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Welcome to the May newsletter.
Pre-requisite for success
Following on from last month below may help you to identify critical success factors to make your business a winner.
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What do customers want?
To determine this we must analyse our customers:
Who are they?
What do they want?
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How does the firm survive competition?
To determine this we must analyse the competition:
What drives competition?
What are the main dimensions of competition?
How intense is the competition?
How can we obtain a superior competitive position?
The factors above are fundamental to success.
External guidance in answering these questions can help you objectively assemble the ingredients for success in your business. If this is of interest to you, please speak to your usual contact at the firm.
Do you have to give the ATO everything if they ask?
A recent case raised the matter of the so-called "accountants' concession" set out in Chapter 7 of the ATO's Access Manual entitled Access to Professional Accounting Advisors' Papers.
As set out at paragraph 7.1.1, this concession states the following:
While recognising that the Commissioner has the legislative power to request access to most documents, it is accepted that there is a class of documents which should, in all but exceptional circumstances, remain within the confidence of taxpayers and their professional accounting advisors. In respect of such documents the ATO acknowledges that taxpayers should be able to consult with their professional accounting advisors on a confidential basis to enable full and frank discussion in respect of their rights and obligations under taxation laws to take place and for advice to be communicated on that basis.
This means that many communications between us and you advising on taxation matters may be off limits to the ATO in the event of an audit.
As with any ATO audit or investigation, you should seek our input early in the process to ensure the questions are answered accurately but in a manner that does not pass on information enjoying this privilege.
Investment Property – should you buy a unit or a house?
Unless the unit, villa, townhouse, apartment (strata) is incredibly unique like it has harbour views, it may make more sense to buy houses (Torrens). Why? . . .
Lets do a comparison:
• John buys a unit in a block of 10 units. There’s nothing unique about the block of units (strata). The block of 10 units equates to 10% of land per unit (10 units x 10% land = 100% of land). Therefore John owns effectively only 10% of the land.
• Sharon buys land with a house on it (Torrens). There’s nothing unique about this property either but she owns 100% of the land.
• When a unit, villa, townhouse, apartment or house is built, it depreciates just like when you buy a car and drive it off the lot.
• Land appreciates in growth areas so it is better to have 100% rather than 10%.
For both scenarios, when the buildings get old, Sharon can knock over her house and build a bigger/better one, but John cannot because the whole block would have to be knocked down.
• All things being equal the more land the better the investment return.
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Business value falling: BizExchange March Report
Private businesses with an annual turnover of $500,00 or below are selling their businesses for earnings multiples of less than one year (that is less than one year’s earnings before interest and tax), according to the latest BizExchange Index. The index, prepared by BizExchange Pty Ltd monitors private business values in Australia.
The previous index in December notes a small number of businesses for sale at less than year’s profit, however the rate has now become quite pronounced particularly in the areas of retail, hospitality and wholesale traders.
Other findings in the current index include:
• 5,000 businesses were listed for sale in the March quarter
• construction businesses offered for sale managed to retain their value
• the majority of index adviser respondents expect business values of the larger businesses to remain steady for the next 12 months
Maximising the value of your business takes time. We would be happy to discuss how you can do this.
ASIC Annual Statements Due Date Incorrect
ASIC is currently experiencing problems issuing Annual Statements. The due date printed on invoices created since 1 May is incorrect. It shows August instead of July.
ASIC has halted the issue of statements until this is resolved. ASIC will honour the payment due date printed on the invoice even if it says August when it should be July.
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