Thinking Ahead - Issue 11

thinking
ahead
ISSUE 11 | winter 2015
Tax reform –
what it really
means for
small business
+ What is your business really worth?
+ HR – avoiding recruitment pitfalls
+ Philanthropy – giving today to help
someone tomorrow
thinking
ahead
contents
Incubating new business
1
Knowing the value of your business
2
Protecting your most important asset
3
Justice for French taxes
4
Work-life balance - facing reality
5
The best person for the job
6
Tax talk
9
Hands off my property!
10
Giving someone shade tomorrow
11
Spotlight
12
Bentleys’ news
13
Thinking Ahead is Bentleys’ quarterly publication of news and information for individuals and business.
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professionals
and
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Zealand
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provide service to family business, small to medium business,
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g
business advisory
Incubating new
businesses
Turning a great idea into a profitable business can be fraught
with unexpected and unknown challenges for a young
entrepreneur. Taking a few important steps at the beginning
of the journey can set you on the path to success.
James Allen
Director, Business
Advisory Services
Bentleys, South
Australia
To help build and grow young enterprises,
Bentleys South Australia created the
Bentleys’ Incubator in partnership with
Renew Adelaide. Renew Adelaide is a
not-for-profit organisation that pairs young
creative artists and entrepreneurs with
unused properties in the Adelaide central
business district (CBD).
On rolling 30-day rent-free licences of
occupancy, these young business owners
test their innovative products in a prominent
CBD location they could not otherwise
afford. The property owners gain foot traffic
and exposure from the new business and
the community benefits with renewed
vibrancy and activated street scapes.
Out of this work, we identified 6 important
lessons.
1. Identify key objectives
Businesses exist to provide returns to their
shareholders. For a micro-business, this
is usually the sole owner and operator.
Micro-businesses are usually born from
passion, which can take on a life of its
own. Often the business owner isn’t fully
aware of why they are in business. We
help the business owner identify their
motivation for being in business.
Is making money a key objective? Is being
a product leader what drives them? Or is
their primary concern a better work-life
balance? Objectives drive our strategic
thinking and resource allocation and
accordingly are an important element
to satisfy.
2. Understand the market position
If you can’t identify what your customers value
from your product, it’s difficult to position a
business for success, or invest scarce capital
to achieve the right outcomes. For example,
it could be a case of making sure you have
the appropriate stock to grow sales or push
into a key market. Or you might need
to increase your capability to head off a
competitor or satisfy a customer.
3. Develop financial reporting systems
Fundamental to any business is its ability to
monitor and improve its financial performance.
A sound reporting process will identify trade
in key product lines. This will allow analysis
of product segments, profitability, fixed and
variable costs and sales channels. All are
fundamental to developing gross and net profit
margins, understanding product contribution
margins and profit targets.
4. Devise a strategy to support and
fund growth
Funding is scarce for a new micro-business.
Once we understand the objectives and
the proposed business model, we can build
strategies to achieve the owner’s goals for the
business. At the same time, we need to ensure
the business is able to grow organically, or find
the funding and resources needed to jump to
the next level.
5. Model cash flow and plan
to succeed
Once we have established a business’s cash
flow, we can help build a business that will
support the business owner to achieve their
personal as well as business goals. We will
devise a plan to ensure the business can pay
its future obligations and achieve working
capital targets.
6. Educate, educate, educate
Terms like GST, cash flow, contribution
margin, fixed costs, structuring, net profit,
PAYG withholding, super stream, debtors and
payables can all be confusing to a new business
owner. Working side-by-side with the business
owner, we help them accumulate knowledge so
they fully understand their responsibilities and
can take control of their business.
To find out more about setting your
new business on the right track,
contact a Bentleys office near you.
bentleys.com.au & Bentleysnz.com | Bentleys thinking ahead | WINTER 2015 3
business advisory
KNOWING
THE VALUE
OF YOUR
BUSINESS
Do you really understand the true value
of your business? Business owners are
unsure about the real value of their
business and may also confuse value
with price. This can result in an incorrect
business decision or a less than
optimum outcome of a transaction.
While the discounted cash flow methodology
is accepted within the industry as probably the
purest method of valuation, it is less commonly
used in the small to medium enterprise (SME)
space due to the requirement of precise
knowledge of all cash inflows and outflows
of your business from inception to the end
of its life.
A modification of this method (the
capitalisation of future maintainable earnings
method) is most commonly used for valuing
mature commercial businesses with a history
of profitable trading and an expectation of
continued profitability. This methodology
involves capitalising the earnings of a business
at a multiple which reflects the risks and
opportunities of the business and the stream
of income that it generates.
To arrive at an appropriate multiple
(or capitalisation rate), the valuer needs to
understand your business thoroughly, including
its key drivers, competitors, customers, market
position and other factors. The valuer will
then build a risk profile with which to assist in
determining the appropriate multiple.
Having a good understanding of the
value of your business is critical for
key business decisions.
Tina Polimeni
Partner,
McLean Delmo
Bentleys
Amanda Fielding
Manager, Business
& Valuation Services
McLean Delmo
Bentleys
Having a good understanding of the value of your
business is critical for key business decisions.
What is a business valuation?
A business valuation provides an opinion of
the ‘fair value’ of your business (and/or equity
if applicable) at a point in time. The valuation
process considers a suitable approach (either
income approach, market approach or assetbased approach) and then selects the most
appropriate valuation methodology for the
business in question. Commonly accepted
methodologies include capitalisation of future
maintainable earnings, discounted cash flow and
net tangible assets.
When do you need a
business valuation?
There are several circumstances
which may require a business
valuation, including:
• Selling a business
• Buying a business
• Selling or buying equity in a
business (change of equity
owners)
• Thinking of retiring and handing
business on to family
• Partnership dissolution
• Settlement of family law or
property dispute
• Bank lending requirements
• Tax reasons (such as,
consolidations, capital gains
tax (CGT) purposes, transfer of
assets).
What are the benefits
of a business valuation?
Understanding the true value of
your business is a powerful tool.
There are a number of additional
benefits which are derived from a
business valuation, including:
• It’s a useful tool in adding
weight to your asking price
when selling a business.
4 WINTER 2015 | Bentleys thinking ahead | bentleys.com.au and Bentleysnz.com
• It provides a level of comfort to
prospective purchaser.
• It will assist in making sure
you don’t pay too much when
buying a business (often a major
contributor to business failure).
• It will help you identify your key
business drivers and highlight
the best options for realising the
value when it’s time to sell.
Who can prepare a
business valuation?
Your valuer needs to understand
your business operations,
key value drivers, competitive
positioning and your financial
performance, amongst other
things. To protect you in the
valuation process, your valuer
should also be experienced
and compliant with the relevant
accounting standards.
For more information
on business valuations,
contact your Bentleys
advisor today.
INSURANCE
A typical
life cycle
Protecting
your most
important
asset
Do you insure your car and your house? Do you place a
high value on your children’s education and put money
aside for it? The answer is probably ‘yes.’ But do you
insure your most important asset – your life and future
income? More often than not, the answer is ‘no.’
Why don’t we feel a need to protect ourselves?
One reason could be that many people think
illness or injury won’t happen to them during
their working life. Or if they do get hurt they’ll
simply be taken to hospital and get better.
While this is probably true in many cases,
have you thought about who will pay for the
bills while you’re recovering? Who will pay the
mortgage and put food on the table? Who will
pay for the children’s education?
It’s important to take a reality check and
understand that if we cannot work we cannot
earn money. If we cannot earn money, we
cannot pay the bills. It’s as simple as that.
Working out where you’re at in your life will
help you determine what insurance you need.
To find out the best insurance cover for
you, contact a Bentleys advisor near you.
Brendan Raynor
Senior Advisor
Financial Planning,
Bentleys, WA
Young single person
•Started career and landed
first job
•Taken out a personal loan to
buy a car
•Found the love of your life
and about to tie the knot.
Young couple
•Just bought a house and a
mortgage to go with it
•Has personal debt as well as
maxed-out credit cards
• About to start a family
• Receives a pay rise
•Planning to send the
children to a private school
and university.
Mature couple
•Renovating the house and
need to increase or re-draw
the mortgage
•Increasing debt to purchase
an investment portfolio or
rental property
•Has a special-needs child
you want to ensure will be
looked after when you’re
gone
•Physically or financially
dependent parent/s
•Divorced and on your own
again
•Want to leave an inheritance
for children or grandchildren.
Self-employed
•Has fixed expenses such as
rent, lease payments and
phone bills
•Takes out a business loan
to purchase a commercial
building
•Goes into business with a
new partner
•Has key staff within the
business who contribute to
profitability.
It’s important to re-assess your
insurance needs as you reach
certain milestones in your life.
Talk to an advisor to help them
work out what you need. Having
the right cover will give you the
peace of mind that you will be
okay financially should you not
be able to work.
bentleys.com.au & Bentleysnz.com | Bentleys thinking ahead | WINTER 2015 5
tax
Justice for
French taxes
With globalisation, more and more people are being
affected by tax laws in the foreign countries in which
they live or own property. Recent court rulings have
created significant financial opportunities for New
Zealanders and Australians with changes to the social
charges tax and capital gains tax in France.
To finance the social security system and
repay social debt, in 2012, France imposed
a social contribution charge for nonresidents. Referred to as ‘social charges’,
these charges comprise the contribution
sociale généralisée (CSG) and contribution
au remboursement de la dette sociale
(CRDS). The combined rate of these charges
of 15.5% was imposed on property income
for rent and capital gains from a French
source. This included overseas income
earned by a foreigner living in France on
secondment for their foreign employer.
Historically, France charged non-residents
the higher rate of 33.33% for capital gains
tax (CGT), with French residents paying
a rate of 19% (previously 16%). CGT is
applied on the profit for both the sale
of property and the sale of shares of a
property-owning company.
The total of improperly
imposed social charges
could be in the vicinity
of €1 billion.
The 2014 Capital Gains Tax
rulings
Lee Harris
Trust Administrator
Bentleys, New
Zealand
Many non-residents of France are now
able to claim for reimbursement of social
charges and overpaid capital gains tax.
The Court of Justice social
charges ruling
On 26 February 2015, the Court of Justice
ruled that France was not entitled to apply
social charges in respect of income that
a Dutch national resident, Mr Gérard de
Ruyter, had earned in the Netherlands.
Mr de Ruyter had been working and living
in France for several years for his Dutch
employer. While he contributed to, and
would be entitled to benefit from, the Dutch
social security system, he was not entitled
to offset the social charges that had been
paid in France against his Dutch social
security system contribution. This effectively
amounted to a double imposition.
The Court noted that the imposition of
social charges on Mr de Ruyter subjected
him to unequal treatment compared with
other residents in France who were able
to benefit from the social charges to which
they were contributing. The existence of
an employment relationship was held to
be irrelevant to the right to impose social
charges on a person not entitled to benefit
from them.
The ruling has immediate impact for
European Union permanent residents and
citizens. This is expected to pave the way
for all non-French residents to claim full
reimbursement for incorrectly paid social
charges.
A French Supreme Court and a Marseille
Administrative Court 2014 decision each
held that a higher CGT rate for non-residents
was contrary to the European Union concept
of free movement of capital. Refunds were
awarded to the respective non-resident.
Applying for a refund
If you have been wrongly
paying social charges or
have paid CGT at the higher
non-resident rate in France
since 1 January 2013, you
may be entitled to lodge a
claim for reimbursement.
Several examples would be
if you contributed to another
country’s social security
system and you were also on
secondment in France, had
French investment income or
owned French real estate.
Any refund amount will
depend on the applicable
rate at the time. For an
example of the potential
for a CGT refund, if the
capital gain on a sale
was €100,000.00, the CGT
payable by a French resident
at the previous rate of 16%
would be €16,000.00. Nonresidents have been subject
to a CGT rate of 33.33%,
(€33,333.00 in this example),
making the potential
overpaid CGT €17,333.33.
This is welcome news for
New Zealand and Australian
non-residents who have a
link with France, particularly
if that link includes the sale
of real estate in the last two
years.
For all your taxation needs in New
Zealand, Australia and overseas,
contact a Bentleys advisor near you.
6 WINTER 2015 | Bentleys thinking ahead | bentleys.com.au and Bentleysnz.com
business advisory
Work-life balance
– facing reality
*A special thank you to our clients for sharing their thoughts about work and life balance at Bentleys’ recent business boot camp.
For many small business owners, the job doesn’t end
at 5pm on Friday afternoon. Even if you turn off your
phone and manage to stop yourself from checking
your emails over the weekend, it can be difficult to
‘switch off’ mentally.
Increasingly, work life is impinging on our
private lives. For small business owners who
often invest so much energy and time in their
business, financial stress, long hours, limited
family interaction and reduced wind-down
time come at a cost.
According to recent research by the
Australia Institute in conjunction with
beyondblue, today’s blurred boundaries
between work and home are associated with
increased stress levels, burnout and poor
physical health.
It’s time to take a reality check and make
some important changes to the way you
manage your business.
Find a mentor: Choose
someone who already has
business experience and who
can advise you on a range of
business matters. A mentor
can provide you with contacts,
insight into events and contracts,
valuable feedback and help you
make the separation between
work and personal life.
‘I had a friend
who was quite
successful. I asked
them for a few
pointers and they
were happy to help.
I’m sure it saved me
from a few blunders.’*
Kim Lambert
Manager
Bentleys, Newcastle
Know when you need to
get help: Is the role you’re
playing in your business now
the best option for you and your
business? Or could someone
else be doing it more efficiently
and effectively? For example,
instead of working late to finish
the invoicing, could you go home
early and pay someone else to do
it? If you had someone else chase
your debtors for you, would you
have time to make more sales?
‘I started off doing my
own bookkeeping.
I did a shocking job
and ended up losing
track of who owed
me money.’
For many, owning a business is a labour
of love. If you don’t love what you do, both
your business and mental health will suffer.
Owning a business doesn’t mean you have to
do everything yourself. It’s vitally important to
know when to ask for help. Persevering with
tasks you’re not suited to or skilled at could
cost you more than getting the expert help
at the beginning. This applies to everything
and anything, from bookkeeping to debt
collection, to human resource management,
to sourcing suppliers, to job costing.
Juggling work, family and your personal
needs is not an easy task. But it’s an
important one – for the sake of your loved
ones, the success of your business and your
own health and wellbeing. The first step is to
value all aspects of your life and to make a
commitment to creating a better balance.
Source: The Australia Institute report Hard to
Get a Break? www.tai.org.au/content/hardget-break-1
Be honest about your finances:
If your business is struggling, let staff
know what they can do to help. If you’re
having trouble paying a supplier, tell the
supplier. Offer to pay in instalments or
give them a payment date (then make
sure you stick to it). By better managing
your financial issues, you will be able to
take away some of the stress.
‘I found that letting my
suppliers know I couldn’t
pay their bill upfront
was better than ignoring
the problem. I’m not as
stressed; I organised to
pay my bill in instalments
and am able to continue
using the supplier.’
For all your business advisory needs, contact a Bentleys advisor near you.
bentleys.com.au and Bentleysnz.com | Bentleys thinking ahead | WINTER 2015 7
FEATURE
The best person
for the job
Getting the recruitment and selection process right
is critical for the success of your business. Hiring the
wrong person for the job could be a costly error and
lead to reputational damage and months, or even
years, of performance management issues.
In a busy competitive market, finding the
time or the right expertise to put effective
people management strategies in place
can be a struggle for many business
owners. Yet investing in your people from
the outset is essential to the success and
profitability of your business.
The costs and risks of hiring the wrong candidate
can be crippling for a small business.
For a cost-effective and time-efficient
people management strategy, you need to
work with your people management team
and follow a systematic recruitment and
selection process. In particular, you need
to do three essential things.
1.Get a clear understanding
of what you need
Define the position: To find the best
candidate, you first need to identify
the position then articulate all that
the position entails. Talk to your team
members and develop a comprehensive
position description that contains the
skills, attributes, qualifications and key
responsibilities of the position.
Describe personal attributes: Next,
develop a person specification that
describes the personal attributes of the
person you wish to hire. For example,
do they need to be flexible with working
hours? What type of personality will fit best
within your organisation? Do you need
someone who is easy-going and robust, or
structured and task driven?
Write a strong job advertisement: The
purpose of the job advertisement is to
attract applicants with the right level of
Heidi MayhewSanders
Director – Human
Resources
Bentleys, Queensland
competency, the appropriate skills and
attributes, and the required experience
for the job. So it’s important that your
advertisement is carefully written.
In your advertisement, distinguish between
essential and desirable characteristics.
For example, essentials could include
particular qualifications (such as a degree or
certificate) as well as experience in certain
skills (for example, experience dealing with
people). Desirable requirements are those
that would be a bonus to the position (for
example, experience in your industry).
The number of essential and desirable
criteria will vary depending on the position.
Too many criteria can discourage potentially
strong applicants from applying. As a
guide, aim for 4 to 6 essential and 1 or
2 desirable criteria. When you write your
job advertisement, make sure potential
applicants can find your advertisement.
8 WINTER 2015 | Bentleys thinking ahead | bentleys.com.au and Bentleysnz.com
Use key words and industry terms that potential
candidates are likely to use when searching
online (for example, via social media or job
search sites such as SEEK or Career One).
2.Set the clock
Establish a timeline for each milestone of the
recruitment process. Your milestones will be:
1. Open applications
2. Close applications
3. Review applications
4. Shortlist applicants
5. Conduct first interview
6. Conduct second interview
7. Check references
8. Offer position to successful candidate.
Your overall recruitment timeline will vary
depending on market conditions and the
requirements of the role. As a guide, you will
need to allow approximately 3 weeks for the
entire recruitment process.
3.Use the right tools
Decide on the tools. Assess and agree with
your team the most effective tools to use
throughout the recruitment process.
For example, will you advertise via the internet,
act on referrals or use a recruitment agency?
You may decide to use a combination of all
three.
Create a candidate scoresheet. List on your
scoresheet the essential attributes and skills for
the job (drawn from your position description).
For example, a skill could be ‘must have strong
written and verbal communication skills’; an
attribute could be ‘must have high energy and
passion for this role.’
Form an interview panel. Choose at least
2 team members for the interview panel –
this will help protect your organisation from
any industrial relations disputes, such as a
discrimination claim. Working in a team will
help you efficiently assess applicants and
bentleys.com.au and Bentleysnz.com | Bentleys thinking ahead | WINTER 2015 9
FEATURE
Make the
offer
gather feedback, thereby reducing the risk
of prolonging the recruitment process and
losing good applicants.
Write the interview questions. Write
questions relevant and appropriate to the
job. The questions need to be open ended,
and need to elicit information about the
applicant’s skills, their attributes and their
behaviour.
Assign each panel member several
questions to ask at the interview. Topics
for interview questions could focus on the
candidate’s:
• background and motivations
• achievements and aspirations
• problem-solving ability and initiative
• management styles
• ability to fit into the team and culture
•technical or trade knowledge.
If your panel members are inexperienced
in recruitment, consider providing training
in interview skills.
Consider testing applicants. Testing can
be an effective and efficient way to add
an objective perspective to the selection
process. There are many different types
of tests that will be applicable to your
process. There are 3 kinds of testing worth
considering:
1.Psychometric testing (to test cognitive
and emotional intelligence)
2.Personality profiling (to assess
personal attributes)
3.Skills testing (to check whether the
applicant has the required skills for
the job.
The advantage of psychometric testing
is that you can objectively and scientifically
measure ability from an objective, scientific
perspective. Depending on the job
requirements, you could, for example, test
applicants for their ability to read people’s
emotions which is a key skill needed for
leadership roles.
Personality testing can help you assess
whether the applicant will fit in with
your team. Testing particular skills (such
as proficiency in Microsoft Office), will
help determine whether the level of the
applicant’s skills is appropriate for the job.
To help you decide on the most effective
form of testing, it’s worth speaking to a
human resources consultant.
If you choose to test applicants, decide
at the beginning of the application process:
1.What type of testing you will use
2.How you will use it (for example,
online, at an assessment centre or in
the field)
3.When you will use it (before
interviewing applicants or after the
first interview).
You will also need to inform applicants,
usually at the first interview, of the testing
you will be using and check whether they
are willing to be tested.
Check references. When you’ve found
the right candidate, be sure to thoroughly
check no fewer than two references before
you make your verbal offer. If you’re
concerned about losing the preferred
candidate due to slow reference checking,
make the verbal offer ensuring the offer is
subject to a reference check.
Any offer should first be
discussed and agreed upon
by the recruitment panel.
Initially, verbally offer the job
to your preferred candidate
then follow up your verbal
offer with a formal letter and
contract of employment.
The contract of employment
must outline the offer
as well as detail the
remuneration, the role and
the terms of employment.
If the successful applicant
wishes to take up your
offer, they will need to sign
the contract and return a
signed copy to you.
A contract of employment
and letter of offer are
important documents for
all employees. Establishing
these at the beginning of
employment reduces your
risk of industrial relations or
employment relation issues
or disputes down the track.
If your organisation does
not have solid employment
documents, your human
resources consultant can
help put them in place.
For help setting up
your recruitment and
selection processes
contact a Bentleys
human resources
advisor today.
For a detailed recruitment
flowchart, call your nearest
Bentleys office.
To avoid a recruitment nightmare, it’s vital that you have
a sound recruitment and selection policy and procedure
in place. Failure to do so will cause a ripple effect that
will impact on all aspects of your business, from job
performance to staff retention.
10 WINTER 2015 | Bentleys thinking ahead | bentleys.com.au and Bentleysnz.com
tax
Tax Talk
In response to the Australian Government’s white
paper on tax reform, Re:think, Bentleys prepared
a submission with a particular focus on the micro,
small business and small to medium enterprise
(SME) sectors.
Foreign investment
The Australian Government thinks that
foreign investment needs to continue and
grow and that our taxation system should
help make this happen. Bentleys knows,
however, that businesses are much less
certain. This is particularly so in rural areas
where the impact of foreign investment has
perhaps been more visible.
We believe the Australian Government
will need to work hard to sell these benefits
to the small business sector.
For more information
about the Australian
Government’s Re:think
paper or to join the tax
reform conversation, go to
http://bettertax.gov.au/
GST
The Re:think paper made the point that
Australia has a low GST rate by world
standards. A range of exemptions also
makes it more complicated and increases
businesses’ compliance costs. The white
paper makes it clear that personal income
tax will continue to increase as a percentage
of total taxation revenues.
We believe that an inherent dislike by the
community of any new or increased tax will
make such future changes difficult.
Complexity of tax system
The complexity of the taxation system
and the attendant compliance costs are
a growing problem and place a particular
burden on the micro, small business
and SME sectors. Bentleys supports the
recent budget announcements to assist
small business. We also welcome the
simplification measures arising from the
Board of Taxation review of tax impediments
facing small business.
However, if the tax system for business
owners really is to be made less complex,
there needs to be an ongoing focus on
simplifying tax rules and administration in
small business sectors.
Technology
The Re:think paper proposed several
possible initiatives to tackle the issue of tax
complexity, including the use of technology
to better harness and use data.
While technology might offer simplicity
and efficiency in the long term, we believe
a considerable amount of work needs
to be done to help businesses face this
technological challenge. This is particularly
the case for micro and small businesses, as
well as non-metropolitan businesses.
Comments in our submission to the
Australian Government were based on our
findings in our recent Voice of Australian
business surveys.
To find out more about Bentleys
Voice of Australian business surveys
go to http://www.bentleys.com.au/
Our-Voice/Bentleys-The-Voice-ofAustralian-Business
bentleys.com.au & Bentleysnz.com | Bentleys thinking ahead | WINTER 2015 11
LEGISLATION
Superannuation
Hands off my
property!
Under the Personal Property Securities
Act 2009* (PPSA), a security interest
secures payment of a debt or performance
of another obligation (for example, a
charge over a motor vehicle or the assets
of a company). It also includes those
transactions not traditionally considered as
giving rise to a security (for example, sale of
stock subject to retention of title).
A Purchase Money Security Interest
(PMSI) is a special type of security interest
that has ‘super priority’ over other security
interests if it is registered on the Personal
Properties Security Register (PPSR).
A PMSI arises in 4 circumstances:
1. Supplying stock
Example: Stephen supplies goods to Hugh
on credit subject to trading terms that
include a retention of title clause. Stephen
has a PMSI in the goods to the extent of the
unpaid purchase price.
2. Providing finance
Example: Stephen provides finance so
that Hugh can purchase goods from Kate
and Stephen takes a security (by way of a
charge) over the goods from Hugh. Stephen
has a PMSI in the goods to the extent of
the finance proceeds applied by Hugh to
purchase them.
3. Leasing goods
Example: Stephen, who regularly leases
goods, leases printing equipment to Hugh
under a 36-month lease. Stephen has a
PMSI in the equipment. 4. Supplying goods under consignment
Example: Stephen consigns goods to Hugh to
sell for Stephen under an arrangement which
is a ‘commercial consignment’ for PPSA
purposes. Stephen has a PMSI in the goods.
To obtain the super priority status of
a PMSI you must satisfy the following
requirements:
• register on the PPSR
•specify on registration that the security
interest is a PMSI, and
• register within a specific timeframe.
Stephen Wicks
Manager,
Bentleys Corporate
Recovery
For help registering
your personal property,
contact a Bentleys
advisor today.
For more information about
the Personal Properties
Security Register go to:
www.ppsr.gov.au
Why is correct registration important?
If you fail to register your PMSI, or you
register it incorrectly:
•another party that does have a
registered security interest may have
priority over the stock or equipment that
you provided, or
•an administrator or liquidator of a
company will be able to sell your stock
or equipment without any regard for
your security interest.
If you don’t register your PMSI, all you will
have is an unsecured claim in the liquidation.
The onus will be on you to prove to the
insolvency practitioner that the debt existed.
If you have a validly registered PMSI and
a customer has gone into liquidation, the
liquidator is required to return:
•stock that is unpaid for that is
identifiable (or may offer to pay you an
amount for the stock)
•the asset purchased with your finance
(or may offer to pay the outstanding
finance amount from the proceeds of
selling the asset)
•equipment leased from you (or may offer
to pay you an amount up to the lesser of
the net sales proceeds and the amount
payable on early termination of the
lease)
•goods that were provided under a
‘commercial consignment’ (or may offer
to pay you an amount for them).
The rules for effective registration are technical. If you
don’t ensure that your registration is effective, you won’t
have a security interest – the result will be the same
as if you hadn’t registered at all. It’s wise, therefore, to
seek legal assistance to make sure your registration
is effective. Equally important are effective business
processes so that when a security interest does arise you
ensure you register it within the required timeframes.
12 WINTER 2015 | Bentleys thinking ahead | bentleys.com.au and Bentleysnz.com
* ‘Personal property’ means all forms of property other than land.
Your customer has stock on their business premises for which you have not yet
been paid. What would happen if your customer went into liquidation and, despite
your terms and conditions, you discover you’re unable to recover the stock?
PHILANTHROPY
Giving someone
shade tomorrow
+
Public funds for deductible gift recipients are either funds established and controlled by government or government authorities,
or funds to which the public is invited to, and does, contribute deductible gifts and contributions.
As our wealth increases, our minds often turn to how we
can use our wealth in a more meaningful way through
philanthropy and other community-minded activities.
One of the world’s most generous
philanthropists today, the American
business magnate Warran Buffett once
said, ‘Someone is sitting in the shade today
because someone else planted a tree a
long time ago.’ Earlier this year, Buffett
donated $US2.6 billion, much of it to the
Bill and Melinda Gates Foundation, which
provides grants for education, world health
and population, and community giving in the
Pacific Northwest.
Traditionally, philanthropy has been
pursued either by regular donations or by
a bequest in a Will. Another option is a
privately-operated trust known as a private
ancillary fund. Each year, a percentage of
the market value of the trust’s assets (at
least 5%) must be distributed to public
deductible gift recipients (DGRs) nominated
by the trustee of the trust.
A private ancillary fund has DGR status
which means it can accept deductible
donations from the establishing individual
Colin Chirgwin
Director Taxation,
Bentleys NSW
Setting up a private ancillary fund means
you too can plant a tree today to provide
shade for someone in the future.
and family members (but not others).
Earnings from invested assets are also
exempted from income tax.
Reducing tax by offsetting
donations
One of the key advantages of establishing a
private ancillary fund is that you can make a
large donation today but extend the gifting
of funds to your chosen public DGRs+ over
many years. Consider the following tax
benefits of this:
1.Deductible donations can be offset
against franked dividend receipts.
Potentially, you can obtain refundable
offsets for imputation credits once you
lodge your income tax return.
2.The donation can be offset against a
net capital gain. Potentially, you can
ensure the funds remain available for
gifting over time.
For example, if you receive a fully franked
dividend of $70,000, which is taxable at your
highest marginal rate and include it in your
income tax return, you will pay (after credits)
$19,000 in income tax, Medicare and debt
levies.
If you were to donate the $70,000 to your
private ancillary fund, the full imputation
credit of $30,000 can be offset against the
tax payable on your other income. In this
way, the full benefit of the $70,000 receipt
(rather than $51,000, or $70,000 less
$19,000) can be distributed, over time, to
your chosen DGRs.
Establishing a private ancillary fund does
require a degree of work and planning.
There are many rules and regulations
associated with the structure of the fund, the
preparation of the constituent documents,
and who will be present on the board of
the corporate trustee. With the help of your
trusted advisor, setting up a private ancillary
fund can be immensely rewarding. Then you
too can experience the reward of planting a
tree today to provide shade for someone in
the future.
To find out how you can become
involved in philanthropy, talk to your
Bentleys advisor.
bentleys.com.au & Bentleysnz.com | Bentleys thinking ahead | WINTER 2015 13
spotlight
A tribute to long
and loyal service
– Nick Storer
After almost 10 years as a member and valued
Chairman of the National Management Board,
and 23 years of service with Bentleys SA, Nick
Storer recently announced his retirement.
On 2 July 2015, Nick handed over
leadership of the National Management
Board to Martin Power, Director of Audit,
Bentleys Queensland. The same day, Edi
Carlesso of Bentleys SA also joined the
National Management Board.
‘Nick Storer’s contribution to Bentleys
and his continued support of his clients,
cannot be overestimated,’ says Michael
Ruggiero, Managing Partner of Bentleys
SA. ‘He has been instrumental in
building our brand and uniting Bentleys
as a federation of firms. Locally, Nick
has developed extraordinarily strong,
trusting relationships with his clients
– many of whom represent the wine
and arts sectors. These relationships
will, no doubt, endure as friendships
for many years. I’d like to thank Nick
for his wisdom, level-headedness and
professional support to date.’
Nick will continue to be available to
clients and support the Adelaide office
as well as chair important forums. His
valuable assistance will ensure a smooth
succession.
Nick Storer
‘Nick has been
instrumental in
building our brand
and uniting
Bentleys as a
federation of firms.’
Michael Ruggiero, Managing
Partner of Bentleys SA
Spotlight on Adelaide, SA
Bentleys SA has forged a reputation as a contemporary, engaging and informed business
advisory firm in the South Australian market since its establishment in 1979.
With an expanding range of
specialist services, Bentleys SA
works with public and private
sectors to deliver a full suite of
high-quality services to help clients
excel and manage changing market
conditions.
‘We have very strong
relationships with our clients,
and their feedback informs our
development,’ said Michael
Ruggiero, Managing Partner. ‘We
are continuing to improve our
systems, processes and programs
to provide added value for our
clients in the future and become
the leading mid-tier advisory firm in
South Australia by 2020.’
Clients include commercial and
private clients, small to medium
sized enterprises (SMEs) and family
businesses. Industries encompass
agribusiness, health and aged care,
property and construction, retail
and trade, and government.
14 WINTER 2015 | Bentleys thinking ahead | bentleys.com.au and Bentleysnz.com
Services
• Business advisory
• Audit and assurance
• Taxation consulting
• Superannuation
• Corporate recovery and
insolvency services
• Financial planning and
wealth management
• Research and
development (R&D)
taxation incentives
NEWS
Martin Power
Bentleys welcomes
the new National
Management Board
Chair
Martin Power, Director of Audit Bentleys
Queensland, took up the role of Chair of
the National Management Board from
Nick Storer on 2 July 2015. Joining
Bentleys in 1987, Martin has over
25 years experience in public accounting.
Martin was a former Chair of the National
Technical Audit Committee, Director of
Bentleys Queensland’s health and aged
care, and community and not-for-profit
business units as well as Chair of the
superannuation business unit.
Louise Vigar
Unforgettable memories of the
Hyatt on the Bund, the spectacular
Pudong skyline, the Huangpo River
and the historic Bund area.
Partners’
Conference –
Shanghai
Gerard Costello
and Kate Tanner of
Bentleys Queensland
Trek for Oxfam raises
over $2,000
Promoting Bentleys
SA’s brand
Louise Vigar joined Bentleys SA in
February this year to build brand
awareness, add value for existing
clients and attract new business.
What started as a casual walking group
of four work colleagues ended with a
100 kilometre trek through the Australian
bush in support of Oxfam charities across
the globe. ‘The trek was one of the most
difficult challenges I have faced, demanding
preparation and teamwork from everyone
involved,’ said Bentleys’ team member
Gerard Costello. ‘This achievement would
not have been possible without the help of
our sponsors from Bentleys and the wider
Bentleys community who helped raise
money to support this amazing cause.’
Mayoral visit to
Bentleys Qld
The Lord Mayor of
Brisbane with Bentleys’
Ben Cameron and
Patrice Sherrie
The Right Honourable, the Lord
Mayor of Brisbane, Councillor
Graham Quirk was welcomed on
29 May to a luncheon held in the
Brisbane office’s boardroom. To
share conversation and insight
into Brisbane’s future economic
development, Councillor Quirk
was joined by Bentley’s Ben
Cameron (Managing Director) and
Patrice Sherrie (Director, Specialist
Advisory) and a small group of
Bentleys’ clients.
The Bridge to China theme gave
an international flavour to this
year’s partners’ conference held
in Shanghai from 11 to 15 April.
As well as partners from Australia,
Bentleys welcomed Kreston affiliates
from Hong Kong, Indonesia and
McGregor Bailey from New Zealand.
We were also pleased to welcome
Jon Lisby (Kreston International),
Roger Thompson and Nick den Heijer
(Bentleys in Auckland), and Karen
Gambles (Bentleys, Tasmania) to their
first Bentleys conference.
L to R: Maia Simmonds, Laura Dunn,
Sarah Pound (of Bentleys NSW), Georgia
Miansarow
ROWING
Bentleys helped to raise almost
$9,000 at a fundraising event to
support the crew of NSW Rowing
Australian Women’s Lightweight
Quad. The team will be representing
Australia at the World Championships
in France later this year.
bentleys.com.au and Bentleysnz.com | Bentleys thinking ahead | WINTER 2015 13
Think ahead
Talk to Bentleys today
Find out how we can help – call an office near you.
Brisbane, Sydney, Melbourne, Adelaide, Perth, Hobart, Newcastle,
Auckland and centres across Australia
bentleys.com.au
bentleysnz.com
Bentleys is a national association of independent accounting firms in Australia and New Zealand
The member firms of the Bentleys association are affiliated only and not in partnership.