Anticipate, Adapt, Apply: Dealing with change in Government Law Reforms.


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Anticipate, Adapt, Apply: Dealing with change in Government Law Reforms.

You’re probably aware of the proposed reform of laws relating to tax, wages and super.  Disruption ahead?  Maybe.  But it’s not bad news for businesses that are doing the right thing.  You just need to know what they are and keep on top of the changes.

A wise man once said, “There is nothing permanent except change”. He was the Greek philosopher, Heraclitus, who lived over 2,500 years ago. As it turned out, he was right.

The speed of change today might have made him dizzy, but would probably come as no surprise. We already have drones delivering dinner and refrigerators restocking themselves and just ahead are cars that will take over driving.

Change, both positive and negative, comes at us rapidly and inevitably, and it will have an impact.

Technological change continuously places demands on businesses to be more efficient and for their provisions of goods and services to be less costly. It is vital for operators in all fields to anticipate the disruptions of advancing technology, and then to be able to adapt and apply them as the means to their own business growth.

But disruptions are not only technological. They also come as a result of changes in the law, and it’s important for businesses to understand, prepare for, and respond to them. Specifically, we’re referring to a number of law reform initiatives that focus on providing for more ready tax collection, more oversight, and greater protection of employees and consumers. Some reforms are in train, some are before Parliament, and others are being actively discussed.

Change usually arises out of need. In this case, the proposed law changes centre on the need to anticipate problems associated with insolvent companies that collapse, leaving large tax liabilities and unpaid wages and super contributions. The ATO is often unaware of the deficiencies, employees have no knowledge of their unpaid super, and directors might have used or transferred company assets, which are hard to trace.

To address these problems, the government is making, or contemplating, various changes:

  • Introduction of Single Touch Payroll:
    Businesses with 20 or more employees will be required to report salaries and wages, PAYG withholding, and super information directly to the ATO at the same time they pay their employees.  This new law commences on 1 July 2018.  To find out more … Single-Touch-Payroll Why? Because too many employers either delay or fail to pay their employees’ super. And when businesses go into liquidation, employees and the government are the losers.
  • Reporting of Tax Debts:
    The government has released draft legislation to allow the ATO to disclose businesses’ tax debt information to registered credit reporting bureaus, which will then be able to provide that information to their subscribers, including banks.  To find out more …  Reporting of Tax Debts Why? Who would lend funds or extend credit to a business that had excessive unpaid PAYG?
  • Targeting of the Black Economy:
    The age-old problem of the ‘cash economy’ is now the subject of increased government attention.  The government is considering a range of measures suggested by its Black Economy Taskforce, focusing on the application of emerging technologies, better use of data and a whole‑of‑government focus. High risk industries are identified for particular attention, including the courier and cleaning sectors.  To find out more …  Targeting of the Black Economy.
  • Penalty Notices:
    The ATO’s director penalty notices are at the moment confined to PAYG and super deductions, making a company director personally liable for amounts owing.  It would seem that the next step could be that the government may be considering whether to add GST as a liability!The government is also planning to supplement these measures with more severe penalties and stricter oversight.

The Good News:

The message might sound harsh but, in fact, many of these reforms are beneficial. They will throw some much-needed light on unsavoury conduct in the business world, where unscrupulous operators compete unfairly with compliant businesses.

Changes are being made in response to what continues to be a serious loss of revenue. The reforms will target the phoenix activity of operators who dispose of a company’s liabilities, but quietly keep its assets. They will focus on businesses that keep their prices down by unlawfully using their workers’ taxes to fund their cash flow, and on directors who use a variety of names and aliases, and apparently healthy credit risks to hide large unpaid taxes.

Current law reform has all these shady practices firmly in its sights.

In summary:

Disruption is not necessarily a bad thing. Whether it’s about rapid technological change or law reform, any initial pain is relieved by more efficient business processes, and a more even playing field for all.  Honest operators need not be concerned but they, and their advisers, should make sure they are informed and equipped to get on top of what’s happening.

After all, as another wise man, Stephen Hawking, said, “Intelligence is the ability to adapt to change”.

If you would like help or if you would like to discuss any of the above, please call the dVT Group on 02 9633 3333 or visit our website dvtgroup.com.au.