Business success tips with Peter Sheppard, HFW Australia
HFW is a global law firm with over 500 lawyers worldwide. Matthew Drew, Director, McPhail & Partners, has worked closely with the Australian business for many years. We sat down with their Country Manager, Peter Sheppard to learn the secrets of a successful law firm.
- Peter, the Australian office has doubled revenue in the last five years. That is a tremendous achievement, congratulations. What has driven that revenue growth?
We have experienced strong client demands for us to increase our capabilities in our selected six sectors across all our three offices.
To stay in Australia's highly competitive legal market where you compete with not just boutique firms, but also large international players, it is important to offer a strong value proposition and client-focused service.
Over the last five years, we have focused on growing by recruiting and promoting the right talent, rather than focusing on numbers. This has enabled us to strengthen our offering in our six sectors.
The firm continues to invest in the Australian practice and our plans over the next 3 to 4 years are to have another period of double digit growth.
- Finding the right staff to support that type of growth can be a challenge in Australia. What has been HFW’s recruitment strategy?
To identify the best talent available and give them the opportunity to flourish alongside the best practitioners in the sectors we practice in.
- As Country Manager, your role is extremely broad, and I’m sure a busy one. What keeps you awake at night?
I never stop thinking about how to make HFW the best legal practice in the world!
I want our people to be proud of who we are and the work that we provide for our clients. We encourage our staff to challenge themselves – think of creative solutions for our clients.
We want our staff to actively think of new and innovative ways to deliver the best value to our clients.
- HFW is a global law firm. How does Australia perform against the other countries regarding innovation and performance?
We definitely punch above our weight! Our Australian practice is agile and always growing, and our leaders are constantly looking for ways to be creative in an ever-changing industry.
We have collaborative discussions with our other offices and work together to find the best solutions for global and local initiatives.
- How do you manage the culture in the Australian office so that it supports the global brand but has a local feel?
We have many of our local leaders sitting on various global boards and business initiative groups within the firm, so we understand the firm's strategic objectives from a global perspective and we can adapt this to our local and regional nuances.
- More and more businesses are allowing [and in some cases asking] their employees to work from home. How has HFW responded to this shift in work practices?
I am actually responding to you from home today! We are sensitive to people's lifestyles and are responsive to requests for altered work arrangements.
For example, we have a Sydney-lawyer working remotely from Tasmania.
- How does HFW ensure that its employees are engaged and motivated every day?
A mentor of mine once said, "you cannot motivate people, but you can create an environment where people can motivate themselves."
By creating a collaborative culture, rewarding people for their efforts, keeping people informed of what is happening around the firm and ensuring people have the resources they need to carry out their work best, we have created that environment.
- How is technology changing the legal profession?
Technology is enabling firms to provide a more effective and efficient way of doing business. It enables us to further help our clients solve their business problems.
- Ten years from now, how do you think the landscape will look for graduates leaving university?
I would like to think that the landscape for future graduates is bright as firms keep up with client demands which is allowing people to be more creative by exploring new technologies and alternate methods of service delivery.
This could open up a greater variety of opportunities than we have seen historically with your traditionally conservative law firm.
We would like to thank Peter for sharing his thoughts and insights into business success.
To read more about HFW, click here to visit their website.
Tax news, views and clues April 2018
ATO embarking on e-Audits
The ATO has recently published information about the “e-Audit” technology it uses as part of its tax compliance activities. These audits involve the ATO performing computer tests on a taxpayer’s own electronic records to verify that the data is accurate and complete and that the taxpayer has complied with relevant tax laws.
If a taxpayer is selected by the ATO for an audit or review, the ATO will take a copy of the relevant records (eg data held in the taxpayer’s accounting or payroll systems) in order to perform the tests. Although the ATO has broad powers to access taxpayers’ records, the ATO takes a cooperative approach and will work with the taxpayer and their advisers.
The ATO may also use an assessment tool to rate a taxpayer's system risks in relation to correct reporting of tax and super obligations. This can have benefits for the taxpayer because the ATO will provide them with a final report that highlights any particular compliance risks for their business and includes recommendations for addressing these issues.
Court finds pay-as-you-go amounts “withheld” from salary payments
The Federal Court has ruled that pay-as-you-go (PAYG) amounts were “withheld” from a taxpayer's salary payments so that she was entitled to a tax credit, despite the amounts never being remitted or notified to the ATO by her employers.
This case illustrates the importance of records and documentation in tax matters. The Court examined evidence such as the taxpayer’s offer of employment, payslips, bank statements and payment summaries, which suggested that the salary payments she received were “net pay” amounts (and not “gross”).
The Court noted that where an employer has not remitted PAYG withholding amounts to the ATO, this will raise questions about whether amounts were really withheld. However, adequate documentation can – as in this case – be used to prove that PAYG has in fact been withheld by an employer, even if the employer has subsequently failed to remit this to the ATO.
“Transition to retirement” pensions to become simpler
In welcome news for superannuation members, the government has announced plans to simplify the payment of transition to retirement income streams (TRISs) so that they will always be permitted to automatically revert to a dependant upon the death of the original pensioner. This is designed to address a trap in the current legislation that is causing some administrative difficulties for funds when a TRIS recipient passes away.
TIP: With greater certainty about the payment of TRISs on death, now is a good time for superannuation members to review their estate plans.
ATO releases latest small business benchmarks
The ATO has released its latest small business benchmarks, providing over 100 different industries with average cost of sales and average total expenses.
These benchmarks can not only assist businesses with tax compliance (eg by prompting them to double-check their records if their expenses are outside the benchmark range for their industry), but also provide useful information to help businesses judge their performance against others in the industry.
TIP: You can access the benchmarks online or by using the ATO app. Contact our office if you wish to discuss how your business compares against industry benchmarks.
Capital gains tax withholding: updated information for trustees
The foreign resident capital gains tax (CGT) withholding regime requires purchasers of Australian property to withhold an amount from the purchase price (for remission to the ATO) if the vendor is a foreign resident. This regime is designed to assist the ATO in collecting CGT payable by foreign residents.
If the vendor is an Australian resident, they must provide an ATO-issued clearance certificate to the purchaser on or before the day of settlement to ensure no withholding occurs. The ATO has released some guidance for trusts and superannuation funds about specific information they must provide when applying to the ATO for a clearance certificate. Contact our office for further assistance.
Goods and services tax on low-value imported goods
From 1 July 2018, goods and services tax (GST) will apply to some offshore supplies of goods valued at $1,000 or less that are purchased by consumers and brought into Australia. The new rules are designed to create a more “level playing field” for local retailers.
The ATO has released a ruling covering GST registration issues for suppliers and other technical aspects of the new legislation. Notably, the existing rules about GST on imports valued above $1,000 are unchanged.
Superannuation rates and thresholds for 2018–2019
We summarise some of the key superannuation rates and thresholds for the upcoming financial year:
Contributions
| Concessional contributions cap | $25,000 |
| Non-concessional contributions cap | $100,000* |
| CGT cap amount | $1,480,000 |
| Super guarantee percentage | 9.5% |
| Maximum contribution base (per quarter) | $54,030 |
* 300,000 for a “bring forward” arrangement
Government co-contributions
| Lower income threshold | $37,697 |
| Higher income threshold | $52,697 |
Superannuation payments
| Lump sum low rate cap | $205,000 |
| Untaxed plan cap | $1,480,000 |
| ETP cap amount | $205,000 |
| Genuine redundancy and early retirement payments – tax-free amounts: | |
| · base amount | $10,399 |
| · service amount | $5,200 |
Pension cap
| General transfer balance cap | $1,600,000 |
| Defined benefit income cap | $100,000 |
| “Total superannuation balance” threshold | $1,600,000 |
Super guarantee: ATO compliance approach to non-payment
The ATO has released a fact sheet explaining its compliance approach to employers who fail to meet their superannuation guarantee (SG) obligations.
Broadly, employers are required to make SG contributions of 9.5% of an employee’s ordinary time earnings (provided they have paid the employee at least $450 in a calendar month). Payments are due quarterly. Employers are also liable to make contributions for certain contractors.
The ATO confirms that its compliance approach towards a particular employer will depend on that employer’s compliance history and other circumstances. The ATO will take firm action against any employer who repeatedly fails to pay the correct amount of SG or who does not cooperate with the ATO (eg by failing to provide information or attempting to mislead or obstruct the ATO).
Single Touch Payroll reporting: ATO urges employers to get ready
The ATO is urging employers with 20 or more employees to start preparing now for the Single Touch Payroll (STP) reporting regime, which will be mandatory from 1 July 2018.
This reporting change for employers means they will report payments such as salaries, wages, allowances, PAYG withholding and superannuation contributions information to the ATO directly from their payroll solution at the same time they pay their employees. STP reporting starts on 1 July 2018 for employers with 20 or more employees, and is slated to apply from 1 July 2019 for those with 19 or fewer employees.
TIP: Businesses should do a headcount of employees as at 1 April 2018 to check if they have 20 or more. There are rules about which employees to include in the headcount. Contact our office for assistance.
Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.