virtualcfosydney-blog

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Moves to deprive expats of housing tax exemptions stymied

On 21 July 2017, the Government released draft legislation which proposes to deny foreign residents access to the CGT main residence exemption (MRE) and amend the foreign resident CGT regime.

As a business owner, you already need to consider the impact of the CGT on the sale of your home in Australia with the benefits of your tax status overseas and the overall balance of the tax status of your business operation, both here and overseas. Now, you are probably also worrying about how these changes will impact your business as it deals with other compliance issues, such as tax audits and R&D payments. And 1 July 2019 is not far away at all – how do you take all this into account in such a short space of time, and decide how the sale of your home might impact your finances overall?

However, the government has wavered. In March, the government indicated that the proposed changes will not go ahead in their current form, and hence the CGT exemption will still apply for Australian expats. Yet the uncertainty over this issue for business owners who live overseas points to the need to find high-level, holistic financial guidance that takes into account a specific issue, such as proposed tax changes to CGT, in light of your overall finances and financial operations in Australia and other tax and grant issues.

After all, while expats may breathe a sigh of relief that they can still access the CGT exemption, this does not exclude any new rule changes occurring in the future. This can significantly affect the value of your sale even if you are a not a foreigner – it can impact Australians who live overseas who are considered foreign residents for tax purposes. This is because under the MRE, currently your capital gain or loss from CGT on the sale your main residence is disregarded. If the change is reconsider, you will be denied access to the MRE if your dwelling is held by an individual, if it was your main residence for any part of the ownership period, and if the interest on the home did not pass to you as a beneficiary in or trustee of a deceased estate.

Paying the CGT on the sale of your home obviously has a big impact on whether or not you sell and the financial benefit you may receive from the sale. It becomes increasingly complex when you consider the impact on beneficiaries of expats who pass away overseas or sales driven by divorce settlements. The draft legislation did not provide any pro-rating or apportionment for the part of the gain accrued while a tax resident.

In particular, Australian business owners who live and work overseas can find great benefit in hiring a virtual CFO to help guide their business finances while also balancing tricky aspects of their personal wealth and tax. This is vital in regards to current uncertainty regarding expats and property tax.

CFOs can keep you on top of the fluctuating world of tax compliance. They can help you plan ahead to find a means for growth and stability in such a climate. In this climate, where financial complexity can be heightened by the debate surrounding the change in one financial ruling, which can then spiral to impact your overall bottom line, you cannot simply turn to your run-of-the-mill accountant and expect them to manage your books and P&L adroitly. A CFO is the key professional who will be able to come up with a clear and coherent plan as to how you can balance the tax demands placed on the sale of your home with the compliance demands placed on your business. They will have access to tax experts to deal with CGT, and will use both your personal and business data and financials to help you see clearly how you can protect your bottom line. Whether it is in regards to expats selling property or tax audit management or R&D grant access or other matters, this is what they have experience in; this is why they are high-end business advisors. And, since hiring an outsourced CFO is not only more popular than ever when doing business in Australia, but also more viable and accessible to small business owners, now is an ideal time to discuss your financial challenges and opportunities with a Virtual CFO.

This saga over property tax and expats points to the severe impact one particular rule change can have on individual tax payers and business owners.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

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How cash industries can protect themselves in a cashless economy

The ATO is keen to clean up the ‘black cash’ economy. They are pushing for greater transparency, and this follows a trend around the world as the push for a cashless economy grows. This particularly effects retail and other cash-centric businesses, especially those who hire subcontractors, as the ATO moves to make sure all payroll tax payments are recouped.

Subcontractors are running their own businesses. They are liable for how they pay tax to the ATO; you are not responsible to the ATO if your incorporate subcontractors fail to comply. But if you are working with subcontractors who are not keeping proper payroll or invoice paperwork, then you are will have significant issues with state payroll tax offices and Fair Work. These organisations will look to penalise or tax all parties involved in improper labour practices. Therefore, you need to make sure that you understand the reporting requirements in Australia. And make sure that you work with subcontractors who follow them.

Cleaning, trolley-collection and courier businesses will need to report payments they make to contractors (individual and total for the year) to the ATO in the form of an annual report. This extends the enhanced reporting requirement imposed on the building industry in 2013-14 to other industries that also commonly use subcontraction. From 1 July 2018, the Taxable Payment Reporting System (TPRS) now applies not only to the building industry.

And if you hire any of these subcontractors, then you and your tax accountants need to ensure that you keep to the new reporting regime to a tee, especially in conjunction with other new tax changes.

The drive for cashless transactions and tighter reporting applies to all employees, not just subcontractors. Single Touch Payroll is the ATO’s means of streamlining payroll reporting. How does it work? It allows businesses to manage their reporting more efficiently and allows the ATO to keep a closer eye on pay and entitlements. Each time you pay your employees, you will report the tax and super information from your Single Touch Payroll (STP)-enabled payroll solution directly to the ATO. This can be done through your existing payroll software as long as it is updated to offer Single Touch Payroll reporting. Essentially, the ATO is requiring all businesses to manage payroll through this STP-enabled system and software.

Will my payroll cycle change? No. You can still pay your employees weekly, fortnightly or monthly.

Will I need to utilize this STP-enabled software every time I pay an employee? Yes. You will send your employees’ payroll and super information to the ATO from your payroll solution each payday.

Will my due dates for PAYG withholding and super contributions change? No, but you can opt to pay earlier.

What does this drive for tighter reporting mean for you? It means many cash-driven businesses will not only need to change – they will need to be more prepared for tax office scrutiny. And this means considering tax audit insurance.

When you pay the insurance premium, your insurer covers the costs of defending your business in the event of a government audit. This costs can be significant since they generally include accountant fees and legal fees. In the face of an ATO tax audit, or an audit from another government body, you most likely will rely on these professionals to deal with the tax officer and defend any your position. Often it is the way these professions present your case that will ultimately determine the outcome of the investigation.

When you or your accountant receive contact from the government agency (e.g. through a letter or phone call), consider the date. Pay your premium before the tax audit commences. You will only be covered if the date of contact from the ATO is after the date when you paid the premium.

You will need to provide your tax audit insurance provider with a) the letter from the government agency initiating the investigation as well as b) the letter at the end of the investigation summarising the outcomes of the audit. Provide the right documentation to receive the cover. Generally, the insurer will cover the fees incurred by you once these documents are provided and once the fees have been forwarded to the insurer. In some circumstances, you can claim progress bills from accountants and lawyer but you will need to provide information about the status of the audit.

Usually, there is a limit on the cover such that in any given year the insurer will only cover fees of up to a certain amount. It is also important to realise that there are situations when an insurer will not pay out your claim. If the audit investigator claims that they suspect any form of tax fraud you are unlikely to receive coverage for cost incurred during the course of the audit. Likewise, if the decision of the tax officer is made on the basis of any absent or lacking documentation, your insurer is unlikely to pay out your claim.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

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Are You Aware of How the Tax Office Shares Your Credit Info?

It is well worth noting that some mistakes can lead to prosecution. The raids the ATO performs on businesses for false R&D incentive claims and liquidation claims is a stark reminder of this. Fraud and serious tax errors can have consequences that are not easily mitigated by voluntary disclosure. And, taking into account the protection of tax audit insurance, the penalties may well be the greater liability than the primary tax you will need to pay back on account of mistakes in your declarations.

Previously, your unpaid liabilities with the ATO stayed largely between you, your tax accountants, and the ATO. Now that credit agencies can also find out about your debts, you run the risk of being on the receiving end of a bad credit report. This can impact your ability to borrow money or even access your current funds. It can also impact you even if you do much of your business overseas.

The tax office is taking stronger measures to recoup tax debts owed by small businesses that do business in Australia. Now, they are willing to share your tax debt information with credit reporting agencies. This means that unless you or your tax accountant approaches the ATO to manage your tax debts in time, your future ability to borrow money might be impacted as banks and other lenders will have access to this information. It will initially only apply if you have an ABN, and have tax debts of more than $10,000 that are at least 90 days overdue.

The ATO is hoping that this pushes small businesses and their tax accountants to be more earnest in disclosing their income and paying up tax debts. Why is this a concern? Only 72% of small businesses pay their tax on time. Hence tax accountants and virtual CFOs who manage the declarations of small businesses need to be ever more aware of ATO scrutiny.

The best thing you can do is to make sure your declarations and reporting are up to scratch. Your business advisor needs to be aware of the best way to manage your obligations with the ATO.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

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Why Benchmarking and Phoenixing can Have Nasty Surprises for Your Business

Understanding ATO Small Business Benchmarks

It is important to check to see if the ATO benchmark for your industry has been changed and measure this change against your business’ current and expected turnover. If your turnover does not meet the benchmark data, you will need to work with your Virtual CFO or accountant to provide adequate reasons to the ATO so as to avoid or manage a potential audit.

The ATO uses small business benchmarking to measure the compliance of small businesses. Understanding ATO benchmarks is important for a small business in that it lets you know if tax audit penalties may be coming your way – if your turnover does not meet their expectations outlined in the benchmark for your industry, then the likelihood of being targeted by an audit is increased.

The ATO benchmark data has been updated in the past, and can change again. The revised data can be accessed on the ATO website, and you and your business advisor can compare your business performance with that of competitors and the benchmark using the ATO app.

No Likely Change to Phoenix Crackdown post Election

The ATO has listed the following as potential warning signs

Employees not receiving a payslip

A company’s ABN and name changing while phone and address details remain the same

Superannuation or other employment entitlements are not being paid

Employees are paid late, or a reduced wage, or less than the minimum wage

Pay slips show a different employer name that varies from the original or actual employer name

It is important to deal with business problems or liquidation in a legal manner. Whether you are a foreign company, manage most of your business as export revenue, or are truly local, any company set up here in Australia needs to plan for these outcomes with compliance in mind, mindful of the ATO’s advanced scrutiny.

In recent years, the ATO’s Phoenix taskforce has been targeting law firms, accounting firms, businesses, and individuals who are suspected of involvement in so-called phoenix activity when doing business in Australia.

In 2017 alone, upwards of 25 businesses across NSW, Victoria, and Queensland were raided by ATO and affiliated officers. More than a 100 officers made unannounced entrances into the offices and residential sites of law firms, tax accountant firms and liquidators who were suspected of facilitating phoenix activity. This was the first time that the ATO and associated agencies targeted these facilitating organisations, and demonstrates intense and renewed efforts to crackdown on businesses and their associates who engage in phoenix activity. In combination with a spate of recent R&D audits, this is another sign that regardless of the election outcome the tax office is likely to continue to keep a close scrutiny on businesses.

Struggling companies engage in illegal phoenix activity to keep the company afloat:

Directors of a debt-laden company transfer the company’s assets to a new company

The new company keeps the same directors

The directors then liquidate the original company to avoid paying employee entitlements, creditors or outstanding tax liabilities.

This allows a deliberately liquidated company to illegally avoid paying its debts, including wages, superannuation and accrued employee entitlements. It gives the company an unfair advantage over competitors, denies suppliers and employees their rightful payments, and results in a loss of government revenue.

The ATO investigation was a multi-agency operation that includes over 20 Federal, State and Territory government agencies, including the ATO, Australian Securities & Investments Commission (ASIC), Department of Employment, and the Fair Work Ombudsman. The ATO is using sophisticated data matching tools to identify suspected illegal phoenix operators.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

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How to lessen your monthly tax payments… the smart way

Varying your PAYG instalments is a fairly common practice. It makes sense to lower what you pay to the tax office by half, or even down to zero, if your cash flow is not as good as it once was, but you need to be prepared to show documentation to the tax office as to why this is legitimate.

The ATO calculates your PAYG instalment rate based on your previous financial situation and returns. You can vary the rate or amount on your most recently issued activity statement if you feel your financial situation has changed and the rate or amount is too onerous at the present time.

A General interest charge (GIC) is applied when an amount of tax, charge, levy or penalty is paid late or is unpaid, or when there is an excessive shortfall in an incorrectly varied or estimated income tax instalment. The Government charges 10-13% interest on the unpaid amount, but realistically this interest is never enforced upon the taxpayer. It is calculated on a daily compounding basis on the amount outstanding, and is usually only based on excessive variation or understatement.

How often and how much you vary your instalments depends on your cash flow. It is left up to the discretion of the taxpayer, though the ATO does provide calculators to help in the correct application of a variation. But if you do vary your rate or amount so that the variation is more than 15% under your actual tax payable, then you may be subject to a General Interest Charge.

This option to decrease what you pay can be taken up a number of times. Naturally, this leads the ATO to question whether you are failing to pay your tax liabilities, hence the institution of interest charges on the difference between your PAYG instalment (calculated based on your reported income) and your variation (the shortfall amount). Effectively, you can keep varying instalment after instalment so that you rarely pay the full PAYG amount.

The key is avoiding a penalty when you vary your instalment amounts is documentation and accuracy. Precise record-keeping can justify to the ATO reasons for lowering your PAYG instalment rates or amounts. Likewise, an accurate understanding of by how much your rate or amount can be lowered will mitigate the potential occurrence of an interest charge. For example, If you use the rate method, then your PAYG instalment rate will be based on the presumed accuracy of your instalment income at T1 on your activity statement. This is checked against your lodged tax return. If you vary this amount so that you pay less, then this may be construed as providing a false or misleading statement about your income. The penalty on the shortfall amount could be 25%, 50%, or 75%.

There are a number of factors that can legitimately require you to vary your instalments. Income and cash flow are unpredictable at times.

For example, the delay in payment was not due to your actions (for example, you were the victim of natural disasters, industrial action, the unforeseen collapse of a major debtor, or the sudden ill health of key personnel) and you took reasonable action to reduce the delay. Or, you took reasonable action to reduce the delay, and it is fair and reasonable to remit payment of the full amount of GIC would result in serious financial hardship for you.

The ATO recognises this, hence there are extenuating circumstances wherein the GIC on a debt may be remitted in part or in full. More often than not, small businesses owners and individuals are hit with surprise (and not a welcome surprise at that) when the amount of their PAYG instalments is learned. It is some relief that you can pay this amount in instalments, and even more so that you can vary the amount you pay as you adjust your income and look for new revenue and finance streams.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

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What Might Trigger a Tax Audit?

The much-feared tax audit needn’t be just around the corner. The ATO released it's annual ‘What attracts our attention’ report in the privately owned and wealthy group's sector on 13 June 2017. It gives some insight into what you can do to feel safe from the threat of a tax office review.

This announces, in plain and public language, what attracts attention for a tax review of privately owned businesses and wealthy individuals in Australia. These include businesses turning over $2 million per year or individuals with a net wealth of more than $5 million.

1) Your tax or economic performance not comparable to similar businesses

The ATO has statistics on all businesses in all industries and makes benchmark comparisons.  If there are changes in performances between years, they will know and compare it the performances and benchmarks for similar businesses. These changes need to be reasonably explained with reference to external and internal factors if you want to avoid the risk of a tax audit.

2) Your business has low transparency of tax affairs

How transparent are your tax affairs? You should ensure that all types of returns (tax, GST and FBT) are lodged on time. Transparency is a hot issue with the ATO. For example, voluntary disclosure of minor and major mistakes is looked on favourably by the ATO, and can help you during an audit if it is done wisely with the advice of an accountant or tax lawyer.

3) You make large, one-off or unusual transactions, including shifting of wealth

This may well be cause for the ATO to initiate the first steps of a tax audit. Maintaining documentation and ensuring that transactions are commercial and are on an arm's length footing is crucial in this regard. It is important that if you do make such shifts then you show good reason and do not simply think that the ATO will not notice.

4) You have a history of aggressive tax planning or regularly adopting controversial interpretations of the law.

If you’ve wrestled with the ATO on numerous occasions, then expect greater scrutiny. In a way, this is common sense. However, yet again accurate and demonstrable documentation helps you substantiate your position no matter what your history of tax dealings may be.

5) Your lifestyle not supported by after-tax income

If your company is but a small café or a fledgeling florist, but you splash cash around like you run a tech empire, then expect the ATO raise its proverbial eyebrows. Directors and shareholders of businesses should be mindful of what is reported in their tax returns as the ATO can cross check this with your asset holdings. They can do this using records held by ASIC, land titles office, motor registries, boat registries, and more. In other words, your lifestyle is evident to them, and such discrepancies are generally the most common triggers of tax audits.

6) You access business assets for tax-free private use.

The divide between business and personal assets is kept for a reason. This is especially the case when tax comes into play. The use of your business assets for tax-free private use should be the exception rather than the norm, and should preferably be avoided unless there is a means of justification.

Knowing that the ATO is likely to start a review or examination due to these triggers means you can be more at ease if your business operates without such activity.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

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2 Top Tips to Avoid Getting Stuck with Your Tax

Tax can be a battle. Indeed, even savvy and experienced entrepreneurs can keep running into issues. This guide will enable you to oversee your tax arranging and maintain a strategic distance from two regular dangers to your well-deserved cash.

Getting Smart with Your Tax

The all-encompassing standard is to guarantee that all your salary is incorporating into your return, from all sources.

• Furthermore, after viewing the parity of tax as paid you can decide if the June portion can be changed.

• For business related costs, remember you more likely than not spent the cash yourself on something identified with your profit, you should not have been repaid for this consumption, and you should have a record to demonstrate it.

• Now is additionally a decent time to check lodgement dates with your tax bookkeeper for income anticipating purposes, since the effect of your potential tax risk should be estimated around your income making arrangements for the new money-related year.

The key is recognizing what you can really guarantee, and guaranteeing you have records that bear witness to what you are asserting.

You can likewise do well from dodging these basic mix-ups and tax impersonators.

Is it accurate to say that you are Making these Common Mistakes on Your Tax Return?

The tax office in Australia proposes that you are well on the way to keep running into an issue with your tax on the off chance that you

• Decline to announce a portion of your pay;

• Claim conclusions for individual costs, for example, individual telephone calls, vehicular use, and so forth.;

• Forget to keep receipts or records of your costs;

• Claim for a cost that you didn't pay for, under the possibility that it is some sort of 'standard conclusion'; and

• Claim individual costs for a property you lease, regardless of whether it's for a property you are leasing for yourself or for the enthusiasm on credits for individual resources.

Step by step instructions to Spot a Fake Tax Scam

The reasons tax office impersonators have had success is that they use programming to make their telephone numbers, messages, logins, and discussions coordinate those of the official tax office as intently as could reasonably be expected. What's more, the danger of tax audit punishments or court activity, frequently totally all of a sudden, can shake up even the most unshakable taxpayers.

However, there are regular manners by which these phoney ATO operators contrast from the genuine article.

• Both telephone and email tricksters will offer tax discounts or maybe just request a report on your tax data, yet you should do as such by giving individual Mastercard data. They do this to take cash utilizing this information. The ATO won't offer discounts to Visas.

• Scammers will reveal to you that you are submitting tax extortion, an objection has made against you, or announce an obligation, and it's the first occasion when you've caught wind of it.

• Scammers will frequently fall back on tormenting, requesting that you pay up without enabling you to make inquiries about their authenticity or the idea of your alleged obligation. They may even compromise you with arrest or court activity. Again, the ATO will never fall back on such strategies.

• Scammers will regularly request immediate payment, frequently through not exactly normal installment techniques, for example, iTunes, Bitcoin digital money, store gift vouchers or prepaid visa cards. The ATO does not utilize these techniques and never requests immediate payment.

• Scammers will frequently attempt kee top you hanging on the phone until you resolve to pay or send them the data they require. They don't care for it in the event that you wish to counsel with your hired CFO or look for further exhortation.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

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How does Salary Sacrificing Work?

Salary packaging or salary sacrificing looks appealing when you are an employee.

You forgo a portion of your pay in return for a benefit, such as a car or a computer. Not only do you get something that you need for their work, but it also reduces your out of pocket expenses. So your take-home pay may, in the end, be fairly similar, your reduction in tax helps your cash flow, and you don’t have to pay for a car, or laptop, or any other benefit you may need for work.

But how does it look like from an employers point of view in Australia?

To avoid any surprising tax costs when salary packaging, think about the following:

What benefits can my employees salary sacrifice?

Always keep an eye out for fringe benefits that may be eligible for an exemption since these are often worth salary sacrificing. Common benefits include cars, superannuation (additional to the 9.5% standard that needs to be taken out by the employer), travel costs, phones, portable devices and laptops, and even bonuses.

If I’m not exempt from FBT, how do I work out what I must pay?

You need to consider the TEC, or the Total Employment Cost of each employee. The TEC is the total cost of providing salary packaging to an employee, and includes wages, benefits, FBT, SGC, etc. With the TEC, you will have a clear idea if offering salary packaging exceeds the remuneration you are willing to pay for the employee. If it does, then you shouldn’t agree to such a package or you should make sure that the employee bears the cost through their after-tax salary.

Can I be exempt from paying FBT on salary packaging?

There are a number of business types and that don’t need to pay FBT or will receive a rebate. These mainly include entities in the not for profit sector such as hospitals, churches, and charities. There is, however, potentially a limit on the number of employees you can exempt. Likewise, you should explore which benefits are exempt from FBT.

Employers need to keep an eye out for the Fringe Benefit Tax costs when offering salary packages in light of other costs and rebates. For example, if you decide to give your employee a car for work purposes, and the cost of this car is deducted from the employee’s salary before tax, then you will have to pay FBT on this cost. Since the FBT rate is a considerable 49%, you need to carefully consider whether you will end up paying more than you expected. To make sure you pay the right FBT, documentation such as vehicle log books and odometer records are very important. Competent Australian business advisors can help, as can hiring a CFO in Australia for this specific purpose. Salary sacrifice amounts which are determined by a particular method for calculating the FBT (such as the operating cost for cars) should ensure that documentation such as log books are kept.

The following questions can help you plan salary sacrificing that works for you and your workers

• Are the benefits 100% for private use by the employee? These should not be salary sacrificed. • Am I exempt from FBT? Are the benefits that I’m offering exempt? If so, then such benefits are usually good to be included in salary packaging. • Is the benefit going to be used regularly for business purposes? Cars are a common example. Subject to Total Employment Cost analysis, such benefits are generally good to be salary sacrificed. • Have I calculated my TEC for the proposed salary package? • Have I set procedures for the consistent and accurate documentation of the benefit and its use?

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

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A Quick Reminder about Small Business Benchmarks

You've got the cash, you got the right business advisory team you've got the place and items, and you're almost all set to open doors to your very first consumers. You figure you will get enough of an earnings stream to grow at best, keep afloat at worst. You understand what the close-of-business situation looks like (in your bad dreams0, however you trust your own monetary nonce, more so than your wild ambition.

But own do your standards match the tax criteria of the ATO?

Bird and Summer run a retail pastry shop, This Cookie is Too Sweet. This Cookie is Too Sweet is expensive because they utilize top quality items their costs are greater than typical for a bakeshop. In September, the ATO observes that the earnings reported for the previous fiscal year fell well listed below an ATO market performance benchmark. Bird and Summer are shocked… a tax audit is heading their way.

Performance benchmarks are criteria by used ATO to target undeclared earnings in cash-centric companies. The ATO expects you to report profits each financial year that match the amounts in these standards. You will get a notice if your organization declares an income that is over or under (by a marked amount) the benchmark amount figured out by the ATO. You are required to make specific details that show income and sources, and ought to have the capability to go over why this profit exceeds the ATO criteria.

Bird and Summer have used an export grant to sell cookies in New Zealand. Their finances are up to date. They even consider a research concession in order to come up with a whole new flavour of cookie ice cream. But are their records good enough for the ATO?

You must keep considerable financial records according to the expectations of the ATO. What may be unknown to many businesses is that when doing business in Australia you need to keep your records with the standard of your market in mind, in order to be prepared to explain any possible disparity.

By notifying the ATO of the ideal market in which your business operates, you guarantee that you are not identified by inaccurate ATO benchmarks. Second, ready your files to guarantee they support all your revenues, particularly your loan income. Third, be prepared to use this to explain any problems to the ATO should they be dubious about your earnings. Perhaps utilizing a Virtual CFO can help you set up your finances in a strong position.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

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Hidden Import Costs (And How to Manage Them)

So you’ve found the goose to lay your golden eggs.

You hit upon that one product; you’ve done your research. You know the one. The one everyone here wants. The one that is in demand but so hard to get. The one that is so hard to get because it is rare but also because it is ridiculously pricey. The one that happens to be quite cheap when it is sold in its local market.

The one that you now can import directly from the local market and export here at slightly lower than the market price. Yes, that one. The import that will make your business thrive.

So if you are going to make the most of this import gold here in Australia, how do you quickly wrap your head around the import and tax costs that might drain away a significant amount of your profit margin?

Let’s look at our old friend the GST. When both foreign entities and Australian business are included in importation, who pays the GST? Because there is no GST-free limit and the GST totals up to 10% of the worth of tax, this concern is extremely appropriate to the revenue margins of importers.

Incoterms

Incoterms specify who is an importer. The seller and purchaser need to work out bringing imports through Australian customs. The deliberation who is identified to be the importer (who brings items into the nation) identifies who bears the GST. 

Free On Board

The purchaser is accountable for the import of items from the abroad port. In this case, an authorized importer can delay paying the GST, or make the GST payment and claim it back. This can just as well occur if the items are utilized in the course of your company business.

Shipment Duty Paid

The seller is accountable for the imports traveling through customs. Because overseas sellers are not likely to be signed up for GST, there will be an extra expense in that the seller will have to pay the GST if the items are utilized in Australia for company purposes.

Who pays?

When purchasing products overseas and offering them in Australia, the majority of importers are conscious that expenses are included. You might not be mindful that the GST is part of these expenses. GST is payable on imports no matter whether the entity is signed up (or needs to be signed up). You can recover this GST payment through input tax credits paid on importation, however, this alternative is just as readily available for signed up entities. In essence, this implies Australian business can declare back GST on service functions, while foreign business, who are typically not signed up GST, cannot.

In essence, entities which are qualified to sign up for the GST can declare it back or delay its payment. There are possible ways for the seller to declare back a GST payment on importations, which import advisors can determine. These require to be taken into consideration when handling trade and currency exchanges in between 2 countries and different tax jurisdictions.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

[virtualcfosydney-blog]

Will 2019 be better than 2018 for your business?

You don’t want to be faced with startling question: Is my enterprise going to finish 2019 in a significantly improved position to where it ended 2018, or will I be doing the same old thing?

So, early January is the singular time to take time aside from your daily grind and realign your business around sharp and solid planning. In fact, now is the time to consider a Virtual CFO in Sydney or elsewhere. The professional (yet carefully scoped and budgeted) advice of a Chief Financial Officer can add impressive new horizons to your strategic objectives.

1. Question your end-of-year objectives

This January to February time slot is the perfect time to redefine your objectives and direction. Why? Because when your staff are back, when your clients and customers are ringing, and when the energy of the new year is flowing, you can already truly begin to see how your business will be performing and where it will go in 2019.

You’ve got a great chance to make your end of year targets realistic yet ambitious. So now is the ideal time to ask yourself…

What are my realistic goals for the end of the year?

How likely am I to hit optimum sales targets and expectations by the end of 2019?

What benchmarks do I need to meet during the year to ensure I hit or exceed these targets?

Outsourcing a CFO to assess your operations and see if you are wasting resources on unwise plans is all the more pertinent when you have the whole year ahead of you to adjust and rectify.

2.Review your operational strategy

Time waits for no one. It’s simple common sense. So why not adjust your operations to ensure your best laid plans come to fruition? You can do more with your business practically speaking with 12 months in hand than you can with 8 or 6. If you miss out on making adjustments when your office first opens in January, any adjustments you do make later may not be significant enough to drastically impact your bottom line by tax time or the end of the year.

Do I have the right staff to implement my reviewed benchmarks for June and the end of the year?

Is it time to invest in additional resources, training, equipment, assets, or staff?

When exactly will I need to decide about these actions during the course of 2019 to make my benchmarks and targets feasible?

You don’t have the pressures of tax time and you’re not overrun, so act in the new year as early as you can.

3. Plan to Use New Software

You may wonder if you can stick to the traditional receipts, Excel and desktop application methods that have served you well in the past. But with new tech, you are behind the game, and this can cost you.

But there are good reasons for the shift to cloud, online, and application-based accounting systems, particularly in Australia.

Companies such as MYOB are no longer supporting the desktop versions of their applications. Measures such as Single Touch Payroll mean every time you pay your employees you need to make a digital record that meets regulatory stipulations.

Real-time monitoring and reporting relies on software. As more and more people are choosing to work remotely, while more and more small businesses are relying on remote and overseas labour, the virtual office is replacing the traditional, physical office. There is likewise a trend toward communicating by apps on phones, even at the expense of email.

Accounting software streamlines and encourages better communication with external accountants, tax accountants, auditors, and outsourced CFOs. Software-based automation is becoming the norm, not the exception.

It takes time to set up new software, much more so a new system. If you want to be better prepared to manage, for example, your EMDG submission, your documentation for a potential audit, or even simply your fringe benefit payments, you need to cohesively upgrade early to make the most of 2019.

4. Budget for the right expenses

Why not plan now to have you finances in a stronger position this time next year? Once the first hint of tax season inevitably creeps up, you will realise how limited you are in regards to how much you can adapt your budget and financials.

You can potentially make a complete shift or refocus to your resources, staffing, and operational goals right now because you still have the year ahead of you. You can mitigate and even prevent the impact of any tax audit penalties that may come your way.

So now’s the time to plan to have more funds over this year than you did over the last. Even more than that, did you feel the pinch of lesser sales and fewer clients over the December period?

What budgeting and tax benchmarks do I need to set in place to maximise my financial and asset value from now, to tax time, and beyond?

How can I adapt my budget to focus on key strategic and operational areas that will ensure I meet my yearly benchmarks and targets?

Is my business structure, R&D, financial and asset planning, and accounting realistic?

This should spark you into action. It could get you ahead of the competition. If it means setting up a meeting with a more broad-minded and intensive business advisor, then now is the time to start thinking ahead about that first meeting.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

[virtualcfosydney-blog]

Service Trust Agreements, Explained

Service trust agreements are common in Australian business with sole traders who have a high income. It’s a smart way to manage your deductions, but you need to be wise about how you set them up.

Here is an example of how a doctor might handle their doctor’s tax deductions through a service arrangement with a trust:

A Surgeon Works as a Sole Trader…

Professor Miriam B is a surgeon. She has just started work, and operates as a sole trader. She works out of the Brains Trust Private Clinic and the General Health Hospital.  She treats many different clients and has to work with a wide number of different staff and experts. So she hires staff, such as nurses and a receptionist, and has a number of other medical and clerical expenses. She realises she also has to pay rent on her rooms, insurance, and other pharmaceutical expenses for the drugs she uses during surgery. She also has some involvement in R&D for medical tech.

It seems like a lot of income and expenses for a sole trader. She does not have to manage government grants or transfer pricing, but she feels like there must be a smarter way to work through the clinic and hospital and also manage her staff and costs. So Professor B hires a Virtual CFO to advise her on how she might run her business.

The Surgeon Sets Up a Trust…

On the business advice of her outsourced CFO, she sets up the B & Relations Trust. She does this with her Aunt, her Grandfather, and her Cousin Ben. They become beneficiaries of this trust. Professor B takes money from her income as a sole trader surgeon and gives it to the trust on a regular basis.

The Trust Works for the Surgeon…

This money covers the cost of some expenses for her work as a brain surgeon - staff hire, clerical and administrative services, and rent -  and the Trust’s role is to manage these expenses. The Trust pays her nurses and receptionist. The Trust pays the rent on her rooms at the clinic and hospital, and for use of the operating theatres.  The trust also purchases passive investments on behalf of Professor B. 

This protects these assets from litigation (such as from someone resentful that surgery did not go as planned), since these assets are kept outside her business as a sole trader. It also allows her to pay less tax since the funds kept in the Trust face a lower rate of tax generally than the profit she makes in her business as a surgeon sole trader.

The Trust Charges Fees for this Work…

The Trust run by her Aunt, Grandfather and Cousin Ben charge a monthly fee for the work that they do managing her funds. As a result, Professor Miriam B must manage this fee in her expenses, and does so usually by adding a mark-up to all the surgery she performs to cover these fees.  

The Surgeon Deducts these Fees from Her Tax…

As a doctor who operates with a service trust arrangement, Professor B can claim a deduction for the service fees and charges paid to the trust as expenditure incurred in the conduct of her surgeon’s business. Done properly, this can save Professor B and mitigate the risk of any tax penalty for excessive mark ups.

As you can see, the service trust arrangement has considerable advantages over pouring all of your income into your sole trader business, especially if your work in certain high-earning professions. A competent business advisor can help you figure out if you have the type of business in Australia that suits a service trust arrangement.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

[virtualcfosydney-blog]

8 Step Guide to Doing Business in the Asia-Pacific

It’s now old-hat to say Asia is boom economic region of this century. In 2018, the issue is survival. How do you do business in Asia and thrive?

The answer largely depends on who you speak to. Entrepreneurs have one take. Financial traders have another. Commodities experts will offer a third. But for all businesses, of any type, large and small, once the gloss and glamour of doing business in Australia, Korea, Japan, or China is stripped away, there is one perspective that underlies all the others. The perspective of accountants.

Accountants and business advisors who deal with the nitty gritty of daily compliance and business financials are the ones to whom the Asian outsourced CFOs and entrepreneurs turn when it’s time to stop dreaming about Asia-Pacific business and time to actually start making money. They can help you prevent the dream from turning sour by limiting the risk of failure, loss, or compliance risks such as tax audits.

1. Why are you investing in a foreign market?

You need to measure your motivations and the lure of outbound investment against your mission, vision, and strategy. How limited is your scope in Australia and will the overseas market compensate by significantly taking up your offering?

2. How do you penetrate the new market?

Opening up a company in a new country (foreign direct investment) is a straightforward approach. But can you manage all those new regulations? Then again, if you work through a local partner, how much of the profits from your business are you willing to share? How will this business structuring affect your ability to access grant schemes such as the EMDG, and how will local grants such as the R&D Tax Incentive help?

3. What incentives can help take your current business model overseas?

Australian companies in particular can take advantage of government incentives. The EMDG (Export Market Development Grant) scheme can equip you to launch into Asia. The EMDG reimburses up to 50 per cent of eligible export promotion expenses above $5,000, if these expenses are at least $15,000.

4. What resources do you need?

These include human resources as well as tangible assets. You may be able to access government grants such as the EMDG. Are they as readily available as you presume? How will these resources take away from your assets and business now?

5. What’s it all going to really cost from a monetary perspective?

This is the return-to-reality question. Here, there is no room to hide behind dreams.

Plan your cash flow and budget. Plan to break even and perhaps have a few early years of losses. You can apply for up to 8 grants across 8 grant years under the EMDG scheme, but you need to measure how much you can gain and where this money will go. How will you manage in these meagre years to balance the books?

6. How much time will it take out of you?

Time is perhaps more lean and precious than money. You need to know how much of your time, and your current organisation’s time, you are willing to spend. It’s often a marathon, not a glamourous dash, and you need to be personally and professional prepared. This means having your compliance, risk, and accounting processes honed for the long-haul.

7. Are you aware of the financial market risks?

Foreign markets are not only unpredictable, they are foreign; you won’t be as well prepared for financial and economic change overseas as you are in your local environment, so you need to be extra conscious. You need to look past the glitzy image of the financial markets in Asia and assess numerical and measurable risk factors.

For example, the risks inherent in the shadow banking industry in China mean you need to be more cautious when appraising the booming Chinese economy and market. It urges you to be smarter when doing business in China, and to prepare for a risks related to your tax obligations and transfer pricing which may be impacted by a hit on the Chinese and global economy.

8. And how does all this apply to your target market?

For example, South Korea has traditionally invested heavily in R&D so this may be an avenue for you. The regulatory framework is different to Australia’s, but both the FTA and Korea’s approach present a climate of stability. The nation has low inflation and low unemployment. It’s higher than average interest rates help draw in foreign investment and its currency is relatively stable, yet you may meet challenges in breaking into industries typically shaped by big, oligarchical players.

Asia is still a big drawcard for small and large companies. But having a strong grasp of the often unglamorous accounting nitty-gritty is vital for anyone embarking on a venture into the Asia-Pacific.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

[virtualcfosydney-blog]

5 Questions You Should Be Asking Your R&D Advisor

Ever dreamed of making it big? And I don’t mean by winning the lottery. I mean by striking it rich in business.

And then have you actually tried to turn this dream into reality? It’s hard, hard work.

But one of the most illuminating paths for those willing to both drive themselves forward with dreams and also knuckle down to the often onerous hard work comes down to this: research. Innovation.

Innovation gives you a leg up in your business like no other thing. Done right, it exceeds hiring the best staff, coming up with grand goals, getting your tax and compliance right, or being on point with rebates, grants, offsets and other government benefits for your field, in that it can help you change the game rather than simply play it better. As any good outsourced CFO will tell you, research into new and innovative products or services allows you to dictate to your market, rather than letting the market always dictate terms to you.

So, you want to innovate. One of the best ways to get the impetus to do so when doing business in Australia is by utilising the R&D Tax Incentive. This grant effectively gives you money to spend on innovation. The Government is still keen to invest in nationwide scientific and technological innovation. An incentive rate of up to 43.5% for research and development is not to be scoffed at – indeed, it has attracted a significant number of claimants. But you’ll need the right advisor to you give you the best chance of getting the money.

Here are some questions to help you identify a reliable R&D grant advisor.

1. How well do you understand research and detail? 

Reliable R&D advisors are able to help clients document R&D activities in such a way that it is demonstrable that these activities lead to new knowledge being created, and does so in a scientific manner. Hence they understand the definition and scope of research and development and the scientific definition undergirding innovation.

2. How do you perform documentation reviews?

Documentation is the primary source of disputes and proper advisors will clearly outline the narrow criteria of eligibility in comparison to a client’s documentation. They are able to review documentation for previous claims. Competent R&D grant advisors do not rest on their laurels about past claims given the current climate of scrutiny and punitive action. There is no limit to how far back the ATO can go when it comes to reviewing R&D claims, unlike limits on income tax and GST reviews.

3. How do you connect company expenditure and R&D?

They can demonstrate the connection between expenditure and the R&D activities.

They are able to emphasise the meeting of innovation criteria and the connection with expenditure in clearly presented lodgements to the ATO and AusIndustry.

4. How well do you present and communicate documentation?

They are able to present and explain documented eligibility clearly with the ATO in the event of an audit. Moreover, they have had experience representing clients in such audits.

5. How well do you understand the implications of the grant on my financials?

The benefit of the R&D Tax Incentive is generally received as a cash back or through a reduction to tax payable. Either way, there are effectively two significantly different ways of recognising it when you present your profitability. The first way is recognising the R&D tax offset as a grant. In this case it is a form of income. The second means of recognising the R&D Tax Incentive is as a reduction in income tax expense. You need to determine which approach best aligns with the plans of your business. Do you wish to show an increase in your profit before tax? In this case recognizing it as a grant makes the most sense. Do you wish to increase your profit after tax? In this case, you might be better off declaring the R&D Tax Incentive as income tax.

Having the right R&D grant advice can make it all the more likely that you will get the grant. And the grant can boost your business forward with innovation that can help you win in your marketplace.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

If you are interested in more business info, click here.

[virtualcfosydney-blog]

Cyborg accountants?

Despite their smile and friendly handshake, are you sure if this person is a human, or robot?

Perhaps he or she would be better off as a number-crunching cyborg.

And perhaps he or she will be replaced by a robot soon.

New apps and software are changing the game. In an effort to streamline and in some cases even automate the accounting process, this new technology is looking to the future. It not only allows accountants to focus more on providing advice rather than chasing numbers. It allows you and your tax accountants to spend less time chasing and verifying documentation, and more time being better business advisors.

Cloud computing software such as MYOB, Xero, or Quickbooks can solve many bookkeeping headaches. From invoicing, inventory, tax office compliance, automated reporting, business financial analysis, bank reconciliation and much more, this software and a plethora of third-party apps can do much of what you are currently paying your accounting to do for your small business.

Receipt apps can ease this burden significantly. All you need to do is take a photo of your receipt on purchase and the app does the rest. Software such as Receipt Bank then stores and analyses your receipts. This information is the processed and sent to your accountant directly, saving you and your accountant hours of pouring through receipts.

You and your accountant need to work hard to meet the tax office guidelines to avoid potential tax audits. It becomes harder when you manage a lot of staff, and even tougher when you through vehicles into the mix. This is why payroll apps like T-Sheets and logbook apps like Logbook Me are a relief to both accountants and small business owners. They are forging a way forward in real-time automation of managing your staff hours, payments, and vehicle costs.

But just as you can make your accounting more efficient with apps and software, you can also work better with your staff, clients, and colleagues using workspace apps. From OfficeTools Workspace to Amazon Workspaces or Chime to Citrix Workspace or XenApps, there are a plethora of dashboards out there that effectively create an online office space for you to communicate, collaborate, and record your work in a team, especially when you deal with international offices and transfer pricing issues.

This is indeed just the tip of a growing iceberg. Advancements in A.I. technology and automation are making the reach and use of these tools far broader. It is not inconceivable that more and more of what your accountant used to have to do will now be done by technology. It is changing the shape of small business bookkeeping and accounting.

Yet he future of accounting is not the end of accountants. Rather, small businesses and accountants can use innovations and streamlining tech to ensure that the future of accounting turns to the area most valuable to any business owner: advice. Accountants can be freed up from excessive pouring over documentation to properly analyse and assess how your business can best adopt a strategy for growth. And you can spend less time hunting for paperwork and spend time planning your business for its own bright future. Thus the role of experts in this field will tend toward that of Virtual CFOs rather than simple bookkeepers.

This means even if you save a space on your payroll for the future advent of accounting robots, there is always a present and future need to hire accountants who have the smarts to function as analysts, advisors, and strategists, not just number crunchers.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

[virtualcfosydney-blog]

Aussie small businesses - get ready for a change

How big is Australia?

As a landmass, its considerably huge. As a population, its considerably small.  But in terms of its place a socio-economic force in the world stage, it has varying dimensions. The Australian economy does not compete with the powerhouses of Europe, China, or the USA, yet it has experience stability that has made it the envy of the developed world. It does not share the dynamism or reputation for skills based growth of its Asian counterparts, yet it has a unique link to the Euro-centric cultural sphere that still dominates the orbital path of world trade through its historic ties to the British Empire and its modern affinity for the USA.

So big changes to the small business world in Australia, while on the surface appearing to be fluctuations only impacting the direct participants, could have a wider impact on various players in the global economy.

And this is certainly the time for change in Australia.

Payroll is undergoing an overhaul. If you employ people in Australia, your every payment will effectively be scrutinised by software. You will need to be ready use STP compliant software by the above deadlines. Once this has been set up, you will need to use it each and every payday.

This means that before or on each payday you will report the following to the ATO via your STP software: employee salaries and wages, PAYG (pay as you go) withholding, and superannuation information.

Once you start using this software on payday, the information you provide about your payroll is planned to be used to prefill your activity statement. You most likely won’t need to provide payment summaries to your employees, and your employees will view their year-to-date tax withheld and superannuation through MyGov.

The screws tighten further when it comes to reporting annually. From 1 July 2018, the Taxable Payment Reporting System (TPRS) now applies not only to the building industry. Cleaning, trolley-collection and courier businesses will also need to report payments they make to contractors (individual and total for the year) to the ATO in the form of an annual report. This extends the enhanced reporting requirement imposed on the building industry in 2013-14 to other industries that also commonly use subcontraction.

And if you hire any of these subcontractors, then you and your tax accountants need to ensure that you keep to the new reporting regime to a tee, and thus plan this in relation to payroll and cash-flow with the benefits of incentives like the small business tax offset.

The first annual report for affected cleaning and courier companies is due in August 2019. You must include info such as the ABN, Name, Address, Total Annual Amount Paid (Including GST), and Total GST included in the gross.

It’s unlikely that this reporting regime will not extend to other industries. The government’s Black Economy Taskforce has encouraged the further expansion of the system to include labour hire, owner-builders, the home improvement sector, and IT contractors. Taxable payments reporting that initially focused on the construction industry will expand. Do you run a business and hire staff in security, IT, road freight, cleaning, or the courier industry? Expect to adopt a new reporting regime to avoid penalties.

These changes mark a big shift. It will push many businesses toward undertaking an external audit to better assess their processes. The government wants to crack down on the ‘black economy’ by keeping a closer watch on taxable payments and cash flow, and in so doing it is effectively throttling the age-old business of cash transactions between small business operators. The recent 2018 Federal Budget in Australia highlights this.

The Government has not been shy about its endeavours to target the Black Economy. They will pour money into the ATO to investigate compliance. Expect new mobile strike teams, a Black Economy Hotline, and improved government data analytics and training activities.

In addition to a number of measures in the past, effectively these Budget proposals will make it harder for you to deal in cash. $19.3 million will be spent to improve the way the existing Companies Register, Australian Business Register and the Business Names Register interact. Businesses will effectively be limited to spending no more than $10,000 in cash in the purchase of goods and services. This is a huge practical change, especially for those in industries such as construction and retail who buy supplies and tools in bulk, and often in cash. It will effectively end current cash practices between you and your suppliers.

Transactions with financial institutions or consumer-to- consumer non-business transactions will not be affected. If you pay your employees in cash you will not receive deductions unless you follow PAYG deduction protocols, which, in light of other payroll measures, effectively makes it almost impossible for many businesses to pay in cash. In conjunction, you will not be able claim a tax deduction for payments to employees or contractors if you fail to deduct tax and remit it to the ATO under the PAYG regime.

The days of paying from the till are gone. Small businesses in the little but also big country of Australia are scrambling to meet the deadlines of July 2018 and 2019. This in turn impacts the way you integrate funds from small business grants such as the R&D tax incentive and EMDG. The intriguing question concerns how this push toward closer scrutiny and greater reporting will impact the world economy in light of tighter measures to bring the cash economy to heel, and, in some parts, efforts to snuff it out all together and bring in a cash free age, which in turn allows every penny you use in your business to be electronically tracked by the tax office.

Hope you enjoyed the read. Now, a little disclaimer. Please note this article is comment and guide only and should no way act as advice on which you should base your actions. Besides, info, legislation, and the business context is always changing. Consult a professional before you act.

[virtualcfosydney-blog]

Got your business TP sorted?

More and more small businesses are realising the value of going global. Hiring staff, breaking new markets, utilising global skills, and tapping into various comparative rates of exchange - these are but a few of the benefits. And they are now more open to small business than ever before, with the advent of new technologies and communication systems that allow the local small business owner to explore overseas markets. But with this, comes the need for prudence. Which markets will you explore - for example, in Asia, will you choose China or Korea for business? Have you considered grants, subsidies, and rebates, such as the R&D tax offset and EMDG grant for exports? And have you considered how you will be taxed - particularly in regards to any applicable transfer pricing methods?