We have some exciting news for you! The cloud continues to revolutionise our economy and we cannot wait to tell you about it. Read on to discover the new features everyone is talking about.
For the Start-ups
Capital funding is a crucial factor of the start-up business cycle, an awfully time consuming stage at that. There tends to be an unnecessary back-and-forth between yourself, your accountant and the financial institution. If only your bank could access real time financial data and credit rating and approve your application on the spot. Welcome to The Financial Web.
Xero have brought accounting and financial services onto the one platform, making your life incredibly easier. Through partnerships with vendors such as Moula, OzForex, CGU and Veda, The Financial Web will streamline your ability access funding and embrace economic growth faster than ever before.
For our inner Auditor
Auditing is not usually the most popular topic on the block, Xero have done it again. Similar to our performance dashboard, we will soon have an insight into each business’ level of assurance. The Assurance Dashboard is a simple means to provide confidence in data within this beautiful software. Through a series of basic audit controls, each adviser can monitor and maintain a level of assurance and continuous certification. The features include a series of exception and anomaly reports, as well as a user summary dashboard.
Our personal favourite, wait for it.. Xero Tax Update!
Now as if Xero Tax wasn't already one of the greatest releases, but here is one better. Who doesn't love automation? That's right, it's another integration! Xero have announced a feature that will change your days. Xero financial statements will soon be imported into Xero Tax, mapped to appropriate categories and voila - a draft tax return. But that's not all.
Some of you may already be familiar with electronic signing through eSign. An Adobe feature that uses digital signatures over the traditional print and scan method. In addition to this, a recent partnership with DropBox and Gmail will enable you to finalise a job all within Xero Tax.
These features will be integrated to allow you to send, save, lodge and sign within seconds! Awesome.
Note: The Gmail integration will also apply within Xero supplier and customer views, where you can attach any relevant conversations and documents.
Other product releases
- Apple Watch App: to be released with iOS 9, the app will include features such as bank refresh notifications, current account balances and an overview.
- Xero Me App: for payroll employees on the go, this app contains all your pay slips readily available, functionality to apply for leave, complete timesheets and update your personal details (Already released in Australia).
- Debtor Auto Reminders: a feature to enable you to send out a friendly reminder to debtors within a selected overdue period.
- Fixed Assets update: Asset types, pools and cost limits will soon be available. This will include both Tax and Accounting options.
You may have heard that there is a new regime when it comes to paying your superannuation contributions from 1 July 2015. It’s called SuperStream and there’s no reason to be concerned about what to do. We’ll walk you through the basics right here and what you need to do to get ready for it’s introduction.
What is SuperStream?
SuperStream is essentially a new data and e-commerce standard designed to improve the superannuation system. The entire system is going electronic, increasing efficiency and transparency (and let’s be honest, room for increased ATO data-matching). The key area we’re going to focus on here is what it means for employers who need to make superannuation contributions for their employees from July 1.
What does this mean for you? It essentially means that the old method of manually filling out contribution documents and sending cheques or doing random EFT payments to various superannuation funds is going out the window.
From 1 July, you’ll be required to make all these contributions electronically using a specific format. How do you know what format to use? There are two main options for small businesses:
Using a commercial clearing house to simplify your payments. An example of this is the Small Business Superannuation Clearing House (only available for businesses with less than 20 employees). You can see more about making contributions this way here or;
You can save the hassles using the above manual process and choose to rely on your payroll software to ensure your contributions are sent in the right format. For all of you guys using Xero for your accounting & payroll, the Auto Superannuation function in Xero Payroll takes care of this (and it’s our preferred option!).
Xero’s Auto Superannuation
As mentioned above, we believe that for all our clients using Xero for their accounting & payroll, Xero’s Auto Superannuation, built inside the Xero Payroll system is the simplest and best option to meet your SuperStream obligations. A video describing how the system works is at the following link:
Xero’s Auto Superannuation is currently available on all Xero’s premium business plans. This means that if you are currently on a Standard Xero subscription, you’ll need to upgrade to Premium 10 before you can use this feature. The difference in price is currently an additional $10 per month, meaning it’ll cost you an extra $120 per year.
On the plus side, this system is ridiculously easy to use and will save you HOURS of admin time every quarter when your super contributions are due. This rings true even for businesses that only have a couple of employees. Money well spent in our opinion... You could even say it’s ‘super’ to use.
Of course, if you don’t use Xero for your accounting or payroll functions, there is a list of government approved payroll products on the ‘Superstream Certified Product Register’. You can find the list here.
Still not sure what you need to do? Don’t hesitate to give the Interactive Accounting team a call on 1300 102 606 and we’ll be happy to point you in the right direction!
Turnover under $2m?
Heard about the $20K asset deduction?
Before you start spending, there are a few things you need to know....
Are you making a profit?
If your business isn't making a profit, you will have a much smaller benefit because you aren't currently paying tax. You will only be able to defer the loss until future years. Basically, there'll be no immediate cash benefit to your business!
It's not law yet!
This announcement is just that, an announcement. It hasn't been passed into law as yet. We expect this to happen in the coming months, but there is always a small risk things could change.
You need to be eligible!
To use the instant asset write-off, your business needs to be eligible. The first test is that you have to be a business – not just holding assets for investment purposes.
The second is the aggregated turnover of your business needs to be below $2m. 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.
Consider your cashflow!
Cashflow is more important than an immediate deduction. Assuming your business qualifies for the deduction, the most important consideration is your cashflow. But, your business still needs to fund the purchase for a period of time until you can claim the tax deduction and then, the deduction is only a portion of the purchase price.
So, what has changed anyway?
In general, a deduction is available for purchases your business makes. What has changed for small businesses under $2m turnover is the speed at which they can claim a deduction. Before the Budget announcement, small business could immediately deduct business assets costing less than $1,000. This figure has now jumped to $20,000.
Remember, this is the price AFTER subtracting the GST portion.
What can't I claim?
There are a number of assets that don’t qualify for the instant asset write off as they have their own set of rules. These include horticultural plants, capital works (building construction costs etc.), assets leased to another party on a depreciating asset lease, etc.
Also, you need to be sure that there is a relationship between the asset purchased by the business and how the business generates income. For example, four big screen televisions are unlikely to be deductible for a plumbing business.
Please note, it doesn't need to be a NEW asset. Second hand goods, purchased for your business can also be claimed.
Not sure? Get good advice.
It’s important not to rely on the advice of the person you are purchasing from. There is a lot of misinformation out there in the market right now and it’s important to know how the concessions apply to you.
What else is new?
These changes will commence from 1 July 2015:
Small business tax cut - 1.5% for companies and 5% tax discount for unincorporated small businesses under $2m (capped at $1,000)*
Employee share scheme rule changes to make the schemes more attractive particularly to start-ups.
Start-ups able to immediately deduct a range of professional expenses required to start up a business – such as professional, legal and accounting advice.
The way work related deductions for car expenses are calculated will change. The '12% of original value method' and the 'one‑third of actual expenses method' will be removed. The 'cents per kilometre method' will be modernised, replacing the three current engine size rates with one rate set at 66 cents per kilometre to apply for all cars.
Superstream is coming!
2015 Federal Budget
How will you be affected?
The Federal Government’s second budget has been anointed the ‘Fair Go’ budget. What it can really be described as is short-term relief with no major focus on long-term strategy for Australia’s future. The main feeling from this budget is that of being a little underwhelmed, with the obvious feeling being the government focusing on the three year electoral cycle.
It is a significant shift from the austerity measures taken in last year’s episode, with a view towards stimulating the economy through small business. Some significant changes have been made in small business, with a view to business ‘borrowing and spending’.
These include the following:
- Instant Asset Write-off
- Company tax rate cut
- Formation Expenses
- Fringe Benefits Tax Exemption
- Rollover Relief
- Changes to Employee Share Schemes
All small businesses will get an immediate tax deduction on items with a value of up to $20,000. The current level sits at $1,000. This limit applies to each individual item (asset) with there being no limit to how many items it can be applied to.
This measure is in effect from Budget Night (May 12, 2015) to the end of June 2017.
The key advantage of this is to allow small business to work smarter and more efficiently with new technology. This will no doubt factor heavily in small business end of financial year tax planning in the next 6 weeks or so.
The much promised, long awaited cut to the corporate tax rate has finally arrived. Small business companies will from 1 July 2015 pay a company tax rate of 28.5%, with a view to cutting the rate to 25% in successive budgets.
The Federal Government estimates that this measure will assist up to 780,000 incorporated small businesses.
Companies with a turnover of more than $2 million will have still have to pay tax at the current 30% rate.
Small businesses will now be able to immediately deduct all setup costs, including the cost of legal and accounting advice. Previously this type of expenditure needed to be written off over five years under the ‘Blackhole Expenditure’ provisions.
The Federal Government has also announced the creation of the Australian Business License and Information Service (ABLIS) to streamline the registration processes for new business. This is expected to be up and running by mid-2016.
Under existing rules, each employee is only allowed an exemption from FBT for one portable electronic device, per year. This rule is now extinct thanks to a new exemption on all work-related portable electronic devices.
This means that for the tech-savvy among us who use a smartphone, tablet and/or laptop computer, you can purchase all within the same year, without incurring an FBT liability. Great news for those who choose to embrace technology and stay connected.
Businesses that commence only to find they have elected the wrong legal structure will now be able to access Capital Gains Tax rollover relief. This will occur when they need to change legal structures but retain the same beneficial ownership. A huge win for small businesses.
Significant changes are on the way for Employee Share Schemes in Australia. Stay tuned to our blogs for a more in-depth, separate coverage of this topic in the coming days.
Want to know more about the 2015 Federal Budget? Click here.