How to reduce the hassle of missing your employee’s super payment.
The Super Guarantee Charge (SGC)
The SGC may apply to employers who do not pay the minimum super guarantee (SG) to their employee’s designated superannuation fund by the required date. The non-tax-deductible charge includes the SG shortfall amounts with interest and a $20 administration fee for each employee. You will need to lodge your SGC statement within a couple of months of the respective quarter. While employers are able to apply for an extension to lodge and pay the SGC, the nominal interest will still accumulate until the extension is lodged. From this point, the general interest charge will apply until the SGC is paid off.
What you can do to reduce your SGC
The nominal interest and SGC shortfall can be offset or carried forward by late contributions against the SGC in certain conditions. This excludes the administration fees, certain types of interest and other penalties. The late contribution is also not tax-deductible, nor is it able to be used as a prepayment for current or future contributions. However, you are able to carry it forward if the payment is for the same employee and is for a quarter within 12 months after the payment date. It is advised to consult with our office to work with your unique situation.
The bigger picture
Struggling to pay your employees’ super is a sign of financial insecurity for your business. While an employee’s PAYG Withholding tax and super may not be due for a while, not having the funds for them at each payday is a debt that will only accrue. You may have to consider your business’ strategy and operations or consult us if you feel it is only the symptom of a bigger issue.
Property investment has a lot of elements throughout that contribute to a smoothly run transaction between landlord and resident. As a homeowner, you have rights and responsibilities to maintain when dealing with your property and the occupants. The relationship between proprietor and occupant is one of giving and take, it is important to familiarise yourself with what is expected from you as well as your rights as the owner.
Firstly, you have the right to choose and know your tenant. As long as your choices do not conflict with the Equal Opportunity Act, you have the right to choose a renter you see fit to live in and upkeep your property. As the homeowner, you also have the right to landlord insurance to guard you against potential financial loss. This cover usually relates to the property specifically but there are plans available to cover the belongings of both the renters and yourself. As long as you provide a fair warning, you have the right to increase rent at the end of a fixed term lease where the resident wishes to continue the agreement. In the unfortunate case of a tenant not paying rent for over 14 days, you have the right to evict them from the property.
Being a landlord comes with many responsibilities that you need to consider. The security of the property is up to you, you will need to make sure alarms and locks on both doors and windows are secure before a new resident moves in, it is also your job to upkeep these security measures. It is also your responsibility to maintain and repair elements of the property. Treating the property as if you were living there is important, your tenants deserve a well-kept environment and reliable assistance on repairs. Finally, the law restricts how much access you have to your property if occupied. You must contact renters before coming over to give notice, do not just drop in unannounced.
The ATO has enforced strict guidelines on tax deductions for rental property owner’s travel expenses.
As a rental property owner, you are not able to claim deductions for travel expenses relating to inspecting, maintaining or collecting rent. If you have already claimed a tax deduction for the cost of travel to and from your property in your 2018 return, you will need to request an amendment. The law change came into effect on 1 July 2017 and affects tax returns from 2017-18 onwards.
You may claim these travel expenses on your tax return if you are carrying on a rental property business or are an excluded entity.
An excluded entity is a:
Corporate tax entity
Superannuation plan that is not an SMSF
Public unit trust
Managed investment trust
A unit trust or a partnership, all of the members of which are entities of a type listed above
The ATO has issued a warning to the public regarding illegal early release of super schemes, which are subject to severe penalties.
There are strict rules around when you can access your super so your current decisions do not jeopardise your quality of life in retirement. The ATO has reminded the public you may only access your super early if you have experienced severe financial hardship or you have reached the preservation age and have stopped working.
How these schemes work
The promoters of these schemes:
Encourage you to transfer or rollover your super from your existing super fund to an SMSF to access your super before you are legally entitled to
Target people under financial pressure or those who do not understand super laws
Claim you can access your super and put the money towards anything you want which is not true
Charge high fees and commissions, presenting the risk of losing some or all of your super to them
May request your identification documents which can result in identity theft
Penalties apply to promoters and individuals who illegally access their super early. If you illegally obtain your super early, it is included in your assessable income even if you return the super to the fund later. If you are an SMSF trustee, you may be fined up to $420,000 and liable for jail terms of up to five years. Civil and criminal penalties apply to promoters.
Property is a valuable addition to any investment portfolio. Deciding whether a house or apartment is a worthier investment depends on many factors. Keep in mind that timing is your best friend for buying any property due to the housing market’s volatility.
Consider the information below so you can make the right move for you in the property market.
Apartments are not inferior investments to houses as they present many advantages that houses do not.
Apartments are usually more reasonable than houses as they lack land and costs like insurance, maintenance and upkeep are provided for by body corporate in a strata scheme
Apartments in inner-city areas that are accessible to tenants and provide higher rental yields, lending security to your investment.
You can build up a diversified property portfolio with greater efficiency with apartments as opposed to the more costly investment of houses
Houses also offer several advantages.
The value of land appreciates over time, making your investment worth it in the long run
Suburban houses are less costly but still have significant investment potential if the suburb is being developed or accessible by public transport
You may have complete autonomy and control of how your run your house as opposed to apartments which have to adhere to body corporate rules
If a home loan is too good to be true, odds are it is. Due to the lengthy time commitment of a home loan and the costly investment, what may seem like small oversights can add and cost you thousands. A guide to reading the fine print of your home loan is attached below.
Low-interest rates on loans may not be for the entire borrowing period.
These types of rates offer a very competitive interest rate that many don’t realise is for a limited period, usually 12 months. The interest rate will rise to a lender’s standard variable rate, which may not be the most competitive rate you sought on the market. It is vital to know how long the introductory rate on your home loan is available for before signing the agreement.
Don’t forget about LMI
If you borrow over 80 percent of the value of your property, you are required to pay lender mortgage insurance. The higher percentage amount of the value of the property you borrow, the higher this fee will become.
Restrictions on additional payments
In some variable rate loans and fixed-rate loans, additional payments at any time or within the fixed rate period are not permitted. A cap may be placed on additional payments. You should check your terms and conditions to make sure that if you receive an inheritance, a bonus at work or win the lottery, you can pay your home loan down when the opportunity is presented to you.
Superannuation is more critical than it has ever been. If having an ageing population has taught us anything, it is how managing money now can have substantial ramifications for your retirement plan.
Merge your super
Every super account you have comes with a set of fees. It is worth your while chasing down inactive accounts and putting all your super into the one account to reduce fees and maximise the investment benefits.
If you can budget putting more of your salary away into a super account every month, you can reap multiple rewards. First, you can use the extra super payments to offset your pre-tax payments up to the current concessional contribution cap of $25,000 per year and after-tax contributions of $100,000. You can also build up your super while you can afford to.
Your investment strategy should depend on the amount of risk you are willing to take. This will vary on where you are in your career. A growth investment option, which is high risk, might suit you if you are in the early stages of your career development. However, as your income stabilises to your goal amount, it might be wise to change super funds to a lower risk option that will protect your growing retirement nest egg.
The Australian Tax Office (ATO) has released draft guidelines changing its previous stance on Fringe Benefits Tax (FBT) for utes. Amendments originated from reports that dodgy tax returns were responsible for a loss of $8.7 billion in income tax due to wrongful claims. Failure to comply with the new requirements listed below may result in a 20 percent FBT imposed on the cost of the vehicle.
The requirement of a logbook
New rules require employers to ensure their workers using these vehicles keep detailed logbooks. Whether the logbooks are the electronic or hard copy, it is vital that the process be effective for returns lodged in the 2019 FBT year, when the law takes effect. Employers receive confirmation via email from employees using the vehicles at the end of the 2019 FBT year with their logbook including all regulated diversions and private use.
Diversions and private use rules
The guidelines introduce capped limits for the log books to comply with. Professional travel means that the vehicle must not deviate more than 2km from its usual route. However, 1000 km of non-work related travel is allowed, provided that there is no single trip exceeding 200 km. Such regulations provide greater flexibility than previous guidelines. What the ATO deems “minor” or “irregular trips” like carpooling the children to and from school or an occasional trip to visit relatives will not render you non-compliant so long as it is recorded as non-professional use.
The Tax Office has released further findings that reveal cash-only businesses could be missing out on a significant chunk of revenue simply by not offering customers the option of electronic payment.
An ‘inconvenience’ was the most popular word consumers surveyed in the study used to describe when a business does not provide the option to pay via card.
Cash-only may also be having a direct effect on the business’s reputation. The results determined that Australian customers are twice as likely to perceive ‘cash-only’ as negative rather than positive – with many respondents questioning whether the business is honest and paying less tax (regardless of whether this may be fact or fiction).
While change may be difficult, cash-only businesses might like to consider the benefits that exist with no longer operating in cash. For instance, electronic tap-and-go payments take less time and cost around 9 cents less than payments made in cash.
By providing electronic payment only, a business can find it easier to keep more accurate record-keeping as well as help them to meet their tax and super obligations.