In response to rapidly changing attitudes towards organisational transformation and risk, one progressive South Australian professional services firm has established a specialist team to guide clients through the challenges of organisational change, risk mitigation, future-proofing and technology evolution.

Adelaide-based firm Holman Hodge has recognised the need to provide additional breadth and depth to their traditional accounting, tax and business advisory services.

“We looked at ways to complement our current services,” said Paul Holman, Managing Director of Holman Hodge. “However, we wanted to ensure that any new specialist who joins us brings experience, knowledge and courage of conviction, but also shares the warm, personal approach for which Holman Hodge prides itself.”

These critical attributes were brought to the firm with the appointment of new directors Grant Mitchell and Murali Sinniah, to lead the Transformation, Technology and Risk team.

With over 65 years’ experience between them at all levels of business, Grant and Murali are well known in corporate and government spheres and have worked closely together in a global Big Four firm for nearly a decade. Grant has also worked with the founding Directors of Holman Hodge for over 30 years.

Both Grant and Murali have successfully steered public, private and not-for-profit entities through periods of transformation, and designed and implemented a wide range of business improvement and risk management strategies for large and small companies.

“Organisational resilience is becoming increasingly critical as business environments are becoming more reactive, community and workplace demands are escalating, and regulatory regimes are tightening,” said Mr Mitchell.

“But with considered planning and practical guidance, pro-active organisations can actually harness these forces of change to increase efficiencies and achieve greater returns.”

“The need for risk management hasn’t diminished”, Mr Sinniah added. “But focus has shifted from risk compliance to realistic strategies for achieving goals in innovative and cost-effective ways.”

“Change is swift and relentless, so transformation management, and leveraging risk into an organisational strength, has become essential.

“We know our clients and the local setting intimately and our broader knowledge is drawn from global best-practice. Therefore we’re able to fine-tune and apply that essential combination to any business, from major corporations to small family enterprises,” said Mr Mitchell.

“We are thrilled with what we have achieved in the last few years, and proud of the quality of service we already provide to our clients” added Mr Holman. “We look forward to the new opportunities that will come from Grant and Murali joining our team”.

2019 – A year of change

With a new year upon us, it seemed a good time to consider some of the changes we may see in 2019.

There will be a Federal Election

We know there will be a Federal election this year and at this stage, we expect it to be held in May.

The current Government hasn’t yet released much information around its’ proposed tax changes however, they have moved the Federal Budget announcement forward by about a month to Tuesday 4 April which is when we expect to see their proposed changes outlined.

The Labor Party however, has already announced some of their tax policies which includes the following:

• Removal of negative gearing for assets
• The removal of the refund of excess franking credits for most taxpayers (charities and NFPs will be exempt from the changes)
• Halving the current 50% CGT discount to 25%
• Applying a 30% tax rate to the income of trusts

Without any further details or legislation, it is impossible to know how these changes will be implemented and therefore what the initial and ongoing impact will be to individuals, trusts, superannuation funds and subsequently, the property market and share market.

If you would like to discuss the potential impact of these proposed changes, please contact your Holman Hodge adviser.

The Personal Property Security Act (PPSA) turns 7 years old

Why does this matter?

When the PPSA was first introduced in January seven years ago, the cheapest registration was for a period of seven years or less.  If this was the option taken, it means the registration may soon expire.  If you have registered any interests on the Personal Property Securities Register (PPSR) under the PPSA you should review your registration.

This is important for a number of reasons:

• If the registration lapses you will no longer have security over the item, and
• A lapsed registration cannot be renewed  – a new security interest needs to be registered but it’s important to note that the new security interest might not have the same priority as the original registration

If you renew the registration before it lapses, the original date of registration will stand and original priority will continue.

Please let us know if you would like further information on how to review your registered interests.

Final report- Financial Services Royal Commission

As most people would be aware, the Financial Services Royal Commission (commonly called the “Banking Royal Commission”) was held last year.  The final report is due to be provided to the Governor-General on 1 February 2019. Without wanting to guess the outcomes of the Royal Commission, we expect that the level of compliance will increase for the finance industry, which may result in some wholesale changes to the banking, finance and superannuation industries.

These changes may have flow on effects for business, investment and personal borrowings – we have already seen the tightening of rules around assessing credit card applications from 1 January.

We await the outcomes and recommendations of the Royal Commission and will provide further information at that time.

The company tax rate changes will be bedded down

The company tax rate for most companies who have aggregated turnover of less than $50M (for the 2018-19 financial year) will be 27.5%.  This tax rate will drop to 25% by the 2021-22 financial year.

These changes, coupled with other announced and/or enacted changes which impact small businesses, such as the small business capital gains tax concessions and Division 7A, may also mean that the way businesses and investments are structured should be reconsidered.

The Division 7A rules may change

In 2018, the Government released a consultation paper outlining some fairly significant proposed changes to Division 7A (refer to client update).  Submissions were made by a number of professional bodies and we are yet to see anything further from the Government.  The proposed start date of these changes was intended to be 1 July 2019.

Reminders…

myGov – where individuals link their myGov account to the ATO, please note that the majority of your ATO mail will only be sent to you via your myGov inbox.  As your Tax Agent, we will no longer receive copies or notification of correspondence from the ATO on your behalf.  Click here for more detail

SA Payroll Tax changes – from 1 January 2019, businesses who have total wages less than $1.5 million will no longer have to pay Payroll Tax in SA.  Click here for further details

ATO scam phone calls – as previously advised, please be aware of scam phone calls from the ATO.  Unfortunately we are still seeing an increase in these calls.  If you receive a call and they say they are from the ATO and you owe them money, please DO NOT pay anything over the phone and contact us straight away.

If you would like to discuss any of the above in more detail, please speak with your Holman Hodge contact.

Reduction in small business company tax rate brought forward

It took Parliament just 3 days to introduce, debate and pass legislation to bring forward the reduction in the corporate tax rate for small and medium businesses.

The applicable tax rates will now be:

2017 – 2018 27.5%
2018 – 2019 27.5%
2019 – 2020 27.5%
2020 – 2021 26%
2021 – 2022 25%

The Small Business Income Tax Offset rate will also increase in 2020-2021 to 13% and to 16% in 2021-2022 but it is still capped at $1,000.

Consultation paper released- Division 7A

Last week the Government released a consultation paper – “Targeted amendments to the Division 7A integrity rules”. Many clients will be aware that Division 7A is an integrity measure which operates to stop individuals accessing funds which have only been taxed at the corporate tax rate, rather than the individuals’ marginal tax rate.

We have been expecting amendments to Division 7A however, the proposed changes were expected to be largely in line with the Board of Taxation’s final report provided into the review of Division 7A which was done back in 2014. From a review of the consultation paper the changes proposed vary, in some parts significantly, from the Board’s original recommendations.

Treasury is taking submissions on this consultation paper up to 21 November 2018 and where appropriate, Holman Hodge will provide input to this process. As further information becomes available from Treasury, we will contact affected clients.

Payroll tax changes in SA

As many employers would be aware, the State Government announced in the SA State Budget that from 1 January 2019, entities whose payroll is less than $1.5 million will no longer have to pay payroll tax (PRT). As this falls in the middle of a financial year, it could complicate things a little.

Below is a summary of how the new payroll tax thresholds are expected to apply:

• Threshold changes
  • The threshold for liability increases to $1.5M
  • Where a business exceeds the $1.5m wage limit, the tax free threshold remains at $600,000
  • If the payroll for a business is between $1.5M and $1.7M the rate increases on a sliding scale from 0% – 4.95%
• The process for businesses currently paying PRT who won’t need to after 31 December is as follows:
  • 1/7/18 – 31/12/18 – if full 12 months wages are expected to exceed $600,000 employers are liable in this period
  • 1/1/19 – 30/6/19 – if full 12 month wages are expected to exceed $1.5M employers are liable in this period
  • Businesses below $1.5M for 2018-19 will not be liable for PRT in Jan – June period
  • They will not be able to cancel registration until 30 June 2019
  • Will not need to lodge monthly after 31 December 2018
  • Will lodge an annual reconciliation in July 2019 and can then deregister

It is expected that there will be a calculator on the RevenueSA website closer to 31 December to help employers work out obligations

Scam phone calls

Another reminder to everyone that scam phone calls to individuals are on the rise with clients and staff both reporting phone calls received from a government authority (they don’t always state where they are from) where they say something along the lines of:

• Your file has been flagged for tax avoidance
• If you pay a sum of money immediately (whilst on the call) you will avoid any further action
• The matter is time sensitive and you must reply immediately
• A warrant has been or will be issued for your arrest

It has been reported to us by those who have answered the calls that the people calling can be very aggressive. If you don’t take the call, it’s likely a very formal sounding recorded voicemail message will be left stating some variant of the above. The most recent spate of calls show as originating from Canberra.

What should you do?

• Contact us if you are concerned – we can confirm whether the ATO has any outstanding matters with you
• You can report the caller to the ATO scam by clicking here (https://www.ato.gov.au/General/Online-services/Identity-security/Verify-or-report-a-scam/)
• You can report the scam to ACCC by clicking here (https://www.scamwatch.gov.au/report-a-scam)
• Do not give any personal details to someone over the phone unless you are absolutely certain who you are talking to
• Block the number

If you would like to discuss any of the above in more detail, please speak with your Holman Hodge contact.