The ATO has issued a stern warning as they crackdown on the sharing economy...

Sophie Elsworth, Personal finance writer - News Corp Australia Network 

THE taxman will target thousands of Uber drivers and Airbnb hosts earning undeclared extra income from the so called ‘sharing economy’ this tax time.

The Australian Taxation Office said it was “concerned” people making income from sites such as Uber, Airbnb and Airtasker were unaware they have to declare these amounts on their tax return.

A stern warning has been issued to offenders: you will get caught if you don’t declare money made from these revenue streams.

The warning comes after the ATO recently collated information from banks to find out who was making money from working as a ride-sharing driver (i.e. Uber driver.)

This prompted them to write to 20,000 drivers in May alerting them of their tax obligations that they must follow.

The ATO’s assistant commissioner Graham Whyte said it would be using sophisticated technology including data matching, data mining and analytics to scrutinise every tax return filed for the 2015/16 financial year.
“If you earn a fee from task sharing for odd jobs or providing a service and it counts as assessable income you just need to include the income in your individual tax return,’’ he said.

 “The law hasn’t changed or has the definition of income, and while the economy is changing with this certainly the rules are the same.”

He said this included earning income from doing things like task sharing, transporting passengers through ride-sourcing or renting out a room or house — they are all forms of assessable income.

But Mr Whyte said this was different to if a person provides goods or an activity through a sharing economy website or platform and it’s done as a hobby or recreational activity — this amount may not be assessable income.

H & R Block’s Director of Tax Communications Mark Chapman said while it was important Australians declared any income made through the sharing economy, on the flipside these people could also declare appropriate tax deductions to coincide with this.

H & R Block director of tax communications Mark Chapman said it was important to seek help if you’re not sure what to claim and declare at tax time.

“The ATO have gone to a lot of these sharing economy services, they’ll know if you’re on Airtasker, or are on Airbnb or you’re an Uber driver,’’ he said.

“Not declaring the income is a disaster when the ATO is data matching and they will typically come after you.”

The ATO will also this tax time be focusing on travel expenses for employees and making sure people return any rental income.

For more information, visit www.ato.gov.au/sharingeconomy

July 18, 2016 12:01am     Victor Cominos
    

sophie.elsworth@news.com.au

Originally published as ATO crackdown on sharing economy

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Eagle Boys and Pizza Hut merger on the table in private equity buy-up deal

 

Eloise Keating / Wednesday, August 10 2016

 

Pizza chains Eagle Boys and Pizza Hut could be merged to form Australia’s second-largest pizza chain, if a reported deal for private equity outfit Allegro Funds comes to fruition.

 

Together Eagle Boys and Pizza Hut are estimated to hold up to 35% of the market for takeaway pizza in Australia, with a combined store footprint of 384 outlets. Australia’s largest pizza chain Domino’s operates more than 600 outlets in Australia and New Zealand.

 

According to a report from Fairfax, Sydney-based private equity firm Allegro Funds is in “advanced talks” to buy the Eagle Boys chain from the company’s voluntary administrators SV Partners, and to buy the Pizza Hut Australian business from parent company YUM! Brands.

 

Allegro, which owns Carpet Court, Great Southern Rail and bus maker Custom, is reportedly one of two private equity firms to show interest in the pizza chains over recent months, with the firm moving closer to securing a deal following the appointment of David Stimpson and Terrence Rose as administrators to Eagle Boys in mid-July.

 

Thirteen company-owned Eagle Boys have closed in the time since, while the Eagle Boys head office reportedly owes $30 million to creditors.

 

Stimpson and Rose have also been appointed as voluntary administrators to EB Pizza India Pty Ltd, EB India Holdings Pty Ltd and EB Pizza Fiji Pty Ltd.

 

Fairfax reports it is uncertain if Allegro would seek to continue to operate the brands separately or rebrand Eagle Boys stores to Pizza Hut outlets, if a deal is finalised.

 

Graeme Houston, general manager of Pizza Hut Australia, told SmartCompany Pizza Hut’s “policy is not to comment on market speculation”.

 

SmartCompany contacted Allegro Funds and Eagle Boys’ administrators SV Partners but did not receive a response prior to publication.

 

What a merger could mean for franchisees

 

Jason Gehrke, director of the Franchise Advisory Centre told SmartCompany a sale of a franchise network does not automatically mean the buyer will negotiate new franchise agreements with existing franchisees.

 

“Most franchise agreements include a provision that allows the franchisor to reassign the agreements without recourse,” Gehrke says.

 

“This allows the franchisor to sell the business and not necessarily have to have the consent of franchisees.”

 

Gehrke says in the event of a sale, the buyer of the franchise network would take on existing franchise agreements but may “subsequently seek to vary the agreements or replace them with new agreements as they determine what the future network will look like”.

 

In circumstances where one franchised business buys out another similar business, or two franchise networks merge, Gehrke says there is commonly an overlap in the location of outlets.

 

“Where there’s an overlap, in some cases, outlets may close or may be released from their [franchise] agreement and allowed to trade independently,” he says.

The question of branding is also an important one in these circumstances, says Gehrke.

 

“Any buyer who acquires a brand has the question of whether they continue with that brand or whether they absorb it into the other, primary brand,” he says.

 

“If they absorb it, the new outlets in time would need to be rebranded. The question of who pays for it, either franchisees or franchisor, may determine how successful that rebranding is.

 

“If the franchisor pays, it will likely happen quickly and be done comprehensively. If the franchisees are to pay, it’s quite likely there will be a significantly extended implementation timeframe … and internal resistance.”     Victor Cominos

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How parcel delivery startup Sendle is putting small businesses at the heart of what it does

 

Denham Sadler / Monday, August 15 2016

 

Sydney-based startup Sendle has raised $5 million as it looks to further expand its reach across Australia and compete with the small business delivery “monopoly”.

The funding round was led by Full Circle Venture Capital and also saw Black Sheep Capital, rampersand and Giant Leap participate.

It follows from a $3 million round that the startup raised last year and Sendle founder and chief executive James Chin Moody says this time round it was all about proven traction.

“The big difference is that we’ve got a very significant business now with proven traction in the market,” Moody tells StartupSmart.

“That gave us confidence to say, ‘here is the engine’, and raise the money.

“We’re absolutely delighted with our new investors. They’re not only aligned with our purpose but with our values as well.”

Moody says Sendle has enjoyed 20% month-on-month growth across the last year, and the capital injection will be used to continue this rapid expansion and further develop the startup’s tech platform.

“What we’re doing is really building a business that’s going to last,” he says.

“Australia deserves more competition, particularly around small business parcel delivery.

“We’ll be using the investment we’ve received to improve a lot of our core infrastructure to make sure we can continue to grow at 20% per month.”
 
A singular focus

The delivery space has become increasingly saturated recently, but Moody says he doesn’t view the likes of Shippit as direct competitors and prefers to set his sights on the biggest player: Australia Post.

“I think that we’re the ones that really focus on small business,” he says.

“Our users can send one thing and that’s very different from the point-to-point couriers. There are a few out there and they’re really designed for metro deliveries. Most of our deliveries are not in the same city, we’re sending parcels all over Australia.

“Other folks in this space are working on the last mile, the parcel pickup places. We see Sendle as the one that’s 100% focused on the needs of small business.

“Our biggest competitor is the post office, and they’ve largely got a monopoly in this space.”
Sendle now facilitates $100 million in small business commerce annually and he says this provides the driving purpose for the startup.

“Our purpose is to make small business delivery reliable, simple and affordable,” Moody says.

“We’re successful when our customers are successful. We love all these small businesses, they’re all using Sendle and the best thing is that we’re saving them both time and money.

“We’re creating an 100% solution for that group. The time has gone when you can be 80% good for everyone. We’re trying to make things to absolutely delight our small business customers.”

Focusing your energy

He says this singular focus on a specific goal and market is one of the keys to Sendle’s success and a central challenge for other founders.

“The hardest thing about running a startup is knowing where to focus your energy,” Moody says.

“If you’re lucky enough to be in a market like ours with lots of opportunities and a monopoly provider there are a huge number of things you could be doing. The hardest thing is working out where to focus.”

And trying to focus all several different aspects of a business could lead to its downfall, Moody says.

“For startups the one thing you don’t have is time,” he says.

“If you aren’t focused you end up spending a little bit of time on everything when you really need a 100% solution for 20% of the market rather than a 20% solution for 100% of the market.

“You need to be saying no as much as you’re saying yes.

“We’ve wholeheartedly said yes to providing a beautiful delivery solution for small businesses.”

This article was first published by StartupSmart.
Victor Cominos

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August 14 2016 - 4:17PM  (Sydney Morning Herald)

Construction, professional services, retail sectors most vulnerable to collapse

Dreamin' retailers are running on borrowed time.

There are too many marginal retailers out there, according to Michael Carrafa, the executive director of insolvency firm SV Partners. "Everyone has a dream," he said of the sector's enduring appeal despite its thin margins. 

SV Partners has warned that a large supermarket or grocer, two computer retail giants, a large clothing retailer, and a big newspaper/book retailer are at "high risk of financial failure" this financial year.

 

SV Partners has come up with a scorecard for Australian companies, big and small, on their likelihood of collapse. It reached these conclusions by analysing numbers up to five years old ranging from the trade payment history of each entity to filings with the corporate regulator and Bureau of Statistics data. 

 

Its Commercial Risk Outlook Report found that more than 1200 retailers in Australia were in "financial distress" as consumer spending sputters. Just over 900 retail companies collapsed in the 12 months to March 30, 2016, up 6.7 per cent year on year.

Mr Carrafa said despite record low interest rates, there was not much cash floating around.

 

"A lot of people have absorbed whatever remaining equity they have in their homes," he said. "They're leveraged to the hilt and there's no ability to fund working capital." The banks are reluctant to lend money, he said.
 

The SV Partners report found that among retailers, clothing retailers and supermarket grocery stores were the most vulnerable.

Retail is the third sector most at risk of financial failure, behind construction and professional, scientific and technical services, the report says.

Of the 959 retailers identified as being the highest risk of financial troubles in the next 12 months, seven of them have turnover of more than $100 million.

One business – in computer retailing – has turnover of $1 billion or more, according to SV Partners. Another business – supermarkets/grocery – has turnover of between $500 million and $1 billion.

 

But the vast bulk of at-risk businesses – 807 out of 959 – are small businesses, with turnover of less than $1 million.

 

Separately, a report by business body Ai Group has found that the "lower Australian dollar and Australian businesses' active responses to it have played a significant role in the improvement of business conditions and optimism in 2015 and 2016 compared to earlier years". 

 

"The lower dollar is helping the Australian economy transition away from the heavy emphasis on mining and energy-related investment towards a pattern of growth that is spread more evenly across sectors, geographies and markets.". Victor Cominos

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Agent rating sites can be a trap for sellers

The proliferation of agent rating and referral sites can be massive trap for property sellers and can cost them many thousands of dollars off their sales price according to Certified Practising Real Estate Chairman, Geoff Baldwin.

“These sites promote that they are honestly rating real estate agents in each suburb through their performance in the marketplace and a number of other criteria however sellers should be aware that there are other influences that can affect the order of merit on these sites”, Mr Baldwin said.

“Firstly, almost all of these sites are charging agents for the privilege, either through a regular monthly fee or via a significant slice of the commission being paid by the seller to the agent often without the full knowledge of the seller.

“It is quite possible, even likely, that the top agents in an area or town simply don’t use the services of these sites which means that the public is often in danger of being misled.

“In some cases agents are able to pay extra for preferential placement in a particular suburb or town and this is resulting in prospective sellers being deceived into thinking they are dealing with a highly successful agent when in fact they may be dealing with one who is battling to attract business any other way.

“Successful, professional agents who have built a good reputation based on their results rarely resort to using these websites to gain business however new and lesser performers see them as a way to gain an advantage.

“Sellers should be aware that these websites are not free public services, they are businesses and that they are making money through charging agents to be promoted and/or for the leads that are gathered from potential sellers who visit the sites.
“In reality the public is often being fooled into thinking they are seeing agents promoted on their merits when in fact the information on many of these sites is misleading and should be closely examined before allowing it to influence a decision.

“Choosing an agent should be based on the real performance, experience, results and resources of the whole agency and the brand they work with and importantly, how a seller feels as the quality of the business relationship is a big influence on the process.

“Quality agents prosper on their own reputation and will rarely pay for leads so choosing an agent based on these so called third party ratings can cost sellers many thousands of dollars through signing up with the wrong agent.

“People who are considering using these sites should inquire as to how they make money, what they charge the agents, if agents are paying for preferential promotion and how their business model actually works”, he said. Victor Cominos - President Emerald Chamber of Commerce.

 

Geoff Baldwin -  Tue 15 March 2016

 

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