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If you’re a business or an individual engaged in eligible research and development (R&D) activities in Australia, it’s vital to be aware of the essential steps and deadlines necessary to claim the R&D Tax Incentive. As per the regulations outlined by the Australian Taxation Office (ATO), the first crucial step is to register your eligible R&D activities before making any claims. To ensure a smooth process, you need to apply for the registration within ten months from the end of your income year. For instance, if your income year concluded on the 31st of December 2022, the deadline for submitting your R&D Tax Incentive application through the customer portal is 11:59 pm (AEDT) on Tuesday, the 31st of October 2023. However, failing to submit your application by the deadline requires a formal request for an extension of time through the customer portal. It is important to adhere to this procedure to avoid any potential lapses in claiming your entitled incentives. To proactively prepare for the impending deadline, it is highly recommended to check your portal access well in advance. This step ensures that you have the necessary credentials and tools to smoothly lodge your application on time without any last-minute hiccups. For those navigating the process for the first time or seeking additional guidance, the Customer Portal Help and Support available on business.gov.au serves as an invaluable resource. This platform is designed to simplify the registration process for your R&D activities, providing comprehensive assistance every step of the way. Ensuring compliance with the stipulated guidelines and deadlines for claiming R&D Tax Incentives is not just about fulfilling regulatory requirements, but also about unlocking the full potential of your innovative endeavors. By staying informed and proactive, you can maximise the benefits available to you and your business, fostering a culture of innovation and growth in the Australian business landscape.

The Australian Taxation Office (ATO) is issuing a stern warning to businesses: Settle your tax and superannuation debts quickly or risk having these debts disclosed on your credit reports. Below, we will cover the ATO’s recent actions, the consequences of debt disclosure, and the steps businesses can take to safeguard their credit profiles. ATO’s Assertive Approach Since July 2023, the ATO has been proactive in debt collection, sending Notices of Intent to over 22,000 businesses with tax debts exceeding $100,000, overdue by more than 90 days. Over 9,000 businesses are expected to see their debts disclosed to credit reporting agencies this month. Businesses must act promptly to prevent credit report damage. Collaborative Resolution The ATO is ready to collaborate with businesses to resolve their debts. Businesses should reach out to the ATO to explore solutions. Those who persistently neglect their obligations will face the consequences of debt disclosure. Understanding Implications Debt disclosure can hinder a business’s ability to secure financing and may lead to supplier loss. In today’s competitive environment, this is a significant setback. Act Swiftly Businesses have 28 days from the Notice of Intent to clear debts or set up payment plans. With the ATO planning over 50,000 Notices of Intent for the 2023-24 financial year, swift action is essential. Reestablishing Timely Payments Reinstating a culture of punctual tax payments is essential. Over $5 billion in debts from compliant businesses are at risk of disclosure. The ATO aims to protect community and creditor interests while promoting fairness. Businesses must heed the ATO’s warning: Act swiftly to settle tax debts or engage with the ATO to protect your credit rating. Avoid the consequences of debt disclosure by taking prompt action, securing your financial stability, and maintaining your business reputation. Please see the ATO website for further information.

When it comes to choosing the right business structure for your clients, there are several crucial considerations, especially when it comes to taxes, compliance requirements, and safeguarding the interests of business owners. The primary goal is to protect their personal wealth while minimising risks and exposure. Sole traders make up a significant portion of small businesses, accounting for 31% according to ABS statistics. However, recent challenges have prompted many sole traders to reconsider their business structure, particularly due to the substantial personal liability they face for all business debts, including tax obligations. If you’re thinking about transitioning your business from a sole trader to a company structure, the following information will guide you through the essential steps to ensure a smooth transition. Taxation Obligations One of the most critical aspects of transitioning to a company structure is understanding and complying with the Australian Taxation Office’s (ATO) stringent requirements, rules, and guidelines. The new entity must register for all necessary tax obligations, including income tax, GST, FBT, and PAYG. After completing and lodging final returns, the old entity may be able to cancel any GST or PAYG registrations. It’s crucial to have a clear understanding of what you can and cannot do within a company structure to avoid potential tax issues. Assets If your business owns physical or intangible assets, you must decide whether these assets will remain with the old entity (sole trader) or be transferred or sold to the new entity (company). Seeking professional tax advice regarding asset transfer or sale is essential. If transferring or selling assets to the company, consider obtaining an asset valuation. The valuation amount, known as proper consideration, should be paid by the new entity to the old entity. Ensure that the transaction is well-documented, and if the assets are sold on credit or vendor finance, register a security interest in the assets on the Personal Property Securities Register (PPSR) or with land titles for real property. Don’t overlook intangible assets such as business names, domain names, phone numbers, emails, trademarks, and patents during the restructuring process. Debtors All old debtors should be collected through the old entity rather than the new one. Any funds collected from these debtors can be used to pay off the old entity’s debts. Once collected, finalise the old entity’s customer accounts and set up new customer accounts in the name of the new entity for future transactions. Any new contracts should also be established under the new entity’s name. Employees Transfer any employees associated with the sole trader structure to the new entity. This process involves terminating them from the old entity and having them sign new employment agreements under the new entity. Ensure that they complete new tax declaration forms, and any accrued entitlements should transfer to the new entity. Suppliers/Creditors To mitigate personal liability, open new accounts with suppliers/creditors in the name of the new entity and close old ones. Be diligent when reviewing credit applications, paying special attention to director’s guarantees and real property charging clauses. Conducting a search on the PPSR can help you identify supplier accounts with registered securities against you as the individual (sole trader). Landlord Transfer or assign any leases for the business premises to the new entity, or enter into new leases if necessary. Be cautious when reviewing new lease documents, as landlords may use this opportunity to modify rental terms or introduce new conditions. Utility Accounts Set up or transfer utility accounts for power, phone lines, and other essential services to the new entity. Remember to consider the intangible value of phone lines and other assets when transferring them to the new company. Workcover/Insurance Policies Take out a new Workcover policy in the name of the new company entity, which will now employ staff. Accurate reporting of wages to Workcover is crucial to avoid costly penalties. Additionally, ensure that all insurance policies are set up in the new entity’s name and cancel any previous policies associated with the sole trader entity. Consult with your insurance broker to ensure your coverage meets your needs. Director IDs If you plan to become a company director, apply for a director ID before your appointment. Your authorised tax, BAS, or ASIC agent can assist in determining whether you need to apply, but the application itself must be completed through your myGovID account. Transitioning from a sole trader to a company structure is a significant step that requires careful planning and execution. Ensuring compliance with taxation obligations, handling assets, debtors, employees, suppliers/creditors, leases, utility accounts, insurance policies, and director IDs is crucial to safeguarding your business and assets. Seek professional advice to navigate this process successfully and protect your wealth effectively. Before you make the leap to incorporate, make sure to address all the key points mentioned above and consult with experts who can guide you through the transition and asset protection strategies. Remember, thorough and meticulous planning during this transition can prevent costly mistakes down the road, ensuring your business thrives under its new structure. Call team Journey2 to discuss your restructuring options.  

In recent times, the Australian Taxation Office (ATO) has been issuing director penalty notices (DPNs) at an alarming average rate of 60 per day, as reported by an ATO spokesperson. If you’re a director of a company or considering such a role, it’s essential to grasp what DPNs entail and how they can affect your responsibilities and liabilities. Below, we’ll break down what DPNs are and the steps you should take to navigate this complex landscape. What is a Director Penalty Notice (DPN)? First and foremost, it’s crucial to understand that a director penalty notice (DPN) doesn’t make you liable for outstanding company debt. Directors are inherently liable for company debts by operation of law. Instead, a DPN serves as a formal notice from the ATO, signaling the commencement of a countdown to remit the outstanding liabilities or face the consequences. Key Actions for Directors Facing DPNs Here’s a step-by-step guide on what you must do if you receive a DPN: 1. Complete Your Business Lodgments Regardless of your ability to pay the associated liabilities such as PAYG, GST, and superannuation, ensure that you complete your business lodgments. 2. Verify Your Business Address Make sure your business address is correct on the Australian Securities and Investments Commission’s (ASIC) register. 3. Contact the ATO If you find yourself unable to pay the DPN amount, it’s crucial to reach out to the ATO to discuss your options. Lockdown DPN vs. Non-Lockdown DPN Understanding the distinction between these two types of DPNs is essential: 1. Lockdown DPN This type applies when a company fails to lodge its business activity statements (BAS) and instalment activity statements (IAS) within three months of the due lodgment date or superannuation guarantee charge (SGC) statements within one month and 28 days after the end of the relevant quarter. In these cases, the director’s exposure to the penalty is automatic and permanent. The only way to remit (cancel) the penalty is to pay the debt in full. 2. Non-Lockdown DPN Directors facing a non-lockdown DPN have several options that may be exercised within 21 days to remit the applicable tax (penalty). These options include paying the debt in full, organizing an approved payment plan with the ATO (typically 50% upfront and the balance over 12 instalments), appointing a voluntary administrator, appointing a small business restructuring practitioner, or appointing a liquidator. Failing to take one of these actions within 21 days of the DPN being issued will result in the director penalty permanently locking down, allowing the ATO to commence debt recovery proceedings. Navigating Director Penalty Notices: Director penalty notices are a serious matter that all directors should be aware of. By taking proactive steps and seeking professional guidance, you can navigate these challenges and safeguard your business’s financial stability. Remember, early action and compliance are key to avoiding the potential consequences of DPNs. Director penalty notices can have a significant impact on your role as a company director. By understanding the process and adhering to the necessary steps, you can protect both your personal and business finances. Don’t hesitate to seek our advice when facing DPNs to ensure you make informed decisions that benefit your financial future and business wellbeing.

Facing financial distress is a daunting challenge for any business owner. When your company is struggling with mounting debts and cash flow problems, seeking a way out becomes imperative. One option that offers a lifeline to struggling businesses is voluntary administration. Below, we’ll explore the benefits of voluntary administration and how it can help businesses navigate through turbulent financial waters. Breathing Room for Assessment Voluntary administration provides a critical breathing space for businesses in financial turmoil. When you appoint a voluntary administrator, it temporarily halts legal actions and creditor demands. This reprieve allows you and your appointed administrator to take stock of the situation without the constant pressure of impending legal actions or creditor calls. Independent Expert Assessment One of the key advantages of voluntary administration is that it brings in an independent and experienced administrator. This professional evaluates your business’s financial position objectively, providing a clear picture of its viability. They conduct a thorough analysis of your company’s assets, liabilities, and operations, enabling them to make informed decisions about the best course of action. Options for Recovery The voluntary administrator’s primary goal is to maximize the chances of the business’s survival. They work with you and your stakeholders to explore various options, such as restructuring, refinancing, or selling parts of the business. This proactive approach aims to identify and implement strategies that can lead to a more sustainable future. Protection from Legal Action During the voluntary administration process, creditors are temporarily prevented from pursuing legal action against your company. This legal protection provides a window of opportunity to negotiate with creditors, develop a repayment plan, or explore other avenues for resolving debt issues. Enhanced Creditor Communication Voluntary administration encourages open and transparent communication with creditors. Your administrator acts as a mediator between your business and its creditors, facilitating negotiations and helping to reach agreements that are in the best interests of all parties involved. A Chance for a Fresh Start In some cases, voluntary administration may lead to the business entering into a Deed of Company Arrangement (DOCA) with creditors. A DOCA outlines a mutually agreed-upon arrangement for repaying debts and may involve concessions or extensions. It offers a viable path for the business to emerge from financial distress with a more manageable financial structure. Reducing Director Liability By taking prompt action and entering voluntary administration when financial problems arise, directors can demonstrate their commitment to acting in the best interests of creditors. This proactive approach can help mitigate personal liability for insolvent trading, potentially protecting the personal assets of directors. While facing financial difficulties in your business can be overwhelming, voluntary administration offers a lifeline that can lead to recovery and a brighter future. By providing a reprieve, expert assessment, and options for recovery, it allows businesses to address their financial challenges strategically and transparently. If your business is facing financial turmoil, seeking the guidance of a qualified voluntary administrator may be the first step toward a successful turnaround and a fresh start. Remember, early intervention can often make a significant difference in the outcome.

In the ever-changing landscape of business finance, staying up-to-date with taxation obligations is paramount. Recent developments suggest that businesses need to pay extra attention to their tax debts, as both the Australian Taxation Office (ATO) and major banks are intensifying their efforts to recover overdue payments. The ATO’s Vigilant Pursuit The ATO’s crackdown on businesses with outstanding tax debts has reached historical levels. They are actively pursuing these debts through various legal avenues, including Director Penalty Notices, court claims, winding-up applications against companies, and even sequestrations against individuals. This aggressive stance is indicative of their determination to recoup old debts. Many of the bankruptcy and winding-up applications filed by the ATO have roots dating back to 2019, underlining their vigorous efforts to recover outstanding funds. The ATO’s actions are in response to a concerning trend where businesses, during the COVID era, were encouraged to defer or neglect their tax obligations. This lenient approach, often accompanied by substantial stimulus payments, resulted in a significant increase in collectable tax debt, which has surged by a staggering 89% over the past four years. The pandemic-induced grace period has ended, and the ATO is now focused on collecting these overdue taxes, contributing to a surge in insolvencies. The Challenging Landscape The repercussions of the ATO’s actions are compounded by other economic factors. Businesses are grappling with higher borrowing costs, supply chain constraints, and rising input expenses. The big four banks are also joining the fray, increasing their legal recoveries as borrowers face the pressure of higher interest rates. This has created a precarious situation for highly leveraged businesses that may be unable to pass on these rising costs to their customers. As the big four banks ramp up their court actions, businesses need to be vigilant and proactive in managing their financial obligations. Shifting Mindsets: ATO’s Call for Change One of the key concerns highlighted by ATO Deputy Commissioner Vivek Chaudhary is a shift in payment culture. Due to the leniency shown during the pandemic, businesses have developed an expectation that interest and penalties will be waived. This has led to more businesses failing to meet their tax payment deadlines. Chaudhary emphasises that businesses must prioritize tax payments just like any other essential expense. Currently, small businesses owe a staggering $23 billion in unpaid activity statement debt, a situation the ATO is determined to address. They are taking firmer action against late payers, especially those with substantial debts who are unwilling to engage in discussions. The evolving landscape of tax debts and financial pressures requires businesses to adapt and stay proactive. The ATO’s relentless pursuit of overdue taxes and the big four banks’ increased legal actions are signals that businesses need to prioritize timely tax payments. In a world where economic challenges are a constant, staying ahead of your financial obligations can make all the difference in safeguarding your business’s future.

The New South Wales (NSW) State Budget for 2023-2024 brings forth a mix of economic forecasts, infrastructure investments, and measures designed to support various sectors of the economy. As we delve into the details of the Regional NSW budget, we’ll explore key economic indicators and significant initiatives aimed at driving growth, creating jobs, and enhancing the quality of life for residents. Economic Outlook Slower Economic Growth One of the prominent features of the budget is a forecasted slowdown in economic growth. For 2023-24, the state’s economy is projected to grow at a rate of 1.25%, with a revision down to the same rate for 2024-25. This indicates the need for prudent fiscal management and targeted initiatives to stimulate growth. Unemployment Challenges The budget acknowledges the anticipated rise in the unemployment rate. In 2023-24, the unemployment rate is forecasted to reach 3.75%, with an additional increase to 4.75% expected in 2024-25. These figures underscore the importance of job creation measures and workforce development programs. Inflation Control While inflation has been a concern, the budget outlines plans to moderate it. After a high of 7.1% in 2022-23, inflation is projected to decrease to 4.75% in 2023-24 and further down to 3% in 2024-25. The alignment with the Reserve Bank of Australia’s inflation target range (2%-3%) is crucial for economic stability. Wage Growth On a positive note, the budget anticipates an acceleration in wage growth from 3.3% in 2022-23 to 4% in 2023-24. Higher wages can boost consumer spending and contribute to economic recovery. Fiscal Management Budget Deficit and Debt The budget outlines a deficit of $7.8 billion (1.0% of GSP) for 2023-24. However, it also projects a small budget surplus of $844 million (0.1% of GSP) for 2024-25. Net debt is estimated to increase from $74.9 billion (9.8% of GSP) in 2022-23 to $92.6 billion (11.7% of GSP) in 2023-24, eventually stabilizing at 12.6% in 2025-26. The commitment to reducing gross debt by $14.8 billion by June 2026 is a prudent financial strategy. Small Business Support The budget provides reassurance to businesses by confirming that there will be no new taxes during this term of government. Additionally, the establishment of the NSW Business Bureau is a promising development, aiming to enhance small business engagement with government processes and overseas markets. Infrastructure Investments Transport Infrastructure The NSW government is investing significantly in transport infrastructure. Key projects include the Mount Ousley Interchange, Picton Road Upgrade, M6 Extension Stage 1, Bulli Memorial Drive extension, and additional entry and exit ramps on the M1 Princes Motorway. These initiatives will improve connectivity, reduce congestion, and enhance road safety. Housing Development The budget allocates $300 million to Landcom to deliver affordable and market homes, addressing housing affordability concerns. The planning system’s artificial intelligence pilot is a step towards streamlining processes, making housing development more efficient. Energy Transition Small Business Energy Rebates The budget confirms support for small businesses with energy bill rebates of up to $650, contributing to their sustainability. Renewable Energy An additional $804 million is allocated to the Transmission Acceleration Facility, expediting the connection of renewable energy zones to the grid. The establishment of the Energy Security Corporation with $1 billion in funding aims to catalyze investments in renewable energy, fostering a sustainable energy future. Healthcare Investments Hospital Upgrades Significant investments in healthcare infrastructure include the new Shellharbour Hospital, Shoalhaven Hospital redevelopment, Eurobodalla Regional Hospital redevelopment, and Wollongong Hospital upgrades. These projects aim to enhance healthcare services and infrastructure in various regions. The NSW State Budget for 2023-2024 navigates economic challenges with prudence while prioritising growth and well-being. By addressing economic forecasts, implementing job creation measures, and investing in critical sectors such as infrastructure, housing, energy, and healthcare, the government aims to steer the state toward a more prosperous and sustainable future. However, the success of these initiatives will rely on effective execution and adaptability to evolving economic conditions.

Innovation is the lifeblood of progress, and Australia is committed to nurturing it. Enter the Research & Development (R&D) Tax Incentive program, a vital resource for businesses seeking to innovate, develop, and thrive. Boosting Innovation This program backs Australian businesses by offsetting up to 43.5% of R&D-related expenses. It’s designed to support activities that drive innovation and growth. Eligible Activities If your venture involves R&D projects that improve products, processes, services, materials, or devices, and if the outcomes weren’t foreseeable, you’re likely eligible. Significant Benefits Here’s the financial kicker: this program offers a refundable tax offset of up to 43.5% on R&D expenditure costs. It’s a substantial boost to fuel your innovation engine. Mark Your Calendar For those planning to leverage this incentive for the fiscal year from July 1, 2022, to June 30, 2023, remember that F23 applications close in April 2024. Time is of the essence if you haven’t applied yet. Our Expertise at Your Service Don’t navigate this incentive landscape alone. We specialise in R&D incentives and are here to guide your business toward maximising this opportunity. If you’re conducting R&D and haven’t applied, reach out to us today. For more information, visit the program website Innovation drives success, and the R&D Tax Incentive program is your key to unlock it. Let’s embark on this journey together, propelling your business toward a brighter, more innovative future.

In an ever-evolving digital landscape, safeguarding sensitive information is paramount. As part of our commitment to ensuring the security of your online interactions, The Australian Taxation Office are rolling out important changes to the client-to-agent linking process in their online services. This update aims to strengthen security measures, protect against fraud, and provide greater peace of mind for both the tax agent and their clients. Here’s what you need to know: Overview of the Update Effective November 13, 2023, all businesses holding an ABN (excluding sole traders) will be required to nominate their agent before an agent can add them to their client list. This new procedure is designed to enhance security across our online services. A Phased Rollout To ensure a smooth transition, the ATO have implemented a phased rollout of this update. The rollout schedule is as follows: Public and Multinational Businesses: This update became effective on June 19, 2022, for businesses within the Top 100 and Top 1,000 categories. Most Public and Multinational Businesses: Starting from December 13, 2022, the update extended to include most public and multinational businesses. Private Wealthy Group: Effective from December 13, 2022, businesses in the Top 500 privately-owned wealthy groups were also included. Government Entities: Government entities joined the rollout on February 24, 2023. All ABN-Holding Businesses (Excluding Sole Traders): The final phase, set to begin on November 13, 2023, will include all businesses with an ABN, excluding sole traders. Why These Changes? The primary objective behind these updates is to reinforce the security of the client-to-agent linking process. By doing so, The ATO ensure that the agent and the client can have full confidence that the client has formally authorised you to access their information and act on their behalf. This added layer of security is crucial in our ongoing efforts to combat sophisticated fraud attempts within our system. How This Benefits You 1. **Reducing Identity Theft**: Identity theft and fraud can pose significant risks to both taxpayers and registered agents. Criminals may impersonate taxpayers and engage an agent to commit fraud or attempt to gain access to client information through digital platforms. 2. **Reducing Workload**: The ATO understand that identity theft incidents can lead to substantial disruptions for agents. This can include extensive time spent resolving issues, arranging for identity document re-issuance, and dealing with the consequences of employee fraud. What’s Changing – The Agent will need to ensure that clients nominate them as their agent. – After the client completes the agent nomination, the agent will have 7 calendar days to add them to their client list in Online services for agents or the practice software. Guidance for the Agent When taking on a new client or modifying authorisations for an existing client, here are the steps to follow: 1. Complete the Proof of Identity (POI) requirement steps. 2. Provide your client with your registered agent number (RAN) and practice name. 3. Guide your client through the agent nomination process. 4. Remind your client to inform you once they’ve completed the nomination. 5. Add or update the client within 7 days after their nomination. Support Information for Agents and their Clients To ensure a smooth transition, The ATO have provided various support resources, including agent nomination information for your clients, a summary of linking steps, and detailed instructions for adding a client in Online services for agents and Practitioner Lodgment Service. For further information please see the ATO website