BAS Agent’s Blog

Director ID

In an attempt to make it easier for external administrators and regulators to trace directors’ relationships with companies over time, the government now requires every company director to obtain a Director Identification Number or Director ID. This will also prevent fraudulent and unlawful behaviour when a company is wound up e.g. illegal phoenix activities. This will begin in November 2021.

The ID is a unique identifier that is applied for once and is owned by a director forever.

A director will need to apply for his own ID number himself – this cannot be done by someone else on his/her behalf. Application instructions can be found on the Australian Business Registry Services (ABRS) website.

Once the director ID is created, the director will need to share it with his/her company corporation record-holder. This may be the company secretary, another director, contact person, or an authorised agent of the company.

To find out further details about obtaining a director ID, go to the ABRS website.

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New Work Mindset

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Over the last few weeks, I have completely turned my beliefs about work, upside down and inside out.

I don’t know if it’s because I’m getting older and starting to eye-off retirement, or if it’s a side effect of living the “Covid-19 lifestyle”, but I’ve changed my mind about how a work-week should look. In short, I’ve decided that for me, the “normal” work-week no longer exists.

I have stopped believing that Monday to Friday are days for work and Saturday and Sunday are days for relaxing or play. For me, there are no longer weekdays and weekends – there are just days. Each day is mine to use as I please. Relaxing can happen on any day. Working can happen on any day. A day may involve both work and play – it’s my choice!

I no longer have set working days or hours – I work when I want to, for as long as I want to, on any day that suits me, including weekends.

I do not subscribe to the “Monday to Friday are for work and weekends are for relaxing”, concept.

How is this possible?

I am well aware that working whenever you choose, is not possible for many people, for various reasons. This is only possible for me because I am self-employed so I can call the shots. I am very lucky in that regard and am very grateful.

But I haven’t written this blog to spruik some sort of new philosophy or to convince you to try it too!

All of this, including this blog, is just for me, but I wanted to share it with you because I have found that this new mindset has made me more relaxed and more focused when I am working. I feel more in control of my work and life in general. I now have a work-life_life-work balance. Cool huh! And, hey, if you do want to give it a try, well that’s up to you, but again, this is really just something I’m doing for myself and my well-being.

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How does this make me feel?

This new mindset has given me pure flexibility in my life. On any given day, if I feel like working, then I will work. If I want to take a walk, then I will walk. If I am asked to look after my grandchild, then I will happily do so.

I used to feel guilty if I tried to do something non-work-related during the week, always thinking, “I should be working right now”. Really, I was letting work control my life and my choices. Since enacting my new mindset, I no longer feel guilty. I feel like I’m in charge!

Giving myself permission to work whenever I want to or can, has somehow empowered me. And how do I feel about this? I feel happy and free. Yeah, that’s it. I feel free (even in lockdown!)


Have you made any drastic changes to the way you are working now? Has Covid-19 forced you to work differently compared to pre-Covid days? What are the pros and cons for you? I would love to read your comments – please do leave them below!

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How to check your transactions before lodging a BAS in Xero

Although there are several ways to check your transactions before you lodge your BAS in Xero, one way to do it is by using the “Detailed Account Transaction Report”.

Here are our step-by-step instructions for using this report:

  • Log into your Xero file.
  • To get to the Detailed Account Transaction Report (DATR), go to the “Accounting” tab, then “Reports”, then “Accounting”, then DATR.
  • Select “wide view”
  • Enter the date range of your BAS.
  • Sort by account code.
  • Choose “cash basis” if your BAS is cash-based.
  • Select “update”. Note that you will now see 2 columns – one for GST rate and one for GST name.
  • Export the report to Excel.
  • Sort the column for GST name by A to Z. Here is a link for how to do this if you aren’t sure.
  • Review the transactions, making note of any errors or issues.
  • Go back to Xero and amend any transactions as required.
  • Save and/or publish the report with your other BAS reports for your records. You can now complete your BAS, satisfied that the data is accurate.
  • Add the DATR to your favourites list so you can find it easily when you do your next BAS.

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Simple Cash Flow Tool

In this blog, I am going to share a cash flow spreadsheet that I use in my business. This is my very “simple cash flow tool”. It’s not a forecast per se (but could be made into one), rather, it’s a reality check tool for your business, that tells you exactly how much you have to spend, as opposed to how much you think you have to spend!

We’ve all looked at our bank balance when it’s healthy and started having visions of new clothes, holidays and nights out etc. However, as business owners, we also know that we have business (and personal) costs that must be paid for before any of those enticing dollars can find their way into our pockets. Below is a list of those costs included in the spreadsheet. You may have different costs or extra ones – feel free to amend the list to suit your needs.

  • General expenses (operating costs)
  • Wages, superannuation and PAYG withholding
  • GST
  • PAYG income tax and/or previous years’ income tax repayments
  • Loans and credit card payments
  • Previous’ month/quarter BAS
  • Your own sundry spending (your drawings or director loan amounts)

How does the spreadsheet/tool work?This tool asks you to review a prior period such as last week, fortnight, month, quarter or year. For the purposes of the tool, we call these periods your “focus periods”. Before you begin using the tool, it is a good idea to choose your focus period. Of course, you can change the period type later as needed, but to begin the process, just choose one period of interest.

In summary, the spreadsheet is split into two sections. The first section takes your opening bank balance at the start of your focus period, adds any income from sales, deducts your operating costs and deducts the required minimum bank balance (that amount you know you need to leave in the bank for running costs). The result provided is the balance available for spending or saving as at the end of the focus period i.e. how much you have at your disposal TODAY. Here is an example of what section one looks like – the cells highlighted in green show your available balance:

You could decide to transfer some funds to savings, pay down debt, buy something special, give employees a bonus, buy new equipment – the choice is yours. While this information about available funds is extremely useful, our tool goes a step further!

The second section in the spreadsheet takes today’s available balance as above, then adds back any future income and deducts future bill or liability payments.

The final result is called your “true cash flow figure“, and is a more accurate representation of your financial position. Note the difference between the result in section one and that of section two in our example above! The true cash flow figure is less than half of the available funds as at the end of the focus period. This is often the case because section two takes all future cash transactions into account, whereas the figure in section one only looks at the here and now. Don’t get me wrong, knowing your available spending balance as of today is still necessary, however, in order to understand your true cash position, it is important to include all future spending/income. Doing this will ensure that you don’t inadvertently spend dollars that really should be saved for the long term.

Now that you can see your “true cash flow figure” you will be able to make a more informed decision about how much is really available for spending (or saving) today. Of course, if your figure is low or even negative, then perhaps you need to review your situation and work out why this is happening. Whatever the outcome, this tool will provide you with a snapshot of your overall financial position. One important aspect to note is that for this tool to work properly, your accounts need to be up to date. As a minimum, ensure that your bank accounts are reconciled up to the end of your focus period prior to using this tool.

I suggest running this cash flow tool on a regular basis to assist you in controlling and understanding your business finances. If you need assistance to use this tool or would like us to prepare it for you, please get in touch to discuss.

Getting started with the cash flow tool

Open the spreadsheet which is shared below. There are 3 tabs in the spreadsheet. The first tab of the spreadsheet is an example of how the tool works and includes notes and instructions. The second tab is a single-period cash flow to look at one focus period only e.g. one week, one month etc. The third tab is a multi-period tool that allows you to look at several periods at once. Follow the instructions provided in the first tab and then enter the figures as required into either the single or multi-period tab.

I hope you find this spreadsheet tool useful. Let me know if you have any questions about it or have some suggestions about how to improve it, by leaving your comments below.


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New year, new process – Job Requests!

This year we are making some changes to our internal processes. As part of those changes, we recently moved to a new job management system called Clickup. The app allows for a lot of innovation and creativity in regards to business operations, including the ability to automate many processes. We have only just begun our journey with Clickup but are already very impressed. Our first “automation creation” via Clickup is a new way for clients to send us job requests.

We have created a form in Clickup which asks clients what their job request is about and it allows for document uploads too – here is a screenshot of the form:

Once submitted, the form is automatically turned into a task inside the client’s folder in Clickup. Clickup then notifies us that the job has been created. The due date supplied by client on the form is marked as the due date in the task by Clickup. Any documents supplied by the client are added to the task too. There is nothing for us to do here (except the job itself, of course!). Automation is a wonderful thing!

We have advised clients to add the link for the job request form to their favourites list for quick access at any time. We also put the form link into our email signature to give clients an alternative way to find the link quickly. Hopefully, the use of this new form will reduce the number of emails between us and our clients (and who doesn’t want less email clutter?). We may even investigate the idea of putting a button on our website for request submission…..who knows!

The Job Request form is the start of a few new processes coming out this year. I’ll blog about this as we go along.

Do you do something similar to the above with your clients? Does it work well? Do you use Clickup for your business? Let us know by commenting below.

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JobMaker Hiring Credit

Employers now have more incentive to employ workers under 35! The JobMaker Hiring credit legislation has now been passed into law! This credit was part of the 2020-21 Budget, which will operate until 6 October 2022. It is designed to improve the prospects of young individuals getting employment following the devastating impact of COVID-19 on the labour market.

Commencement

The scheme will be backdated to commence on 7 October 2020 and provide eligible employers with the following payments for up to 12 months for new jobs created for which they hire the following young workers:

• $200 a week for hiring a worker aged 16 to 29 for at least 20 hours a week and

• $100 a week for those aged 30 to 35.

Although the scheme is slated to run for just 12 months, that period is the hiring period – not the payment period. Eligible employers who hire an eligible employee as late as the last day of the scheme (6 October 2021), may be eligible for hiring credits for the subsequent 12 months until 6 October 2022.

Employer Eligibility

As an employer, you will be deemed eligible for JobMaker if the following criteria are met:

  • for the first 6 months of JobMaker, you have hired additional eligible employees (minimum of one additional employee). This is determined by a headcount as at 30 September 2020 and the payroll of the business for the reporting period, as compared to the three-months to 30 September 2020.
  • have an ABN,
  • are registered for PAYG withholding,
  • are up-to-date with lodgement obligations for the previous 2 years (including BAS and income tax returns) and
  • are reporting payroll through STP

You will not be deemed eligible if any of the following apply:

  • you are claiming JobKeeper for your business,
  • you have entities in liquidation or who have entered bankruptcy
  • your entity is a commonwealth, state, and local government agency (and entities wholly owned by these agencies)
  • you are subject to the major bank levy
  • your business is a sovereign entity (except those who are resident Australian entities owned by a sovereign entity.
Employee Eligibility

Employees will be eligible if they:

  • commenced employment between 7 October 2020 and 6 October 2021
  • were aged between 16 and 35 years at the time they commenced employment
  • have worked an average of 20-hours a week for each whole week the individual was employed by the qualifying entity during the JobMaker period.

Additionally, the worker must have met the pre-employment condition which requires that for at least 28 of the 84 days (i.e. for 4 out of 12 weeks) immediately BEFORE the commencement of employment of the individual, the individual was receiving one of the following payments:

  • parenting payment
  • youth allowance (except if the individual was receiving this payment on the basis that they were undertaking full time study or was a new apprentice) or
  • JobSeeker payment.

We note that the new worker must be in a genuine employment relationship. For example, ‘non-arms length’ employees will not be considered eligible employees. This includes family members of a family business, directors of a company and shareholders of a company.

A summary of the above can be downloaded here – this a nifty fact sheet from the ATO. Also from the ATO, is this useful JHC payment calculator. Further fact sheets and information can be found here on this ATO page.

If you have hired new employees from October 2020 or are planning to do so in the next 12 months and are interested in the JobMaker Hiring Credit program, please get in touch with us for further information and assistance.

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Superannuation Services Extended

A new legislative instrument has been released which has extended the services BAS Agents can provide to clients in relation to the super guarantee charge (SGC). BAS Agents have been able to assist clients with superannuation tasks for approximately 2 years now, but this instrument allows them to do more and be of greater benefit to clients.

BAS Agents can currently offer superannuation services to clients like processing, advising upon and lodging monthly/quarterly superannuation guarantee data. The Tax Agent Services (Specified BAS Services Services No. 2) Instrument 2020, as it is known, will allow BAS Agents to expand upon these services to include the following tasks in relation to SGC:

  • Act as an authorised contact on behalf of clients with the ATO in relation to SGC accounts, payment arrangements, penalty remissions, super audit and/or review activity;
  • Advising clients when the superannuation guarantee (SGC) charge applies and why;
  • Advising clients about offsetting late payments of superannuation contributions against the SGC;
  • Completing the late payment offset election section of the SGC statement;
  • Acting on behalf of clients in relation to lodging the SGC statement.

The instrument will also allow BAS Agents to view and access superannuation guarantee and SGC accounts in online services.

If you are a BAS Agent and would like to read the detail of the new instrument, here is the link to the Explanatory Statement.

The new legislation means that we can now assist clients with superannuation services on a much higher level and therefore provide more value than before. We have added these new services to our services page where you can also view other services we provide.

If you would like to find out more about the superannuation guarantee charge, go to this ATO webpage.

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The “Boosting Cash Flow for Employers” payment (PAYGW Boost Credit)

As part of the economic stimulus triggered by the Corona Virus pandemic, the Federal Government has introduced the “Boosting Cash flow for Employers” measure or as we like to call it, the PAYGW Boost Credit. This measure promises to “refund” the PAYG withholding reported on the BAS or IAS by employers back into their integrated client accounts (ICA) as an offset against any existing BAS/IAS debt. To be clear, this is not a supply of cash to employers into their banks. This is simply crediting PAYGW back into the ICA to effectively reduce BAS/IAS debt. The only time an employer will see any cash is when a refund is created because the PAYGW credit is more than the whole activity statement debt. So who gets these payments, how much do they get and how do they get it? Read on to find out!


WHO IS ELIGIBLE?

Businesses will be eligible for this stimulus measure if they:

  • Held an ABN on 12 March 2020 and continue to be active
  • Are a small or medium business including NFP, sole trader, partnership, company and trust entities.
  • Have an aggregated turnover under $50M
  • Have made payments from which they have been required to withhold (even if this a zero amount). Such payments may include salary and wages, director’s fees, eligible termination payments, compensation payments and withholding from contractor fees.
  • Have made GST taxable, GST free or input taxed sales in a previous tax period since 1 July 2018 and lodged a relevant BAS on or before 12 March 2020.

HOW MUCH IS PAID?

PAYG withholding amounts will be credited back to the integrated client account (ICA) of between $20K and $50K. These credits are not income and as such will not be taxed. The do not have to be repaid ever. The good thing is that the PAYG withholding you report on your BAS will still be tax deductible. Note, if you have a tax debt on your ICA, the credit boost amount will simply pay down that debt.


HOW IS IT PAID?

These credits will be applied in two stages to integrated client accounts after 28th April 2020 and after the March 2020 quarter or monthly BAS is lodged. You do not have to apply for this measure, AND you do not receive any actual cash – this is credit only, not cash paid to your bank. The second stage credit will be applied in quarter 1 of 2020-21.


HOW DO THE PAYMENTS WORK?

Put simply, there are 2 payment stages for this measure. The first stage is a payment of up to $50K based on the amount of PAYGW reported on the March 2020 BAS. Examples below:

Quarterly Lodgers

If your March 2020 BAS shows a PAYGW amount of $12,000, this amount will be credited back to your ICA. In your June 2020 BAS, if a $14,000 PAYGW is reported, then this will also be sent back to the ICA. So far, a total of $26,000 has been credited. This is the first stage amount. The second stage amount will be the same as the first one i.e. $26,000 and will be credited to your ICA split evenly across June to September 2020.

Monthly Lodgers

If your March 2020 BAS shows a PAYGW amount of $12,000, this amount is multiplied by 3 (to take up amounts for January and February 2020) to give you a credit of $36,000. April, May and June 2020 BAS’s will continue to be lodged which may or may not total more than $50K. For this example, let’s say April was $10,000, May was $8,000 and June was $6,000. This will be a total PAYGW of $60,000. As the first stage payable can be no more than $50K, then $50K is all that will be credited to your ICA. The second stage payment will also be $50K.

What if my PAYGW is less than $10K or zero in my March 2020 BAS?

In this case, you will be credited $10K in the first stage of credits and another $10K in the second stage for a total of $20K.

PAYGW Boost Credit Calculator

Here is a great calculator to assist you to work out how much your PAYGW boost credit might be: https://digit.business/payg-cashflow-boost-calculator-advanced


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JobSeeker Payment

The JobSeeker payment will be delivered by Centrelink, now known as Services Australia. It is a new payment designed to assist those who have lost their jobs or had had their income reduced due to the COVID-19 pandemic.

Here are the details about this payment:

  • To be eligible, you must be between 22 and Age Pension age (those under 22 may be able to claim Youth Allowance).
  • You must be a permanent employee who has been stood down or lost your job, a sole trader, self-employed, a casual or contract worker whose income has reduced, or caring for someone who has been affected by Coronavirus.
  • To register you intent to claim for this payment, you do not need to go to Centrelink. You can do this via your MyGov account (ensure you are linked to Medicare, ATO and/or Centrelink).
  • When you log into MyGov, you will be prompted to register your intention to claim the JobSeeker Payment.
  • After registering, you will be contacted (in time) to complete your application for this payment.
  • Income testing may apply (see below).
  • If you are receiving payments for annual or sick leave or income protection insurance, you will not be eligible for JobSeeker payment until those payments have ceased.
  • You will be required to look for work whilst on JobSeeker payments, however, this requirement has been temporarily lifted up to and including Friday 22 May 2020.
  • Sole traders and self-employed people now earning less than $1,075.00 per fortnight will not have to look for work whilst on JobSeeker payments as long as they continue to operate their businesses. Note, JobSeeker payments are income tested. If your partner earns more than $79,762 a year, you will not be eligible for JobSeeker.
  • Payments will begin on April 27 and will be available for at least six months.

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