Month: February 2020

Becoming socially conscious of where you super invest

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Whether you are a newcomer to the workforce or have been working full time for 30 years, you must have come across the concept of superannuation. Chances are, you’ve already been steadily building your retirement funds in one of the 500 Australian superannuation funds but are still unfamiliar with how exactly your super is being managed and where your super fund is investing your money in.

With the beginning of a new decade and social issues on the rise, it is time to take a more conscious stance on what you are doing with your super and what causes you are supporting through the employment of your money through your super fund.

A recent investigation into Australian super funds by the Australian Centre for Corporate Responsibility (ACCR), released in February 2020, found that 50 of the largest super funds in Australia are proxy voting against local climate-change initiatives. These organisations are instead approaching climate change from a global perspective, whilst ignoring more pressing domestic challenges to reduce carbon emissions.

The lack of support from Australian super funds for localised climate action is growing problematic, as Australia fails to address its appalling record on carbon emissions and is falling behind new-age global goals to fight against environmental degradation and climate change.

In contrast, some of Australia’s most environmentally and socially conscious super funds lack the reputation to attract long-term users. To look for more environmentally friendly Australian super funds, the Responsible Investment Association Australasia (RIAA) grades supers based on their ethical contributions and makes this information available to the public.

Instead of mindlessly joining Australian super funds that are neglecting growingly problematic domestic climate change issues, Australians need to become more conscious of our indirect actions and super investments. Rather than investing in an unethical super fund, looking into self-managed super funds may be another good option. We need to learn to take matters into our own hands and become more socially conscious of where exactly our money goes.

Tips to incorporating career mentoring into your business

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A career mentorship program involves partnerships between employees to develop professional skills and gain industry knowledge. Career mentoring programs are often seen as powerful development tools for cultivating both leaders and employees within a business. Whether you are a small business owner or a multinational corporate leader, the implementation of a mentorship program will always be profitable for businesses as not only does it create a harmonious workplace culture, it also helps to attract and retain employees.

As straight-forward as career mentoring sounds, there are a few key tips to keep in mind when building a mentorship program for your business:

Make sure your mentoring program is clearly defined:
To create a successful mentoring program, both mentors and mentees should have a concise understanding of their roles and what they would like to gain from the mentorship. By succinctly outlining the purpose of the mentoring program, mentors and mentees are more likely to keep organised and communicate respectfully with the guarantee of mutual rewards.

There should also be short-term and long-term goals established for all parties involved, including the business. These goals could be the narrowing of particular skill gaps or creating a more open workplace culture. By having these goals set in stone, both mentors and mentees and have a clear direction to work towards.

Personalise the match-making process:
Often times, businesses will match a mentor and mentee together depending on their skill-set and position within the company. While on paper, this may appear to be an efficient process, but the lack of chemistry between a mentor and mentee may prove to be devastating for the workplace environment.

As a result, be sure to involve both mentors and mentees in the match-making process and take into account personality traits. You could do this by asking employees to take a personality test to ensure compatibility in career goals, personal interests and preferred communication methods.

Be involved as a third-party:
Lastly, it is the responsibility of the business to check-in on the progress of mentorship programs in order to understand how mentors and mentees can grow together and what improvements can be made to the program. Remember to always refer back to the long-term goals established and consider the feedback provided by mentors and mentees from the program.

Employer jury duty responsibilities

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When an employee gets summoned for jury duty, it can put added stress on the workplace with other staff having to take on extra work. As an employer, you’ll likely want to avoid the inconvenience of releasing an employee for jury duty, however, this may prove to be difficult.

Employers must comply with the legal responsibilities outlined when dealing with an employee who has been summoned for jury duty. Employers who don’t adhere to these responsibilities can face penalties of up to $50,000.

Can you refuse to release an employee for jury duty?
As an employer, you are required to release any employee for jury duty if they have been summoned. It is an offence to act prejudicial to an employee if they have been summoned for jury duty, including threatening their employment or wages.

If your business will face significant hardship with an employee at jury service, then you may be able to request for the employee to be excused. This will require an explanation of the impact jury service will have on your business. A request must be communicated before empanelment (when the jurors have been selected), and making a request does not guarantee that your employee will be excused.

What are the employee’s rights?
When your employee is away on jury duty, this cannot be counted as any other leave other than jury duty leave. An employee’s annual leave and sick leave will be unaffected.

Employers also cannot dismiss their employees for attending jury duty. Most Australian states restrict employers from terminating an employee or detrimentally changing or threatening employment terms because an employee is on jury duty. NSW, for example, considers this a criminal offence where a company can be penalised up to $22,000 and an individual employer can be penalised $5,500 or face 12 months of imprisonment.

Employers also cannot ask an employee to work on a day they are serving as a juror in court or ask them to work additional hours to make up for the time they missed whilst on jury duty.

When an employee is serving jury duty, employers generally must pay permanent employees their usual wages for the first 10 days of service, or pay what is often referred to as ‘make-up pay’. This is the difference between the jury service payment and the employee’s base rate for the ordinary hours they would have worked.

Are you responsible for unfair dismissal of employees?

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If you are a small business employer wishing to dismiss employees, you must do so according to the Small Businesses Fair Dismissal Code, as breach of the code could result in legal action taken against you. If your business has less than 15 employees, it counts as a small business.

Employees can apply for unfair dismissal if they believe they have been unreasonably dismissed from their job. These cases could include when:

  • The dismissal was harsh, unjust or unreasonable
  • The dismissal was not a case of genuine redundancy
  • The dismissal was not consistent with the Small Business Fair Trading Code.

Employees working for small businesses can only apply for unfair dismissal when they have been employed for at least 12 months. If the business had a change of ownership during their employment, then their time with the first employer may still count as service with the second employer when calculating the minimum employment period.

When dismissing an employee, there are three main valid dismissal reasons:

  • Capacity (poor performance)
  • Conduct
  • Genuine redundancy.

Employers must also adhere to employee entitlements upon dismissal, meaning they must pay:

  • Accrued leave and annual leave loading
  • Accrued or pro-rata long service leave
  • Redundancy pay if applicable
  • Outstanding wages.

An employer can make objections to the unfair dismissal claim by submitting an Employer response to unfair dismissal application, or an Objection to application for unfair dismissal remedy.

Improving your social media content

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Social media marketing is a powerful way to promote your business and establish a connection with your target market. Your content should closely relate to what you’re trying to sell or provide.

A key to great content is that it must be consistent and regularly updated. This is important because it will keep the business relevant in people’s news feeds.

Content does not have to be completely original work. It can be a combination of new content developed by the business, and content sourced from other platforms. Sharing other relevant social media posts through Retweeting or Reposting content can also be a great way to demonstrate your engagement with the community. However, do not forget to link back to the source that the content was taken from.

Another good idea is to ask questions or share a quote or tip. This will entice the audience to respond, share and join in the conversation.

Good content should be interesting, informative and engaging. It is a good idea to steer clear of technical jargon as the majority of people may not be able to understand. Remember who the target audience is and use language that will appeal to them.

While short text is the easiest content to produce, utilising visual elements such as images and videos can be an effective way of capturing an audience’s attention and are also able to deliver more information. It is also an opportunity to create links across social media sites that allow customers to click through to the website, or share videos and pictures onto their own news feeds.

You can now opt-out of super guarantee as a high income earner

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If you’ve unintentionally been going over your superannuation concessional contributions cap in past years, you may not have to worry about it from now on. As of 1 January 2020, eligible individuals with multiple jobs can apply to opt-out of receiving super guarantee (SG) from some of their employers.

You may be eligible to apply if you:

  • Have more than one employer.
  • Expect that your employers’ mandatory concessional super contributions will exceed your concessional contributions cap for a financial year.

Employees who are eligible can apply for the super guarantee shortfall exemption certificate when they complete the Super guarantee opt-out for high income earners with multiple employers form (NAT 75067).

When you opt-out of SG contributions, you must still receive SGC from at least one employer. If other employers agree to use the SG exemption, then they may provide an alternative remuneration package instead, as to not be disadvantaged. However, the exemption certificate:

  • Does not restrict the employer from making super contributions on behalf of the employee.
  • Does not change the employer’s obligations or an employer’s agreement with their super fund.
  • Cannot be varied or revoked once issued.

Will legislation changes affect the FBT you pay on staff parking?

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Employers who provide staff parking spaces may be affected by the rewrite of the car parking fringe benefits Taxation Ruling. A draft ruling TR 2019/D5 was released on 13 November 2019, a rewrite of TR 96/26.

The draft ruling states that from 1 April 2020, the ATO proposes to treat a car park that offers all-day parking (meaning parking for at least six hours between 7 am and 7 pm) under the same rules as ‘commercial’ parking for fringe benefits tax (FBT) treatment even when the carpark’s fee structure discourages all-day parking with higher fees.

Generally, a carpark will be considered a ‘commercial parking facility’ when it is provided to make a profit. This includes car parks in shopping centres, airports and entertainment venues. A key change that the new draft ruling is that there will no longer be a general exclusion for shopping centre car parks that provide free short-term parking and higher rates for all-day parking. Employers therefore need to be aware of whether their staff parking spaces are considered to be commercial for FBT obligations.

The draft ruling proposes that FBT can generally apply to car parking provided by employers to staff where:

  • A commercial parking facility such as a shopping centre car park is within a one-kilometre radius of the workplace.
  • The car park charges a higher amount than the car parking threshold for all-day parking to the public. The threshold is currently $8.95 for the 2019/20 FBT year.
  • The car park provides parking in the ordinary course of business and the facility is commercial (run to make a profit).

Small businesses where the employer’s turnover is less than $10m will still be eligible for the existing exemption from car parking FBT.

Do you have to pay tax on super death benefits?

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When someone dies, their superannuation usually gets transferred to their beneficiary as superannuation death benefits. Depending on who the beneficiary is, the benefits may be taxed in some circumstances.

If you are a beneficiary, the amount of tax you pay depends on factors such as:

  • If the benefit is paid as a lump sum or pension.
  • Your age and the age of the deceased at the time of their death (for income streams).
  • Whether the benefit is paid from an untaxed superannuation scheme or a taxed scheme.
  • Whether you’re a dependent for tax purposes.

Someone who is tax-dependant will:

  • A spouse of the deceased.
  • An underage child of the deceased.
  • Someone who was financially dependent on the deceased at the time of their death.
  • Someone who was in an interdependency relationship of the deceased at the time of their death.

Lump sum payments
Lump sum super benefits paid to tax-dependant beneficiaries are not taxed, whereas those who are not tax-dependent will need to pay more tax and will only be able to receive the benefit as a lump sum. Not all super death benefits paid to a non-tax dependant are subject to tax. There are tax-free components that are made up of contributions after-tax that the member made to their super.

The taxed element (where the member paid tax in their super) of the taxable component of the benefit is subject to a maximum tax rate of 15% plus the Medicare levy. The untaxed element (where the death benefit is being paid from an untaxed super fund or includes proceeds from a life insurance policy held by the fund) of the taxable component of the benefit is subject to a maximum tax rate of 15% plus the Medicare levy.

Income stream payments
If the death benefit is paid in the form of an income stream, the tax treatment of the payment is dependent on the age of the deceased and beneficiary at the time.

If the deceased or the beneficiary is aged 60 or over at the time of the benefactor’s death and the super is paid from a taxed super fund, then the payment will not be taxed. If the age of the deceased and the age of the beneficiary are both under 60, the taxable portion of income stream payments will be treated as assessable income but will be entitled to a tax offset equal to 15% of the amount.

Taking a super pension

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Once you have met your preservation age (between 55 and 60 depending on when you were born), you can choose to take a super pension. There are six main types of super pension:

  • Account-based pension: this is the most common type of pension. It is a regular income stream bought with money from your super when you retire.
  • Transition to retirement pension (TTR): you can use this pension if you have reached your preservation age but are below 65 years old and still working,
  • Defined benefit fund: with this pension, you are paid a guaranteed income stream for life, however, it is not commonly used.
  • Annuities: this is a series of payments you receive at fixed intervals for a defined period or the remainder of your life. Annuity payments are purchased with a lump sum.
  • Reversionary pension: this is an income stream you set up with your superannuation that automatically reverts to someone else (generally your partner) when you die.
  • Death benefit pension: this is where your dependents receive your death benefits as a pension when you die. This is only available from some super funds.

The standard conditions of release for super pension withdrawals are:

  • Retirement.
  • Turning 65 years old.
  • Beginning a transition to a retirement income stream.
  • Ceasing an employment arrangement after you turn 60, regardless of if you get a different job.
  • Becoming permanently incapacitated.
  • Being diagnosed with a terminal medical condition.

The amount you withdraw can have an impact on any Age Pension entitlements you have, so be aware of these implications when deciding to withdraw an amount. You should also be aware of the transfer balance cap of $1.6 million that you’re allowed to move to an account-based pension. For super pension income streams, you generally need to transfer funds from your accumulation account to your retirement account for your pension.

Training a new employee

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Hiring a new employee can interrupt the daily workplace routine while they need a little extra attention and help and learn how things work. Here are some ways you can make the training period more successful…

Onboard before the start date
It is likely that new employees will feel more comfortable and perform better if they are prepared for their first day on the job. New employees often worry about things like what they should wear or where they should go and are reluctant to already be asking trivial questions. To ease them into the workplace, you can send an email prior to their start date that outlines:

  • The start time.
  • Locations.
  • Parking details.
  • Dress code.
  • A brief overview of what will be covered on the first day.
  • Anything they need to bring and what will be provided.

Offer mentors
Enlisting the help of senior employees to help train and mentor new employees can be a great way to efficiently train them. This can also help senior members of the team continue to feel valued and can promote friendly relations and coworker connections.

Provide regular feedback
Constructive feedback can go a long way for new employees as you can correct any mistakes before they turn into habits. When giving feedback, you can avoid demotivating the new employee by providing both positive and negative feedback and focusing on their behaviour and not them.

Train for culture as well as practice
Ensuring that the new employee has the right practical information is obviously important, however, if your company has a certain culture it wants to uphold, you can also train them for this. For example, if your business focuses on being an eco-friendly office, demonstrate how that is done and what eco-friendly procedures are taken in the workday.