Business Re-Structuring

There are a range of reasons that business owners may need to consider re-structuring their business. If:

* Your business is experiencing cash flow problems;

* Your creditors are demanding payment of outstanding accounts and threatening legal action;

* You're finding it hard to remain within your overdraft limit;

* Your bank is making demands;

* You have inherited company liabilities as a result of personal guarantees provided;

* You are unable to make payments to the ATO on time

Then you may need to look at restructuring your business as a method of getting it back on its feet and heading in the right direction.

Taking action to get a distressed business back on track is generally the best option for all involved. Following a comprehensive independent review of the business, if it is deemed that restructuring is a viable option the next step is to determine which particular restructuring components best suit the individual situation. Some possible options include restructuring the business, the disposal of some divisions/assets that are not performing well or possible refinancing.

The range of areas that a business restructure can affect reach far and wide. Such areas can include control of the business, asset protection planning, capital gains tax, stamp duty, income tax, GST, land tax, payroll tax, estate planning and succession issues. Depending on the individual situation this can have either be a positive or a negative effect.

Specific examples include that if a sole trader or partnership decides to incorporate, under certain conditions, they may be eligible to deduct, over five years, costs incurred by them in relation to the incorporation such as legal, search or lodgement fees. On the flip side, another entity may be liable for stamp duty on the transfer of assets, capital gains tax and possible loss of tax benefits that the current business structure is eligible for.

It is said there are two types of expertise that are required in order to implement a successful restructure, traditional and contemporary. A knowledge of traditional legal and accounting practices is necessary in order to address areas such as taxation, the rights and shares of owners and the ownership of various types of assets.

Additionally, an up-to-date, working knowledge of the modern business arena is needed to aid the development of modern business models, as well as to improve workflow management and online business and leverage with third parties. This contemporary expertise assists many businesses to operate cheaper, faster and better than their competitors.

As has been demonstrated, there are many issues to be aware of when looking to restructure a business, which is why it is extremely important to enlist the help of professional lawyers and accountants.

At The Quinn Group the highly qualified team of both accountants and lawyers are well equipped to assist you with your business restructuring needs. Having all your needs met by one firm ensures timely and cost effective solutions for you business. Contact us on 1300 QUINNS or click here to email your enquiry.

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Government Introduces Small Business and General Tax Break on Depreciating Assets

In a further attempt to support and stimulate the businesses of Australia, and small businesses in particular, the Federal Government has introduced a temporary "investment allowance" known as the "Small Business and General Business Tax Break".

The original proposed allowance package was amended prior to being approved, with the final version having both an increased amount and scope. The revised allowance provides that for tangible depreciating assets that are acquired between 13 December 2008 and 30 June 2009 small business owners can now claim an additional 10% deduction.

Which assets are eligible for the new "investment allowance"?

Assets that are eligible for the "investment allowance" are any new tangible depreciating assets and also any new expenditure on existing assets that are used in carrying on a business that are considered eligible for a deduction under the core provisions of Division 40 (Capital Allowances) in the ITAA 1997.

Specifically, the deduction is applied to depreciating assets under S.40-30 that already qualify for the capital allowance under Subdivision 40-B, except for intangibles and rights that would otherwise be included by S.40-30(2), (5) and (6).

However, it is important to note that cars will NOT be disqualified from the allowance merely because they use the 12% method.

Additionally, land and trading stock are EXCLUDED from the definition of depreciating assets, and will not qualify for the deduction.

Expenditures above the threshold which are capitalised into an existing asset as a second element of cost will also qualify for the deduction.

How much "allowance" do I get?

The "investment allowance" has different conditions depending on whether the entity is a "small business" or "other business". The general guidelines for each situation are outlined below.

Small Businesses

In order to be eligible to benefit from the "Small Business Tax Break" a small business must have an annual turnover of $2 million a year or less.

Small businesses can claim an additional 30% tax deduction for eligible assets costing $1,000 or more that are acquired between 13 December 2008 and 30 June 2009, and are installed by 30 June 2010.

For eligible assets costing $1,000 or more that are acquired from 1 July 2009 to 31 December 2009 and are installed by 31 December 2010, small businesses can claim an additional 10% deduction.

This deduction is on top of the usual capital allowance deduction claimable for the asset in the taxpayer's income tax return.

Other Businesses

Other businesses are entitled to the same deduction percentage rates for the same defined purchase and installation periods however this only applies to eligible assets costing greater than $10,000.

What are some practical applications of the new "allowance"?

Example 1: A small business that buys and installs a $1,500 computer before 30 June 2009 can claim an additional $450 deduction (i.e., 30%) in its 2008/09 tax return. Example 2: A Landscaping business entered into a binding contact to acquire a new backhoe on 20 May 2009 at an inclusive cost of $50,000.

The backhoe is delivered and ready for use on 20 June 2009 and has an effective life of 8 years.

The business will be entitled to claim the 30% deduction because:

* A backhoe is a depreciating asset for which the business would be entitled to claim a deduction under the core provisions of Subdivision 40-B of the ITAA 1997;

* The asset exceeds the expenditure threshold of $10,000;

* The business started to hold the asset between 13 December 2008 and the end of June 2009; and

* The asset was installed ready for use before the end of June 2010.

The deduction will be 30% of the asset's first element of cost under Subdivision 40-C (i.e., $15,000).

When lodging its 2008/09 income tax the business will be able to claim this deduction in addition to the usual depreciation deduction in respect of the asset.

If the business had delayed this investment until after 30 June 2009 - for example, until September 1 2009 - and had it installed ready for use before the end of December 2010, the 10% rate would apply (meaning it would be able to claim a deduction of $5,000).

The information above is a general overview of the Government's new Small Business and General Business Tax Break. If you have recently purchased for your business, or perhaps you are considering purchasing capital investments in your near future, then you may be eligible for the "investment allowance". For more information on how you can make the most of this Government benefit contact the tax and accounting experts at The Quinn Group on 1300 QUINNS or submit an online inquiry form.

Are You Entitled to Law Enforcement Officer Retirement?   Workers' Compensation Rights - Understanding Employers and Employees Workers' Compensation Rights   Jones Act Lawyer - Your Protection   Train & Railroad Accidents and Railroad Employees   New York Wage and Hour Law   How to Fight For Unpaid Overtime