$20k instant asset write-off to get 1-year extension

The amendment will hold off the threshold reverting to $1,000 until June 30 next year.

Small businesses will be able to claim an immediate deduction for assets less than $20,000 under amendments to the Income Tax (Transitional Provisions) Act 1997 introduced to Parliament on Wednesday.

Nearly four million small businesses with an annual turnover under $10 million will be eligible under the scheme, which is estimated to cost the government $290 million over five years.

Treasurer Stephen Jones and Minister for Small Business Julie Collins said in a joint statement that the instant asset write-off scheme would encourage businesses to invest in more capital resources.

“The $20,000 instant asset write-off will help improve cash flow and reduce compliance costs, while the Small Business Energy Incentive will ease pressure on energy bills and help small businesses become more energy efficient,” they said.

“The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets. This is targeted, responsible support, to help Australia’s small businesses continue to grow.”

“Small businesses are the engine room of Australia’s economy, which is why these new measures are so critical.”

The Tax Institute senior advocate Robyn Jacobson said she was pleased to see the temporary increase in the write-off threshold but said there would be “minimal revenue impact” due to the costs to the government.

Ms Jacobson added that the “constant tinkering” of the scheme has made it difficult for businesses to keep on top of current laws.

“While there may be concerns about the inflationary impact of allowing immediate deductions for the cost of certain depreciating assets, what is paramount in a good tax system is simplicity, certainty and efficiency,” she said.

She suggested introducing a permanent scheme for small to medium businesses with an annual turnover of less than $50 million and for assets costing less than $50,000.

“Annual changes increase the risk of errors and result in uncertainty, particularly when the measure will apply from 1 July 2023 this year and the amendments have not yet been legislated,” she said.

The scheme’s genesis can be traced back to a $1,000 deduction introduced by the Gillard government in 2012 and it has undergone a raft of changes in the last decade in response to changing economic conditions.

As part of the COVID-19 measures, the government scaled up the threshold to $150,000 and increased eligibility to encompass businesses with a turnover limit of less than $500 million.

The latest amendment, announced in the 2022–23 federal budget, will scale back the write-off and eligibility limits back to $20,000 for small businesses only.

Ms Jacobson said that “while this will feel like a reduction of what was available throughout the pandemic until 30 June 2023 under the temporary full expensing measure, people should be aware that it’s actually an increase as the write-off threshold would have otherwise reverted to $1,000 from 1 July 2023 without this measure”.

The change was part of a broader array of measures introduced for small businesses on Wednesday.

The bill will also create a 20 per cent deduction for businesses that make less than $50 million annually buying equipment that supports electrification or efficient energy use this financial year.

“The new small business energy incentive builds on the Albanese government’s measures to help small businesses become more energy efficient and ease pressure on their energy bills,” Mr Jones and Ms Collins said.

Christine Chen
15 September 2023
accountantsdaily.com.au

How Do I Respond to an Allegation of Trade Mark Infringement?

Imagine you think up a fantastic name for your business and are ready to start operating. You have set up your website and begin advertising online using the business name and logo you have designed.

Everything is going great until you receive a letter claiming you have infringed on someone else’s trade mark. This article explores how you can respond to an allegation of trade mark infringement and the available defences.

Understanding the Allegation

If another business (or their lawyers) notifies you that your business’ name or logo infringes on their trade mark rights, it is essential to first assess whether the allegations are true. Once you understand what the registered trade mark owner is claiming, you can respond with a suitable reply that considers the defences available to you.

The Trade Marks Act 1995 (Cth) (TCA) sets out that if a name or logo is substantially identical or deceptively similar to an existing trade mark (and in relation to the same goods or services), it will amount to trade mark infringement. This is the case if the goods or services are the same or closely related.

You may also be infringing someone’s trade mark if it is well-known in Australia, even though it is registered for unrelated goods or services. Given the trade mark’s notoriety, an ordinary person could make a connection between the unrelated goods or services and the registered mark.

An Example: Using a Well-Known Trade Mark

DC Comics v Cheqout Pty Ltd (2013) 212 FCR 194 (FCA) explains how using a well-known trade mark in bad faith will lead to infringement.

Cheqout applied to register the name ‘superman workout’ in class 41 for exercise classes. DC Comics opposed the application because it has registered the name ‘Superman’ for various goods and services in Australia. They argued that ‘Superman’ is well-known in Australia. Consequently, it would confuse or deceive the public into thinking the ‘superman workouts’ were associated with the comic book character, ‘Superman’.

The Court stated that ‘Superman’ is undoubtedly a recognisable character. However, without a reference to the indicia of the character, there would be no confusion with the phrase ‘superman workouts’.

Cheqout had maintained that they were not associating the ‘superman workout’ with the ‘Superman’ character. However, evidence showed that Cheqout was using the ‘superman workouts’ phrase together with a shield device recognised as a ‘Superman’ symbol to relate to strength and fitness. As such, the indicia of DC Comics was used in association with the name, meaning Cheqout was using their trade mark in bad faith.

Recent Changes to the Law

It is important to remember that when determining whether two competing trade marks are deceptively similar, the Courts will no longer consider reputation or notoriety in an earlier mark to be a relevant consideration.

This new feature of trade mark infringement in Australia was established in early 2023 through the High Court decision of Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8. This case sets a new precedent establishing trade mark infringement in the marketplace.

Defences to Allegations of Trade Mark Infringement

There are several defences available under the TCA, including using any of the following:

a person’s name in good faith (such as part of the name of a company);
the name of a person’s place of business in good faith;
the name in good faith to describe goods and services; or
a name for the purpose of comparative advertising.

If your defence is successful, you can continue using a certain name or logo, and it would not amount to trade mark infringement.

An Example: Using Your Own Name

Optical 88 Limited v Optical 88 Pty Limited [2011] FCAFC 130 illustrates that you would not be infringing an already registered trade mark where the name you are using is your given name.

Optical 88 Limited is a company incorporated in Hong Kong (Optical 88 HK) with trade marks registered in Australia. It brought an action against Optical 88 Pty Ltd (Optical 88 AUS) for trade mark infringement.

Optical 88 AUS was able to rely on the defence that its use of the words ‘Optical 88’ to run its business was in good faith because it was using its own name.

Additionally, the Court clarified that acting in good faith involves considering whether:

it was an honest use of the trade mark;
there was intent to deceive the public into an association that doesn’t exist; and
the trade mark was trying to appropriate the goodwill that the other business had acquired.

If you believe your use of the registered trade mark was in good faith, you may have a valid defence to using the mark. It is important to speak to a trade mark lawyer to ensure that you respond with every possible available defence to you.

Commercial Considerations

When facing an allegation of trade mark infringement, you should consider whether engaging in a trade marks dispute to defend your position is worthwhile for your business. For instance, your business might be relatively new and are yet to acquire any goodwill or reputation with the public or in your industry. In that case, it may be worthwhile to change your business name or logo to one that is not infringing on someone else’s. This option would certainly be cheaper and less stressful than undergoing potential litigation.

On the other hand, you may have grown attached to your business name or logo. Likewise, you may have spent considerable sums of money growing your business around your brand and developed a strong presence in your sector under that name. Accordingly, pursuing your case and trying to get a favourable outcome may be commercially sensible to protect your business and trade mark.

Whether you are fighting your dispute in court or out, it is an expensive and personally taxing process that may still not provide you with a desirable outcome. You should weigh these commercial considerations before responding to an allegation of trade mark infringement.

Key Takeaways

Devising your business’ name and logo is a big part of starting a business. However, you may find yourself at the receiving end of a trade mark infringement notice. The first step is to understand the allegation and consider whether defences are available. It is best practice to speak to a qualified lawyer who can guide you through your options.

Shannon Macdonald
September 8
legalvision.com.au

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Cyber threats facing small to medium-sized businesses (SMBs)

SMBs can be particularly vulnerable to cyber security risks, with limited resources, expertise, and infrastructure all contributing factors as well as lack of awareness and training.

Many fall prey to dangerous practices, like clicking on suspicious emails, using easily guessable passwords, or neglecting timely software updates. This can inadvertently open doors to cyber attackers.

If you are concerned about your business’s cyber security, there are a number of ways to strengthen your cyber defences.

Tips from an expert

Some essential steps that can bolster your business's cyber security:

Discuss cyber threats: regularly chat about scams and cyber security with your team, as keeping the topic front and centre builds awareness.
Implement multi-factor authentication: especially for email and social media accounts.
Install updates promptly: ensure your computers, phones, tablets, and apps are always updated.
Regular backups: always back up your data and test these backups frequently.
Strengthen your password game: using a password manager can help you create and manage robust passwords for all your accounts.

Source: BusinessVic

ATO linking system takes giant stride into business

The revised procedure will encompass an additional 1.7 million entities from 13 November.

The ATO’s revised client linking system takes a giant step forward in November to take in roughly 1.7 million businesses yet to be encompassed by the rollout.

The expansion, which starts on November 13, applies to all businesses with an ABN except for sole traders and includes companies, trusts, partnerships, not-for-profits and superannuation funds.

The six-step procedure, as outlined by the ATO late last year, prompted a storm of protest on social media and angry comments from Accountants Daily readers who described it as a “joke” and “absolutely ridiculous”.

Representatives from CA ANZ, CPA Australia and IPA are understood to have pushed for changes to the system but it survived unmodified, the ATO said.

“The process will follow the steps used by the 191,000 business entities who have been progressively deployed since 19 June 2022,” an ATO spokesperson said, referring to the initial phases of the rollout which took in big business, multinationals and government entities.

Outlining the new procedure the ATO said: “Businesses and organisations included in the process will need to nominate their agent before the agent can add them to their client list.”

“They will need to use the new agent nomination feature in Online Services for Business when they:

Engage a new tax or BAS agent, or payroll service provider to represent them
Provide extra authorisation to their existing authorised agent (for example, the agent begins representing them for a new obligation, such as income tax or a new entity in their group).”

“After your client completes the agent nomination, you’ll have seven calendar days to add them to your client list in Online Services for Agents or your practice software. You won't get an automated notification advising you that your client has completed the nomination. So, make sure you tell your client to let you know.”

Head of policy and advocacy at CPA Australia Elinor Kasapidis acknowledged the ATO’s need to tighten security but said many businesses would struggle with the system.

“Our members are understandably concerned about the extra work it creates for their clients,” she said. “This is especially so for small businesses who have previously relied on their tax agent to do this work for them.”

“Switching to digital systems should make things easier and more efficient, but only if businesses know how to use them. The ATO needs to ensure it provides adequate support to businesses when they begin to navigate this change.”

“We have a diverse society with lots of different needs and accessibility is important. It’s crucial to make sure there are alternatives such as paper and phone-based options for those who require extra support.”

The ATO confirmed it would proceed with the final phases of the rollout, which will take in roughly 800,000 sole traders and more than 15 million individuals.

“We intend to roll out the client-to-agent linking to individuals and sole traders in the future,” an ATO spokesperson said. “We will be consulting with the community before we deploy this tailored solution to them.”

“We have listened to feedback from those entities that have been deployed and we are continuing to enhance the process and provide additional support material.”

Director of 5ways Group accountants Paul Meissner, who was a party to the ATO consultation process on the system, said it was unclear whether the procedure would survive unchanged for the next phase but welcomed the latest expansion despite a few issues.

“As a tax agent, as a small business owner, I don't see what the fuss is about,” he said. “MyGovID is currently being used for tax agents – it’s being expanded.

“The new Online Services for Agents is the accepted platform for agents. Online Services for Business, which is the business version of the portal, is already the accepted contact point for the ATO.”

“The professional bodies are very good at theory and policy. But they don’t have the practical knowledge because they don’t press the buttons every day.”

“Let’s talk about how we can streamline this experience, which the ATO is extremely focused on doing.”

Philip King
22 September 2023
accountantsdaily.com.au

TOP 5 CHALLENGES FOR FAMILY BUSINESSES

Improving cash flow is the no. 1 challenge for most family businesses, according to a new survey.

Grant Thornton's 2023 Family Business Survey reveals the key challenges and focal areas for Australian family businesses.

The top five are:

Improving cash flow (91%)
Recruiting, retaining, and upskilling family members and employees (86%)
Succession planning (72%)
Developing/launching new products (70%)
Expanding into new markets (69%)

With family businesses accounting for about 70% of all Australian businesses and employing about half of the country’s workforce, the research aims to help future-proof family businesses by highlighting the challenges and opportunities for the sector.

Increasing costs, high inflation, rising interest rates, and an uncertain future are all factors derived from the current state of the economy, with predictions Australia could be heading into a recession. However, the research showed 67% of family businesses are very optimistic about the current economic outlook, particularly in relation to the development of new products and expansion into different markets showing their resilience and adaptability.

Family businesses have a clear focus on growth, looking to improve cash flow, develop new products, and expand into new markets. But family businesses are underutilising research and development grants and other government assistance, with most family businesses surveyed (between 50% and 72%) noting that accessing government support was deemed generally not important.

Succession continues to be a key priority for family businesses with 72% of family businesses rating this as important for their business in the next 24 months. Only 15% of family businesses have no plans in place for succession, with 43% currently formulating a succession plan, and 38% already implementing a plan.

Kirsten Taylor-Martin, partner and national head of Family Business Consulting said, “The top two challenges are interesting as they can be linked to the current economic climate where the majority of Australian family businesses are looking to improve cash flow, while also attracting and retaining the best staff. Succession planning comes in at number three and is still such an important issue for family businesses as it can be extremely challenging to balance maintaining family relationships and fairness while encouraging business growth.

“Government grants appear to be an untapped resource for family businesses indicating there is a need for education, simplification and support for understanding available benefits, particularly for innovative family businesses, like the R&D tax incentive and government grant programs.”

The survey revealed four key themes for family businesses:

1. Leaving your legacy – there is a mindset change between generations and whether they see themselves as owners or stewards of the family business. From the 2nd to 3rd generation, there is an opportunity for the family to discuss their involvement in the community and the impact they wish to make. As the family moves from 3rd to 4th generation, the focus shifts to the family legacy.

2. Succession planning – this continues to be one of the major concerns for family businesses in 2023. The challenges include maintaining family harmony, and fairness and ensuring the business prospers.

3. Future growth – sustainability and ESG might not yet be fully resonating with family businesses. It is clear family businesses are guided by their family values, not terminology and mandatory standards.

4. Embracing diversity – the potential for growth when it comes to diversity in family business is currently untapped. Similar to sustainability and ESG, there is a disconnect with many family businesses not fully realising the power of diversity and how it can contribute to the expansion and longevity of the family business.

The 2023 Family Business Survey report showcases what makes family businesses distinctive and unique, and the integral role they play in Australia’s wider economy.

26 September
mybusiness.com.au

ATO interest charges soar to highest level since GFC

The general and shortfall rates for late tax payments rise for the eighth quarter in a row.

The ATO has raised its general interest charge (GIC) rate and shortfall interest charge (SIC) rates for the eighth quarter in a row with both up by 0.25 per cent to levels unseen since the tail end of the GFC in 2012.

The GIC annual rate for the October to December quarter rises to 11.15 per cent while the SIC annual rate goes up to 7.15 per cent. The second quarter of 2012 was the last time that either rate was higher.

The ATO said GIC was applied to late payment of most taxes including income tax, FBT, GST and PAYG, as well as excessive shortfalls in incorrectly varied or estimated instalments.

The rate compounded daily and was calculated using the RBA’s 90-day Bank Accepted Bill rate plus 7 per cent. Taxpayers were notified when it applied and

“You can claim a tax deduction for GIC in the year that it's incurred,” the office said. “On the other hand, you're required to disclose remitted GIC in the year the remission occurs. This applies if you claimed a deduction (or can still claim a deduction) for the GIC incurred.”

Taxpayers could apply for remission of GIC in part or in full.

“We may remit the GIC if there are extenuating circumstances, such as:

The delay in payment being not due to you (for example: natural disasters, industrial action, the unforeseen collapse of a major debtor or the sudden ill health of key personnel) and you took reasonable action to reduce the delay.
The delay in payment being due to you but you took reasonable action to reduce the delay, while it is also fair and reasonable to remit.
Payment of the full amount of GIC would result in serious financial hardship for you.”

The lower SIC rate was introduced in 2005 and applied to amended income tax assessments prior to the period of amendment. It was also calculated on a daily compounding basis using the 90-day Bank Accepted Bill rate plus 3 per cent.

“Generally, the SIC applies from the due date for payment of the earlier, understated assessment until the day before we issue the notice of amended assessment,” the ATO said. “The amended assessment or tax shortfall and the related SIC are due 24 days after the amended assessment is issued.”

Both rates were updated quarterly and generally announced two weeks before the start of that quarter.

Philip King
14 September 2023
accountantsdaily.com.au

Super tax concession changes: consultation

As flagged earlier in the year when the announcement was made, the Federal Government recently released a consultation paper on its proposal to reduce super tax concessions for individuals with super balances over $3 million, including those with self-managed super funds (SMSFs).

Some important questions the paper asked included whether the proposal would create any unintended consequences and whether the current proposed proportioning methods are appropriate. The new measure is not yet law.

To recap, the government proposed in late February that individuals with a total super balance (TSB) of more than $3 million combined in all the super accounts will have their super concessional tax rate changed to 30% from the 2025–2026 financial year onwards. This means from 30 June 2026, the earnings of those individuals on the part of their TSB over $3 million will attract an additional 15% tax. The additional tax will be applied directly to the individual and there will be no change to the tax arrangements within super funds.

The Australian Taxation Office (ATO) will continue to calculate the TSB of all individuals annually using existing information provided by super funds and SMSFs. Individuals will be able to quickly identify whether they will be subject to the new tax by reference to their TSB at the end of each financial year through myGov. As it is proposed, the threshold will not be indexed and is not shared between spouses, family members or between other individuals who have interests in the same fund such as an SMSF.

The additional 15% tax will be determined by the ATO and levied directly on individuals. This will also be imposed separately to personal income tax, and it is intended that the amount of tax payable would not be reduceable by deductions, offsets or losses available under the personal income tax system (i.e. only prior year negative earnings could be applied).

Acctweb

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Small Business Tax Time toolkit for 2023.

Small businesses are the engine room of our economy

In 2020-21 there were approximately 4.5 million small businesses contributing more than $856 billion to our economy, and providing over 6 million jobs.

The Toolkit is one way the ATO looks to help this vital sector. It is reviewed every year to make sure the fact sheets are up to date and reflect what small businesses want to know.

The toolkit includes:

a helpful directory of links to help find information, tools, calculators, learning resources and other support and services;
several fact sheets including one on claiming deductions for the cost of digital expenses, and another on using business money and assets.

We also have 3 fact sheets for primary producers.

For more detail click on the following links: