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Paul Carrazzo CPA has been involved in public practice business issues
since 1986 and in this period has gathered valuable practical
experience in the area of business start-ups. Given the dynamic
business environment we now operate within, this experience can only be
of immense assistance to new and existing clients commencing business.
It is worth noting that since Paul has been in public practice, the
following new tax and business issues have emerged:
- Capital Gains Tax;
- Fringe Benefits Tax;
- Company dividend imputation;
- Taxation Self Assessment;
- WorkCover;
- Compulsory Employee Superannuation;
- Extraordinary number of changes in the area of Superannuation law, especially the rules surrounding Self Managed Superannuation;
- Corporations Law Simplification;
- Superannuation surcharge for high income earners; and
- GST and Business Tax Reform.
Paul has been involved in the implementation and on-going advice in
relation to all of the above - experience and know-how has never been more important in this current business environment.
Medical Profession
Of course, saying you have expertise in the area of Business Start-Ups
is one thing, getting out there and actually doing it is another. In
this regard, Carrazzo Consulting CPAs is as active as any of its
competitors. For example, Paul Carrazzo has previously presented, with
the Commonwealth Bank of Australia, specialist tax seminars for medical
professionals - they were titled "Establishing your practice" and dealt
with the tax and financial issues practitioners should consider when
dealing with this major step. Projects like this not only demands that he
stays at the "cutting edge" of this area, but also gives him valuable insight
as to what current needs are. As a result of this involvement, Paul has
sponsored and been involved with a special Practice Management forum for
members of the medical profession, jointly arranged by the AMA and Royal
Australian College of General Practitioners ("RACGP").
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The specialist advice available within this area includes:
- Evaluation of correct business trading entity (e.g. company, trust,partnership, sole trader etc);
- Regulations to follow (e.g. employee awards);
- Taxation obligations;
- Other employer statutory obligations, e.g.WorkCover;
- Record Keeping;
- Finance requirements;
- Finance submissions;
- Break Even analysis;
- Budgeting;
- IT requirements; and
- Employee superannuation options.
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Q. I am thinking of commencing business. In what circumstances do
I need to pay employee superannuation under the Superannuation Guarantee Scheme? |
A.
The superannuation guarantee scheme is designed to encourage employers to provide a minimum level of superannuation support for employees.
Where an employer provides less than the required level of support, they will be liable to pay a non-deductible charge called the Superannuation Guarantee Charge (SGC).
An "employee" for superannuation guarantee purposes is anyone who is an employee at common law. Generally, the degree of control exercised by the "employer" over the "employee" and the degree to which the "employee's" services are an integral part of the "employer's" business will be significant whether an employer-employee relationship exists.
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Q. How is the required superannuation calculated?
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A.
Employer superannuation support under this scheme is measured in
terms of a percentage of an employee's notional earnings
base/salary and wages. For the current 2000/2001 year,
the percentage of that base that must be contributed is
8%. This percentage will gradually rise to 9% by the
year 2002/2003.
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Q. Are any employees excluded
from superannuation requirements? |
A.
A limited category of employees are excluded and need not be
provided for under the Superannuation Guarantee scheme, including:
- employees paid less than $450 a month;
- non-resident employees paid for work done outside Australia;
- employees under 18 years of age who are not working full-time; and
- employees aged 70 years or over.
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Q. When do I need to register my new business for WorkCover? How much will it cost me? Can you briefly summarise the rules?
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A.
WorkCover is Victoria's injured workers' compensation system.
If you are a Victorian employer and your annual remuneration is
$7,500 or more, you must take out a WorkCover policy and pay WorkCover
premiums for your workers (refer definition below).
An employer's WorkCover premium depends on a number of factors:
- the size of your payroll (remuneration);
- your safety or claims experience; and
- your previous premium rate (which, for small employers is mainly based on the risk rating of their industry).
Your insurer must be advised of your annual remuneration to calculate the premium. The premium can be payable yearly in advance (a discount applies) or by instalments.
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Q. What is Remuneration?
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A.
The basic definition of remuneration is:
- Gross wages and salaries (including overtime and all pay loadings), bonuses, commissions, allowances, items included as part of an employment package and any other fringe benefits provided in accordance with the Fringe Benefits Tax Assessment act.
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Q. How does an employer register?
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A.
To register for WorkCover you must complete an official form, available from either your accountants, post offices, WorkCover insurers or the Victorian Workcover Authority.
As part of your application, you must nominate a WorkCover insurer. This will be the company that will collect your WorkCover premium and administer claims for any injured workers.
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Q. Who is a Worker?
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A.
For the purposes of determining a "worker", the WorkCover
laws specifically outlines them, and they include:
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a full-time employee;
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a part-time employee;
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a casual employee;
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any person who is deemed to be a worker or deemed to be working under a contract of service; and
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a director working for an employer.
For example, a medical practitioner employed by their company or trust
is a "worker" for the purposes of paying WorkCover premiums.
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Q. What should I consider in determining the business structure
I should use?
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A.
The business structure used should be chosen having regard to the following:
- What type of business is it (business income or personal services)?;
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Who will be the principals?;
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What assets does the professional and his family own?;
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What debts does the professional have?;
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Do the principals want to borrow money from the company?;
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Are new partners to be admitted into the future?;
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Marriage status (children, etc) of the business owner?;
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Rules of regulatory bodies?; and
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How old are the principals? Is superannuation a major issue?
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