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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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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7 Things To Review For Enhanced Business Performance

7 Things To Review For Enhanced Business Performance

If you are a business owner in Australia, there’s a big chance that you are now back at the desk after a break. The Christmas holiday period is a great time to rest and reflect over the previous year and think about what you want to achieve in 2019.

There’s no better time to review the performance of your business given you should have a team that’s rested and ready to help you achieve your goals and growth targets for 2019.

Here’s our guide for the critical business activities to prioritise reviewing to ensure if you’re on track for a good year.

1. Review your reporting systems
Take some time to understand how you currently measure effectiveness. Particularly sales and employee performance. Do you know what your cost of sale is, whether you are achieving sales at the right costs and what the most effective sales channels are?

2. Review your cash flow requirements
Cash flow constraints can considerably hinder business growth. Effective balance sheet management of accounts receivables, accounts payables and inventory levels help make sure that you have sufficient cash to operate effectively. It’s also critical that adequate cash is being set aside to meet Tax and Super obligations

3. Review your products and services
If you have good reporting, you’ll understand how profitable each of your products and services is. Understanding this means you can plan for the year ahead, focussing on promoting profitable (and eliminating unprofitable) products or services.

4. Review your staff performance
Do you have good systems for understanding what your team members are working on and also for recognising achievements? A strong culture and communication amongst staff will ensure your team is motivated and focussed on the overall company objectives.

5. Review your operating costs
Getting a handle on all your operating costs and then reviewing for improved deals and more competitive suppliers can have a significant impact on profitability. You can even task staff with finding ways to streamline costs and reward them for finding savings.

6. Review your most profitable customer relationships and satisfaction
Understanding which customers are generating the most revenue and or profit should be a top priority. After all, we all know it’s cheaper to retain a customer than to acquire a new one. Customer retention has a considerable impact on growth. Using tools such as Net Promoter to track customer satisfaction and the likelihood of referral can streamline satisfaction monitoring.

7. Review any debt or finance arrangements.
Make sure you have the most cost-effective finance facilities in place, and you are reducing any debt effectively.

Last but not least, make sure that you involve your trusted advisors in helping you review your business. An experienced advisor can help you take an “outside-in” look at your business and also bring valuable experience and therefore suggestions for improved business performance.

PrimeAccounting specialise in working with private business owners, keeping them on track with finance and accounting services. Contact us for an obligation free Business OnTrack consultation on improving your business performance.

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Why crunching your numbers matters, no matter who does the crunching

Why crunching your numbers matters, no matter who does the crunching

There’s no escaping numbers, whether you like playing the numbers game or not, so it’s best to either embrace them, or find someone who can crunch the numbers for you.

We’re all surrounded by numbers

Now I may sound like a boring old school accountant when I ask “Have you ever really challenged yourself and pondered the value of ‘numbers’? I was recently challenged in this way by my 12-year old daughter when, for her first High School Mathematics assignment, she interviewed me about how numbers are used in my work and around the home.

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How cloud accounting can help you make better business decisions

How cloud accounting can help you make better business decisions

I recently attended a Business Insights presentation with other business owners, software providers, accountants and advisers.

Of course, it wasn’t long before the conversation turned to cloud accounting, and how its real-time data can really help businesses. The presenters talked about its importance, and how it can not only improve business performance but also change the relationship between business owners and their accountant/adviser.

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