Update Thursday 23 April

The Tax Office has now released further guidance on the basic decline in the Turnover Test based on GST turnover.

According to the ATO, an entity will need to follow (5) five steps to satisfy the test, namely:

1. Identify the turnover test period.

2. Identify the relevant comparison period.

3. Work out the relevant GST turnover.

4. Determine which shortfall percentage applies.

5. Determine if GST turnover has fallen by the specified shortfall percentage.

You can satisfy the fall in turnover test in two ways:

• The basic test

• The alternative test

Generally businesses will use the basic test, which is based on GST turnover. Where appropriate turnover comparison periods are not available (for example, where your business has been operating for less than a year) the ATO may make an alternative test available.

You only need to satisfy the fall in turnover test once – you don't need to test your turnover in the following months or quarters.

However, there are ongoing monthly turnover reporting requirements.

Further details including; eligibility and how to apply can be found on the ATO's website link below.

Source and credit: Accountants Daily and ATO.gov.au

IP strategy starts with your internal factors: your company’s size, IP value and external factors such as industry structure, level of competition, the novelty of tech and appropriability.

This leads to an audit of what IP assets your company has. For example, how does Christian Louboutin do this? It starts with distinctiveness and evaluating what assets are important, such as trademarking the distinctive red sole of their designer shoes.

Early on, this company ‘bundled’ commercial measures of extensive use, innovation, trade dress (red sole) and official channels of distribution for the trademark. Trademark is therefore not just the protection of the name – their key argument is that copies (there are plenty of cheap fakes) cause customer confusion.

Over 20 years, establishing IP for Christian Louboutin has meant continued courts cases for trademark protection across global regions, with some positive results. For example, in China on Feb 15 2020, the Chinese Supreme Court recognised Christian Louboutin's red sole as a Registrable Trademark, and in the European Union, Louboutin has won their case to trademark the signature red soles in the EU's highest court.

It is clear that IP is valuable and should not be regarded as negative or costly.

Generating Revenue from IP

Investors and brand builders value IP in terms of business growth issues around market opportunity, as well as the use of IP as an asset within the organisation.

Valuation of the elements of your IP such as specific (restricted) geographic areas, use in all potential applications and value recognition of the associated human capital required to enable the IP are some key areas covered.

IP can also be sold or licensed. An Australian golf products innovator has patents for golf putter heads and commercial decisions are made on selling the patent outright or licensing them to receive on-going payments for units sold.

Would you accept $1 million now for sale of the new patent? Or prefer $1 for each putter sold?

Building strong IP and IP strategy can start with a rework of your thinking

The collection of your intellectual property are intangible rights and can protect and sustain your competitive advantage. This IP audit checklist is a start to your IP strategy:

• Identify the IP assets – identified both old and new IP that exists in your organisation and if they are registered.

• Uncover underutilised assets – there are usually many IP assets that are not used to their full potential.

• Evaluate the assets – determine their importance. Determining your assets value may cover:

• International Trademark protection in several markets

• Contracts such as Distributor Agreements

• Licensing agreements

• Trade Secrets around processes/formulas, distinctive features (trade dress/trademarks)

• Contracts around employee and contractor non-disclosure.

• Establish ownership – establish whether the organisation or a third party owns the IP assets. Identify any conditions that apply to the use of IP, for example licensing arrangements.

• Record the IP assets – create detailed records of the IP assets (in the form of an IP asset register) and a report setting out the findings of the IP audit.

• Educate staff regarding IP – by conducting an IP audit your employee’s awareness of IP will grow.

For more click on the link below.

Source and credit: Business Australia

Managing revenue can be a challenge on your own ­– especially when the economy takes a turn for the worse. Here are (5) five things every sole trader can do to protect their business and keep the wheels turning when times get tough. ​

1. Mitigate your Financial Risk

Taking out the right insurance policies can help protect you from unexpected bumps in the road. Income protection insurance, for example, can cover part of your income if you’re unable to work for an extended period. Personal accident insurance can also help mitigate financial risk if a workplace accident puts you out of action.

Public liability insurance is also a must if you deal with members of the public in any way. It can help protect you against financial costs and claims associated with property damage or personal injury related to your business operations.

2. Forecast your future sales

Regularly forecasting your sales can also help you predict your revenue over the coming months. It’s not only helpful for spotting potential cash flow issues while you still have time to take action, but sales forecasting can also assist you to set realistic budgets. Overspending can demolish your profitability, so having an accurate picture of your expected income is a valuable reference point you can use to control your outgoings.

Likewise, it’s important to understand any business threats that might be lurking on the horizon. A risk assessment analysis will help you identify risks that may be facing you as a sole trader and to put a management plan in place.

3. Review your invoicing

Maintaining cash flow can be a real struggle for sole traders who tend to work on one large project at a time. Late or non-payments can quickly drive your business into the red. So, for large projects, try to negotiate a series of milestone payments rather than invoicing a lump sum at completion. This can help keep your cash flow steady throughout the project and give you the opportunity to take early action if the client is not meeting their financial commitment to you.

For smaller projects, consider reducing the length of your payment terms so you’re not waiting too long to receive payment following project delivery. It might also pay to offer a modest discount for early payments to incentivise your clients to get their bills paid before the due date.

4. Invest in marketing

It may seem counter-intuitive to put more money into marketing when times are tough, but it’s vital for sole traders to keep generating leads to maintain future cash flow. The key here is to carefully track the return on investment you’re getting from the cash you’re spending on marketing. For example, many digital marketing platforms include built-in analytics that can tell you exactly which campaigns are delivering the most leads.

Digital advertising networks, such as Google Ads and some social media platforms, allow you to turn ad campaigns on and off as required. This can be great for managing your spend. Turn the campaign on when you’re coming towards the end of a job, then turn it off when you’re flushed with work.

5. Diversify your business

If your regular source of income is at risk of drying up during an economic downturn, look for new ways to apply your expertise. For example, offering your know-how to other companies as a specialised consultant may work for you. You could also look into teaching your skills at workshops or via webinars to open a new revenue stream.

Developing a new product, finding ways to take your business to new geographic markets or demographics, embracing e-commerce or partnering with complementary businesses could also help you diversify your business.

The antidote to uncertain times is proper planning and foresight. While managing your day-to-day operations as a sole trader likely takes up the bulk of your time, keeping an eye on the horizon can help to prepare your business for challenging economic conditions.

Source and credit: Business.gov.au