2013/14 Australian Federal Budget - how it affects me!

Last night the Budget delivered no real surprises after the majority of the proposed changes had been drip fed to the market in previous months.

Wayne Swan blamed a stubbornly high Australian dollar and lower commodity prices for a dramatic fall of some $17 billion in forecasted tax receipts, leading to an estimated budget deficit for 2012/13 of $18 billion... and that was why there wasn’t the $1.5b surplus promised....

He knew there was a high dollar and lower commodity prices a year ago.... why did he not make appropriate changes then? Or tell us then that there would not be a surplus then ? what a joke!!! I hate surprises!!
If I gave this excuse to my board... I would be fired on the spot!

What was the price of iron-ore  when he took over the reins  from Costello and what are they now? Costello had a surplus when Swan took over!

Key takeouts relevant to me


From a financial planning perspective

Great Article from our team at Ark total Wealth please feel free to contact them by clicking on their link
From a Financial Planning perspective, there have been a few changes in relation to superannaution and taxation which may have an impact on your personal situation. We have provided a brief summary on some fo the key changes.

• Superannuation

Cap on Tax Free Earnings - At the moment, any income in the pension phase is tax free. From the 1st of July 2014, the tax free portion will be capped at $100,000 per individual. Any earnings above this will incur a 15% tax. There is no change to the taxation of lump sum withdrawals, these will still be tax free.
There is however an exemption around the capital gains tax as this could cause many funds to exceed the $100,000 cap. For assets purchased prior to the 5th of April 2013, until the 1st of July 2024 the old tax system will apply (no tax in pension phase). This gives you ten years to structure your assets within the superannuation environment.

Refund of Excess Contributions - Current excess contributions are taxed at 46.5%. Excess contributions will now be taxed at your marginal tax rate as opposed to the 46.5%. In addition, excess contributions can be withdrawn from the fund.

Higher Concessional Caps - If you are aged over 60, from the 1st of July 2013 your concessional cap will increase from $25,000 to $35,000. From the 1st of July 2014, this will apply to anyone aged 50 and over. These amounts will be indexed.
Additional 15% tax for high income earners on concessional contributions - For those that earn more than $300,000, an additional 15% tax will be applied to concessional contributions. These contributions include superannuation guarantee and salary sacrifice Contributions. If you earn more than $300,000, you need to review your super contributions.

• Taxation/Cash Flow/Social Security

Cap on Self Education Expenses - There will be a cap of $2,000 on self education expenses that can be claimed in a Financial Year.

Replacement of Baby Bonus - This change has attracted the most attention. Essentially the baby bonus will be replaced by the Family Tax Benefit A.

Increase of 0.5% in Medicare Levy - Another of the well documented changes. The increase in the Medicare levy will be used to help fund DisabilityCare Australia.(.05% on 100k taxable income is $500 - well worth it to support disabled kids and education!!) 

Ending of discount of early repayment of HECS/HELP debt - From the 1st of January, there will be no discount for up-front and voluntary payments of HECS and HELP debt

Given the uncertainty around which changes will be implemented, it is very much a wait and see approach for everyone. If you have any questions, please don't hesitate to contact on of our Advisors.



From an Innovation Perspective 

Research and development

More timely R&D credits for smaller business

Quarterly payments of the 45% refundable tax offset from 1 January 2014for companies having a turnover of less than $20 million. This measure is designed to provide a cash flow benefit to SME’s as they will not need to wait until lodgement of their income tax return for their refundable R&D tax offset. There are a number of tests in the draft legislation that potentially make it difficult for those companies, at which the assistance is targeted, to actually qualify for the payments. BSI have made submissions to treasury in this regard.

Denying Companies with turnover of $20b or more to access R&D Incentives encouraging R&D for conglomerates to go offshore!

This measure was announced in February and and is expected to affect 20 corporate groups including large banks, miners, refiners, retailers and telcos. Whilst the budgeted savings may be significant ($1.1 billion over the forward estimates), the potential cost to the economy from these corporates potentially shifting R&D activities and other operations offshore could be massive!

Speak to one of our R&D Gurus to see how they can help you maximise your incentives

Do You want to maximise your export grants?

FEDERAL GRANTS ON HOLD

It has recently come to light that the Federal Government has placed a 'temporary pause' on new grants. It has been confirmed that the Commercialisation Australia program and the Clean Technology Investment Fund, among others, have been affected by the pause.

Swan... we are putting a pause on $2b worth of government grants.
We need a surplus!

While the programs are still open for application, no new grants are being written for the duration of the pause which has been described as a 'normal part of the budget process'. At this stage all background work such as preparation of guidelines and the assessment of applications is continuing as normal, but uncertainity remains regarding how long the pause will last and what will happen to the grants programs following the conclusion of the pause.

EXPORT MARKET DEVELOPMENT GRANT

EMDG is the financial initiative of Australian Government aiming to help and aid current and aspiring exporters.

Do you want to maximise your export grants?

Global and domestic economies are facing turbulent times. Europe’s sovereign debt crisis, the struggling US economy, Australian’s two speed economy and wavering business sentiment are just some of the challenges facing business today.

Australian businesses have historically demonstrated their resilience and resourcefulness during tough times. Initiatives such as EMDG are important tools in bolstering the current account and foster strong, sustainable growth.

The Export Market Development Grant:

• Provides a 50% rebate on eligible overseas marketing costs above $10,000 (minimum spend $20,000).

• Acts to encourage Australian exporters to seek out and develop overseas markets. These markets include goods and specified services and industrial property rights which are substantially of Australian origin.

• Has a maximum grant payable of $150,000 per annum for a maximum of 7 years.

We at BSI believe that there is no better time than now for exporters to plan their activities and to establish or increase their overseas market share.

If you wish to know more please contact us and we will be happy to arrange a meeting for an obligation free initial eligibility assessment.

BSI INNOVATION
Suite 1, Level 3
55 Holt Street
Surry Hills NSW 2010
P: 02 9212 5505

5 Ways to raise capital for your SME

Angel Investors

Angel investors are wealthy individuals who will give an entrepreneur financing in exchange for a share of equity in the company. Investment sizes range, but usually are less than $1 Million. Angels often times work in organized groups that screen deals and invest with each other, while many invest on their own. Angel investors are more serious than the type of investor you would find in a Friends and Family Round, but they are usually less serious than a VC Firm.
Pro: Angels normally have experience in the industry and can offer helpful guidance and introductions to their network.
Pro: Because angels are less rigid than VC Firms, flexible business agreements are common.

Con: You can be forced to give up some degree of control over your company. Due to the high-risk nature of angel investing, angels rarely make follow-on investments.

Friends and Family

As an entrepreneur, you can lobby friends, family, and associates for funding that is usually invested more because of your personal relationship rather than an accurate assessment of the business plan. The Friends and Family Round often acts as a seed investment to get the business to a point where it will be able to obtain larger funding from an Angels or VCs.

Pro: Funding is usually obtainable quickly due to your existing relationship.
Pro: Potential exists for the mutual vested interest in the business to bring you closer with loved ones.
Pro: The investment terms are usually more flexible and potential exists for numerous equity or pay back methods.

Con: Immense pressure to succeed can strain personal relationships.
Con: Friends and family frequently have an extremely limited ability to evaluate the potential of your business, though they tend to give advice because of their monetary stake in the company.
Con: Friends and family usually bring nothing more to the table as an investor besides the initial capital.

Venture Capital (VC) Funding

Many entrepreneurs think that VC Funding is the key to their success. Venture capitalists are investors who are willing to put forward a large sum of money in exchange for equity in the company, but who only get their money out once the business either is acquired by another company or goes public. VCs are professional investors that are all about the money. They normally look for investments that can provide a 6X return on their investment, so you better be prepared to go big!
Pro: VCs can invest large sums at once and they can provide expertise and other assistance that is helpful in growing and exiting your business.
Pro: Being VC funded brings instant credibility to your company.
Pro: VCs open up doors to a vast network of individuals including partners and future investors.

Con: The term “Vulture Capitalist” exists for a reason. VCs are about the money and will take necessary steps to see a return on their investment, including ousting you from your own company.
Con: VCs may steer the business in a direction that you don’t agree with. However, they are very experienced and may know something that you don’t.

Bank Financing

Bank loans are the most frequently sought after source of financing and can be pursued at your nearest lending institution. Bank financing can be tricky as there are many different types of financing options and interest rates to go along with them. It is imperative to educate yourself about the process and your options before beginning.
Pro: Banks offer a range of funding amounts and payback options to fit your needs.
Pro: If you qualify, the time to funding is usually fairly quick.
Pro: If you go the financing route, you do not have to give up equity in the company.

Con: Bank loans are very difficult to obtain and the criteria is constantly changing.
Con: The entrepreneur owes the borrowed money whether the company succeeds or not.
Con: The large amount of documentation required can be tedious and time consuming.
Con: The financing options can be confusing. If you lack the knowledge or experience, you may lock yourself into an unfavorable deal with poor payment terms.

To enable your business to get the best chance for financing... you need to have your vision, values, 30 second pitch and business plan together, with a good management team and an understanding how the investor will get a return on their investment.

Government Funding 

There are various programmes that will assist you in accessing funding and even match funding on a $ for $ basis without giving up equity.



If you need help with raising capital... look us up on www.bsi.com.au

R&D tax break farce: Business seeks clarification as Government fails to get new scheme in place for July 1 start date

Tuesday, 29 June 2010 10:24 James Thomson Smartcompany

Business groups are calling on the Federal Government to urgently clarify whether its controversial R&D tax credit scheme will come into force as planned on July 1, after the legislation backing the new scheme failed to pass the Senate last week.

But while the Australian Industry Group wants the Government to officially delay the implementation of the scheme until July 2011 and spend the next 12 months revising the scheme, Industry Minister Kim Carr says he is determined to press ahead with a July1 start-date, suggesting that he will introduce retrospective legislation when Parliament next sits.

The new R&D tax credit scheme, which will replace the current R&D tax concession scheme, was supposed to be debated and passed by the Senate late last week in order for the scheme to start as planned on July 1.

But the debate never occurred, leaving businesses in limbo.

In a short statement released yesterday, Carr laid the blame for the delay at the feet of the Coalition.

"The Opposition deliberately prolonged debate on other Senate business to prevent debate on the R&D legislation. It did this because it knew the Government was close to securing minor-party support for passing the legislation."

However, Australian Industry Group chief Heather Ridout praised the Opposition and Family First Senator Steve Fielding for standing against the changes.

The AIG argues the "draconian and ill-considered restrictions on eligibility" under the new scheme will reduce business innovation.

"Clearly the R&D tax incentive Bill didn't pass muster with its failure to pass through the Senate before the winter recess. The delay is a chance to get core concerns resolved and the sooner we start working through this the better."

However, the AIG and tax experts want clarification on what will happen in the short-term, given the next possible sitting of Parliament does not happen until late August, but could potentially be much later if an election is called.

Do the current rules stand for now? Or does Carr's promise to have the new system in place by July1 through retrospective legislation mean companies should make investment decisions based on the fact the new system could come into place?

Tracey Murray, partner at accounting firm BDO, is advising clients that they should take a "business as usual approach and follow the current scheme.

"We're advising clients that you deal with the legislation that is in front of you," she says.

Murray, whose analysis of the new credit scheme shows many firms who currently receive R&D support would be ineligible under the new arrangements, says the Government needs to take the year to get things right.

"There would complete public outcry if they introduced retrospective legislation. Hopefully the might take the next year to have a look at what those issues are and address them."

Tax counsel for the Institute of Chartered Accountants, Yasser El-Ansary, has written to the Treasurer and Industry Minister saying they have no choice but to put the new system off for a year and "accept that timing got away from them on this occasion".

"Given Parliament was not able to pass the legislation it would be sensible and appropriate for the Government to announce a one-year deferral of the regime," he says.

"These changes are so significant that it would not be appropriate for the Government to expect that taxpayers would assume that the draft is final law."

El-Ansary says such a big legislative change would usually involve government departments – in this case, Australian Industry Group – providing taxpayers with guidance notes and other information products explaining in detail how the new system works.

"They simply won't be able to issue that guidance when that legislation is still in a draft form before Parliament. This is not a minor change where businesses can operate on the basis of press release announcements."

SmartCompany has contacted the Minister's office to find out whether there is any official advice as to whether companies intending to undertake R&D in the next few months should do so on the basis of the current system or the proposed tax credit system.

New RandD Tax Credit Scheme

Friday 18 September 2009

Changes to the R&D Tax Credit scheme will come into effect in the 2010-11 income year. The scheme will replace the R&D Tax Concession with a tax credit system. Key changes include:

*
a 45 per cent refundable tax credit (the equivalent to a 150 per cent tax deduction) will be provided to small businesses with a turnover of less than $20 million per annum
*
a 40 per cent non-refundable tax credit (the equivalent of a 133 per cent tax deduction) will be provided to businesses with a turnover of $20 million or more per annum.

To find out more about the changes, visit the AusIndustry website. There are also business consultation sessions being held around Australia in the next few weeks. For more information and to register, visit the R&D Tax Credit Consultation page.


This information is brought to you by www.business.gov.au

call BSI on 02 92125505 to see how this may effect you

Interview with Rob Judd of BSI Innovations on R&D

Ivan Kaye interviews R&D Tax COncession specialist Rob Judd from BSI Innovations on the R&D Tax Concession and R&D Tax Offsets. for more information see BSI R&D