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Month: February 2020

Remembering your Insurance When you Renovate

Posted on by Glance Consultants

Remembering your Insurance When you RenovateRenovating your home or investment property is an exciting time, whether you are creating a better space to live or improving investment opportunities. However, homeowners can get caught up in the build that they forget to look at what is covered by their home and contents insurance.

The first step is to identify what kind of builder you are using, this is important as the different types incur different warrantees. For owner builders, no warranty is required whereas a registered builder will be required to supply you Warranty Insurance on signing the building contract.

Homeowners must inform their insurer that they are planning on renovating a property. If you fail to do so, the insurance for that property may become void, meaning in the event something happens during the renovation, you will not be covered. Some insurance policies also require you to be living in the property for the insurance to be valid. Therefore, if you are relocating during the renovation period, check on the living requirements for your policy.

Home and contents insurances are designed to cover existing homes, not building sites. If the renovations are valued at over $50,000, your home will be categorised as a building site and further insurance will be needed.

Your policy will also be affected once the renovations are finished if they have increased the value of the house. Being under insured can leave you out of pocket if you need to make a claim. After renovations are completed, homeowners should revise their home and contents insurance again to make sure everything is up to date and compliant.

When a Trustee Goes Bankrupt…

Posted on by Glance Consultants

When a Trustee Goes Bankrupt...SMSF members need to be aware of the rules that govern their fund, including what to do when one member becomes bankrupt.

A requirement of an SMSF is that each individual trustee of the SMSF must be a member of the SMSF. In the case of corporate trustees, every member must be a director. This means all members are connected and held accountable for one another. If one member enters bankruptcy, they will be categorised by the ATO as a “disqualified person”, meaning they can no longer act as a trustee of the SMSF.

Where a disqualified person continues to act as an SMSF trustee or director, they will be committing an offence that is subject to criminal and civil penalties. The ATO provides a six-month grace period to allow a restructure of the SMSF so that it either meets the basic conditions required or can be rolled over into an industry fund.

During the six-month grace period, the ATO requires:

  • The bankrupt to remove themselves as trustee.
  • The bankrupt to inform the ATO in writing.
  • To be notified within 28 days if there is a change in trustee.
  • The bankrupt to notify ASIC of the resignation as a director (if the SMSF is run by a corporate trustee).

Other members will need to remove the bankrupt’s balance from the SMSF before the grace period is over, this may involve:

  • Selling any real estate or shares.
  • Transfering the bankrupt’s balance to a managed fund.
  • Deciding whether they want to remain as a single member SMSF, or roll over their entitlements to a managed fund.

For members who enter bankruptcy, they must sell all assets for the market value available at the time and then transfer all of the liquid assets to a managed fund.

Can you Claim Deductions for Employee Training?

Posted on by Glance Consultants

Can you Claim Deductions for Employee Training?Employees of a small business may need to develop their expertise or skills in a particular area to better perform their duties. While training courses like seminars and one-day intensives can be a worthwhile investment, there are still a few things employers should consider from a tax point of view.

Employers can generally claim deductions for the full costs incurred when providing education to employees, including aspects like course fees and travel costs. Many owners tend to forget possible FBT implications.

Paying for employee work-related course fees commonly constitutes as a fringe benefit and is subject to FBT. However, FBT law allows a full or partial reduction of FBT payable provided that the ‘otherwise deductible’ rule is met. The ‘otherwise deductible rule’ implies that if the employee had paid the expense themselves, they could claim a deduction for the expense. The business could then provide the benefit to the employee without having to pay FBT on the amounts.

An education expense is considered to be hypothetically deductible to the employee depending on the type of course or education studied. The course must have a satisfactory connection to an employee’s current employment, maintain or improve the skills or knowledge required for the employee’s current role, or result in an increase in the employee’s income.

Employees cannot claim a deduction for education expenses if there is no connection to their current employment, even if it assists them to gain new employment.

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