Melbourne Cup has been run, and no doubt there were some celebrating and some commiserating on the outcome.
Did you see the other outcome on the second Tuesday of November? The Reserve Bank of Australia kept cash interest rates at the record low of 1.5%.
With the ASX on a stellar climb (up 7% in the last month) and managing to break through the 6,000 barrier for the first time since January 2008, there are signs that the economy is going well (at least in some sectors).
With those signs comes the prospect of interest rates rising again. Have you reviewed your debt levels lately? Are you taking advantage of the low interest rates and paying extra into your mortgages to reduce your principal faster?
Everyone knows that interest rates will rise again at some point, however it is those that do something about it now that will be able to secure their position when the inevitable rises occur.
Is Your Business Better Than The Industry Average?
You might be running a business and making a profit, but how are you performing compared to your competitors and others in your industry?
Benchmarking your business performance can help you understand whether you can improve measures such as gross profit (cost of goods sold), rent, salaries and other expenses, and net profit. By determining the areas in which your expenses are higher compared to your industry, you can analyse your expenses to work out ways in which you might be spending too much, or find better rates or deals from your suppliers.
It might even be the case that the benchmarking will highlight that you just aren’t charging enough and your prices need to increase!
The ATO provides a number of small business benchmarks which are broken up into industries, as well as turnover bands.
This is important, because you can benchmark yourself against similar businesses with the same level of sales, as generally a change in sales will change the percentages of various expenses. Expenses such as rent are generally fixed, so if you increase sales but the rent doesn’t change, the percentage will become smaller.
It may also be that you need more space if your business grows, so by reviewing this benchmark it might highlight or confirm your need to find new premises.
How do I benchmark my business?
You can find the ATO Small Business Benchmarks on the ATO website and compare your business manually, or you can use the ATO app which can be downloaded from Google Play, Windows Phone Store or Apple App Store.
If you are in doubt about how to benchmark your business, contact us at Value Beyond to arrange a review of your business, and we will help you determine the areas of your business that you need to work on.
Business Names vs Trade Marks
A common misconception is that once a business name is registered it is protected.
Any person or company running a business that does not trade under their legal name, must register a business name with Australian Securities & Investment Commission (ASIC). This business name registration lets the public know who the legal entity they are dealing with is when they are dealing with your business.
For example, if your name was Robert Smith and you are trading under the name Robert Smith, then you do not need to register a business name. If you are Robert Smith trading as Bob’s Hot Dogs, then you need to register a business name because your trading name is different from your legal name.
If you register a company with ASIC, then that company will trade under its legal name e.g. Bob’s Hot Dogs Pty Ltd. If the company trades under a name different than its legal name, then the company will need to register a business name e.g. Bob’s Hot Dogs Pty Ltd trading as Bob’s Burgers.
Registering a domain name only provides you with a web address for your web site. It does not provide any legal protection for the name that you are using for your business. Say Robert Smith registers www.bobshotdogs.com.au, this does not give any legal protection to the name as it is only a web address used to find the location of the website.
Trade marks are administered by IP Australia. By registering a trade mark, this will give you the exclusive rights to use, licence, or sell the mark. There are many famous trademarks such as the Coca-Cola symbol, Nike swoosh, and even the distinctive purple colour of the Cadbury packaging for its chocolate.
How much value do you think your brand has?
If you don’t have a trademark registered, then it is possible that someone could register a name that is very similar to yours, which could lead to confusion, and a dilution in the value of your name.
You don’t think it matters to have the trademark registered?
We have had a client who (thankfully) registered their trademark, and then when a competitor opened up a business doing the same thing under a very similar name, they were able to enforce their trademark and make them change their name. This then protected the brand and its value, as well as the value of the ongoing business.
If you are unsure of what protection you have over your trading name, contact us at Value Beyond to organise a review of your business structure and ensure you retain the value in your brand.
Court Rejects $3,000 Claim For “High Class Clothes”
The Administrative Appeals Tribunal has ruled that a political staff was not able to claim more than $3,000 in clothing expenses as a tax deduction, despite her claim that she was required to wear “high class” clothing to work.
The employee worked for former Prime Minister Kevin Rudd, and claimed the clothing in her 2013 and 2014 tax returns. She argued that she was required to regularly meet with foreign dignitaries and executives, and it was the expectation of her workplace to wear clothing of a certain level that she would not usually wear.
However, the AAT determined that expenditure on “conventional clothing” is not an allowable work expense. Clothing has to be distinctive or unique to the nature of the employment (uniforms, costumes etc.) and is unsuitable for activities other than work.
What does this mean for me?
The findings of the AAT highlight the general rules that an expense will be tax deductible only where it has a connection to work/business activities and your ability to earn your income, and it is not a private expense.
Typically an expense would be private if you had to pay for the expense anyway, and there is no strict requirement of your job that you have to pay for that expense in order to earn your income. Examples of these types of expenses include, clothing, hair and make up, food and drink, and travel to and from work. There are obviously exceptions to these scenarios:
- protective clothing specific to your job
- hair and make-up if you are a TV presenter or airline hostess
- food and drink while you are travelling away from home overnight for work
- travel to and from work, only if there is a work related stop on the journey e.g. to see a customer, pick up the mail etc.
The key to being able to claim expenses as work related deductions is that there has to be a connection between the expense and the earning of your income. If that link doesn’t exist, and you would normally treat the cost as a private expense, then it is likely not tax deductible.
If you are in doubt about any expenses that you think might be claimable, contact us at Value Beyond to make sure before you make a claim – particularly if the only reason you are spending the money is to get a tax deduction!
21 November 2017
Lodgement and payment of monthly October 2017 activity statements
25 November 2017
Lodgement and payment of quarterly September 2017 activity statements if lodged electronically
1 December 2017
Payment of income tax for taxable large/medium companies and super funds (turnover greater than $10 million) – lodgement due 15 January 2018
21 December 2017
Lodgement and payment of monthly November 2017 activity statements
25 December 2017
26 December 2017
1 January 2018
New Year’s Day