Welcome to this latest edition of The Blueprint.
There’s little doubt that the proposed Resources Super Profits Tax is a hot topic for the business community at the moment.
While still too early to predict any specific effects, the ultimate scope and nature of the tax will undoubtedly have far reaching implications for the SME sector.
In our first article we review some of the potential implications.
We also take a look at online accounting systems and deliver some timely advice on taking stock of your current financial structure.
Kind regards
David Carpenter
Partner
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SMEs and the Resource Super Profits Tax - How will it impact you? |
| SME’s and the Resources Super Profits Tax – How will it impact you? |
The Resources Super Profits Tax (RSPT) was announced in May 2010 by the Federal Government as part of their response to the Henry Tax Review. Since the announcement, there has been much debate on the impact of the tax to the mining industry. But what exactly is the Tax and what impact will it have on SME’s?
Mining companies and interest groups believe that the tax will make the Australian mining sector one of the most highly taxed industries in the world and will result in many projects being scrapped or sent offshore.
The Government strongly disagrees with this view and believes that the RSPT is not expected to adversely effect the level of mining activity in the medium term, while it is likely to lift activity in the long run.
However, a major challenge for the Government is undoubtedly the impact that will be felt if the legislation to introduce the tax is blocked.
If the RSPT doesn't get through, small businesses will suffer more than anyone. The $12 billion expected to be generated from the RSPT over the next four years is slated to pay for two initiatives for small business starting in the 2012-13 income year:
1. A two percent cut in the corporate tax rate from 30 percent to 28 percent; and
2. An immediate asset write-off for assets under $5,000, which will apply to businesses with less than $2 million in turnover.
The Government will also use part of the revenue from the RSPT to fund a phased reduction in the company tax rate for other business to 28 per cent.
In addition, SME’s that enjoy flow-on benefits from the mining sector could suffer if projects are either abandoned or severely reduced.
In the Hunter economy alone, the resource sector directly employs around 15,000 people and indirectly another 50,000. One in five workers is associated with the coal industry, who support the Upper Hunter towns and their manufacturing suppliers at Tomago, Beresfield and Rutherford in the Lower Hunter.
Talks between the Government and resources industry stakeholders are set to continue. With so much at stake, let’s hope they get it right.
If you’d like to know more about the potential impact of the RSPT on your business, please contact David Carpenter on 4928 8500.
| Online Accounting Systems - which one is right for you? |
With most businesses now enjoying broadband access, online accounting systems are fast becoming a financial management tool of choice for SMEs.
Here’s a snapshot of online accounting systems from three key players in this space, Xero, QuickBooks and MYOB.
Xero – easy access for you and your accountant.
Xero is a well-established New Zealand company with a strong reputation for innovation and reliability. Their program offers easy access for you and your accountant and has the ability to import bank transactions from your current banking software. You can essentially invoice anywhere you can access the internet.
Fees for this service are via a monthly subscription. Xero offers a tiered fee structure based on usage with no lock-in contracts. A big benefit of this system is that you no longer need to worry about backup as this is an automated process.
QuickBooks online – flexibility and functionality.
QuickBooks Online gives you access to your company data file anywhere, with the functionality of QuickBooks Enterprise. This product is ideal for small to medium sized businesses. It provides you with multi-site and multi-company reporting, comprehensive payroll management and integrated Inventory management. One key feature of this program is the ability to design your home page and reports specifically to suit the needs of your industry.
MYOB – business snapshot from your iPhone.
MYOB’s online product is “Your Business Cloud”. Amongst other things, this allows you to access live snapshots of business performance via your iPhone.
Other features include being able to create invoices and bills in real-time and process payments received and manage bills to be paid on the fly. This product also has an excellent contact management system with the potential to reduce the amount of databases your business requires.
For more info about the right accounting software and systems for your business, contact Michael Graham or Jeremy Wilcox on 4928 8500
| New Financial Year - Time for a finance health check! |
A new financial year is a great opportunity for you to review the effectiveness of your existing financing structure.
The past year has been a turbulent one in regards to interest rate increases and numerous other changes in the finance market. So what options are available to you now that weren’t available previously?
It’s more than likely that when you originally arranged your finance structure, there was limited innovation in the finance market. But now competition between financiers is fierce and new products are constantly emerging that might be better suited to your ongoing requirements.
Anyone with a business loan should be ensuring they have their loans structured to ensure that their personal debt is repaid in preference to their tax deductible debt.
Additionally you should be looking at various features and benefits that you are able to include in your loan structuring. Features such as redraw, interest offset, leasing, line of credit and extended loan repayment terms on business loans.
These options along with a competitive interest rate may provide you with an improved cash flow position. Would that be beneficial to you?
At Cutcher & Neale, our Finance division provides a value added service for our clients. We work in conjunction with your accountant to ensure that we are providing the best possible solution for your finance structure.
For a no-obligation review of your existing finance structure, contact our Lending Manager Alan Johnston on 02 4928 8500.