Regulatory Roundup November 2012

Medium-sized businesses have to change their tax patterns

One of the major changes to have come from the latest “Mid-Year Economic and Fiscal Outlook” is a proposal for medium sized businesses (that is, those with turnover of $20 million or more) to pay their tax in monthly, instead of quarterly, instalments. The government implemented the change to align tax payments with the way businesses pay GST and enable them to make payments closer to when the income is earned, like wage and salary earners. But this is only to affect medium businesses from January 1, 2016. Smaller concerns with a turnover of less than $2 million will not be affected.

First Small Business Commissioner appointed

Former Victorian Small Business Commissioner Mark Brennan has been appointed as Australia’s inaugural Small Business Commissioner. Upon commencing his position on January 2, 2013, Brennan will work in consultation with the small business industry and state-based commissioners on federal issues to ensure that small business concerns are heard and taken into consideration across the country. Through the commissioner, small and medium-sized enterprises (SMEs) will be able to access information, advice and referral to services – including business advisory and dispute resolution services – although the commissioner himself will not have the legislative power to resolve disputes.

Innocent businesses caught in ATO’s benchmark net

A report by the Inspector-General of Taxation has exposed the fact that the ATO’s wide-ranging efforts to clamp down on the cash economy has caught many SMEs that were only doing the right thing, and subjected them to unnecessary financial costs and emotional strain. Out of the 7,670 taxation audits that were initiated by the ATO’s benchmark “trigger”, the ATO ended up making assessment adjustments to only 24% of cases – meaning slightly less than 6,000 businesses went through undue stress, extra compliance costs and wasted time away from running their businesses.

Small businesses still confused by Personal Property Securities regime

The latest confusion surrounding the new Personal Property Securities (PPS) regime is in regards to a certain “Section 64” in the act that provides banks and financiers with a “super priority” over suppliers. If a supplier provides goods to a customer on credit terms, they can register their security interest over the goods. But if the customer has a debt facility with a financier, the financier can serve a notice to the supplier indicating it has a “super priority” over the proceeds from those goods in the event the customer’s business collapses. Experts have advised businesses to either seek a bigger deposit up front or ask the customer to set up a transaction account with a non-financing bank where they can put the proceeds of the sale of supplied goods – stopping the debt facility-providing bank from gaining access to the proceeds.

Problems with the national business register persist for SMEs

The Australian Securities and Investments Commission (ASIC)’s new National Business Names Registration System was put in place to save time and money but almost the opposite has rung true for many businesses. After initial teething problems in the form of privacy concerns and issues with the sale of business names, businesses have reported a 28-day time lag between applying for the registration of a business name and receiving it along with delays in accessing the ASIC system. ASIC spokesperson Andre Khoury said ASIC has increased the number of phone lines, upgraded its call centre infrastructure and trained 40 additional staff to deal with the onslaught of calls, while efforts are in place to allow new business owners to hold a business name prior to the 28-day period.

SMEs negligent on credit check front

Despite the fact that 83% of SMEs experienced cash flow problems in the past year, only 17% of businesses are doing credit checks on new customers, according to a national survey. Run twice yearly, the Bibby Barometer Small Business Survey showed that 23% of SMEs wrote off a bad debt, 32% had customers negotiate to pay in monthly instalments and 21% had difficulty meeting tax payments on time. Director of Bibby Financial Services Australia, Gary Green, said it is a “concern” that many SMEs do not conduct credit checks as they are an “inexpensive way of reducing the chance of bad debts”.

Big company gets slap on the wrist in a lesson for small businesses

A recent Federal Court case where Metricon Qld was penalised $800,000 for false and misleading promotional material reinforces key messages for small businesses, including:

  • advertised savings must be real savings: if an advertiser offers a discount to a “standard price”, the advertiser must have actually offered the “standard price” for a reasonable time before the promotion
  • fine print disclaimers will not cure a misleading representation: a promotion may be misleading if the advertiser includes terms and conditions that significantly affect the availability of the offer and does not spell out any qualifications clearly to potential purchasers
  • significant penalties can be imposed without any evidence of loss or damage: in this case, neither the ACCC nor Metricon Qld were aware of whether Metricon Qld’s contraventions had actually caused any loss or damage
  • it is not enough to have a competition and consumer compliance program in place, it must be followed.

Ransomware attacks Australian businesses with Windows servers

SMEs are being cautioned to bolster their security systems against a new ransomware which specifically targets businesses with Windows servers by masquerading as the Australian Federal Police. The ransomware attacks servers and encrypts all data and backup storage attached to the server, accompanied with the message “Anti-Child Porn Spam Protection”. The message notifies business owners that they have accessed illegal websites and in order to retrieve their encrypted data, they have to pay a $3,000 ransom using the Ukash payment system.

Social media fails to result in more sales, says new research

New research has shown that only a minute portion of business sales can be traced back to social media links. Independent research company Forrester Research’s survey found that 39% of online retail transactions by new customers start with clicks from paid or organic search results with less than 1% of new sales coming from social media channels. However, 48% of customers reported that social media posts are a great way to discover new products, brands, trends and retailers – despite the fact that it is not a meaningful sales driver.