Posted on 18 January '19, under super.
It’s no secret that the median super balance for Australian women at the time of retirement is significantly lower than that of their male counterparts. The Australian Commission & Investments Commission (ASIC) have reported that men retire with about twice the amount as women. The discrepancy is reportedly even higher between Mums and Dads. Between lower wages and a higher likelihood of having an interrupted working life for women, women also tend to live longer and thus require more super to cover more years. Unfortunately, between personal finances, business financial capabilities, and governmental policies, actions to close this gap can be limited.
Where viable, private companies can consider:
- continuing paying superannuation to staff during parental leave.
- paying full-time super benefits to part-time parents. This has already been implemented by Viva Energy (a Shell subsidiary). From the ABS, women are much more likely to be working part-time than men.
- increasing the percentage of base salary put toward their employees’ super accounts.
Posted on 18 January '19, under tax.
On 1 July 2018, the Australian Tax Office (ATO) rolled out Single Touch Payroll (STP). This changed the way employers with 20 or more employees report their employees’ tax and super information. Generally through payroll or accounting software that offer STP reporting (or through a third-party service provider), employers are expected to report information on withholding amounts, superannuation liability information or ordinary times earnings (OTE) and salary, wages, allowances and deductions.
The STP currently affects businesses with 20 or more employees, but just last month, the Senate passed a Bill for the STP to include all Australian businesses, affecting at least an additional 700 000 businesses. Although the amendments to the STP are currently under review by the House of Representatives, the change is expected to be implemented on 1 July 2019.
Posted on 20 December '18, under super.
Merging your super is vital to maximising your retirement savings.
Changing jobs over the years will put you at risk of losing some of your super if your previous employers have set up accounts you have forgotten about. Fees will erode the balances on these inactive accounts and result in you losing your hard earned super. You should also consolidate to maximise the interest accrued on your single super balance.
Merge your super with this checklist and keep your super savings on track for success.
Research your fund’s policy
Compare your active super accounts so you can make the right choice about which one you should close. You should assess:
- Exit fees
- Insurance policies
- Investment options
- Ongoing service fees
- Performance of the funds
Once you have made your decision, you can combine your super balance by:
- Requesting to merge your accounts through your chosen super fund
- Apply through your myGov account or the ATO
Keep in mind that funds will take time to process your request and rollover.
Posted on 20 December '18, under tax.
You can claim tax deductions for expenses related to business travel provided you follow the ATO’s rules.
You must fulfil certain eligibility requirements for your tax deduction claims to be valid. You can only claim a tax deduction if you:
- Travel once your business has already started
- Keep records and documentation to provide evidence for your claim
Record keeping rules
The ATO has strict recordkeeping rules to ensure deductions are accurate. For one or more nights away from home ensure you keep documents like:
- Boarding passes
- Booking confirmations
For travellers spending six or more consecutive nights away from home, a travel diary or similar document must be kept. You must record the detail of each business activity before your travel ends, or as soon as possible afterwards. You must log:
- The nature of the activity
- The day and approximate time the business activity began
- How long the business activity lasted
- The name of the place where you engaged in the business activity
Business and private travel rules
Many travellers may integrate a holiday into their business trip. If you operate your business as a company or trust, fringe benefits tax may apply if the employee travel includes private activity paid for by the employer. For sole traders, exclude the private expenses from your claim.
Posted on 14 December '18, under super.
The new Australian Financial Complaints Authority (AFCA) will make it easier for individuals and small businesses to make complaints about their superannuation financial firms.
The Coalition government has responded to criticisms of previous dispute resolution bodies by creating a new financial disputes framework. AFCA has been described as a “one-stop shop” that will improve outcomes for consumers and increase the efficiency of the dispute resolution process.
AFCA has been given authority over a range of complaint areas including:
- Superannuation annuities
- Corporate, industry and retail super funds
- SMSFs (handled under investments and advice jurisdiction)
- Approved deposit funds
- Small funds
- Retirement savings accounts
- Trustees, insurers and decision makers of relevant super bodies
What you can make complaints about
Your super complaint to AFCA must adhere to its governing rules. AFCA has specific time limits for complaints but no monetary limits.
You can make complaints about:
- The advice you were given about a superannuation product
- Fees or costs that were incorrectly charged or calculated
- Information you weren’t given about the product including fees or costs
- Errors in the information provided to you; for example, if your benefit statements are incorrect
- Decisions your super provider has made
- Payment of a death benefit
- Giving instructions that were not followed
- Transactions that were incorrect or unauthorised
Posted on 14 December '18, under tax.
Unwanted attention and penalties from the ATO can jeopardise your small business.
Protect your business by avoiding these common small business tax errors.
Not using an accountant
Tax laws frequently change, and compliance requirements can be time-consuming and demanding. A registered tax agent will streamline your financial processes, provide advice on maximising your finances and keep you compliant.
Inaccurate tax returns
Small businesses that do not declare their income and deductions accurately will attract the ATO’s attention and financial penalties. All foreign income, capital gains tax, business sales and bank interest must be declared. You must also have legitimate evidence supporting your tax deduction claims.
Poor record keeping
Businesses that fail to keep accurate records will struggle to remain compliant. It is vital to keep:
- Cash, online, EFTPOS, bank statements, credit and debit card transactions
- Records showing when you use business purchases for private purposes to provide evidence for tax deduction claims
Incorrect superannuation payments
The ATO will sanction employers that fail to pay their employees’ superannuation correctly and on time. Make your mandatory quarterly payments are paid at the correct rate of 9.5 per cent of your employee’s pay. The cash-flow benefits of delaying super payments and missing deadlines are not worth the financial and criminal punishments incurred by frequent breaches.
Posted on 7 December '18, under super.
Employers must make superannuation contributions on behalf of their employees. SuperStream is the ATO’s electronic and standardised solution that streamlines the super payment process.
Using SuperStream for employers means:
- You can use one online channel to pay multiple funds
- Less room for error during data entry, due to fewer steps
- Transactions reach funds faster
You must make contributions to a super fund through a SuperStream solution unless you are eligible for the following exemptions:
- Personal contributions if you are self-employed or a sole trader and make after-tax contributions to a super fund for yourself
- Contributions to your SMSF where you’re a related party employer. For example, if you are an employee of your family business and your super guarantee contributions go to your SMSF.
Once you have decided that SuperStream is right for you, the following steps will help you stay compliant:
- Choose an option: you can choose from a payroll system, your super fund’s online system, a super clearing house and a messaging portal
- Collect information and update your records: refer to the ATO for an exhaustive list of the information you will need from your employees
- Pay the SuperStream way: pay as soon as possible so you can get used to the system
Posted on 7 December '18, under tax.
The ATO has introduced the Business Portal to allow small business owners to manage their tax affairs online at their convenience.
Connect your ABN to your myGov account or a compatible AUSkey so you can access the business portal. The portal is accessible 24 hours a day, seven days a week.
The portal can be used for the following services:
- Registering for GST or PAYG withholding
- Lodging, revising or viewing activity statements
- Requesting refunds or transfers between accounts
- Updating your business details
- Tracking the progress of refunds or transfer requests
- Communicating with us through a secure mailbox
Refer to the ATO for direct links that will step you through how to use these services successfully. If you still have trouble with technology it may be worth consulting a registered tax agent to help you fulfil the ATO’s compliance requirements.
Posted on 29 November '18, under super.
The ATO has issued a warning to the public regarding illegal early release of super schemes, which are subject to severe penalties.
There are strict rules around when you can access your super so your current decisions do not jeopardise your quality of life in retirement. The ATO has reminded the public you may only access your super early if you have experienced severe financial hardship or you have reached the preservation age and have stopped working.
How these schemes work
The promoters of these schemes:
- Encourage you to transfer or rollover your super from your existing super fund to an SMSF to access your super before you are legally entitled to
- Target people under financial pressure or those who do not understand super laws
- Claim you can access your super and put the money towards anything you want which is not true
- Charge high fees and commissions, presenting the risk of losing some or all of your super to them
- May request your identification documents which can result in identity theft
Penalties apply to promoters and individuals who illegally access their super early. If you illegally obtain your super early, it is included in your assessable income even if you return the super to the fund later. If you are an SMSF trustee, you may be fined up to $420,000 and liable for jail terms of up to five years. Civil and criminal penalties apply to promoters.
Posted on 29 November '18, under tax.
The ATO has enforced strict guidelines on tax deductions for rental property owner’s travel expenses.
As a rental property owner you are not able to claim deductions for travel expenses relating to inspecting, maintaining or collecting rent. If you have already claimed a tax deduction for the cost of travel to and from your property in your 2018 return, you will need to request an amendment. The law change came into effect on 1 July 2017 and affects tax returns from 2017-18 onwards.
You may claim these travel expenses on your tax return if you are carrying on a rental property business or are an excluded entity.
An excluded entity is a:
- Corporate tax entity
- Superannuation plan that is not an SMSF
- Public unit trust
- Managed investment trust
- A unit trust or a partnership, all of the members of which are entities of a type listed above