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”.
NOTE! THE DETAILED ACCOUNT TRANSACTION REPORT NO LONGER EXISTS IN XERO (SINCE JULY 2023). YOU NOW NEED TO ACCESS THE GENERAL LEDGER DETAIL REPORT TO MAKE THIS PROCESS WORK!
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.
The minimum super guarantee (SG) percentage employers are required to pay, is set to increase to 10% on 1st July 2021. This should be considered in part, as a wage increase, and therefore an increase to the overall payroll budget.
There is a further sting in the tail to come for employers! The proportion of wages that must be contributed to employees’ superannuation, is legislated to increase half a percent a year, before reaching a final value of 12% by the 2025/26 FY. See the table below which outlines the rate increase schedule.
PERIOD
GENERAL SUPER GUARANTEE (%)
SUPER GUARANTEE (%) FOR NORFOLK ISLAND (transitional Rate) (from 1 July 2016)
1 July 2002 – 30 June 2013
9
0
1 July 2013 – 30 June 2014
9.25
0
1 July 2014 – 30 June 2015
9.5
0
1 July 2015 – 30 June 2016
9.5
0
1 July 2016 – 30 June 2017
9.5
1
1 July 2017 – 30 June 2018
9.5
2
1 July 2018 – 30 June 2019
9.5
3
1 July 2019 – 30 June 2020
9.5
4
1 July 2020 – 30 June 2021
9.5
5
1 July 2021 – 30 June 2022
10
6
1 July 2022 – 30 June 2023
10.5
7
1 July 2023 – 30 June 2024
11
8
1 July 2024 – 30 June 2025
11.5
9
1 July 2025 – 30 June 2026
12
10
1 July 2026 – 30 June 2027
12
11
1 July 2027 – 30 June 2028 and onwards
12
12
What This Means for Your Small Business
Your payroll budget will increase by 0.5%, per employee, every year until the 2025/26 FY.
An employee on a minimum award wage cannot be paid less than the minimum rate already being paid, therefore the SG at 10% is to be calculated on top of, and without reduction to, the original base amount.
Another factor to consider is if the employment agreement or other industrial relations instrument permits it, the components of an employee’s salary package can be altered to increase the SG to 10% and reduce the gross pay (before tax). This means that your employee’s take-home pay will be less than it is now and will continue to decrease each year until 2025. If this scenario affects you and your employees, we recommend that you review the appropriate agreements and seek HR advicebefore 1 July 2021.
If you use an accounting software package, you won’t need to make any adjustments for the SG increase in your payroll – the developers will do that for you. If you process payroll manually, however, you will need to remember to change the percentage from 9.5 to 10 (and again by 0.5 % each year until you reach 12 % in 2025). Remember, if you don’t pay the correct rate of SG into your employees’ super accounts by the quarterly due date, you will have to pay the Superannuation Guarantee Charge (SGC).
With regards to “when” the rate rise should be applied to your payroll, the rule is that it is applicable to any payments made on or after 1 July 2021 – this is regardless of the period in which the services were performed by the employee.
Managing your Payroll Budget & Cash Flow
Every employer’s obligation to pay superannuation will increase as of 1st July 2021 – there is no escaping this change. This is an increased cost to your business that must be considered for cash flow and budgeting purposes.
With the increases to compulsory super contributions coming out of the same business budget as wages, and all other on-costs such as workers compensation, payroll tax, PAYG, and superannuation, you need to be prepared. All future SG increases need to be built into a business budget and cash flow forecast to be considered part of wage increases over time. We recommend that you assess the total employment costs of your business and add a percentage on top of the total costs to cover not just the rise in superannuation, but also any miscellaneous expenses and unforeseen blow-outs. The best practice is that it is better to overestimate than underestimate. Accurate and up-to-date financial records will help a business manage cash flow.
By regularly reviewing your budget and cash flow forecast, you, your bookkeeper, and your Tax Agent can address financial problems immediately. By doing this, you will be empowered to make important and necessary decisions for your business when they are required.
The Fair Work Act 2009 was updated on 26th March 2021 to reflect new workplace rights and obligations for casual employees. One of the main changes to the Act was the requirement for employers to provide their casual staff with a Casual Employment Information Statement. The statement brings to light several aspects of casual employment centered around “casual conversion”. So what is casual conversion and how will affect employers in Australia?
Casual conversion is when a casual employee moves to permanent part-time or full-time employment. The recent changes to the Fair Work Act enforce new casual conversion rules for employers. Some rules affect large employers, while others affect small employers (those with 15 or fewer employees).
If you are a large employer, you must offer your casual employee the opportunity to move to permanent positions when/if s/he:
has worked for you for 12 months
has worked a regular pattern of hours for at least the previous 6 months
could continue to work the same hours (or more hours) as a part or full-time employee without too much disruption to himself or the workplace
You do not have to offer casual conversion if you have reasonable grounds to do so. These may include the following:
the employee’s position will cease within 12 months
the employee’s hours will be significantly reduced
the times and/or the days the work is to be performed will be significantly changed and those changes cannot be accommodated by the employee’s availability to work
making the offer would not comply with a State or Territory law
Please note, however, even if you have decided not to offer casual conversion to your staff initially, this does not mean that they cannot apply for it at a later date.
If you are a small employer, you are less likely to be affected by these new casual conversion rules. However, please note that this does not stop your casual employee from requesting conversion. If this occurs, you must act accordingly and attempt to accommodate the employee’s wishes.
If the employer decides not to make an offer for casual conversion, he must do so in writing as per the Fair Work website. However, I would say that it is best practice to ensure that all communication with your employees about changes to their employment, is in writing. So, if you are going to make an offer for conversion or decline an offer, always put this in writing and file the document with the employee’s records.
If you need further information about casual conversion, please visit the Fair Work website.
If you’ve been thinking of buying new equipment or a new vehicle for the business, now might be the time to do it. The instant asset write-off cost limit of $150K has been replaced by a new “temporary full expensing” measure (TFE) which effectively means you can fully deduct the cost of most assets, no matter how much they cost. This measure is in place to provide immediate tax relief and assist cash flow.
Who & what is eligible?
Businesses with an aggregated turnover of less than $5 billion.
Assets purchased and/or installed between 7:30 pm on 6 October and 30 June 2023.
Commercial vehicles, vans, buses and motorcycles.
Who/what is not eligible?
Fancy a new car?
Cars costing more than $59,136 (they can only be depreciated up to this amount).
Assets allocated to a low-value pool or a software development pool.
Certain primary production assets (water facilities, fencing, horticultural plants or fodder storage assets), unless you are a small business entity that chooses to apply the simplified depreciation rules to these assets.
Buildings and other capital works.
Assets that will never be located in Australia, or will not be used principally in Australia for the principal purpose of carrying on a business.
If your entity has an aggregated turnover of $50 million or more, you cannot TFE the cost of assets that are secondhand or that you purchased or installed prior to 7:30 pm on 6th October 2020.
While TFE sounds good on paper, it is imperative that you get advice from your tax agent or accountant about TFE and how it may impact your tax situation, especially if it results in creating a loss. As we are BAS Agents, we cannot advise you about this so please do speak to your tax advisor if you think you would like to use the TFE measure for your business.
In this blog, I am going to share a cash flow spreadsheet that I use in my business. This is my very “simple cash flowtool”. 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.
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.
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.
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.
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.
so you can find it easily when you do your next BAS.
so you can find it easily when you do your next BAS.
