Corporate Social Responsibility, and Your Business’s Social-Cause Branding

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When branding your business, it’s important to consider all aspects of marketing. Businesses should utilise their marketing and branding strategies effectively to promote not only their business but also the values that the business holds true to.

In a socially conscious world, consumers are moving towards businesses whose business values align with their own moral, social, and environmental values. Effective marketing and branding strategies are often used by businesses to promote their image, boost their reputation, convey a specific message to their customers or impart their values.

Social branding is no different to most marketing campaigns – it simply conveys the business’ commitment to social and environmental responsibility, and creates visibility and transparency around how they are doing so. Social-cause branding as it is also known is furthered by the concept of Corporate Social Responsibility.

Corporate Social Responsibility is a concept that began to emerge over the past decade, where a company, business, or organisation markets with or alongside morally or socially just causes to promote their support and remain relevant in a constantly changing world.

Incorporating Corporate social responsibility into a business does not have to start at a global or macro level. Businesses can address their social, ethical, and environmental responsibility by beginning with their local community or smaller causes. This can be a more effective strategy for smaller businesses.

Social branding driven by corporate responsibility can be engaged by businesses for strategic or ethical purposes. It can aid in adding to a business’s profitability and relatability to its shareholders, as well as promote positive and negative outcomes of their endeavours from this engagement. It also addresses the loyalty of a customer base, as shared business values and personal values for a customer may result in a more stable consumer base beyond what was initially forecast. If your business is not seen as socially or ethically conscious, it can attract negative feedback and impact your business reputation.

Some notable examples of the ways in which corporate social responsibility is expressed by businesses include fair trade coffee beans, Pride Month branding of products, recycling resources to repurpose for other goods (e.g. recycled paper cups).

Here are a few tips on how to adjust your marketing strategy to reflect your business’ diverse social branding, and show your consumers that you are in alignment with their values:

If you are a local business, showing support to identified causes that are relevant to your community can kindle a sense of belonging and solidarity towards the community.

  • Creating and finding partnerships with similarly like-minded businesses that share your corporate social goals can shine more light on the social and moral values your business takes pride in.
  • Marketing the successes of your business in achieving corporate social responsibility is a good way to ensure that your targets are being met and that your consumers are seeing the results.
  • By committing to a social or environmental cause, and using it to promote awareness, your appeal should increase to consumers who value that aspect or cause highly.

By increasing the visibility of your business’s corporate social responsibility, you are more likely to engage with consumers beyond your initial target. Consider what best suits your business’ products when it comes to championing a cause to support. Your messaging is impacted by how your product is seen and conveyed and choosing an improper way to relate to a cause will minimise the effect it could otherwise have had.

Corporate social responsibility could be as simple as being against domestic violence and supporting local charities, using your position as a corporate body to promote this message in your sponsoring of, for example, sports teams, or donating to worthy causes to gain recognition of the good deed.

As a business, consider your marketing strategy and whether or not you should address causes in your branding. Can you use it effectively? And if so, how? Discuss with your marketing manager or team whether or not this could be a viable plan for your business potential to be maximised.

Contractors & Superannuation

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Contractors who run their own business and sell their services to others have different obligations to their super than what employees in a business may usually have.

A contractor (also known as an independent contractor, a subcontractor, or a subbie) who is paid wholly or principally for their labour is considered to be an employee for super purposes, and may be entitled to super guarantee contributions under the same rules as other employees.

A contract may be considered ‘wholly or principally for labour’ if:

  • You’re paid wholly or principally for your personal labour and skills
  • You perform the contract work personally
  • You’re paid for hours worked, rather than to achieve a result

If hiring a contractor to perform solely their labour for a fee, the employer may also have to pay super contributions on their behalf.

In this sense, if you are a contractor who is being contracted to an outside business than your own to perform your usual work or labour, your employer must contribute to your super the same way they would any other employee.

This could be seen in an example of an electrician who runs their own small business, or is employed by a small business who has been hired by another business to supplement their workforce and perform a specific role that they can fit to.

Take, for example, an electrician who runs their own business and has been subcontracted by a larger business.

They are performing labour but also providing materials (ie, themselves plus a toolbox plus a van full of powerpoints and wiring etc), they would be seen as a contractor and not an employee for super purposes. They must pay themselves super, in this case.

However if they are sub-contracted to perform labour only then the company that has sub contracted them may be liable to pay super on the amount that they pay to their contractor.  This would be the case where the electrician just turns up with their tool box and everything else is provided by the “employer”.

If they are in an employment-like relationship with the person that they entered their contract into, they may need to have their super paid to them by their contract employer. In order for super to be applied from what you earn, the contract must be directly between you and your employer. It cannot be through another person or through a company, trust or partnership.

It is important that both parties in the process are aware of their super obligations during the contracted period. There can be significant penalties for employers who use contractors if they fail to correctly pay super. Each case regarding contractors and super needs to be assessed independently to ensure that you are doing the right thing. There is no definitive black and white line between a contractor and a contractor in an employment-like relationship that can be obviously seen after all.

If you’re unsure about whether or not you’re meeting your obligations as an employer, or are a contractor looking to make sure their super is being correctly paid into, speak with us.

Contractor obligations for business owners

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Contractors bring with them different obligations that business owners need to comply with. Employers that incorrectly classify employees and contractors can face hefty penalties and charges as well as claims for entitlements and superannuation contributions. It must be established whether they are employees or contractors to get tax and super requirements right.

When hiring an individual contractor, the contractor may wish to enter a voluntary agreement for owners to deduct PAYG withholding amounts from their payments. This arrangement helps the contractor manage their tax by making contributions towards their expected income tax liability. Employers will need to check whether a contractor is eligible for super guarantee and if they can choose a super fund. If so, employers will need to;

  • Give the contractor a Standard choice form (or equivalent) within 28 days of them starting, so they can nominate their preferred super fund.
  • Check that the fund they’ve nominated is a complying fund.
  • Give their tax file number to their super fund the next time you make a payment for them, or within 14 days, whichever is the later.
  • Set up an electronic system to report and pay your super contributions using SuperStream.

Employers should also promptly start keeping records about the contractor as they will be needed to meet tax and super obligations.

Business owners will generally need to withhold 47% (from 1 July 2017) from payments to contractors that are a company, partnership or trust, and do not provide an ABN. Employers are also required to give a completed “PAYG payment summary – withholding where ABN not quoted” to the contractor with their net payment, include the payments in the “PAYG withholding where ABN not quoted – annual report” and lodge the report with the ATO by 31 October.

Business owners will need to meet other obligations when employing contractors such as preventing unlawful discrimination in the workplace as well as supporting working parents, people with a disability and those with carers responsibilities.

Consolidating your super

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Consolidating your super can save you time and money. Consolidating your super means that rather than having multiple different accounts, all your super is in one account. 

Why you should consolidate your super:

  • Choosing to consolidate your super means that you will no longer be paying fees to multiple super funds. 
  • There is also less paperwork to complete each time
  • You will be able to track your super more easily 

Before you consolidate your super: 

  • Consider how changing super funds affects employer contributions: Certain employers may contribute more to one fund than another. In which case, you should consider switching to the fund that your employer is most compatible with.
  • Consider how changing super funds impacts insurance you have through the fund: Changing funds might mean you no longer receive benefits of the insurance. Double checking the details of this is particularly important if you have a pre-existing medical condition or you are aged 60 or over. 
  • Inform your employer of any change in details they may need, to pay to your chosen super account. 

Don’t simply choose the account with the highest balance. Rather, take into consideration the performance of that super fund, the fees you are required to pay, whether it is linked to any insurance and any other factors. Upon reviewing this, you may find that rather than choosing between your current super funds, starting with a completely new fund might be the best way to go. 

How to consolidate to one of your current super funds:

  • Create an account on the myGov website
  • Link your myGov account to the ATO
  • Go to ‘Super’ and then ‘Manage’
  • Select ‘Transfer Super’ 

Transferring to a new fund

In the case you decide that transferring to a new fund is the best option, you can consolidate either by contacting the new fund directly, or using an ATO rollover form. 

Consequences of late SMSF annual returns

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From 1 October 2019, if an SMSF is more than two weeks overdue on any annual return lodgment due date and hasn’t requested a lodgment deferral, the ATO will change their status on Super Fund Lookup (SFLU) to ‘Regulation details removed’.

The ATO is taking this approach as non-lodgment combined with disengagement indicates that the fund’s retirement savings could be at risk. This status will remain until any overdue lodgments have been brought up to date.

On the first business day of each month, the new process will update SFLU depending on the situation:

  • SMSF trustees who haven’t lodged their SMSF annual return on time and are more than two weeks overdue, the ATO will change their SMSF regulation status to ‘Regulation details removed’ on SFLU.
  • All overdue lodgments were received for an SMSF during the previous month, the ATO will update SFLU to reinstate the SMSF’s ‘complying’ status.

By having a status of ‘Regulation details removed’, APRA funds won’t roll over any member benefits to the SMSF and employers won’t make any super guarantee (SG) contribution payments for members of the SMSF. While the fund’s status is ‘Regulation details removed’, members should alert their employer to make any SG payments into the employer’s default super fund or a fund of the member’s choice.

SMSF trustees who don’t think they can meet lodgment requirements should call, before the due date, to seek a deferral to lodge.

Consequences Of Improperly Lodged Tax Returns

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With tax return season approaching quickly this year, you may have already started looking into lodging your income tax return. Ensuring that your details are correct and that any information about your earned income from the year is lodged is the responsibility of the taxpayer and their tax agent. However, if during this income tax return process the tax obligations of the taxpayer fail to be complied with, the Australian Taxation Office has severe penalties that they can enforce.

Australian taxation laws authorise the ATO with the ability to impose administrative penalties for failing to comply with the tax obligations that taxpayers inherently possess.

As an example, taxpayers may be liable to penalties for making false or misleading statements, failing to lodge tax returns or taking a tax position that is not reasonably arguable. False or misleading statements have different consequences if the statement given results in a shortfall amount or not. In both cases, the penalty will not be imposed if the taxpayer took reasonable care in making the statement (though they may still be subject to another penalty provision) or the statement of the taxpayer is in accordance with the ATO’s advice, published statements or general administrative practices in relation to a tax law.

The penalty base rate for statements that resulted in a shortfall amount is calculated as a percentage of the tax shortfall, or in the case of no shortfall amount, as a multiple of a penalty unit. This percentage is determined by the behaviour that led to the shortfall amount or as a multiple of a penalty unit, which are as follows:

Failure to take reasonable care – 25% of the shortfall amount or 20 penalty units
Reasonable care is not taken if the taxpayer failed to do what a reasonable person in the same situation would have done.
Recklessness – 50% of the shortfall amount or 40 penalty units
Recklessness is determined as disregarding or showing indifference to a real risk of a shortfall amount arising that a reasonable person would have been aware of.
Intentional Disregard – 75% of the shortfall amount or 60 penalty units
Intentionally disregarding the law occurs if there is full awareness of a clear tax obligation, and the obligation is disregarded with the intention of bringing about certain results (underpaying tax or over-claiming an entitlement).

If a statement fails to be lodged at the appropriate time, you may be liable for a penalty of 75% of the tax-related liability if:

A document that is necessary to establish tax-related liability fails to be lodged
In the absence of that document, the tax-related liability is determined by the ATO.

To ensure that the statements, returns and lodgements are done correctly, and avoid the risk of potential penalties, contact us today. We’re here to help.

Connecting With Customers To Boost Your Business

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More and more Australians bought local products during the past year and rallied behind smaller businesses, which buoyed many shops that may have otherwise struggled to stay afloat. 

To create this kind of loyalty and support it’s crucial to develop and maintain a strong connection with your customers. 

If you are a small business, this is a vital aspect of business management that you will want to have occurred to strengthen customer relationships. 

Make The Customer Feel Special

Customers want to feel special – you can achieve this by approaching each customer as an individual rather than as a customer per se. Making the user interactions tailored to suit each customer’s specific needs/usage of your products will enhance the relevance and improve the authenticity of the interaction. Your customers will feel heard by your business and seen.

Let Your Customer Feel Heard

Always ensure that the customer feels heard – if the customer has a complaint, treat it the same way that you treat a good review, and respond accordingly. This builds trust with the customer and future customers that you will hear them out, and act the best you can to assist. 

Reward Customer Loyalty & Strengthen Connections

Go above and beyond for your customers – if you’re a small business, you can use the closer connection you may have with your customers to your advantage and offer additional loyalty discounts, recommendations, and phenomenal customer support. 

Follow Up With Your Customers

Follow up with customers (new and current) to ascertain reception of products and services, spearhead a proactive approach to appraisals and determine if a poor customer experience has been had. Following up allows customers to feel acknowledged while also granting you access to potential data that you may not have received otherwise. 

Connect Via Social Media 

Ensuring that you remain actively involved on your social media for your business with your customers should increase interaction. With many looking to online platforms to browse products, leave reviews and share favourite products via social media, it makes sense to turn your social media platform into a way to make your brand shine. Actively engaging with customers, responding to comments and questions, and directing your brand’s narrative are great ways to use social media to strengthen your connection.

Your Existing Customers Should Come First

Prioritise the customers you already have over the accrual of potential customers. If you’ve already got an established customer base, one of the best ways to maintain it is to keep them happy. You don’t want to risk losing them during the growth of your business due to less attention and more subpar customer service. The best way to maintain customer loyalty is to ensure that you can meet their needs, follow up with their requests (to the best of your ability) and satisfy their customer service needs. 

Conducting due diligence when buying an existing business

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You’ve found the perfect business for you to buy. It fits all your requirements and you’re in a position where you can comfortably buy the business. What’s next?

Before you sign the contract to finalise the buy, it is important to conduct due diligence. For this, you should review the financial records, business operations and legal documents. These will prepare you to manage the business and identify any risks or problems in process that you might need to tackle head on. You will also be able to better understand what will be expected of you as owner of the business and which responsibilities have been allocated to that position. 

You should review items such as: 

  • Licenses and permits: Have all the necessary permits and licences been acquired, and if not, look into why this might be the case – were they denied a permit due to any issues with the business?
  • Contracts and leases: Have you spoken to the landlord and whether they’ll be transferring the lease agreement/negotiating a new lease? Is the business in contract with another that is problematic?
  • Agreements: Are there any agreements the business is in that you don’t feel comfortable with?
  • Status of plant, equipment, and fixtures: What is the current status of the equipment and machinery? When will you need to replace it? Has it been approved by the relevant authorities?
  • Assets: Identify any assets that are under the business. Does it have any intellectual property? 
  • Inventory: How much inventory is there? Is it included in the sale? How is the inventory managed and will you still be able to source it from the same place? What is the status of the current inventory i.e. can it be used?
  • Liabilities: What liabilities do you need to be aware of? Are there any outstanding debts? Any fines, warranties, refunds that need to be paid for? 

Additionally, you need to conduct financial due diligence. Examine the past 3 to 5 years of the following financial documents:

  • Tax returns
  • Business activity statements (BAS)
  • Records of accounts receivable and payable
  • Balance sheets
  • Profit and loss records
  • Cash flow statements
  • Sales records

You should examine these to make sure that record-keeping has been conducted and maintained appropriately. This will also inform you of any changes that need to be made once you start running the business yourself. 

Conditions to accessing your super

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You may find that accessing your super is the best way to meet your financial needs in a given situation, for example in the early stages of the pandemic. Individuals are able to legally access the funds in their super earlier but there are conditions of release. 

Common conditions of lease:

  • Reaching your preservation age and retiring (preservation age is between 55 and 60, depending on the individual’s date of birth)
  • Reaching preservation age and starting a transition to retirement income stream (TRIS)
  • Ceasing employment once you are 60 or over (even if you don’t retire)
  • Being 65 or over (even if you don’t retire)
  • Death

There are more conditions of release that allow individuals to access their super early:

  • Suffering from financial hardship (more resources due to Covid-19)
  • Compassionate grounds
  • Diagnosed with a terminal medical condition
  • Temporarily/Permanently incapacitated
  • First Home Super Saver Scheme
  • Temporary resident departing Australia
  • If you terminate gainful employment with less than $200 in your super account

Commutation authorities for SMSFs

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Commutation authorities are issued by the ATO when a member of a SMSF has exceeded their transfer balance cap. A commutation authority will be issued after the member has received an excess transfer balance determination alerting them they have passed the cap.

The transfer balance cap is currently $1.6 million and is applied to the combined total of all superannuation accounts held by an individual. To receive a commutation authority, a SMSF member has either;

  • Not commuted the excess amount in the determination in full by the due date, or;
  • Has made an election for the ATO to send a commutation authority to their fund to have the excess amount commuted.

After receiving a commutation authority, individuals must then;

  • Pay a superannuation lump sum by way of commutation. The commutation authority will detail the amount that must be commuted from a specified income stream for that SMSF member. Or;
  • Choose not to comply with the commutation authority because the member is deceased or the ATO issued in relation to an income stream that is a capped defined benefit income stream.
  • Send the ATO a transfer balance account report (TBAR) stating the details of the commutation or why you have chosen not to comply with the commutation authority.
  • Notify your member in writing that you have complied or not complied with a commutation authority.

This will need to be done within 60 days of receiving the commutation authority. Though the Commissioner of Taxation issues the authority, they do not have the power to grant an extension of time to respond. If you fail to commute or respond to the ATO regarding the authority, the income stream will stop being in retirement phase, affecting the fund’s entitlement to exempt current pension income. You may also be liable for penalties or subject to compliance action.