How innovation can help business

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Innovation doesn’t have to be a revolutionary and world-changing breakthrough. It can also be small changes you make to continually improve your business. Innovation can help in multiple aspects of business.

  • Improve sales and customer relationships: Putting the time and effort into improving your products and services is essential if you want to retain customers. Customers will recognise the changes you make and your commitment to doing the best you can for them. This will inevitably translate into improved sales.
  • Reduce waste and costs: Implementing changes which utilise new ways to eliminate waste and increase efficiency are extremely important. This will help you either increase your profits, or invest the money you save back into other necessary improvements for the business.
  • Improve employee performance: Creating a work environment that promotes innovation is more likely to keep employees stimulated and interested in their work. When employees are given the opportunity to suggest and implement changes, they are more likely to take pride in their work. This will also result in greater productivity.
  • Boost your market position: Innovation is also important in keeping up with changes in the market. Creating a company culture which is flexible and facilitates regular changes will mean that you can transform according to the needs of the market. This will differentiate you from competitors and boost your position in the industry.

How Does A No Interest Loan Work?

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Sometimes there are a few unexpected expenses that can impact on our financial situations, and make things just a little more difficult to deal with. The refrigerator breaking down the same week that the car registration is due could be too much of a financial burden for many individuals. With many credit-providing schemes and dubious loans advertised to the public, there is a simpler way to solve your financial issue if you are applicable.

The No Interest Loan Scheme is provided by the Australian government for individuals and families to have access to safe, affordable credit.

No interest loans are designed to assist people in getting back on a more stable footing financially, allowing them to borrow up to $1,500 to pay for essentials. The term for this loan is between 12 and 18 months, with no credit checks, interest, fees or charges. Repayments for no interest loans are affordable as you are only paying for what is borrowed.

To receive a no interest loan, you must:

  • Have a Health Care Card, a Pensioner Concession Card or an income less than $45,000
  • Have lived at your current address for more than 3 months
  • Show that you can repay the loan.

There are only a couple of steps that need to be completed to apply for a no interest loan under the scheme. A meeting must be arranged with a NILS provider through a telephone or website enquiry, in which you will be interviewed and helped through the application process. Then they will assess your eligibility and present you with an outcome. Loan assessments generally take between 45 and 90 minute, with the loans being approved within 2 days. If all paperwork is provided on the day, it can sometimes be same-day approval.

No interest loans can only be used for essentials. These can include:

  • Household items, like a fridge, washing machine, computer or furniture
  • Educational materials e.g. tablet or textbooks
  • Some medical and dental services
  • Car repairs and tyres

How Do You Make Sure Your Super Goes To The Right Person When You Die?

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What happens to your super when you die? It might not be a question that has cropped up in many people’s minds, but it is something that you should be concerned about.

Upon the untimely death of someone, their superannuation may be one of the elements of the estate that can be bequeathed and divided between their loved ones (trustees of the estate and beneficiaries. 

This is not done through your will though, as it isn’t automatically included unless specific instructions have been given to your super fund. Often this is done through a binding death benefit nomination. These payments are usually paid out in lump sum payments and split between beneficiaries as dictated by the deceased.

However, like any property or asset that can be challenged, the death benefits from superannuation and SMSF can be a legal quandary if the appropriate succession planning measures have not been put into place.

Death benefits are one of the most commonly occurring legal issues that plague the superannuation and SMSF sector for individuals. Many court cases involving death benefits are the result of poor succession planning, as individuals who were not stated to be recipients of the payments miss out on what may be supposed to be theirs.

In the event of an individual’s death, the deceased’s dependent can be paid a death benefit payment as either a super income stream or a lump sum. The non-dependants of the deceased can only be paid in a lump sum. The form of the death benefit payment (and who receives it) will depend on the governing rules of your fund and the relevant requirements of the Superannuation Industry (Supervision) Regulations 1994 (SISR).

If succession planning around who the superannuation is to be left to is in place by the deceased, those who may be classed as dependents and non-dependents can become legally blurred.

In any event, dependents are defined differently depending on what kind of law they are being examined under (superannuation law and taxation law).

Under superannuation law, a death benefits dependant includes:

  • The deceased spouse or de facto spouse
  • A child of the deceased (any age)
  • A person in an interdependency relationship with the deceased (involved in a close relationship between two people who live together, where one or both provides for the financial, domestic and personal support of the other).

Under taxation law, a death benefits dependant includes:

  • the deceased’s spouse or de facto spouse
  • the deceased’s former spouse or de facto spouse
  • a child of the deceased under 18 years old
  • a person financially dependent on the deceased
  • a person in an interdependency relationship with the deceased

Depending on the type of law that the beneficiary is classified under affects how they can interact with the death benefits.

How Do I Make Sure My Beneficiaries Will Receive The Death Benefits That I Want Them To Have? 

Death benefit payments need to be nominated by the holder of the superfund, as superannuation is not automatically included in your will. If you fail to make a nomination, your super fund may decide who receives your super money regardless of who is in your will.

That’s why succession planning is important when it comes to death benefits, no matter the situation. Even if you are at your healthiest, you’ll want to be prepared for any eventuality.

To get your succession planning right, here are 5 tips that will help you during the process.

    • Locate and/or consolidate your superannuation funds – if you do not consolidate your funds, ensure that there is a binding death benefit nomination (BDBN) in place for each fund.
    • Prepare a BDBN – this is a notice given by you as a member of a superannuation fund to the trustee of your super fund, nominating your beneficiaries on your death and how you wish for the death benefits to be paid.
    • Seek advice before making changes to your level or type of insurance cover – you may be compelled to disclose medical conditions which may impact your ability to obtain cover or impact the cost of your cover if you remove or change your insurance cover.
    • Review your binding death benefit nomination (BDBN) each year during tax time
    • Seek advice on a superannuation clause under your will – though superannuation is not an estate asset, the death benefit may be paid to the estate under certain conditions, which you should consult with a super professional about.

How Do We Make The Office Work More Productively, Post-Covid?

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There have been critical changes to the workplace over the past year. With many office-based employees forced to work remotely or from home during the pandemic, the adaptation of new technologies, systems of work, and overall business models has changed the office’s approach. 

Many office businesses may need to reevaluate their structure and model as employees return to the office.

Here are a few ways that your office can update to help boost productivity and reassure employees during this process:

  • The physical workplace should prioritise collaboration with a communal, free-flowing workspace. This workspace allows employees to be transient and hybrid while still possessing the resources they need to work effectively in person.
  • Use remote work technologies for effective communication to facilitate and support teams collaborating and catalyse innovation. 
  • Place greater importance on portability, flexibility, ease-of-use integrated support for an entire ecosystem of software when it comes to IT.
  • Businesses should create more significant support for cloud software, data management and security measures.
  • Businesses should ensure that safety and sanitation measures are more visible, accountable and that the appropriate policies will be enacted.

Feedback from your employees can also be an invaluable resource in helping them readapt to working from the office productively. 

How do people use the internet?

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Each person uses the internet in a different way. Whether they regularly access the internet for their job or only go on it to watch movies and shows, users have found a way to utilise the internet for their convenience. 

One particular convenience that has come from the internet is being able to research a product or services and purchase them online. A snapshot of July 2020 of internet users between the age of 16-64 showed that:

  • 81% of users searched online for a product or service that they wanted to purchase
  • 90% visited an online store
  • 74% purchased a product online

This data shows that the internet has become an important part of purchasing products and services. This also extends to users reading information about what the product/service is, what’s involved and reviews other people have provided.

Taking this into consideration, businesses should be putting in the time and effort to make their internet platforms (website or otherwise) user friendly. Customers should be able to access the information they require easily, otherwise, they will be driven towards a product/service whose information is more readily available.

Set up a website for your business if one does not already exist, and regularly update it with relevant information so that your customers have all the information they need. The more customers have to look for information, the more likely they are to opt for another product/service. 

How Do Partnerships Operate?

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Starting a partnership may be a high-yielding decision whether you are in the business game or setting your sights on a new business venture.

A partnership business structure is an incorporated business with 2-20 owners. The individual owners work together to achieve the business’s goals, sharing responsibility and profits.

In a partnership, control or management of the business is generally shared. A partnership is not a separate legal entity, so you and your partners are liable for all debts and obligations of the business. A formal partnership agreement is common but not essential (it is a recommended course of action though).

The specifics of partnership laws will vary depending on your state or territory.

There are two types of partnerships – general and limited. A general partnership is where all partners are equally responsible for the day-to-day management of the business.

Whereas a limited partnership has at least one general partner who is responsible for controlling the day-to-day operations and is liable for the debts and obligations of the business.

The passive partners in this type of partnership are called limited partners. Limited partners generally contribute a defined amount of capital, and their liability is limited to the amount of capital that is contributed.

Consider the following advantages and disadvantages before starting or joining a partnership:

Advantages

A partnership structure is easy and inexpensive to set up. Unlike operating as a sole trader, there is increased opportunity for income splitting, more capital available and higher borrowing capacity.

Working as a team can also provide more perspective than working as an individual. High-performing employees can also be made partners.

From a tax perspective, partnerships do not need to pay taxes on their income. Each partner pays tax on the share of the net partnership income they receive. Paying superannuation is the responsibility of each individual partner, as partners are not considered employees.

Additionally, there are limited external regulation and reporting requirements.

Removing partners is generally straightforward. The only condition is that at least two partners are left in the business. If a partner wishes to resign from the partnership, it is relatively simple to dissolve the partnership and recover their share.

Disadvantages

This type of business structure carries unlimited liability, meaning the business owners are liable for the business’s debts. They are subject to reasonably cover what is owed or risk seizure of their personal assets.

Each partner is responsible for the debts and liabilities of the business (with the extent depending on the type of partnership), including the actions of other partners.

This can cause disputes and friction among partners, resulting in unfavourable circumstances. For example, one partner may have a different vision or opinion on administrative control or profit sharing for the business compared with the other partners.

Although adding and removing partners is simple, partners will most likely need to value partnership assets which can be expensive.

If choosing to structure a business as a partnership, it is important to consult with an advisor to ensure that it is done correctly and compliantly to maximise the benefits (such as concessions, liability etc.) that could be infringed upon otherwise.

If you’re not certain of where or how to start your partnership, come speak with us as your business advisers. We’re ready and willing to help.

How Different Trust Types are Taxed

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A tried and true method of investment, trusts are generally and commonly known as being for the wealthier elements of society. A trust however is a highly versatile tool that individuals and businesses can use to align with and achieve their particular investment, financial or personal goals. They can also incur a number of taxable concessions, depending on the type of trust that has been established.

Trusts are a type of business structure that holds income, property or assets for the benefit of others (known as the beneficiaries of the trust). To establish a trust, a legal document called a trust deed is created to bestow upon the beneficiaries (be they a company, individual or a group) the power needed to deal with the trust’s contents.

In Australia, trusts are established as fiduciary relationships. This means that the two parties involved are bound legally and ethically to act in the best interests of the other, and particularly when acting on behalf of them. A trustee of a trust is responsible for managing the trust’s tax affairs, including registering the trust in the tax system, lodging trust tax returns, and paying some tax liabilities.

Some of the more common types of trust funds include unit trusts, managed investment trusts, family trusts, deceased estates, super funds, charitable trusts, family trusts, deceased estates, super funds, charitable trusts & special disability trusts.

Each type of trust has special tax rules mandated by the Australian Taxation Office.

Unit Trust

Unit trusts are used in many commercial arrangements, including managed investment schemes. Units can often be bought and sold in a way similar to shares in a company. Some unit trusts are taxed like companies and their unit holders like shareholders.

Managed Investment Trusts

Managed investment trusts are a type of managed investment scheme, which had a new tax system come into effect in 2016. The new tax system was designed to reduce complexity and increase certainty for MITs and their investors.


Family Trusts

Trusts that are qualified as family trust for the purposes of the trust loss provisions may benefit from concessional tax treatment. However, family trust distribution tax (FTDT) will apply to distributions made from these trusts if the trustee confers a present entitlement or distributes income or capital, makes concessional loans or otherwise provides or allows the use of income or capital of the trust for less than its market value to a person or entity that is outside of the trust’s family group. FDTD is payable by the trustee of the family trust at the highest marginal rate plus the Medicare levy. Beneficiaries that receive distributions on which FTDT was paid receive the distribution as non-assessable non-exempt income (against which they can’t deduct expenses).

Deceased Estates

A deceased estate is technically not a trust while it is being administered, but is treated as a trust for tax purposes, with the executor or administrator of the estate taken to be the trustee

Super Funds

Self-managed super funds, in essence, are trusts, with trustees and beneficiaries (members) of the funds. However, these super funds are taxed differently from other types of trusts.

The income of an SMSF is generally taxed at a concessional rate of 15%, but the fund needs to be a complying fund that follows the laws and rules for SMSFs to be entitled to that rate. If they are a non-complying SMSF, they could be taxed at 47% instead. The certain assessable contributions that can comprise an SMSF fund include:

  • Employer contributions
  • Personal contributions that a member has notified as being intended to be claimed as a tax deduction
  • Generally, any contribution made by anybody other than the member, with limited exceptions such as spouse contributions and government co-contribution.

Charitable Trusts

Some types of charitable funds must be established as trusts in order to qualify for charity tax concessions.

Special Disability Trusts

Immediate family members and carers can set up a special disability trust to provide for the future care and accommodation needs of a person with a severe disability. The trustee is taxed at individual marginal rates.

For more information about trusts and taxable concessions, speak with us.

How can you fund your business?

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Turning an idea into a business requires money, and securing this stable funding is not easy. Businesses have a variety of innovative funding options today, but before you pick one, you may want to consider how well some of these methods fit your business model and if you can really benefit from them.

Peer-to-peer lending
This is a form of financing that pairs you up with people online that are willing to lend money to your business, without going through a financial institution like a bank. It involves filling in an application on a peer-to-peer lending website, where your risk rating is determined based on your security, creditworthiness and revenue projections. Once approved, other members on this platform can see your request and may decide to lend you money.

If you are looking for a smaller loan, P2P might be ideal for you. Despite the cap on the maximum loan amount, its easy online application and competitive interest rates make P2P a great way to finance your transactions.

Crowdfunding
More business owners are turning to the internet to grow their business. Crowdfunding is a way to gain finances without going into debt. These platforms involve business owners pitching their business and asking for funds in exchange for some type of reward, like early access to your products or exclusive discounts for investors.

However, crowdfunding is not a long-term financing solution. Your business might benefit more from this if it is an innovative idea, and if you are looking for a one-off financing option that is cost-effective. Crowdfunding offers the added bonus of gauging how people feel about your business – which is essentially free product-testing and customer feedback.

Purchase order financing
POF works by converting your incoming orders into collateral. When you engage with a POF company, they directly pay your supplier so the order can be met. The customer then pays the POF company directly, which then deducts its fee before returning the payment to you.

This can be a great option for small businesses that may not be able to financially take on larger orders. However, it is important to note that POF companies limit their services to product-based businesses, and their fees can be quite high.

How bullying brings your workplace down

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Bullying is a serious issue in workplaces and can affect your business on many levels. Workplace bullying is where repeated and unreasonable behaviour is directed towards an individual or group of employees. It is considered to be workplace bullying where it poses a risk to health and safety.

Examples of bullying behaviour include verbal abusive, unjustified or unreasonable criticism, singling someone out, spreading misinformation or malicious rumours, or humiliating someone. Workplace bullying doesn’t just affect those involved. The wider workplace can suffer through lost productivity, low morale, and toxic company culture. Here are some of the ways that bullying can negatively impact on your business.

Reduced productivity:
As people don’t perform well in high stress and anxiety situations, businesses will face a loss of productivity due to workplace bullying. When workers are distracted by bullying, research suggests that productivity could decline by 40%. Employees who are being bullied may also experience a loss in motivation, which will cause them to avoid putting in any effort or time into their work.

Higher staff turnover:
People that do not feel comfortable at work due to the effect of bullying will be inclined to look for work elsewhere. This can cause a business to have high rates of employee turnover, which will have significant economic impacts on the employer. This includes the replacement costs associated with recruiting, hiring and training new staff. A culture of bullying within a workplace can also create low morale, making the business even more susceptible to high turnover rates.

Financial impacts:
There can be many legal costs and other financial impacts associated with bullying within a business. In some cases, employers may be found to be liable for the bullying that takes place within their organisation. They may be required to pay for damages, costs of legal proceedings, or even settlements in more extreme cases. Further financial impacts may be associated with rehabilitation costs if the bullied worker chooses to stay with the business. These costs may include counselling fees, team-building activities or anger-management training.

How are investments taxed?

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Investment income needs to be included when conducting tax returns. This includes any income acquired through interest, dividends, rent, managed funds distributions, and capital gains. The income yielded from investments is taxed at a marginal tax rate. 

Individuals are able to claim deductions for the cost of buying, managing, and selling an investment. However, the Australian Tax Office (ATO) provides rules about what an or cannot be claimed as a tax deduction. 

The MoneySmart website has a simple and easy-to-use tax calculator that may give an indication as to what the annual tax will be. However, it is recommended that if an individual has a diverse portfolio that yields income from multiple sources, then should consult an accountant or advisor that can lead them through the process as it can become quite complex. 

In order to minimise taxation on investment income, individuals should consider tax-effective investments that provide concessional taxation. These include superannuation and insurance bonds.