Monthly Archives: September 2017

Small business restructure rollover

As we announced in our 2015 Federal Budget briefing, small business restructure rollover relief has been available since July 2016. It has been a welcome initiative as one never knows how a new business will perform.  Despite the best planning and expectations, an accountant often wishes they had recommended a different structure when reality becomes known.

These rules allow a small business to transfer active assets from entity to another and do so without attracting an income tax liability. Assets include depreciating assets, stock and other active assets used in the business.  Rollover relief is not available on passive assets (including loans to shareholders).  Assets transferred will retain their original Capital Gains Tax (CGT) status in the new entity.

One needs to be mindful or wary of:-

  • The restructure must be a genuine to qualify for this relief.
  • After the transfer, there must be no change in the ultimate economic ownership of the assets transferred.
  • Only a small business can use these rules (which means group turnover must be less than $10,000,000).
  • These ATO rules provide relief from income tax; there may be GST implications.
  • There might also be state government stamp duty issues.
  • Tax is deferred under these provisions until such time as the assets are sold. It might be that a business may be better off by re-structuring under the Small Business CGT concessions.

Despite sounding relatively simple, these are complex provisions that should only be used after a full examination of all of the options and implications (as we have done with a number of clients). 

At MRS, we will spend today planning for your success tomorrow.

Credit card surcharge rules update

In last week’s blog, we outlined the credit card surcharge rules that apply to small businesses as of 1st September 2017.  At that time, we were not clear on how it affects the use of providers such as Square, PayPal and the like.  Such providers typically charge businesses a flat fee of around 2% on various credit cards.

We can now confirm that such providers are referred to as Payment Service Providers. Our investigations have found that a small business will comply with the new rules provided they do not charge any more than what they are charged by the payment service provider.

At MRS, we will spend today planning for your success tomorrow.

New credit card surcharge rules

The new credit card surcharge rules first introduced one year ago for large businesses now apply to all businesses as of 1st September 2017.

Consequently, no Australian business can now charge a credit card fee any higher than what it is being levied by its credit card providers.

If your business accepts multiple payment types, then you will have to charge different rates for:-

  • Visa and Mastercard (which we understand commonly to be 1.5% but can be often be as low as 0.9%).
  • American Express (which we understand commonly to be 3.0% but sometimes less).
  • Debit cards (which we understand commonly to be 0.5% – but we have seen reports of fees of up to 1.0%).

It is critical that you check the rates charged to you by your provider.  Westpac have printed the Cost Of Accepting Credit Card Payments on their June 2017 statements.

TIP      Make sure all your staff know so they don’t make an avoidable mistake that results in the ACCC paying you a (costly) visit.

TIP      Some businesses might find it easier to charge a set rate (being the lowest credit card rate) to avoid any mistake.

So what does this mean for those using providers such as Square, PayPal and the like? We don’t know and are currently seeking clarification.

At MRS, we will spend today planning for your success tomorrow.