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This month's newsletter includes the following topics:

• Payments Via Credit Cards
• Single Touch Payroll
• ALP Key Tax Policies
• Co-Ownership (Shareholder) Agreements
• Grants Update
• Salespersons Need for a "Story"

We hope you find it beneficial. If you would like more information on any of the below, please contact the office. 

Payments Via Credit Cards

If your preference is to pay bills via credit card, our Bpay facility has been enabled to receive payments via credit card, specifically Visa and Mastercard. If you have any questions in relation to this, please contact the office. 

Single Touch Payroll Extended to All Employers 

Parliament has now passed legislation to extend Single Touch Payroll (STP) reporting to include all small employers (those with fewer than 20 employees) from 1 July 2019. The Commissioner says the ATO understands the move to real-time digital reporting may be a big change for employers, especially small business, so it will adopt a supportive, tailored approach to help them undertake this change.

The ATO understands that many small businesses and other small employers do not currently use commercial payroll software and they will not be required to purchase such software to report under STP. The ATO is working with software providers to develop low and no-cost reporting solutions including simple payroll solutions, portals and mobile apps. It will publish a list of providers on the ATO website: ato.gov.au/stpsolutions.  

Snapshot of the ALP Key Tax Policies

The Federal Election will be the primary focus over the next few months, with many commentators predicting a possible change in Government. As usual, tax policy is a focal point of the political debate. 

Recently, at Labor's 48th national conference (16-18 December 2018), a document entitled 'A fair go for Australia: National platform - final draft' ('A fair go for Australia') outlined the key ALP policies. The table below outlines some of the key ALP tax policies of interest. 

Income Tax Reforms
Key ALP Tax Policies	Comparable Coalition Tax Policies
1. Restrict deductions on personal tax-related expenses to a $3,000 cap per individual, per year.	No cap on personal tax-related expenses is proposed, although the ATO has made adjustments to Item D10 – Managing tax affairs to obtain a more detailed breakdown of what is being claimed by taxpayers at this label from the 2018 'I' returns.
2. Reduce the maximum general CGT discount from 50% to 25%, with exceptions for: · Grandfathered investments; · Investments made by superannuation funds (which are effectively taxed at 10% after the CGT discount); and · Assets of small business owners	The Coalition has not indicated a desire to change the maximum general CGT discount from 50% for eligible tax payers.
3. Limit negative gearing to investments in new housing, with grandfathering for pre-existing investments. Labor has proposed any losses from new investments in shares and existing properties (which we assume includes commercial property) will still be permitted to be used to offset investment income tax liabilities (but not against salary and wages). Any deferred losses can then be carried forward to offset the final capital gain on the investment.	The Coalition has not indicated a desire to change the current negative gearing rules
4. Remove the ability for certain taxpayers to claim excess imputation credits as cash refunds.	The Coalition has not indicated a desire to change the current ability for eligible taxpayers (including individuals and SMSFs) to receive cash refunds for excess imputation credits.
5. Apply a minimum tax rate of 30% to all distributions from discretionary trusts (non-fixed trusts) to mature individual beneficiaries (i.e., those over 18)	The Coalition has not indicated a desire to change the current rules in relation to the taxation of discretionary trust beneficiaries at their applicable marginal tax rate
6. Introduction of an Australian Investment Guarantee from 1 July 2020 This accelerated depreciation for business proposes to immediately allow a 20% write-off for eligible depreciating assets	The Coalition has announced that from 29 January 2019, the instant asset write-off threshold for SBE taxpayers will increase to less than $25,000 and this will apply until 30 June 2020 (at which time the immediate write-off threshold presumably goes back to less than $1,000)
Superannuation Reforms
Key ALP Tax Policies	Comparable Coalition Tax Policies
1. Lower the non-concessional contributions ('NCCs') cap to $75,000 (down from the current $100,000)	The Coalition has not indicated a desire to change the current $100,000 NCCs cap (indexed)
2. Lower the Division 293 tax threshold to $200,000 (down from the current $250,000)	The Coalition has not indicated a desire to change the current $250,000 Division 293 tax threshold
3. Repeal the newly introduced concessional contributions ('CCs') catch-up rules	Retain the new CCs five-year catch-up rules for eligible members if they have a total superannuation balance of less than $500,000
4. Repeal the recent reforms allowing all eligible individuals to claim a tax deduction for personal superannuation contributions	Retain the recently legislated relaxation of the personal superannuation deduction rules (i.e., the removal of the '10% test' from 1 July 2017)
5. Prospectively restore the prohibition on direct borrowing by SMSFs on housing investments via Limited Recourse Borrowing Arrangements ('LRBAs')	The Coalition has not indicated a desire to change the current LRBA rules.
6. End the freezing of the Superannuation Guarantee rate at 9.5% and fast track the employer compulsory contribution percentage to 12% - although firm dates have not been provided	The coalition has not indicated a desire to change the current 9.5% Superannuation Guarantee rate until the first increase in 2022 (to 10%) begins the gradual progression to 12% by 2026.

Co-Ownership Agreements Are Important

The best time to finalise an agreement which relates to disputes, sale of the business, major capital expenditure, policy on the treatment of profits, decision-making, restraint of trade and many other issues is when the business is being formed, not months or years later when the same level of enthusiasm and friendship, that was there at the beginning of the business, may not be as evident.

Going into business with someone else is a big event, so the key reasons to have a co-ownership agreement is to have set the "rules" before you start playing the business game in which your business entity envisages being involved.  It's important to consider setting the clear expectations of everyone involved as a partner, unitholder or shareholder right from the beginning.

Items to consider include:

• Is every partner, unitholder or shareholder required to work full-time in the business? (Called a principal)
• The principals should agree on the decision-making processes to be implemented within the business.
• Restraint of Trade – consideration should be given at the very beginning as to what would happen if one of the principals wanted to do "private work" or wanted to leave the business at some future date.  There are various types of restraint of trade clauses and consideration should be given as to which type of restraint clauses should be included in the agreement.
• Working Capital Contributions – the agreement should summarise the founding principals' intentions relative to the funding of working capital for the business:
• The founding principals need to determine a policy relative to the treatment of profits.
• Sale of equity to third parties – will there be a prohibition on any one selling their equity to a third party?
• What will be the rules that have been agreed to by all of the founders relative to a forced exit from the business?
• A formula for the methodology to be utilised for the calculation of an exit value held by a principal in the business.
• An agreement relative to a "Buy-Sell Agreement".  Consideration of wording and the formula to be utilised for the calculation of the exit value.
• Dispute resolution procedures relative to a dispute that cannot be agreed on from normal negotiations
• Consideration relating to the inclusion of a "drag-along rights" within the agreement.  (A right that enables a majority shareholder to force minority shareholders to join in the sale of the company)
• Consideration relating to the inclusion of a "tag-along rights" within the agreement.  (If the majority shareholder sells their stake the remaining minority shareholders have the right to join the deal and to sell their shares on the same terms and conditions as the majority shareholder).

Whilst it is preferable that a co-ownership agreement is negotiated at the beginning of an entity's life there is no reason that a co-ownership agreement cannot be agreed to at any time during an entity's existence  

Grants Update

The following grants are all targeted at small/medium enterprise businesses:

Employers Support Payment Scheme

Provides financial assistance to eligible employers of reservists and self-employed reservists when the reservist is absent from their workplace on eligible periods of defence service.  Payments for full-time employees is $1,567.90 per week – pro-rata payments may be made for a part-time employee.  Employers must have an Australian Business Number and can include partnerships, companies, trusts and trustees of trusts.

Small Business Export Loan

A loan to meet the specific needs of small business exporters who need finance to support their export transactions and their bank is unable to help – the Export Finance Insurance Corporation (EFIC) may be able to provide the company with the necessary funds to satisfy their cashflow needs.  Loans are available from $20,000 to $350,000 secured by directors' guarantees.  Interest rates are approximately 13% per annum.  In the first instance the business must apply to their bank for financial assistance and they are only eligible for the small business export loan if the company's bank is unable to assist.  The company's turnover must be between $250,000 and $10 million in the previous financial year and have been established for at least 2 years.

Assistance for SMEs Accepting Work in the Defence Industry

The Centre for Defence Industry Capability's administers a program providing advisory and facilitation services to defence sector small to medium enterprises to improve business management, skills development, innovation and access to export initiatives and international and domestic supply chains.

The program also provides grants to defence sector SMEs to implement recommendations from advisory and facilitation services. 

Eligible applicants must be a company or an incorporated trustee on behalf of the trust.  Businesses are not eligible to apply if they are an individual, partnership or trust (however an incorporated trustee may apply on behalf of a trust).

If an applicant is successful they will be assigned a business advisor or facilitator who will work with the applicant to complete the advisory or facilitation service and produce a report with recommendations.  Funding of $5,000 to $250,000 is available for successful applicants to implement the recommendations that have been made in the advisory or facilitation process.

Salespersons Need a "Story"

The sales process is not easy and many people believe it can be enhanced by telling a "story" rather than just talking about a product or service.  Potential customers like to know who they are dealing with, the salesperson's experience, knowledge and background, together with information about the business and the "success stories" that have emerged from customers who have utilised the products or services referred to by the salesperson.  To implement a "story" process requires the salesperson to start with themselves – briefly who are they, what is their experience in the industry, show that there is empathy for the customer's problems.

The next stage in the "story" is to comment on the other members of the team who will be responding to a customer's questions or requests for assistance such as the person responsible for delivery and installation of a product or service, the training person, the accounts person who is going to be following up for payments, the service department person to whom any concerns about the product should be directed and anyone else in the supplier's team who is going to interact with the customer.  Customers normally have some interest in the history of the business that is supplying them with a product or service.  This is the opportunity to introduce some comments on key products or services that your business has produced, awards won, key intellectual property developed by the business.

Successful salespeople normally undertake some research on the customer or the customer's industry and have developed an understanding as to how the products or services that are being recommended to a potential customer can be utilised to improve efficiencies, reduce costs, improve the work experience of the customer's team members – these are the types of items that can be blended into the "story".

The "story" is a great opportunity to mention customers who have been very successful in utilising the business' products or services to great effect within the customer's business.  The utilisation of a "story" can open up further dialogue with the prospect and enables the prospective customer to gain a significant insight as to how your business operates and therefore gives a strong indication to the prospective customer as to how they will be treated by your business, once the initial sale is completed.