9 ways for small business owners to keep the taxman happy

When Benjamin Franklin said that the only things certain in life were “death and taxes” most people didn’t consider that they may be closely linked.

But problems with taxes can lead to the death of your small business unless you take steps to keep the taxman off your back.

With sales meetings, recruitment, salaries, cashflow issues, marketing, suppliers, and a whole string of other things for small business owners to worry about, there’s no need to add the taxman to the list.

A robust financial system that keeps the tax authorities happy should be the foundation that underpins your business – allowing you to focus on the multitude of other issues that require your attention.

The specific requirements set out by your tax authority will differ by location but many of the basics remain the same wherever you are.

And most authorities are currently tightening the rules and clamping down on tax cheats and tax avoidance.

Nine of the most important general guidelines are detailed below: wherever you’re located, whatever your business size, and whatever industry you’re in, these will help you identify red flags in your tax setup:

1. Understand all the tax requirements – or find someone who does

Do you think your tax affairs are simple? They’re probably not. Ninety-nine percent of small business owners don’t fully understand tax legislation – so it’s important to seek specialist help.

The temptation a business owner is to try to look after everything yourself. With tax, this can be a false economy: not only can it take ages to get to grips with what you need to do; it’s likely that you’ll miss something important. And the taxman will be on your back!

2. File returns on time

The general rule is to file tax returns within twelve months of the end of your accounting period but this may vary with location.

Good planning in your business will ensure that you’re ready for the process; you know when it’s coming, have scheduled time to do it each year, and don’t end up scrambling around at the last minute to avoid penalties.

3. Keep consistent & accurate records

You should already understand the importance of accuracy and consistency: quite apart from generating the management reports to make good business decisions, the tax authorities love you for it too.

Being consistent and accurate will help you flag any changes that affect your tax liability and explain any changes that raise questions from the tax authorities.

If you have some bookkeeping experience, you may be able to manage this yourself with user-friendly cloud software like Xero and Quickbooks Online. Otherwise, it’s best to have a certified bookkeeper or accountant keep your accounting records up to date.

4. Keep the ‘evidence’ together

Keep the receipts and invoices for business expenses together. Most business owners know they should do this but it’s surprising how many find themselves scrambling around looking for receipts when the time comes to do tax returns.

And even when they do find the receipts, they don’t know what they relate to.

Keep it organised. All tax authorities want to know that there is sufficient documentation to justify business expenses. Receipts don’t have legs. Your own inefficient system is responsible for losing them or causing confusion about their origin.

One of the benefits of using a cloud computing app such as Xero is the ability to take a photo of a receipt with your smartphone to ‘scan in’ an expense receipt straight into Xero; or you can use specialist apps that integrate with Xero such as Receipt Bank or Expensify.

5. File business & personal expenditure separately

It’s easy to confuse business and personal expenditure. Unfortunately, it’s one of the quickest ways to get offside with the tax authorities.

By keeping them separate, you can see at a glance what you can deduct and what you can’t: that means two separate (probably electronic) filing systems. Don’t be tempted to think “I’ll sort them out when the time comes for my tax return”. You’ll forget or cause delays.

6. If you’re a cash-based business, take extra steps

For small business owners such as tradespeople, who often get paid in cash, take extra steps to keep things transparent. You can guarantee that you will be on the taxman’s radar at some point.

For income, keep additional records to back up bank deposit records, such as cash register printouts or manual records of daily sales that can be matched to the bank records.

One of the benefits of moving your accounting systems to the cloud, is the ability to do things faster and easier with paperless processes. For example, trades-based businesses can use apps like ServiceM8 to quote and invoice in the field and even take electronic payments on site.

If you’re thinking, “I prefer to be paid in cash,” the ‘cash economy’—where a business does not declare all its income in order to reduce profits and therefore tax—is not such a great idea. Your business will be more valuable when it comes time to sell it if you have always shown all your sales revenue ‘on the books’.

7. Create a clear policy for employee reimbursement

Tax auditors want to know that you’re following the regulations with regards to employee reimbursement for travel, mileage, personal expenses, etc. They also want to know that expenses are appropriately signed off within the business to indicate that the business accepts liability.

Document a clear policy that determines what employees can claim for and how they go about claiming it. Make sure that this is clearly communicated to all employees.

8. Plan for your tax bill

There’s no room for surprise tax bills on the path to success. Tax is generally predictable and consistent. This means that you can – and should – plan for it in advance.

Sit down with your tax professional, understand what’s coming and when, and create a fund that can be used to pay the bill when it arrives. Maybe lock away a set sum every month. That way there are no nasty surprises ahead.

9. Never avoid the letters

Just because your tax authority writes to you asking questions or requesting records, it doesn’t necessarily mean the worst. Never avoid or delay answering these questions, as they don’t go away.

Answer in a timely fashion – there will normally be an expected response date detailed on the letter. Don’t go beyond this.

Take some tax advice and answer the questions to the best of your abilities. Most tax issues can be solved relatively easily if they are dealt with before they spiral out of hand.

Don’t get caught out by non-compliance with tax or it can cost you and your business. Get the right tax advice from the start and follow the tips above to keep the taxman happy.

If you need any specialist tax advice for your business, contact one of our advisors to talk it through.

Changes to Superannuation Rules – $1.6 million transfer balance cap

In this ever-changing financial environment, it seems that service charges are forever on the rise – which leads to the age-old question, “How do I inform the owners?”.

In truth, it’s a little more involved than simply informing the owners. While the question might best be answered by a solicitor, the position of the Office of Fair Trading (OFT) is that the best practice for advising owners about updated fees calls for the most direct approach.

That means personal notification—rather than having the news buried in a general issue newsletter—where it might easily go unnoticed.

How you can notify and renegotiate

Owners would be required to respond one way or the other (either negatively or positively), a non-response cannot be taken as acceptance. There must be a clear provision for the owner’s signature and a date, so that a manager has proof that the appropriate person was notified and accepted the updated fees for the new owner agreement.

One possibility is to make an announcement on the monthly statement sent to the owner, advising him or her about the inclusion of a new addendum on the statement, which calls for their immediate attention.

It should be remembered that under the Property Occupations Act, any units which still operate under the old PAMDA 20a Form, must move to the latest version of Form 6 in cases where changes are made to owner agreements—including increases to owner agreement fees.

The Office of Fair Trading and its Judiciary

As you read through the Property Occupations Act (POA) and its regulations, you will occasionally see the term ‘Maximum Penalty’, which may apply to non-compliance or breaches of the Act. Terminology used by the Office of Fair Trading implies that a wide range of actions can potentially be taken when dealing with breaches of the POA, and that the maximum penalty will not necessarily be sought.

OFT Compliance officers identify three separate categories of offenses: those of carelessness, those of recklessness, and those of dishonesty.

  • ‘Careless’ offenses include administrative oversights which have little or no financial impact, and which have already been rectified.
  • ‘Reckless’ offenses are considered to be more serious, because these do carry a financial impact, and must therefore be corrected at the very earliest opportunity.
  • ‘Dishonest’ offenses are self-explanatory, and must be reported immediately to the OFT, as they require immediate rectification.

Where to learn more about updating owner agreement fees?

As part of the continuing education of licensees, the OFT will be conducting informative seminars in locations all along the east coast. These seminars will provide excellent educational opportunities for managers new to the industry, and will also serve as great refresher courses for veterans.

The OFT provides education on an ongoing basis through its Web-site and YouTube channel.


Changes to super contribution limits: How it will affect you

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It’s that time again.

With the 2016 Federal Budget came several shake-ups, in particular the changes to contribution limits. With many other changes announced in the budget now passed by Parliament, you can have more certainty when it comes to planning your Self-Managed Super Fund (SMSF). Especially regarding the SMSF contributions you might wish to make to your fund.

The Government is lowering both the concessional (pre-tax) and non-concessional (after-tax) contribution limits as of 1 July 2017.

Knowing this—and with tax time fast approaching—it’d be wise to start getting your financial ducks in a row.

SMSF contribution limits

One of the original proposed measures which received a lot of comment and caused concern, was the $500,000 lifetime non-concessional contributions (after-tax contributions) limit. This proposed measure was dropped and replaced with a $100,000 annual limit on after-tax contributions.

Pre-tax contributions will be limited to $25,000 for all taxpayers, beginning on 1 July 2017. Below is a summary of the changes for both concessional and non-concessional SMSF contributions.

After-tax contributions

The $500,000 lifetime limit has been dropped in favour of a $100,000 annual cap. The rules allow the opportunity to bring forward three years of contributions – making it possible to contribute $300,000 in one year.

For the 2016/17 year, it is still possible to make a contribution of up to $180,000 for one year, or to bring forward three years’ contributions – so you are able to make a contribution of up to $540,000. If you do not use this full limit of $180,000 or $540,000 in the 2016/17 year, then you will be limited to the $100,000 annual, and $300,000 bring-forward caps for future years.

Where the bring-forward of contributions has been triggered before 1 July 2017, transitional contribution caps may apply. If you have a balance of $1.6m or more in your SMSF at 1/7/2017, then you will not be able to make further after-tax contributions.

When approaching the $1.6m cap, care will need to be taken with the bring-forward rules, as these are restricted by the new $1.6 million balance restriction.

Pre-tax contributions

The concessional contributions cap is lowered to $25,000 per year for all taxpayers as of 1 July 2017. Taxpayers who were aged 49 or over on 30 June 2016 can make up to $35,000 in pre-tax contributions in 2016/17. Those aged under 49 on 30 June 2016 can make up to 30,000 in pre-tax contributions in 2016/17.

Some of these changes may require you to adjust your SMSF contributions strategies going forward. This will most likely be the case if you have a superannuation balance of over or close to $1.6 million, or were planning on making contributions to superannuation in the next few years that exceed these new limits.

How we can help you with your SMSF contributions

If you are concerned that the Government’s changes to contributions for superannuation are going to affect you, please feel free to get in touch to arrange a meeting. We’ll discuss your situation in more detail and find a solution that works for you.

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Employer Alert


Empolyer Alert 

The end of the financial year is only days away

Employer Alert

As an employer you need to:

  1. Provide PAYG Payment Summaries to your employees by the 14th July 2016.
  2. Please ensure you send the ATO, your PAYG withholding payment summary annual report by the 14th August 2016.
  1. Use the latest tax rates to calculate employee withholding tax from 1st July 2016. While there have been no changes to tax rates for 2016/17, to check the latest rates, go to ato.gov.au/taxtables
  1. Ensure your accounting software payroll rates are updated from the 1st July 2016 and the file is ready for the first pay run of the 2017 year.
  1. All employee Superannuation Guarantee Charges have been met for the 2015/16 financial year. Please note the June Quarter SGC is due by the 28th July 2016.


If you have any questions on your EOFY obligations to the ATO, please do not hesitate to contact us.

Payroll End of Year Processing in Xero

Xero – Year end Payroll procedure – Payment Summaries and Lodgement with ATO

It’s That time of year again, end of year and time to process your PAYG Payment Summaries.

Following a step by step process, your payment summaries can be generated and issued to the ATO using your Xero.


Payroll End of Year Processing in Xero

Step 1:

Checking your payroll settings

  • Select Settings from the main toolbar. Go into General Settings
  • Organisational Settings

Check the details are correct, make sure the Trading Name is the correct name, as this is what will show on the payment summaries

  • Save and close
  • Select Settings from the main toolbar. Go into Payroll Settings
  • Organisation – Check the correct accounts are linked to Pay Items
  • Pay Items – Check pay items have been set up as the correct type
  • Check the W1 checkbox settings are correct in the pay items; this can be found by selecting the individual Earnings Name and editing the earnings rate
  • Select Payroll from the main toolbar
  • Employees
  • Check each employee for accuracy (TFN, DOB, and Address)

Step 2:

Pre-Reconciliation Checks

  • Check all pay runs for the financial year have been posted
  • Check all wages have been paid through the business bank account
  • Check the payment dates for the pay runs march those to the bank payments

Step 3:

Reconciling payroll totals to general ledger accounts 

  • Select Reports from the main toolbar. On into Reports
  • All Reports
  • Payroll Activity Summary report
  • Check that the following items match


In your Payroll Activity Summary In your General Ledger Summary
Total Earnings Should match Total Wages & Salaries
Total Super Should match Total Superannuation
Total Tax Should match Total PAYG Withholding Payable


If any of the balances don’t match check your pay run history to find the pay run with the error and process any necessary adjustments.

Step 4:

Identify & correct errors

Make corrections for any discrepancies found.

  • If any adjustments need to be made, a new pay run will have to be processed.
  • Use an unscheduled pay run to make any corrections to a processed pay run.
  • You can adjust a pay run for missed pay items, or reverse and re-enter an incorrect wage item.
  • You can also use an unscheduled pay run to process a negative pay run to reverse incorrect wages & taxes.
  • You can go back 8 pay periods from the current date when adjusting a processed pay run.

Step 5:

Employee payment summaries

  • Select Payroll from the main toolbar.
    • Go into Employees
    • Payment Summaries
  • Check that your organisations name, ABN & postal address information is correct.
  • Enter the Signatory name & add the contact number, then select Confirm & Continue
  • Select the Financial Year Ending
  • Review the Gross payment, PAYG, allowances and amounts allocated based on your payroll data
  • Identify & fix any payment summary errors
  • Enter any RFBA from your fringe benefits tax return to each employee if applicable
  • Enter any additional Lump Sum amounts paid if applicable
    • You can preview the payment summaries before you publish
  • Select all employees
  • Select Publish
    • Once you have published the payment summaries select ‘Send to employee”
    • You can now print them PDF or email them to your employees 

Lodge the report to the ATO through Xero 

  • Select Payroll from the main toolbar.
    • Go into Employees
    • Payment Summaries
  • Select Confirm & Continue
  • Select all employees and select File Now
  • Select the Authorisation to File declaration check box
  • Select File Now

The annual report is filed at the ATO if all payment summaries are accepted. If it can’t be filed, you will need to fix the relevant payment summaries & submit the file again.

Once you have sent the annual report to the ATO, your end of year payroll process is complete.

SuperStream deadline: June 30

If you have one employee but less than 19, You must be Super Stream ready by 30 June 2016, McAdam Siemon Business Accountants Upper Mt Gravatt, Noosa Heads & Maroochydore. Specialising in Accounting, Taxation, Management Rights, SMSF Administration, Business Advisory, Business Valuations , SuperStream

SuperStream deadline: June 30

  • Are you and your small business ready for the changes?
  • Do you have 19 or fewer employees?
  • Are you an SMSF Trustee? Self-managed super funds (SMSFs) must be able to receive employer contributions and the associated data electronically.
  • APRA – regulated funds


From1 July 2016, the ATO’s SuperStream standards are set to be enforced.

A reminder:

  • If you are a larger employer, you should already be using SuperStream

A Brief Overview

SuperStream was introduced by the Government as a part of the Stronger Super reforms. This new standard requires employers to pay and report contributions to superannuation funds electronically. Both the payment and the reporting will need to be completed on the same day.

  • These measures don’t apply to individuals who are making personal contributions direct to their superannuation funds, only employers. 

SuperStream will make it easier for you

  • You need to use SuperStream when paying employees super.
  • With SuperStream contribution payments are made electronically and you can pay all your employees super; sending all their information through one channel; saving you time and effort.

You should have already started transitioning by choosing an option to make super contributions electronically:

  • Your pay role system
  • Your super funds online system, or
  • The Small Business Super Clearing House (SBSCH). This is a free service administered by the ATO whereby you can make super guarantee contributions as a single payment to the clearing house and it distributes the payments to the employees fund/s.
  • Outsource to payroll/salary packaging provider
  • Accountant or bookkeeper
  • Some banking institutions

Please give us a call if you need some advice regarding these options.

Next: You need to collect the following information on your employees:

  • Their Tax File Number (TFN) and,
  • A Unique Super Identifier (USI)
  • Super fund ABN
  • A Unique Superannuation Identifier (USI) (APRA regulated funds only)
  • For employees who have selected a SMSF for their contributions, they will also need to provide their Fund’s Bank Account details and Electronic Service Address (ESA)

Once his is done, these details must be entered into your preferred system.

Start using SuperStream as soon as this process is completed so that any problems can be solved before 30 June, 2016.
For new employees, the ATO has updated the Super Choice form to include collection of the extra information required.

If you any questions on how SuperStream will change the way you make super contributions for employees, please contact McAdam Siemon.

Brisbane: 07 3421 3421

Sunshine Coast: 07 5474 8955



Using EOFY to strengthen your business

McAdam Siemon Business Accountants Upper Mt Gravatt, Noosa Heads & Maroochydore. Specialising in Accounting, Taxation, Management Rights, SMSF Administration, Business Advisory, Business Valuations , Management Rights specialist accountants

Using EOFY to strengthen your business

(source: Sean O’Meara) 

With the end of the financial year quickly approaching it is critical that small business owners use this time to make a strong plan for the year ahead. It is vital to analyse your business and try to find any opportunities and improvements that can be made, no matter how small they may seem.

The additional administration time required at EOFY can make the lead up to 30 June extremely stressful. So the keep your business goals in check. Here are some strategies that will improve your business to maximise your growth in 2016/2017.

It’s time to review your businesses situation 

You are probably already using reporting throughout the year to track your revenue, gauge your sales trends etc but it is important to take a second look at how your business performed on the whole and compare this to previous years.

“By looking at year-on-year sales and revenue we can see how public holidays or seasonal changes affect the business and enables us to do more accurate forecasting, rostering and budgeting for the year ahead. It also helps us make informed decisions on whether to spend now or later,”

Take advantage on the low interest rates

Interest rates remain low so it could be an opportunity to invest in capital equipment and paying off debts. 

Review business partners and suppliers

Ensure you are getting an excellent price for quality products. New businesses keep coming into the market, so be sure to do your research and renegotiate with your present partners and suppliers.

Your customers are probably reviewing their own strategic plan and making changes for next year so don’t forget to let them know that their business matters to you.

Take a long – term view of your cashflow 

  • How is your cashflow?
  • Is your business seasonal, with peaks and troughs?

Do some advanced planning -review your budget and anticipate what may happen in the year ahead. It may be all that is needed to free up liquid assets and ensure ongoing profitability. This is the best way to ensure you have safeguards in place to keep your business afloat during low times. 

Capitalise on tax breaks 

  • Have you any expenses that can be pre-paid?
  • Think about maximising your superannuation contributions to the relevant caps.
  • Consider investing in areas that will support your business; new equipment and/or technology that will provide your business with greater efficiencies and productivity The Government still has an immediate tax deduction on assets coasting less than $20,000.

Don’t hesitate to give us a call if you would like to discuss anything EOFY’s.

Kind regards

The Team at McAdam Siemon