Is a pay cut worth it?

Posted on by Adam_Admin

When looking for a new career opportunity, a pay cut is something that may come up with a job offer. There are factors such as experience, field of work, job demand and potential for growth that all affect a salary offer.

Deciding whether or not to take a pay cut with a new position can be difficult and is best done after looking at the pros and cons of the opportunity.

You are changing careers
Jobs within your existing field and changing industries should be treated differently. For a new career, it is likely that you will need to take a pay cut to gain a new set of skills and establish yourself in the industry. Before you take the offer, make sure that the rate of pay is competitive and assess the opportunity for future promotions, to ensure that this pay-cut will not be something permanent.

You want to improve your work-life balance
Your work-life balance is crucial to maintaining your physical and mental health. Taking a new role that reduces your workload will result in a cut to your pay. Find the balance right for you and consider if what you will gain back in family time, free time and a reduction of stress compensates for your pay cut.

Opportunities for future growth
The short-term loss in salary may be worth it in the event that the new job opportunity has the potential to grow your salary past your current earnings in the future. For example, young businesses and startups with proven growth periods of time may be a good choice if you get in early and reap the financial rewards in time. Making less money in the short term may not be too bad if your salary, job satisfaction and experience are growing in the long term.

Investing in shares vs property in SMSFs

Posted on by Adam_Admin

Shares and property are two popular investment options for those with a self-managed super fund (SMSF). However, they both have very different attributes and choosing the one that will achieve the best outcome for an SMSF depends on your personal goals and situation.

While the price of shares can vary drastically, property is a relatively stable asset, making it appealing to those who want more security and predictability. Property prices are also negotiable unlike shares, and you can generally borrow money at a lower rate for property purchases.

It may seem hard to find the perfect investment property, but older and undercapitalised properties can be renovated for profit. However, returns from property rentals can be dented due to factors such as land tax, utilities and rates, maintenance and tenancy vacancies.

Shares are more dynamic and volatile than property. One advantage is the accessibility of investing in shares, as you can enter the share market with a few thousand dollars – much less than what you need to invest in a property.

Maintaining a portfolio of quality shares that pay tax-effective dividends may be a good way to fund retirement. With the right portfolio allocation, shares also have the potential to provide a better, stronger income than property rentals, as long as that income is sustainable and increasing.

Property can generally be used as a wealth-creation tool, while shares can create a reliable retirement income. For those who can afford to put more money into investments, it may be a good idea to consider investing and diversifying in both. If you’re unsure about which investment option is right for you, seeking financial advice may be the best option.

Invested In Cryptocurrencies? So Is The ATO – But Not For The Reason You Think

Posted on by Adam_Admin

Cryptocurrency investments are on the ATO’s radar this tax return season, with 100,000 taxpayers to be alerted by the ATO of their tax obligations from their cryptocurrency investments this financial year.

It’s an outcome that has resulted from a growing concern that many taxpayers who invest in cryptocurrency believe their gains to be tax-free, or only taxable when their holdings are cashed into Australian dollars.

This proactive prompt to taxpayers is a repeat of the ATO’s 2020 attempt, which resulted (after contacting 100,000 taxpayers) in the lodgement of 140,000 returns.

Cryptocurrency’s current popularity as an investment solution for many taxpayers, due to the fairly consistent returns, is causing the ATO to evaluate the digital asset’s tax implications further.

Currently, those who invest in cryptocurrency need to be aware of the capital gains tax implications that may eventuate from selling or buying and any losses or gains that may come about due to investing, particularly in how it impacts their reportable income tax.

The ATO will also be heading into tax time with access to more data and the ability to track those investing in crypto-assets and ensure they are meeting their tax obligations.

The best way to ensure that your tax returns are lodged correctly when it comes to cryptocurrency reporting is to keep immaculate records. You should ensure that you have records of:

  • Dates of transactions
  • The value of the cryptocurrency in Australian dollars at the time of the transaction
  • What the transactions were for
  • Who the other party was (even if it’s just their wallet address)Be sure that you are meeting your tax obligations this tax return season (especially to avoid the harsh penalties resulting from incorrect reporting or lodgements) by speaking with us. We can advise you further about your particular situation and give you the advice you need to suit your circumstances.

Introducing ASFP

Posted on by Adam_Admin

Plans are underway to carry out a system change during the December closure of the ATO to introduce Activity statement financial processing (ASFP). This change will move the majority of taxpayer financial information into one accounting system that will have multiple accounts.

ASFP will shift activity statement and franking deficit tax accounts from the current ATO system into their primary accounting system, covering all the different taxes they administer. This change is intended to help improve ATO digital services by delivering simplified transaction descriptions and summary views of “statement of account transactions” with the ability to view full account transaction if required.

During the closure, a number of ATO online services will be unavailable. These include;

  • SuperMatch: A service that enables APRA-regulated funds to consolidate member accounts.
  • EmployerTICK: An online service employers can voluntarily use to validate employee details, prior to making the first contribution to a super fund.
  • Fund Validation Service (FVS): A service that enables employers and funds to obtain APRA-regulated funds’ e-commerce details that support SuperStream transactions.
  • Electronic portability form (EPF): An ATO-hosted form that can be used by fund members to transfer the whole balance of super accounts between APRA-regulated funds, or to member’s self-managed super fund.
  • Member Account Attribution Service (MAAS): A service for super providers and life insurance companies to report the opening and closing of accounts, and changes to a member’s account phases and attributes when they occur (event-based reporting).
  • Member Account Transaction Service (MATS): A service for super providers and life insurance companies to report member contributions or transactions more frequently and at a transactional level.
  • Small business superannuation clearing house (SBSCH): The superannuation clearing house is a free online super payments service that can be used by employers with 19 or fewer employees or have an annual aggregated turnover of $10 million or less, to pay super contributions in one transaction to a single location.

Businesses will still be able to report using STP, however, these records won’t be processed and displayed until the ATO systems are back up and running. The ATO’s “System maintenance page” and “Superannuation Dashboard” will be updated with dates of planned system outages.

Introducing a new employee

Posted on by Adam_Admin

Hiring a new employee is a time-consuming process that affects you, the company, and the team. It can often be especially nerve-wracking for the new employee starting a new job and joining a brand new team. It is therefore important to take steps to make the process easier on all parties affected.

One of the most effective ways to announce your new employee to the team is through an email. This ensures that all staff are aware of the new employee whether they are in the workplace that day or not. It is also a great way to have written relevant information that staff can refer back to. Introduction emails usually cover key details such as the new employee’s full name, start date, job role, department, responsibilities, supervisor, professional and/or academic background, and perhaps an interesting fact about them. The email can also encourage other employees to welcome the new employee and say hello, making them feel welcomed and valued and providing a positive start to staff relationships.

If the team is small, you can also introduce your new employee by organising a meeting for everyone to meet face to face. This can be formal or casual. A meeting through a morning tea or lunch is a great way to gather staff in the same place and provide a positive atmosphere to encourage a warm welcome. This event would be casual enough that the new employee doesn’t feel overwhelmed, but big enough that they feel valued and get the opportunity to introduce themselves to everyone.

The way you introduce a new employee often depends on the environment of your business. If the workplace is a bit less formal, you can announce the new employee’s commencement on a staff Facebook group if you have one, instant messaging channels such as Slack, or noticeboards.

If your business has regular one on one interactions between the same staff member and client, it is a good idea to formally introduce the new employee to your clients. This can be done via email that provides the new employee’s name, business details, and work experience. Good emails let the client know that they are appreciated for their time and patience and that they will still be supported as normal during this transition period. This can also be done through a social media post alerting your followers about the new employee which lets them know what is happening without direct one on one correspondence.

Interest On Your Home Loan Could Be Tax-Deductible

Posted on by Adam_Admin

It’s a simple, step-by-step process used by many Australians to increase their income. Borrow money from a financial institution, invest in a second property and pay off the loan with the profit accrued from the investment property (ie. rent from tenants).

But did you know that the interest on a home loan for the purchase of an investment property can be claimed as tax-deductible?

To clarify – claiming a tax deduction on the interest of a loan can only be used on the loan that was used to purchase the investment property. It also must be used to earn income, because a property that is solely residential isn’t eligible for any tax deductions (except in certain situations where the residence may be used to produce income, like home business or office).

Here are a few examples of when tax deduction claims on your property are not allowed:

  • If the secured property is being used for living as a primary residence, and no income is made from it.
  • Refinancing your investment loan for some other purpose (like buying another property).
  • Using the loan for private purchase, other than the purchase of a home.
  • If the investment property is a holiday home that is not rented out, then deductions cannot be claimed as it doesn’t generate rental income.

As an example, if borrowing against your main residence for the purpose of purchasing an investment property, then the interest on that loan is tax-deductible. Conversely, if the loan was against the investment property to buy a car for your personal use, then the interest from that loan will not be tax-deductible.

The only way that a tax deduction on a home loan’s interest is possible, is if there is a direct, unbroken relationship between the money borrowed and the purpose the money was used for. Any money that resulted from a home loan, for instance, should have been invested into a property.

If you happen to redraw (make extra repayments into your loan that reduce the loan balance) against an investment loan for personal use, the tax-deductible interest is watered down. This is because the new drawdown (transfer of money from a lending institution to a borrower) is deemed to not be for investment purposes.

It is important that any investment loans are quarantined from your personal funds to maximise tax deductions on interest. Though it may be tempting to pull additional funds from the loan for additional finances, it’s shooting yourself in the foot.

A better strategy (if there is only investment debt that has been incurred, and you wish to pay it off), is to place funds in an offset account (a bank account that is linked to your home loan) and then redraw those funds for your personal use. It’s also important to ensure that the offset account is a proper offset – a redraw that is disguised as an offset account can be a major drawback for investors looking to capitalise on their tax threshold.

If you or someone you know has recently purchased an investment property with a home loan, speak to your accountant or financial advisor to see how your tax return can benefit from it.

Insuring your super

Posted on by Adam_Admin

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.

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.

Insurance & Your Business – Are You Covered?

Posted on by Adam_Admin

Providing your business with insurance is like providing a safety net to a trapeze artist. You hope that you won’t need it, but having it in place adds security and protection if the worst-case scenario should occur.

Your business may require certain types of insurance, depending on the circumstances. These may be because it is required by law (such as workers’ compensation insurance) or because people you deal with may require it to provide something to you.

Other types of insurance are your choice but can be an important way to reduce business risk and protect things like your:

  • business assets (such as equipment, premises and stock)
  • customers
  • employees
  • business owners
  • earnings

Some forms of insurance are required by law.

  • Workers’ compensation insurance is compulsory if you have employees.
    • If you are an independent contractor, you may require your own insurance.
    • If you are a sole trader, you cannot cover yourself as an ‘employee’ with workers’ compensation insurance. So you’ll need to consider your own personal death, illness and disability insurance. You can cover yourself for accident and sickness insurance through a private insurer. This policy will compensate you for the loss of revenue while you recover.
  • Third-party personal injury insurance is compulsory if you own a motor vehicle. This is often part of your vehicle registration fee.
  • Public liability insurance covers you for third-party death or injury and is compulsory for certain types of companies.

Other forms of insurance may be necessary for your business’s needs to provide you with security in the event of incidents (and keep you from having it taken out of your pocket). Keep in mind the following for your business’s purposes.

Personal Or Loss Of Income Insurance

These are personal insurances that cover things that could happen to you. These may include income protection or disability insurance, life insurance, business interruption or loss of profits insurance, or even employee dishonesty.

Stock Products & Asset Insurance

If you have important business assets, property, stock or products you can’t afford to lose, these types of insurance provides cover. This may include building and contents, tax audit, transit goods, farm insurance, etc.

Accident & Liability Insurance

Liability insurance protects you if you are liable for the damage or injuries sustained to another person or property. This is mostly optional, but it’s highly recommended for your business if the possibility of legal action is high. For some industries, liability or professional indemnity insurance is mandatory.

Technology & Cybercrime Insurance

Insurance cover is required to protect against emerging technology risks within businesses. This may include:

  • Electronic equipment insurance will cover your electronic items from theft, destruction or damage.
  • Cyber liability insurance protects your business against cybercrime. This insurance covers the cost of keeping your data secure and the expenses from disrupting your business

Examine each type of insurance and consider if it’s something your business needs. Talk to a licenced insurance broker, business advisor or insurer for advice.

Insolvency reforms to support small business

Posted on by Adam_Admin

The government recognises that despite support to get through the COVID-19 outbreak, not all businesses are going to remain viable.

Many small businesses will have significantly increased levels of debt in order to remain in business during the COVID-19 pandemic. The government is introducing a number of permanent and temporary measures to expand the availability of insolvency practitioners to deal with this expected increase in the number of businesses seeking to restructure or liquidate.

The package of reforms features three key elements:

Debt Restructuring

Currently, requirements around voluntary administration in Australia are more suited to large, complex company insolvencies. The new debt restructuring process will adopt a ‘debtor possession model’ where the business can continue to trade under the control of its owners, while a debt restructuring plan is developed and voted on by creditors.

Liquidation Pathway

The costs of liquidation can consume all or almost all of the remaining value of a small business, leaving little for creditors. Under the government’s new process, regulatory obligations will be simplified, so that they are commensurate to the asset base, complexity and risk profile of an eligible small business.

Temporary Relief Measures Extended

The government announced a further extension of relief measures to 31 December 2020. The

temporary increase in the threshold at which creditors can issue a statutory demand on a company from $2,000 to $20,000; and a temporary increase in the time companies have to respond to statutory demands they receive from 21 days to 6 months. In addition there is a temporary relief for directors from any personal liability for trading while insolvent, with respect to any debts incurred in the ordinary course of the companies business.

The temporary gives businesses needed breathing space to and highlights the importance of working with financial professionals as soon as required, ensuring that your small business has the best chance of success.

Innovation Stems From Collaboration – So How Can Your Business Get Involved?

Posted on by Adam_Admin

Innovation is one of the pinnacles of good business practice. However, sometimes innovation isn’t a process that can be achieved by one person alone. In business, some of the best ideas and practices that your business might achieve could occur through collaboration.

Most businesses will have understood the impact and importance of internal collaboration between team members and already put into place tools to help promote this. However, what exactly does effective business collaboration look like?

Business collaboration is the leveraging of internal and external connections in order to generate ideas, find solutions and achieve common goals for your business. It can be done internally (through collaboration with your team), or externally (through the combined efforts of multiple businesses).

Many businesses are already seeing the benefits of remote collaboration within their teams, especially with regards to the time being saved and the increase in productivity.

Businesses may also find that learning opportunities are presented to their employees and team members through the interaction and collaboration with other businesses that could benefit them, with additional knowledge and skillsets gained throughout the process.

Even with many restrictions remaining in place that limit travel on both domestic and international scales, businesses are able to confer with remote workers and businesses through the assistance of digital technologies, thus enabling collaborative efforts to continue

As restrictions ease and businesses are able to engage with one another once again in face-to-face settings, remote collaboration tools can be used to facilitate inter-business collaboration from the ease of anywhere.

These include:

  • Instant messaging – allows for quick online communication for day-to-day business with the teams involved.
  • Video conferencing – replicating face-to-face contact without the need to travel into the office or to a meeting space.
  • Online workspaces – communicating, collaborating, and sharing ideas in one online space, without the need to be in the same room or even area
  • Cloud sharing – cloud tools offer functionalities for collaborating on files, tasks, projects, and calendars in real-time in one accessible, shared online space.

These tools allow businesses to work uninterrupted with individuals, clients and other businesses, as the distance between is no longer a major inhibiting factor to operations (if operations can be conducted away from the site). It can also potentially promote global interconnectedness for the business, as collaboration does not have to occur at a local or domestic level.

Your business might not collaborate with other businesses in exactly the same way as a business in the same industry. It’s important to know what might be the right form of collaboration for your business to benefit from it – and doing that will depend on what you may want to get out of it, and how long you may want it to last.

Alliance

This is known as the traditional type of business collaboration, usually involving two or three companies temporarily working together. They are able to reach a common goal by combining their resources and knowledge, which can be effective for businesses with knowledge/resource gaps that another business could temporarily fill.

Co-Opetition

Competitors can be great collaborators if used appropriately. Co-opettion involves collaborating with competitors so that businesses can share resources, avoid duplication of their work and generate new customers for all parties involved.

Portfolio

When one large business manages a broad collaboration with multiple smaller, external partners, this is known as portfolio collaboration. The main, central business sets the rules for the collaboration and maintains it, offering many of the benefits of an alliance but in a long-term form that generates more connections between businesses.

Community 

Simply put, community collaboration uses one of the greatest resources that a business may have at its disposal – the community. Essentially, businesses collaborate with individuals or other businesses that are within their community. This can be done via both the business community (e.g local business partnerships) AND the customer community (e.g. social media influencers).

Network

If a business knows of other businesses with similar goals and values that they want to uphold, they may instigate network collaboration. This style of collaboration means that the businesses may not necessarily be in competition with one another but, with shared interests can collaborate on mutually beneficial projects with access to one another’s resources and customer base.

Your business may choose to collaborate with other businesses through:

  • A wiki, which can be used to share knowledge, improve training and contribute towards a strong company culture.
  • Cross-promoting, where the businesses promote one another on various platforms. This could be done through social media, running partnered promotions, or even by getting creative with guest posts on websites or a shared podcast.
  • Running a networking event to find new clients and potential future collaborators, which can be conducted online or in person.
  • Community events can be a great way to connect your business with potential customers and collaborators, and running it with another local business is an effective way to put yourself out there and foster connections that could lead to long-term partnerships.

The rapidly changing and digitally-inclined business world means that businesses that don’t prioritise collaboration – both internally and externally – are likely to fall behind. Making the most of collaboration solutions and tools allows collaborations to be streamlined, which is beneficial to all involved.

If you are looking for advice on how to structure these collaborations or work out the best way to get involved with other businesses, you can plan out your way forward with our help. Start a conversation with us today.