business

The Federal Government has so far announced two separate stimulus packages to the sum of $189 billion.

The packages include both cash and tax incentive measures.

Below they are summarised, based on what we know as of today.

1) 100% Cashback on PAYG Withholding, up to $100,000 in total
Eligible small and medium-sized employers will be provided a 100% tax-free ‘cash back’ of up to $50,000 (and a minimum of $10,000) on your PAYG Withholding on wages between 1 January 2020 and 30 June 2020.

A second tranche of tax-free, cash back payments of up to $50,000 (and a minimum of $10,000) on your PAYG Withholding on wages will also be paid for the period 30 June 2020 – September 2020.

This second payment is calculated as the total cash back credit calculate in the first payment, split evenly over the June-2020 to September 2020 BAS/IAS lodgement period.

So to summarise – the cash back is now calculated on 100% of PAYGW of your wages, paid in 2 separate calculation periods.

So, breaking this down:

Payment 1

If you have spent more than $50k in PAYGW for the 6 month period between 1 January and 30 June 2020, you will receive $50,000 in cash from the Government for this period.

If you have spent $30k in PAYGW for the same period, you will get $30,000

Regarding the Additional Payment (Payment 2):
The same total benefit per Payment 1 is paid equally over your BAS/IAS lodgement period between 30 June 2020 and 30 September 2020

A couple of other points on this:

If you take your ‘salary’ as a dividend or directors drawing and want to maximise your ‘cash back’, you could explore changing the treatment of your remuneration from drawings to salary.

If you have an existing debt with the ATO this benefit will offset your existing liability.

💡 How to apply?

This credit will automatically be processed upon lodgement for your BAS and IAS. We and/or your bookkeeper will process it for you.

2) 50% subsidy on apprentice wages, up to $21,000

Eligible employers can apply for a wage subsidy of 50% of apprentice or trainee wages for up to 9 months from 1 January 2020 to 30 September 2020 (up to a maximum of $21,000 per eligible apprentice or trainee).

If a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.

Tax incentives for Small Business Owners

The immediate tax deduction threshold has been increased from $30,000 to $150,000 for assets purchased between 12 March 2020 and 30 June 2020

Assets over $150,000 will attract an additional 50 percent depreciation rate of the asset cost in the year of purchase for assets purchased between 12 March 2020 and 30 June 2021

A couple of other points on this:

It’s important to note that these are tax incentives, not cash back incentives. In other words, you need to spend the money, and pay income tax in order to get the tax benefit.

The tax benefits will be applicable for your FY20 and FY21 tax returns, which means you won’t see any benefit until you’ve lodged your 2020 and 2021 returns.

💡 How to apply?

This credit will be processed upon preparation and lodgement for your 2020 and 2021 income tax returns.

Tax Payment Deferrals

The ATO is providing SMEs payment deferral concessions for businesses directly impacted by COVD-19.

They are outlined as followed:

Deferring by up to 4 months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise.

Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get faster access to GST refunds they may be entitled to.

Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.

Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.

Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.

A couple of very important things to note:

You will still need to pay Superannuation

These relief provisions are not automatically applied. You will or we can contact the ATO to make any of the above requests for assistance.


💡 How to apply?

Businesses can call the ATO’s Emergency Support Infoline on 1800 806 218 to discuss relief options based on their needs and circumstances.

Government underwritten, Cash flow loans for SMEs
The Government will provide a guarantee of 50% of new loans written by banks and SME lenders to support new short-term unsecured loans to SMEs.

Important clarification – this does not mean the Federal Government is issuing loans directly.

It means that the Government is providing a guarantee to banks and SME lenders to reduce their risk to provide unsecured loans to SMEs that need the cash for working capital.

So what does this mean for me?

Expect a new type of loan product issued by the banks and lenders, tailored for SMEs that have been directly disrupted by COVID-19


💡 How to apply?

Contact your bank/lending institution about this package.

Refer to the ‘Coronavirus SME Guarantee Scheme’ and ask what new loan products are available to assist.


There is a lot more information out there and we will endeavour to sort through it all and pass on all that is important and relevant.


These are stressful times, and we are here to help you in anyway we can.


Please contact us if you any questions or need help with anything. Together we can work through this.
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business

Managing your business in a crisis

Practical strategies you can deploy straight away.

We are experiencing extraordinary events, first the bushfires, then the rain and now the impact of the coronavirus.

The impact of these are likely to see Australia enter into recession for the first time in almost 30 years.


For businesses to prepare and combat the effect of a recession, business owners must urgently review their business and prepare for such an event. To assist business owners (or your clients) through these troublesome times, below are some simple and practical ideas that business owners can implement during such a crisis. We can also assist business owners with this assessment.

Here is our 5-step process to crisis proof your business.
  1. Review
  2. Identify and build
  3. Execute and act
  4. Monitor
  5. Speak to us
1. Review

This is for you to focus on what is within your control and what your business key drivers are.

• Is your work environment for staff and customers safe?

• What expenses are key to the business operating and which are not?

• Are there any expenses that can be reduced without impacting the business’s long term viability?

• Which revenue streams have been or will be impacted?

• What actions can be undertaken to protect and maintain revenue?

• What obligations do you have to financial institutions, such as loans?

• What statutory obligations to you have in the short and medium term?

2. Identify and Build

Once you have determined the key drivers of your business then you MUST develop a plan.

Documenting the plan, allocating responsibilities, and setting agreed timelines is essential.
 
Ensure your staff and key stakeholders are supportive of the plan. Communication is key.

• Prepare a plan to ensure a safe environment for your staff and customers. How are you communicating that you have a safe environment to your staff and customers? How often are you communicating?

• Optimise revenue—what revenue initiatives can be undertaken to maintain a sustainable level of income—consider collection of debtors, sale campaign, alternative delivery methods (online). Are there new revenue lines that can be undertaken as a result of changing market conditions? But also be honest with the stock levels you have to your customers.

• Supplies – ask your suppliers if they can recommend alternatives if they’re affected by imports. If they can’t, explore finding alternative for your stock.

• Reduce expenses—a detailed review of business expenses should be undertaken to identify any expenses that can be reduced or even eliminated altogether. This could be a reduction in staffing hours, termination of unnecessary or non-essential services or even sale of surplus assets that are subject to finance.

• Deferral of expenses—are there any other expenses that can be delayed? Are there any creditors that are willing and able to provide support through relaxed payment terms? The Australian Taxation Office (ATO) can provide relief through the following initiatives:

 – Deferring (by up to four months) the payment date of amounts due through the business activity statement—including pay as you go (PAYG) instalments)—income tax assessments, fringe benefits tax assessments and excise tax.

 – Allowing businesses on a quarterly reporting cycle to opt into monthly GST reporting to get quicker access to GST refunds they may be entitled to.

 – Allowing businesses to vary PAYG instalment amounts to zero for the March 2020 quarter. Those businesses can also claim a refund for any instalments made for the September 2019 and December 2019 quarters.

 – Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities.

 – Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low-interest payment plans.

 – Financier support—contact your financier to discuss what financial support is available (usually by way of deferred payment terms under the loan facility).

 – Consider government assistance—find out which government support applies to your circumstances.

3. Execute and Act

Urgently responding to these situations could include the following approach.

• Increase your sales through new sales approaches and new revenue lines.

• Increase exposure through other platforms to sell and market your business. Could platforms previously thought to not work for your business now be relevant? Consider ecommerce and social media to increase your businesses visibility and exposure to current and new markets.

• Communication must be open and transparent with employees, financial institutions, landlords, suppliers, the ATO, customers and local business networks. It should be regular and honest. 

• Implement relaxed payment terms. Make it easier for other businesses to do business with you. But  make sure you understand the financial impact this may have on your business.

• Enable staff to work from home if possible. Staff safety is paramount and non-negotiable.However, knowing what they need to be effective while away from an office environment will help speed up this process and streamline job functions/tasks during this period. Also ensure cyber security measures are in place.

4. Monitor

Regularly check on the financial position.

This means:
• Monitor on a regular basis.
• Adapt and change your plan, if necessary.

5. Speak to us

The current environment can be very daunting and we are available at any time to assist business owners that find themselves in a distressed position. We are experts in
providing advice and can provide the guidance that may be needed in these difficult times.
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business

Over the years we have worked with many medical professionals across many specialisations. This great level of experience means we understand the medical profession.

 

In this medical practice checklist, we discuss key areas you need to consider.

 

BUSINESS STRUCTURE

The structure you choose to operate from can make a massive difference to your wealth and financial security. Each structure has its own benefits and limitations, but it is important to choose a structure that meets your individual circumstances, is in accordance with ATO guidelines, while at the same time yielding any additional tax benefits.

 

  • Is your structure compliant with ATO guidelines?
  • Does your structure ensure you meet payroll tax, superannuation, WorkCover and employee leave entitlement obligations?
  • Does your structure provide opportunities for tax planning?
  • Does your structure provide adequate asset protection?
  • Do you have the appropriate documentation in place for your structure?
  • Do you have agreements in place with your business partners?

 

TAX PLANNING

As a medical professional it is likely you will be in the higher income brackets, and therefore be expected to pay a fair share of what you earn in tax. However, there are certain tax planning strategies that can be implemented to effectively manage tax liabilities, while still ensuring you are compliant with ATO guidelines.

 

  • Are you taking advantage of the unique tax planning opportunities available to medical professionals?
  • Do you meet with your accountant at least once a year to discuss tax planning strategies?
  • Is your debt structured correctly to ensure you maximise the tax deductibility of interest? Do you know the difference between good and bad debt?
  • Do you have a structured plan for your superannuation and contributions?

 

 

TECHNOLOGY & SOFTWARE

With cloud technology and software available for almost every role and purpose, the facilities available to medical professionals to streamline processes and reduce costs are huge. The hardest part is working out what is most suitable for your practice.

 

  • Do you use cloud-based accounting software?
  • Are you aware of the various add-ons available for you accounting software to automate & streamline processes?
  • Are you utilising your software to the fullest and have you been provided with adequate training?
  • Are your automating steps with technology to improve efficiency and reduce costs?
  • Is your accountant familiar with the software available to medical professionals?

 

THE POWER OF COLLABORATION

The life of a medical professional can be a very stressful one with competing demands on you time being at the top of the list. Efficiencies gained from having everything ‘under the one-roof’ should never be overlooked.

 

  • Is your medical practice and associated entities accounting and taxation all done by the one team to streamline the process and reduce costs?
  • Are you able to speak with your Advisor about lending, investments and insurance?
  • How much time do you spend working on your business to understand how to identify efficiencies in operation, implement process improvement ideas and best practice solutions?

 

INDUSTRY EXPERTS

Having solid knowledge of the medical profession ensures an understanding of the professional life-cycle of medical professionals. The medical profession is unique and therefore to get the best advice you need to make sure you have the right people ‘on your team’.  Professional understanding, technical knowledge and proven results are critical attributes you should look when selecting your team.

  • Has your advisor looked after medical professionals before?
  • Does your advisor have a great network of firms around them to support you in the successful operation of your practice and personal wealth growth?
  • Are you fully aware of all the financial opportunities available to you as a medical professional?

 

Want to talk about your Medical Practice to see if you are operating at your full potential, then contact us for a coffee and a chat.

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business

Tax Tips for Medical Practice Owners

Tax time is a headache for many doctors, let alone medical practice owners. Even worse when you are a doctor and a medical practice owner!

Not only are you paying a lot of tax, you need to stay compliant to avoid audits and issues with the ATO while still keeping as much cash flow in your medical practice as possible.

So how do you keep on top of your tax as a medical practice owner?

Get organised

Doing your tax should not just be once a year thing. You should be working and reviewing your tax position throughout the year to stay compliant and be prepared come year end.

You should be working with an accountant that specialises in the medical industry, who will understand your situation and requirements. You should have regular meetings with your accountant through the year to ensure you are on top of everything, including due dates, changes in tax laws and how they impact you and your business

Keep your records safe and easily accessible. Also, you should maintain separate files for personal and business-related documents.

Know your business structure and the rules

Every business structure has different tax responsibilities and requirements that need to be met. Medical professionals in particular have a specific set of rules that need to be followed.

Each structure also has unique features that you need to understand. Having this understanding will help you with your business and your legal requirements.

Know what deductions you are entitled to

The expenses you can claim as a deduction will depend on your practice – how it is structure and how it is run, but some common areas include:

  • Professional dues or membership fees
  • Professional and some personal insurances
  • Medical journal subscriptions
  • Medical and technical equipment
  • Superannuation contributions
  • The cost of managing your accounting

Being familiar with what expenses you can claim will likely see a great uplift in your return.

Keep your books up-to-date

Keeping your financials up-to-date will have multiple benefits to you: you should not be hit with any surprises, such as an unexpected tax bill, you will have current figures if you need finance, it will give your accountant the opportunity to look at your position and make suggestions to help your tax position before the end of the tax year.

 

You can automate things and streamline your business, use accounting software like Xero. You can also explore other practice management software that may integrate bookkeeping as one of their functions.

Get expert advice

The most important tip for a medical practice owner is to work with a medical accountant who understands your needs and your profession. Running a medical practice is unique, and a financial expert who specialises in your profession will help you identify opportunities and reduce risks.

Reach out to us if you wish to discuss your practice and your situation.

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business

As a dentist, you will face a unique set of financial challenges that not many other medical professionals have to deal with.

You will require an area that has multiple private treatment areas and a wide variety of expensive equipment.

But the question then becomes – how can you build a successful practice, run a business and achieve your financial plan without going into too much debt?

Do your research.

Building your own practice is rewarding and can provide you with a good retirement, if it is done right.

The questions you need to ask yourself are:

  • But should you start your own clinic from scratch?
  • Buy into a practice with other dentists or join a dental group?
  • Purchase an existing practice?

Each presents its own pros and cons. You will need to consider all before making a decision.

Know your market and pick the location accordingly.

The choices you make about who you wish to market your practice to and its location will influence the potential profit you generate.

Do your due diligence to find out what the demand for dental services and the amount of competition in a given location before progressing with your plans.

Don’t go too big, too quick.

You might be thinking to go big at the outset in anticipation of a big inflow of new patients. But you also need to be realistic about your potential growth. Utilise the space you have to its maximum before you make plans for expansion. Start your expansion only when your revenue and client base justifies it.

Purchasing dental equipment – have a plan.

Dentists will generally have to outlay a lot more to fitout their practice than most medical professionals, given the treatment chair and other specific tools you require.

Yes, you can pay cash, but that can impact the cash flow of the practice You can also go second hand or a lower quality product, but would that give the give the right impression for your practice or provide the best experience for you patients.

Financing the equipment may be an alternative. Medical professionals can, if you are able to find the right provider, get access to some great deals for finance. Make sure you get advice from a medical finance expert, who understands your practice, knows what you can afford and can find the best deal that is suitable to you.

If you decide to enter into a loan, you will need to understand and be aware of the cash flow impact on your practice and the legal implications that go along with the finance agreement.

Don’t under insure.

Insurance, for business owners, is quite often something they think about but never end up doing, or they take the cheapest option. Insurance should provide full coverage– protecting your expensive dental equipment, protect your practice, protecting your staff and your family and finances in the event something goes wrong.

Run a lean machine.

You don’t want to go cheap and cut corners, but the secret to saving your practice money lies in reducing your overheads. This may include changing electricity providers or review your supply ordering process (as you may be holing too much stock).

Are you overstaffed? Can new technology or automation streamline processes and same time and money?

This is an ongoing process so always review your costs as small changes all add up.

Be aware of your tax obligations.

Many medical professionals, including dentists, struggle at tax time. As a high-income earner, you will owe a lot in tax so it’s important to be prepared. Talk with your advisor to help you understand your position and if you can be doing things differently to help your tax position out.

Get advice

When it comes to accounting, finance and financial planning, it pays to work with the best people who know the medical profession

Contact us today to discuss how we can help with your practice.
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business, strategy

A Service Trust is a must for doctors and health experts who want to reduce risk and protect their assets.

Medical professionals are looked at with high esteem within society, as we all look for a healthy and long life. However, this brings with it costs at times, and often medical professionals find themselves as targets for litigation.

A person’s health is serious business. If something goes wrong in a medical setting, someone usually must take the blame. As medical professionals usually make a substantial amount of money, the chances of a lawsuit are increased.

It means that for doctors and health experts, protecting your assets is absolutely essential. It can only take one lawsuit to have devastating result to your wealth.

Is Insurance Enough?

Insurance is an essential part of business for all professionals and is more substantial to those in the medical profession than most other professions. At the very least medical professionals should have basic and efficient insurance. This is usually compulsory for medical professionals.

If a medical professional owns property, they should have building and contents insurance. They should also have public liability, cyber attack, business and medical indemnity insurance. But, is just having insurance enough?

Insurance companies have an obligation to generate profits for their shareholders, and unfortunately settling claims does not always serve this purpose. This regrettably means other measures need to be put in place to have sufficient  and effective protection over assets. This is where the Service Trust comes into play.

Trust the Trust

When a medical professional owns their medical practice, their name is usually tied to their Medicare number; thus, their business is under their name. However, their assets outside of their business should be held under someone else’s name – spouse, child, sibling, etc. This is where you split the risk and the assets – the person with the risk should not hold the assets.

The next step for a medical professional is to establish a Service Trust, lessening future risk and allowing for the efficient system to pay staff members and rent premises. The service fee – typically 30-40% of the Doctors billings – produces profit for the trust. This can then be distributed to family, or other beneficiaries. The ATO have benchmarks for Service Fees. Anything outside of the benchmark will need to be justified to the ATO under an audit.

If a medical professional is looking to acquire a property, it is wise to set up a property trust with a corporate trustee. However, the medical professional should make his/her spouse (or another trusted person) the director of the trustee company, and the sole named beneficiary. This allows for assets to be protected under the medical professional’s benefactor’s name in the case of an unfortunate event.

Only for Steady Relationships

In most cases, assets are owned in the names of both parties in a marriage. However, for medical professionals, it is highly recommended to keep assets, especially real estate, in the spouse’s name. If the medical professional and his/her spouse both can attest that their property is their primary residence, then it will be capital gains exempt.

Now you can see why it is so important that medical professionals keep their assets in their spouse’s (or other deeply trusted person) name, and not their own.

Nonetheless, although highly recommended, the stability of the relationship will really decide whether this method is effective or not.

It’s vital to seek personalised advice about Service Trusts and asset protection. OnPoint Advisory specialises in accounting, tax and financial advice for medical professionals. Contact us now for a no obligations discussion about your needs.

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