Wayne Swan was always going to get the budget to show a surplus.  His & Labor’s reputation, in his eyes at least, depended on it.  Even if the projected surplus is based on optimistic assumptions about tax revenue, the surplus would be in the figures.  Even if last years deficit ended up being twice as big as the figure budgeted. That it is very unlikely we will see a surplus this time next year, is in my view, better than achieving the dream of surplus.  The economy is too fragile to support a surplus and the further restrictions that brings.  At the current time a smallish deficit would be more appropriate in assisting the economy and businesses and families.

The real problem with the budget is that it has withdrawn or delayed compensation for the impending carbon tax. The company tax reduction, which was meant to compensate businesses, has been withdrawn altogether.  Some of the compensation is now only targeted at lower income people, leaving middle income people feeling a larger hit from the carbon tax.

There are some benefits for business.  A new and novel benefit is to allow companies to offset losses against previous profits.  However this can only be a benefit for losses incurred from the 2013 year, which means it will be about 18 months before this benefit could be obtained.  This benefit only applies to companies or entities that are taxed like companies.  While the maximum amount of losses that can be refunded is $300,000 there are a number of tests could make the benefit less than the losses incurred.

The immediate tax deduction for up to $6,500 ($5,000 for vehicles) for the purchase of new depreciable assets by businesses with a group turnover of under $2million is still to come in from 1 July this year. This is now the only help businesses get to assist with the carbon tax.

The living away from home allowance is being further restricted from now to only be allowed if an employee maintains a second home for their own use and will only be available for up to 12 months.

Capital gains tax benefits are to be removed for non-residents.  They will no longer receive the 50% general discount for assets held for more than 12 months.

Superannuation takes a further hit with ability for those over 50 to make up to $50,000 of deductible contributions now being put back a further two years.  Likewise those earning over $300,000 will have to pay 30% tax on contributions they make.

The budget is making an honest attempt at being responsible. It has shown restraint, even if the promised surplus is unlikely. It is looking after the less well off who will be affected by the carbon tax and a weaker economy.  Business and middle and higher income earners do not fare well from this budget when the impact of the carbon tax hits us in less than two months.

 Peter Ambrosiussen is the principal of Ambrosiussen Accountants & Advisors and a certified Gazelles International Coach www.ambrosiussen.com.a

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Published by Toowoomba Chronicle www.thechronicle.com.au on Saturday 12 May 2012

Mission of the Position:  To prepare accounts for business clients (predominantly multiple entity structures) in a productive and timely manner with the key external objective of delighting business owners who have tax related questions. Utilise our proven tax planning systems and tools to provide accurate and legally creative tax reduction solutions for our clients.  Internally, the focus is on managing the workflow through the (small) growing compliance team.  Individually, the incumbent needs to have the ability and internal drive to grow, progress and take on greater responsibility (including more staff) in time.

Outcomes:
Defining what must get done:
1. Deliver completed compliance jobs on time and within budget
2. Achieve at least +70% NPS for clients under your control (deliver value through the eyes of the clients)
3. To manage workflow effectively across the team so that deadlines are met with minimal delays

Competencies:
Leadership:
• Develop and lead a strong, united team
• Able to delegate tasks and hold team members and peers accountable
• Proactive and resourceful – takes initiative
• Able to plan – work for self and team

Personal Competencies:
• Display strong personal integrity, discretion and candid honesty
• Enjoy interactions with clients, building rapport and strong relationships easily
• Attention to detail – important things are not missed – but not a perfectionist
• Works efficiency – able to produce work on budget and on time
• Has a hunger for knowledge in both personal and professional development – remains at the front of the information curve
• Highly organised with well developed time management skills
• Ability to remain calm under pressure by elevating the level of focus
• Pragmatic with a history of execution – follows through on things started

Interpersonal Competencies:
• Listening Skills
• Team work
• Written & oral communication skills
• Treats people with respect

Motivational Competencies
• Strong work ethic
• Persistent and seeks to find better and smarter ways (without being a perfectionist)

Salary:
Starting salary negotiable up to $70K per year
Salaries are reviewed annually with increases based predominantly on your ability to execute on the objectives that you set with us.

The mining and energy sectors are opening up increasingly more work for local companies.  While the income can be good the costs of doing business in these sectors are also much higher.  There is a tax benefit that can help offset some of that cost.  The “living away from home” and “remote housing benefit” have been in the news as they have become more restrictive in some respects.  However they can still provide a very effective tax benefit and can offset some of the cost of doing business out in the regions.

What has been in the news is that living away from home exempt fringe benefits will not be allowable for temporary residents unless they have a main residence somewhere else in Australia. This is a big blow to those employers trying to get workers out in the more remote areas.  This restriction applies to non-mining businesses who are finding it increasingly difficult to get staff, as well as to those in mining-related industry.

Living away from home fringe benefits can provide accommodation free of fringe benefits tax or a 50% reduction in the fringe benefits tax.  A contribution to food of $42 per week can also be made without incurring fringe benefits tax.

The big benefit is remote area housing.  You can reimburse the employee their rent or the interest costs on a loan he takes to buy a house in the remote area.  With these up to half the total amount is exempt from fringe benefits tax and tax deductible to the employer.  Thus if you paid half of your employee’s rent or interest cost then you could claim a full deduction and not pay fringe benefits tax and the employee would not be taxed on the benefit.

If however you pay the rent directly to the landlord, rather than reimburse the rent, then there is no fringe benefits tax at all on the payment. This way you could claim a 100% deduction and not pay any fringe benefits tax.

To be considered remote housing it must be situated at least more than 40kms from a town with a population of between 14,000 and 130,000 and 100kms from a city with a population of more than 130,000.

The person receiving the benefit must be a current employee.  It must also be customary to provide housing benefits for employees in your industry.

These fringe benefit exemptions open up good opportunities for salary packaging and providing additional incentives to attract people to the western regions where the mining and energy sectors are opening up.  They are also useful if you as the owner of the business need to relocate to the west as well.

Peter Ambrosiussen is the principal of Ambrosiussen Accountants & Advisors and a Certified Gazelles International Coach www.ambrosiussen.com.au

View LinkedIn Profile – http://www.linkedin.com/pub/peter-ambrosiussen/29/171/a24

Published by Toowoomba Chronicle www.thechronicle.com.au on Saturday 31 March 2012

“Businesses are recording bad profits and not good profits in their financial statements!” Fred Reichheld, author of the Net Promoter System, told the audience.  Bad profits are your phone company charging extra for your mobile phone when you go over your plan.  Bad profits are a restaurant trimming the meat off your burger or sandwich.  Bad profits are made in a way that makes customers unhappy.  They also demotivate employees as they feel ashamed that they have to uphold such practices. Bad profits are not sustainable as customers will walk. 

Good profits come from loyal customers.   Loyal customers deliver repeat sales – they come back. Loyal customers buy additional products. They speak highly of you and provide unsolicited referrals to their friends.

Research shows that companies that have strong loyalty will grow at 2.6 times more than the average company in their industry. The studies show that loyal customers will deliver you double the revenue of unhappy customers. An even worse finding is that on average you will lose money on unhappy customers. 

Reichheld’s research published in the book The Ultimate Question found that one simple question was able to determine the level of the loyalty – “How likely is it that you would recommend company X to a friend or colleague?”  If you receive a score of 9 or 10 the customer will most likely enthusiastically refer you to others, a 7 or 8 is neutral and a score of 1 to 6 indicates that these people will be saying bad things about your business.

To be able to get additional information and be able to take corrective action a second question is asked “What is the primary reason for the score you just gave us?” When scores of 1 to 6 are received it isn’t enough just to know that.  This is an alert to get to the root cause of the problem and fix it for the customer. The reason for the dissatisfaction may be a company policy or the way you charge for things.  If it is making customers unhappy it needs reviewing.  The aim in dealing with low scores is to turn those dissatisfied customers into raving fans.

Not only will your customers be happy but so too will your employees as they will be dealing with happy customers. Once this system is in place the goal is to work with your team is to get more tens from your customers.  Give the staff that get 10’s recognition and have them share with the rest of the team what they did to get the high scores.

Remember the old adage it is far more expensive to get new customers than it is to keep existing ones.  Measuring and knowing you have happy customers – and identifying early those that are unhappy – is much better than just assuming that everything is alright.

The following is a great website for the Net Promoter System:  www.netpromotersystem.com .  If you would like to discuss the System further, please do not hesitate to contact Peter on 4639 1957 or at admin@ambrosiussen.com.au.

Peter Ambrosiussen is the principal of Ambrosiussen Accountants & Advisors and a Certified Gazelles International Coach www.ambrosiussen.com.au

View LinkedIn Profile – http://www.linkedin.com/pub/peter-ambrosiussen/29/171/a24

Published by Toowoomba Chronicle www.thechronicle.com.au on Saturday 17 March 2012

“Tell ‘em they’re dreaming” Dad would often say to Dale over high prices people were trying to sell things for, in the famous 1997 Australian comedy “The Castle”. This is often the case when people are trying to sell their businesses and I’m tempted to quote Dad Kerrigan. Sometimes the dream comes true and a business does sell for the price owners are expecting.  We have had the good fortune to witness a couple sell their business for more than they expected.  Not only that, but by using capital gains tax benefits, they received the sale proceeds tax free and now have those proceeds earning them tax free income. 

Well this dream, like most real life dreams, didn’t just drop out of the sky but came about by smart and hard work.  First up there had to be a reality check – facing up to what their business was really worth.  Once that reality settled in, then realistically looking at what they needed to do to sell their business to live at a comfortable level in retirement. 

To bridge this gap they made smart use of Government programs to increase the profit, appeal and value of their business.  This started with getting a clear strategic plan.  The plan challenged a number of strongly held views, but the owners to their credit, made the changes.  They involved key staff who increasingly took on more responsibility and were given more autonomy.

The next level of government funding enabled in-depth work on opening up new markets, marketing, HR and succession planning.  This led to increased sales and the ability to deliver, sustain and increase those sales, profitably.

In the space of three years the business had become an attractive acquisition and sold.

Due to wise planning they were able to extract the sale proceeds tax free.  The small business exemptions with advance planning will enable you to extract the capital gains tax free.

Not only were they able to extract those capital gains tax free they were able to put the proceeds into super tax free.  In addition they were able to transfer their business buildings into their SMSF with no capital gains tax, despite the value of the buildings increasing substantially.  Again this was because of the small business capital gains exemptions.

The advantage of having assets in super is that the income is only taxed at 15%.  However if you put the super fund into pension mode then no tax is paid on the income generated by the super fund.  You can put a super fund into pension mode when members are over 55.

Even better when you are over sixty you pay no tax on the pension you draw from the fund.  In this case, as most of the contributions have gone into the super fund without claiming a tax deduction, most of the pension will be tax free.

I can hear Dad Kerrigan saying “Tell ‘em they’re dreaming”. However with good planning, smart work, good use of the tax laws and a little bit of luck the dream can be a reality.

Peter Ambrosiussen is the principal of Ambrosiussen Accountants & Advisors and is a Certified Gazelles Coach. www.ambrosiussen.com.au

View LinkedIn Profile – http://www.linkedin.com/pub/peter-ambrosiussen/29/171/a24

Published by Toowoomba Chronicle www.thechronicle.com.au on Saturday 25 February 2012

Doesn’t it feel good when you touch the accelerator and you get an immediate response from your car’s engine accelerating you out of danger or quickly past the car in front?  In the same way a finely tuned business is better able to avoid danger and much better able to take advantage of opportunities.  A finely tuned business has an excellent dashboard of instruments telling you quickly what is happening in your business engine. With advances in computing this type of system is now in the reach of most small to medium businesses.

Cloud technology has now brought the price of larger software systems down to an affordable level.  It has done this in two ways.  One, you do not need to purchase expensive servers to run the software as you use the software over the internet.    Secondly, you do not have to buy the software outright as you pay a monthly fee per user.  This approach enables you to afford more powerful software that gives you the information you need to run your business better.

Most businesses rely upon spread sheets and their accounting software to provide them information about where their business is at.  Some have specialist front end software for invoicing and perhaps job costing and stock management.  The problem with this approach is that because the different sources of information are not integrated or poorly integrated you have to input similar information in different software applications.  Also you do not know what the information is telling you until you get time to input it all.  Back to our car analogy this is like needing to pull over while you check the oil and the radiator.

An Enterprise Resource Planning (ERP) is a software package that has all the applications you need in the one program which means you only input data once.  An ERP will include sales, quoting, customer relation management (CRM), project management, job costing, time recording, manufacturing, inventory management, HR & payroll and accounting.  You are able to tailor an ERP to only include the parts you need.

Better still an ERP captures information at the time you are doing the business activity.  That may be quoting, invoicing, doing work on a job etc. The other big benefit is that it updates all the different aspects of your business in real time so you know exactly where you business is at now.

An ERP should have excellent reporting so that it tells you what is important to you in managing the business.  A good system will give you a dashboard that comes up on your main screen with the most important things you need to know about your business for it to be running well.
 
With a good ERP you are able to better manage the business, because you are better measuring it.  You are able to make those small percentage improvements that all add up and are very important in today’s economic and competitive climate. 

Peter Ambrosiussen is the principal of Ambrosiussen Accountants & Advisors and accredited Gazelles International Coach www.ambrosiussen.com.au 

View LinkedIn Profile – http://www.linkedin.com/pub/peter-ambrosiussen/29/171/a24

Published by Toowoomba Chronicle www.thechronicle.com.au on Saturday 11 February 2012

Take the Rockefeller Challenge to improve and grow your business.

Developed by Verne Harnish, the Rockefeller Habits offer a disciplined and proven approach to business growth.  From doubling your cash flow, to determining your competitive advantage and energising your employees, the world-renowned Rockefeller Habits offers an easy to use program for making strategically smart business decisions.

Our Rockefeller Challenge introduces you to the Rockefeller Habits Checklist, a process that covers 10 essential business habits and will allow you to determine areas for improvement relating to People, Strategy, Execution and Cash.

To take the Challenge is easy and free!

Simply spend 10 minutes working through the checklist, score your results and email or fax your checklist to us for an obligation free analysis of your results.

Participants who complete the checklist will receive a free copy of Verne Harnish’s book, Mastering the Rockefeller Habits.

Email us today for your checklist or speak with either Peter or Julie on 07 4639 1957.

Having lost a full frontal battle to totally demolish trusts just over ten years ago by trying to tax trusts as companies, the ATO has resumed the battle in recent years in a sniper approach.  The latest sniper attack comes in the form of a consultation paper released late last year that puts forward options that will further limit the tax effectiveness of trusts.

Last year saw trusts tax effectiveness hit by reducing the tax free distributions to minors from $3,300 to $416; reduced flexibility of trust distributions if tax returns need to be amended; and higher taxes if trust distributions to companies are not cash flowed. 

This consultation paper headed “Modernising the taxation of trust income” sets out a number of options.  One of these options, which seems more favoured by the ATO is one used in New Zealand, Canada & the USA, called the “Trustee assessment and Deduction model” – TAD for short.  Under this model whatever taxable income is not physically distributed to the beneficiaries of the trust in cash or property is taxed against the trustee.  Under current law the tax rate for taxable income to the trustee is 46.5%.

The problems with this approach are:

• The higher rate of tax.  This is due to both the penalty rate of 46.5% and that if the distributions cannot be cash flowed through to lower income individuals and not for profit organisations in the required time frame the tax free or lower tax rate opportunity is lost.
• Difficult to retain cash in a trust:   A business needs to retain cash for working capital, debt reduction and purchase of assets.

This approach is pushing businesses to look more closely at operating through company structures. However company structures do not have the range of capital gains benefits that trusts do. If you are over 55 when you sell your business then the company structure will give most business owners the opportunity to receive the capital gains tax free.  Alternatively if you sell your business before you are 55 you have the opportunity to roll over the capital gain into another business asset and thus defer the capital gain until you are over 55.

Not all business owners want to wait until they are 55 before they realise the proceeds from the sale of their business.  For this reason the more appropriate structure moving forward is more likely to be a combination of a trust and a company working in tandem.  The trust structure gives you the capital gains tax benefits and the company enables you to retain profits and keep your tax rate at a maximum of 30%.

While submissions on the draft paper close in two weeks it will be another six months before we see the draft legislation.

If you are setting up a new business or restructuring your existing business it will be important to keep these possible changes in mind.  It is also important to keep in mind that the ATO is continually finding ways to minimise the effectiveness of trusts, especially as a business entity.

Peter Ambrosiussen is the principal of Ambrosiussen Accountants & Advisors and accredited Gazelles International Coach www.ambrosiussen.com.au

Published by Toowoomba Chronicle www.thechronicle.com.au on Saturday 28 January 2012.

“There is no such thing as goodwill” this experienced businessman was often heard to say, except that is when he came to sell his own business. For a healthy business goodwill is the major part of the overall value of a business. Many of the younger entrepreneurs today are very much focused on the value of their business and increasing that value. They see their business as an investment, in the same way as they would an investment property.

These younger entrepreneurs are working on getting their business “sale ready” even though they do not have immediate plans to sell. They recognise that it takes a few years to get your business to the place where you can maximise the sale price. They are also ready to sell it if the price is right, or another Alan Bond should come along.

You can increase the value of your business by having consistent or growing profits. Strong systems also increase the value as they minimise the risk on takeover. The less the business is reliant on the business owner the greater the value of the business. Likewise a quality, stable workforce that is adequately paid gives the buyer confidence. A strong brand, image and reputation also increase the value. Working on these areas as well as growing profits will make your business an attractive proposition and will help you get closer to the price you would like.

Tax on the sale of your business can significantly reduce the end price you may be expecting. By looking at the sale of your business well in advance you have the opportunity to reduce the tax impact. By handling the tax smartly it is possible to receive the bulk of your sale proceeds tax free.

A business is generally valued by capitalising its future maintainable earnings. This is the same way a commercial property is valued. The only difference is the larger range of capitalisation rates for businesses. The more sought after a business the better the capitalisation rate. The higher the profits and the less the owner works in the business the better the capitalisation rate.

If the profits of the business are say $500,000, and you believe this can be maintained, and the capitalisation rate is say 30% the business would be worth $1.5mill. The difference between the $1.5mill and plant and equipment and stock is the goodwill of the business. The greater the goodwill the greater capital value you have created.

By working on increasing the value of the business you are working on the second form of return from your business, the capital growth. The good thing – as your capital value grows so too will your profits.

Peter Ambrosiussen is the principal of Ambrosiussen Accountants & Advisors and Certified Gazelles International Coach. www.ambrosiussen.com.au

Welcome to the launch of Ambrosiussen TV!  This page will showcase videos that are relevant to your business, including popular Gazelles and strategic planning topics.

• We launch with a video of Peter Ambrosiussen being interviewed by CPA Australia.  Peter was selected as part of Showcasing Best Practice in Public Practice .    We have included an extract on how our organisation’s culture impacts on our client relationships:

Impact of Our Culture on Our Client Relationships from Ambrosiussen Accountants on Vimeo. For further information and to view the full video, please contact our office on (07) 4639 1957.   CPA Australia can also be contacted by initially going to their website: CPA Australia Online

For another 70 free segments, please click on this link which will take you to the CPA Australia website with all options.

• Gazelles:  Gazelles TV provides online education, resources and tools to keep you great.   Peter attended the Fortune Growth Summit which is featured in some of the videos.

• Be inspired by Naomi Simson, CEO of Red Balloon as she discusses her business’ Core Values:
  
  and Red Balloon’s Big Hairy Audacious Goal: