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Are You Buying A Business?
If you are contemplating buying a business, there are numerous matters to be considered.
Some items you need to receive from the Vendor are as follows;
- - trading terms for the business
- - recent Debtors' Aged Analysis
- - customers' list
- - suppliers' list
- - methodology for valuing stock
- - a copy of the business' lease agreement. Check
- option period;
- reinstatement conditions (painting, new carpets etc);
- business uses permitted;
- can the lease be assigned?
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If you are taking over employees, obtain a schedule of employees' entitlements. A new owner may decide not to recognise the period of service performed by employees for their previous employer, when calculating their length of service, to determine dismissal entitlements. However, the new employer must inform employees of this in writing before the new period of service commences, otherwise their previous service must still be included in any calculation (Fair Work Australia).
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Is there a systems' manual for the business? Is it current?
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Details of patents, trademarks, trade secrets and intellectual property systems.
There are some other issues relative to buying a business that you should be aware of
- Never sign a contract until you have had legal and accounting advice.
- Make sure you are buying the business in the appropriate entity.
- Keep full records of everything that is said or given to you by the vendor or vendor's representative.
- Do your own due diligence and check all the information supplied to you.
- Is the location satisfactory for your business?
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Tax Office's Motor vehicle data matching program
According to the Commissioner, under its vehicle data matching program, the Tax Office will obtain data from state and territory motor vehicle registration bodies to bematched against taxpayer records. The data will be obtained for all motor vehicles where the transfer and/or market value is $10,000 or greater from 1 July 2009 to 30 June 2010.
The Commissioner states that the data matching is to identify those participating in the cash economy who are not declaring income in deliberately avoiding their tax obligations.
Read more
The Tax Office uses the publicly available small business benchmarks in its data matching and review process.
Taxpayer not a share trader, 06 August 2010
Richard Anthony Smith v FC of T
The AAT has held affirming the decision under review that the taxpayer who worked full time for an international bank in Sydney and London during the relevant period (2007 and 2008) and conducted various buying and selling transactions in shares on his own account, was not carrying on a business as share trader. The AAT also rejected the alternative claim that the shares in question are to be treated as trading stock on revenue account. The AAT found that the taxpayer did not exhibit a discernible pattern of trading. It was also found that the taxpayer held the relevant shares for periods longer than a share trader would.
Court ref: [2010] AATA 576 (Ms G Ettinger, Senior Member), Sydney, 5 August 2010.
Extension of the Small Business Assistance Package, 09 July 2010
The Commissioner has announced that the Small Business Assistance Package will be extended for a further year. The package, which was originally intended to expire on 30 June 2010, will now run until 30 June 2011.
The extension will mean that eligible businesses with a turnover of $2m or less will continue to have access to:
· • a 12-month general interest charge free payment arrangement with the Tax Office, and
· • a deferral of activity statement payment due dates.
Source: Commissioner’s speech to the Council of Small Business Summit and Assistant Treasurer's media release No 151, 8 July 2010.
Client Spot
Check out the awesome food and service at a great new restaurant in Newstead - Dish Bistro.
www.dishbistro.com.au
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