Category: News

The Australian Federal Government has unveiled a new draft bill aimed at revising the taxation of superannuation. The measures, initially announced earlier this year, are specifically targeted at individuals with superannuation balances exceeding $3 million.

Scheduled to take effect from July 1, 2025, the bill will implement a new tax provision named ‘Division 296 tax.’ This provision would impose an additional 15% tax on the earnings exceeding the $3 million threshold. Notably, the $3 million cap is not subject to indexing, potentially impacting a larger number of individuals over time as asset values rise.

The draft bill maintains the current rules for taxing earnings within superannuation funds, possibly leading to a combined tax rate of 30% for those affected. The definition of ‘earnings’ encompasses the variation in an individual’s total superannuation balance, including withdrawals and contributions, irrespective of realised capital gains.

Moreover, individuals facing a tax liability will have the option to settle it either from their personal non-superannuation resources or from their superannuation savings, provided they hold multiple accounts.

While the proposed changes have sparked debate, the Federal Opposition has indicated a possibility of repeal if elected in the upcoming election. The bill’s first assessment of superannuation balances is expected to occur by June 30, 2026, with notices of tax liability anticipated in the 2026-27 financial year.

The bill’s implementation, if passed, is poised to have a substantial impact on high-balance superannuation holders, potentially influencing retirement planning and investment strategies.

As always, we recommend that individuals obtain professional advice relevant to their personal objectives and outcomes. If you want to understand the implications of this proposal in greater detail, please contact one of the SG Advisory Financial Planners to help.

Did you know that one in eight individuals faces unexpected interruptions in their retirement plans, often due to unforeseen circumstances like health issues or redundancy? Despite meticulous planning, life can throw curveballs that challenge even the most carefully crafted retirement strategies. 

Let’s explore four potential interruptions to your retirement plans and offer expert advice on navigating them effectively, ensuring your financial security and peace of mind.

Managing Divorce:

Divorce rates among individuals aged 50 and older for men and 45 and older for women are rising. This can lead to significant financial turmoil, especially if dependents are involved. Transitioning from a dual-income household to a single-income status can be daunting, particularly when it disrupts retirement planning. 

To minimise financial and emotional stress, consider the following: 

• Seek a reputable lawyer experienced in amicable divorce settlements. Avoid prolonged disputes over asset division to prevent unnecessary legal fees from eroding your savings.
• Prioritise your mental well-being during this challenging time. If needed, consult your GP for guidance on managing stress and seeking additional support.

Managing Recession Impact:

Economic downturns can impact retirement savings and future income. Diversifying your investments is a smart financial strategy, and consulting a trusted financial adviser can help ensure your portfolio is well-balanced. 

While recessions can be stressful, remember that they are temporary, and better times will come. To weather the storm, consider these steps:

• Explore strategic ways to maximise the efficiency of your investments.
• Acknowledge that some factors are beyond your control; maintaining a positive perspective can help you endure financial challenges.

Dealing with Job Loss:

Redundancy, especially in the years leading up to retirement, can be disheartening. If you receive a significant payout, consult an experienced financial adviser for guidance. Consider diversifying your investment approach for added protection. 

Additionally, investing in retraining or further education may enhance your reemployment prospects, even if it feels stressful:

• Be open to new challenges, as a change in career could provide much-needed income to support your retirement lifestyle.

Caring for a Loved One or in case of Inheritance:

Long-term illness or disability can significantly affect retirement plans. Whether you become a caregiver or have your own health concerns, these issues can strain your finances and emotions. To address this challenge:

• Consult a specialist to explore Government assistance eligibility.
• Talk to your financial adviser about adjusting existing investments to access necessary funds.
• In the case of receiving an inheritance, seek expert advice to understand its impact on your existing retirement income.

Getting Back on Track:

To ensure your retirement plans stay on course, consider these options based on your life stage and circumstances:

• Top up your superannuation to minimise tax obligations.
• Diversify your investments for better risk management.
• Build greater equity in your home, or consider downsizing.

Seek Retirement Guidance:

In times of uncertainty, seek advice from experts who specialise in retirement planning. Stay focused on your long-term goals while managing short-term interruptions. With the right planning and support, a secure retirement remains achievable.

Are you in control of your retirement plan? SG Advisory’s experienced Financial Planning team can help you assess whether you’re on track and provide valuable guidance to secure your retirement future.

Disclaimer: The information contained above is general in nature and should not be considered as personalised superannuation advice. Please consult one of our experienced staff as superannuation laws, regulations and the way they affect your business can differ from year to year.

As you approach retirement, one of the key considerations in your financial planning should be optimising your superannuation savings. While there are various strategies to boost your super, one that often goes overlooked is downsizer contributions. Let’s delve into what downsizer contributions are and how they can enhance your superannuation as you prepare for retirement.

Understanding Downsizer Contributions

Downsizer contributions are a unique feature of Australia’s superannuation system. This initiative encourages older Australians to downsize their homes and simultaneously enhance their retirement savings by allowing eligible individuals to contribute a portion of the proceeds from the sale of their primary residence into their superannuation accounts.

Key Benefits of Downsizer Contributions:

1. Tax Advantages

One of the primary advantages of downsizer contributions is the potential for significant tax savings. Unlike regular non-concessional contributions, these contributions are exempt from the usual $100,000 per year cap. Instead, you can contribute up to $300,000 per person (or $600,000 per couple) from the sale of your home. This can result in substantial tax savings, especially if you have substantial equity tied up in your home.

2. Boosting Your Super

Downsizer contributions provide a valuable opportunity to bolster your superannuation balance. By transferring funds from the sale of your home into your super account, you can potentially increase your retirement savings substantially. This can be particularly beneficial if you’ve focused on paying off your mortgage and haven’t had the opportunity to contribute significantly to your super in the past.

3. No Age Limit

The best part? There’s no age limit for making downsizer contributions. Whether you’re still working or have already retired, as long as you’re 55 or older, you can use this strategy to supercharge your super.

4. Flexibility

Downsizer contributions provide flexibility in how you use the funds in your superannuation account. You can invest the funds according to your risk tolerance and financial goals, allowing you to potentially grow your retirement nest egg further.

Eligibility Criteria:

To be eligible to make downsizer contributions, you must meet the following criteria:

• Be aged 55 or older.
• Have owned your primary residence for at least ten years.
• The property must qualify as your primary residence and be eligible under Australian tax laws.
• You must make the contribution within 90 days of receiving the proceeds from the sale of your home.

Incorporating downsizer contributions into your financial planning as you approach retirement can be wise. This strategy offers tax advantages, a means to boost your superannuation savings, and flexibility in managing your retirement assets. 

When considering this strategy, it’s essential to consult with a qualified financial advisor to ensure that downsizer contributions align with your overall retirement goals and financial situation.

At SG Advisory, we understand the importance of tailoring financial planning strategies to your unique circumstances. If you’re considering downsizer contributions or exploring other ways to optimise your superannuation for retirement, contact us today. 

Our experienced advisors are here to guide you on your path to a secure and comfortable retirement.

Do You Need A Superannuation Plan?

Superannuation law is a delicate area, and personalised planning is required for each individual. The team at SG Advisory are superannuation experts who can assist you in reaching your financial retirement goals. 

So if you need assistance in establishing or updating your superannuation, make an appointment to see one of SG Advisory’s superannuation experts today. 

Disclaimer: The information contained above is general in nature and should not be considered as personalised superannuation advice. Please consult one of our experienced staff as superannuation laws, regulations and the way they affect your business can differ from year to year.

The 120% deduction for technology and skills boost has been approved by Parliament, providing benefits for small and medium businesses (SMEs). This article will outline how you can optimise your deductions under this scheme.

After almost a year since the announcement in the 2022-23 Federal Budget, the 120% tax deduction for SMEs on technology expenses, skills training for staff, or digital operations has become law. However, there are some timing complexities associated with this deduction. To qualify for the technology investment boost, the technology must have been purchased by 30th June 2023, or eligible assets must have been installed and ready for use by that date—merely seven days after the legislation was passed.

Who is eligible for the boosts?

Small business entities (individual sole traders, partnerships, companies, or trading trusts) with an aggregated annual turnover of less than $50 million can access the 120% skills and training and technology boosts. Aggregated turnover includes the turnover of your business as well as that of your affiliates and connected entities.

$20k technology investment boost

The Technology Investment Boost allows SMEs to claim additional deductions for expenses and depreciating assets related to digital operations or digitisation between 7:30 pm (AEST) on 29th March 2022 and 30th June 2023.

Expenses are considered incurred when you are in debt for them, such as having a tax invoice or a contractual obligation for the cost.

For depreciating assets like computer hardware, there is an additional requirement. The technology must have been purchased and installed, ready for use. For instance, if you ordered 10 computers, you need to have received and set them up for use by 30th June 2023. Ordering them on 29th June will not be sufficient to claim the boost if you haven’t received them.

Expenses that may qualify for the technology boost include:

• Digital enabling items like computer and telecommunications hardware, software, internet costs, systems, and services that facilitate the use of computer networks.
• Digital media and marketing, including audio and visual content accessible on digital devices and web page design.
• E-commerce expenses, such as goods or services supporting online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services, and advice on digital operations or digitisation.
• Cybersecurity systems, backup management, and monitoring services.

The technology must be primarily or substantially used for your business’s digital operations or digitising its operations. There must be a direct link between the technology and how your business earns its income, particularly in digital operations.

Repair and maintenance costs can be claimed if they meet the eligibility criteria.

If the expenditure has mixed use, the bonus deduction applies only to the portion used for business purposes.

There are some costs that the technology boost does not cover, such as staff employment costs, capital raising expenses, construction costs of business premises, and the costs of goods and services sold by the business. The boost does not apply to:

• Assets that were purchased and sold within the relevant period (on or prior to 30th June 2023).
• Capital works costs, including improvements to business premises.
• Financing costs like interest expenses.
• Salary or wage costs.
• Training or education costs, including training staff on software or technology (refer to the Skills and Training Boost section below).
• Trading stock or the cost of trading stock.

Let’s consider the example of GoCo Pty Ltd (GoCo), which purchased multiple laptops on 15th July 2022 to facilitate remote work for its employees. The total cost was $100,000, and the laptops were delivered on 19th July 2022 and immediately put to business use.

As the asset holder, GoCo is entitled to claim a deduction for the depreciation of this capital expense. GoCo can deduct the full cost of the laptops ($100,000) under the temporary full expensing provision in its 2022-23 income tax return. Additionally, GoCo can claim the maximum $20,000 bonus deduction in the same tax return.

The $20,000 bonus deduction is not given to the business as cash; instead, it is used to offset GoCo’s assessable income. If the company is operating at a loss, the bonus deduction will increase the tax loss. The cash value of the bonus deduction to the business depends on whether it generates a taxable profit or loss for the relevant year and the applicable tax rate.

The good news for eligible businesses is that your technology subscriptions and other business products may qualify for the boost.

To claim the boost, you need to include the extra 20% in your tax return on top of your regular claim. The way the expense or asset is claimed (immediately or over time) will determine how the bonus 20% is applied.

The Skills and Training Boost

The Skills and Training Boost provides a 120% tax deduction for external training courses provided to employees. Its objective is to assist SMEs in expanding their workforce by hiring less-skilled employees and upskilling them through external training, enhancing productivity and skills development.

Sole traders, partners in a partnership, independent contractors, and non-employees do not qualify for this boost. Similarly, associates such as spouses, partners, or trustees of a trust are not eligible.

Here are a few rules to keep in mind:

• Registration for the training course must have been done between 7:30 pm (AEST) on 29th March 2022 and 30th June 2024. Enrollments in courses or classes after 29th March 2022 are eligible, but not those before.
• The training must be deductible to your business under ordinary rules, meaning it should be related to how your business generates income.
• A registered training provider must charge your business directly or indirectly for the training.
• The training must be for your business’s employees and delivered in-person in Australia or online.
• The training provider cannot be your business or an associate of your business.
• Training expenditure may include incidental costs like books or equipment necessary for the course if the training provider charges your business for these expenses.

Let’s consider an example. Good Pets Pty Ltd is a small veterinary centre that recently hired an employee to perform various tasks. The employee has some prior experience in animal studies and aims to upskill as a veterinary nurse. The business pays $3,500 for the employee’s external training in veterinary nursing, which qualifies as a GST-free supply of education. The training is delivered by a registered training provider specialising in veterinary nursing education.

The bonus deduction is calculated as 20% of the amount of expenditure that the business could typically deduct. In this case, the full $3,500 is deductible as a business operating expense. Assuming all other eligibility criteria are met, the bonus deduction is 20% of $3,500, which equals $700.

In this example, the available bonus deduction is $700. This does not mean the business receives $700 in cash from the ATO; it means the business can reduce its taxable income by $700. If the company has a positive taxable income and is subject to a 25% tax rate, the net impact will be a reduction in the company’s tax liability by $175. However, this also means the company will generate fewer franking credits, potentially requiring additional top-up tax when distributing profits as dividends to shareholders.

Which organisations can provide training for the boost?

Not all courses provided by training companies qualify for the boost. Only courses charged by registered training providers are eligible. Typically, this includes vocational training for trades or courses contributing towards qualifications rather than professional development.

Qualifying training providers are registered with:

• Tertiary Education Quality and Standards Agency (search the register, including States and Territories)
• Australian Skills Quality Authority (ASQA)
• Victorian Registration and Qualifications Authority (search the register)
• Training Accreditation Council of Western Australia

While some training courses may not be delivered by registered training organisations, there are still many options available, such as short courses offered by universities or flexible courses designed for upskilling rather than degree qualifications. If you have recently conducted performance reviews and training is part of the employees’ development pathway, it might be worth exploring these options.

Schedule your tax time appointment with SG Advisory now

To ensure a smooth tax season in 2023, book your appointment with SG Advisory. If you require general advice or guidance, speak with one of our tax accountants or financial planners, and let us alleviate your tax-related anxieties.

Source: ATO Website

 

Tax season is once again upon us, and for small businesses in Australia, May marks an important deadline for lodging various tax reports. It’s important to ensure you know these tax return deadlines to avoid late fees and potential legal complications. In this article, we’ll cover the tax reporting due dates for Australian small businesses in May. So, whether you’re a sole trader or a small business owner, read on to ensure you don’t miss any important deadlines.

Tax reporting due dates are important to keep in mind for Australian small businesses, as missing a deadline can result in penalties and fees. For the month of May 2023, the Australian Taxation Office suggests several key dates to keep in mind.

Tax Return Deadlines for May 2023

It’s important to note that the due dates listed below are for 30 June balancers only and events or timelines may change. 

If a due date falls on a weekend or public holiday, you can lodge or pay on the next business day. 

• 15 May
• • Lodge 2022 tax returns for all entities that did not have to lodge earlier (including all remaining consolidated groups) and are not eligible for the 5 June concession.
  • Due date for companies and super funds to pay if required.
  • Note: Individuals and trusts in this category pay as advised on their notice of assessment.

• 21 May
• • Lodge and pay April 2023 monthly business activity statement. 
  • Final date to add new FBT clients to your client list to ensure they receive the lodgment and payment concessions for their fringe benefits tax returns.
  • Lodge and pay Fringe benefits tax annual return if lodging by paper.

• 26 May
  • Lodge and pay eligible quarter 3, 2022–23 activity statements if you or your client have elected to receive and lodge electronically.

• 28 May
  • Lodge and pay quarter 3, 2022–23 Superannuation guarantee charge statement if the employer did not pay enough contributions on time.
  • Employers who submit a Superannuation Guarantee charge statement have the option to offset any late contributions paid to a fund against their super guarantee charge for the quarter. However, they are still required to pay the remaining balance of the super guarantee charge.
  • Note: The super guarantee charge is not tax deductible.

Use the ATO’s Super guarantee charge statement and calculator tool to work out the super guarantee charge and prepare the Superannuation guarantee charge statement – quarterly.

Schedule your tax time appointment with SG Advisory now

Book in your tax time appointment now. The first quarter of the new financial year is a hectic time for accountants and appointment times fill up fast so don’t put it off.

Should you require more general advice and guidance, speak with one of our tax accountants or financial planners and let’s take the anxiety out of tax time in 2023. 

 

Stay ahead of the game and keep your tax reporting up to date to ensure a stress-free financial year.

Self-Managed Super Funds (SMSFs) have become increasingly popular in recent years, with many individuals and small business owners turning to them as a way to take greater control of their retirement savings. However, as with any investment strategy, SMSFs come with their own set of advantages and disadvantages. In this article, we take a closer look at what an SMSF is, some of the positives and negatives associated with self-managed super funds and the importance of ongoing financial advice.

What is a self-managed super fund?

A self-managed super fund (SMSF) is a private retirement fund that provides individuals with greater control over their investment decisions. With an SMSF, you can have up to six members and all members also serve as directors or trustees. This means that you are responsible for running the fund and making investment decisions that will benefit you.

While an SMSF provides greater control over your retirement savings, it also comes with added responsibility. Members must ensure that they comply with superannuation and tax laws, and the fund must be managed solely to provide retirement benefits for members and their dependents.

Note – It is important that SMSFs are still regulated by the Australian Tax Office, and therefore, they must comply with the same regulations as other super funds. As a result, managing an SMSF requires a significant amount of time and skill. Before deciding to set up an SMSF, it is important to consider if you have the necessary skills and knowledge to manage the fund effectively.

The pros of an SMSF

Positive #1: Control – One of the biggest benefits of an SMSF is the level of control it gives you over your investments. As the trustee of the fund, you have the power to choose the investments you make, which means you can invest in assets that you are confident in and that align with your investment goals. This level of control is not possible with traditional superannuation funds.

Positive #2: Flexibility – Another major advantage of SMSFs is their flexibility. With an SMSF, you can change your investment strategy as your circumstances change. You can adjust your investment strategy to align with your financial goals, which means you can take advantage of market opportunities as they arise.

Positive #3: Tax Benefits – SMSFs also offer several tax benefits. For example, if you are a small business owner, you can use your SMSF to purchase commercial property, which can provide a tax-effective way to grow your business. Additionally, if you are nearing retirement, an SMSF can provide you with greater control over your tax position.

Positive #4: Cost-Effective – While there are some costs associated with running an SMSF, it can be a cost-effective option when compared to traditional super funds. With an SMSF, you only pay for the services you require, which means you can tailor your fund to your needs and avoid paying for unnecessary services.

Positive #5: Estate Planning – SMSFs also offer greater control over estate planning. As the trustee of the fund, you have the power to choose who receives your superannuation benefits in the event of your death. This means you can ensure that your super benefits are distributed according to your wishes.

The cons of an SMSF

Negative #1: Risk – One of the biggest risks associated with SMSFs is investment risk. As the trustee of the fund, you are responsible for making investment decisions, which means that if the investments perform poorly, you could suffer significant losses.

Negative #2: Time-Consuming – Running an SMSF can also be time-consuming. As the trustee of the fund, you are responsible for ensuring that the fund is compliant with all relevant regulations, which can be complex and time-consuming.

Negative #3: Cost – While SMSFs can be cost-effective, they can also be expensive to set up and run. There are several costs associated with running an SMSF, including accounting fees, audit fees, and legal fees. Additionally, if you have a low balance, the costs of running an SMSF may outweigh the benefits.

Negative #4: Lack of Diversification – Another potential downside of SMSFs is a lack of diversification. With an SMSF, you are responsible for making investment decisions, which means that if you do not have the necessary knowledge and expertise, you may make poor investment decisions or fail to diversify your portfolio effectively.

Negative #5: Compliance Requirements – Finally, SMSFs come with several compliance requirements that must be met to ensure that the fund is compliant with all relevant regulations. This can be complex and time-consuming, and failure to comply with the regulations can result in significant penalties.

Note – If you suffer losses due to fraud or theft, SMSFs aren’t eligible to access government compensation schemes or the Australian Financial Complaints Authority (AFCA). Additionally, moving from an industry or retail super fund to an SMSF could result in losing insurance. Refer to the MoneySmart website for more information.

The importance of ongoing financial advice to maintaining an SMSF

Getting financial advice is critical to setting up and managing a sustainable and compliant self-managed super fund (SMSF).

A good financial advisor can help you assess the risks involved in running an SMSF and assist in the administration of investment decisions. However, it’s important to remember that the ultimate responsibility of executing those decisions rests on the trustees.

Here are three reasons why it’s essential to use an experienced financial advisor for your SMSF:

#1. Informed and objective investment research

A financial advisor can provide a wealth of knowledge and experience in identifying investment opportunities that SMSF members may not have considered. They can also help filter through a range of investment options and choose the ones that align with your goals and objectives.

#2. In-depth knowledge of taxation and superannuation law

SMSF members without adequate financial and legal skills can benefit from the guidance of a financial advisor to help minimize risks. A financial advisor can make recommendations on areas such as taxation, membership, financial compliance, and other legal requirements.

#3. Delegating administration

Delegating the authority to make transactions on your behalf to a financial advisor can be an effective way to relieve the pressure of day-to-day management tasks and keep tabs on various investments. This way, SMSF members can focus on other important aspects of running their business or personal life.

Note – However, it’s essential to note that the SMSF members still have the final say in making investment decisions. A financial advisor only provides recommendations based on their knowledge and expertise. It is important to have a trustworthy relationship with your financial advisor and to ensure that you’re on the same page when it comes to your investment goals.

SMSFs: not a decision to be taken lightly

Self-managed super funds offer several advantages, including greater control, flexibility, tax benefits, cost-effectiveness, and estate planning. However, they also come with their own set of risks and disadvantages, all of which require careful consideration before starting out.

For those wishing to embark on establishing an SMSF, getting financial advice is crucial. The benefits of having an experienced financial advisor on board far outweigh the costs. They can provide valuable insights into investment opportunities, help avoid financial and legal troubles, and ease the burden of day-to-day administration.

SG Advisory has a team of superannuation experts who can assist in providing you with the very advice and guidance you need to establish and maintain your own SMSF.

So make an appointment to see one of SG Advisory’s superannuation experts today. 

 

Disclaimer: The information above is general in nature and should not be considered personalised superannuation advice. Please consult one of our experienced staff as superannuation laws, regulations and the way they affect your business can differ from year to year.

Superannuation, commonly known as ‘super,’ is a retirement savings plan for employees in Australia. By law, as an employer, you must pay a percentage of your eligible employee’s earnings into their chosen super fund or their stapled super fund where no choice has been made. In this article, we explore what you need to do to set up super for your business and ensure that you comply with your legal obligations.

Selecting a default super fund

The first step in setting up super for small businesses is to select a default super fund. This is the fund that you will contribute to if your employee has not made a choice or does not have a stapled super fund. When selecting a default fund, you should consider the fund’s performance, fees, and insurance options. 

Note – The Australian Taxation Office (ATO) provides a list of default funds that meet their compliance requirements.

Offering a choice of super funds

The next step is to offer your employees a choice of super fund. You are required to offer your employees a choice of fund, and you must keep records that show you have done this. Your employees have the right to choose their fund or use their existing one. If they do not make a choice, you can contribute their super to your default fund.

Stapled super funds

If your employee does not have a stapled super fund, you must request their super fund details. A stapled super fund is a fund that follows the employee when they change jobs, and it is designed to reduce the number of duplicate accounts that employees can have. 

Note – You can request your employee’s stapled super fund details by completing a ‘Stapled super fund choice form’ which is available on the ATO website.

Note – For more information on stapled super funds, download this helpful ATO reference guide for employers.

Providing your employees’ tax file numbers

Providing your employees’ tax file number (TFN) to their fund is another important step in setting up super for your business. You must provide your employee’s TFN to their fund so that they can identify the contributions you make for them and ensure that their account is not subject to extra tax. You should also ensure that your employees provide you with their TFN so that you can make accurate contributions.

Note – If a current employee has not given you a TFN declaration since 1 July 2007, they can complete the Authority to provide your tax file number to your super fund form.

Setting up electronic transfers

Setting up your systems to pay super contributions electronically to the right fund is crucial in ensuring that you comply with your legal obligations. Most super funds have an electronic payment system that you can use to pay your employee’s super contributions. You should also ensure that you make contributions at least four times a year and that you pay them on time. Late payments can result in penalties and interest charges.

Note – You must pay SG contributions by the quarterly due dates – 28 days after the end of each quarter to avoid the SG charge.

Note – Eligible small businesses can pay super for their employees through the Small Business Superannuation Clearing House.

Additional reporting obligations

You should also identify any reportable employer super contributions. Reportable employer super contributions are additional contributions that you make to your employee’s super fund that are not compulsory. These contributions include salary sacrifice amounts and bonuses. You must include these amounts on your employee’s payment summary at the end of the financial year.

Next steps

Setting up super for your business is an essential aspect of being an employer in Australia. By complying with your legal obligations, you can ensure that your employees receive the benefits of super and that you avoid penalties and interest charges. 

Remember to select a default super fund, offer your employees a choice of fund, request their stapled super fund details if they do not make a choice, provide their TFNs to their funds, set up your systems to pay super contributions electronically to the right fund, and report any extra super you pay for your employees. 

The ATO website is an excellent resource to explore and get further information on setting up super. However, if you require more personalised assistance in setting up your superannuation process, make an appointment to see one of SG Advisory’s superannuation experts today. 

 

Disclaimer: The information above is general in nature and should not be considered personalised superannuation advice. Please consult one of our experienced staff as superannuation laws, regulations and the way they affect your business can differ from year to year.

Superannuation is an essential part of financial planning for small business owners in Australia. It is an effective way to ensure your employees are provided with retirement benefits while also providing you with tax benefits. But, for many small business owners, the world of superannuation can be confusing and overwhelming. In this beginner’s guide, we explain the basics of superannuation for small business owners in Australia, including the different types of superannuation funds, employer contributions, investment options, insurance, beneficiaries, tax implications, and pension options.

What is Superannuation?

Superannuation is a system designed to provide income for individuals in retirement. Under Australian law, employers are required to contribute a percentage of their employees’ salaries to a superannuation fund. This is called the Superannuation Guarantee (SG) and the current minimum employer contribution rate is 10.5% of an employee’s ordinary time earnings.

The contributions made to the superannuation fund accumulate over time and earn interest, providing employees with a pool of funds for their retirement. It is important to note that superannuation is not just a legal obligation for employers, but it is also an important part of financial planning for small business owners.

Types of Superannuation Funds

There are several types of superannuation funds available in Australia, including retail funds, industry funds, and self-managed super funds (SMSF). Financial institutions manage retail funds, while unions and employer associations manage industry funds. SMSFs, on the other hand, provide greater control over investment decisions and can offer tax benefits, but require a significant amount of time and effort to manage.

When choosing a superannuation fund, small business owners should consider several factors, including fees, investment options, performance, and insurance options. Additionally, it is important to consider whether the fund meets the criteria for a complying fund under Australian law.

Employer Contributions

Employers are required to contribute to their employees’ superannuation funds in Australia. The Superannuation Guarantee (SG) requires employers to contribute a minimum of 10.5% of their employees’ ordinary time earnings to a complying superannuation fund. 

Note – This amount will increase to 11% as of 1 July 2023. For more information relating to the SG, please follow the link to the ATO’s Super Guarantee Percentage Table. 

It is important to note that contributions must be paid on time and that failure to pay contributions can result in penalties and interest charges. 

Note – Keeping accurate records of contributions is also important as employers must provide these records to their employees upon request.

Investment Options

Superannuation funds offer various investment options, such as shares, property, and fixed-interest investments. Small business owners should consider their investment options carefully and seek professional advice before making any investment decisions.

Insurance

Superannuation funds also offer insurance options, such as life insurance and income protection. It is important to review the insurance options provided by the superannuation fund and determine whether they meet the needs of both the employee and the employer.

Beneficiaries

Superannuation funds require individuals to nominate a beneficiary or beneficiaries who will receive their superannuation benefits upon their death. It is important to ensure that these nominations are up-to-date and reflect the individual’s wishes.

Tax Implications

Contributions made to a superannuation fund can provide tax benefits for both employers and employees. Employers can claim tax deductions for contributions made to their employees’ superannuation funds, while employees can receive tax concessions for personal contributions to their superannuation fund. It is important to seek professional advice to ensure that all tax implications are understood.

Pension Options

Superannuation funds also offer pension options, which provide a regular income stream for retirees. There are several pension options available, including account-based pensions and transition to retirement pensions. Small business owners should consider their pension options

Do You Need A Superannuation Plan? 

Superannuation law is a delicate area and personalised planning is required for each individual. The team at SG Advisory are superannuation experts who can assist in establishing a superannuation fund that will effectively enable you to reach your financial retirement goals. 

So if you need assistance in establishing or updating your superannuation, make an appointment to see one of SG Advisory’s superannuation experts today. 

Disclaimer: The information contained above is general in nature and should not be considered as personalised superannuation advice. Please consult one of our experienced staff as superannuation laws, regulations and the way they affect your business can differ from year to year.

Administration Assistant

General Purpose

SG Advisory is growing and we’re on the lookout for an Administrative Assistant to support our team. This is a great opportunity for someone with or without admin experience, to join a well established and high-performing business.

Main Job Tasks and Responsibilities

Your responsibilities will include:

• Action daily mail/emails to staff, clients & third parties
• Day-to-day scanning of documents
• Filing, profiling documents, document collation, copying & binding
• Typing of correspondence
• Australian Taxation Office (ATO) Lodgements
• Handle ATO Portal queries
• Scanning project – converting paper files to electronic files
• Relief reception duties including appointment setting; greeting clients & visitors;
• Other ad hoc administration duties

To be successful in this role, you will have:

• Strong analytical skills
• Good communication skills & be able to work harmoniously in a team environment
• Experience working within an office environment will be highly regarded but not essential
• Advanced Microsoft Word skills are essential
• Knowledge of administrative and clerical procedures
• Knowledge of customer service principles & practices

 

If you’re interested in applying please email your resume to juliec@sgadvisory.com.au

Working arrangements for many individuals and small businesses in Australia changed with the onset of the COVID-19 pandemic back in early to mid-2020. Since then, these working arrangements have evolved, and with them, the costs incurred when working from home. To better reflect these contemporary working-from-home arrangements, the Australian Taxation Office (ATO) has made some recent changes to the way taxpayers can claim their relevant deductions. In this article we’ll summarise those changes and decipher what it means for you.

 

Existing Methods For Claiming Working From Home Deductions

Taxpayers have a choice of two methods when claiming work-from-home deductions: actual cost and fixed rate methods. The changes made by the ATO relate only to the fixed rate method and they came into effect on 1 July 2022. The revised fixed rate method can be used from the 2022–23 income year onwards. 

The actual cost method remains unchanged.

Below is a current summary of the two methods and some important factors to keep in mind during the financial year and when you are getting ready to submit your tax return.

	Actual Cost Method	Fixed Rate Method
What is it?	You work out your deduction by calculating the actual additional expenses you incur when working from home	You can now claim 67 cents for each hour you work from home during the relevant income year (up from 52 cents the previous financial year
Expenses you can claim?	the decline in value of depreciating assets – for example, home office furniture (desk, chair) and furnishings, phones and computers, laptops or similar devices electricity and gas (energy expenses) for heating, cooling and lighting home and mobile phone, data and internet expenses stationery and computer consumables, such as printer ink and paper cleaning your dedicated home office	home and mobile internet or data expenses mobile and home phone usage expenses electricity and gas (energy expenses) for heating, cooling and lighting stationery and computer consumables, such as printer ink and paper
Things to note	Where you incur running expenses for both private and work purposes, you need to apportion your deduction. You can only claim the work-related portion as a deduction You can’t claim a deduction for expenses that have already been reimbursed by their employer In limited circumstances, you may also be able to claim occupancy expenses (such as mortgage interest or rent)	The rate per work hour (67 cents) includes the total deductible expenses for the above additional running expenses. If you’re using this method, you can’t claim an additional separate deduction for these expenses You no longer need a dedicated home office to use the fixed rate method Assets and equipment that typically give taxpayers a bigger deduction, such as technological items and office furniture, are not included in the revised rate and need to be claimed separately

Regardless of the method you choose, ATO Assistant Commissioner Tim Loh has reminded taxpayers of some essential factors to keep in mind:

• Double-check that you are eligible

• • ‘To claim your working from home expenses, you must be working from home to fulfil your employment duties, not just carrying out minimal tasks, such as occasionally checking emails or taking calls. Also, you must incur additional expenses as a result of working from home.’

• Keep clear and consistent records

• • ‘No matter which method you use, make sure to keep records. This will give you more flexibility to choose the method that gives you the best deduction at tax time depending on your circumstances.’
  • ‘From 1 July 2022 to 28 February 2023, the ATO will accept a record that represents the total number of hours worked from home (for example a 4-week diary). From 1 March 2023 onwards, taxpayers will need to record the total number of hours they work from home.’

• If in doubt, check with your accountant what you can claim

• • ‘You can’t claim for things like coffee, tea, milk and other general household items, even if your employer may provide these kinds of things for you at work.’

• Take note of the year you’re claiming expenses for

• • ‘If you are working out your claim for working from home expenses for 2021–22 or earlier income years, see Prior year work from home methods.’

• For items worth more than $300

• • ‘No matter which method is used, if taxpayers purchase assets and equipment for work and it costs more than $300, they can’t claim the full amount immediately. For each of these items, the deduction must be claimed over a number of years and the work portion claimed (known as a decline in value or depreciation).’

 

For further information

The changes mentioned above are now in effect so make sure you understand them carefully and begin applying them immediately. 

For assistance in determining depreciation and keeping track of expenses, you can access the ATO’s:

• Depreciation & Capital Allowance Tool
• myDeductionsTool
• Working From Home Deduction Factsheet

And as always, if you need assistance or tax advice about claiming working-from-home expenses, make an appointment to see one of SG Advisory’s registered tax accountants. Our tax specialists will provide assurance that you are in compliance with your tax obligations.

 

Disclaimer: The information contained above is general in nature and should not to be considered as personalised taxation or accounting advice. Please consult one of our experienced tax accountants as taxation law, regulations and the way they affect your business will differ from year to year.

Making the decision to hire staff is one of the most important decisions any business can make. Done well, they will become an indispensable asset to the long-term growth of your business. Done poorly, you run the risk of being outpositioned by emerging trends your staff cannot adapt to, outpaced by demand your staff cannot meet, and outrun by competitors who didn’t leave their hiring decisions to chance. It is vitally important to carefully consider the kind of employee you need with respect to the needs of your business. In this article we cover these fundamental considerations and what implications this will have for you.

Assessing Business Need

The first consideration that must be made in determining the kind of employment opportunity you offer is how long you think you’ll need the person for. Will this person need to be an ongoing part of your business operations, or, will they only be required to provide specialised skills for a set period of time? This distinction is an important one for small business owners to make as it carries with it a range of differing taxation, superannuation and other entitlement implications. 

Differing Employment Arrangements

Based on the required need of the business, employment can be offered by way of a:

• Contractor Arrangement – who provides services to your business, is registered via their own Australian Business Number (ABN) and invoices you for their work, rather than receiving wages. A contractor also:

• • carries their own insurance
  • can work for multiple organisations at one time
  • has the ability to subcontract their work to others
  • uses their own equipment and/or works from their own base
  • is hired until the completion of a set task

• Labour Hire Arrangement – where the employment agency employs the worker and outsources them to you for an agreed period. Under this arrangement:

• • You pay the agency and they cover the worker’s entitlements
  • You pay the agency a commission, or finder’s fee
  • You can hire people at short notice for short-term or long-term projects

• Direct Employee Arrangement – where an employee serves in your business, and performs their work as a representative of your business. An employee:

• • Can be employed full-time, part-time, casual or as an apprentice or trainee
  • Is paid a wage by the employer
  • Tax, super and all leave obligations are managed by the employer
  • Is based at your business, works from home or are mobile
  • Can be directed on the when, where, what and how of a task

Work Factors That Distinguish A Contractor From An Employee

Determining whether you need an employee or contractor can also be determined by reviewing this checklist and reviewing each factor against the legal rights and obligations that arise from the contract you enter into with your worker.

Factors	Employee	Contractor
Control	Control: your business has the legal right to control how, where and when the worker does their work.	Control: the worker can choose how, where and when their work is done, subject to reasonable direction by you.
Integration	Integration: the worker serves in your business. They are contractually required to perform work as a representative of your business.	Integration: the worker provides services to your business, performing work to further their own business. They may present themselves as part of your business.
Payment	Mode of remuneration: the worker is paid either: for the time worked a price per item or activity a commission.	Mode of remuneration: the worker is contracted to achieve a specific result, and is paid when they have completed that result, often for a fixed fee.
Delegation	Ability to subcontract or delegate: the worker must perform the work themselves and cannot pay someone else to do the work for them.	Ability to subcontract or delegate: the worker is free to delegate to others who the worker will pay to complete the work on their behalf.
Provision of tools	Provision of tools and equipment: your business provides all or most of the equipment, tools and other assets required to complete the work, or the worker provides all or most of the tools, but your business provides them with an allowance or reimburses them for expenses incurred.	Provision of tools and equipment: the worker provides all or most of the equipment, tools and other assets required to complete the work, and you do not give them an allowance or reimbursement for the expenses incurred. The work involves the use of a substantial item that your worker is wholly responsible for.
Risk	Risk: the worker bears little or no risk. Your business bears the commercial risk for any costs arising out of injury or defect in their work.	Risk: the worker bears the commercial risk for any costs arising out of injury or defect in their work.

 

Employee or Contractor Indicia – Australian Taxation Office

What Are Your Tax And Super Obligations?

These obligations will vary depending on whether your worker is an employee or contractor.

For Employees	For Contractors
withhold tax (PAYG withholding) from their wages and report and pay the withheld amounts to us pay super, at least quarterly, for eligible employees report and pay fringe benefits tax (FBT) if you provide your employee with fringe benefits.	they look after their own tax obligations, unless they don’t quote their ABN to you, or you have a voluntary agreement to withhold tax  you may still have to pay super for if the contract is principally for their labour you don’t have FBT obligations.

 

Your Tax And Super Obligation – Australian Taxation Office

 

Tax TIP – It’s illegal to wrongly treat an employee as a contractor. Seek advice if you are unsure if you got it right. Failing to do so could result in hefty fines. 

 

Find Out More

Ensuring you understand your employer obligations correctly the first time is essential not only to avoid fines, but also to protect your staff, your business and the relationship you share. To find out more about your legal obligations and responsibilities as an employer visit:

• ATO “Engaging a worker” – https://www.ato.gov.au/Business/Engaging-a-worker/
• VicGov – Employer responsibilities – https://business.vic.gov.au/business-information/staff-and-hr/employer-responsibilities

If you require further advice or bookkeeping and taxation assistance in meeting your employer responsibilities, contact SG Advisory today. Our experienced accountants will help you determine your business needs with strategies that are targeted towards the ongoing success of your business. Book your appointment today. 

 

Disclaimer: The information contained above is general in nature and should not be considered as personalised taxation or accounting advice. Please consult one of our experienced tax accountants as taxation law, regulations and the way they affect your business will differ from year to year.

In part one of this series of articles, we explained how cyber attacks on Australian businesses are increasing each year, detailing some of the cyber threats that are out there and the kind of cybersecurity measures that can be implemented to mitigate them. Because it is crucial that all Australian small and medium businesses understand what they can do to protect themselves, their customers, and their suppliers from cyber threats, we have written this article to cover some of the fundamental steps you can take to proactively safeguard your business.

How can I safeguard my business from cybercrime?

Whilst the list below is far from exhaustive, it does cover the most straightforward of security measures you can take to protect the data, resources, and finances of your small business:

1. Keep your operating systems and software up to date

• Just as a burglar tries to find the most effective way into your home, cybercriminals look for the easiest and most effective way into your computer and/or network. Software that isn’t updated is much like locking the door to your house but leaving your windows wide open. Software security is perpetually updated in response to new threats so keep your IT / mobile infrastructure up to date to make it as hard as possible for cybercriminals to find a way in.

Cybersecurity Tip – Enable automatic updates on all your devices to make sure you’re always using the most secure up-to-date version. Setting up automatic updates will save you time and worry

 

2. Enable Multi-factor authentication (MFA) for all your accounts

• MFA or 2-factor authentication (2FA) is a security measure that requires two or more proofs of identity to grant access to your accounts. MFA is one of the most effective ways to protect against unauthorised access to your accounts. 

Cybersecurity Tip – Enable MFA or 2FA where applicable. Yes, cybercriminals may still be able to steal or guess one proof of identity, but correctly accessing a second, and remotely accessing another of your devices to complete the security protocol is much harder and much less likely to occur

 

3. Use passphrases where MFA is not possible

• Whilst MFA is the most effective way to password-protect your accounts from unauthorised access, it may not always be possible to set it up. In this instance, consider developing a unique, strong passphrase rather than a simple password.

Cybersecurity tip – Develop passphrases using four or more random words as your password. Where possible use a secure password manager (eg: Keychain in MAC OS or Passwords in Google Chrome) to help store your passwords and passphrases

 

4. Backup your key data

• A backup is a digital copy of your information that is saved to an external storage device or to the cloud. Backing up your data regularly is one of the most effective and failsafe approaches you can take to ensure your information is always available to you in the event your data is ever lost, stolen, or damaged as a result of a ransomware attack locking you out of your computer or network.

Cybersecurity Tip – set up an automatic backup system to routinely save your data and ensure you routinely test your access to it so as to ensure it can be restored if required. If you are able, it is also highly advisable to keep at least one backup disconnected from the internet, preferably at an offsite location in case of natural disasters or theft

 

5. Conduct routine employee training

• Machines make things possible, but people make them happen. Your employees are one of the first and last lines of cyber defense and with a regular refresher course in cyber awareness, your staff can be kept up to date on the ever-evolving threats that are present. Think of it like a software update for you and your staff.

Cybersecurity tip – enlist an IT Service Provider to provide regular cyber awareness training. Proactive workplaces will go one better by creating a positive cybersecurity culture that empowers staff to come forward if they suspect something amiss

 

6. Implement an access control protocol

• Access control helps manage who can access what within your business computer systems. Developing a protocol based on the principle of ‘least privilege’ is generally considered the safest approach as it provides users with only the permissions they need to perform their work. 

Cybersecurity tip – Develop an access control protocol and inform your staff so that they understand and are able to do their work. If you are unfamiliar with how to implement this within your software, enlist an IT Service Provider to help

 

7. Think personal cybersecurity

• Have you considered your own online footprint? What you do in your personal cyberspace, leaves a trail that can come back to affect your business. For this reason, taking the appropriate measures to protect your privacy and data on your own devices and platforms can be as important for your business as it is to you personally.

Cybersecurity tip – Thankfully, all the steps mentioned here are also directly applicable to you personal mobile and home computer network so acting on these is a first and significant step

 

8. Watch out for scams

• The price of effective cybersecurity is eternal vigilance. To this end, being ever mindful that scams and the artists that push them are perpetually around us, and, having an up-to-date knowledge of what scams are out there and what they look like goes a very long way in minimising the likelihood of you becoming a victim.

Cybersecurity tips

• Always make sure you know who you are dealing with or talking to 
• If something seems too good to be true, it probably is
• Check if the company is registered through the ABN lookup website
• Read reviews of the business and check for signs that it could be a scam
• Always use a credit card so that you can ask your bank for a chargeback or to cancel your card immediately

 

What if I become the victim of a cyber attack?

This is likely to be a very stressful and anxious event. The panic that may set in is the very thing cybercriminals feed on in presenting you with a quick-fix option (usually the payment of a ransom) to make the problem go away. If it is at all possible, resist this urge and follow Australian Cyber Security Commission’s (ACSC) recommended steps below:

• • Report your cybersecurity incident and cybercrime or call 1300 292 371
  • Visit the ACSC Have You Been Hacked page to view additional help options 
  • Visit ACSC’s Email fraud page if you have been the target of email fraud
  • Visit ACSC’s Ransomware Response page if you are the victim of an attack
  • If there is an immediate threat to life or risk of harm please call 000
  • Contact Your IT Advisory Service immediately to plan out your next steps

Next Steps

With cyberattacks on Australian businesses increasing each year, it’s imperative to make sure you and your I.T systems are as secure as possible to minimise future risks.

To find out more about what you can do to keep your business is cyber safe, download a free copy of the Essential Cybersecurity Toolkit for SMB’s eBook by visiting SG Advisory’s IT Services Page.

SG Advisory IT offers a suite of IT management services and technical supports designed to maximise and maintain your business’s cybersecurity. We work collaboratively with you to understand the needs of your business, match you with the security measures you need to protect your technology, data, resources, and finances, and provide you and your employees with ongoing support and training as required.

 

Contact SG Advisory IT today and let’s ensure you and your business are protected.