June 7, 2023

As a creative artist, your focus is on making the best use of your talents and skills, and turning this into a viable, income-earning activity.

And sometimes, this means that your income and cash flow are ‘lumpy’, with periods of low or no income, followed by ‘the great years’. Years of effort, that result in a large cash payment in one year – and a large tax bill as a result.

For this reason, it’s important that you can understand the concept of Income Averaging. This tax treatment offers significant concessions, and knowing how to make the most of them can save you a lot of money.

It is ok if you are not familiar with this particular area of taxation, we’re here to help. This is a highly specialised field that only a select few have expertise in. Many accountants, unless they have a specific focus on creative industries, may not be aware of it. Moreover, if you typically handle your tax returns on your own, it is improbable that this benefit has come to your attention. This is why you need to utilise an accountant that understands and specialises in the creative industries (as Fiscal Artisans does!) to assist you in your accounting and taxation matters.

Here’s how it works: your Special Professional income from creative sources (such as writing, performing, or inventing) is isolated and taxed at a concessional or reduced rate based on a rolling 5-year average. This means you pay less tax in years where your income from these sources is significantly above average. In years where your income is below or in line with your average, you are taxed at normal marginal tax rates. Keep in mind that income from other sources is always taxed at normal rates, and income averaging may not benefit you in years where your income is below average. However, years of lower income will affect your rolling average, and reduce your tax rate in future periods when you earn above-average income.

To qualify for income averaging, you must be classified as a “Special Professional.” This encompasses authors, artists, composers, inventors, performers, production associates, and sportspersons. In some cases depending on the circumstances, you may be designated as such if you are in a “creative decision-making role” such as a director. Eligibility is assessed on a case-by-case basis, so it’s wise to seek advice from a knowledgeable tax professional to determine if you meet the criteria.

One of the reasons these jobs are included in income averaging is due to the inconsistent nature of income. For example, a composer may spend years developing a project before receiving any income, resulting in large peaks and troughs of income year to year. Income averaging helps to spread this income over the entire development process, resulting in lower overall tax payments.

In simple terms, Income Averaging allows you to smooth out your taxable income over a few years, minimising the impact of any one high-earning period. By doing so, you can reduce your overall tax liability and free up funds to invest back into your creative pursuits.

In the first 4 years, the benefit can be even greater! It is quite common for the first year of averaging to result in little or no tax needing to be paid – at least on the earnings up to $90,000 (assuming no other income has been earned on salary from areas like school teaching, waiting tables or other non-artistic employment)

Keep in mind that income averaging is an opt-in system, and once you opt-in, you remain in the system. You can start using income averaging once you’ve earned more than $2,500 from creative work, and it only considers the income generated from creative activities to calculate your average. Other income, such as non-creative activities or investments, is not included.

Ok, you say, so what sort of benefit can this provide?

Case Study 1

Brian Eno(1) is a successful composer, musician and recording artist. They have a stream of income coming from local and international royalties from Film and TV compositions, Gigs and CD sales annually, as well as investment and non-Artist income.

In 2021, they lodged their Income tax return without claiming Artist Averaging, as they had done in all prior years of their career.

On a total taxable income (after all deduction claims) of $219,830, they incurred a total tax liability of $67,399.81. After the tax instalments were paid through the year, they were left with a net tax liability of $12,236.30.

However, on review of their return, and implementing Artist Averaging on their Professional Income, the Total Tax payable was reduced to $21,746.80, resulting in a net benefit of $45,653 to the Artist.

This also subsequently reduced the amount of PAYG tax instalments that were needed for the following tax year.

Case Study 2

Mariah Carey(1) is a professional writer.

On their Tax year professional income of $91,500, and a net taxable income (after all deductions, and including non-business income) they paid tax on a Taxable income of $57,746.

Before using the Artist Averaging provisions, they are liable for tax totalling $9,460.65.

Artist Averaging was then applied to this return, and with the provisions for the first year of averaging, their total tax liability was reduced to $1,154.92 – a saving of $8,305.73 on the same taxable income.

It’s important to remember that you cannot opt-out of income averaging once your income normalises. Also, the concession only applies in “good” years – you will not be taxed more in years where you earn less than the rolling average.

I.e. if your income has been consistently around $80,000 p.a. but then drops in one year to under $40,000, you will pay the ‘standard’ tax you would normally pay on $40,000 for that year. Subsequently, if the following year jumps up to $120,000 (as the project you have been working on is completed and you are paid a lump sum on completion, or the unit sales happen in the following year) then Artist Averaging may reduce the tax payable on the amount ‘over’ $80,000, so your tax rate payable does not jump up significantly.

To show how this works over the years, let’s consider the following case study.

Freddy McQueen, the lead singer of a hard rock band called Mercury, has income over a 5 year period that has ebbed and flowed as CD sales, royalties, writing and recording over new material and concerts were undertaken.

His Net taxable income after all costs and deductions are as follows:

Year 1 – $50,000

Year 2 – $75,000

Year 3 – $120,000

Year 4 – $40,000

Year 5 – $130,000

The tax payable – with and without Artist Averaging over this period would look like this:

	1	2	3	4	5
Taxable income	$50,000.00	$75,000.00	$120,000.00	$40,000.00	$130,000.00
Tax on normal rates	$6,717.00	$14,842.00	$29,467.00	$4,142.00	$33,167.00
Tax on averaging	$ –	$9,625.40	$22,042.00	$4,142.00	$32,717.00
Net Tax Benefit / Savings	$6,717.00	$5,216.60	$7,425.00	$ –	$450.00

Income averaging is a specialised area of taxation that can be incredibly advantageous for those in creative professions. However, it’s crucial to enlist the help of a tax professional like Fiscal Artisans to determine eligibility and maximise benefits.

Talk to us for further information, and let’s see if Income Averaging applies to you.

We may even be able to look at your past tax returns and reclaim tax that you may have overpaid. Contact us for further information and a review of your past tax lodgements.

Stuart C Smith CPA

Director

Fiscal Artisans

Of course, these are not their real names. The facts in the first two case studies are real, but the names have been changed to maintain confidentiality.
Note that the tax payable amounts do not include the Medicare levy and other related offsets.
As the Income for the year is below the average over the prior years, there is no rebate claimable for the year, but also, no additional tax is payable on Total Taxable Income.

by Fiscal Artisans

February 20, 2023

The Australian Taxation Office has just released its revised methods for working-from-home deductions for the 2022–23 tax year. The main change this year is that the ATO is now more focused on making sure people are actually working from home, and not just claiming the deduction without any evidence to back it up. So if you’re planning on making a claim for working from home this year, make sure you follow these new guidelines to avoid being caught out!

From the 2022–23 income year, the methods available to calculate working-from-home deductions are the:

revised fixed rate method
actual cost method.

While the actual cost method remains unchanged, the revised fixed rate method has been updated to better reflect contemporary working-from-home arrangements, making it easier to calculate expenses and avoid time-consuming apportionment calculations.

The revised fixed rate method:

has increased from 52 cents to 67 cents per hour worked from home
removes the requirement to have a dedicated home office space
works out the claim for
electricity and gas
phone and internet usage
computer consumables
stationery
allows taxpayers to separately claim the work-related portion of the decline in value of depreciating assets – such as office furniture and technology.

The revised fixed rate method can also be used by businesses that operate some or all of their business from home to claim home-based business expenses.

If you plan to use the revised fixed rate method for your 2022–23 tax return, you need to have:

from 1 July 2022 to 28 February 2023 – a record which is representative of the hours you worked from home. (e.g. diary notations or a work record showing start and finish times for at least 1 month of work as a representative period of time for the year)

from 1 March 2023 to 30 June 2023 – a record of the total number of hours you worked from home (such as a timesheet, roster or diary) as well as evidence you paid for each of the expenses you incurred that are covered by the fixed rate method (for example, a phone or electricity bill). You will also need records for any equipment you bought to work from home, like technology or furniture (which provides details of the supplier, cost, date acquired).
So this will mean that, for EVERY HOUR you want to claim work-from-home deductions using this method, you MUST have the time documented. While this may not be needed for your employer, it is necessary in order to be able to make a full and legitimate tax deduction at year-end.Your diary – paper or electronic – will become your best friend this year!

There are many apps that can be used for this, or even just a consistent notation on your diary of your start and finish times, recorded daily. But recorded it must be!

Working from home is becoming more common, so make sure you know what you can and can’t claim in order to get the best return on your investment. Contact Fiscal Artisans today for expert advice on how to maximise your deductions this financial year!

by Fiscal Artisans

September 30, 2022

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The Optus Hack – and what you

(and I) need to do with our business data!

It has become common knowledge that Optus has had its database breached.

And this has personal relevance to me, as I am an Optus mobile subscriber, with my business (mobile) number and those of my entire family impacted by the breach. I received the ‘generic’ email from Optus on Saturday (12:51 am. Nice they got it out at a time when it was likely to be buried under a plethora of spam emails), so the awareness of the issue came more from the press reports than the ‘genuine communication’ to its customers.

The key issues we need to look at here are:

What was taken, and
How did it happen?
What does this mean in my situation?
Stuart, is the data you hold on me safe?

It APPEARS (as Optus has not been crystal clear yet with this information) that their basic database information has been ‘taken’.

This includes:
Full customer name
Date of birth
Phone numbers
Email addresses
Account addresses

They claim that payment details (Bank and credit card numbers?) and passwords have not been taken – just the identification data. But that is bad enough.

Access may also have been obtained to the I.D. document details provided for the ‘100-point check’ each account holder needs to provide.

This would also mean access to items like:
Driver’s licence – state, number and expiry date;
Medicare card number and details; (They have reported that details of at least 35,000 current and expired medicare cards were accessed)
Passport details;
Other items used for verification could be your electricity account details, rates notice, etc.

The danger here is that these details are potentially enough to create a fraudulent I.D. or to assume someone’s identity to do things like:

Change your bank account details, and get new cards issued to defraud you;
Alter phone account details, and have your calls and mobile account redirected to someone else;
Create new credit card accounts in your name that someone else controls (and leave you with a debt or bad credit record).

How did it happen?
While Optus has been claiming that it was a sophisticated attack, it seems the reality is that they left their backdoor unlocked and the lights on. The door might not have been wide open, but it was not far removed from that situation.
Many business systems are set up to ‘talk’ to each other using an interface or ‘API’ to do so.

To explain this, here is an explanation from The New Daily
In basic terms, APIs are ways for computers to pass code between each other (such as instructions). They are often used to enable services such as Google’s weather alerts, which make use of Bureau of Meteorology data.
They are supposed to be safe because companies usually have authentication rules attached to their APIs – but Optus allegedly did not.
“What we’ve seen is there was an API where you pass a phone number, and a phone number’s just … you just keep adding one, and you cover them all eventually,” Mr Hunt said.
“So why was there an API [without user] authentications? That could be a programming error.”

So the system that Optus was using did not have enough security built into it to stop a systematic ‘guessing’ of the key to access the data. It would be like if I could get hold of your ATM card and just keep guessing your PIN time after time without ever being locked out of the process. In time, with enough guesses, I will get access and can get all of your money. In this case, it only takes one correct ‘guess’, and access is obtained to potentially the whole database.

Data security is becoming increasingly important, and more attention needs to be given to this by everyone in business – even if you are a ‘business of one’ and freelancing or self-employed. Again, look at your contact details, the data you hold on your associates, customers, and finance arrangements and think about what data you need to hold – and how secure it is.
It is often considered that your database is one of your greatest assets in a business, and the reality is, that it is also potentially one of your greatest liabilities or risk factors, as you need to ensure you are ‘protecting’ your position and that of your customer base when you undertake your activities.
So, the potential danger here is that the data obtained won’t just impact activity with Optus. It can impact people in other areas.

Like in activity with the Tax Office.

I have been asked by a concerned client to check data on the Tax Agents portal, as it appears that some hackers are trying to change details with the ATO. This could result in tax refunds landing in the wrong bank accounts, GST or other tax claims being made incorrectly, or business entities being created to defraud the government, using false names obtained via a data hack to draw funds out from the ATO.

We will be doing random checks of client data on the ATO site to make sure nothing has changed (and if you are an Optus customer, don’t hesitate to get in touch with us, and I will check your ATO data to make sure it is all ok)

So, what can you do about this?

After spending over 4 hours on the Optus ‘chatbot’ trying to get some clarity on what has been taken – and running into the same brick wall as everyone else on finding out ‘exactly’ what was released, the action that I took was as follows: (and what I would suggest is done by anyone else who is a current Optus Mobile system user)

Contact VicRoads (or, if you are not in Victoria, your local roads authority) and request a new driver’s licence with a new number. They will also ‘flag’ that the current licence may have been compromised and can’t be used for I.D. verification. I don’t think it will get you out of any speeding or redlight fines, however. Sorry about that!
I found the process with VicRoads took all of 5 minutes and 5 lines of information. So unlike dealing with Optus, it was painless;
Contact Medicare via MyGov, and request a new Medicare card for you and your entire family. They will issue a new card with essentially the same details but ‘moved on’ sequentially. Again, this will override the ‘old’ cards and make the number redundant.Again, the Medicare website has been set up to deal with this Optus issue, and the process is simple.
Passports – this appears to be a harder scenario. Currently, it does not appear that the Passport office will ‘simply’ process new passports to replace any that ‘may’ have been compromised. And it will come down to finding out precisely what data Optus received and held regarding I.D. for their customers.News Flash! Optus has now agreed (Been made to!) to pay the cost of passports that need to be replaced due to data being released through this breach. The replacement process is still to be determined, so keep an eye on the Passports Australia website and contact Optus to confirm if these details have been accessed. As mentioned above, they are still to provide full details of what data has been accessed and what I.D. documents they retained on their files.
There are various ‘data monitoring’ sites available (Optus is funding a 12-month subscription to Equifax to those impacted who shout loud enough) that will let you know if changes have been made to any of your accounts. It may take a bit of work to set everything up, but it will only take one notification of fraudulent change to make the subscription worthwhile.
Contact your banks and financial institutions, change your passwords, online pin numbers, etc. Make sure that the systems are set up to contact you with any changes made on your accounts, so you can act quickly if any suspicious activity has occurred.

The need for security over a business’s data is significant, and everyone in business needs to look at this situation and identify the lessons relating to their own data.

As business owners, we hold a large amount of data on our clients – and also on our suppliers, financiers and associates. And, the more ‘automated’ we make things, the more data we hold to make that possible. E.G. ID numbers such as ACN, ABN, TFN, Director IDs, driver’s licences, bank accounts, addresses, date of birth, etc., are all recorded. If that data is hacked, it becomes easy for an identity to be duplicated or to change and divert the information.

Look at what data you hold for your customers., clients, suppliers etc., and what security is used to access those details. And what do you need to retain once identification has been confirmed, or the ‘transaction’ has been completed?
How is this stored and saved? Who has access to this data? What checks can you make to see if changes have been made without your knowledge?
What is needed to access your database? – is it just a password, or have you set up 2-factor authentication? Many online systems require this, but I have noted that many people fail to take it up if they can avoid it. The lesson is – DON’T AVOID IT. It is like leaving the key under the mat for your front door. Sure, the door is locked, but finding the key is not as hard as you want to believe it is.
Do you use the same password for multiple sites? I know, remembering multiple passwords is a Pain in the pass-word, but the frequency of database hacks makes keeping them unique more and more important. You can use programs like Last Pass to keep track of your different passwords – and create unique, hard-to-crack passwords or passphrases for each site you use. This type of system will also ‘flow’ through to all your devices, so you don’t have to keep track of them separately. (At Fiscal Artisans, we are using Last Pass, and it works well on computer browsers and mobile phone systems)Most mobile phones can also help you create unique passwords stored on the phone, so you don’t have to remember them (Just keep your phone security tight!)
If you use your mobile phone to access most sites, it is not hard to see which sites have duplicated passwords – and which ones have potentially been compromised. You can usually find this in Settings/passwords/security recommendations. Your web browser (such as Google) or your computer setup may help you with this process. Keep them unique, combining UPPER and lower case letters, numbers, and special characters. And don’t use easy-to-remember words or numbers that relate to you, like your birthday, middle name, or kids’ names.

Ok, so what are we doing about this?

This is how we operate in terms of Fiscal Artisans with our data.

All of our operating system access requires 2FA, meaning that as well as a password, all access requires a code that can only be obtained via my phone (which is pretty much permanently embedded with me). All staff use unique 2FA access, log-ins and passwords for their access to our systems as well.
Unique passwords are used for all systems, and these are kept secure at all times.
All paperwork and related data for clients, such as questionnaires and paper copies of data that have been emailed to our clients, is scanned, then shredded if it does not need to be saved or stored or sent as a hard copy (and the shredded paper is turned into garden compost and worm food!) so no data or client information is disposed incorrectly, or kept beyond the time it is needed.
Where former clients have ‘moved on’ and are no longer using our services, any data we hold for them is taken ‘off line’ from our systems and kept in a separate archive system until the required period has elapsed. Then, after around 7 years, that data is deleted and completely purged from our systems.
We only share data that you have agreed to be shared with associates and will always ‘copy you in’ to communications of data provided to third parties like finance associates, legal advisers etc.
We review our systems frequently to ensure that data is stored correctly, security is maintained at a high level, and superfluous data that is not needed is removed.

We suggest that all business operators look at their systems and determine if changes need to be made to increase their security over the data they hold.

We are happy to assist and advise around your data management, and we can assist you with associates who can provide you with the services needed to improve your data security.

Meanwhile, please check your own systems and make sure that they are as secure as possible.

After all, you wouldn’t leave your front door open or leave the keys in your car would you?

Treat your data with the same level of security.

Enjoy your weekend – and check your data security!

For more information, or to discuss your own data situation, please email me at stuart.smith@fiscalartisans.com.au or call me on 0409788399.

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Thank you for your response. ✨

Stuart Smith CPA
Director
Fiscal Artisans.

by Fiscal Artisans

September 28, 2022

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Book your home loan health check today

With interest rates on the rise, there has never been a better time to review your home loan.

Our team of brokers can look at the options available on the market, and compare the options to your current situation.

We can look at your rate, term, repayments, and equity, giving your loan a full check-up to make sure it’s still right for you and your current needs.

Then, if they can add value to what you already have, they will talk you through:

What rates are available for your loan options
100% offset options on fixed or variable loans
How LVR (your loan to value ratio) works
what other options are available to you

This can also be the start of your plans to look at your financial plans, whether that be an investment property, holiday home, renovations, debt consolidation or minimisation, or helping your children get into their first place.

Click here (Home Loan Fact Finder) to download the fact finder, then send it to us at info@fiscalartisans.com.au.

We will review the information and pass it to our finance associates to analyse. They will then get in touch with your to arrange a time to talk with you and discuss your alternatives and look at the best options on the market for your home loan options.

Find out how you can pay down your home loan faster, use your equity to reduce your tax liabilities and increase your wealth portfolio and set up your future plans.

Take advantage of this opportunity, and give your home loan a spring clean!

by Fiscal Artisans

September 19, 2022

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Australian Domain name changes are about to go live.

Australians have until 20 September 2022 to seek priority allocation of an .au direct domain name that matches their existing domain name.

Anyone with an Australian presence (including businesses, organisations and individuals) can now register a new domain name category, known as .au direct. These shorter, simpler domain names will end in simply ‘.au’ (e.g. mybusiness.au) and complement existing namespaces such as ‘com.au’, ‘net.au’, ‘org.au’, ‘asn.au’, ‘id.au’, ‘gov.au’ and ‘edu.au’.

Existing domain name licence holders have been provided priority to register the .au direct equivalent of their domain names until 20 September 2022, after which domain names that have not been allocated will become available to the general public.

This new option for domain names creates opportunities for businesses, organisations and individuals. However, it could also provide another opportunity for cybercriminals by facilitating fraudulent activity like business email compromise. For example, by registering yourbusiness.au where you have already registered yourbusiness.com.au to impersonate your business.

The ACSC recommends that all Australian businesses, organisations and individuals consider taking advantage of the priority allocation process to register the .au direct equivalents of their existing domain names. In cases where conflicts occur, such as when different organisations own similar domain names (e.g. mybusiness.com.au and mybusiness.net.au), priority allocation will help determine who can register their .au direct equivalent. Until 20 September 2022, registrants of .au domain names licensed before the launch of .au direct have priority to apply for the matching .au direct domain name.

After this date, it may be possible for ‘cyber-squatters’ to register ‘your’ domain name and seek to impersonate your website or use it for various fraudulent activities, or simply ‘squat’ on your name and potentially look to sell your own site back to you.

Businesses, organisations and individuals who have registered a domain name outside of Australia can also consider registering an .au direct domain name. For example, a business that currently holds mybusiness.com should consider registering mybusiness.au. This will prevent cybercriminals from registering these domain names and using them for attempted financial fraud.

You can reserve your .au direct domain name by visiting an auDA accredited registrar.

If your business or organisation is a victim of business email compromise or other fraudulent activity, please report the incident to the ACSC through ReportCyber or contact 1300 CYBER1 for support. auDA also has a complaints process available you can access through their website.

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by Fiscal Artisans

June 3, 2021

Victorian Business Costs Assistance
Lockdown 4.0 support payments

Through Business Victoria, the Victorian State Government has released the guidelines for its latest round of support for businesses and sole traders that the current Victorian lockdown has impacted.

There are two specific schemes – the Business Costs Assistance Program (round two) and the Licensed Hospitality Venue Fund. I am focusing here on the Business Costs Assistance Program in this piece.

It needs to be noted that not all businesses will qualify automatically, as the support has been targeted primarily at businesses and industries that have been shut down as a result of the lockdown and are unable to continue income-earning activities in a work from home basis. The list of industries are listed in the blog, as well as the guidelines for the scheme.

In addition, there are effectively two levels of support, based on the different periods of lockdown between Metropolitan Melbourne and Regional Victoria. Essentially, this equates to a $2,500 per week payment for businesses affected by the lockdown.

The guidelines are shown below (extracted from the Business Victoria guidelines), as are the industry sectors that qualify for the support.

This is not limited to incorporated businesses, so sole trader businesess (with a registered ABN AND GST registration) can also apply.

We can assist you with the submission (as we did for many clients with the various support grants in 2020), and can discuss the eligibility guidelines with you as needed.

Please feel free to contact us on 0409788399 or info@fiscalartisans.com.aufor more information.

GUIDELINES

Business Costs Assistance Program Round Two

COVID-19 assistance to businesses

Program Summary

On 30 May 2021, the Victorian Government announced a $250.7 million Circuit Breaker Business Support Package to support Victorian businesses most affected by the May-June 2021 circuit breaker action. An additional $209.3 million was announced by the Acting Premier on 2 June 2021.

The $371 million second round of the Business Costs Assistance Program (the Program) will provide grants of either $2,500 or $5,000 for eligible businesses directly affected by the circuit-breaker industry restrictions.

1. Standard Eligibility Criteria

1.1 To be eligible for the Program, a business must:

a) Be located within Victoria (primary operating address, and Victoria address registered with Worksafe Victoria) ; and

b) Be registered as operating in an eligible industry sector identified in the List of Eligible ANZSIC classes (as defined by the ANZSIC class linked to the business’ ABN ; and

c) Have incurred direct costs as a result of the circuit breaker action and the business cannot predominantly operate remotely; (For example, but not limited to: booking cancellations, utilities, wages, paid leave for staff unable to attend work, rent or the loss of perishable good or any other direct costs affecting the operation of the business related to the May-June 2021 circuit breaker action. These costs may have been incurred prior to, on or after 27 May 2021. The costs must be incurred by the applying business, as defined by its ABN.) and

d) Have an annual Victorian payroll of up to $10 million in 2019-20 on an ungrouped basis ; and

e) Be registered for Goods and Services Tax (GST) on 27 May 2021; and

f) Hold an Australian Business Number (ABN) and have held that ABN at 27 May 2021.

g) Be registered with the responsible Federal or State regulator

For employing businesses only :

h) Be registered with WorkSafe Victoria ; and

i) Attest that the business is supporting its workers to access any paid leave entitlements, or that if a person can work from home, to work from home during the circuit breaker action, and supporting their casual workers, where possible

2 Other eligibility conditions

2.1 Businesses that have received assistance through the Business Support Fund, payroll tax rebate/waiver, or other COVID-19 programs may apply for assistance under the Program.

2.2 Businesses that receive a grant under the 2021 round of the Licensed Hospitality Venue Fund (LHVF21) are not eligible for a grant under the Program.

2.3 Organisations that operate a private gender-exclusive club where membership is only by invitation or nomination by an existing member are not eligible for assistance under the Program.

3 Demonstration of eligibility

3.1 Applicants must attest that they meet the eligibility criteria at the time of application and intend to remain trading at the end of the circuit breaker action. Applicants will also need to meet the eligibility criteria at the time the application is assessed by the Department of Jobs, Precincts and Regions (DJPR).

3.2 Industry sector: To be eligible, an Applicant’s primary business activity must be in an eligible industry sector and this must be reflected in the Applicant’s ABN registration information. Applicants should check that their details on the Australian Business Register website are correct prior to submitting an application. This includes ensuring that the industry classification (ANZSIC class code) linked to their ABN registration correctly captures their primary business activity.

3.3 Identity Documents: Applicants must provide details of a current proof of identity document. This must be one of the following:

a driver licence or learner permit issued in any Australian jurisdiction; or
an Australian Passport; or

a Medicare Card; or
a foreign passport for those issued with an Australian Visa.

The identity document details must be for a person listed on the Australian Business Register as either the owner, co-owner, associate or authorised contact of the business

3.4 If the current proof of identity is unable to be confirmed, Applicants will receive a follow-up email with instructions to amend their proof of identity details. If the applicant does not then rectify proof of identity details before the Program close date, the application will not be considered by the Department for this Program.

4 Available funding

4.1 From 4 June 2021, changes to the existing industry circuit breaker restrictions (from 28 May 2021) affect businesses differently depending on the businesses location and industry type.

4.2 The total value of a grant under the Program is up to $5,000. For businesses that meet the standard eligibility criteria:

• businesses that were directly affected by the circuit breaker industry restrictions between 28 May up to and including 3 June 2021 will be eligible for funding of $2,500;

• businesses that remain directly affected by the circuit breaker industry restrictions on and from 4 June 2021 will be eligible for funding of $5,000.

4.3 The Department will determine the value of the grant based on an assessment of the Applicant’s business location and ANZSIC class.

4.4 A business as defined by its ABN can only receive one grant under the Program.

5 Funding use

5.1 Grant funds must be used to assist the business, for example on:

• Meeting business costs, including utilities, wages or rent;

• Seeking financial, legal or other advice to support business continuity planning;

• Developing the business through marketing and communications activities; or

• Any other supporting activities related to the operation of the business.

6 Assessment Process

6.1 Funding will be allocated through a grant application process, through which businesses are invited to apply for a grant.

6.2 As part of the assessment process, any information provided by Applicants will be shared and subject to verification with other government agencies (state and federal) including the Victorian State Revenue Office, WorkSafe Victoria, the Australian Business Register and the Commonwealth Department of Home Affairs.

6.3 Any of the following circumstances may be taken into consideration in any decision whether to award a grant:

• Any adverse findings by a Government agency or local council regarding a business or its operation;

• A business is, or notice has been given that it will be, placed under external administration;

• There is a petition for bankruptcy or to wind up or deregister a company or business; and

• The business is or becomes deregistered or unregistered (including cancellation or lapse in registration or any relevant permit).

6.4 Businesses must ensure that their ABN registration information is current and accurate as at the time of application.

6.5 Each application will be carefully considered and assessed against the eligibility criteria. If an unsuccessful Applicant considers that their application has been incorrectly assessed, they will have the opportunity to lodge a complaint. More information on the complaints process and a complaint form can be found at https://business.vic.gov.au/contact-us/complaints.

6.6 Only final applications that are lodged with the Department will be considered and assessed, and applications in draft stage will not be considered.

7 Compliance and Audit

7.1 Applications may be subject to audit by the Victorian Government, its representatives or the relevant Auditor-General and will be required to produce evidence (such as payroll reports to demonstrate impact) at the request of the Victorian Government for a period of four years after the grant has been approved.

7.2 If any information in the application is found to be incomplete, inaccurate, false or misleading, or grants are not applied for the purposes of the business in accordance with the terms of funding as set out in these Guidelines and any attached application, the grant will be repayable on demand.

8 Other information about this Program

8.1 DJPR reserves the right to amend these guidelines and application terms at any time as it deems appropriate.

8.2 DJPR will endeavour to notify all Applicants of the outcome of their submitted application within 10 business days.

There may be delays if your application:

• does not meet all the eligibility criteria

• does not have correct evidence or documentation

• requires you to make changes • is a duplicate application for the same business

• has incorrect information, such as ABN or bank details (for successful Applicants)

• does not include current or accurate information registered with relevant regulators or partner agencies, such as the State Revenue Office, Australian Business Register or WorkSafe Victoria.

9 Closing date and how to apply

9.1 The Program will be open for applications until program funds are exhausted or 11.59pm Thursday 24 June 2021, whichever is earlier.

9.2 Applicants are required to submit an application online via the Business Victoria website (business.vic.gov.au). All questions in the application need to be completed and requested information is to be provided to ensure timely assessment and grant payment.

9.3 If you have any queries about your application or require further information on the program visit business.vic.gov.au or contact the Business Victoria Hotline at 13 22 15.

ANZSIC Industry codes for Business Support Grants

Please note:

If your ANZSIC industry code is not on this list, you are not eligible for funding through the Business Costs Assistance Program Round Two. This list applies to both employing and non-employing businesses in Metropolitan Melbourne and Regional Victoria.

* Regional businesses in these ANZSIC classes may be eligible for a $2,500 grant due to easing of restrictions in regional Victoria.

# Businesses in these ANZSIC classes may be eligible for a $2,500 grant due to easing of restrictions in metropolitan Melbourne and regional Victoria.

Which sectors are eligible for a grant?

To see if your business is in an eligible industry sector you should:

check the four-digit ANZSIC class linked to your Australian Business Number (ABN) on the Australian Business Register and confirm it matches your primary business activity

check if the four-digit ANZSIC class linked to your ABN is in the list of eligible ANZSIC classes for this program.

If your four-digit ANZSIC class linked to your ABN is not on the list of eligible ANZSIC classes for this program, then your business is not eligible for a grant under this program.
If you need to update your ANZSIC class, more information is available on the Australian Business Register.

You should only change your ANZSIC class if your current one does not accurately reflect your business activity.

Which sectors are NOT eligible for a grant?

Businesses that are continuing to operate or can work from home during restrictions are not eligible to apply for a grant. For example:

essential retail (i.e. supermarkets, food retailers, pharmacies)

manufacturing

construction

mining

agriculture, forestry and fishing

professional services (with some exceptions, such as wedding and events photographers).

My business is able to partially operate during restrictions. Can I apply for this grant?
Businesses in eligible sectors continuing to operate but unable to carry out their usual business activity can apply and may be eligible for a grant.
For example:

a retail business unable to open for normal trading but changed its operation to ‘click and collect’

a restaurant unable to have dine-in service but can operate a limited takeaway service.

Why are some businesses getting $2500 when others get $5000?

The grant amount payable is determined by the business’ industry sector (see Eligible ANZSIC classes) and its location.
Businesses that were subject to restrictions between 28 May 2021 and 3 June 2021 (inclusive) will be eligible for funding of $2500.
Businesses that continue to be subject to restrictions on and from 11:59pm on Thursday 3 June 2021 will be eligible for funding of $5000.

My business is a gardening business, why am I only eligible for a $2500 grant?

Gardening service providers in regional Victoria and metropolitan Melbourne are able to resume operating from 11:59pm on Thursday 3 June 2021, so they are only eligible for a $2500 grant rather than the $5000 grant, which is only for businesses that remain subject to restrictions after Thursday 3 June 2021.

How do I update my Australian and New Zealand Standard Industrial Classification (ANZSIC) on the Australian Business Register?

Only update your ANZSIC class if your current class does not reflect the activities of your business.

Business Victoria is not able to advise you on which ANZSIC class your business falls into. If you are unsure about your business’ ANZSIC class, please seek independent advice, from your accountant for example, or by contacting the Australian Business Register.
If you need to update your ABR details, there is a step-by-step guide on the Australian Business Register and the Business Victoria website.

Why do I have to be registered for Goods and Services Tax (GST) to receive this grant?

For the purposes of this program, being registered for GST indicates that your business was actively trading prior to 27 May 2021 up to now.

A business must register for GST when it has a GST turnover (gross income minus GST) of $75,000 or more.

Not-for-profit entities with annual turnover between $75,000 and $150,000, that are not registered for GST and are registered with the Australian Charities and Not-for-Profit Commission, are eligible to apply.

Businesses with annual 2019-20 turnover of more than $75,000 that are not required under relevant taxation legislation to be registered for GST are also eligible to apply.

I previously applied for the Business Support Fund (or another COVID-19 related grant) and was not eligible. Can I still apply for this program?

Yes, but you must meet all this program’s eligibility criteria to be eligible for a grant.

I have applied for a Licensed Hospitality Venue Fund 2021 grant, can I also apply for this program?

Businesses can only receive a grant from either the Business Costs Assistance Program Round Two or the Licensed Hospitality Venue Fund 2021, not both.
If you submit applications to both programs and are found to be eligible under both programs, you will only receive one grant – the program that delivers the highest level of financial support.

However, applying for both programs may result in delays to application processing and receiving your grant payment.

My business is a hospitality venue with a liquor licence and I incurred direct costs as a result of restrictions but I wasn’t eligible for the Licensed Hospitality Venue Fund. Can I apply to this program?

Licensed hospitality venues that do not receive a grant under the Licensed Hospitality Venue Fund 2021 may apply for assistance under the Business Costs Assistance Program Round Two if they meet the eligibility requirements.

What types of businesses are eligible?

Employing and non-employing businesses, companies, partnerships, and trusts are eligible to apply for a grant from the Business Costs Assistance Program Round Two. Superannuation trusts are not eligible. For more information, please read the program guidelines.
Business Costs Assistance Program Round Two guidelines (PDF 272.46 KB)

Business Costs Assistance Program Round Two guidelines (DOCX 1553.88 KB)

I received a grant/support through another COVID-19 business support program. Can I apply for the Business Costs Assistance Program Round Two?

Yes. If you meet the eligibility criteria you can apply for a grant from the Business Costs Assistance Program Round Two unless you receive a grant through the Licensed Hospitality Venue Fund 2021.

My business lost more than $5000 during restrictions. Can I apply for more?

No, the grant is capped at $5000 per eligible business.

If I incurred less than my grant amount in costs, will I need to pay some of the money back?

No. But businesses must attest they have incurred costs as a direct result of the restrictions to be eligible for a grant.

I am a performer/artist who has lost work during restrictions, but I am not registered for GST. Can I still access support?

No, under the program guidelines all applicants must be registered for GST. A business or enterprise must register for GST if it has a turnover of $75,000 or more.
Not-for-profit entities with annual turnover between $75,000 and $150,000, that are not registered for GST and are registered with the Australian Charities and Not-for-Profit Commission, are eligible to apply.

Which identification documents should I submit with my application?

I’ve received notification that my identification check has returned an invalid result or could not be validated. How do I update my proof of identity?
Update your contact details by following the steps outlined in our Proof of Identity Verification User Guide.
Download a copy of these instructions: Updating Proof of Identity Details in Grant Hub forms (PDF 633.93 KB)

How do I know what the status of my application is?

The status of your application will appear in the Business Victoria Grants Portal:

Draft – you have started an application

Submitted – you have accepted the terms and conditions and submitted

Under assessment – your application has been received and is being assessed by the Business Victoria team

Successful – your application was successful

Unsuccessful – your application was unsuccessful.

From the time you submit your application, you will receive progress notifications.
We cannot contact you while your application remains in ‘draft’ as you haven’t yet given permission for the department to use your contact details.

I wasn’t eligible for a grant from the first round of the Business Costs Assistance Program. Can I apply for this round?

Yes, you can apply for the second round of the Business Costs Assistance Program. This round has an expanded list of eligible sectors compared to the previous round, to cover businesses most impacted by the May and June 2021 restrictions, and reflect that businesses no longer have JobKeeper or other safety nets to fall back on.
You will be eligible for a grant from the Business Costs Assistance Program Round Two if you meet all the program’s eligibility criteria.

How do I provide evidence that my business is registered for WorkCover Insurance with WorkSafe Victoria?

If you are an employing business, you will need to include your unique WorkCover Employer Number (WEN) on your application.

Your WEN can be found on the top right-hand corner of your 2020-21 invoice from WorkSafe Victoria. Your WEN is also printed on your WorkSafe Certificate of Currency. Note you do not need to provide your certificate of currency when applying for this grant.
If you have only recently applied to be registered with WorkSafe and do not have a WEN, please provide the WorkSafe Application Reference Number (WRN) instead.
Non-employing businesses do not need to provide a WEN on their application.
I’ve recently applied for a WorkCover Employer Number (WEN) but haven’t received it. What can I provide in my application as evidence that I’m registered with WorkSafe Victoria?
If you have only recently applied to be registered with WorkSafe and do not have a WEN, please provide the WorkSafe Application Reference Number (WRN) instead.
A WRN is issued in the format of NR-XXXXXX-XXXXXX when you submit an online application for WorkCover insurance. It appears in printable form once the application is submitted. You will also receive an email with the number.
When your WEN is issued, your information will be updated in our systems automatically and we will progress your application. You do not need to take any action.
Please note that applications with a WRN may take longer to process because the WorkCover registration process must be complete before we can start assessing your application.

You must provide details of a current proof of identity document. This must be one of the following: a driver licence or learner permit issued in any Australian jurisdiction; or an Australian Passport; or a Medicare Card; or a foreign passport for those issued with an Australian Visa.

by Fiscal Artisans

May 31, 2021

Is Property Still a Good Investment?

As we approach Tax time again – it’s only four weeks away now! – the questions around tax deductions for this year and beyond start coming in thick and fast.
And one of the most common questions is – can I get a tax deduction from buying a property?

Of course, the answer is yes – provided that it is an investment (not something you are living in yourself) and the costs of the property – interest and running costs – are higher than the rental received.
I have been keeping track of the median value of property in Melbourne over the years, and the following graph shows how it has moved over the years. This is based on the June median value across all dwellings (houses and apartments/units) from 1970 to 2020. It takes out the month by month variation and keeps to a consistent position – outside of the ‘spring and autumn rush’ for each year.

While there was a drop in the 2019 year, Covid in itself does not appear to have had as big an impact on prices as many thought. The December median price for houses was $750,000, and for units, it was $605,000. So, even in a Covid affected year, prices have continued to rise.

But, as I am often asked – is property still a good investment? I mean, how can prices keep increasing?

There are many elements to this issue, so let me try to go through some of them for you.

Over the last 40 years, we have seen substantial rises in property prices, and many will say that ‘it cannot go on like this’. As I see it, the key factors for the ongoing increases in prices are as follows:

1. Household incomes have increased.

Beyond the simple fact of steady increases in annual salary for most people (even if the increases have been very modest over the last few years), the increase in the female workforce participation over the last five decades has meant that most households have seen an overall increase in total income levels available.

Increased childcare and early childhood education, and better health arrangements, have also meant that it has been easier for most couples to have both members in the workforce simultaneously, leading to more disposable income, savings and debt reduction capacity.

This has also meant that there is ‘more money on hand’ to cover loan repayments, making higher loan balances more affordable.

Data from the Australian Institute of Family Studies in 2020 suggests that: “Changes to employment patterns, including a larger female workforce, have resulted in significant increases to household income, with the 2017/18 financial year average weekly household income at $2,242 before tax, up from $1,361 in 1995/96.”

That’s an increase of 65% in just over 20 years. As a result, it is likely that household incomes have increased by 85% or more since 1980.

2. Loan terms have changed

Over the last 20 years, the standard loan term has increased from 20 years to 25 and now 30. This may not seem like much of a benefit when you consider the extra interest payments, but it has a big impact on affordability and how much people can borrow.

Let’s say you are looking at purchasing a property and seeking a $500,000 loan. The bank offers you a loan over 20 years at 3% p.a.

The cost for a Principal and interest loan on this basis would be $2,772.99 per month.

Now, if we stretch that loan out to 30 years – what is the monthly payment?

It is $2,108.02 per month – a saving of over $600 per month.

But what if we go the other way and say – well, I can afford $2,773 per month. How much could I borrow with a 30-year loan?

The answer is $657,724 – $157,000 or 31% more!

So, for the ‘same’ monthly savings/investment, the scope to purchase a higher value property (or to bid to a higher amount at an auction) is suddenly realised.

Having worked with many finance brokers, spoken to many bank managers, and seen the assessment processes that the bank uses in calculating loan approvals, this element is very much in the picture. i.e. the banks don’t look only at the total amount that you are looking to borrow. They look instead at how much of your income it will take to repay the loan every month. If the monthly payment is below a certain % of your total income, and other factors agree, they will approve the loan – no matter how big it is.

The banks also know that, in many cases, a loan is renegotiated, or paid out with 5 – 7 years, so their risk factor is reduced significantly. Higher prices and ‘affordability’ reduce their risks even further as a result.

3. Interest rates have dropped

And with the second point, this is the big change in the market over the last 20 or so years.

The website infochoice says: “Interest rates on home loans hit 10.38 per cent p.a. in July 1974 and stayed at around that level until September 1980.”

Let’s do the maths on the same 20-year loan as per above, but with a 10.4% interest rate instead of 3%.

A 20-year loan costing $2,772.99 per month would only get you a total of $279,628. Compared to the $657,724 shown above for 30 years, or $500,000 for 25 years.

Falling interest rates have more than doubled the borrowing capacity over this time.

But you say, surely interest rates cannot stay this low?

In time, you may be correct. Assuming that the economy ever gets back to what it was like ‘in the good old days’ before Covid, interest rates will – almost certainly – increase. But if they have been pushed up, then it is because inflation has increased as well, meaning that what is borrowed in “today’s dollars” will cost less to repay in ‘tomorrows dollars’ – and inflation is likely to have pushed the price of property up further as well.

A good indicator in most cases is the fixed rates on offer for 3 to 5 year terms (Very few banks offer anything longer here in Australia). Currently, many of these fixed-rate terms are lower than the standard variable rate on offer. While this is partly due to ‘special covid arrangements’ the Reserve Bank put in place to assist the banks, it is a key measure to watch to see the direction of interest rates in the short to medium term. It is only my opinion, but I don’t believe we will see any significant change in interest rates for at least three years. Inflation would need to reach over 5% for two or more years before the Reserve Bank decided to pull the reigns in tighter.

4. Population growth and demographic changes.

There is where I see a generational shift in the demographic make-up of the Australian population.

This change arises from many factors, with immigration only being one aspect (and that is limited in the current ‘closed border’ situation).

While point 1 highlighted the impact of the ‘two income’ family arising out of the increasing female workforce participation, it also has had the impact of far more ‘solo’ income households, and the ‘professional couple’ groups – friends who are not in an intimate relationship, but who live – and invest – together, to step into the property market (or simply to save on living costs and increase scope for saving and investing). Sharing a flat in uni, becomes sharing a home, becomes sharing an investment property.

At the other end of the marital relationship, where marriages have broken apart, each member of the couple often needs to acquire their own residence. One household becomes two, each with “extra space for the kids” and a shared work or study space as well. I know I have assisted a few clients with such a transition, to understand the growing impact this has on property demand. And the need to ‘re-establish roots’ is hugely important in this area.

This has led to an increase in the number of one and two-bedroom dwellings being required in the inner suburban and city areas and an increase in the ‘townhouse’ type dwelling in the inner and middle rings of Melbourne. i.e. affordable, compact but with facilities, near to work and social requirements. The quarter-acre block is being replaced by a fully functional townhouse that has group amenities and social connection.

There is also a large amount of ‘generational transfer of wealth’ happening, and at a later age than for previous generations, where our parents and grandparents are passing on in their 80s and 90s – instead of their 50s and 60s, as was often the case in pre-war generations. This has meant that the inherited wealth is often larger – as it has had the benefit of time to grow – and it is going to children who are more ‘set’ in their financials plans, and are able to use more of the inheritance for investment, rather than for covering living costs.

So, where to from here?

So, based on the above, you can see that the increasing ability of people to afford home loans means that there is an increased ability to ‘invest’ in property – be it for their own living requirements or investment purposes.

The ongoing ability to claim rental property losses as deductions against other taxable income – and then have the profits made from the sale of the investments taxed at a discounted rate – makes the residential property an attractive form of investment.

What Covid has somewhat ‘driven home’ is that people do not have to ‘commute’ as much to work. More and more of their employment can be done ‘from home’, leading to a significant shift in demand for property from the ‘inner circle’ to both the middle suburbs or increasing the ‘tree change/sea change’ element for many people. After all, if you are stuck in front of a laptop most of the day, wouldn’t it be nicer to look out over an ocean view than the Jolimont railyards? Or to know that the surf is only ten minutes away when you finish work?

As a result, much of the demand – for both purchase and rental – are occurring in ‘planned developments’ where lifestyle and living facilities are being included from the start or are centred around areas that have well-established facilities, such as schools, hospitals, transport links, and local employment opportunities.

Various locations are ‘targeted’ for growth, resulting from the Victorian Government’s Melbourne 2030 plan, with its emphasis on Principal and Major Activity Centres, identifying the likely growth areas within the metropolitan region due to increased infrastructure, employment, and transport connections. Some areas will grow faster than others, and the opportunity to invest in this growth can be taken with proper research and due diligence.

There are some good opportunities in the market and scope to invest for medium-term growth and short-term tax benefits. With marginal tax rates of 34 to 49%, the total cashflow investment required to fund a property investment can be ‘tax effective’ and, over time, provide a solid base for your investment portfolio.

We have a team of associates that can help with many aspects of this investment, from investment property selection to bank finance and legal support. We can analyse the choices and show you how the tax savings can assist in funding the investment and how to optimise your choices.

For more information or to discuss your tax position or investment opportunities, please contact us on 0409788399 or info@fiscalartisans.com.au

by Fiscal Artisans

April 16, 2021

Din Din Din!

Your days as a director are

about to be ‘numbered.’

The Federal Government is working on implementing a Director ID number system, which will allow for the tracing of directors across companies.

This system is to be implemented from November 30, 2022, and Directors will be required to apply for a new Directors ID Number (or DIN) by that date.

This system will be managed separately to the Tax File Number (TFN) and Australian Business Number (ABN) system now in operation and will be managed by the Commonwealth Registrar, operating as a separate statutory function of the ATO as part of the Governments “Modernising Business Registers (MBR) program.

In the 2020 federal budget, additional funding was announced to integrate the system with the government’s Modernising Business Registers (MBR) program.This integration will create a super registry by bringing together the Australian Business Register and 31 other registers currently administered by the Australian Securities and Investments Commission, forming the Commonwealth Registrar.

It is hoped this system will prevent the use of false identities and help prevent illegal phoenix activity, where directors deliberately liquidate companies to avoid paying debts, which is estimated to cost the Australian economy between $1.8 billion and $3.2 billion each year. i.e. It ‘should’ make it easier to trace directors who move operations from one company to another, or who have a record of ‘companies closing’ year on year.

How the Director ID system will work

All directors will be required to establish their identity with the Commonwealth Registrar before receiving their unique director ID, which they will retain throughout their lifetime, even if they cease to be a company director.

This process will involve directors providing their names and former names, addresses and former addresses, contact details, and their date and place of birth.

Directors will also need to prove their identity using key identifying documents, such as a driver’s licence, passport, birth certificate or visa, and may be asked to provide their tax file number (TFN). I expect that this last part will become a critical aspect so that it is harder for people to obtain multiple DIN’s. It is currently relatively simple for a person to have two different sets of details listed with ASIC, depending on whether or not middle names are included in the filings, address details, etc., are maintained correctly.

While the Commonwealth Registrar will operate separately from the ATO, it may ask the ATO to provide the TFN of applicants to verify their identities, and details provided to the registry may be cross-checked against the taxation office’s records.

Directors will face significant civil and criminal penalties if they fail to apply for a director ID by the deadline and for conduct that contravenes the new rules, including falsifying identify information or intentionally apply for multiple director IDs

For companies registered under the Corporations Act, directors face potential civil penalties of up to 5,000 penalty units, or $1.1 million.

What Happens next?

According to the proposed arrangements, the director ID regime will go through a testing phase, which will run until October 31 this year. As part of this phase, the Commonwealth Registrar will invite a group of existing directors to test the system to make sure it has a robust, reliable and consistent user experience.

After this testing is completed, existing directors and those who became directors during the testing phase will have a little over 12 months to apply for their director ID number.

Anyone who wishes to become a company director after November 30, 2022, will need to apply for a director ID before being appointed as a director. This may slow down new company setup processes for small businesses, depending on the approval processes involved, which is why I expect the submission of the TFN will be crucial in the identification process.

So by early 2023, anyone in business will need to add a new identification number to their lists! TFN, ABM, ACN and now DIN.

What has not been reported on so far is the impact of this process on directors of Australian companies that reside overseas. What will the process be for these individuals, and what forms of ID will be accepted? Will they be required to apply for an Australian TFN if they don’t already hold one? Time will tell on that one.

I recall the chaos when the ABN system was first implemented, Hopefully, 20 odd years later, some lessons have been learned, and the ‘trial process’ will consist of a bit more than a few ‘mates filling in some forms to check it all out’ to test the process. There will be a flurry of activity with various corporate register and management systems that will need to update systems to record the DINs and changes to every single ASIC form that needs to be lodged for company activities to incorporate the DINs into the system.

As the systems become apparent, we will liaise with our clients to arrange the application process to ensure it is as smooth as possible.

For more information or to discuss what you need to do as part of this process, please email us at info@fiscalartisans.com.au, or call me on 0409 788 399.

by Fiscal Artisans

February 25, 2021

2020 Vision

I can see clearly now the year has gone.

(with apologies to Jimmy Cliff)

Lessons from a year in lockdown

As we move into 2021 and the end of summer, let’s look back at the realisations that came from the year that was 2020.

Yes, the headings are song titles. Let’s have some fun with this.
(Artists listed at the end. Can you guess them all without peeking?)

1. If you want it, here it is, come and get it…

Twelve months ago, we could see that the virus was going beyond being a ‘small problem somewhere overseas’ and could disrupt us on more than just a personal scale. But we were being told to ‘keep calm and carry on’. What really needed to be said was that we all had to be ready for substantial changes and that everything could and would shift in a moment.

While Federal government support was promised and eventually provided, it was always after the event. It was not provided to help businesses and individuals deal with the coming problems, but rather to try to ‘rectify the problem’ after the event.

JobKeeper, cashboost etc., were all contingent on businesses being ‘prepared’ in advance – if you did not have all of your ‘paperwork’ in order before the assistance was announced, it was too late to step up. You had to pay staff before the funding was provided. And the support was going to be paid a month or more in arrears – and in some cases up to 6 months later.

The State government support was very much the same. The early rounds of support were released with little information and explanation, and no recourse for later follow up. In some cases, payments took six months from application to payment. This was not what was needed – help was needed right away, not ‘on the never never’. If you were not able to cover your needs upfront, you either had to borrow the money or dip into reserves to survive until the cavalry arrived.

It’s easy to say that the support was arranged in a way that favoured larger businesses, but in my experience, that was the case. Cashflow management is crucial in small businesses (and it’s important in all businesses!), and the support of banks was lacking at the small business level but was far more possible with a business ‘of size’. In our experience, larger organisations found the banks were more willing to “extend credit”, but the same arrangements were not there for the “solo operator” or any business with less than $1 million in turnover. This often meant that business owners were struggling or had to make employment choices that were not beneficial to them or their staff. The ability to rebound was also affected as a result. The catch-up process to recover from this could take years for some people.

In virtually all cases, the government support was contingent on a business (or sole trader) being correctly registered – all tax registrations, Super, WorkCover etc., in place before the problems started. (For many small businesses, these registrations were often considered voluntary and somewhat unnecessary and costly). And accounting and financial systems all need to be in place so that the data needed was on hand at all times. The difference between having this in place and not doing so (and hence qualifying for support) could be measured in the tens of thousands of dollars for most small businesses in Victoria. In some cases, this was the sole factor between survival and bankruptcy, and business income fell by 75 – 100%. As we move out of lockdown and into a post-vaccine economy, the lessons to be learned from this are to have your business arrangements in order from the start – the proper business structure, accounting, payroll and reporting in place – and understanding what the numbers mean for you and your business. And be in regular contact with your advisors, so you know what you need to do, then take action quickly, as the opportunity to rebuild stronger and better in 2021 and beyond become more evident.

The lesson from this – be prepared. Structure your business as if it is ten times the size it is today. And get some help in doing this!

2. I get by with a little help from my friends

For many in business, the only way through the tangle of support was hand-in-hand with their advisers – accountants, lawyers, planners and mentors. Over the last 12 months, the reality that all our businesses do not ‘operate alone’ – even when you think you ARE in a one-person business – has never been more true.

There is an old saying is that it takes a village to raise a child. In the same way, I believe that you need a ‘village’ to help grow your business. Legal, financial, corporate, tax advice is usually turned to at various times, but you also need to look at assistance in the way that you manage the business, balance your personal and business time and life, and how you keep the focus on the important things. How do you market and promote? Having gone back into a coaching process with a trusted business coach and taken some time to review and refocus on the important elements of health, family, as well as business values and goals, I can only highly recommend to you that, as you plan to grow your business, don’t think you have to try to do it ‘all on your own’. (And I can highly recommend my coach to you!)

One focus I have this year is to provide you with a team of people that can help in key areas – of course in accounting and financial (bank and finance) aspects, but also with financial planning, legal, and business development sides. These are people that I trust with what I do, and I am sure that they can help you in the same way.

Why have ‘just’ one superhero on your side, when you can have the whole Marvel Universe?

3. I am, you are, we are… dependant on each other

Its always interesting – and a bit of fun – to debate the role of Government and taxation in modern society. How as a population, we are overtaxed, or undertaxed, should all fend for ourselves, should look (or not look) to the Government to provide basic essentials to us, etc.

And just what is ‘essential’ these days? Besides air, that is – as everything else has a ‘price’ on it now and can be obtained from ‘non-government sources’. But is that the way it should be? Does this provide an opportunity for ‘everyone’ to achieve their fullest potential or only the fortunate few?

At a minimum, health and education services should be a high priority for all of us, just like roads and communication (Internet / NBN access). None of these should be left purely ‘to the market’ as the market will always favour some over others,and value profit over service or access. And in a society that promotes equality and opportunity, that is unfair.

Post-Covid, what do we see as being important now – wealth or health? Individual success or collective achievement?

With Covid, the people we have come to depend upon the most are the front-line people: Medical services to test and treat us; security, cleaning and protective staff to keep things managed in such a way as to protect the affected and minimise the impact on everyone else in society.

And the demands on retail staff, hospitality staff, drivers, delivery people etc. has never been greater. We need them to feed us, clothe us, bring things to us and protect us. And yet, these people have often been maligned, underpaid, and put into temporary positions with little or no security, training or respect. This needs to change on many levels.

I have always suggested to clients that tax is an expense of business – not something to be avoided, rather, to be minimised but accepted as being a cost of business and a societal cost of living. It is a cost of business operations that is necessary to provide services that would otherwise have to be paid for anyway – and may otherwise be completely unaffordable.

For me, the Government’s role has always been to provide the base on which our society can survive, grow and prosper (you cannot have an economy without a society unless that is an economy of machines). No matter who you are, what family you were born into, what abilities you have in your head, hands, face, voice, body or feet, your success is as a result of not just what you have done individually, but also the support you have got from the society and the government-funded or supported schools, health services, roads, police and all the rest that is provided by the taxes that we all pay. Paying tax is not a ‘burden’. It’s a contribution towards providing all of that to you and everyone else around you.

How the Government uses that money to support us – now that is another topic altogether!

4. Ch-Ch-Changes

When action needs to be taken, do you do nothing and hope it goes away, or do you make a change quickly?

Over the year, there has been plenty of debate about how soon action needs to be taken, how much action, and for how long. We saw this ‘post-GFC’ as well as with Covid.

Looking back over the last 12 months, I believe that this is what should have happened:

a) Lockdown of the economy should have happened earlier, minimising the risk of spread, and continued until a full eradication happened. This could have been done in the same timeline as New Zealand did.

b) Government financial support needed to start in February, not announced to start in April and paid in May. Yes, people should have been paid to ‘stay at home’ on a substantial percentage of their salaries, not just a basic ‘supplement’ to help businesses maintain employment. And this should have been done in a way that was equitable and supported small businesses, sole traders and creatives, especially those in itinerant roles and positions.

c) Front line staff needed to be employed directly and paid and trained properly. Covid and quarantine should have been treated as a medical problem, not a security one.

d) There is an opportunity in every crisis. Facilities should have been built (and should be now) to house those at risk or needed quarantining or return to Australia, manage them safely and protect them and everyone around them. These facilities could then be used for other ‘relief matters’ – be it post a natural disaster, support for displaced people, or for cross border quarantining of itinerant workers for the agriculture and mining industries. The construction of these facilities would employ many trades during construction and operation and redeployment of the facilities on an ongoing basis.

The current use of ‘hotel quarantine’ should be stopped, and as the lockdowns ease, hotels can return to their normal corporate and tourism-based activities. Use these facilities for the role where they are ‘fit for purpose.’

There has been a great reluctance to make ‘large changes’ to how things have been done, and planning always seems to have been an afterthought instead of a forward-looking, confident process. There was little leadership shown in taking the country forward together with a cohesive process to overcome the problems. It was more a reaction than taking action.

In the same way, in our businesses and our personal lives, we need to look at what we are doing and identify what changes we need to make – and make them now!

a) How important is it for us to be ‘in the office’? Can we operate from anywhere else to do our work? This won’t apply to everyone, but what changes can or must be made to simplify the processes for all?

b) Is your business set up in the right way? Is it able to grow or change as needed in the future?

c) Is your information (accounting, financial, data services, ideas, materials etc.) up to date, accurate and relevant to what you are doing?

d) How do you promote what you do? How well do you use the Digital environment to tell the world what you do? It’s not just ‘social media’ – It’s a new way of promoting and doing business.

Let’s talk about what you need to do and set up a plan for your future.

5. Are ‘Friends’ Electric?

The way that we ‘connect’ with friends, family, and business changed for many of us in 2020. The ongoing lockdowns of last year and the ‘snap’ actions seen a few times already in 2021 point to the fact that much will change in the future.

How will this affect what you do – and how you do it?

For many years, we have been told that the internet will be the backbone for almost everything in our lives – communication, entertainment, information, etc. I think that what 2020 has done more than anything else is accelerate that realisation (and implementation) for many of us.

From home-based primary, secondary and tertiary education, to on-line music, art or language lessons, telehealth appointments, endless Zoom meetings, Houseparty dinner gatherings and drinks with friends and family around the country and the world, our world has expanded while it has been consigned to a 24 inch (or phone sized) screen. We truly do have the world in our pockets, so why are we limiting our opportunities to our local suburb, region, state or country?

Office spaces are coming home – or out of the CBD sprawl, and the need to commute has diminished. How does that affect what you do and how you do it? What opportunities does it open up for you, and what you can do? Are there benefits from establishing ‘community hubs’ with flexible workspaces for people to go in and out of (with appropriate social spacing and health requirements) that facilitate both ‘office /creative work’ and remote work options? Would larger employers use these facilities instead of towers full of employees in the future?

And what does this ‘new world’ mean for infrastructure – do we need a new model for ‘home development’? e.g. apartment or residential developments with dedicated ‘workspaces’ available for periodic use? How does retail change – and will there be more “Uber deliveries” instead of bricks and mortar retail. What does that do to the shopping centre environment? The Amazon experience could grow, reducing the need for ‘the Chadstone experience’, replaced by a flotilla of flying delivery drones (or a fleet of star track vans) instead.

For many, 2020 is the year that the world has changed, and the need to adapt to a “Brave New World” has become significantly clearer. Is work our main focus?

6. Crushed by the Wheels of Industry

Is work our sole focus and the most important thing in our lives?

Really, is that it?

Just how much do we need, how fast do things need to be?

For many, the ‘extra’ time at home and with the family has been a good opportunity to review what the priorities in life truly are. To walk the streets in our limited exercise hours, read those books, watch those movies, and talk with friends and family and reconnect. And to reflect and think.

The pause may have allowed you to revisit your priorities and perhaps let go of what was once ‘so important’ to you and focus instead on what is ‘truly’ important.

2021 can (and perhaps should) be the year to look at what your priorities are – business and personal – and perhaps work on the truly important things, not just the things that ‘need to be done’. Find the “Why” you do “what” you do.

No-one gets this all ‘100% right’. Over the life of my business, I know I have not done so! But the process of doing something, getting the results, seeing the errors, correcting and doing again is all part of the process.

And the more we understand the “why”, and the more we do it, the better we get at it (hopefully!).

No one really gets it right without effort, and practice, and repeated action.

We do it, stumble, dust ourselves off (or have our team help us dust ourselves off) and ‘get back in the fight’.

So, let’s talk about your ‘fight’ for 2021 and beyond – and let’s get on achieving your goals!

Comment here, or email or call and lets talk about what the year looks liek for you, and how we can take action.

Stuart Smith

Director

Fiscal Artisans

And the arists are:

1. 1. Badfinger

2. 2. The Beatles

3. 3. The Seekers

4. 4. David Bowie

5. 5. Gary Numan & Tubeway Army

6. Heaven 17

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The revised fixed rate method:

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The Optus Hack – and what you

(and I) need to do with our business data!

Like in activity with the Tax Office.

So, what can you do about this?

Ok, so what are we doing about this?

Thank you for your response. ✨

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Australian Domain name changes are about to go live.

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Victorian Business Costs Assistance Lockdown 4.0 support payments

Which sectors are eligible for a grant?

Which sectors are NOT eligible for a grant?

Why are some businesses getting $2500 when others get $5000?

My business is a gardening business, why am I only eligible for a $2500 grant?

How do I update my Australian and New Zealand Standard Industrial Classification (ANZSIC) on the Australian Business Register?

Why do I have to be registered for Goods and Services Tax (GST) to receive this grant?

I previously applied for the Business Support Fund (or another COVID-19 related grant) and was not eligible. Can I still apply for this program?

I have applied for a Licensed Hospitality Venue Fund 2021 grant, can I also apply for this program?

My business is a hospitality venue with a liquor licence and I incurred direct costs as a result of restrictions but I wasn’t eligible for the Licensed Hospitality Venue Fund. Can I apply to this program?

What types of businesses are eligible?

I received a grant/support through another COVID-19 business support program. Can I apply for the Business Costs Assistance Program Round Two?

My business lost more than $5000 during restrictions. Can I apply for more?

If I incurred less than my grant amount in costs, will I need to pay some of the money back?

I am a performer/artist who has lost work during restrictions, but I am not registered for GST. Can I still access support?

Which identification documents should I submit with my application?

How do I know what the status of my application is?

I wasn’t eligible for a grant from the first round of the Business Costs Assistance Program. Can I apply for this round?

How do I provide evidence that my business is registered for WorkCover Insurance with WorkSafe Victoria?

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Din Din Din! Your days as a director are

about to be ‘numbered.’

How the Director ID system will work

What Happens next?

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Victorian Business Costs Assistance
Lockdown 4.0 support payments

Din Din Din!

Your days as a director are