- If you became a company Director (or Secretary!) on or before the 31st of October 2021, you must apply for your Director ID by the 30th of November 2022. Failing to do so may result in ASIC charging you a significant penalty. More information, including a video showing you how to apply for your ID, is available here on the Australian Business Registry Services website. If for any reason you are unable to apply by the date you need to, the ABRS advises you can apply for an extension of time to apply by completing a form available at the bottom of this page.
- The festive season is fast approaching, which means so, too, are potential Fringe Benefits Tax (FBT) implications. Many employee entertainment costs (like paying for the annual Christas party) can be exempt from FBT. However, as usual, it’s important you keep the right records. Here’s a link to a summary of the details you’ll need to have on hand, come the end of the 2023 FBT year (31 March 2023).
- A reminder to be extra careful with any unfamiliar or unsolicited emails you might receive, like the one below, which was recently sent to a member of the Up-To-Date team. The Australian Taxation Office will never email you directly requesting you update your banking details. Instead, you’ll either be asked to log into your MyGov account to check your Inbox there, you’ll hear directly from us, or you’ll receive some other form of formal communication in the mail.
Return on Investment Ratio
Your Return on Investment ratio – commonly referred to as “ROI” – is a simple one to use to calculate the return earned (or loss made) on a specific business activity or investment, like an advertising campaign.
To calculate your ROI, all you have to do is divide the return made on a purchase or expense by the cost of the purchase/expense itself.
ROI = (Sales or $ generated – Cost = Profit) / Cost
ROI = Profit / Cost
As an example, imagine you run a Christmas 2022 advertising campaign through Facebook, selling 2023 diaries. You invest $5,000 into your advertising spend during the holiday season and subsequently attract sales of $12,000. Your ROI on that activity would be calculated as follows:
ROI = ($12,000 – $5,000 = $7,000) / $5,000
ROI = $7,000 / $5,000
ROI = 1.4 (or 140%)
That’s not a bad result and could suggest that investing money into Facebook advertising during the holiday period is a lucrative way to boost your December and March quarter earnings.
However, ROI is a blunt tool and doesn’t take into consideration the time it takes you to see a return – in which case, you should always consider where else you might invest your time and money instead. It also doesn’t factor in other costs or benefits. For example, the cost to actually produce and ship your diaries, or the brand awareness/exposure the advertising results in.
Still, for a quick back-of-the-envelope ratio, ROI is a good one. Let us know if it’s something you use in your business, and if so, how it works for you!
Asked & Answered
Rental Property Deductions
Question: I was out with some friends recently and one of them happened to mention – and I’m paraphrasing here – that he could get into trouble with the Tax Office if he didn’t check the ABNs on the invoices he received for work done on his rental property. He was a bit vague about it all and so I was wondering if you could elaborate?
Answer: It sounds like your friend is referring to the requirement from the 1st of July 2020 for rental property owners to check that suppliers have a valid ABN in place before making payment to them. The Australian Business Register’s ABN Lookup site is the place to do that and so we recommend bookmarking this link for ease of future reference.
If a supplier doesn’t provide you with a valid/current ABN – or if they suggest they’ll do a job for less money if you pay them in cash – and the total payment for goods and/or services is over $82.50 including GST, it is your responsibility to withhold the top rate of tax (47%) from the money owed to them and pay it directly to the Tax Office. If you don’t do this and attempt to claim a tax deduction for the cost in question, your deduction could be denied as your payment will be deemed non-compliant.
If/when you withhold tax from a supplier’s payment you must complete a payment summary and give it to them at the same time you pay them the net amount, or as soon as possible afterwards. The ATO’s website has more information on this point, including a link to where you can source payment summary forms.
As a general rule, you should always check the validity of ABNs anyway, as sometimes people aren’t aware their ABN is incorrect or has been cancelled, and situations sometimes arise whereby people incorrectly charge GST.
For those of you who own commercial properties, are registered for GST and lodge Business Activity Statements, if the Tax Office discovers you’ve paid and claimed GST as per a non-compliant invoice, not only will your GST credit be denied, but you might also incur penalties and interest, too.
Additionally, since you can’t claim GST credits for payments you have withheld tax from, you should keep records of these particular transactions separate from your other payment records. It can all get a bit scruffy which is why checking ABNs first is so important.
Holiday Hours 2022/23
As the festive season is fast approaching, we wanted to let you know our office will be open until 5pm on Friday the 23rd of December this year, and then closed for the festive season until 9am on Monday the 9th of January 2023.
If you need to contact us at all during this period, please call us on (08) 9221 4100 (and be sure to leave a message if we can’t immediately get to the phone), or email us at firstname.lastname@example.org and we’ll do our best to get back to you promptly.