Pros and cons of home reversion

Super (AU): Pros and cons of home reversion

Home reversion is when you sell a share of the future value of your home whilst still living there. You receive a lump-sum payment and continue to own the remaining share of your home equity. 

Pros

  • You are able to continue living in your home after you sell the share
  • You can conduct renovations or maintenance that your home may need with the lump-sum payment you receive
  • You can use the lump sum for any urgent needs such as medical treatments
  • The lump-sum could help you secure accommodation till your home sells

Cons

  • You will own the lower share of the equity in your home
  • Transactions and costs can get complicated and it may be hard to navigate that
  • Your eligibility for Age Pension might also be influenced
  • Your ability to afford aged care could be affected
  • You might end up eating into money that you need for the future – such as for medicare
  • You might be locked into fewer options if your circumstances change
  • If you are the sole owner and someone else lives with you, they may no longer be able to live in the house if you move out or pass away

Pros and cons of hiring an intern

With so many eager school-leavers looking for employment opportunities, hiring an intern can seem like a good way to offer work experience to someone without the risks of a long-term commitment of a regular employee. However, you should consider whether hiring an intern would be the best move for your business. Here are some pros and cons you may run into:

Pros:

Extra help: It can be handy to have some extra assistance over busy periods in your business. This also ensures that the intern isn’t bored and gets hands-on experience taking on real-world tasks.

Potential employment: If you feel that the intern fits into the workplace well, you could offer them employment later on. This is often a smoother introduction to employment as they are already trained and familiar with the business. However, you are not obligated to offer them a job if you don’t feel they are a good fit.

Fresh perspectives: Interns can often offer new perspectives to work that you may not have thought about before. Having someone who hasn’t sunk into the routine of your workplace yet can be useful in offering new ways of thinking that could potentially improve your business.

Social media insight: Most interns are young and tech-savvy and could offer important insights into the world of social media for the new generation. They could help you devise relatable, trendy content for your social media that you may not have considered.

Cons:

Time commitment: Taking on an intern means that you will need to filter through applications and conduct interviews, as well as providing them with supervision and training. If you’re too busy to dedicate time to take care of an intern, it may not be the best move for your business.

Inexperienced: If you’re looking for some to take on roles that require knowledge and experience, an intern may not be the right choice as they often have limited work experience in career-based roles.

Less flexible: If an intern is still studying, then the hours they can offer you can be limited and variable depending on their timetable. As well as this, when exam periods arrive they could have an exam on a day they would normally work or may ask for time off to study.

Proposed measures to increase retirement savings

Currently, people aged 65 to 74 can only make voluntary superannuation contributions if they meet the ‘work test.’ This means they must report themselves to be working a minimum of 40 hours over a 30 day period within the financial year to qualify.

The government has proposed that from 1 July 2020, individuals aged 65 and 66 will be able to make voluntary concessional and non-concessional superannuation contributions without meeting the work test. This approach will enable participants nearing retirement to increase their superannuation savings regardless of their working arrangements.

As well as this, the government also proposes to increase the age limit for receiving spouse contributions from 70 to 74, to be implemented on 1 July 2020. Currently, people aged 70 and over cannot receive any contributions made by another person on their behalf, and the change will give older Australians greater flexibility to save for their retirement.

Proposed law to restrict cash payments

New restrictions on cash transactions may be coming into effect after the government released the draft Currency (Restrictions of the Use of Cash) Bill 2019, which proposed to make it an offence to make or accept cash payments of $10,000 or more.

The bill proposes that people using cash above the $10,000 limit could face a two-year jail sentence and fines up to $25,200. There are, however, transactions that are to be exempt from the cash payment limit, including:

  • Payments related to personal or private transactions, excluding real property transactions.
  • Payments that exceed the cash payment limit due to the payment also including an amount in digital currency.
  • Payments that only exceed the cash limit due to the payment being part of a transaction involving cash in transit providers, where the payment results in collecting, holding or delivering cash.
  • Payments, where there are no reasonably available non-cash payment methods and the inability to use a non-cash payment method was not a choice by either party involved in the transaction.

The bill was originally set to be enacted on 1 January 2020, however, after a flood of community objections, the Senate Economics Legislation Committee has agreed to hold a public hearing on 30 January 2020. The committee has opened an inquiry accepting concerns from Australians and plans to report back by 7 February 2020.

Proactive consolidation with ILBAs

Inactive low-balance accounts (ILBAs) are a new category account that needs to be reported and paid to the ATO. This was introduced in the Treasury Law Amendment (Protect Your Superannuation Package) Bill 2019 that came into effect on 1 July 2019 after first being announced in the 2018-19 Federal Budget.

ILBAs are designed to protect accounts from fee erosion. Where possible, the ATO will proactively consolidate super on behalf of an individual.

A superannuation account is considered an ILBA if the following criteria are met:

  • No amount has been received by the fund for crediting to that account for an individuals benefit within the last 16 months.
  • The account balance is less than $6,000.
  • A prescribed condition of release has not been met.
  • The account is not a defined benefit account.
  • There is no insurance on the account.
  • The account is not held in a self-managed super fund (SMSF) or small Australian Prudential Regulation Authority (APRA) fund.

An account will not be considered an ILBA if, in the last 16 months, the individual has changed investment options, insurance coverage, made or amended a binding beneficiary nomination, declared that they are not a member of an ILBA or there was an amount owed to the super provider on behalf of the individual.

Funds are required to identify ILBAs on 30 June and 31 December each year, then report and pay them to the ATO by the statement date.

  • 31 October in the same year for accounts identified on 30 June.
  • 30 April of the following year for accounts identified on 31 December.

Individuals that have an account that they do not want to be transferred to the ATO as an ILBA, can:

  • Consolidate super accounts using ATO online services through myGov.
  • Contact their super fund for more information. Or;
  • Authorise their super fund to provide a written declaration to the ATO.

Preventing cybercrime on your business’ social media

Having a digital presence nowadays is crucial to getting the most out of marketing your business. However, being online puts you at risk of being a target for cybercrime, which means that you and your customers are at risk of being scammed, hacked, harassed or stalked. Business owners have legal responsibilities to ensure that their business and customer information is safe. For this reason, it is vital that you take precautions when putting anything online.

While social media platforms such as Facebook and Instagram have policies in place to prevent people being victim to cybercrime, it is still possible for hackers to dodge these measures and attack your business. It is therefore important that you implement your own safety measures to reduce the risk of being targeted.

Many cybercriminals target business’ social media accounts to get access to a large following of people they can trick or manipulate. It is crucial that your business account has a strong password consisting of at least 8 characters, with a mix of upper and lower case letters, numbers and symbols. Ensure that only authorised users have access to the business’ social media accounts.

Create a social media use policy for your staff to ensure that they are aware of the consequences and risks of sharing account information and being careless with social media handling to reduce the risk of misuse and security breaches. It is also useful to provide a cybersecurity incident response management plan to help your business prepare for security breaches and know how to respond to them quickly and effectively to prevent them from escalating.

When planning a social media campaign, think about ways you can prevent your campaign from being hijacked by hackers to keep you and your followers safe. For example, if your campaign is a competition that involves participation from your followers such as them uploading a photo, think about ways to keep them safe from hackers. Perhaps you can provide guidelines for entering the social media competition, such as discouraging them from geotagging their location and ensuring they don’t have their house or any other personal details evident in the picture.

Preserving your customer’s confidentiality

Customers trust businesses with a lot of personal information and it is the business’ responsibility to maintain confidentiality. Businesses should take relevant precautions to ensure that the privacy and personal information of their customers is not compromised. 

  • Encrypting the information you receive from customers: There are programs available which encrypt information that customers send to you over the internet. These scramble the data so that it is indecipherable to anyone trying to read the information.
  • Create employee log-ins: Create log-ins for each employee for company computers. Screening each employee before they are given access to a log-in for any of the databases is necessary. Creating passwords for protected files that only the relevant employees have access to will add another layer of security.
  • Keep your sensitive files in a different location: Avoid keeping particularly sensitive files on the same network as all other files. These files should instead be kept on a separate computer and limited employees should have access to it, if not any.
  • Separate groups of customers: Separating databases will prevent loss of all customer data if there is a breach of security. 
  • Confidentiality agreements for employees: If the information you store is particularly sensitive or high profile, ask employees to sign confidentiality agreements. This increases their accountability as they run the risk of a lawsuit if they give out confidential information.

Preparing For Your Employee’s Performance Review

The performance review process is an integral part of a business that ensures that all staff (old and new) know their roles and responsibilities and perform them satisfactorily. It allows employers to directly give feedback to their employees in a formal setting that employees can then direct back into and shape how they perform their role.

Performance reviews may include praise about performance, suggestions for improvement or raise professional concerns, or assist in their career development and growth by planning for a future with clear strategic goals.

To be sure that the performance reviews conducted benefit you and your employees, It is essential to make sure that you are fully prepared and able to articulate your feedback. It’s important to have a plan, and a well-organised agenda of how you want the meeting to go can be a valuable tool to employ.

Make a note of any critical issues or points that you wish to discuss with your employee, as having the physical prompt should assist you in keeping the meeting on track and examine all of the relevant points that you want to pursue with the employee.

Essentially, you should cover in the performance review:

  • Each employee’s goals or KPIs, and how well those goals are being met/achieved
  • Areas where they have excelled
  • Places where they may need more improvement

You can also ask your employees to assess their performance and see what they may identify differently from what you have highlighted. You can do this by simply having them conduct a self-analysis on how their performance has been in reaching (or not reaching) their goals

If you are after a more formal approach to a self-analysis, you can ask employees to complete a more formal SWOT analysis, which identifies their strengths and weaknesses, opportunities they’ve taken advantage of to enhance their performance and any threats that may have impacted or may impact their performance.

Performance reviews can also identify and highlight areas for improvement in the business that may have otherwise gone unnoticed.

Typical Things To Address In A Performance Review

  • The employee’s quality of work and ability to meet particular metrics
  • Dependability and punctuality
  • Leadership, communication and team skills
  • Progress made towards personal career goals
  • Innovation and problem-solving skills

Performance reviews should be conducted periodically and methodically to ensure that you get the most benefit from them. It will also keep you informed about progress and issues within the business. It is recommended that you conduct performance reviews every three or four months, but half-yearly reviews are also perfectly suitable.

Pre-mixed investment options

Super funds make investments depending on the different levels of risk chosen. 

There are 5 types of pre-set investment options which you can choose for your superfund. Remember that if you want more control and flexibility, opting for a SMSF option might be ideal for you.

Growth

  • 85% shares or property and 15% fixed interest or cash (can also be 100% shares or property)
  • Expect higher average returns (with risk of higher losses)

Balanced

  • 70% shares or property and 30% fixed interest or cash (can also be 50-50)
  • Expect reasonable returns with reduced risk compared to ‘Growth’

Conservative

  • 30% shares or property and 70% fixed interest or cash
  • Expect lower returns due to much lower risk

Cash

  • 100% in deposits with Australian deposit-taking institutions
  • Expect accumulation of interest over the years – no losses incurred

Ethical

  • Invest only in ethical companies i.e. companies that meet environmental, social and governance standards
  • Investment, risk and return can sit anywhere on the spectrum

Make your investment choice based on how much risk you are willing to take. If you feel comfortable taking greater risks with your super because you have other investments you can rely on, then the growth option might be good for you. However, if you are relying on your super to fund your retirement, then the balanced approach might be more appropriate.

Practicing social distancing in the workplace

With COVID-19 threatening the health and safety of all communities around the world, it is now more important than ever to practise social distancing in the workplace. Social distancing includes ways to stop or slow the spread of infectious diseases and as the name implies, lessens the amount of contact between you and other people.

It is important to apply social distancing wherever possible within your workplace to minimise the risks of person-to-person infection and fulfil the responsibility you have to the safety and health of your colleagues and clients.

In the context of a workplace, social distancing means avoiding direct contact with your colleagues through a number of effective methods, including:

  • Staying at home if you feel unwell or are sick
  • Implementing work-from-home measures wherever possible
  • Dividing in-office work hours between employees to reduce the number of people in an indoor space at any given time
  • Stopping handshaking as a greeting – emerging alternatives include the “elbow bump” or a pat on the back
  • Moving office meetings to online video or phone calls
  • Limiting food handling and sharing of food in the workplace
  • Having employees take lunch at their desk rather than in a communal lunchroom
  • Cancelling non-essential business travels
  • Promoting good hygiene practice such as coughing/sneezing into elbows
  • Providing disinfectants and hand sanitisers for all staff to use during working hours
  • Opening windows and adjusting air conditioning for better ventilation

As COVID-19 grows in severity, consider how you can enforce any of the above social distancing measures in your workplace and how you can encourage others to do the same.