- As we lead up to the end of the Financial Year, if you have a trust, please ensure that you make trustee resolutions to distribute the 2017/18 Trust income by 30 June 2018. Failure to do so could result in the undistributed income being taxed in the Trustee’s hand at 45%.
- The manner of distributions are dictated or governed by your Trust deed. It is important that the trustees are familiar with the terms of their trust deed so that distributions can be made properly. The ATO has ruled that a written record is essential if you wish to effectively stream capital gains or franked dividends.
- Most trust deeds contain a default beneficiary clause which makes that particular beneficiary entitled to the Trust’s income if no other resolution is made by the 30 June. Therefore if you wish to distribute to someone other than the default beneficiary, it is important to have a resolution in place by the 30 June. Depending on circumstances, it is easier to allocate distributions by percentages rather than fixed amounts. This will ensure that any tax adjustments that might lead to a different trust income reported at year end can still be distributed out without residual income caused by the adjustments.
Below is a table detailing the differences between “salary” and “ordinary time earnings (OTE)”. It is important as the definition also affects the superannuation payable for an employee. Therefore the superannuation calculated is:
OTE times Superannuation Rate
OTE ($3000) x Rate (9%) = $270 (Superannuation Payable)
Employers must use ordinary time earnings (OTE) to work out the minimum superannuation contribution for their employees. If this base is different from the one in use, and the superannuation calculated is lower than the minimum threshold, the employer could be liable for the SGC (Superannuation Guarantee Charge) and also possible audit from the ATO.
|Payments to an employee in relation to:||Salary or wages?||Ordinary time earnings?|
|Awards and agreements:|
|Overtime hours – award stipulates ordinary hours to be worked and employee works additional hours for which they are paid overtime rates||Yes||No|
|Overtime hours – agreement prevailing over award||Yes||No|
|Agreement supplanting award removes distinction between ordinary hours and other hours||Yes – all hours worked||Yes – all hours worked|
|No ordinary hours of work stipulated||Yes – all hours worked||Yes – all hours worked|
|Casual employee whose hours are paid at overtime rates due to a ‘bandwidth’ clause||Yes||No|
|Piece-rates – no ordinary hours of work stipulated||Yes||Yes|
|Overtime component of earnings based on ‘hourly driving rate’ formula stipulated in award||Yes||No|
|Allowance by way of unconditional extra payment||Yes||Yes|
|Expense allowance expected to be fully expended||No||No|
|Hourly on-call allowance in relation to ordinary hours of work for doctors||Yes||Yes|
|Payment of expenses|
|Reimbursement of travel costs||No||No|
|Payments for unfair dismissal||No||No|
|returned to work||Yes||Yes|
|Parental leave – eg maternity leave, paternity leave, adoption leave||No||No.|
|Ancillary leave – eg jury duty, defence reserve service||No||No.|
|in lieu of notice||Yes||Yes|
|unused annual leave||Yes||No|
|Bonus labelled as ex-gratia but in respect of ordinary hours of work||Yes||Yes|
|Bonus in respect of overtime only||Yes||No|
What a Dashboard Is and Does
A dashboard is a collection of reports displayed together in one main report, where the only logic linking the resulting information is its relevance to the overall business strategy. Data can come from the same database, or from a number of different sources or databases. Even where the reports interrogate only one database, data can be reported in very different ways, and the results returned in a variety of formats.
This is where record-keeping methodology and software selection can help to facilitate the implementation of these BI tools. Many small business owners often assume that this is beyond their budget and fail to understand the greater benefits such reporting brings. In addition, the cost behind such implementation need not be substantial and can often be tailored to individual business needs. What is often critical is that the business starts with the right pillars or foundation. This is often overlooked or carelessly cast aside until bottlenecks occur when it is usually too late!
This high level view of the pertinent aspects of a business issue is an invaluable tool in the interpretation and communication of up-to-the-minute results, and an important aid to strong decision making.
The logical approach to all this boils down to 3 simple steps:
- Know your business objectives.
- Know what to do to accomplish the objectives.
- Know how to measure what your business do. If you can’t measure, you can’t manage.
Some practical starters for new business owners:
- Give some thoughts on your record-keeping. Your accountant should be able to work with you to give you an idea on the structure behind these records.
- Start with the simplest technology or software, taking into consideration future expansion. The simplest is not always the cheapest. Focus on productivity and efficiency in terms of administration as it will reap benefits for your business in the long run.
- Start only with a few drivers to measure your business. Do not be overly-ambitious with too many but really focus on the key drivers. If the wrong drivers are selected, they can always be changed. You can only tell they are wrong if they are being measured!