Planning For 2012/2013
Happy New Financial Year!
Setting business targets for 2012/2013 will require small business operators to take into account a number of variables, including:
Growth in the Economy
- A number of commentators were surprised at the annual rate of growth revealed in the March 2012 figures, which was calculated at 4.3%. Do you expect that kind of growth to continue throughout 2012/2013? Probably not, unless you're operating in one of the key industries in the strong economic performance states of the Northern Territory, Western Australia and Queensland.
- The inflation rate appears to be under control and it is not expected that there will be a significant change in the underlying inflation rate during this financial year.
- The Reserve Bank of Australia (RBA) refrained from moving interest rates at the July board meeting. Many commentators believe that the prime rate will continue downward to around 3%. However, one former Australian Reserve Bank member has advocated in recent weeks that interest rates should in fact be increasing. The general consensus of opinion however, seems to be that interest rates will not be going up in the short term. There is an expectation however that, by 2013, interest rates will start to increase again.
The Government -
It is difficult to ignore government action because so many things, which may affect small businesses, can be instigated by government action. The Carbon Tax has commenced, businesses can expect significant increases in gas and electricity charges. However, in some areas of Australia, waste disposal fees and dump usage fees are expected to increase substantially because of high methane gas production from dumps, which means that a number of local government organisations are included in the 500 major organisations that are expected to be paying the Carbon Tax. These organisations will undoubtedly seek to recover the costs in dump usage fees, waste management fees and general rates. In many areas of Australia, business conditions are still very sluggish with the retail sector in particular being very slow. There has been some publicity of public companies, involved in retail activities, announcing profit downgrades and closure of some retail outlets.
Cashflow management remains a very important component of effective business management for small business operators. If you are preparing Budgets and Cashflow Forecasts for 2012/2013, these factors should be taken into account in drafting the Budgets and Cashflow Forecasts.
Stamp Duty Concessions and Grant for Home Buyers
The following measures have been announced as part of the Building the State package:
from 1 October 2012, First Home Owner Grants will be restricted to buyers of newly built homes costing up to $650,000 (the Sydney median house price). The grants will increase from $7,000 to $15,000 from 1 October 2012 and then to $10,000 from 1 January 2014
from 1 July 2012, property value thresholds will increase for first home buyer stamp duty concessions on newly built homes. Full exemptions from stamp duty will be available for first home buyers of newly built homes worth up to $550,000 and concessional rates of stamp duty up to $650,000. For vacant land, bought with the intention of building a new first home, stamp duty exemptions will be available for land valued at up to $350,000, with concessional rates available up to $450,000. The threshold for new homes is $50,000 higher than that applying in 2011/12, and
a new measure, the New Home Grant, will provide $5,000 to all non-first home buyers of new properties of up to $650,000.
Under the new arrangements, the maximum financial support for purchase of a new dwelling will be $35,240 from 1 October 2012 and $30,240 from 1 January 2014.
New Director Penalties Regime
New director penalty laws received Royal Assent on 29 June 2012 and are now in effect. Under the new laws, directors face a series of new obligations and challenges, including:
- being held personally liable for unpaid superannuation
- the denial of PAYG its in certain circumstances
- being personally liable for unpaid PAYG
Should you wish to discuss the above further please contact us.
Export Market Development Grant Application
If you have exported product during 2011/2012 and have expenditure in excess of $20,000 on export market development activities, then you could be eligible to lodge an Export Market Development Grant Application. The application needs to be lodged with Austrade by no later than 30th November 2012. There are no extensions available. Businesses with turnovers under $50M in the 2011/2012 financial year and who have spent in excess of $20,000 on eligible export expenses, can apply.
In the first year, a business is able to combine eligible export expenses for two years to achieve the $20,000 minimum expenditure requirement. Please feel free to call should you require any further information.
As a means of broadening your target market base and advising of the availability of products that you have for sale, have you considered negotiating with another organisation to sell their products for a commission. You may be able to do this as a value-add to the products that you are currently supplying to your customers. Making cooperative promotion sales may be a means of promoting your services to other potential customers who are not currently customers of your business, but they may be interested in the cooperative products that you are selling.
Database Clean Up
Databases can become obsolete very quickly. This can be due to people leaving their positions, businesses changing their contact details (email addresses, phone numbers, etc.). Every six (6) months is an ideal time to check the integrity of your database by contacting the organisation that you have listed in your database to ensure that the contact person is still present and that the contact details in your database are still appropriate and up to date.
Send Articles To Your Customers
Whilst it is true that we are living in an era where there is potentially information overload, many customers are still hard-pressed to find articles, magazines, books, YouTube video clips, etc., that could be beneficial to their business operations. Why not have a policy of ensuring that, whenever you notice any such articles, you send a copy or alert your customer of the article, etc. This will show the customers that you do have concerns about their businesses and that you're trying to assist them in their knowledge of important things, occurring in the marketplace, which might affect their business.
Customer Surveys Do Help
Operating a business is a very lonely affair, especially as more and more sales transactions are conducted over the internet. Why not design a short customer survey form and send it to your customers, to seek feedback about the types of products and services you provide, and ask what your customers think about them, what improvements could be made, how your products and services compare to others in the marketplace. Unfortunately, the majority of surveys do not have a high return rate. Therefore, you might have to offer an "inducement" for your customers to return the survey forms. The "inducement" could be an entry in a draw for a prize, a discount on the next product the customer purchases from you, perhaps send them a "dollar scratchie ticket" in advance, or offer them a business book or article. Surveys are a great way to keep in touch with your customers and show them you care about the products and services you are offering.
Tax Planning For Trusts
The recent action by the Australian Taxation Office (ATO) relating to Trust Distributions having to be made prior to the 30th June has created a number of issues for Accountants, Trustees and Beneficiaries of Trusts, including:
- If the trust minutes are invalid, this could result in the trustee being assessed at a full marginal rate of tax, due to no beneficiary being presently entitled, if no default beneficiary is included in the trust deed.
- Trust deeds that do not deal with Capital Gains and Franking Credits could result in the trustee being assessed on these amounts at the full marginal rate of tax due to no beneficiary being presently entitled.
- Poorly drafted trust minutes could result in trust distributions being taxed at higher rates in higher income earning beneficiaries' hands instead of in the hands of a lower income earning beneficiary.
The action by the ATO has highlighted the need for tax planning for each trust to become a compulsory measure during the financial year, and not at the end of June, in order to ensure proper distributions are agreed to and that the trust minutes are prepared confirming the decision of the trustees prior to 30th June each year.
If you have any queries on the operation of your trusts, please do not hesitate to contact us.