Check eligibility for small business tax regime

Small businesses (sole traders, partnerships, companies and/ or trusts with a turnover of less than $2 million) may be eligible for a range of tax benefits including immediate write off of assets costing less than $20,000, a 28.5 per cent company tax rate, simplified depreciation, capital gains tax concessions and accounting on a cash basis.

These measures have now been extended to businesses with a turnover of less than $10 million with the notable exception of the CGT Small Business Concessions.

Maximise depreciation deductions

Small businesses can get an immediate tax deduction for nearly all individual assets purchased costing less than $20,000, to the extent such assets are used for an income producing purpose and is installed ready for use by the end of the financial year. This measure was due to expire on 30 June 2017 but has been extended to 30 June 2018.

For businesses registered for GST, the $20,000 threshold is calculated on a GST-exclusive basis, but for businesses not registered for GST, the threshold is calculated on a GST-inclusive basis.

Review salary sacrifice arrangements

Employees can consider salary sacrifice arrangements under which their gross salary may be foregone to obtain either a packaged car for fringe benefits tax (FBT) purposes, or they can make additional superannuation contributions.

Make trust resolutions by 30 June

Trustees of discretionary trusts are required to make and document resolutions on how trust income should be distributed to beneficiaries for the 2016-2017 financial year by 30 June.

In the event a valid distribution is not made then a default beneficiary may be assessable. If there are no default beneficiaries, then the trustee will be assessable at the highest marginal rate.

Write of Bed debts

Businesses can only obtain income tax deductions for bad debts. If the debt still exists at the time it is written off. Thus, if the debt is forgiven or compromised before it is written off as bad in the accounts no deduction will be available. The debt must also be unrecoverable and written off in the accounts as bad prior to 30 June.

The bad debt must have been previously brought to account as assessable income or lent in the ordinary course of carrying on a money-lending business.

When a new employee commences work, there are a number of things that must be put in place to ensure that the new relationship gets off to the right start and continues in a positive manner.

The first step before any employee commences their role is that they should go through a comprehensive induction process which includes:

         Information about their new workplace

         Explanation and access to the workplace policies and procedures

         Job description and responsibilities

         WH&S procedures and workplace specific requirements

         Orientation of work area and amenities

         Security information

It is also a good idea to assign an existing employee or supervisor as the new employee’s mentor for the first six months.

The letter of offer or contract of employment should clearly define if there is a probation period in place and the duration of this probation period.

Access to the Unfair Dismissal Protections of the Fair Work Act 2009 for employees only applies when the minimum service requirements of 6 months’ service for a business with more than 15 employees or 12 months for a business with less than 15 employees are met.

You may require a shorter or longer probationary period but the requirements of the Fair Work Act 2009 do not change. Many employers therefore set their probation periods at 3 to 6 months with the majority of employers choosing the 6-month period.

The probation period is when the employer is able to assess the suitability of the new employee and how they fit into the workplace and perform the role they were employed to perform.

During the probation period either party may terminate the employment relationship with or without notice (usually a week’s pay in lieu of notice) depending upon the stipulations contained in the employment contract or applicable award.

There are some important actions to take during this probation period to give the employee the best possible chance of success and to defend the employer’s position against potential claims if the position is terminated.

These actions include:

1.       Clearly define the role, responsibilities, and expectations of the role

2.       Meet with the employee on frequent occasions to discuss their progress and how they are performing in their role

3.       Provide meaningful and challenging work within the scope of the role of the new employee to ensure that you can properly assess their competence and behaviour

4.       Advise the employee of any specific areas where their performance or behaviour is below the required standard and provide advice, assistance and support to help them reach the required standard

5.       Advise the employee that if they fail to meet the required standard that their employment may be terminated at the end of their probation period or before in accordance with their contract of employment or award

6.       Give feedback on the employee’s attempts to improve

7.       Do not make promises to the employee that their work will continue after the expiry date of the probationary period as this is an assessment period

8.       Before the expiry of the probationary period make a clear decision on whether to keep the employee or terminate their employment

9.       If the decision is to terminate the employee it should be done before the probation period expires otherwise the degree of difficulty in managing and defending the termination increases significantly

The probation period is the opportunity for both parties to assess their suitability to work together in a workplace and specifically for the employer to assess the suitability of the employee in their role.

It is important for the employer to closely monitor the new employee during their probation period to ensure that any decision made is based on solid grounds.