Tax implications of buying a holiday home

Buying a holiday house can seem appealing, whether it’s to rent out for income, for your own holidays or both. However, it is important to be aware of the different tax implications for how you choose to use your holiday house.

If you own a holiday house and do not rent it out, you cannot claim any expenses relating to the property. If you decide to sell the property, you will need to calculate your capital gain or loss. Even though you don’t need to include anything in your tax return while you own the property, it is still important to keep all records to determine the capital gains tax implications for when you sell it.

If you own a holiday house and rent it out to others, you have to include the income you receive from rent as part of your income in your tax return. Deductions can be claimed on expenses incurred for the purpose of producing rental income, such as cleaning, advertising costs, pest control, insurance, maintenance and repairs. The cost of repairs and renovations cannot be claimed immediately, but are deductible over a number of years.

You are only able to claim deductions for the periods the property is rented out or genuinely available for rent. A holiday house may not be considered genuinely available when:

  • It has none or limited advertising, e.g. when you only advertise by word of mouth or restricted social media pages.
  • It is rented out free or discounted to family and friends.
  • You use the property for yourself.
  • There are unreasonable conditions for renting, e.g. restricting children and pets and only being available during off-peak holiday seasons.

If a holiday house is shared between two owners, then the deductions need to be split accordingly. For example, if the house is owned 50-50, then the owners can claim equal shares of the expenses. If one partner owns 20% of the property, they can only claim 20% of the expenses.

Do you have insurance with your super?

Most super funds offer insurance as part of their super plan. It is important to be aware of what types of insurance you are covered by through your super fund to help you determine if you need extra cover outside your super and if you have adequate support in the event that you cannot work. There are three types of insurance that can be available through super funds:

Life insurance (also known as death cover):
This is the most common of all personal super insurances and is part of the benefits your beneficiaries will receive when you die. Life insurance is typically applied to your super account by default. It is not compulsory with your super, however, if you have a self-managed super fund (SMSF), then you are required to consider insurance as part of your investment strategy.

Total and permanent disability (TPD) cover:
This insurance pays a lump sum if you become permanently disabled and are unable to work again, protecting you against the risk that your retirement income is cut unexpectedly short. TPD cover is often automatically joined with life insurance as a default cover.

Income protection (IP) cover:
This pays you an income stream for a period of time that you are not able to work due to temporary disability or illness. It is only available as a default cover in about one-third of super funds. It may be particularly useful if you are self-employed or have debts.

From 1 April 2020, you will not be given insurance through your super fund if you are a new member under the age of 25 unless you specifically request insurance and they accept, or if you work in a dangerous job.

You can check what insurance you have with your super fund on your annual super statement, your online super account or by contacting them. Through these you can see the type and amount of cover you have, and how much you are paying for it.

Creating a successful work team

If you’ve never had a bad teamwork experience, then you’re often considered to be very lucky. Creating a successful team at work can be challenging as it forces people with a range of opinions, values, work styles, work goals and past experience to work together in proximity. To help build a successful team, certain measures can be considered:

Choose the right people:
Taking the time to deliberate and choose a group of people with the right skill set for the project can increase the team’s chances of success. Having the right amount of people doing a particular job in the team can help prevent there from being too many workers in one area with other areas failing to be completed. Choosing a diverse team can also provide a broader perspective on the project and allow for growth.

Encourage team-building exercises:
Allowing the team to spend time together before undertaking a collective project can be a good way for them to get to know each other without the pressures of work. This can strengthen relations and make it easier for team members to ask each other questions, ask for help and offer their opinion when the work begins. Having team-building exercises can also help identify who is suited for what role and who works well together.

Have a clear purpose:
Make sure that your team is all on the same page about their purpose and the short-term and long-term goals they should be working towards. It is helpful when these goals are specific and measurable to avoid arguments of what the team is working towards.

Outline performance expectations:
If the team is unsure of what is expected of them, they may get off track or not meet work standards. Outlining deadlines, work quality and work hours can help the team perform effectively. This can also prevent arguments and criticism about each others work performance.

Reward good teamwork:
If the team excels in an area of work, it can be motivating to show your recognition of their achievements. This can be as simple as verbally congratulating the team on their work, or can be more formal, such as a workplace announcement or a spot in the company’s internal newsletter.

Ongoing checkups:
While teams may feel uncomfortable with being micro-managed and feeling like they are under constant surveillance, having simple evaluations throughout the project can be helpful. The results from evaluations can show you if your team is on track as well as if there are any problems that may be arising. This can help the team be motivated to succeed and help you identify and resolve problems early.

Building customer relationships on social media

With the overflow of businesses posting high-quality content on social media every day, it can be a challenge to make yourself stand out and keep people’s loyalty. One way to increase consumer appreciation and attract returning customers is to work on developing relationships on social media.

Create good captions:
Having a caption that only consists of hashtags, is hard to understand, is irrelevant, or doesn’t resonate with your target audience can potentially reduce the amount people care and the legitimacy of your business. When writing a caption, make sure that is relevant to the social media platform you are using, your audience and your brand. When using multiple hashtags, putting them below your caption can prevent it from being distracting and messy.

Respond to comments:
Taking the time to read and respond to comments can be a great way to build relationships with your customers. People are more likely to remember your business if you respond to them, as they often don’t expect a response. Replying to comments can show customers that you care and are listening to them. This practice can also help you understand what your customers like and don’t like and improve your business and social media accordingly.

Personalise conversations:
Many businesses use bots to automate conversations, whether it’s on social media, phone answering machines or online messaging services. You can stand out from these businesses by communicating with your audience in a way that seems more personal and human. Some ways you can achieve this is by:

  • Addressing customers by their first name if it is supplied on their profile.
  • Always responding to comments in a polite and friendly manner, even if they are complaining or being rude.
  • Using appropriate language – depending on your business branding, you don’t always have to be formal and robotic. You can show the audience that you relate to them and understand them by using language that they are comfortable with. Think about how your target audience typically communicates.

Use content from your audience:
Hashtags and profile tags are a great way to see how your customers are engaging with your business. If a customer posts something about them enjoying your products/services, consider reposting it. This demonstrates that you value their opinion and appreciate their support. As well as this, potential customers are more likely to try your products/services if they see that another customer is benefitting from it, as this can be seen as more trustworthy than advertisements straight from the business.

How to prepare for a quick hire

With usual recruitment cycles taking up to two months, business owners may panic when faced with the need for a quick replacement.

Fortunately, there are some ways to prepare for a speedy recruitment process:

Look internally
External hiring can be lengthy, between interviews, background checks and competency tests, an external hire can take months. Consider notifying and encouraging suitable internal employees of the available position before posting the job advertisement externally. Internal hiring reduces time spent as the employee’s information is already in the system and they are familiar with the company culture.

Formulate an action plan
An action plan can help ensure a stress-free emergency recruitment. Consider drafting and updating job descriptions all year round so they are immediately ready for use. Training documents, business processes and login details should all be stored in a central document which is easy to access.

It is also a good idea to collect resumes all year-round. Use your business’ website and LinkedIn page to inform potential candidates you are always accepting applications.

Screen candidates before interviewing
Don’t feel obligated to interview everyone – only interview candidates that stand out on paper. Interviewing is the most time-consuming part of recruitment, so be selective when deciding suitable candidates to reduce your recruitment time.

Tips to speed up invoice payments

Taking care of invoice and billing payments can often be an onerous task for many small businesses. However, very few things are more important in the business industry than getting paid on time, since delays in payments can disrupt a business’s cash flow quite seriously.

Business owners looking for best practice tips to get paid on time should keep in mind that often the most effective solutions are usually the most simple. Owners should make sure that their invoices are accurate, easy to read and include information such as:

  • how to pay the invoice
  • a clear description of goods or services provided
  • the details of any discounts and how they were determined
  • information about any outstanding payments
  • delivery charges if applicable

If any queries should arise about the invoice or payment, owners should handle them fairly and quickly.

Making only a few simple adjustments to invoices can speed payment from customers so owners can focus more of their time on their business than on their bills. Some techniques to speed up payments include:

  • Confirming the correct location and contact details so the invoices reach the right person.
  • Clearly stating on your invoice that you reserve the right to charge a set late fee for overdue invoices.
  • Contacting customers to tell them what corrections or adjustments are being made to their invoice before sending the amended invoice.
  • Quoting any relevant customer reference number customers have provided.
  • Including a credit card or online payment option.