How the ‘gig economy’ has changed work and the economy.

How the ‘gig economy’ has changed work and the economy.

Firstly, you’re probably wondering what this whole “gig economy” means.  It’s actually a buzz phrase, first coined at the height of the financial crisis when a number of workers started ‘gigging’ and working many casual jobs to stay afloat financially. Today, it is more recognised with people freelancing who are seeking more flexible and diversified work and working hours especially within the rapidly growing digital platforms.   These platforms allow freelancers to directly connect with potential employers to find employment.  Hence the term ‘gig workers”.  Great examples of these digital platforms are companies such as Uber, Airtasker and Deliveroo who are changing  traditional markets.

With this growing trend legislation also needs to be updated to reflect these abovementioned changes and it has, but it has been slow. Internationally, we have seen disagreement over gig workers classifications as either ‘employees’ or ‘independent contractors’. The most recent ruling by Australia’s Fair Work Ombudsman in June 2019 found Uber drivers to be independent contractors because there is not “an obligation for an employee to perform work when it is demanded by the employer”, as reported by Stuart Ridley.

A survey commissioned by the Victorian government published in June 2019, found 7.1% of Australians reportedly used a digital platform such as Airtasker (34.8%), Uber (22.7%), Freelancer (11.8%), Uber Eats (10.8%), Deliveroo (8.2%) for work. This report further found 64.8% of gig economy workers to access work via one platform opposed to 35.2% who accessed work through more than one platform and 11.4% who are registered on four or more platforms.

This however has forced changed to be made in the definition of work reviewing the definition of ‘casual’ work to ensure legislation applies to capture gig workers under workplace health and safety, improve superannuation rights and ensure protection under Australia’s industrial relations system. Simona Scattagalia Cartago says, “Getting a real measure of this global phenomenon is not easy, especially when some may underestimate its true size by considering only gig work as a primary source of income. In the US, more than 35% of the workforce seems to be participating in the gig economy, and that number is expected to jump to 43% by 2020.”

This however is also causing issues regarding superannuation. The Association of Superannuation Funds of Australia (ASFA) noted almost a quarter of self-employed people to have no super and less likely to meet the $450 per month earning threshold with any one employer as recorded in February 2018. It has been suggested a new ‘dependant contractor’ category to be made, ditching the earning threshold.

Further taxation issues have arisen from this new gig economy with the Australian Tax Office (ATO) updating guidelines for people earning income via digital platforms to also include ride sharing, short-term property or room rentals or skills on demand, as changed in June 2019. The ATO warn they will be matching data earnings from such above-mentioned platforms.

If you want to know more about how to navigate through these gig economy changes, please get in touch with the team via email or phone us 02 9415 1511. Speak soon!

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Important changes to land tax and stamp duty surcharges.

Important changes to land tax and stamp duty surcharges.

The NSW Government has recently proposed new laws to target discretionary trusts that currently own or intend to own NSW property, either directly or indirectly via other entities (i.e. unit trusts, companies and partnerships, subject to some exclusions).  The new laws will mean that discretionary trusts may be treated as ‘foreign persons’ with the following consequences:

  • A land tax surcharge of 2% (in addition to the normal land tax); and
  • A stamp duty surcharge of 8% (in addition to the normal stamp payable on NSW property acquisitions).

To prevent this from happening, your trust deed must be amended so that it includes provisions that specifically exclude foreign persons as trust beneficiaries.  If your trust already holds NSW property and has paid either of the above surcharges, then you only have until 31 December 2019 to amend the trust deed to obtain a refund on surcharges paid.

Please contact our office to discuss the matter further.

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F45 Condell Park on a winning streak

F45 Condell Park on a winning streak

With a background in Primary School teaching and hobby job as a group fitness instructor Meg decided to take the plunge with her husband Harley Borkowski and buy into one of the fastest growing fitness franchises F45 training located at Condell Park.

Since opening their doors 3 years ago they have won local business awards along with the highly prestigious F45 Division Champion award in Las Vegas this year. In the industry this is one of the highest signs of recognition which is very impressive for a relatively newly opened studio.

Meg attributed much of the success due to putting care into what they do, being in and working on the businesses and always looking to improve ensuring everyone is looked after. Her passion comes from a great community of trainers and members who experience rapid change to their own fitness, strength and self-thanks to the structured training provided by F45.

She explains opening the business was a steep learning curve and they both had a lot to learn particularly in the accounting area.   Meg exclaimed, “the PrimeAccounting staff could always answer my questions, they know what they are doing, and I could rely on them for any business financial needs.”

In being inaugurated on the “On Track for Life” wall we asked Meg what she defines as success and being on track for life means to her,  which she explained, “being able to do what I love, having a lifestyle to work for me and being financially stable”.

The staff at PrimeAdvisory would like to congratulate Meg on her recent achievements and welcome her, very deservingly, to the On Track for Life Wall!

Want your photo up there too? Get in touch with your Advisor and share your wins and you could be next! Contact us on 02 9415 1511.

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Don’t let your Christmas generosity cause unwanted tax for your business

Don’t let your Christmas generosity cause unwanted tax for your business

When celebrating Christmas with your staff in the form of Christmas parties or gifts, be sure to keep accurate record as certain scenarios may attract Fringe Benefit Tax (FBT). Since 1986, the FBT system has existed in order to tax on things on the fringe, as the name suggests or outside of your salary package.

There is no separate FBT for the Festive Season however you may encounter several different circumstances when providing these events to your staff. This could also include fringe benefits provided by you to past and future employees and their associates (spouses and children), an associate or those under an arrangement with a third part to any current employees.

Implications for taxpaying body

If you are not a tax-exempt organisation and do not use the 50-50 split method for meal entertainment, the following scenarios may help you determine whether there are FBT implications arising from a Christmas party;

Implications for tax-exempt body

If you are a tax-exempted organisation the following situations may be relevant in determining the possible FBT implications arising from a Christmas party.

Understanding the Fringe Benefits Tax implications can be confusing and for a merrier Christmas your awareness of FBT and having accurate record keeping is important. Before planning your Christmas party, staff and client gifts please call us for advice.

If you any questions and what to know more please get in touch 02 9515 1511 or email us reception@primeadvisory.com.au.

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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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