Do you want a Tax Incentive for your Company to conduct Research and Development?

Australia’s Department of Industry, Science, Energy and Resources incentivises Australian companies to invest in research and development for the betterment of their own business productivity, to drive innovation, to improve communities with employment opportunities and to increase Australia’s international competitiveness.

The Research and Development (R & D) Tax Incentive provides an opportunity to reduce the financial burden of conducting R & D.

Only companies, not individuals, may be eligible to claim the R & D tax incentive, government-offered financial support that offsets R & D expenses.

Who is eligible to apply for the R & D Tax Incentive?

To qualify, a company must meet eligibility criteria:

• Be an Australian incorporated company (under the Corporations Act 2001) or be a foreign company operating a permanent establishment in Australia.
• Be compliant with tax policies and regulations. Companies must be registered with the Australian Taxation Office (ATO).
• Conduct eligible R & D activities. Core and supporting R & D activities are experimental in nature and their outcomes cannot be known or determined in advance, but rather they must be determined through work based on scientific principles to generate new knowledge, processes, devices, products, or services.

• Incur eligible R & D expenditure, such as employment costs of R & D staff, costs related to R & D activities, costs of acquiring or constructing assets used in R & D.
• Register with AusIndustry to claim within 10 months of the end of the financial year in which R & D expenditure was incurred.

To meet the legal requirements of the programme, it is essential that complete and accurate records, showing that your company’s R & D activities are eligible, are maintained.

What is the tax offset percentage for my company?

Since 1 July 2021 the tax offset rates under this programme are dependent upon your company’s total annual revenue.

For small-to-medium companies (SMEs) with a total annual turnover of less than $20 million, the refundable offset tax rate is equal to your company’s tax rate plus a premium of 18.5 percent.

For large companies with a total annual turnover of more than $20 million, the refundable offset tax rate is equal to your company’s tax rate plus a premium calculated using incremental intensity (your company’s R & D annual expenditure as a proportion of your company’s total annual expenditure):

• For R & D expenditure up to 2 percent of total annual expenditure, a premium rate of 8.5 percent; and
• For R & D expenditure over 2 percent of total annual expenditure, a premium rate of 16.5 percent.

How to claim the R & D Tax Incentive

Once a company has determined it is eligible for the R & D Tax Incentive, approval to claim must be sought from AusIndustry. Keeping records is important for this stage when an in-depth description of your company’s R & D activities must accompany your application.

Claim applications must be lodged annually for R & D expenses incurred in the corresponding financial year. Lodgement is strictly within 10 months of the end of financial year.

Once AusIndustry approval is given, the claim will be processed through a company’s income tax return.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with R & D Tax Incentive. For more information,view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Long-term Value Investing – How it is suited to SMSFs

Growth stocks have outperformed value stocks in recent years, leading investors to believe that this trend might be due to reverse. Self-managed superannuation funds (SMSFs) are best suited for adjustment from pure growth investing to combined value investing.

Growth vs Value Investing

Growth stocks are companies that are expected to grow at a faster rate than the overall market, providing increases in share price appreciation and lesser or no income, whereas value stocks are companies that are undervalued when analysed, providing an opportunity for greater income against slower share price appreciation.

Investors can use value stocks to achieve growth by reinvesting income in their portfolios during the pre-retirement accumulation phase. Over the long-term, investment growth may be achieved through value investing and a solid foundation built from re-investing income can be drawn upon in the retirement phase.

Why SMSFs benefit from long-term Value Investing

Superannuation viewed as a long-term investment should only be adjusted after adequate consideration, rather than taking frivolous action in a changeable marketplace. A considered long-term investment has capital stability, a commitment to long-term investing, a relevant strategy, and a trust deed. These are generally all characteristics of an established SMSF.

To benefit from value investing, where income derived from stocks is reinvested in an investment portfolio to grow the fund, long-term stability of the capital base is crucial. During the accumulation phase, fund members receiving regular mandatory contributions from employers and avoiding withdrawals until the retirement phase will ensure the compounding effect of stock income reinvestment is realised.

SMSF members will eventually realise an investment portfolio that enables them to draw down retirement pensions equating to a financially comfortable lifestyle.

A committed investment team consisting of a SMSF’s members and advisors is important to ensure that there is a willingness to manage investments based on performance and trust to make any amendments for financial improvement. Good communication and excellent record-keeping are prerequisites for investing in a SMSF.

Every SMSF needs an investment strategy, a statement of how the trustees will invest to provide growth from diversification, will allocate asset classes, and will ensure liquidity of the fund. A SMSF trustee should regularly review their investment strategy and check that it aligns with the fund’s long-term goals and risk tolerance.

Another important part of any SMSF is its trust deed, a legal document setting out the rules for operating a SMSF, detailing the responsibilities of its trustee and the rights of its members. A trust deed along with a long-term investment strategy form the core structure of a SMSF.

Due to the flexibility of SMSFs, whereby a trustee and members can readily choose investments and evolve an investment portfolio over time, it is possible to include more value stocks and take advantage of stock income reinvestment.

A SMSF is an effective vehicle for long-term value investing with potential tax benefits and reduced tax obligations on investment income.

SMSFs require a significant amount of time and effort to manage well. It is prudent for investors to seek professional advice. YML Group has the expertise in SMSF management to assist you with long-term value investing. Start compounding your investment today!

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF investment strategy. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

Why engage a Lawyer for Advice on State Taxes and Duties?

In Australia tax agents are professional providers of federal tax-related services to individuals and businesses. The Tax Practitioners Board (TPB) registers tax agents and they operate under the Tax Agents Services Act 2009 (TASA). Tax agents are authorised to prepare and lodge tax returns, provide federal tax advice about income tax, Goods and Services Tax (GST), and fringe benefits, as well as represent clients in dealings with the Australian Taxation Office (ATO).

State (and territory) taxes and duties, such as land tax, stamp duty and payroll tax, fall under each state’s own tax system with laws and regulations governing each state’s own taxes and duties. TPB-registered tax agents are not authorised to advise on state tax issues.

Federal tax guidance sets clear boundaries for tax agents. Under the TASA, tax agents need to tread carefully around giving advice on state taxes to avoid being in breach of the prohibition of unqualified legal practice. In other words, a tax agent must be sure to not give advice that transcends in to the ‘legal advice’ arena.

Legal advice implies an analysis of documents, legislation, and case law. A tax agent giving advice where analysis is not required for a simple state tax or duty matter might not be considered legal advice, but this is why it is considered a grey area.

What can you do if your tax agent agreement – a contract between a tax agent and a taxpayer – specifically excludes state taxes?

If your tax agent is not responsible for providing advice relating to state taxes and duties, you may need to engage a legal practitioner, namely a lawyer, who can advise you on state tax matters. A lawyer is also required to be consulted when you have a document to be read to protect your rights or to be interpreted for any liability upon you, such as a sales agreement.

YML Group is a holistic Professional Service Provider

In collaboration with our YML Legal division, YML Chartered Accountants can assist you with state taxes and duties. We have qualified and experienced practitioners in both legal and accounting to ensure you get the right tax advice for best financial results.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with tax and legal advice. For more information,view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

NSW Surcharge Purchaser Duty and Land Tax – NEW Exemption for Foreign Owners from Four Countries

Revenue NSW has announced it will no longer apply additional tax levies – Surcharge Purchaser Duty and Surcharge Land Tax – on residential property and land owned by ‘foreign persons’ from four countries, namely New Zealand, South Africa, Germany and Finland.

Revenue NSW will still apply Surcharge Purchaser Duty at 8% and Surcharge Land Tax at 4% to residential property transactions by ‘foreign’ buyers of other nations in line with Australia’s international tax treaties.

Eligibility for Surcharge Exemption

Eligibility to be exempt from paying these two surcharges is restricted to individual ‘foreign persons’, as well as non-individual entities – a corporation or a trust – where a substantial interest is held by a ‘foreign person’, from New Zealand, South Africa, Germany and Finland.

NSW is the only Australian state to introduce the surcharge exemption for these four nations. It is not yet known whether Victoria and other Australian states will follow NSW by making a similar announcement.

Refunds for Surcharges

Residential property and land purchasers, both individuals from and entities associated with New Zealand, South Africa, Germany and Finland, who paid Surcharge Purchaser Duty and Surcharge Land Tax on or after 1 July 2021 may be eligible for a refund, inclusive of any associated interest and penalties paid.

Revenue NSW has limited the eligibility for refunds to on or after 1 July 2021 and it is unknown at this time whether this cut-off date will change.

Revenue NSW will contact those owners whose transactions are eligible for refunds, however if you are not contacted or are unsure of your eligibility, you might wish to check by calling Revenue NSW or seeking professional advice about your specific case.

Trust Deeds amended to exclude ‘Foreign Persons’

The amendment of a discretionary trust deed to exclude ‘foreign persons’ as beneficiaries and thereby avoid surcharges on residential property and land purchases will not be affected by Revenue NSW’s announcement to no longer apply these surcharges.

However, it will be prudent of trustees to take a wait-and-see approach to any further surcharge policy changes by Revenue NSW. Trustees, meanwhile, might wish to review their trust deeds in relation to these latest surcharge exclusions.

How can YML help?

Talk to YML Legal today to see how YML Group can assist you with surcharge refunds from Revenue NSW. For more information, view our website and contact us on (02) 8383 4499 or by using our Contact Us page on our website.

PAID Family and Domestic Violence Leave from 2023

Under Australia’s Fair Work Act, family and domestic violence is defined as violent, threatening, or other abusive behaviour by an employee’s close relative that seeks to coerce or control the employee and causes them harm or to be fearful.

Every year millions of Australian workers experience family and domestic violence that often affects their ability to effectively do their jobs and fulfil tasks assigned to them. These employees may feel stressed and be easily distracted in their workplace, potentially reducing their productivity.

If a perpetrator of abuse stalks an employee or harasses an employee at their place of work, then the risk of danger to all employees makes family and domestic violence a workplace health and safety issue.

The Australian government views family and domestic violence as a social problem, a problem to be dealt with by the community. With adequate support for affected workers, employers can mitigate the implications of family and domestic violence on their employees and on their businesses.

What is Family and Domestic Violence Leave?

Under Australia’s National Employment Standards (NES), the government has legislated that from 1 February 2023 employees are entitled to Family and Domestic Violence Leave, a type of leave provided to employees who are dealing with family and domestic violence.

It may be used by an employee to find a safe place to stay or live, to seek professional services such as those offered by medical and legal practitioners, and to attend court hearings and any other matters associated with their personal situation for the safety of themselves and their children.

Since 2009 Australian employees have been entitled to five days of unpaid family and domestic violence leave per year. From 1 February 2023 this entitlement will switch to 10 days of paid family and domestic violence leave per year.

Entitlement is available from 1 February 2023 for employees of non-small business employers (with 15 or more employees on 1 February 2023) and from 1 August 2023 for employees of small business employers (with fewer than 15 employees on 1 February 2023).

Note, until 1 August 2023, small business employees may still access five days of unpaid family and domestic violence leave.

The new leave entitlement is applicable to all employees – full-time, part-time, casual (after 12 months of regular work) – and may be taken by employees throughout each 12-month period of employment, commencing from the first day of employment in an organisation.

If this leave is not taken, it does not accumulate year to year, but it does renew in full on an employee’s anniversary of their employment start date at an organisation. This leave may be taken as one period of 10 days or as a separate day or days at a time.

How is Family and Domestic Violence Leave treated on Payroll?

In terms of accounting and payroll, employers are obliged to ensure that employees are paid their usual rate of pay for any paid Family and Domestic Leave taken.

Employers will need to check that their accounting systems are set up to record and track this leave appropriately. To protect an employee’s safety, employers must ensure that remuneration and its descriptions do not appear any differently from usual on an employee’s take-home payslip.

Employers should be aware of any relevant taxation and superannuation requirements related to remuneration for this leave and pay accordingly. Some employers might offer additional paid leave entitlements under enterprise agreements.

Other Employer Obligations

Employers are obliged:

• To not discriminate against nor penalise employees who take Family and Domestic Violence Leave.
• To ensure that any information relating to an employee’s family and domestic violence situation is kept confidential.
• To maintain adequate and relevant records of any Family and Domestic Violence Leave taken.
• To provide information to all employees about their entitlement to Family and Domestic Violence Leave.
• To provide support and assistance, including offering and instigating flexible working arrangements for employees as a right under the Fair Work Act.

Employers can familiarise themselves with the new legislation and its regulations to best support their employees by reading this guide Employer guide to family and domestic violence. To remain up-to-date, employers can subscribe to email updates.

How can YML help?

Talk to our YML Business Services Team today to see how YML Group can assist you with your employer Family and Domestic Violence Leave obligations. For more for more information, view our website and contact us on (02) 8383 4455 or by using our Contact Us page on our website.

Higher Interest Rates OR Options to Refinance your SMSF Loans?

The Reserve Bank of Australia (RBA) is serious about inflation in Australia. When RBA governor Philip Lowe appeared before Senate estimates recently, he was asked about possible mortgage rate increases. He replied, “if we don't get on top of inflation, it means even higher interest rates and more unemployment”.

In a climate of potential inflation woe, what can you do with your SMSF loans to mitigate the financial risk of higher interest rates?

At YML we have SMSF loans starting from an interest rate of 6.19%. We can also offer you an offset account to offset your SMSF loan.

Reach out to us NOW and learn more about how we can help you by calling us on (02) 8383 4466 and requesting a callback or making an appointment with the YML Finance Team.

How can YML help?

Talk to YML Finance Team today to see how YML Group can assist you with managing your SMSF loans. For more information, view Our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.

How to Improve your Company’s Environmental and Social Impact

What is ESG?

Environmental, Social, and Governance (ESG) refers to a set of factors that can be used to provide an understanding of a company’s current and future environmental and social impact on the world. For companies today, ESG is a strategic differentiator in a crowded and competitive commercial market.

No longer is business about only producing a product and generating a return for investors. IBM’s 2022 CEO Study: Own Your Impact reports that “Almost half of CEOs say increasing sustainability is one of the highest priorities for their organisation in the next two to three years – up from roughly a third in 2021, an increase of 37% in just a year”.

ESG is a serious focus for many CEOs worldwide as their investors, employees, and consumers – a younger generation – are taking notice of organisations’ operations and their environmental impact. Such emphasis on ESG by companies is delivering positive business results, such as greater trust and better reputation among stakeholders, and consequently long-term financial gains.

To improve your business’s ESG, you will need to action these steps:

• Measure and assess your business’s current environmental impact, including carbon footprint, waste production, greenhouse gas emissions, energy-efficient technology, and renewable energy use.

• Determine and assess your business’s current social impact, such as diversity, inclusion, human rights, and community engagement activity.

• Review and assess your business’s current governance structure and practices, including accountability, decision-making, transparency, independent board of management, ethics, and regulatory compliance.

• Set quantifiable ESG goals to improve in all ESG areas.

• Develop an ESG strategy based on your ESG goals, including communicating your ESG agenda and improvements to all stakeholders, employees, investors, and the wider community. Concise and transparent language will ensure your goals and progress are clearly explained and better understood. Provide updates on your company’s website and through other online communication channels.

• Monitor your business’s ESG strategy and execution by preparing annual sustainability reports.

How does ESG benefit company growth?

Implementing an ESG strategy can help you grow your business in numerous ways. Incorporating ESG in to your organisation may improve your company’s reputation to increase consumer loyalty and consumer retention. Investors attracted to socially responsible companies see their values align and are more likely to invest for the longer-term, providing companies with investor stability. Employees may be more engaged and committed to greater productivity for a company that is conscious of its environmental and social impact and actively bettering its impact.

Next Step

To assist your company with fulfilling regulatory ESG disclosure requirements and with communicating your ESG agenda to your stakeholders, contact YML Group for its expertise in ESG strategy development.

How can YML help?

Talk to YML Chartered Accountants Team today to see how YML Group can assist you with your ESG strategy. For more information, view Our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Welcome to YML Legal – Legal Support in English and Mandarin

Introducing YML Legal

Our new legal division can assist you with all your commercial legal needs. With decades of experience and in-depth industry knowledge, YML Legal offers support in both Mandarin and English to achieve the best legal outcomes for our clients. This gives you the confidence, and support to focus on and achieve your business’s targeted growth and financial goals.

YML Legal Services

Corporate Structuring and Transactions

Is your business involved in an acquisition or disposal or a joint venture? YML Legal can help you with all types of corporate transactions and corporate governance matters to ensure a positive result for your business.

Real Estate

Does your business invest in real estate or asset management? YML Legal can support you on any acquisitions, sales, leases, and other real estate transactions to smooth the way for your business to grow.

Cross Border Investment

Does your business pursue an investment strategy involving inbound or outbound foreign assets? YML Legal can help you navigate Australia’s regulatory frameworks and can apply for Foreign Investment Review Board (FIRB) approval for your business’s international investments.

Immigration and Hiring

Hiring a new employee from overseas on a visa? YML Legal supports your business throughout the entire visa application process, so you can focus on employing the most suitable candidate.

Estate Planning

Are you thinking about how best to leave things for the next generation? YML Legal works with you to craft robust legal agreements to achieve your financial and succession planning objectives.

Technology and Cyber Security

Is your business assessing its cyber security and privacy legal risk or looking to procure new technology? YML Legal has expertise in the full spectrum of technology, data, and privacy law for your peace of mind.

Dispute Resolution

Is your business dealing with fractious disputes? YML Legal can assist you in finding pragmatic solutions for your business.

How can YML help?

Talk to YML Legal today to see how YML Group can assist you with your commercial legal needs. For more information, view Our website and contact us on (02) 8383 4499 or by using our Contact Us page on our website.

Australian Taxation Agents require Clients to provide Photo ID

Identity breaches by nefarious people in our widening technological world is cause for the Tax Practitioners Board’s requirement for tax practitioners to verify their clients’ identities with a form of photo identification. This means greater protection for you of your personal and financial information and transactions.

To mitigate devastating financial consequences affecting Australians and the Australian economy, the Tax Practitioner Board asks tax agents to ensure that they adequately authenticate their individual clients’ identities. To achieve this, clients must provide evidence to their tax agent, including a form of identification that contains a photograph.

What you need to provide to your tax agent?

As an Individual seeking to engage a registered tax practitioner in your own right, you are required to provide your Full Name plus either your Residential Address or your Date of Birth. To do this, you will need to show original documentation as evidence:

An original or certified copy of a primary photographic identification document; or BOTH of the following:

An original or certified copy of a primary non-photographic identification document; and

An original or certified copy of a secondary identification document.

YML Group – Your registered Tax Agent

At YML Group we value our clients and, as directed by the Tax Practitioners Board, we wish to protect both your identity and our practice. You will soon receive an email from us requesting the necessary identification documentation to assist us with validating your identity with YML Group.

How can YML help?

Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your identification process. For more information, view Our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

End-of-Year Festive Season – Claims and Tax Exemptions

Australia’s tradition of celebrating the festive season culminates with end-of-year parties at commercial businesses across the nation, especially in 2022 following a hiatus. Employers keen to reward their employees with the bonhomie of a party, as well as gift-giving, with the right approach, can avoid or reduce tax obligations on the costs of parties and gifts. The Australian Taxation Office (ATO) sets out a complex tax treatment for festive season claims, including Fringe Benefits Tax (FBT). Here is a general summary for employers.

Party Time – How to apply the Minor Benefits Exemption

The rules around tax-deductible expenses when it comes to throwing a work-related party can be confusing. A staff party is classified as entertainment by the ATO. Entertainment is subject to FBT – at 47 per cent (47%) unless the Minor Benefits Exemption is used.

A minor benefit to an employee, and any associate of an employee, is exempt from FBT where it is not a reward for service, it is less than $300 (GST-inclusive) and it would be unreasonable for it to be treated as a fringe benefit. The ATO determines if a minor benefit would be unreasonable to be treated as a fringe benefit by looking at a range of criteria, including the infrequency or irregularity of a minor benefit and the practical difficulty of establishing the notional value of a minor benefit.

A seasonal weekday party held on business premises to which only staff are in attendance and at a cost of no more than $300 (GST-inclusive) per head is an example of how to throw a party that is FBT-exempt. No tax deduction or GST input tax credit may be claimed.

For seasonal weekday parties held on-site with staff, associates and/or clients, so long as the cost per head for food and drinks does not exceed $300 (GST-inclusive) per head, then these parties are also FBT-exempt. Employers might note that there is no FBT on benefits provided to clients.

Off-site seasonal parties, held on a weekday and at a venue that is not used for business, may also be FBT-exempt, so long as the cost per head is up to $300 (GST-inclusive). No tax deduction or GST input tax credit may be claimed.

Once a party’s cost per head exceeds $300, FBT at 47% is payable for employees and any associates of employees. The cost now becomes an allowable tax deduction.

Gifts Galore – What is exempt and what may be claimed?

Giving gifts to staff and clients to incite goodwill and festive cheer can be fraught with questions about tax exemptions and tax obligations on gifts.

To avoid paying FBT, firstly, a gift must not be considered entertainment, such as restaurant meals, concerts, sporting events, movie tickets and holiday accommodation but rather must be a non-entertainment gift such as gift hampers, flowers, sealed bottles of alcohol, beauty products, gift cards and store vouchers.

Second, a gift must cost less than $300 (GST-inclusive) to avoid paying FBT. A gift that meets these criteria is not only exempt from FBT, but a business may claim a tax deduction and a GST input tax credit.

If a non-entertainment gift exceeds the $300 threshold, it will incur FBT, but a tax deduction and a GST input tax credit may both be claimed. To minimise the amount of tax paid, keeping a non-entertainment gift below the $300 threshold is advisable.

Gifts to clients, irrespective of cost, do not incur FBT. No GST input tax credit or tax deduction may be claimed on an entertainment gift to a client. Therefore, to benefit from a GST input tax credit and a tax deduction, consider giving non-entertainment gifts to clients.

Are company partners and sole traders allowed to gift themselves a present?

No. Company partners and sole traders may not buy themselves a gift. These benefits are only for employees, any associates of employees and clients.

Festive Season Record-keeping – YML’s Bookkeeping is at your service

YML’s dedicated virtual bookkeepers understand Australian business, all financial processes and tax regulations, providing your business with financial information, processing, and management-level reporting at any given time of the day or night.

Make sure to keep all records related to entertainment, parties and gift benefits given to your employees and clients.

To assess your festive season costs and the tax implications of throwing your staff and clients a party and giving them gifts, contact YML’s bookkeeping service today.

How can YML help?

Talk to our YML Business Services Team today to see how YML Group can assist you with festive season tax assessments. For more information, view Our website and contact us on (02) 8383 4455 or by using our Contact Us page on our website.