinking about what your AirBNB guests will use such as electricity, cutlery, furniture and insurance.

Holding costs such as claiming a portion of your mortgage costs are a little bit trickier.

There can be some quite technical considerations when it comes to renting out your house on AirBNB so we believe it's well worth getting sound advice from your accountant so you can plan ahead.

You certainly don't to be surprised with a hefty tax bill from the ATO when you go to sell your house.

If you would like any further information about this topic, please call Anthony de Jager, Chris Garret or Doug Cheetham on 02 6566 2200.

Did you know?

Tue, 05 Dec 2017 22:00:00 GMT

Travel costs are no longer deductible for rental properties.

This change became effective as of 1 July 2017 and in our opinion it wasn't well publicised. Before you rack up any potential travel costs in association with your rental property, we recommend you consult your accountant.

Use Your Summer Season’s Taking to Build a War Chest for Winter

Sun, 03 Dec 2017 22:00:00 GMT

Summer is here, hooray.

As a business located on the beautiful Mid North Cost of Australia there's more than a few reasons to get excited about this time of year.

Extended daylight hours allow us to hit the beach or catch up with friends after we finish work. The warmer temperatures add a spring to our step and for a lot of businesses, you will look forward to your peak season trade.

We believe that a peak season of trade also presents opportunities to prepare yourself for a potential lull in trade in the Winter season. Being clever with your peak season profits can ultimately save you a lot of stress and anxiety in the months that you are not so busy.

Here are four of our top tips that will help you best utilise your peak season profits to build your war chest for Winter.

One of the best things we have noticed with our clients who have been proactive and used their busy periods to prepare for the slow periods, is that it provides them with emotional peace of mind.

There's often an underlying sense of anxiety that can be present with business owners, even during high profit periods. It's like knowing what goes up must ultimately come back down.

Of course, these tips apply not just to Summer and Winter seasons, they can be applied to any busy and quiet periods.

For more information about how you can build a war chest for slower sales periods please call Anthony de Jager, Chris Garrett or Doug Cheetham on 02 6566 2200.

Is my Christmas Party deductible?

Thu, 30 Nov 2017 22:00:00 GMT

Very quickly it seems we have arrived at the time of year to start planning our festive season celebrations! It's now time to plan just how you will reward your team and your clients for working with you throughout the course of the year. A question we are often asked by our clients is what and how much is deductible when it comes to our end of year festivities.

Staff Rewards

When it comes to Christmas parties, you can spend up to $300 per staff member which will be 100% deductible.

If it exceeds these limits, your spend could be subject to Fringe Benefit Tax and not be considered a tax deduction. If you do plan to spend in excess of $300 per staff member, we recommend you speak to your accountant to get further advice on this.

You can also give gifts up to the value of $300 per staff member and it be tax deductible.

For example, one of our client's gives our staff $250 in gift vouchers as a Christmas gift. These vouchers are certainly appreciated at a time of year when personal costs can escalate significantly.

It works for them. The vouchers are essentially a gift of pre-tax money. If they were to give the equivalent as a bonus payment, they would have to gift $450 for them to actually get the $300 in the hand. Also, by giving gift vouchers, they don't pay super or workers comp on it this amount.

And yes, you can double dip. You can spend up to $300 per person on a Christmas party as well as up to $300 on a gift and this amount of $600 will be fully tax deductible.

Client Rewards

A wonderful way to show your appreciation to your clients for their loyalty and custom throughout the year is to host an end of year party or present them with gifts. The full amount of gifts and party spend is 100% deductible when spending on clients.

If you are unsure about which business expenses are deductible, we recommend you check with your accountant before you spend the money on them!

For more information, visit wrightsca.com.au/our_services/accounting/tax

When to set up a tax effective business structure to minimise tax

Wed, 29 Nov 2017 22:00:00 GMT

One of the biggest mistakes we see small businesses make when it comes to structuring their businesses to minimise tax is leaving it too late. We believe there are five key times that you should come to us for advice on your tax strategies.

If you feel your business could benefit from some expert advice around setting up tax effective business structures, please call Chris Garrett, Partner, on 02 6566 2200 or visit wrightsca.com.au

Accountants – the original Business Coaches

Tue, 26 Sep 2017 23:00:00 GMT

Setting goals, keeping you accountable and knowing how to make the numbers work. This is all in day's work for an accountant who offers strategic business advice.

We help you decide the goals to set

In our opinion setting financial goals that can drive your business forward are integral for business growth.

It's easy to jump straight into revenue or profit goals, however not so easy to understand what's realistic for these.

In our experience, some business owners need to peel it right back and get the simple foundation goals in place before worrying about profit goals.

Setting goals around ensuring that you consistently break even, achieving healthy levels of staff utilisation, optimising your cash flow, reviewing pricing and reducing expenses may need to be considered in alignment with revenue and profit goals.

We keep you accountable

Goals are only useful if you make them happen. We know how easy it is for small business owners to set goals with every intention to reach them, then life gets in the way.

Knowing that someone will be holding you accountable every month or every quarter can be the ammunition you need to keep you on track.

Our Clarity and CFO services aim to do just that.

We understand the numbers

With the introduction of cloud accounting software such as Xero, reports such as your Profit and Loss are simple to keep up-to-date generate upon demand.

The bottom line of a P&L is very easy to interpret however, what about all of the other line items. The numbers may be clear, but what those numbers actually mean, may not.

This is where the expertise of a qualified accountant can help.

We are a firm believer that all numbers tell a story. By working closely with our clients we have the ability to review a P&L and immediately identify abnormalities that an unqualified eye won't necessarily read.

We also believe that these reports need to be monitored regularly. Monthly, quarterly and of course annually.

If your business is at a stage where you need some strategic business advice for growth, please give Anthony, Chris or Doug a call on 6566 2200.

How to get more time and more money with Xero

Tue, 12 Sep 2017 23:00:00 GMT

Cloud Accounting company Xero recently surveyed 340 small businesses across Australia and New Zealand to find out what they thought 2017 had in store for them.

Nearly one in three businesses surveyed had a neutral outlook - believing their business will remain stagnant – and one in five had a negative outlook for 2017.

When it comes to surviving those first five (often tough) years of business, it's software such as Xero that can make all the difference.

Statistics show that while only 51 percent of small businesses survive more than five years, 88 percent of those on Xero will still be around to celebrate their fifth birthday.

In our experience, the biggest difference something like Xero can make to a small business is that it can simply provide savings in time and resources meaning you are getting paid faster and more efficiently.

More time and more money – the two things on every small business owner's wish list right?

Cloud accounting software such as Xero can eliminate inefficient manual systems which saves your team from having to double handle tasks. In fact, we've seen one of our clients reduce a seven step manual process to a simple click of a button.

By removing inefficiencies such as manually reconciling your bank account and being able to roster and reconcile payroll within a one-tap system you could potentially reduce your bookkeeping time from 60 hours a week to less than 15 hours a week.

We all know how important cash flow can be to a business. One of the easiest ways to maintain cash flow is to simply get paid on time. Simple efficiencies such as being able to set up auto reminders for invoices can save you several hours a week and increase your cash flow.

Imagine what else you could be getting done or the money you could be saving!

If you would like to find out more how we can save your business time and money by introducing Cloud Accounting solutions, please give Anthony, Chris or Doug a call on 6566 2200.

Opportunities arising from recent Super changes

Tue, 29 Aug 2017 23:00:00 GMT

As most of you will know, on July 1 this year there were a number of changes that took effect to Australian Superannuation rules.

Superannuation legislation is always going to be subject to change. The reality is, is that super rules are far easier to change than company laws. This is because when you change a company law it affects all companies. From the three-person corner store to the BHP's.

Superannuation laws on the other hand really just affect Mums and Dads making them easier and nimbler to pass.

So it's our job to keep you ahead of the game and ensure that we are always optimising your business's financial opportunities in the face of these constant changes.

A couple of the main July 2017 superannuation changes that have now taken effect will definitely warrant a review of your tax effective strategies.

Annual concessional (before-tax) contributions cap has now been reduced to $25,000 and annual non-concessional (after-tax) contributions cap reduced to $100,000.

With the company tax rate transitioning from 30% to 25% over the next two years this could present opportunities.

There are simple and effective strategies that our team can help you out with to ensure that your wealth creation and retirement planning is considered and effective.

For more information about tax effective strategies for your business, call Anthony, Chris or Doug on 6566 2200.

How did the budget affect small business?

Thu, 24 Aug 2017 23:00:00 GMT

Good question. And the answer is not terribly much. However, we have summarized a few points below that small business owners should know about:

$20K immediate deduction extended for another year

So all businesses with an aggregated turnover of under $10million will get the $20k immediate deduction for assets purchased by business owners. #win

If you are planning for some purchases in the next two years – you should know that the immediate deductibility threshold will revert back to $1k from July 1 2018.

Contractors in the courier and cleaning industries face greater compliance

In an effort to win the war against the #blackeconomy, these organisations are now required to report payments they make to contractors to the ATO – including details such as ABN, name, address, gross amount paid, total GST included in gross amount.

This industry has been identified as a high risk industry and this call for increased transparency are hoped to improve fairness for businesses, level the playing field and strengthen the integrity of our tax system, resulting in a net gain to the budget of $632 million.

Small business CGT concessions tightened

Put simply, some small businesses are being creative with their access to concessions for assets which are unrelated to their small business.

As a result the small business CGT concessions will be tightened to ensure that the concessions can only be accessed in relation to assets used in a small business or ownership interests in a small business. #fairenough

Levy on businesses employing foreign workers on skilled visa

Businesses that employ foreign workers on certain skilled visas will pay a levy that will be channelled into the Skilling Australians Fund . The new levies replace and increase the existing training benchmark financial obligations, generating an estimated gain of $1.2 billion over 4 years.

For businesses with a turnover less than $10 million p.a.

Businesses with turnover of less than $10 million per year will make an upfront payment of $1,200 per visa per year for each employee on a Temporary Skill Shortage visa and make a one off payment of $3,000 for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa.

Who collects the GST on residential property & sub-divisions

Under new integrity measures, property developers will no longer manage the GST on sales of newly constructed residential properties or new subdivisions. Instead, the Government will require purchasers to remit the GST directly to the ATO as part of the settlement process.

It seems that some property developers are failing to remit the GST included in the property purchase price to the ATO despite having claimed GST credits on their construction costs.

The practical effect for developers is that they will not have the GST they would have collected to assist with cashflow between the period between settlement and when they would normally remit it to the ATO.

Indexation returned to Medical Benefits Scheme

Indexation will be reintroduced for elements of the Medicare Benefits Schedule:

In addition, from 1 July 2020, indexation will be introduced for certain diagnostic imaging items on the MBS, including for computed tomography scans, mammography, fluoroscopy and interventional radiology.

Large multinationals laws tightened further

The multinational anti-avoidance law will be enhanced so that it applies to:

Removing double tax on Bitcoin

The GST treatment of digital currencies such as Bitcoin will be aligned to prevent consumers who use these currencies paying GST twice.

If you need any advice about around small business tax compliance please please give Anthony, Chris or Doug a call on 6566 2200.

How to Forecast for the Financial Year Ahead

Sun, 16 Jul 2017 23:00:00 GMT

Firstly, plan for how much profit you want to make next financial year.

Your forecasted profit may be based on previous year's performance or you may want to choose a magic number to work towards.

Our top three tips for coming up with the magic number are as follows:

And remember, just getting a wage out of your business is not profit. A wage is a return for your effort. Profit in your business is a return or the risk of being in business.

If your business is at a stage where you need some strategic business advice to plan for profit, please give Anthony, Chris or Doug a call on 6566 2200.

When enough is really enough

Sun, 05 Feb 2017 22:00:00 GMT

As business owners it's very easy to feel like we are achieving something if we feel busy. Often though, that busyness is a result of inefficiency – either your own or your teams.

And when we are being inefficient, it's easy for us to tip the work/life balance scales in favour of the work quotient and before you know it, you're spending all your time at work and your family life suffers.

We believe this problem can be addressed by a few things, the most important is to put some clear financial goals in place – and stick to them.

By having clear financial goals in place, you can work hard as an organisation to achieve those goals. Once they have been achieved – and here is the hard part – you can relax, go home early and spend some time with your family. Yes you can.

For example, if your goal is to achieve $100k in revenue for a month and you achieve that goal by the 20 ^th of the month, celebrate that and then take it easier for the next 10 days. Take the opportunity to get home a bit earlier and spend time with the family while you can.

If you have reached your budget and an opportunity arises to make more money on a job or opportunity that you know will cause you pain. Have the confidence to say no.

There is a great fable about a Mexican Fisherman that was featured in the 4 Hour Work Week by Tim Ferris. It illustrates this point perfectly.

An American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them.

Three Ways to Avoid a Cash Flow Crash in 2017

Wed, 30 Nov 2016 22:00:00 GMT

In any business at any stage, cash is king. However, cash flow mismanagement is often the number one pain point for most SME's and one of the highest causes of business insolvency.

A recent MYOB survey of SME's revealed one of the biggest stress factors for business owners comes down to cash flow management, with 50% respondents opting to not pay themselves a wage one or more times in the past year as a result of cash flow issues.

If any of this is sounding familiar, it may be time to nip your cash flow issues in the bud for 2017. If you are going to work as hard as you do, you want to ensure that you are generating a return for your hard earned efforts.

Below are three factors we believe are crucial to ensuring your business has a healthy and sustainable cash flow.

1. Be aware of your cash flow cycles

Plan out your year in advance by anticipating peaks and troughs of sales activity. If you can see where you may have lulls in your turnover you can start to plan to address these before it is too late. Marketing and promotion can take a couple of months to start generating results so if you know that you will be quiet over Christmas or during winter – start ramping up your marketing well in advance of these periods.

2. Have a solid billing system

Having clear payment terms on your invoice, billing for the provision of your goods and services as quickly as possible and having a system in place to chase bad debtors are all integral habits to have in place to ensure your bills are being paid as quickly and efficiently as possible.

Using automated accounting software such as Xero can help exponentially with this. The technology has been developed to make it as easy as possible for you to get paid. It includes invoice templates that include all of the necessary information needed to communicate your billing terms and automation functionality such as scheduled invoice follow-up emails.

3. Get some help where needed

Consider getting some help with forecasting and budgeting, bookkeeping or debt collection. If you find that you're are not getting the time or do not have the expertise to manage your cash flow effectively, perhaps it's time to harness some help from the experts.

Many businesses feel uncomfortable about chasing debts, particularly with existing clients. Outsourcing this job to a third party can avoid those uncomfortable conversations and ensure that you collect your money promptly.

Accountants and bookkeepers are familiar with the nuances of managing a business's numbers. They know the key figures to monitor and the warning signs of an impending cash flow disaster.

By allowing experts to manage your accounting or bookkeeping activities you may end up saving yourself a stack of time and money as well as investing in your businesses sustainability in the long run. So make a point of reviewing your key numbers regularly, looking forward and planning ahead rather than looking back and reacting and you will be far more likely to avoid a cash flow crash in 2017!

Avoid Accounting Overwhelm

Tue, 25 Oct 2016 22:00:00 GMT

There are times in a business journey where sticking your head in the sand and not paying enough attention to your numbers can start to cause some major headaches.

It's easy to feel overwhelmed as you consider adding yet another lot of jobs to your already extensive to do list, let alone being faced with the notion of having to understand what can sometimes seem like another language.

However, having more skin in the game in the day-to-day management of your accounts does not have to be time-consuming or complicated. In fact, the simpler you make this process for yourself, the better results you will get.

Below are some easy suggestions that will help you ease into getting a handle of your business accounts.

1. Set yourself one attainable goal at a time

One of the biggest factors that we see causing overwhelm in our clients is when they set themselves unrealistic financial goals. While it's admirable to set yourself a high-flying goal, if you can't achieve it, you will simply end up demotivating yourself. We urge you to set yourself a challenge that will take you outside of your comfort zone, just make sure the timeframe or financial figure you are aspiring to is something you can achieve.

2. Monitor one or two key numbers

There is no need to dowse yourself in excessive numbers or reports that don't mean anything to you. Based on the attainable goal you have set yourself, determine what one or two key figures you will need to monitor closely in order to help you achieve that goal and then just monitor that figure every month. Good examples of numbers to watch are your break-even point, your monthly revenue or profit margin or even your monthly expenses.

3. Set daily habits

Setting daily habits can help us achieve a big goal little by little. For example, if you were to aim to spend just 5 minutes a day reconciling your accounts, you would not be faced with a pile of boring reconciliations to action at the end of each month or quarter.

4. Automate where possible

Cloud accounting software is amazing – it saves bucket loads of time and it makes your key financial figures super easy to access and understand. We suggest you get onto it right now.

5. Measure your progress

Keep track of how you are progressing to achieve your goal. We find that when our clients set themselves mini milestones to achieve along the way, it significantly increases their chance of achieving their goal. For example, if your entire goal is to increase your revenue by 10% within 6 months, reverse engineer that goal and work out what your revenue needs to be each week or month within that 6 month period for you to be able to achieve that increase. By achieving your smaller goals, you will easily achieve your ultimate goal.

6. Make adjustments when necessary

If you are measuring your progress regularly you will also have the opportunity to make adjustments along the way if it looks like you are veering off track. Be prepared to spend the time not only monitoring your progress but also to make any necessary adjustments to help steer you back on track.

We love providing our clients with strategic and considered advice that helps them grow their business. If you would like to speak with one of our accountants about how we can grow your business, contact us today.

Three simple steps to creating effective financial measurement

Mon, 17 Oct 2016 22:00:00 GMT

Let's face it, business owners are often time poor and fulfilling ubiquitous roles. Keeping track of their finances is simply another job to add to their very long list. We speak with a lot of business owners who will openly admit that they like to either bury their head in the sand when it comes to the day to day management of their accounts due to not having the time available to monitor or to understand what the numbers really mean.

As Chartered Accountants who have worked with thousands of small businesses for many years, we see how measuring your financial activity on a regular basis can have such a significant effect on the success of your business. Keeping the key figures front of mind with both yourself as well as your team can help you make better informed decisions about costs, investments and business development efforts.

In many business cases, there are generally just a few key numbers that you need to keep front of mind to help you make decisions that will benefit your business.

Keeping track of your financials doesn't have to be hard or take a lot of time. Below are four quick and easy steps that will help you effectively and efficiently measure your businesses key financial data.

Step 1: Decide what you need to know

Ascertain what the important numbers are to report on by considering your short and long term objectives. Do you need to increase revenue, reduce debt, achieve a break-even, increase profit or simply generate a healthy cash flow?

If you are unsure about what you should be aiming for with your measurement metrics, hit Google up for some industry benchmarks. These are available online in bucket loads and most of the time you can access the information for free.

Step 2: Pick a period to report on

There's already not enough time in a working week for a small business, so the last thing you want to do is add an unnecessary task to your list for the sake of it. Depending on their size and industry, most of the businesses we work with measure their financials in detail on a quarterly basis. They do however also pay attention to a few key numbers monthly or even weekly to help guide decisions around expenses, sales, marketing or cash flow.

The weekly or monthly measurements don't need to be longwinded or consist of pages of figures – they may just involve half an hour of reviewing your P&L and setting some goals accordingly.

Step 3: Go forth and measure

Once you have decided what you are going to measure, how often you will measure it, who is in charge of measuring and what you should be aiming to achieve, it's time for the doing.

There is no point in completing steps one and two if you don't actually follow through with the measurement activity itself.

We have found that by formally nominating either someone within your organisation, or your chosen accountant / bookkeeper to have ultimate accountability for monitoring, measuring and reporting on your numbers often works best.

It's also a good idea to nominate all of those within the organisation that could benefit from being exposed to these figures in order to help drive their activities or decision they may have to make that will affect your figures.

Distribute this information in a consistent manner either at a weekly or monthly WIP meeting or simply sent as a group email to the relevant people. Your team will be far more inclined to keep your financials front of mind in their day-to-day operations if they are exposed to them often, and can appreciate how their actions may affect the bottom line.

Increasing Profit: Why Reducing Your Overhead is not Necessarily the Answer

Sun, 11 Sep 2016 23:00:00 GMT

There are not many business owners we work with who don't have 'Increasing Profit' as one of their number one financial goals.

When it comes to increasing the potential for profit in a business a lot of business owners jump straight to the assumption that reducing their overheads is the answer.

While this is certainly one tactic you can take, it's generally not the one we advise first up. Firstly, let's take a look at the most common overheads in a business; staff and premise costs.

Below we look at some alternative solutions to increasing your profit around these areas by simply working a little bit smarter.

Staff Utilisation

Yes, you can reduce the number of staff you have in a business to save on costs. However, if you need these staff to help you get a job done in a timely fashion, this will not be the answer. If you start overloading your remaining staff with extra work because you have cut back on other staff members, they are likely to become disgruntled and leave or simply become unproductive. This can lead to customer disappointment and or increased recruitment costs.

Instead, we recommend looking at your staff utilisation and / or your workflow processes. Are your staff being as efficient & productive with their time as they can be? Or are there some process improvements that you could implement to help them achieve more in a day.

Premise Costs

Saving money by relocating your premises is something we often see our clients consider when they are reviewing their profit opportunities. However, we believe that there is more to consider than just cost in this decision. For example, if your business is paying a premium in rent because you are located in a street that experiences high traffic, this could be leading to certain proportion of your leads and sales.

At the very least it will be contributing to a high awareness of your brand. By moving your premises to a less visible location you risk losing that visibility and therefore a portion of sales.

In this circumstance, we would recommend gaining a thorough understanding of how your customers find you and weighing up the pros and cons and potential loss in revenue vs cost savings by relocating premises. We would also review alternative solutions such as subleasing some of your premise space to another business.

How to Maximise the Potential of Your Cloud Based Accounting Software

Tue, 30 Aug 2016 23:00:00 GMT

When it comes to getting the most out of your chosen cloud based accounting software - it's not what you've got - it's how you use it!

Cloud accounting solutions are improving by the minute and can offer your business so many benefits including the ability to access your financial data from anywhere at any time, savvy integrations with other third party cloud software, immediate access to upgrades and the list goes on.

As accountants, we find the biggest benefit of using this software is it allows us to access key financial information at the stroke of a key. Within an instance we can get a snapshot of your financial position in real time and make decisions with more clarity and speed. This to us is an absolute game changer.

We do however notice a lot of businesses who have taken the step to embrace a cloud based accounting system into their business but are not using it to its maximum potential.

Below we give you three tips for you to ensure that you are getting the most efficiency out of your software.

1. Integrate your accounting software with other third party cloud based software

The options for integrations are endless. Potential integrations could include timesheeting software, payment gateways, banking software to name a few. These integrations could be streamlining further processes in your business, freeing you up to spend time on other things.

2. Connect Your Bank Feed for automatic entry

The better cloud based accounting systems will allow you to pull your bank feeds automatically into their systems. This can save hours in reconciliation and data entry.

3. Download the mobile versions so you can invoice on the go

With applications such as Xero Touch , you can download to your mobile or Iphone and can issue invoices via email on the go. This is perfect for people who are on the road for the majority of their day and would like to speed up their data processing and payment times.

Cloud accounting software provides us with fast and easy access to key financial information and reduces lengthy manual compliance processes. This allows us to spend more time providing you with strategic advice.

If you would like more information about how you can utilise Cloud Accounting Software to save time in your business, please contact us today.

How to Create a Gold Medal Financial Result

Mon, 15 Aug 2016 23:00:00 GMT

We can learn a lot from super successful athletes such as Michael Phelps. His athletic achievements are nothing short of stunning. But like every successful person, the man has a strategy.

His coach Bob Bowman has a clear philosophy for creating excellence. His approach is not rocket science, however like any successful strategy it requires some planning, big thinking and persistence.

Create a big vision

Why think in small measures when it comes to creating a vision for your business. Successful people create goals for themselves that push them outside of their comfort zone while remaining realistic with what they can achieve. To rack up close to 25 Olympic Gold Medals is a huge vision – however we believe Michael's vision is a lot larger than this!

Achieve something everyday

Achieving on a regular basis only serves as inspiration to keep the momentum going. Daily KPIs – no matter how big or small all - add up. Whether it's achieving a certain daily staff utilisation amount, a daily sales figure or as simple as checking in on your key numbers – these daily achievements will lead to impressive annual results.

Take chances

Be OK with uncertainty. A high aversion to risk can limit your ability to leverage a great opportunity. We often work with our clients to help them run the numbers on certain opportunities which ensures that they are taking calculated risks.

Create shorter term goals that will lead you to long term success

Goal setting is crucial to achieving success. We advise setting a few key short term goals that help to keep you focussed and that ultimately lead you to achieving your larger, long term goals. For example, ensuring you are covering your break-even every month or setting weekly / monthly sales forecasts.

Create a routine

Create positive financial habits both for yourself and your team. Incorporating a weekly team meeting that reviews forecasted revenue and expenses for the week or month will help keep everyone in touch with what the organisation needs to achieve financially.

Review often

It's one thing to set financial goals and forecasts however these are useless if you are not reviewing them to see if they have been met. It's also important to investigate why or why not goals have or have not been met so you are also able to optimise and tweak your tactics to ensure you are meeting these goals in the future.

Build Your Support Team

Michael has a massive support team! His coach, his fellow Olympic team, his medics, his family and friends, the entire population of the USA! The more support you have, the more help you have and the more accountable you are. This is particularly powerful when you may be going through a financial rough patch and you need to rally the troops to pull you through as a team.

Maintain Your Focus

Use your vision to keep you focussed and motivated. There are always good days and bad days in business and it's easy to get disheartened if you experience a bad financial result every once and a while. The most successful business owners that we see are those that ride out the tough times by reviewing and revising their KPI's and goals on a regular basis. This puts them in a good place to react or even better to take proactive action to improve a situation.

Perform with Confidence

If you are doing all of the above, you can proceed with the utmost in confidence.

We help businesses achieve their PB in business on a daily basis. We are an Accountant Practice that is driven by our client's success. If you'd like to find out more about our strategic approach to building business contact us today.

One-on-One with Dan our Business Audit Supervisor

Sun, 03 Jul 2016 23:00:00 GMT

Can you tell us a little about your background?

I completed a Bachelor of Commerce at the University of New England in 2004. Then I joined an accounting firm in Armidale where I specialised in Internal and External Audits. I spent just over 3 years there before my wife and I relocated to Kempsey to be nearer family. I then moved into a management accounting role within local government, focusing on budgeting and forecasting and cost management. I did that for over 5 years whilst completing my CPA, then moved back into public practice in 2013 when I joined the team at Wrights.

What is the most rewarding part about your role with Wrights?

For SME's it's really satisfying to see entities grow and improve their bottom line as a result of some work we have done for them, or advice we have provided. For audits clients it's being able to add value to their controls and systems at the same time as helping them meet their compliance obligations.

What are some of the biggest challenges you think businesses may face next financial year and ways to overcome?

Technology developments: there are a lot of changes in this space, and it can be costly for business to keep up to date and maintain the appropriate skill set to fully capitalise on the benefits and efficiencies that could be obtained. I think a lot of these changes have been, and will continue to be, forced upon business, and the challenge will be to embrace the benefits rather than resist change.

Also, we are seeing a trend of political instability within Australia at present, with governments and leaders chopping and changing at both the State and Federal levels. This appears to be having a negative effect on consumer confidence and the economy. It would be good to see some longer term planning rather than governing for the sake of re-election.

If you could invite any three business people to lunch, who would they be and why would you invite them?

John Singleton – he has been successful for a long time and at such a wide variety of businesses as well, it would be good to get an insight into some of the common themes in his successful ventures. Also appears to be a bit of a character, so would be entertaining.

Steve Waugh – a sportsman, but also has made the transition into the corporate world. Just to get his perspective on getting the most of your abilities and unlocking potential.

Justin Herald – founder of the "Attitude" clothing line – I saw him speak at a conference a couple of years ago and was impressed by his story of starting out with next to nothing and turning an idea into an international brand.

Did your business hit target last financial year?

Tue, 28 Jun 2016 23:00:00 GMT

"If you fail to plan, you are planning to fail" - Benjamin Franklin

For most small business owners in Kempsey and Port Macquarie, failure is not an option. We have staff to worry about, bills to pay and goals to achieve. Yet how many of us plan accordingly to get where we want to go?

As Benny Franklin suggests, without a plan in place, you're on the back foot from the get go. As small business owners we naturally want to get more out than we put in, right? But how often are we leaving our success to chance?

The benefits of business planning mean you can stay on top of your business financials and focus on growth milestones.

Four reasons why you need to start setting goals and projecting your business performance next financial year:

1. This is an opportunity for you to learn, improve and anticipate problems that may arise over the next 12 months.

2. It can improve your vision on where your business is heading and prompt you to plan for how you are going to get there.

3. It gives you a solid, evidenced-based approach to your decision making.

4. It can provide you and your team with added motivation by setting achievable goals and targets.

A great place to start when planning your business budget is to focus on key performance indicators. By focusing on key indicators, you can easily monitor and notice changes that may affect the performance of your business so you can act accordingly.

Two key performance indicators to focus on when creating and monitoring your budget are:

Break-even Point

Your break even calculation will help identify the number of sales you need to make to cover all of your business expenses. Any revenue generated above your break-even point can be considered as profit. By understanding your break-even point, you can set weekly, monthly and annual sales targets that will ensure you cover costs and begin to earn a profit.

A simple formula to calculate your break-even point is:

Overhead expenses/ (1 – (Cost of Goods Sold / Total Sales))

For example, if your overhead expenses were $20,600, your cost of goods sold were $51,200 and your total sales were $74,000, then you would need to make $66,860 to cover your business expenses prior to making any profit.

Break-even calculation: $20,600/ (1-($51,200/$74,000)) = $66,860

Net Profit Margin

The net profit margin indicates how much profit your business makes per dollar of revenue it brings in. Understanding your net profit margin will allow you to deep dive into your business to find ways to reduce costs and increase efficiencies.

A simple formula to calculate your net profit margin is:

Net profit/total revenue

(Net profit = total revenue – total expenses)

For example, your business may earn $500,000 in revenue with a net profit margin of 5%, generating $25,000 of net profit. Without generating any further revenue, you can look into your operating costs, such as staff and rent, and discover ways to reduce expenses in an effort to increase your profit.

If you were to change premises and reduce your annual rental expense, you would reduce the amount it costs to generate the same amount of revenue. By reducing your rental expense your new net profit margin increases from 5% to 10%. Your business now earns $50,000 net profit for every $500,000 of revenue generated.

By monitoring simple KPI's regularly and looking for trends, you are able to understand where things may be going wrong and where you may need to make changes.

Similar to the engine light in your car, when it lights up on your dash, you know something needs fixing. The same principal applies to your business. With a simple budget and a process for monitoring this budget in place, you can catch the small inefficiencies before they blow up into big cash flow problems.

Need help putting a budget and growth strategy in place for your business this coming financial year? We're your local Accountant in Kempsey and Port Macquarie focused on helping you grow your business. Contact us today.

There's more to protecting your assets than just renewing your insurance.

Wed, 18 May 2016 23:00:00 GMT

These days, insurance is almost second nature. Whether it's your car, boat, business or health your insuring, it's the obvious solution to protect against unexpected mishaps. While the go to strategies are important, there's so much more business owners can do to ensure they don't get caught out. In truth, the best way to protect against loss of assets is to have a number of protection mechanisms in place, commonly known as an Asset Protection Plan.

Here are 5 top tips that you can implement to protect your assets.

- Employ best business practices

- Get adequate insurance cover

- Spread your risk

- Be smart with your home ownership

- Be super savvy

Employ best business practices

This may seem an obvious point, but the less likely to be sued you are the better. By employing ethical business practices and obtaining the correct financial and legal advice, businesses can greatly assist in reducing the likelihood of being involved in litigation.

Get adequate insurance cover

Having adequate insurance cover is an easy way to protect your personal and business assets. This is a must have and any business who doesn't have the appropriate insurance cover is treading on thin ice. However, don't put all of your eggs into the insurance basket.

Spread your risk

Separating business assets is a great way to spread and reduce risk. Consider creating multiple entities where ownership of key assets are separate. This way, if a claim is made, only one entity may be effected.

Be smart with your home ownership

We all know the family home is one of our most valuable assets. So, a great tip is to have this asset in the name of a low risk spouse or family member, rather than under a business entity. This way you can stay clear from capital gains tax, reap other tax concessions and keep your family assets in tact if a claim is made against the business.

Be super savvy

Unless the ships already sinking and you're transferring large sums of money into your superannuation account on the way to court, your super has statutory protection from creditors.

Not only this, Self Managed Super Funds (SMFS's) can provide more flexibility and control over assets compared with some corporate or industry super funds. T he fact is, with a bit of planning and sound advice you can ensure both your personal and business assets are protected.

Avoiding a Cashflow Crisis

Tue, 22 Mar 2016 22:00:00 GMT

Those of you who have run a business for even a short time know that you will not be able to operate for very long if cash flows out more than it flows in. Surprisingly, despite this knowledge being common, many businesses regularly find themselves in cashflow crisis.

So, before your cash-strapped business is pushed over the brink, here are three ways to tell if you're in cashflow crisis and three things you can do to avoid it.

You're probably in cashflow crisis if:
1. You're in regular contact with your bank about the overdraft and meeting payroll and statutory payments
2. You're in regular contact with your clients and your suppliers about overdue payments
3. You're obsessed about your month-to-month bottom line.

The lesson that business owners have to master immediately is that cashflow is the lifeblood of any operation. A business owner can never assume that cash will look after itself. Cashflow needs to be actively managed and monitored - here are three ways how.

1. HAVE A CASHFLOW FORECAST OR PLAN

It's important to understand your cashflow cycle, to understand the relationship between your profit and cashflow over the year and to be prepared for when the high tides and low tides in cashflow occur.

The key factors to build in to your cashflow forecast plan are:

2. MANAGE YOUR DEBTORS AND YOUR STOCK

Remember, a sale doesn't count until the cash is in your bank account and if you overstock, you invite cashflow problems.

To manage your debtors, create a good billing system; send out the bills on time, with clear payment terms and timely debt chasing. If you are a key person in day-to-day business relationships – say, in sales, business development or delivering the service – give the job of dedicated, diplomatic debt-chasing and communication with your creditors to someone who doesn't need to maintain a positive sentiment in daily relationships with customers and suppliers.

3. LOOK OUT FOR HIGHS AND LOWS

Businesses experience high tides and low tides in their cashflow, but it isn't always clear why this occurs. It's important to compare cashflow on a month-by-month basis against purchase trends for the three months before and the three months after a dip. Can you pinpoint the reasons? Was it price, performance, competition? If so, you may need to adapt your business operations or marketing to respond to the problems exposed in the low cashflow periods.

If you've read these tips and are thinking 'where do I find the time to do all this?' or 'where do I start?' then maybe you need some expert assistance.

Wrights Chartered Accountants | Blog

Repairs vs Capital on Rental Properties (Residential & Commercial): Getting the call right

Key principles in plain English

Residential vs commercial: same rules, different outcomes

Why accuracy matters to owners

How to position your claim

Practical scenarios we see

FBT: What the ATO Is Watching and How to Get Ready

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Why lodge an FBT return - even if you think your exposure is small

What typically triggers FBT attention

Start now: the April deadline comes fast

Quick wins we often implement

What “good” looks like by April

Payday Super Is Coming: What Employers Should Know Now

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What is “Payday Super” in plain English?

Why this change matters (even if payroll software does most of it)

Cash flow: the part to think about early

Your “self-serve” readiness checklist (keep it simple)

SBSCH is being phased out - plan for it

What to do next

One Powerful Way to Lift Profit: Take a Fresh Look at Your Overheads

When profit feels tight, many businesses jump straight to chasing more revenue. Growth matters, but so does the quality of each dollar you keep. A practical way to improve your profit and loss (P&L) without disrupting sales is to take a fresh, focused look at your overheads .

Why overheads deserve your attention

Good places to look (examples)

What “good” looks like

How to get started

Pitfalls to avoid

Where your accountant adds value

Mid Year Check In - Is Your Business on Track?

Start with the scoreboard

Cash flow: the next 90 days

Customers, pipeline, and pricing

Capacity and delivery

Budget vs actuals: learn, then revise

A 60-day plan

Make improvements stick

Closing Over the Holidays? Here’s Your Small-Business Shut-Down Plan

If you’re closing over Christmas/New Year, a little prep now means you can actually switch off, and reopen without a scramble. Use this simple plan to line things up before you lock the door, and to be ready for the first week back.

Pick your dates and tell people

Set up out-of-office (that actually helps)

Money & deadlines: the Jan/Feb pair (and the April squeeze)

Cash flow over the break

Operations: pause cleanly, restart smoothly

Team: clarity beats availability

Systems, logins, and scams

First week back: a short checklist

Actually switch off

The wrap-up

Employees vs Contractors: What’s the Real Difference for Your Business?

Audit Season, Board Governance, and AGMs

What You Need to Know and Do

Key Focus Areas for This Season

1. Audit Preparation: Don’t Leave It Too Late

2. Board Governance: More Than a Tick Box

3. AGMs and Annual Reporting: Deadlines Are Looming

Practical Tips to Stay on Track

Beyond Compliance: A Governance Opportunity

ATO Interest Charges Are No Longer Deductible: Here’s What That Means for Your Business

From 1 July 2025 , interest charges applied by the Australian Taxation Office (ATO) are no longer tax deductible .

What’s Changed?

Why the Change?

What Does This Mean for Your Business?

How to Respond

Looking Ahead

Super on Payday from 1 July 2026

What These Changes Mean for Your Business – and How to Prepare Now

Super Payments Will Match Your Pay Cycle

Double Dipping: Prepare for the Cash Flow Squeeze

What Can You Do Now?

In Summary

Looking Ahead: Why Now’s the Time to Set Profit Goals and Build a Budget for Next Year

What do I want next year to look like - and how much profit do I want to make?

Start With the Profit You Want to See

Set a Few Simple Goals

Why a Budget Makes It All Clearer