As it stands, currently 21 per cent of SME leaders remain undecided ahead of the upcoming May federal election, compared to the 10 per cent that was registered in the 2022 election.

Amid this current indecision, SME leaders hope that the next elected government could bring to fruition some key policies and initiatives. In particular, 22 per cent of SMEs, equally split between those experiencing business growth and contraction, wish for the easing of labour regulations, 20 per cent, meanwhile, seek company tax cuts and lighter touch enforcement from the Australian Tax Office (ATO), and 19 per cent want no further increase in the Superannuation Guarantee, which is set to rise again on 1 July to 12 per cent of ordinary wages.

ScotPac CEO Jon Sutton commented that it was no surprise that more SMEs are torn over what to do at the ballot box than in 2022.

“Business owners have borne the brunt of inflationary pressures over the past three years, but they feel like they have been left in the political wilderness,” Sutton said. “SMEs have had to navigate the rising cost of living alongside huge increases in the cost of doing business. Wages, superannuation, insurance, and energy costs have surged at a greater rate than revenue growth for thousands of businesses.

“This combination of factors has put enormous pressure on working capital, depleted SME cash reserves and created a sense of isolation. The message from SMEs ahead of the election on May 3 is clear – if you want our support, give us the support and space we need to keep employing and servicing millions of Australians,” Sutton added.

The post Undecided SME leaders may be a key factor in the upcoming election appeared first on Inside Small Business.

The general document that discusses the proposal described the removal of tax deductibility of the laGIC (general interest charge) and SIC (shortfall interest charge) imposed by the Australian Taxation Office as a fairness measure.

“Removing these deductions will enhance incentives for all entities to correctly self-assess their tax liabilities and pay on time, and level the playing field for individuals and businesses who already do so,” it stated.

The proposal is also seen as a revenue-generating measure – lifting the late tax payment fee exemption is expected to generate around $500 million every year for the government.

The measure is being opposed by different sectors, particularly the small-business sector.

Luke Achterstraat, CEO of The Council of Small Business Organisations Australia (COSBOA), said removing the deductibility of the late payment fees was a “punitive and radical departure from current practice” that would impact small business the most.

“The overwhelming majority of small businesses are doing the right thing and seek to pay their tax on time and pay it correctly,” Achterstraat said. “Targeted measures to deal with high-debt accounts would be more appropriate and equitable to encourage voluntary compliance across the tax system. Introducing a blanket policy of higher costs is indiscriminate, punitive and undermines the cashflow of small businesses grappling with tough operating conditions.”

Achterstraat noted that many small businesses were frustrated in their tax dealings.

“The Government should prioritise better service delivery and engagement with small business users before treating them with contempt,” he added.

CPA Australia has also voiced its opposition to the proposal, saying that the non-deductability would effectively raise the penalty rate by 25 per cent and up to 47 per cent for sole traders, depending on the marginal tax rate.

“By making these interest costs on tax debts non-deductible, the proposal risks the ballooning of tax liabilities of small businesses to unsustainable levels, potentially threatening their viability,” CPA Australia stated.

CPA Australia also decried the “moving of goalposts” with this measure, which COSBOA seconded.

“The ATO’s past sentiments to delay tax payments during the pandemic may not have been taken on by small business owners if they knew the GIC would later become non-deductible,” Achterstraat said. “Is this really about repaying outstanding tax debt, or just a penalty on taxpayers struggling to do the right thing and meet their obligations? The ATO risks biting the hand that feeds it if this policy is blindly pursued.”

Meanwhile, Liberal-National Coalition and the Senate crossbench called out the alleged underhanded tactics by the government to pass the controversial measure including it among unrelated but popular measures that the Coalition or the crossbench support.

“At a time of record business insolvencies, where Australia’s 2.5 million small businesses in particular are really struggling, the government needs to provide support rather than pile on the pressure,” said Independent Senator David Pocock. “This is another example of government rolling together unrelated measures in a game of wedge politics.”

The post Exemptions for late tax payment fees to be scrapped, sparking concerns appeared first on Inside Small Business.

1. Intentionally underpaying employees will become a federal crime

From 1 January 2025, intentional underpayment of wages or entitlements can be a criminal offense. Small-business employers will be subject to this legislative change.

ISB has previously reported on small businesses accidentally underpaying workers due to misunderstandings. We heard from small businesses and experts alike that the complex IR system can lead to mistaken underpayments. 

In response to these concerns from the community, the Fair Work Ombudsman has introduced a Voluntary Small Business Wage Compliance Code to help small businesses avoid criminal prosecution. The Code includes steps like “working out correct pay rates” and “seeking information from a reliable source about paying employee entitlement correctly”. If these steps are satisfied, then it’s unlikely that the employer will be found to have intentionally underpaid employees.

2. Tax and BAS agents will be under stricter ethical and operational requirements

Tax and BAS agents will have new obligations next year. These will apply from 1 July 2025 for tax practitioners with 100 or less employees, and 1 January 2025 for all other tax practitioners.

For small businesses, this will mean that your tax agents will be under stricter ethical and operational requirements. According to the Tax Practitioners Board, these include keeping proper client records, having quality management systems in place, and keeping clients informed.

3. “Introductory” classifications can only apply to employees for a limited time, under some awards

Some awards will have new rules for introductory classifications early next year. These classifications can now only apply for a limited time.

If you’re unfamiliar with introductory classifications, these refer to the first stage of a job, i.e. in an induction or training period. They often allow an employer to pay an employee below minimum wage, under the assumption that they are still gaining the basic skills and experience required for the job. The new laws will mean that employees can only be in this introductory stage, with below-minimum-wage entitlements allowed, for a limited period. 

The new time limit on introductory classifications varies between affected awards, but it will be applicable for a maximum of six months. 

A list of affected awards is available here. For all affected awards bar the Horticulture Award, the changes will take effect on 1 January 2025.

4. The ‘right to disconnect’ will apply to small businesses

From 26 August 2025, small-business employees will have the right to refuse work-related contact outside of regular business hours.

The laws already apply to businesses with over 15 employees, but are reportedly not having much of an impact. According to a survey by Indeed, 79 per cent of employees are still fearful of disconnecting from work-related messages after hours.

Additionally, many small businesses say they rely on flexible hours and integrated work schedules – meaning they have no set working hours. The legislation may therefore not be relevant to their working lives either.

Recent changes to know

A couple of key pieces of legislation have been passed in these last few weeks of 2024. These include a crackdown on unfair trading practices, a new banking code of practice, and new legislation making the reporting of cybersecurity incidents mandatory.

The post The 2025 legislative changes that small businesses should know appeared first on Inside Small Business.

ATO Assistant Commissioner Tony Goding explained that Australians are fed up with dodgy behaviours in the community and are stepping up to correct these practices by tipping off the ATO about taxpayers not declaring income, demanding cash from customers, paying workers in cash to avoid paying tax and super, not reporting sales, and where someone’s lifestyle does not appear to match their income.  

“These businesses are deliberately undercutting their competitors and gaining an unfair advantage in their industry. People who cheat their competitors and the community will likely try to cheat their customers too,” Goding said.

The ATO estimates that there is around $16 billion in stolen taxes because of unlawful business practices such as cash jobs each year, with businesses in building and construction, cafes and restaurants and hairdressing and beauty services sectors topping the list of industries the ATO received tip-offs about.

The ATO noted that it received almost 1,000 tip-offs every week from people who know or suspect tax evasion. During the 2023-24 period,15,516 tip-offs were received from New South Wales residents, followed closely by Victorians (11,256 tip-offs) and Queenslanders (10,629 tip-offs).

“Community tip-offs are one of our best sources of information when it comes to tackling the shadow economy,” Goding said. “When we receive information through a tip-off, we cross-check the information and assess whether further action is required.”

Approximately 90 per cent of tip-offs analysed by the ATO in 2023–24 were deemed as being suitable for further investigation. This investigation is then carried out by specialised teams and taskforces within the ATO, including the cross-agency Shadow Economy Taskforce.

“A tip-off can provide the ATO with crucial information it needs as part of an investigation, sealing the fate of those who intentionally do the wrong thing,” Goding said.

The ATO has also encouraged businesses that have been operating in the shadow economy to become legal by speaking to their registered tax professional or the ATO.

The post Tip-offs about tax-avoiding small businesses are on the rise appeared first on Inside Small Business.

The ATO is currently making debt collection a top priority, planning to intervene earlier and use firmer actions if businesses are not meeting their tax obligations. Furthermore, their data-matching platform now has access to a broad range of organisations, from Uber and Airbnb, to financial institutions and government agencies, to track whether taxpayers’ claims align with their actual financial transactions.

Sole traders should be wary

If any sole traders are feeling like the ATO has put a target on their backs without reaching out with a helping hand, you are likely not alone. Unfortunately, there is good reason to be alert as you prepare your tax return documentation this year.

For years, the ATO has talked about a “fully digitised” tax ecosystem whereby taxpayers can leverage a digital-first approach to tax returns that helps them fairly pay and receive what is owed on time.

However, we are yet to see this system in action.

The government has made heavy investments into digital tools and technologies that involve precise data-matching across multiple systems and technology platforms, and is also investing in a Digital ID system that will further increase its access to taxpayers’ personal information. All of these investments help to further the ATO’s agenda of catching ‘dodgy’ taxpayers, who are supposedly trying to ‘cheat’ the system or purposely avoid paying their debts.

Meanwhile, taxpayers are not seeing comparable investments being made in digital tools and technologies that help them navigate Australia’s complex tax system, particularly sole traders who often straddle the worlds of being both an employer and employee. Furthermore, the ATO’s ongoing changes to tax rules and expectations, and growing ‘crackdowns’ on sole traders and side hustlers, is adding more pressure on sole traders who are trying to do their taxes correctly.

Flip the script, use technology to your advantage

Many sole traders are time-poor and with an endless to-do list. Understandably, keeping track of receipts, expenses, and the overall P&L can take a backseat to delivering on their core business service or product. In fact, many would say financial and tax management can be a full-time job in itself. This is why leveraging digital tools specifically built for sole traders is important.

Using generic “business tools” can be costly and time-consuming. Generic digital tools will lead to generic outcomes, and most sole traders do not operate like an “average” business, nor will they have the budget to pay for tools that are not already tailored to their needs.

Rather than taking on the burden and costs of a business-focused technology product, sole traders should be looking for tools that:

• Work from live bank feeds to ensure nothing is ever lost, forgotten or faded.
• Provide real-time insights into their financial circumstances, preferable with the smarts to calculate your live tax position, including any other incomes you may have.
• Are designed specifically for sole traders, including automated small business depreciation offsets, vehicle logbooks and ability to manage any losses.
• Are low-cost, but don’t skimp on high-value insights that enable fast decisions.
• Continually update based on the ATO’s changing rules or expectations.
• Provide a full suite of tax reports and the ability to invite your accountant or advisors to enable real-time tax planning and collaboration.

At a time when the ATO is gaining greater control and visibility into sole traders’ businesses, it is only fair for sole traders to start gaining equal or more control and visibility into their own tax affairs. It is not always the first thing that comes to mind, but a hefty fine – or worse – could be what sets a sole trader back or puts them out of business. Get ahead and stay ahead of the ATO by leveraging the latest digital tools designed specifically for the sole trader hustlers.

The post How sole traders can stay ahead of the ATO’s tightening scrutiny appeared first on Inside Small Business.

However, far too many people who’ve made the transition haven’t given any thought to the financial challenges. To help ease the stress, I’ve prepared some tips that all new business owners should know:

Declare your income

First and foremost, income you receive from your business is taxable and must be declared on your tax return. You might think your side-hustle is just a hobby but the ATO will disagree!

What can I claim?

You can claim deductions for any expenses you incur as part of running your business. That could include the costs of using your vehicle for business journeys (particularly relevant for ride-share drivers), the cost of any materials you use in your work, as well as the costs of any courses you undertake that are relevant to your business.

If you offer your services through a sharing economy platform, they generally take a fee or a commission out of the price you charge your customer for the service. That fee or commission is tax-deductible. 

If you run the admin side of your business from home, don’t forget to claim the appropriate proportion of home-office expenses, such as internet fees, landline or mobile phone bills, costs of office furniture, etc.

Finally, where expenses relate to a mixture of business use and private/domestic use, make sure you only claim the business-related element.

You’re on your own now

Particularly if you’re coming out of a paid job, you’re probably used to getting your taxes deducted straight from your pay packet by your employer. But now you’re in business on your own account, nobody is going to be deducting anything so you need to proactively manage your cashflow to set money aside for future tax bills. This might seem obvious but, unfortunately, failing to set money aside to pay tax is one of the most common pitfalls that new businesses fall into.

You might also need to register for GST. If you’re an Uber driver, you must register for GST with the ATO and charge GST on all your fares, from the first dollar. For most other businesses, you only need to register for GST if your turnover from your business (combined with any other business you run) exceeds $75,000.

You can also claim back GST incurred on business purchases. You will need to report your GST sales and purchases at least quarterly by lodging a Business Activity Statement (BAS) with the ATO.

So, being self-employed comes with extra tax obligations. But it also comes with some tax perks. For instance, you have access to all the tax concessions available to small businesses, including the full expensing of capital assets, which is available until 30 June 2022. That means you can immediately deduct the cost of any plant, tools or equipment you use in your business, including items such as computers and even most motor vehicles.

Stay out of trouble with the ATO

My tip for keeping taxes stress-free is to get an accountant. Most people find it far less stressful to simply pass on all their information to a tax accountant and leave it to them to complete their BAS and tax return, safe in the knowledge that the work done will be accurate and complete.

An experienced accountant will usually be good at sniffing out those obscure tax deductions you didn’t know you could claim so they can often pay for themselves several times over.  Best of all, their fee is also tax deductible!

The post The biggest challenges Aussie start-ups face…and how to overcome them appeared first on Inside Small Business.

The ATO’s Essentials to strengthen your small business website offers more than 20 short courses and a calendar of key lodgment due dates to support small businesses.

Deputy Commissioner Will Day stated that the new platform is designed for small-business owners who want to enhance their knowledge of tax and super.

“Small-business owners can now access short, free and flexible online courses to sharpen their knowledge of tax, super and the core aspects of effective small business management,” Day said. “The new platform supports a variety of learning styles with videos, case studies, audio content and written information, as well as the option to test your knowledge with quick quizzes – making it easier for all small businesses to learn about important components of running a business.”

The website includes tips on areas where small-business owners commonly make mistakes, such as goods and services tax (GST) and business deductions. It also offers useful resources for tax practitioners, especially for those that are small businesses.

“We know that a lot of small businesses don’t have time to attend courses during business hours while they are busy running their business – so the beauty of our new platform is that you can do it at a time that suits you, save your progress, and then pick it up again later,” Day said.

The website was co-created with small businesses and educational experts to deliver learning pathways that can be customised, depending on each stage of a business’s life cycle, structure and industry.

Minister for Small Business Julie Collins said the Albanese Government is committed to reducing the time small businesses spend doing taxes and resources like this provide valuable practical assistance.

“I encourage small businesses to take up this great opportunity from the Australian Taxation Office with free courses specifically designed for the needs of small business,” Minister Collins said. “Our latest Budget included new measures to help small business with taxes including longer timeframes to amend tax returns and expanding access to advice through the tax clinic program.”

Australian Small Business and Family Enterprise Ombudsman, Bruce Billson said this resource will be helpful to small businesses.

“Business know-how and being able to benefit from the wisdom of others can be key to successfully turning an idea into an enterprise,” Billson said. “But the spark that inspires an entrepreneurial person into creating and growing a business is rarely the behind-the-scenes business of running the business. Yet this is where success and better decision-making can be formed.”

The post ATO offers free online tax and superannuation support for small businesses appeared first on Inside Small Business.

The viability of any business is its financial health. If you’ve been guilty of devoting all your time to working in the business rather than on the business, it’s time to take a step back and review the numbers.

It’s so easy to get caught up in the day-to-day work and the many, many demands on your time as a business owner. Customers, employees and suppliers are all important relationships to build and maintain.

Yet they can obscure the fundamental health of the business – sometimes until it’s too late.

This checklist is a good way to audit the financial health of your business and help you shore it up for a long and prosperous future.

1. Rightsizing your business structure

Some businesses aren’t suitably structured for their current situation. Which structure your business operates within can affect its tax status plus your rights and responsibilities as a director and/or shareholder.

Sole traders and companies are the most well-known structures, yet others exist, such as partnerships, trusts, co-operatives, joint ventures, and Indigenous corporations.

Growth over time may make businesses outgrow a particular structure; for example, when a sole-trader takes on staff or a private company goes public.

Business structure also includes property. Should you buy or rent your business premises? The decision has considerable cost, tax and investment implications.

For all these reasons, it pays to review your business structure.

2. Finance plans

A finance plan provides clarity over financial goals and strategies for reaching them.

And, while it may feel like you and your business are one, you are two separate entities. Hence, you need separate finance plans.

“Don’t overlook the power of the share economy to earn passive income.”

This will help you safeguard and track your personal finances independently of the business, which is important for various reasons – such as calculating tax liabilities, selling, or exiting the business, refinancing your home, taking on business partners and alternative investments.

Each plan should be built on the same five foundations:

• emergency fund
• spending and investments plan
• insurances/risk mitigation
• superannuation/nest egg
• estate planning/exit strategy.

You may also find it useful to revisit your business plan, ensuring operations remain aligned with your goals, market and purpose.

3. Funding/working capital

Interest rates have been a hot topic in recent months. Have you reviewed your business loans and other debts? What about your home mortgage – especially if it is security for a business loan or equity that could be reinvested?

You may reward your customers’ loyalty but, sadly, most banks and lenders don’t.

A good broker can help you refinance to a better deal. Also weigh up whether to purchase or lease new equipment, factoring in the purchase price, any borrowing required, and ongoing maintenance and repair costs.

4. Tax management

Chances are you have some form of savings to be gained or deduction to be made that you aren’t already using.

Do a depreciation audit; itemise every item you are eligible to depreciate, then check you are claiming the full tax deduction for each.

Review your personal expenses versus those of the business, ensuring you aren’t double-dipping (which may attract penalties) or paying too much tax by claiming through the wrong entity.

Keep your tax, wages and superannuation payments up to date, to avoid late penalties and to protect your cashflow – smaller, regular payments are easier to accommodate than larger instalments less often.

Double-check that wages and super are being distributed correctly.

Consider charitable donations, too – they may be tax deductible and support your marketing activities.

5. Staffing, incentives and rewards

With acute labour shortages nationwide, retaining current employees is a must.

Consider how you are paying, incentivising, and rewarding your staff. Do they feel valued? Are competitors offering more? 

Pay is just one factor. Non-monetary benefits or rewards you could offer include additional training, appointments with financial advisers, accountants, massage therapists or meditation teachers, discounted benefits at other local businesses (gyms, cafes etc.), competitions, team-bonding events, extra annual leave, educational resources such as books – the possibilities are limited only by your imagination.

6. Risk mitigation

Cast a critical eye over your operations and see how well they would stand up in the face of an unexpected disaster or sudden market shift.

Among the gaps may be:

• Insurance: out-of-date policies, inadequate cover, policies with poor value for money or providers notoriously slow at paying out claims.
• Contingency plans: remote working processes, digital systems and website back-ups, emergency scenario strategies and a pre-determined roster for who implements them.
• Security: site access, cyber-security, password protections.
• Cash flow: identifying peak cashflow gains and drains, foreign exchange stop-losses, current inventory.

Be sure your review covers all operations, assets and cashflow.

7. Bring in money 

Money in hand is worth more than money owed. Scrutinise your current means of banking the cash.

Invoices generally become harder to recoup the longer they have been outstanding – how earnestly do you chase them? How can you simplify payments for your clients – for example, by adding a ‘pay now’ button on invoices, automated reminders and payment plans?

Examine your product/service offering – are there gaps where extra revenue could be earned? What innovations can you bring to market? Are you fully capitalising on your USPs?

Also, don’t overlook the power of the share economy to earn passive income. Could you rent unused warehouse, office, retail or parking spaces, vehicles or equipment?

8. Charge what you’re worth

Pricing should reflect not just what you offer, but the value you provide.

You may offer the same product or service as Jim or Jane down the road, but if your offering has greater value for the customer, you potentially could charge more to reflect this.

Added value could be additional perks, faster delivery, more in-depth service, or superior qualifications and experience.

Also examine what is selling well or poorly. You may be losing revenue potential by retaining products or services the market no longer wants.

9. Be ruthless on costs

It takes money to make money. But how much of your spending is really needed or delivering full value?

Common sources of waste include:

• Unused or underused subscriptions
• Unbudgeted social media advertising
• Poor value utilities, insurances, loans or services
• Technology and software.

10. Look after yourself

Review costs regularly to ensure you pay only for what you use and get full value from.

Investing in your business means investing in yourself.

Poor health – physical, mental or financial – has many flow-on effects, including absences, poor decision-making, distractions, low productivity, and higher medical bills.

Maintain a good diet, regular exercise and sufficient sleep. Allow yourself a break or holiday to recharge. 

Pay yourself fairly and regularly – wages and superannuation – to extract value, safeguard your personal finances, and diversify your retirement assets.

And don’t go it alone. External input will ensure everything remains on the right track. So, check in regularly with your tax adviser, mentor or business coach, financial adviser, and your doctor, too.

This article first appeared in issue 39 of the Inside Small Business quarterly magazine

The post Stay fine, fit and on the money appeared first on Inside Small Business.

ATO community conversations bolster efforts to improve the system.

In a series of personal ‘community conversations’, the ATO has spoken with around 240 regional small businesses around Australia so far.

Community conversations offer another opportunity for small business owners to tell the ATO directly what they need, says Tax Commissioner Chris Jordan. The ATO has already taken on board feedback and ideas from small businesses and made improvements.

‘I am committed to making business interactions with the ATO simpler, more efficient and less costly. Hearing directly from the community about what would make the most difference to their experience is vital,’ Commissioner Jordan said.

 These community conversations help us understand what it is like to be in the shoes of small business.  

‘These community conversations help us understand what it is like to be in the shoes of small business and gives small business the opportunity to give feedback about their experience, and tell us more about what they need.’

Some feedback from small-business owners:

‘Tools like webchat, the ATO app and call-back services are a great idea. These sorts of services work with how we work’ – Christina Pilkington from Ninja & Jhi, Wagga Wagga, NSW.

‘I had some questions about the ATO products, including myTax, and my questions were answered’ – Ali Jolooiyan from Zam Geosolutions, Traralgon, Vic.

The events run from 5.30 to 8.30 pm.

2015 dates & locations

8 October – Sunshine Coast, Qld

13 October – Cairns, Qld

15 October – Port Pirie, SA

20 October – Mount Gambier, SA

22 October – Darwin, NT

5 November – Geraldton, WA

10 November – Launceston, Tas

12 November – Busselton, WA

Find more information about ATO community conversations or register for events at http://lets-talk.ato.gov.au/CommunityConversations.

The post ATO goes on the road to listen to small businesses appeared first on Inside Small Business.

The Australian Taxation Office (ATO) invites all small-business owners to join our online consultation forum: Let’s Talk.

We are keen to hear about your experiences with taking on employees – as well as ideas for improvements.

It’s quick and easy to register and open to all. Not only can you share your own experiences but you can learn from what others are saying about taking on employees.

The conversation closes on Wednesday, 8 April 2015.

Go to Let’s Talk.

Why are we having this conversation?

The ATO wants to improve the interactions that small-business owners have with government agencies. This is why we’re leading a cross-agency initiative called Small Business Fix-it Squads.

These squads are unique because small-business owners and the different government agencies can work together. Squads can look at issues from your perspective – with a focus on identifying and reducing red tape.

Red tape includes processes that take up your valuable time. This could be a complex or repetitive process, or the time taken to find government information – and understand it.

It’s all about improving things and making it easier for you.

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