© The Institute of Certified Bookkeepers November 2016 Newsletter Page 1

Institute of Certified Bookkeepers

Making you Count

P: 1300 85 61 81 F: 1300 85 73 93 E: admin@icb.org.au W: www.icb.org.au

Bookkeepers helping Bookkeepers helping Business

November 2016

News, views and things you need to know.

Welcome to ICB's November 2016 Newsletter for Members.

Contents

Important News 3 ICB Annual Bookkeepers Survey

3 Valid KPIs for a Bookkeeping Practice - New Resource

6 ATO Supports Stressed Business Owners

7 Artificial Intelligence or Automated Intelligence? - New Resource

Best Practice Bookkeeping 9 Casual Workers - New Resource

16 Christmas Related Matters - Updated Resources

20 Does Your Charity Have the ACNC Tick?

21 Who do You Want to be in 2017?

27 ATO Super Entitlement Tools

30 Software Comparison Update

BAS Agent World 31 ATO Working With Registered Agents - They Admit They Need To

32 Dealing with Non-Compliant Clients

33 TPB Forum for BAS Agents

37 The New TPB Website - What do you Think?

38 TPB Refuses BAS Agent

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 2

Continued Professional Education 39 This Month From the ICB CPE Page

39 ICB Annual Conference - Bookkeeping 2017

39 ICB Technical Webinar - Overseas Sales and Purchasing

39 ICB Technical Webinar - Bookkeeping Cycle - Banking

39 A Practical, Plain-English Guide to Modern Awards

39 ICB Technical Webinar - The Bookkeeping Cycle - End of Month

39 ICB Technical Webinar - Review of Payroll Entitlements

ICB Network Meetings 40 November 2016 Question of the Month - GST on Processed and Unprocessed Milk

40 October 2016 Question of the Month - Claiming GST - ICB's Response

41 Upcoming Network Meetings

Other Things Happening in the World 42 Xero Loves Bookkeepers

This Month From the ICB 43 How to Use the ICB Website

45 ICB Christmas 2016 Closure Notice

45 What's New this Month from ICB

45 November 2016 eBrief - Client Newsletter

Products and Solutions 46 Income Protection Insurance - New Policy for Bookkeepers

47 Inside Small Business Magazine

From the ATO 47 ATO Small Business Benchmarks

48 AUSkey Update

48 ATO Forum Report

50 ATO "Connect with Us" Showcase Event Report

51 Upcoming Portal Maintenance

ICB Membership Statistics

ICB Supporters and Sponsors

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 3

Important News

ICB Annual Bookkeepers Survey

The 2016 Annual Bookkeeping Survey provides information to you about your world with questions such as "How many bookkeepers are actually using bank feeds?" "How many bookkeepers charge their clients for travel time?" "How much are bookkeepers charging?"

ICB provide the independent survey results to government, software companies and the education sector to assist them to understand the reality of the bookkeeping profession. Help us to help them!

Which survey is right for you?

Contract Bookkeepers providing services to multiple clients:

Access the Bookkeepers in Business Survey

Employed Bookkeepers providing services to one clients:

Access the Bookkeepers in Employment Survey

Results will be published in January. You do not have to be an ICB member and you do not need to log in. We anticipate the survey to take approximately 15 minutes to complete. We do not capture your email address for any subsequent marketing without your permission. Everything you say is totally confidential.

Pass the link on to any colleagues, employees or even your accountant to complete, as the more information we can get, the better. You can access the past years results here.

If you are having any problems accessing the survey, please contact us at admin@icb.org.au. We know your time is valuable, so we really appreciate your response.

Valid KPIs for a Bookkeeping Practice - New Resource

The Power of KPIs

This article responds to a social media post by Receipt Bank, "The application of KPIs to a fictional bookkeeping practice”.

It is a valuable process to compare your bookkeeping business performance against your own previous performance and also against the performance of other bookkeepers. (The ICB Survey, as well as other bookkeeping organisations’ profession surveys, provides great insight. Complete the 2016 ICB Survey here.

Key Performance Indicators, (KPIs), can be set as the indicators of what behaviour you want to achieve and then indicate whether you and others are matching up to that intended behaviour. Be wary of what a KPI might be stating; use your judgement to assess its usefulness to your business.

Receipt Bank - The Application of KPIs to a Fictional Bookkeeping Practice

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 4

Quoting the Suggested KPI's for a Bookkeeper - With Added Commentary

1. Bookkeeper to Client Ratio

This measures the number of clients handled by each bookkeeper. The proposition was that an increase in this ratio would lead to revenue increase at no extra cost.

This KPI would need to be evaluated carefully. It implies that more clients means more money. Is that correct?

An increase in revenue is not a fact, nor a direct consequence, of more clients. Many bookkeepers are taking on more clients as a way to maintain their revenue. Is this a numbers issue or a basis of revenue issue or a billing issue or a matter about what services they actually provide?

The anecdotal evidence at the moment is that for some bookkeepers, more clients is creating far too much stress, too much peak work and leading to lower quality work.

The stress leads to non-productive time, inefficiency, time off for illness and so on. As such the costs go up.

Maybe an increase in bookkeeper to client ratio would be good. A better use of this KPI would not be only that the ratio is increasing but, what is your desired bookkeeper to client ratio. However we think it may be different for each individual due to the different requirements of different clients and the different billing rates and agreements in place for each client.

To have a goal that this KPI must increase, only works if your main process is churning data and churning clients. We don’t see an increase as a good target for good bookkeepers, without other factors being considered.

It was proposed by the fictional bookkeeping firm that uses this ratio that, “our bookkeepers know they’ll be rewarded for working efficiently”.

We struggle with the comment as efficiency does not necessarily relate to this KPI. Increased number of clients is not necessarily a consequence of efficiency, nor necessarily a direct flow to increased revenue.

2. Average Revenue per Bookkeeper A useful KPI, we agree. In the days of value based pricing and fixed pricing I am not sure it is what fits as a contemporary KPI but nevertheless we are happy for it to be stated.

3. Monthly Recurring Revenue

This is a reasonable KPI and the discussion points are relevant.

However there is much discussion about the loss of revenue when a client put onto a monthly recurring fee agreement leaves without notice, or within a short time frame, and the upfront costs of engaging the client are not yet recovered.

There is also a risk of reliance on a recurring revenue stream that isn’t necessarily directly connected to the performance of any task. The revenue is coming in anyway, why do anything? This factor alone is dangerous. In combination with other considerations of success or health it significantly contributes to a good bookkeeping business. It certainly helps with cashflow.

"Retention of Clients" would be a good KPI that helps with this perspective.

We would be very interested to see the "Monthly Recurring Revenue" targets or KPIs in conjunction with some assessment of the margin or contribution being made by those recurring revenues.

In a fixed fee or value based pricing world where the push is to have everyone on recurring revenue, where is the allocation of costs to see whether that recurring revenue actually makes money for the business?

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 5

4. Average Production Cost per Client This is described as “total staff cost divided by the number of clients, and tracks how much it will cost your firm to do what your clients need you to do". The promotion of this as a KPI that should be reducing has a serious flaw. Such a view does not account for different clients needing different services. While it may be a valid big picture KPI, it is not indicative, nor a good driver, for future business models. It is again built on the premise that more clients is better; whereas less clients, paying more money, is a far better and more efficient business model.

We are proposing that a bookkeeper would be in a better position looking at a KPI of "Average Revenue per Client"

5. Client Efficiency

This KPI monitors how long it takes clients to submit information to the practice.

It is a metric for the systems and/or behaviour of clients and is a reasonable KPI for gauging whether a client is providing their information effectively. It is not a one-size-fits-all KPI, and may not be comparable from client to client, nor from practice to practice. A data-churning bookkeeper that relies on information being available to allow immediate and scheduled processing would look at this factor.

6. Client Referrals and Exits

This is a reasonable KPI for a bookkeeping business.

If we were to read the fictional bookkeeping firm’s positive response to these KPIs, what does this set of behaviours say about the style of providing bookkeeping services? It says you should be aiming to have more clients that take less time to process.

What is the result of that premise? Absolute lack of loyalty, lack of connection, lack of relationship, lack of longevity and promotes the churn of clients.

It does not promote a positive quality of bookkeeping. It promotes bulk data entry with little regard to quality.

What if we set our own Benchmarks for these KPIs?

Given the type of work you want to do and given the type of client you want to work with:

What is your ideal number of clients? What is the ideal number of clients for each level of bookkeeper you may have in your business, given the

type of work you want them to do and given the rate you pay them? What is your ideal type of client?

What is the desired revenue level for each bookkeeper? Maybe it is a desired minimum revenue level from each client? Maybe it includes a minimum level of fee per hour? (Oh dear did I really say that? - and yes I did, because I still think hourly based billing has a place and is not "old school").

Is there a combination here that each bookkeeper may set themselves an ideal number of clients that produces an ideal amount of revenue?

The KPI infographic worries me.

It is a “fictional” scenario but it has generated this conversation so maybe it isn’t all bad.

As mentioned, we think the scenario presented would benefit greatly from a KPI for average revenue per client. That would be a positive KPI as it lends itself to a greater connection with the client.

Where is the KPI for retention of staff? That is, staff are satisfied and developing in their work so you have the benefit of long-term knowledge, system implementation and application. Where is the KPI for accuracy? Where is the KPI for enhancing the automation and auto coding of the transactions?

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 6

Summary

Let’s look at a great professional bookkeeping community that also has a good set of KPIs.

Revenue per client: too low means too many small clients, too high may mean too many eggs in the one basket.

Clients per bookkeeper: set a target - it doesn’t need to be a huge number. The ‘pros’ about more clients are that there is less impact if a client leaves your practice. The ‘cons’ of more clients is that there is higher administration cost.

Contribution per client: look at the costs involved in servicing each client. It is not always the same for each client; some require more services than others. Are you billing accordingly, so that the contribution per client (i.e., revenue less costs) is realistic and profitable?

Contribution per bookkeeper: different bookkeepers have different skills, resources, speed, efficiency and workload. Assess each staff member to see what is relevant and possible for each person in your practice. Do you make money on each allocation of time? How much time in your practice is unbillable and must be absorbed by the practice?

These are some great points to consider in assessing and developing your own business.

References

ICB - Charge Rates and Fixed Fees Receipt Bank - Business KPIs for Bookkeepers

ATO Supports Stressed Business Owners

The ATO recognises that stress, depression or anxiety can have a negative impact on a business owner’s quality of life and ability to run their business. This can in turn affect people involved with the business, including employees, contractors, partners and clients.

The ATO also acknowledges that these circumstances can affect a business owner’s ability to meet tax and super obligations. Business owners can speak to the ATO directly, or have their registered agent speak on their behalf.

Financial Hardship

The ATO has options to help business owners who are experiencing financial stress or hardship.

Financial hardship for a business applies only in certain circumstances, for example, impending business closure, repossession of business vehicle, imminent legal action against the business and so on.

BAS agents can submit a request for priority processing via the BAS agent portal. Agents can also set up payment plans for clients or arrange a lodgement and payment deferral.

Some proof of hardship is required and may include documents such as bank statements, overdraft statements, eviction notice, disconnection notice, notice of legal action, staff records and supplier contracts.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 7

Support Organisations

There are various organisations that exist to support people in distress and help them with mental health issues and wellbeing.

Beyondblue - learn more about anxiety, depression and suicide prevention, or talk through your concerns with their support service.

Lifeline Australia - a national charity providing Australians experiencing a personal crisis with access to 24-hour support and suicide prevention services.

Suicide Call Back Service - provides free national telephone and online counselling for anyone affected by suicide.

Heads Up - a Beyondblue and Mentally Healthy Workplace Alliance initiative that provides business owners with free tools and resources to look after their mental health at work and achieve a mentally healthy workplace.

Business in Mind - a program developed by the University of Tasmania focusing on mental health especially tailored to small and medium business owners.

Mates in Construction - a charitable organisation focused on reducing the high level of suicide among Australian construction workers.

Return To Work - designed to help anyone involved in the process of returning to work after absence due to depression, an anxiety disorder or other mental health issues. Information is available for employers, employees, colleagues, family and friends who can assist in a successful return to work.

Council of Small Business Australia - COSBOA supports and represents privately owned small businesses, with socially responsible practices and awareness being a focus.

References

ATO - Business Owners Experiencing Mental Health Issues ATO - Serious Financial Hardship

ATO - Priority Processing

Artificial Intelligence or Automated Intelligence? - New Resource

It is really about “Automated Intelligence”!

In the world of Artificial Intelligence, how does a bookkeeper prove that they are a valid contributor?

The answer comes out of the following questions:

Why do we do what we do? Why do we do bookkeeping?

Why does bookkeeping exist?

Why do bookkeepers care so much?

Why do businesses engage bookkeepers?

Doing business automatically imposes a series of obligations on the things you must do in order to legitimately conduct business: compliance, record keeping, GST, taxes, etc.

Doing business properly means knowing what is going on in the business: using the records of what has happened to provide information about what is working, (or not).

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 8

Doing business efficiently means using the one system to do all of these: to conduct the business, meet the obligations and provide information.

Bookkeeping is about all of these outcomes. We help businesses with meeting their obligations, we help businesses to understand what is going on and we help them have the right systems in place to run their business intelligently and effectively.

Typically it is a better business result if the business owner uses an expert, i.e., the bookkeeper, to achieve these outcomes.

We also do it because the business person doesn’t generally want to do it. We do it because the business person isn’t the expert, (a polite way of saying they aren’t any good at it anyway).

The development of software, computer learning, machine learning and the increased availability of “big data” are all decreasing the friction in achieving the best outcomes quickly. These examples of Artificial Intelligence are not replacing bookkeeping, they are enhancing it.

Artificial Intelligence does not Replace all the Bookkeeping

As the tools get better, we get better. As the tools get better, we provide more insight and achieve the previous outcomes more efficiently.

Previously we bookkeepers created the process, looked for the information, entered the data, computed the results of the data, formatted the information and if we had time provided the information and the analysis.

It has been taking too long.

With computer assisted techniques, we are able to do each of these tasks quicker. “Computers can process significantly faster than the human brain”.

Artificial Intelligence is the Wrong Term

The term “Artificial Intelligence” implies that the computer will be able to think and do and replace the human. There is significant debate and discussion about the dangers of allowing artificial intelligence to be the only determinative process, (a discussion for next month).

In our world of doing bookkeeping, the application of Artificial Intelligence is actually misleading.

If we set aside the actual establishment of the systems in the first place: the setup, the customisation, the linking of programs and apps; all of this is performed by professional bookkeepers and is required before the computer can do its thing.

A better term about what is happening in our space is that software is increasingly bringing us “Automated Intelligence”.

1. Data is swapped rather than created. We are in a world that is already developing such that data can be electronically exchanged. More of the business transactions are performed by computer to computer rather than, for example, computer to paper to postal service to person to computer.

2. Records can be electronically saved rather than hard copy filed. Today’s document management solutions allows less time on filing and indexing, and less time on finding or retrieving documents. Once upon a time, when asked to find a particular invoice, you had to know if it was filed by supplier or item or date or some other protocol.

3. Searching document names, within documents. Computer search engines scan the folders, the documents or files within folders, the words within documents, in a fraction of the time that a human would be able to perform the same task.

4. Collation and computation of data: manual vs computer. Remember the manual spreadsheet? After allocating numbers into the columns we would then add up the columns; now the computer coding allocates it to the columns electronically and adds them up in a fraction of the time.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 9

5. Provision of information: typewriter vs computer. Previously, we had manual design of each and every report, with each iteration being another manual creation, (even when following a standard). Now we go to “print report” and the computer has followed its reporting template, (even customised versions), and prints the information in the format in a fraction of the time.

Developments in Artificial Intelligence

All of these developments are the beginnings of what “Artificial Intelligence” has brought us so far. Note what actually was happening in the past: previously manual and time consuming tasks are now performed by a computer in a fraction of the time. Someone has still requested the task or the information, but rather than a lengthy process of compilations, the task has been automated and performed by machine. The intelligence of the computer brings us “Automated Intelligence”

I watch NCIS LA and I watch the “Ops” people perform miraculous searches, finds, facial recognition, phone searches and identity traces in a matter of seconds. Go back ten years and that would have been more like look at the street directory, open the filing cabinet, scan photo albums, retrieve paper statements of phone calls, (although I am not even sure those records were kept), request personal information from other government agencies, etc etc; all of which would have taken weeks to obtain the same data and information that now takes seconds.

What does a Bookkeeper now do?

We use computers to process the same information we always have and reach the same outcomes in a fraction of the time. We use computers to automate previously manual tasks.

The greater expertise we now have in knowing how to use software as “Automated Intelligence” tools to produce meaningful outcomes, efficiently allows us to spend more time on certifying the outcome as correct and providing understanding and analysis about the data, rather than just creating the data.

The Automated Intelligence of the future should provide us with better “review and amend” tools; that is, the ability to quickly detect anomalies and the ability to quickly provide information based on the data. We will still play with data, but we will use better tools to play with it and make better use of it.

Related References

ICB - Artificial Intelligence and Bookkeeping

Best Practice Bookkeeping

Casual Workers - New Resource

Employing Casual Workers

A casual employee is someone that doesn’t usually have regular hours of work, is not guaranteed particular hours and is not on a regular roster. A casual worker can end their employment without any notice unless the award, registered agreement or employment contract states differently.

They are paid for the hours of work they perform and receive a casual loading in addition to their base rate of pay, resulting in a higher hourly rate. This loading is designed to compensate them for not receiving some of the benefits of full time and part time workers, (for example annual leave), and is usually 25%; you must check the relevant award for the exact rate. Most awards state the minimum number of hours to be paid per shift, for example, the Fast Food Industry Award is 3 hours.

Casual workers may also be entitled to penalty rates, allowances and other loadings for working on weekends, early or late in the day, public holidays and overtime. Again this depends upon the relevant award.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 10

Casuals are Entitled to the Following Under National Employment Standards

2 days unpaid carer’s leave per occasion 2 days compassionate leave per occasion

Unpaid community service leave (except paid jury service)

Unpaid parental leave (after 12 months of working)

2 days unpaid adoption leave(after 12 months of working) A day off on public holidays unless asked to work by the employer and paid accordingly

A maximum of 38 hours per week, plus reasonable additional hours

If a casual has been employed regularly for at least 12 months and expects to keep working they are entitled to request flexible working hours and parental leave. Casuals may also be entitled to long service leave and paid parental leave.

If a casual employee has a reasonable expectation of continuing employment or is employed on a regular systematic basis then they would probably be deemed a permanent employee, (full or part time), and should receive all the normal entitlements and without the casual loading.

If an employer incorrectly classifies an employee as casual and the employee takes it to Fair Work then the employer could be up for payment of annual and personal leave for the term of their employment. This could also include fines and penalties from Fair Work, and they would not be able to offset the casual loading already paid to the employee against this cost, so it can end up being quite costly.

It is important to review casuals to ensure that they continue to meet the criteria for being genuine casual employees, as conditions can change over time. The employer needs to check the award to determine if the casual is required to convert to full or part time after a particular period of service. Some awards state that if a casual employee is still employed after a certain period, they must be offered a permanent position. Other awards are silent on this issue.

Pay Slip Requirements

Employers are required to keep accurate and complete records for all workers, including casuals. The records must include timesheets and wages paid. Pay slips must also be issued to all workers within one day of being paid, and may be provided in either paper or electronic format.

All Pay Slips Must Contain the Following Information The employer's name The employer's ABN (if any) The employee's name The date of payment The pay period (beginning and end dates - e.g. 24/8/16 to 30/8/16) The gross and net amount of payment Any loadings, monetary allowances, bonuses, incentive-based payments, penalty

rates, or other separately identifiable entitlement paid.

Casual Workers Must Have Additional Information on the Pay Slip

Base hourly rate Casual loading rate

Penalty rates

Number of hours worked

Any other separately identifiable payment amount

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 11

Casual Loading Penalty

Fair Work outlines different methods to calculate casual loading. Not all awards use the same method. Always check the relevant award to understand how to calculate the casual loading and penalties.

Three Most Common Methods of Calculating Casual Loading

1. Default Method – base rate + (base rate x casual loading %) + (base rate x penalty %) 2. All Purpose Method – (base + casual loading %) x penalty

3. No Casual Loading Method – Penalty rates are paid instead of casual loading – base rate + penalty %

4. Note that some awards may use another method not covered here.

Examples Using all Methods

It is important to note that different awards treat weekend rates differently. Some may categorised as a penalty or overtime or both.

Casual Worker

Monday and Wednesday x 3 hours each day @ base rate Saturday x 4 hours @ time and a half penalty = 10 hours worked in the week

Base Rate = $18.64 per hour Casual Loading 25% = $4.66 ($18.64 x 25%) Saturday Penalty 50% = $9.32 ($18.64 x 50%)

Default Method – Casual Loading and Penalty Rates Calculated on the Base Rate of Pay

Most modern awards use this method In this example, Award treats weekend as penalty

Casual and penalty rates are calculated on the base rate of pay Formula = base rate + (base rate x casual loading 25%) + (base rate x penalty 25%)

Wage Categories Hours Rate Amount

Base Hourly Rate 10 $18.64 $186.40

Casual Loading 10 $4.66 $46.60

Saturday Penalty 4 $4.66 $18.64

Total Amount $251.64

Less Tax -

Superannuation 9.5% $23.90

All Purpose Method – Penalty / Overtime Rates Paid on Top of the Base + Casual Rate

Some awards use this method In this example, Award treats weekend as overtime and penalty

Penalty rates are paid on top of casual rate, not base rate

Formula = (base rate + casual loading 25%) x penalty rate 25%

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 12

Wage Categories Hours Rate Amount

Base Hourly Rate 6 $18.64 $111.84

Casual Loading 6 $4.66 $27.96

Saturday Rate 4 $18.64 $75.56

Sat Casual Loading (25%) 4 $4.66 $18.64

Saturday Overtime = (Base rate x 1.25) x .5 = ($18.64 x .625%) 4 $11.65 $47.40

Total Amount $281.40

Less Tax -

Superannuation 9.5% $13.28

In the above example casual loading is paid twice. It is paid as normal casual loading and then combined casual loading again with the penalty rate, so the penalty is being paid on top of the full casual rate.

Super is not payable on overtime hours. Note that in this example all of Saturday is classified as overtime and therefore not included in SGC calculations. As always, you must check the relevant award to clarify how each pay rate is classified, (e.g., whether overtime or penalty or loading), and whether super is payable.

No Casual Loading Method – Penalty Rates for Weekend Instead of Casual Loading

Penalty rates are paid instead of casual loading In this example, Award pays 33% Casuals don’t get a casual loading when penalty rates apply

Formula = base rate + penalty 33%. Check the award for the relevant penalty rates, there are different penalty rates for different reasons

Wage Categories Hours Rate Amount

Base Hourly Rate 10 $18.64 $186.40

Casual Loading 6 $4.66 $27.96

Saturday Penalty 33% 4 $6.15 $24.60

Total Amount $238.96

Less Tax -

Superannuation 9.5% $22.70

Superannuation

Superannuation is calculated on Ordinary Time Earnings, (OTE); penalty rates generally are considered to be OTE but overtime is not. Therefore you need to ensure that superannuation is set up correctly for each payroll category. It is imperative that you check the award and ATO to determine OTE.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 13

Casual Under 18 Years and SGC Superannuation

Superannuation Guarantee is generally paid to an employee after they have earned $450 gross income within one month, however with a casual who is under 18 years of age the criteria is different.

1. The employee must earn $450 gross in a calendar month and 2. Where the under 18 employee works more than 30 hours in a given week they are eligible to super on the

OTE in that week, or other weeks in that month where they did work more than 30 hours.

If the under 18 works more than 30 hours in a week, but does not earn $450 in that calendar month, no super needs to be paid.

Example

A casual 17 year old employee works variable hours in a month. The base rate is $12.37 for the fast food award, casual loading is 25%, making the hourly rate $15.46.

Super is payable only on the third week because of both the hours worked and the total earned in the month being greater than $450.

Pay Period Hours Gross Pay Super

Week 1 10 hours $154.60 $0

Week 2 15 hours $231.90 $0

Week 3 32 hours $494.72 $46.99

Week 4 6 hours $92.76 $0

Withholding Tax for Casual Employees

Claiming the Tax Free Threshold from More than One Employer

If you or your client has a casual employee who works for more than one business then they can potentially claim the Tax Free Threshold (TFT) from more than one employer.

If the employee is certain that their total income for the year will be less than the current tax free threshold of $18,200 then they can claim the tax free threshold from all their employers, therefore not paying any tax.

The important thing to remember here is that if an employee’s situation changes and they start earning more money and are likely to earn more than the threshold amount in the year, then they must notify their employers so that the employee can be taxed correctly.

If the employee’s circumstances change they must advise their employers by completing a new declaration.

If the Employee is Earning Above the Tax Free Threshold

If the employee earns more than $18,200 in the financial year, then they can only claim the Tax Free Threshold from one employer. You would expect them to choose the employer that they expect to earn the most from over the year and claim this from them. They would then claim the No Tax Free Threshold for all of their other employers.

What Happens if They Claim it When They Shouldn’t?

If the tax free threshold is claimed incorrectly then the issue is with the employee not the employer. It is the employee’s responsibility to submit a new declaration if they either leave the current employer and start with a new employer, and / or their circumstances change, for example, they start working more and therefore are likely to earn over the tax free threshold of $18,200 for the financial year. If this happens, the employee is required to start paying tax. If they do not notify the employer and no tax is withheld, then the employee will be liable for a tax debt to the ATO.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 14

1 October, 2016 Tax Scales Change

As of 1 October 2016, the tax threshold for the 37% tax rate moved from $80,000 to $87,000. Employees with a gross income over $80,000 will receive a tax reduction.

The scale with no tax free threshold is used where the worker has more than one job and is normally applied to the job with lesser earnings, although that is the worker’s choice. The scale assumes earnings from the other job of $18,200, ($700 per fortnight).

Some casual workers tax rates will be affected by this tax scale change. For example, an employee earns $2,970 per fortnight, or $77,220 per year. Adding the assumed income for the ‘other’ job of $18,200 gives $95,220. That income is in the range where the tax cut applies.

Bookkeeper Process for Tax File Number Form

Receive the TFN form from the casual employee; check all fields have been completed correctly; if the employee has claimed the Tax Free Threshold, question the employee regarding other jobs and check that they understand the requirement to notify the employer of any changes to their working situation.

If appropriate, provide the ICB Tax Free Threshold Information Sheet or customise to your business needs. Question the employer regarding whether the employee is a genuine casual worker. If engaged to do so, check the award regarding provisions for casual workers. Flag to revise the casual classification every 3-6 months – question the employee and / or employer as

appropriate, to ascertain if there have been any changes that will affect the casual worker status or Tax Free Threshold.

Set up employee in software with correct employment status and basis, and correct tax tables selected.

The Tax File Number Declaration Form

This form has been updated by the ATO to be an editable and saveable PDF file. This allows you to fill in the form and save electronically. The PDF is not able to be lodged with the ATO via the BAS portal at this time. If your accounting software is able to generate an ATO approved TFN file, this may be lodged via the BAS portal file transfer facility.

Calculating Long Service Leave for Casuals

The calculation of long service leave for casuals is different for each state. The calculation must take into account the variable hours they work. Long service leave pay across all states is paid at the last / current pay rate, but the LSL calculation of how many weeks to pay differs from state to state.

NSW - Average hours over 12 months or 5 years whichever is greater. VIC - Average hours over 12 months or 5 years whichever is greater.

QLD - Average hours weekly over entire accrual period. TAS - Average hours weekly over 12 months. NT - Average hours weekly over entire accrual period. ACT - Average hours over 12 months. If moved from casual to full-time less than 2 years then average over

5 years. WA - Average hours over entire accrual period. SA - Average hours over last 3 years.

Example - South Australia

Belinda is a university student and has worked off and on over the last seven years with the local pub in SA. She now has her degree and wishes to terminate her employment. She is eligible for pro rata Long Service Leave of 9.1 weeks, (accrual of 1.3 weeks every year x 7 years). Her current rate of pay is $25 per hour.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 15

SA calculation is the average hours over last 3 years worked. That is, if the employee had weeks where she did not work, these weeks would not be counted for service. The employee must have their average calculated over 156 weeks, which may in fact be greater than three years of service.

Note also that because of excluding weeks where no work was performed, a casual worker may in fact need to work more than seven years before being eligible for long service leave.

2014 2015 2016 Total Average Hours Per Week

520 624 416 1,560 1,560/3 = 520/52 = 10 hours per week @$25 = $250

9.1 weeks x $250 = $2,275 gross LSL to pay

When and How Must a Casual Worker Become a Permanent Employee?

When

The Fair Work Act does not cover this subject. Employers need to check the applicable modern award or enterprise agreement. Some modern awards like the Fast Food Industry are silent on this issue which means an employer does not have to offer a genuine casual a permanent position after a specific time period.

Other awards state that a casual can be made a permanent employee after a certain period on employee request.

How

Moving a casual employee to part-time or full-time status within your payroll system requires the following: 1. Keep using the same employee card as this is preferred by the ATO; record the date of move to a

permanent employee and record the new status, i.e., part-time or full-time. This will also make production of payment summaries easier.

2. Record in the employee card the total long service leave hours accrued thus far; if employee leaves these hours may need to be considered as part of the calculation of long service leave.

3. Check the entitlements accrual to ensure calculation for part-time or full-time is correct, although hourly accrual is preferable for all types of employees.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 16

References

ICB - Payroll Records and Payslips ICB - Employment Status

ICB - Employer Obligations

ICB - New Employee Checklist

ICB - Pay Slips ICB - Template to Advise Employees of Tax Free Threshold

ICB - Long Service Leave

ATO - TFN Withholding Declaration

Fair Work - Understanding Casual Penalty Rates Fair Work - National Employment Standards

Christmas Related Matters - Updated Resources

Annual Shutdowns

Many businesses have a scheduled period of closing business operations during the Christmas and New Year period. How an employer must treat this depends on the award or agreement the employee is governed by. These guidelines apply to permanent employees - casual employees do not have to be paid during a scheduled shut down.

1. Award or Agreement allows employer to direct leave If the award or agreement provides for the employer to direct leave to be taken at specific times, then the employer can do this so long as they follow the guidelines about how much notice is required. Example: The Clerks Private Sector Award does allow employers to direct employees to take leave during an annual shutdown, and they must be given at least 4 weeks’ notice (before the first day of leave), in writing. What if the employee doesn’t have enough leave? The employer can agree to pay annual leave in advance or the employee can take unpaid leave. However, from FairWork: “If an employee doesn’t agree to either, they have to be paid their ordinary pay rate for the shutdown. They can’t be forced to take unpaid leave”.

2. Award or agreement is silent If the award or agreement is silent on the issue, then the employer may not force an employee to use their leave during a scheduled closure. The employer can negotiate with the employee to take paid or unpaid leave, or half pay leave if the award/agreement allows this.

3. The employee is not covered by an award or agreement Note that this is rare - the majority of employees are governed by an award. If there truly is no award or agreement governing the employee, then the employer can direct the employee to take leave if the direction is ‘reasonable’. See below for detail on what is ‘reasonable’.

4. Public holidays during leave Public holidays that fall during a period of paid leave are always paid as normal work days; they should not be taken as annual leave days. If an employee usually works a given number of ordinary hours and overtime hours, then they will be paid only for the ordinary hours on a public holiday, they will not be paid for the usual overtime hours. If a public holiday falls during a period of agreed unpaid leave, the public holiday is not paid.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 17

What is ‘Reasonable’?

From FairWork Best Practice Guidelines: “What is 'reasonable' will depend on factors such as the kind of business run by the employer, the nature of the work performed by the employee, the employee's personal circumstances (including family responsibilities) and how much notice was given to the employee”.

An employer can refuse a request from an employee if they do not feel it is reasonable; this applies also to the employee refusing a request from an employer they do not feel is reasonable.

This will be governed by factors such as: the effect on the workplace and the employer's business of approving the request, including the costs of doing so and negative impacts on efficiency, productivity or customer service; the inability to organise work among existing staff; and, the inability to recruit a new employee or the practicality or otherwise of the arrangements that may need to be put in place to accommodate the request.

Christmas Bonus Payments

Employees are often paid a bonus around the time of Christmas. Generally, the bonus is paid for performance over the past year - in this case, when it is classified as a “one-off bonus”, it is taxed only in the current financial year.

If the bonus relates only to the current pay period, for example for extra work done before the business closes for an annual shutdown, then the bonus would be taxed within the same pay period and not spread across the financial year pay periods. Superannuation is payable on all bonus payments, the exception being that if a bonus relates to overtime only then super guarantee is not payable.

Note, a bonus payment is distinct from a back payment, which relates to wages that should have been paid in a prior financial year. Back payments are treated differently and are based on the time frame and the amount of back payment; this governs whether the amount is included in Lump Sum E or Gross Payments.

Salary Sacrifice of Bonus Payments

A bonus payment may only be sacrificed to superannuation if such an arrangement already exists in writing before the bonus payment is made or notified to the employee. If the arrangement does not exist before the bonus, it must be paid as wages, it cannot be sacrificed.

Christmas Parties and Gifts

The boss decides to throw a Christmas party for the staff. Can you claim this as a business expense? Does Fringe Benefits Tax apply? This depends on who attends and where the party is being held. The provision of a Christmas party for an employee may be a minor benefit and exempt from FBT if the cost of the party is less than $300 per employee and certain conditions are met. This provision also applies to the employee's associate (family member) or spouse.

The cost of providing a Christmas party is income tax deductible to the extent that it is subject to FBT. Therefore, any costs that are exempt from FBT cannot be claimed as an income tax deduction. GST credits can only be claimed to the extent that a cost is tax deductible. Therefore, if you cannot claim it as a deduction, you cannot claim the GST credits either. The ATO have guidelines in regards to FBT as it relates to different business structures. See links below for more detail.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 18

What Can You Claim?

Christmas party held at your premises on a work day

If only employees attend No FBT, not tax deductible

Current employees and spouses @ $180pp

No FBT (minor exemption applies for spouse)

Employees and clients @ $365pp Employees - No FBT and not tax deductible Clients - No FBT and not tax deductible

Employee associate @ $365pp (family members)

FBT applies as value more than $300pp

Christmas party held at other premises

Only employees attend @ $195pp No FBT (minor exemption applies), not tax deductible

Employees and associates @ $195pp No FBT (minor exemption applies for both), not tax deductible

Employees, associates and clients @ $365pp

Employees and associates - FBT applies as value more than $300pp

Clients - No FBT and not tax deductible

Minor Benefits Exemption

The $300 threshold is applied separately to each benefit, gift or party. So for example, an employee could attend the workplace party at a cost to the employer of $280 and receive a gift worth $250, but because these amounts are treated separately there are no FBT implications.

Christmas Gifts

The provision of a gift to an employee at Christmas time, such as a hamper, may be a minor benefit that is an exempt benefit where the value is less than $300. Where the gift is given at the Christmas party, each benefit can be considered separately.

Christmas Gifts for your Clients and Employees

Are gifts to your employee, clients and suppliers claimable? Gifts may be classified as “entertainment”.

For gifts such as wine, food, hampers, vouchers, etc., these are not considered to be entertainment.

If the gift is a minor benefit (i.e., less than $300 value), then the gift is not tax deductible, and therefore GSTis not claimable for gifts to employees and their family members, clients and suppliers. No FBT applies togifts of less than $300.

For gifts over $300, FBT may apply for employees and their family members, but FBT does not apply toclients or suppliers.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 19

For gifts such as holiday, membership to a club, or tickets to a theatre, sporting or musical event are considered to be entertainment.

For minor benefits, as above, the gift is not tax deductible and no FBT applies. Also for clients and suppliers, the entertainment gift is not tax deductible, and no FBT applies. For employees this is not a minor benefit, the gift is tax deductible but it is also subject to FBT.

Type of Gift Gifts to employees and their family

Gifts to non-employees such as clients, suppliers, contractors etc.

Non-Entertainment Gifts Christmas Hamper Bottle of Wine or Spirits Gift vouchers Flowers Other Gifts

Subject to FBT unless considered a minor benefit

Minor benefit is a gift less than $300 (GST inclusive) and provided infrequently.

Gift is then considered not a tax deduction nor can you claim GST.

No FBT Applies

Gift is tax deductible and GST can be claimed.

Entertainment Gifts Theatre or Musical

Tickets Movie Tickets Tickets to sporting

events Flights and

accommodation for holiday

Membership to a club

Subject to FBT unless considered a minor benefit.

Minor benefit is a gift less than $300 (GST inclusive) and provided infrequently.

Gift is then considered not a tax deduction nor can you claim GST.

Not Subject to FBT

Not Tax deductible

GST cannot be claimed

Giving your clients a gift at Christmas is a personal choice that you as the business owner can make. Be aware that some clients may not be allowed to accept gifts due to their business’s Code of Conduct (e.g., government workers).

We remind you that the topic of entertainment, tax deductibility and fringe benefits tax is complex and not always straightforward. Check with your Tax Agent if in doubt and refer to the ATO website for detailed guidance.

For a Business Information Sheet covering these topics, please click here.

Related References ICB - Christmas Related Matters ICB - Christmas Parties and Gifts ICB - Business Information Sheet - Christmas Related Matters ICB - Business Information Sheet - Payroll and FairWork ICB - Guide to Employer Obligations ICB - Payroll Resources ICB - Public Holidays ICB - Tax on Commissions and Bonuses Worksheet ICB - Guide to FBT FairWork - Small Business Best Practice Guidelines FairWork - 5 Things you Should know about Public Holidays FairWork - Annual Shutdowns ATO - Tax Table for Back Payments, Commissions and Bonuses

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 20

ATO - FBT and Christmas Parties ATO - FBT and Entertainment for Small Business ATO - FBT and Entertainment for Government ATO - FBT and Entertainment for Non Profit Organisations ATO - FBT and Christmas Parties for Tax-Exempt Bodies

Does Your Charity Have the ACNC Tick?

Introducing the ACNC Charity Tick

Our 2015 Public Trust and Confidence research showed that support of charities is closely entwined with trust, and that charities are the third most trusted group in Australia (behind doctors and the police).

Importantly, when the ACNC’s role as the charity regulator was explained to research survey respondents, their trust in Australia’s charities grew significantly. This increase in trust is partly derived from the credibility which well governed charities generate and also from the fact that there is a regulatory body keeping watch over the sector, finding those that do the wrong thing, and taking action to ensure that all charities operate with integrity and good practice.

A similar concept to the charity tick already exists in Scotland, and in the United Kingdom and New Zealand charities have a unique ‘charity number’ that can be used when fundraising.

We see the benefit of the charity tick as two-fold; registered charities can display their charity registration status in a simple way and donors can instantly be confident that they are giving to a registered (and regulated) charity.

The charity tick will only be able to be downloaded by a registered charity via the Charity Portal. Its use will be governed by terms and conditions which the charity must agree to before they can download the file. The ACNC will track the use of the tick by each registered charity and take action where we are notified of a breach of the terms of use.

The charity tick will be available for charities to download in the Charity Portal by the end of November, ahead of the traditional Christmas charitable giving period.

All registered charities will receive an email when the Charity Tick becomes available. The ACNC will be conducting a public information campaign to support the release of the tick.

Over time, we hope that the charity tick will become synonymous with a charity that is well governed, reputable, and worthy of public donations.

Reproduced from ACNC Spring 2016 newsletter.

References

Australian Charities and Not-for-profits Commission ICB - Not for Profit

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 21

Who do You Want to be in 2017?

Implementing a business plan and establishing a few areas of focus doesn’t have to be an expensive, business-coached, multipage document. Simply establishing a few observations about who you are now, who you would like to become and things you would like to change, learn or develop can set up some meaningful strategies for the year to come.

In the following sections, we provide a framework for you to think about your business and make some plans for where you would like to be in 12 months’ time.

It is totally acceptable to plan to be the same as you are now in many facets of your profession, while there are some things that you should still contemplate developing. See the final section on technology developments and compliance processes - at the very least you will need to adjust your systems and services to embrace these coming changes.

The Bookkeeping Business

How Much are you Charging?

Current Charge

Indicative average based on 2015 survey results

Aiming for

Normal Services $ $50 - $80 per hour $

BAS Services $ $50 - $80 per hour $

Specialist Services $ $80 - $150 per hour $

Other $ $

If you are making a change to charge rates, on what date will you implement this change? _______ / ______ / ______

Charge Rates and Billing Models Are you happy with the billing model you currently use? Consider alternative billing models to your current one, either to change all clients or to offer other choices to

future clients. Are there other services you could be offering to clients? For example, cashflow planning, budgeting,

payroll, business systems…

Charge Rate Calculator If a contractor, are you paying yourself superannuation? Are you factoring in all your administration time and professional development costs? Remember that your charge rate should also include Income Protection insurance, holidays, unbillable time,

subscriptions, technology, Professional Indemnity insurance, hardware, registrations…and more. Have youcalculated properly?

If it is more than a year since you have done the charge rate calculation, make this a priority for early 2017.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 22

Essential Documents

Yes No Planning to

Engagement Letters

Task Reports

Authority Forms (e.g., Lodge BAS, SC Charge Statement, Supplier Payments, etc.)

Other

A task report is an email or communication to the business owner after each batch of work that provides information to the owner about what you have done. This should either be included in your invoice to the client, or provided in addition to the invoice.

If you are not currently using either of these documents with your clients, at the very least keep your own notes about what work you do for each client on each occasion.

How Many Clients?

Current Aiming for

Weekly

Monthly

Quarterly

Ad Hoc Consulting

Regular Payroll

Verify and Lodge BAS

End of Year Payroll

End of Year Accounts

Supervision

Mentoring

Training of Clients

Other

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 23

Review and Update Your Business Information and Marketing Do you have a professional email address? Does your email, website and all online activity display your professional associations, accreditations, logo

and so on - are all of your communications to peers and potential clients consistent and congruent? Do you have a website - if so, is it time to update the information on it? Are you linked to software companies and industry associations? Have you added your information to ICB Find a Bookkeeper? Do you have a social media presence and / or blog? Consider joining business networking groups in your area or industry specialisation.

What Type of Clients?

Who is your ideal client? Think about size of business, location if relevant, employees, software in use, industry and so on. Do you want to focus on a particular niche type of client? Or do you want to be able to look after anyone who rings you? If you are clear about who your ideal client is, then it is easier to make decisions about which clients are a good fit for you and which ones to say “No” to.

In reviewing your current mix of clients and what you are aiming for, review also your own invoicing cycle and process, average debtor days and KPIs relevant to your business.

Planning Your Year

How Much Time are you Working?

Current Indicative average based on 2015 survey results Aiming for

BAS Time 31 - 50 hours per week

Non-BAS Time 21 - 40 hours per week

Holidays Planned

Time Management

Do you need to improve your time management to work more effectively and efficiently? Do you need to change the structure of your working week? For example, you may need to put in place

stronger boundaries around work time and personal time. Consider structuring your work days for specific periods that are dedicated to specific tasks, e.g., returning

phone calls, dealing with administration, reading and answering emails, billable work time. Consider whether you can delegate some of your tasks to others and/or outsource to other providers so that

you free up your available work and billable time. Do you need to say “No” to some things? For example, not every client may be suitable for you, not every

Facebook thread requires your attention and not every networking group is relevant for you. Be discerning about where you spend your professional development time.

Consider using an online project management solution for better client and task management.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 24

Style of Operation

Currently Indicative average based on 2015 survey results Aiming for

Just Me 85%

Casual or Ad Hoc Engage Others 20%

Formally Engage Others Part Time 30%

Formally Engage Others Full Time 55%

Embrace a Network or Franchise

Become Part of Another Network

Become an Expert Advisor for Related Services

Create a Network of Affiliated Providers to Refer Business to Each Other

Retire

Sell Business

Lifestyle Factors Do you want to continue working the same amount? Do you want to reduce or expand? Do you need to start planning for retirement of sale of business? Are you happy doing what you are doing? Do you take regular weekends, public holidays and holidays each year? Consider whether being a contractor or employee is best for you - or perhaps a mixture of both? Is working from home a good option? Or is it time you left the home office and found business premises?

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 25

Professional Development / CPE

Note: ICB require 15 hours per year / TPB requires 45 hours every 3 years

Number Hours Total

ICB Network Meetings 2 hrs each

ICB Monthly Newsletter 2 hrs each

ICB National Conference 5.5 hrs

ICB End of Year Workshop 6.5 hrs

ICB Technical Webinars 1.5 hrs

Software Roadshows

Software Annual Conference

Software Training

ATO Webinars

TPB Forums

FairWork Information

Other Training to Acquire Specific Skills

Current Technology Solutions to Assist Business Systems

Become an Accredited Partner of Accounting Software and Technology Solutions

Total

Technology Developments - Automated (Artificial) Intelligence

2017 seems to be a year that everyone is going to talk about the development of artificial intelligence in the world of the bookkeeper.

Your reaction is to be the expert to bring this to fruition in a way that makes you more effective.

We are used to bank feeds and various forms of auto-coding and auto-processing. For many, this has been the first step into using automated intelligence to make us more efficient.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 26

In 2017 set your plans for what automated intelligence you are going to embrace:

Bank feeds Automatic payment gateways integrated with software SuperStream (this should now be implemented for all employers) Optical Character Recognition (OCR) invoice processing packages, (e.g., Smartbill, Receipt Bank,

Shoeboxed, Entryless) Employee portals; client portals; secure communication channels Digital authenticated signature solutions Enhanced electronic lodgement via Small Business Reporting solutions and gateways from within

accounting software Client management dashboards, (e.g., GovReports, Xero Practice Manager, MYOB dashboard, Reckon

dashboard, Intuit QBO dashboard)

Keep watching the software and be on top of what solutions they are bringing to automate your world. Through effective use of their best features, you will become the automated intelligence expert, bringing the best software solutions into your own businesses systems and also for your clients.

Changes to Compliance Processes

2017 is also going to be the year for changes to the way we do things, because the government is introducing various developments. Your year will include being on top of these changes and implementing them for you and your businesses.

1. Simpler BAS

This will apply for all small businesses with a turnover less than $10m. Starting officially on 1 July 2017, but new businesses may be able to adopt the system earlier. This will change the way we report GST on the BAS.

2. Single Touch Payroll

This will apply to all “substantial” employers, (more than 20 employees), from 1 July 2018, with the option to enter the system for all from 1 July 2017. It’s here and it will need to be considered for every employer.

3. Fair Work

Fair Work seems to be increasing its activities against employers. There is a great amount of work to assist employers in understanding their obligations and avoiding potential Fair Work prosecution.

4. ATO BAS Agent Portal

The portal will be undergoing evolution during 2017. This will change your processes and approach.

Consider your strategies to stay informed and embrace these changes.

ICB - Bookkeepers Helping Bookkeepers

All of the above processes, developments and considerations about you and your professional bookkeeping services are informed and assisted by ICB news updates, resources, checklists templates, newsletters, network meetings and technical support.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 27

Related References

ICB - Your Bookkeeping Business ICB - Charge Rates and Fixed Fees

ICB - Building Your Bookkeeping Business

ICB - CPE

ICB - Engagement Letter ICB - Business Plan

ICB - Bookkeepers Task Report

ICB - How to go on a Holiday

ICB - Bookkeepers Starting Out ICB - KPIs for Bookkeepers

ATO Super Entitlement Tools

The ATO have released their new tools to check superannuation entitlements. The three tools address eligibility, entitlement estimate, and complaint about an employer.

1. Eligibility Tool – Are you Entitled to SGC Contributions?

Example – Employee

Are you an employee?

Confirm you are paid more than $450 per month

Enter age. (If under 18, you will be asked if you have worked more than 30 hours in a week).

Then are a series of questions relating to domestic work, CDEP, non-resident, JPDA, foreign executive. Result: entitled to super.

You are entitled to super

Based on the information you have provided you are entitled to super guarantee contributions from your employer.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 28

Example – Contract Bookkeeper

Are you an employee?

Answer is based on the concept that you are performing work to achieve a result and using your intellect and expertise; you are not providing solely physical labour.

Result: not entitled to super.

You are not entitled to super

Based on the information you have provided you are not entitled to super guarantee contributions from your employer.

You are not eligible to super guarantee contributions because you are not an eligible employee for super purposes.

2. Estimate Tool

This tool enables the employee to determine the amount of super they are entitled to, excluding the current quarter. If they are trying to determine an estimate for the current quarter, an error message is received advising that the employer has until the 28th of the following month to pay and therefore they are unable to calculate.

Enter the time frame you want the estimate for.

The employee is then required to enter the Ordinary Times Earnings, which is where they may need

help as not every employee understands what OTE is. There is a question mark that they can tick that gives them the basics of OTE.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 29

The calculation tool then provides an estimate and advises that this estimate does not take intoconsideration any salary sacrifice.

3. Complaint Tool

This form enables the employee to report any unpaid superannuation to the ATO

Employee first needs to check super fund to confirm that they have not been paid the super they areexpecting

Confirm eligibility, i.e., $450 per month has been earned

Enter ABN of employer, confirm that it is your employer

Then enter the period the enquiry relates to Enter personal details, (name, DOB, TFN, email address, details of superfund Then confirm you give permission for the ATO to contact the employer, providing any other relevant details If you do not allow the ATO permission to contact the employer, “processing of your enquiry may be delayed

if we are unable to refer to you by name when contacting your employer”.

References

ICB - Contractor or Employee ATO - Check Super Entitlements

ATO - Employee or Contractor

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 30

Software Comparison Update

A tool created by ICB to allow the bookkeeper to capture all the business processes of their client and then compare against the various software providers. This was originally issued in a series of monthly instalments comparing the features of MYOB, Intuit, Reckon, Xero and Saasu.

We aim to update this on a regular basis; however, each software company releases new features frequently. We encourage you to check each company’s website for current information about features.

Our process has been firstly to assess in-house against a basic list of features. As we compare the products, the feature list grows and the list goes back and forth a couple of times as we seek further information or clarification about a particular feature or product.

These companies have been involved directly in assessing and updating the feature list. The spreadsheet has been updated with information as at September 2016.

The aim is to produce a valuable tool to help you assess products on their own merits and independent of the marketing material published by the software companies. Each company publishes comprehensive information about their product features, but sometimes it can be hard to compare products; this tool is designed to help you make that comparison more easily.

We have compared different parts of the bookkeeping process in turn. Processes compared are: Sales, Purchases, Payroll, Inventory, Banking, Chart of Accounts, BAS and GST. The full comparison - download the spreadsheet to view the whole list. We remind you of related ICB information on selecting software for your clients and checklists for software choices are accessible from our Accounting Software section.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 31

Related Information

Accounting Software Software Feature Comparison - Spreadsheet

BAS Agent World

ATO Working With Registered Agents - They Admit They Need To

Working Together – Have Your Say

Would you Agree the ATO and the Tax Profession Depend on Each Other for Success?

Together with members of the tax profession, we’ve described the relationship we need to work together effectively now and into the future.

This will guide our interactions and establish roles in our working relationship.

Working with the Tax Profession

The ATO and tax profession are known for working together to provide expert services that help Australians and businesses succeed.

In Australia, tax professionals have a critical role in the tax and superannuation systems. They are intermediaries, conduits and influencers of behaviour; providing expert advice to, and completing the necessary transactions (record keeping and lodgements) for clients to meet their obligations.

Taxpayers can choose to deal directly with the ATO and self-prepare, or use a tax professional to help them meet their taxation and superannuation obligations. It is recognised that the more complex the affairs of a taxpayer, the more likely they are to need the services of a tax professional.

Both the ATO and the tax profession work together to facilitate taxpayers effectively and efficiently through the tax system – helping individual Australians and businesses to prosper, while meeting their various tax (and other regulatory) obligations.

Principles for working together effectively:

The ATO and the tax profession depend on each other for success. The ATO and the tax profession take responsibility for developing the necessary expertise to support their

respective roles in the tax and superannuation system. Clients can choose to interact directly with the ATO or use a tax professional – materials and services are

designed to reflect this choice. Services offered by the ATO and the tax profession:

are contemporary aim to improve productivity and viability for businesses and the community allow clients to meet a variety of regulatory obligations – following the ‘write once, use many’ tenet are provided early and upstream to help people get it right from the start keep people connected and aware of their position – so that things aren’t left alone or don’t get off

track.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 32

The Future

Administration of the tax and super systems will change in the coming years because of:

Greater automation and digital business Reduction in transactional requirements Increased data sharing between taxpayers, third parties and

government Whole of government services.

Challenges and Opportunities

As both the ATO and tax profession modernise, new products and services will need to be co-designed to suit the majority.

The changes in administration are likely to impact on the viability of some tax professionals whose work is based on a business model of low complexity, low margin and high volume.

Do you Think this Reflects the Working Relationship we Need?

Give the ATO your feedback by commenting on the discussion board.

Reproduced from the ATO Tax Professionals Community - Working Together - Have Your Say

Dealing with Non-Compliant Clients

Your Obligations if the Client is not Complying

We refer to the TPB code of conduct and Section 30-10(10) from the TASA.

"You must take reasonable care to ensure that taxation laws are applied correctly to the circumstances in relation to which you are providing advice to a client."

Real life example:

An agent is working for a client and notes that the client is not paying Superannuation Guarantee Contributions.

You must advise the client of their obligations. The TPB would strongly suggest (and ICB would insist) this should be in writing. (This meets the obligation under 30-10 (12) “You must advise your client of the client’s rights and obligations under the taxation laws that are materially related to the tax agent services you provide”).

If the client does not engage the agent to then pay the SGC, or engage them to complete the SG charge statement, then nothing in the law or the code requires an agent to do work that they are not engaged by the client to do.

However, neither can an agent complete forms that are incorrect, i.e., a partially correct SG charge statement, (or a partially correct BAS) would not be acceptable.

There is nothing in the law that requires an agent to consider matters that they are not engaged to do.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 33

The same principle would apply to any BAS obligation of lodgement or payment.

If a client engages an agent then the scope of the engagement, (“the thing you are doing for a client”), should be understood and the agent must; “competently” “take reasonable care” to “ascertain a client’s state of affairs” and “ensure that taxation laws are applied correctly” “to the circumstances in relation to which you are providing advice” or “relevant to a statement you are making or a thing you are doing".

You are not required to make yourself fully aware of every circumstance of a client, or to make yourself aware of and fix every instance of non-compliance of a client. This would be a significant extension of the code and the law. We also expect this would lead to you performing a significant amount of work that you would never get paid for.

The TASA does not insist that agents only work with fully compliant clients.

The TPB have specifically advised in response to the question, “ what action should a BAS agent take in respect of a client who continues to refuse to meet their employer superannuation obligations”?

"The agent should formally advise the client in writing that they are failing to meet their obligations under the law and impress upon the client the requirement to comply. If the client continued to refuse to comply the agent should consider refusing to act for that client."

Please note: An agent cannot knowingly lodge a false or misleading statement. You cannot lodge a BAS or any other form that you know leaves out some obligation or some amount of obligation. In the same way a tax agent cannot lodge a tax return that they know has understated income or overstated expenses.

TPB Forum for BAS Agents

TPB Forum Melbourne 26 October, 2016

TPB members in attendance:

Ian Taylor Russell Smith Rosemary Holloway

Jeanette Wu

Presenter for the day was Russell Smith who gave a great presentation and interacted well with the BAS agent audience.

Emerging Issues With Your Practice

Accounting Software

Software selling direct to clients causes issues that still require a BAS agent interaction.

Incorrect bank feeds and allocation of such by clients Clients deliberately allocating transactions that are not compliant

The TPB reiterated ICB’s position, that is, automation doesn’t necessarily mean we are out of a job. We still have a role in ascertaining and advising, even if we do less data entry.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 34

Single Touch Payroll

STP is due to start on 1 July 2018. This will initially be a requirement for large business with small businesses able to opt in. Software companies are preparing now.

Australia is one of a few in the Western world that doesn’t currently have a solution like STP and is the slowest country in Western world in recouping PAYG payments.

Simpler BAS

Russell reiterated that this didn’t mean we had to do less. We still need to allocate, code and review to ensure compliance and correctness; again, the same position as ICB is saying.

Code of Conduct Considerations

Russell stressed that we need to follow the TPB codes when processing clients’ work.

Code 7 - Ensure you are not performing work that you are not competent in. He gave the example if you only know Fuel Tax Credits and had no experience in any other area, then that is the only help and advice you should be providing.

Code 9 - The importance of checking a client’s state of affairs and ensuring you take reasonable care. However, they were unable to state what reasonable care really is defined as, because there is no set formula as to what is “reasonable”. They suggested that we discuss with other BAS agents to help make the decision as to whether you are taking reasonable care. What your professional peers believe is important. Use the ICB forum or Facebook group or your local network meeting to raise these sorts of issues for discussion. New BAS agents especially should seek the advice of more experienced agents to help clarify the concept of “reasonable care”.

Code 5 - Ensuring you manage potential conflicts of interest. We discussed the disclosure requirement in regards to recommendation of software as well as other situations with clients. See references below for ICB resources that can assist.

Cloud Computing Covered subscriptions in your name, ownership of the file, how to

manage ownership issues. Concerns that if the file is in your name, you still need authority to add

another user as this qualifies as disclosing information to a third party. Concerns that others are now able to change the file and introduce

possible errors etc. However, audit trails can usually show who has done what when.

Reiterated emphatically the requirement for BAS agents to obtain authorisations for every lodgement. This is a legal requirement by ATO which BAS agents must uphold at every stage.

Outsourcing and Offshoring

Outsourcing is defined as transferring portions of the services you provide to a third party rather than doing yourself, (or having an employee do it).

Stressed that authority to do so must be provided by the client. Recommended to include in Letter of Engagement if you use outsourced service providers.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 35

Offshoring is defined as the use of a third party in an offshore location to undertake elements of the agent services you provide.

Reiterated the need to check the provider’s competency and understanding of our tax law. Reminded that ultimately the agent is responsible for the work and sometimes the checking time involved

can negate the savings of lower offshoring costs. Reiterated quite strenuously Code 7 in regards to the competency of the work and Code 6 in regards non-

disclosure to a third party without authority.

Russell advised that the TPB website has many factsheets and webinars that are updated regularly for registered agents to use.

Expanded BAS Services

The BAS services definition has been expanded on 1 June, 2016 to include advising on superannuation, setting up a clearing house, and lodgement of Tax File Number declarations.

Technically this has not been passed as law, because the Government hasn’t yet met the 15 sitting days of parliament as of today.

Unregistered “Agents”

Russell talked about their programme to identify unregistered BAS agents.

Out of 1,000 advertising as BAS agents, 130 were not registered. Cease and desist letters were sent out with most subsequently doing the correct thing. 20 are still being monitored.

Advised that civil penalties could apply. Also following up on BAS agents that have chosen not to renew registration, to ensure they are not still

providing BAS services after their registration period has ceased.

There was discussion about the reporting of unregistered providers or issues with existing BAS agents.

Stressed the need to report to the TPB. Advised it can be done anonymously but you need to provide significant information for them to take action. The TPB receives roughly 1,600 complaints per year which is 0.5% of agents. 48 agents were terminated last year. Case studies and examples where agents have been penalised, terminated etc.

Registration Renewal

Financial advisers only came under the Act on 20 April 2014 and they have 19,500 registered who will be due for review in 20 months’ time, which may cause delays in renewals of BAS agents due to increased workload for the TPB during that time.

Russell advised that this shouldn’t impact much, as your registration continues until the TPB have made a decision. When you are renewing, you are able to continue providing BAS services, even if the TPB take longer than usual to process your renewal.

Reminder to download and use the TPB registered agent symbol.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 36

Annual Declarations

There was discussion about why agents need to make annual declarations.

Pick up any changes during 3 year period Pick up failure to meet requirements Change of details of the agent

Ensure Professional Indemnity Insurance is up to date

Ensure CPE requirement is being met

Panel Discussion: Russell Smith, Ian Taylor and Rosemary Hollaway

Russell Smith was asked about the changes he has seen since BAS agent regime came on board.

Responded that the biggest change is the recognition of the professional bodies Change in technology and moving forward with that

What does a BAS agent need to consider when recommending software?

Disclosure of commission No single software suits all business owners and agents, so agents need to be advising about options

available to the client

Can you get electronic signatures for lodgements?

Yes

What do you do when receiving information from the accountant that you feel is wrong?

Again use reasonable care, ask the questions and if still not happy go with your gut and apply accordingly.

Where does your obligation end with a client that has unpaid super and client isn’t acting on it?

Refer to separate article in the November 2016 ICB Newsletter: Dealing with Non-Compliant Clients

Summary

Overall it was an informative session, especially for agents who are not members of a bookkeeping body. ICB has advised members about all the issues discussed.

Related References

ICB - BAS Agent Code of Conduct ICB - BAS Agent Authority Templates

ICB - BAS Agents

ICB - Applying and Renewing as a BAS Agent

ICB - Disclosing Commissions ICB - Ownership of Cloud Based Software

ICB - Simpler BAS

ICB - Single Touch Payroll

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 37

The New TPB Website - What do you Think? A Message from the Tax Practitioners Board

As you may be aware, we have been working to make it easier for tax practitioners to use our website. Over the last 12 months we have invested significant time and effort into the development of a new TPB website. We have worked with tax practitioners, stakeholders and the general public to ensure that we are building a website that meets users’ needs. After three rounds of user testing, we are pleased to announce that the beta test website is now available for you to preview.

Until the final site is completed, the current TPB website still remains the official website and you should continue to use the current site for the most up-to-date information and online forms. We will let you know when the final website goes live.

What’s new on the beta test website?

The focus of the website is to improve user experience – especially with ease of finding information quickly. The beta test website reflects key feedback received from our user groups and takes into consideration the different user pathways. You will see significant changes to design and layout.

Following feedback from our user groups, some key changes in the new site include:

A landing page for each user group such as tax agents, BAS agents and tax (financial) advisers to improve navigation

Grouping of content within each user group landing page to reflect the registration life-cycle: Apply to register Maintain your registration Ending your registration

Access to TPB Register page from Home as well as the user-group landing pages Access to My Profile on the top right hand corner from every page.

What we would like you to do?

We invite you to take a tour of the TPB beta test website, exploring and navigating your way through the various menus and links. We have migrated a number of pages to enable you to experience the beta test website. However, as not all pages have been migrated yet, you may notice some broken links.

Click here to go to the TPB beta test website.

We would like your feedback on your experience using our beta test website and if it meets your needs.

We would also appreciate your assistance in promoting this beta test website to tax practitioners who are members of your association, and have attached an article you may wish to use.

We look forward to hearing what you and your members think of our beta test website. Your feedback will help us deliver a better website

To provide comments or suggestions about our beta site, please use the feedback form on the beta test website. You can access this form from the About the TPB menu or the footer.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 38

TPB Refuses BAS Agent

TPB Said They Were not Qualified to be a BAS Agent

A recent application to be a BAS Agent sought to rely on his attendance at seminars, engagement in continuing professional development activities as a Fellow of CPA Australia, and his previous employment as a finance and administration manager to justify that he had met the requirements to complete a TPB approved course in basic GST / BAS taxation principles.

The TPB applied the standards and requirements of the registration regulations and stated that it was not sufficient. The Administrative Appeals Tribunal (AAT) agreed that they had failed to meet the relevant education qualification requirements. The AAT affirmed the TPB’s policy requiring independent assessment as part of an approved course.

TPB - Summary of penalties sanctions and terminations

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 39

Continued Professional Education

This Month From the ICB Continued Professional Education Webpage

ICB Events and Webinars Classroom Online

ICB Annual Conference - Bookkeeping 2017 Nationally, March 2017

ICB Technical Webinar - Overseas Sales and Purchasing Webinar, 6th December, 2016

ICB Technical Webinar - The Bookkeeping Cycle - Banking Webinar, 8th December, 2016

A Practical, Plain-English Guide to Modern Awards Webinar, 8th December, 2016

ICB Technical Webinar - The Bookkeeping Cycle - End of Month Webinar, 19th January, 2017

ICB Technical Webinar - Review of Payroll Entitlements Webinar, 31st January, 2017

Reckon One Certifications Multi-Locations Multi-Dates

Clients in the Cloud: Making your practice scalable and valuable Classroom, Sydney, NSW 23rd November, 2016

Budgets and Cashflow Management Classroom, Balcatta, WA 28th November, 2016

Reckon Accredited Partner Training Days Multi-Locations Multi-Dates

Learn Calxa in a Day Classroom, Balcatta, WA 2nd December, 2016

Xero Accounting & Xero Payroll Classroom, Perth, WA Multi-Dates

Reckon Advanced Certificate Training Multi-Locations Multi-Dates

Learn Calxa in a Day Multi-Locations Multi-Dates

ATO Let's Talk Webinars Online Multi-Dates

Excel Training Courses Online Multi-Dates

MYOB Training Courses Online Multi-Dates

Xero Training Courses Online Multi-Dates

MYOB News Channel Online Multi-Dates

TPB Webinars Online Multi-Dates

The Power of Calxa for Your Practice Online Multi-Dates

Effortless Bookkeeping with Receipt Bank Online Multi-Dates

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 40

ICB Network Meetings

Question For You to Discuss This Month - GST on Processed and Unprocessed Milk

This month's question for you all to debate at your network meeting is:

Why are dairy farmers charged GST when their milk is picked up from the dairy, (before any processing), but it is sold at the supermarket GST free?

Let us know your thoughts here.

Last month we asked you:

My client recently registered for GST, effective 1 July. He had issued invoices prior to July and is now being paid for them. Does he have to pay GST? (He is on cash basis). Or because they were issued as GNR, does he get to keep all the money?

He also purchased business items in June but didn’t pay for them until July. Should he claim the GST credits for the June invoices?

ICB's Response:

If your client registered by choice without reaching the compulsory registration threshold of $75,000 then the answer is no. He gets to keep the money. He is only required to report the GST on the invoices issued after 1 July.

However, if your client reached the threshold and was required to register then he must forfeit 10% as GST payable to the ATO. He could reissue the invoices adding the 10% GST onto the original cost, but the customer is obliged to pay only on the original invoice issued – so good luck getting the extra money from the customer!

Because he is on cash reporting, for the purchases, he should claim the GST credits as he has paid for the goods in July.

Related References

ICB - GST and BAS Reconciliation ATO - Accounting Methods

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 41

Upcoming Network Meetings

Join a network meeting, not just to share, but to also network and keep informed. All ICB Network Facilitators volunteer their time to assist ICB in keeping you up to date and informed and without the help of these fantastic people these valuable meetings would not happen.

If you are unable to attend your local meeting due to time restraints or there isn't a meeting in your area, why not join us via webinar on the 2nd week of each month.

WebinarsOnline - 12pm 9th December, 2016

Online - 5pm 12th December, 2016

ACTCanberra - Northside TBA

Canberra - Phillip 13th December, 2016

New South Wales

Albury 25th November, 2016

Ballina 9th December, 2016

Balmain TBA

Bathurst TBA

Bellingen TBA

Blue Mountains 28th November, 2016

Brookvale 5th December, 2016

Central Coast TBA

Dubbo 1st December, 2016

Hawkesbury Region 29th November, 2016

Hills Region (Rouse Hill) 24th November, 2016

Hornsby 9th February, 2016

Lower North Shore TBA

Moorebank 14th December, 2016

Newcastle TBA

Newport 6th December, 2016

Orange TBA

Port Macquarie 13th December, 2016

Randwick - Bondi 7th December, 2016

Shoalhaven 5th December, 2016

Southern Highlands 5th December, 2016

Sutherland TBA

Wollongong TBA

Queensland

Atherton Tablelands 7th December, 2016

Brisbane North 13th December, 2016

Brisbane South 6th December, 2016

Bundaberg TBA

Burpengary 13th December, 2016

Cairns TBA

Dalby 24th November, 2016

Gold Coast - AM 13th December, 2016

Gold Coast - PM 13th December, 2016

Hervey Bay TBA

Ipswich 17th January, 2017

Logan 18th January, 2017

Moreton Bay 12th December, 2016

Nth Sunshine Coast 9th December, 2016

Paddington TBA

Port Douglas 16th December, 2016

Sth Sunshine Coast 8th December, 2016

Toowoomba 9th December, 2016

Townsville 9th December, 2016

South AustraliaAdelaide West TBA

Mt Barker 13th December, 2016

Para Hills TBA

South Adelaide 2nd February, 2017

Unley 8th December, 2016

VictoriaBrunswick TBA

Bulleen 13th December, 2016

Burwood 7th December, 2016

Chadstone 12th December, 2016

Cobram 2nd February, 2017

Craigieburn TBA

Docklands 9th December, 2016

Echuca TBA

Frankston 8th December, 2016

Geelong 13th December, 2016

Lilydale 25th November, 2016

Macedon Ranges 13th December, 2016

Mordialloc 13th December, 2016

Mt Waverley 13th December, 2016

Narre Warren 6th December, 2016

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 42

Point Cook TBA

Sale 8th December, 2016

Warragul TBA

Yarra Valley 9th December, 2016

Western Australia Broome TBA

Bunbury TBA

Busselton 25th November, 2016

Cockburn Central TBA

Geraldton 2nd December, 2016

Joondalup 15th December, 2016

Kalgoorlie 15th December, 2016

Melville 14th December, 2016

Noranda 8th February, 2017

Welshpool TBA

Tasmania Northern TerritoryHobart TBA

Launceston TBA

Darwin 12th December, 2016

These meeting are conducted in a relaxed and informal environment to promote discussion amongst those attending the meetings.

No meeting in your area?

We are always on the lookout for facilitators to run meetings in their local area so if you are interested please contact Carmel Wright here.

ICB Network Meetings are proudly supported by MYOB

Other Things Happening in the World

Xero Loves Bookkeepers

Paul Dunn (B1G1 Chairman) interviews Rod Drury (Xero CEO)

(The following text starts after the 14 minute mark)

Paul Dunn: Bookkeepers are more naturally used to connecting with their clients more frequently. "You guys are switched on!"

Rod Drury: Quick secret - bookkeepers do the work, they are the ones that are in sweating every transaction, making sure it is right.

In Australia, the bookkeeping community has gone nuts, bookkeeping is well organised, it has Matthew at ICB who is an icon in the industry, who is really driving that and all over the A.I. (Artificial Intelligence) thing and really positive and proactive and driving that. The Australian bookkeeping industry is a really defined and well-respected tier and we are trying to take some of the lessons learnt there. Bookkeeping is a very noble profession, and actually in there helping small businesses, usually it's cost effective and what Xero are doing is to help bookkeepers scale to help many more businesses.

Bookkeeping is a super exciting thing, it is moving from just doing the numbers to really checking and making sure it is right.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 43

Rod Drury and Paul Dunn sharing some great insights from B1G1 on Vimeo.

This Month From the ICB

How to Use the ICB Website

The ICB website is packed with great information for ICB members - and much of this is available publicly to non-members as well. There is so much information available on our website, take a minute to review the information here to make sure you are making the most of what ICB offers.

Main Website Sections

Home Page: The latest news feed and essential locations within the website, including links to the following sections.

Corporate Information: An overview of ICB, who we are and what we are involved in.

Membership: The benefits of being a member, how to apply or renew as a member and ICB’s code of conduct.

Members: This section provides access to MyICB, technical support, member benefits and more.

Resources: ICB produced technical resources - see below for details.

Professional Development: Opportunities for Continuing Professional Education, further education and ICB assessments.

Products and Solutions: ICB offers products and solutions relevant to bookkeepers. ICB affiliates offer accounting software, insurance, Human Resources advice, books and manuals and other services such as budgeting tools, debt collection, IT support and digital signatures at member prices.

Network Meetings: ICB network meetings are fun around Australia by ICB members. Search for meetings in your area or join by webinar.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 44

Who Are You: Dedicated information for members, BAS agents, bookkeepers, business owners, not-for-profits, students, accountants, media and educators.

Resources

Resources are divided into the following main sections. Resources are mainly for members only, although there are some news items that are listed in resources indexes, which are publicly available.

BAS Agents: Provides templates and checklists for BAS agents to use with their clients, guidance on professional conduct, and information on using the ATO portal and other technology relevant to BAS agents.

Bookkeeping: Provides general bookkeeping cycle information, processes, principles and checklists.

Business Matters: Includes information related to business systems, compliance and daily running of business.

End of Year: Processes, systems, checklists, reviews, lodgements and preparation of accounts for the tax agent.

GST & BAS: Topics relevant to the detail of how GST applies to different aspects of accounts and preparation of a BAS.

Payroll: All aspects of payroll that a bookkeeper may get involved in, including Fair Work and human resources matters.

Software: Product updates, partner programs and technology issues relevant to bookkeeping and business.

Your Bookkeeping Business: Addresses various issues and aspects of being in business as a bookkeeper, as well as providing checklists, templates and authority forms.

Student Resources: Student focussed resources about the basics of bookkeeping and essential information.

Templates and Checklists: Provides access to ICB’s checklists, templates and authority forms from all areas of resources, all on one webpage.

How To Guides: Another way of searching for resources, the focus being on practical “how to” information.

Search the Website

The ICB website has two search functions. 1. Global search of the entire website - top right of every webpage.2. Resources search - only available from within the Resources pages, this function searches resources and

news items.

Shop

ICB offers merchandise, events and books for sale from our website. Some items are member-only and some are also available to non-members at a different price.

Forum

The ICB forum is a space for questions and answers, allowing anyone with interest to post questions and participate in discussions with others in the forum community. This is a great way to share information, exchange views and processes, and learn from your peers in the wider community of bookkeepers around Australia.

Although not directly available from our website, another forum for exchange of ideas and information is the (members only) ICB Discussion & Support Facebook group.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 45

ICB Christmas 2016 Closure Notice

ICB's office will be closed from:

4.00pm Friday 23rd December, 2016 (AEDST)

until

8.00am Tuesday 3rd January, 2017 (AEDST).

We would like to take this opportunity to with you and your families a very Merry Christmas and a safe and happy New Year.

What's New this Month from ICB

New and updated resources for November 2016

Second Hand Goods November 2016 Network Meeting Webinar

October 2016 Members Newsletter Podcast

Click here to view the latest news for the month.

ICB Q & A Space - You can check out all the latest threads here. Feel free to ask your questions regarding any issue you may be having or if you require clarification, we are here to help. The Latest Updates lists all the topics in order of replies.

November 2016 eBrief Newsletter for Your Clients

The November 2016 Bookkeeping eBrief is now available for you to download.

November 2016 Bookkeeping eBrief Newsletter - Customisable November 2016 Bookkeeping eBrief Newsletter - PDF

Back copies are available here.

"The best bookkeepers using the best resources".

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 46

Products and Solutions

Income Protection Insurance - New Policy for Bookkeepers

Personal Accident and Illness - Exclusively for ICB Bookkeepers

We all see those ads on TV for Income Protection, Life Insurance, Personal Accident and Illness etc. and they are meant to arouse a call to action but do they?

Have you ever thought what if I got sick or injured and couldn’t work for an extended period? How would I survive?

Most of us get sick once or twice a year with a cold or flu; Income Protection Insurance is not designed to cover this.

It is for that significant life event that can have dire consequences should one not be able to earn an income following a serious illness or injury.

Most income protection policies restrict policy payments to 85% of your taxable income, and like all self-employed people, your taxable income might further be reduced by your accountant / tax agent to minimise the tax paid. This has a significant impact on the overall benefits paid.

Let’s look at an example:

A bookkeeper bills out $76,000 for services rendered and receives an additional $2,000 in commission. Their tax return deducts costs such as car, conferences, rent, subscriptions, memberships, equipment purchases and depreciation etc.

The new taxable income is now $60,000 and income protection only pays 85% of this which is $51,000.

Solution: Exclusive to ICB Members:

The new Bookkeeper Personal Accident and Illness policy which has been exclusively tailored for our ICB Members only and offers a unique product which is based on 100% of your invoicing for labour and includes commissions earned on sales of ancillary services such as software etc., i.e. You are covered for all income which is forfeited due total disablement resulting from accident or illness to the maximum sum insured.

Ok, how does this work?

Again, let’s use the same example - A bookkeeper bills out $76,000 for services rendered and receives $2,000 commission on software sales They pay the relevant premium for $1,500 per week i.e. annual cover for $78,000.

Any ongoing commission you receive on a monthly or regular basis for software or ancillary sales which will continue to be paid to you by the supplier, would be deducted from the $78,000 insurance cover. However, if for any reason commission is no longer received, then it would be added back into the claim and would be covered. This means you would have full cover for income forfeited as opposed to current policies on the market.. This additional benefit can be as much as $27,000 per year.

To Summarise: "After the 14 or 28 day waiting period that you have selected, the policy will pay 100% of the $1,500 per week less any commissions you still receive.”

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 47

More good news!

The following additional benefits have been included:

All benefits paid up to age 70, (no restrictions), most policies only available up to 65 Death and Capital Benefits automatically included to $20,000 Cover available from age 70-75 (some restrictions apply)

This cover is only available from Insurance Made Easy. For assistance, please contact our Specialist Bookkeeping Team on 03 9757 8181 or toll-free 1800 641 260.

Inside Small Business Magazine

Inside Small Business looks at how Australia’s small businesses can enhance the way they manage operations, resources, staff, marketing, finances and technology to create a more positive and profitable outcome.

ICB members can subscribe to the Inside Small Business magazine (digital edition), quarterly at no cost at all! Simply add to cart and fill the details to access the magazine immediately and all archived issues. Log in and click here for the link to subscribe.

ICB members are also entitled to a 20% discount on any purchase on the Inside Small business website for either books, subscriptions, reports and much more.

Product Description

Your digital subscription to Inside Small Business magazine. Access anywhere around Australia and the world, from mobile, tablet or computer. Keep up to date with the latest exclusive news, advice, coverage and opinion about the small business industry including leading educational series in marketing, finance, human resources, risk and eCommerce.

Inside Small Business Subscription

From the ATO

ATO Small Business Benchmarks

ICB are involved in a working group with small business owners, tax professionals, industry groups and ATO representatives to review the existing Small Business Benchmarks material on the ATO webpage.

We will provide further information as the project develops.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 48

For now, visit the current information on Small Business Benchmarks.

ATO’s cash and hidden economy program Small business benchmarks main page – this page include links to the detailed list

of benchmarks How benchmarks can help your business – includes the benchmark formula and

links to how they are calculated and can be calculated What it means to be outside the benchmark Small business benchmarks methodology and ratio calculations – this page

provides links to a review of the methodology we use and a detailed description of the methodology

How benchmarks are calculated – provides information on how a business or a tax professional can calculate a small business benchmark for themselves or their client

Taxation statistics – comprehensive statistical summary of information taxpayers report to the ATO

AUSkey Update

AUSkey is now compatible with Chrome. Chrome users need to download an extension to allow the AUSkey to function within Chrome, click here.

See also ICB - AUSkey in the Cloud.

ATO Forum Report

The Melbourne ATO Forum was informative and interesting. The ATO are keen to improve communication to the partners - including BAS agents. This report provides an overview of topics discussed.

Agenda Included:

Technology Digital Services

TPB

Debt Management Superannuation

Employer Obligations

Technology, Services and Support for Tax Practitioners Practitioner Lodgement Services (PLS) replaces ELS Agents’ Portal and ATO Online - Discussion re MyGov debacle for agents Client Communication List New partnership framework - 66 committees to improve networking Protecting you from scams Simpler BAS

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 49

Digital Services ATO Online and MyGov AUSkey alternatives Future initiatives - Single touch payroll to be implemented 1/7/2018 Latest features of the ATO App were shown

TPB - Greg Lewis Recommend to use BAS Agent logo everyone to prove registration, as TPB coming down hard on

unregistered people Explained if property sold for > $2m then a Clearance Certificate Foreign Investor form is required (FRCGA).

This is not a BAS Agent service. Confidentiality - Obliged to let clients know that your backup of their files are stored offsite by a third party. Confidentiality - Do not send client’s TFN information via email.

Debt Management - Reece Jackson Online viability assessment tool to estimate payment plan ATO - Payment arrangement calculator Change to agent portal to view debt plans of clients, though ATO could not confirm this is currently available

to BAS Agents.

Superannuation - Louie Markovski (Director of Superannuation) SuperStream impact is working well. Question raised re superannuation funds forcing monthly payment and

demanding letters for payment. Director was unaware and will look into this. Working holiday makers’ tax on superannuation (DASA) is now 95%. Question raised why add SGC to their

wage in the first place. Superannuation fees on funds killing the superannuation earned by young people. Transition to Retirement Concessional CAP changes.

Employer Obligations How future review / audit process will run - Interesting change for unpaid superannuation. If an employer has

good history with the ATO, then they will be lenient and waive SGC statement if the employer paysimmediately to the funds directly. Equally, the ATO will waive penalties if employers are working towardsbeing compliant.

Audit will include whether contractor is an employee or not. If found a contractor is an employee, the ATO willdraw a line in the sand on that date of audit for the contractor to become an employee.

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 50

ATO "Connect with Us" Showcase Event Report

I recently had the opportunity to represent ICB and its members at an ATO “showcase event” in Canberra titled "Closer engagement with stakeholder for better outcomes". Invited guests included Chartered Accountants of Australia, Small Business Council, CPA Australia, Institute of Public Accountants, KPMG, Deloitte, Ernst and Young, PWC, Tax Practitioners Board, Australian Bankers Association and others. I spoke with professors of accounting, lawyers, Treasury officials and ATO staff but got the feeling that the bigger end of town were more of a focus than bookkeepers and ICB. This just increased my resolve to network with as many as possible to explain how important bookkeepers are to business and the ATO and to listen to the panelists about how the ATO is delivering better outcomes through closer engagement with key stakeholders. Those present were referred to Brene Brown’s research on "The power of vulnerability to assist with making connections".

The ATO’s consultation process provides information about Consultation.

The event highlighted the use of current technology with registration being organised with electronic or paper tickets for registration using Eventbrite and the polling and publication of audience feedback throughout the sessions using Poll Everywhere, a far more effective process than the old breakout sessions with butcher's paper. There were two panels made up of ATO representatives and industry representatives in a Q & A format.

Second Commissioner Andrew Mills led the discussions and made it clear that the ATO believes that by making connection with stakeholders they will be building trust and thereby improving outcomes by having a shared understanding of each other’s concerns. Andrew informed us that in the past there were 68 consultative forums with 1,500 people meeting over 200 times a year but lacking an outcome focus. This has now been reduced to 8 consultative forums which are outcome focused which importantly allow space in the agenda for listening and they have introduced a co-chair.

While consultation is important so too is certainty, and the Law Companion Guidelines (LCG 2016/1) is seen as assisting with this. The ATO also aims to be contemporary by bringing older rules up to speed, with smart tools such as “Ask Alex for Help” to learn from user experiences.

Consultation has also worked with policy and law design, particularly with ATO and Treasury consultations, with a service ethic managing expectations. With the administration of tax law, pre-policy discussions have proven effective. There needs to be a consistent response and the ability to adapt when problems arise with the ability to ask questions we feel are relevant.

It was felt that digital literacy is becoming increasingly important with better project management essential with activities such as Single Touch Payroll and Super Stream projects - implementation is everything.

80% of business start-ups first consult an accountant.

There are over 14,000 pages of tax law costing $40 billion a year to administer, Law Companion Guidelines are a way of simplifying this for the practitioner.

After the panel sessions there was an opportunity to visit stalls from a variety of business lines across the ATO. I visited a number of theses such as Simpler BAS, Small Business, Single Touch Payroll and My Tax, all of whom are well aware of ICB and the importance of bookkeepers in partnering with the ATO to provide a better experience for business.

John Birse Director, ICB

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 51

Upcoming Portal Maintenance

See this link for scheduled times for the full guide to system maintenance and issues.

The portals will be unavailable at the following times for scheduled system maintenance.

Regular Planned System Maintenance

Saturday 3rd December 9.00pm AEDST Sunday 4th December 9.00am AEDST

Please note the long shutdown over Christmas and New Year.

Annual Shutdown System Maintenance

Friday 23rd December, 2016 9.00pm AEDST Tuesday 3rd January, 2017 7.00am AEDST

For more details regarding BAS Agent portal maintenance, click here.

ICB Membership Statistics as at 31st October, 2016

6,515

3,529 Members maintain Fellow, Member, Associate, Affiliate and Educator membership.

ICB also has 18 Accredited Training Provider Members and 2,968 Student Members.

ICB Supporters and Sponsors

© The Institute of Certified Bookkeepers November 2016 Newsletter Page 52

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