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Self Correct Your Super Or Suffer….

Self Correct Your Super Or Suffer….

Find out what the Super Guarantee Amnesty means for you.

After the original amnesty failed to pass parliament in May 2018 the government have reintroduced legislation to establish a one-off amnesty for historical underpayments of the superannuation guarantee.

If enacted this will apply from the date of the original amnesty announcement, 24 May 2018 until 6 months after the legislation has passed. This will give employers time to disclose of these super guarantees to the commissioner of taxation including historical underpaid or unpaid for any period to the March 2018 quarter.

To qualify for the amnesty, employers must voluntarily make this disclosure and either pay the full amount owing or arrange a payment plan in which all payments are met otherwise the amnesty will no longer apply.

The ATO continue its compliance activities during the amnesty period and if they make the discovery first, full penalties will apply. The amnesty will also not apply to amounts already identified as owing in which the employer is subject to an ATO audit.

What employers pay for failing to meet SG obligations

No AmnestyAmnesty
SGC comprised of:SGC Comprised of:
- The outstanding SG entitlements (this component might be higher than what it would have been had the entitlements been paid on time)- The outstanding SG enititlements
- Interest of 10% per annum- Interest of 10% per annum
- An administration fee of $20 for each employee with a shortfall per quarter- No administration fees
Penalties of up to 200% of the amount of the underlying SG charge (minimum 100% for quarters covered by the amnesty)No penalties
A general interest charge of the SBC or penalties are not paid by the due dateA general interest charge
SGC amount is not deductible - even if you pay the outstanding amountA general interest charge

So, what do employers need to pay under the amnesty?

Under normal circumstances employers pay the super guarantee charge and lodge a superannuation guarantee statement. However, under the quarterly superannuation guarantee, the interest is calculated on an employer’s quarterly shortfall amount from the first day of the relevant quarter to the date when the super guarantee charge would be. If the superannuation guarantee is paid late, special provisions exist within the legislation to automatically protect employees from inadvertently breaching concessional contribution cap limits if the unpaid superannuation guarantee is paid to the Commissioner and then transferred to the employee’s superannuation fund. In the case an employer makes the payment directly into the employee’s fund, the individual would need to apply to the Commissioner requesting the exercise of discretion to either disregard the concessional contributions or allocate them to another financial year.

But what happens if you don’t take advantage of this amnesty?

If you are found to have underpaid employee’s superannuation guarantee penalties up to 200% apply. With the amnesty-imposed legislation however calls for tougher penalties on employers that do not voluntarily correct underpaid or unpaid. The Commissioner therefore loses the power for leniency even in cases where an employer has made a genuine mistake.

So what does that mean for you?

Regardless of if you do not believe that your business has an Super Guarantee underpayment issue, it is worth undertaking a payroll audit to ensure that your payroll calculations are correct, and employees are being paid at a rate that is consistent with their entitlements under workplace laws and awards.

With the introduction of single touch payroll there is going to be a lot more transparency on super and non-compliance with the ATO now able to capture more recent non-payments.

If  you need a super health check get in touch with our accounting team to see how we can help you avoid these penalties and stay on track , you can call us direct on 02 9415 1511 or contact us.

 

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Procrastinator or Producer?

Procrastinator or Producer?

Yes, I suppose the title isn’t quite correct because you could be both, but I got your attention, didn’t I? Are you procrastinating right now? If you are a procastinator that’s totally okay because this might be a productive procrastination situation and you spend 28 per cent of your day on distractions anyway.

With so many demands for your time and so many distractions beyond your colleague’s family and friends, can it ever change?

The answer, well that’s entirely up to you. You are the one who makes the choice as to what you do and how you do it. So you can either remain disorganised like 27% of office workers checking emails on average 13 hours per week, or you can consider the remainder of the article and take action and be a producer delivering results.

Top Tips

  • What you eat has a direct effect on how productive you are at work, experts suggest foods low in glycaemic carbohydrates including fruits, vegetables and whole grains.
  • Fight the temptation of checking your emails, the first few hours set the tone for the day and get you pulled in many different directions. With a clear head get your creative juices flowing on projects before jumping into your inbox and what awaits.
  • Identify what distracts you, by tracking your work activity for one week and evaluate the cause and effect of your distractions to stop them in their tracks
  • Create a to-do list with priority levels and deadlines
  • Only schedule purposeful meetings and make them efficient, don’t book a meeting if it can be written in an email
  • Experts have found that working for 90-minute intervals maximises productivity, your mind needs a break and a reward so find a break schedule that works for you and stick to it! Be kind to yourself!

If you want to increase your productivity in your finances, have someone working on it who specialises in the field, give us a call, 02 9415 1511 or email us today and stop procrastinating!

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Done with Data?

Done with Data?

Find out why data is surpassing oil as the world’s most valuable asset.

Confused as to what this big data hype is about? Sick of reading about data and technology in every professional and global magazine and newspaper?

You have a point. It is the latest buzz word but there is a buzz for a reason and one you do need to know about, sorry!

Dr Paul Darby writes in September’s Independent Financial Advisor, “Data is now a key resource for your business, and if you don’t see it as a key resource for your business, someone will come along and take your business.”

Scary right? Now don’t go start to blaming technology. Knowledge is power right, and data and technology is your greatest weapon. So, make sure you manage and use it properly!

For us as Financial Advisors and Accountants the forces of technology are shaping our industry which can feel like disruption but really “it’s accelerating the empowerment of the consumers and providing more transparent price discovery in a cost-conscious role”, as said by David Haintz in Septembers Professional Planner.

However technology and data disruptors aren’t unique to the finance industry; we have seen the rise of Uber and fall of taxis, in hotels it has been Airbnb, recorded music has been transformed through Apple and Spotify, video has seen massive disruption in streaming services such as Netflix and in retail Amazon has taken out many established players.

Amazon have 50 per cent of the retail market in the US, but they aren’ complacent. “They’ve got masses and masses of data on everything” says Dr Paul Darby from Vorai Systems. This data provides unique information on their client’s patterns, behaviours, persuasions and more. Their client’s data is their biggest asset not only to their business now but also in the future.

If you don’t believe me, check out ‘The Great Hack’ on Netflix. Directed by Karmin Amer and Jahane Noujaim, this documentary begins as one man’s quest to see his personal data morphs into an investigation and expose that impacts democracy and the worlds future with insights into the recent US presidential election.

A common trend however in all industries is ultimately not the technology acting as a disruptor but rather aiding a solution in which traditional industries are not being client and customer centric forming the biggest threat to any business and industry.

As the late Steve Jobs said, “Technology is nothing. What’s important is that you have a faith in people, that they’re basically good and smart, and if you give them tools, they’ll do wonderful things with them.”

Here at PrimeAdvisory we like to be at the forefront of technology to keep you and your business on track. For more don’t be a stranger, give us a call on 9415 1511 or send us an email.

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The reality of your rental property

The reality of your rental property

Your rental yield could improve by 13 percent.

Have you got a rental property and overwhelmed at tax time knowing what you can and can’t claim? It’s not uncommon for landlords to feel this way with what makes sense in the real world often not making sense for the Australian Tax Office (ATO).

Tax deductions in general can only be made in the period that you rented the property or during the time it was genuinely on the market for rent and actively looking for a tenant. If you are renovating for example, then you may not be able to claim expenses during this period, with some exceptions. A few common problem areas include;

Interest on bank loans

Only the repayments for the investment are deductible and not the loan itself, with some exceptions.

The sharing economy

The deductions made for renting out a room are like that of a rental property with tax deductions claimable for expenses such as the interest on your home loan, professional cleaning, council, insurance etc. However, these need to be in proportion to the lease period and in proportion to proportion of your house rented.

Repairs or maintenance?

Currently the ATO is looking very closely at deductions claimed for repairs and maintenance and is an area of major confusion. Repairs and maintenance can often be claimed independently with the deduction for capital works spread over several years. Repairs are defined as the wear and tear of the property as a result of being tenanted such as replacing fence palings or fixing a broken toilet. However, if looking to replace a whole fence, water system, improvements and extensions this falls under capital works as it goes beyond the general wear and tear.

However, with that said Australia’s renovation industry is profiting from weakened economic conditions and tighter lending standards. The Australian Bureau of Statistics (ABS) December building activity data showed a 6.6 per cent increase in alterations and additions in 2018, with renovation spending in the December quarter alone reaching $2.27 billion.

This indicates homeowners and investors are seeking to improve capital values and increase rental income, rather than purchasing anew. According to Corelogic’s quarterly rental review for 2019, gross rental yields are currently sitting around 4 per cent. In some scenarios however, renovators can achieve a 13 per cent return on their renovation investment.

Sounds a lot right? Let’s look at a case study by BMT Tax Depreciation, where an investor completed a $60,000 renovation.

Investor X purchased a $410,000 residential property in January 2018, originally built in 2004 and producing a rental income of $18,720 a year ($360 per week), producing a rental yield of 4.6 per cent.

In 2018 Investor X installed a new kitchen and appliances, split system air conditioner, blinds, lights, carpets and bathroom.

Post-renovation the property was now worth $565,000 and the rental income is now $26,520 per year ($510 per week).

Prior to the renovation Investor X was experiencing an annual cash loss of $1,207. Now, they have increased their rental income by $150, achieving a 13 per cent yield to their renovation costs and have a positive cash flow of $5,261.

This example shows the dream, it is important to be aware of some tips and traps. Choosing which assets to install can make a huge difference to what can be claimed upon completion of the renovation. Investors should stick to a budget when selecting items as it is easy to overcapitalise.

 

If all this just got you more confused, don’t hesitate to speak to your PrimeAccountant and make your property work for you, 02 9415 1511 or email us.

 

 

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What’s the price of advice?

What’s the price of advice?

Financial advice is less about increasing a client’s wealth now and more about helping the individual; or family achieve the things that really matter to them.

The coming 25 years will be a transition as the Baby Boomers move to retirement. CoreData estimates $3.9 trillion of wealth to be transferred into the hands of younger generations. This wealth transfer is unprecedented in history. With the progress of technology and current landscape of the financial services market, “advice is less about increasing a clients wealth now and more about helping the individual or family achieve the things that really matter to them”, as said by Simon Hoyle in Septembers Professional Planner.

In a number of recent studies undertaken by CoreData it has been revealed that individuals who seek competent and professional financial advice and who act on it are healthier and happier with benefits of advice beyond financial issues. These include;

  1. A Comfortable Lifestyle

In case studies, a core goal was to maintain a desired level of spending and allowing for inflation, to ensure living standards do not drop. This was exceeded as clients enjoyed additional expenditure including holidays.

  1. More Superannuation

Through the implementation of curated advisor strategies, additional contributions were made to enable a tax-efficient superannuation resulting in healthier balances and more funds when needed.

  1. Optimised Allocation

Financial advisors provide value in optimising the allocation of assets by placing assets into more productive investments. Case studies proved clients to have more funds to spend on themselves and their families.

  1. Peace of Mind

With the assistance of advisors households are assured of a more protected financial situation even with unexpected events occurring allowing for a greater sense of security and less to worry about in life.

  1. Confidence

Individuals equipped with expert financial advice generally have more confidence to spend on their lifestyle and are more confident in their decisions.

  1. Reduced Stress

Research by CoreData found a lack of financial wellness creates huge emotional and social costs from lack of sleep to damaging relationships.

Want to know how we can support you or your family in doing and achieving what matters to you? Give us a call on (02) 9415 1511 or email us for your no obligation conversation.

 

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