Is it time to hire a new employee?

Hiring at the right time is the difference between creating a cash-generating machine and struggling with an unprofitable business. If you are the owner of a service-based company, then you will know all too well the growing pains of business. 

Mastering that balance between supply and demand is tricky, but recognising the cues and triggers is a skill that is greatly needed. Ideally you would want to forecast future growth and hire a new employee at a time where they can be trained up and ready for a surge in demand.

In this article, we look at the important area of knowing when you can afford a new employee. 

Is there ever a ‘right’ time?

Many business owners just go with their gut feel and decide that it’s time to hire someone new. But this mindset is fraught with emotion and a successful business is always run with the numbers in mind.

When you shift your decision making processes to a more systemic framework, you’re going to make better decisions. 

Hiring is a cost

New employees take time to get up to speed. They are a drain on resources and therefore place constraints on your business. Staff needed to support a new employee aren’t adding revenue for a period of time. 

So do make sure that you have factored in enough revenue to cover both the direct and indirect expenses of hiring someone new. 

The two rules for profitable hiring

It is recommended to use the rule of thumb of having at least 2 times the new employee’s monthly salary as committed revenue and 2 times the new employee’s monthly salary in cash. 

This way, you should have the ability to justify the new hire and significantly reduce the risk of eroding your profit.

You do not want to fall into the trap of increasing headcount without increasing your profits. As you expect losses from the unavoidable drain on resources that your new hire creates, you want to have backup revenue and cash to ensure you can maintain a profitable business.

To put it another way, if your new employee expects a salary of $5000 a month, then you will want to ensure you have $10,000 of committed sales and $10,000 in spare cash available.

Using your business’s financials to guide your decision making processes means that emotion and ‘gut feelings’ are left out of the equation or minimised. So next time you’re wondering if you can afford to hire that new employee, go back to the two golden rules of hiring economics. Doing this will ensure you will grow profitably, not grow broke.

If you are interested in discussing this strategy in further detail, contact our team at Glance Consultants.

What are your obligations as an employer?

Are you a new business owner? Even if you’re a seasoned employer, it’s good to brush up on your obligations as an employer to make sure you’re compliant.

We cover a few key considerations here from tax obligations to the code of conduct. Recent changes are something to keep your eye out for, but rest assured knowing that any major changes to the way you do business will be highlighted for you by your team here at Glance Consultants.

It is our duty to ensure that our clients are operating at the best of their abilities and to provide them with up-to-date resources and support.

Employee Tax

You need to withhold tax from your employees’ wages and pay it to the ATO on their behalf. Single Touch Payroll (STP) has been implemented these past years to make this process as seamless as possible. You can find out everything you need to know about this on the ATO’s website, or get in touch with our team for additional information and support.

Superannuation

You need to process Superannuation Guarantee (SG) contributions at a minimum of 10% of your employees’ ordinary earnings. This is to eligible employees only, who are adults (18 – 69 years old) that are paid more than $450 per week. For those under 18, they need to be working for more than 30 hours each week (this applies till the 30th of June 2022). Contractors are exempt, except for in certain conditions.

Wages and Payslips

You must pay at least the minimum wage dictated by the Fair Work Commission. This is reviewed yearly on the 1st July. A payslip needs to be issued within a day of payment and it must include certain information.

Contracts and Documents

Don’t forget that a contract is designed to protect both the employee and the business! Make sure you take the time to draft a complete and compliant contract. Before commencing employment, every employee should receive the ‘Fair Work Information Statement’ as well as their contract. You also need to provide them with information regarding their health and safety on the job.

Leave

Employees are entitled to leave. This could be for holidays, because they are sick, for maternity, a bereavement or stress. Employees except casual employees are entitled to at least 4 weeks of paid leave each year.

This is by no means an exhaustive list. There are several pieces of regulation that you need to be aware of in regards to the welfare of your employee. Do make sure you familiarise yourself with these, and others, on the relevant governmental websites.

Contact Glance Consultants today on 03 98859793 or at enquiries@glanceconsultants.com.au to get the very best out of your business, for yourself and your employees.

Trusts or companies for your small business structure?

It can be a daunting and overwhelming prospect to decide how to set up the structure of your small business.

Not taking the right approach can lead to stumbling blocks in the future. Conversely choosing the right business structure can set you up for success.

If you’re uncertain which avenue to choose, we do recommend having a chat with an advisor here at Glance Consultants, who can discuss with you the advantages and potential pitfalls of using either a trust or a company for your small business. We take the time to listen to your specific needs and learn about what it is you do to offer a bespoke consultation.

In this article, we will outline the key differences between a trust and a company to give you an overview of what they are to make an initial determination about what you believe might be suitable for you.

What is a trust?

Outlined by a trust deed, trusts are basically an agreement between the trustee and the beneficiaries.

You should be aware of two different types of trusts: discretionary trusts and unit trusts.

A discretionary trust allows the trustee to decide what income and capital can be given out to the beneficiaries. Unit trusts give more power to the beneficiaries, where they purchase ‘units’, similar to how shares are purchased in a company. The advantages of a trust include costs, they are both cheaper to establish and receive the 50% CGT discount in certain instances. There is also an appealing nature for some regarding discretionary trusts, where trustees have a significant amount of control.

However, with this power, comes liability. Be aware that the trustee can be held responsible for all debts of the trust, losses are trapped within the trust and there can be complex paperwork to get through to establish one.

What is a company?

A company is controlled by the directors. It is a separate legal entity.

There are advantages to this. You have the ability to sell and transfer shares, there is a capped tax rate of 25% and it is easier to maintain than a trust. But, it is more costly. You aren’t entitled for a 50% general CGT discount like you are for trusts and there are annual ASIC fees to consider.

So, that’s a quick breakdown of what both a company and a trust is.

Do get in touch with us here at Glance Consultants for more support and advice regarding your small business.

Banish burnout in the workplace

Severe levels of burnout have been either experienced or witnessed by a lot of people in recent years, with Mark Bunn, the director of Ancient Wisdom for Modern Health noting the ‘Great Resignation’ trend being one of the many side effects.

Growing work demands, emotional distress that has been strongly influenced by uncertainty surrounding the impact of the pandemic on personal and professional lives and the inability to balance the boundaries between work and home life, especially when we work from home are all attributing factors of burnout.

People are now reflecting on their purpose and their life expectations more than ever before.

A large subset of the population aren’t looking to work tirelessly for 30 to 40 years before reaching retirement and discovering that they have missed out on a lot of things.

So how can we banish burnout from the workplace and ensure that we retain staff that feel connected and positive about their role and their future?

Have an open communication policy

Encourage your employees to share their challenges. Provide a network of support, whether it be from the higher ups, their peers or from outsourced psychologists or well-being managers to assist in targeting specific challenges that they are facing.

It is all about showing empathy and allowing communication to occur.

Look at your workplace culture

Hustle culture, where those that work the hardest are rewarded the highest, is out. An inclusive workplace culture that encourages meaningful work that aligns with an employee’s values is in.

You will find that employees will likely work more, be more productive and morale will improve in the workplace as well.

Try to remove the emphasis from strict hours and client focus to a more holistic approach that suits the needs of everyone.

Celebrate the little things

Micro-recovery is a key way to banish burnout. Focus on small achievements throughout the day and enable frequent and small holidays to enable rejuvenation rather than looking at the 2 week holiday at the end of the year and hope that you can carry on until then.

Ensure your workplace offers information regarding the importance of sleep in aiding mental and physical recovery as well as providing tips on how micro-recovery and hitting small targets can improve their day to day wellbeing.

Contact Glance Consultants today on 03 98859793 or email us at enquiries@glanceconsultants.com.au, let our professional accountants help take pressure off you and your business.

Glance Consultants Newsletter February 2022

In the May 2019 Federal Budget, the Government announced that Single Touch Payroll (STP) would be expanded to include additional information, building on the first stage of STP which was made compulsory for most employers from 1 July 2019.

For background, the STP regime is a government initiative which is designed to reduce an employer’s burden when reporting to Government agencies such as the ATO. Under the regime, employers report employee payroll information to the ATO each time they are paid via STP-enabled software.

Start date 

The start date for Phase 2 reporting was 1 January 2022, however the ATO has advised that employers who provide the additional reporting required under Phase 2 by 1 March 2022 will be accepted as having met the deadline. Digital service providers (DSPs) can apply for a deferral if they need more time to make changes and update their solutions. Such a deferral then automatically applies to customers of that provider. For example, Xero have advised that they have been granted a deferral until 31 December 2022. This means that all customers using Xero Payroll will also have until that date to report their first STP Phase 2 pay run. Check with your provider if a deferred start date applies. For businesses that need more time to transition, you may apply for an extension beyond your software provider’s deferral. Registered accountants and bookkeepers will also be able to apply on your behalf. On the compliance front, under Phase 2, genuine reporting mistakes will not be penalised in the first year until 31 December 2022. 

ATO: Benefits for employers

1. TFN Declarations Employers will no longer need to send employee TFN declarations (they will still need to be collected and filed in employee records, however).

2. Closely held payees For businesses using concessional reporting, such as is the case for closely held payees, this can be communicated through income types.

3. Lump Sum E Payments When making Lump Sum E payments, employers won’t need to provide Lump Sum E letters to employees.

4. Payroll Data Integrates with Services Australia Payroll information employers provide to the ATO will be shared in near real-time with Services Australia, who can use it to streamline requests.

What isn’t changing? 

  • The way you lodge, pay and update events
  • The due date for lodging events The types of payments that are needed
  • Tax and super obligations
  • End of financial year finalisation event requirements 

In practice Once your STP 1 solution is upgraded to offer phase 2 reporting, you can transition at any time throughout a financial year. The way you transition from STP 1 to STP Phase 2 reporting will depend on your circumstances and the solution you use.

Warning: STP 2 is not just a software upgrade

The sheer volume of additional data is perhaps the most notable feature of STP 2. Phase 2 requires employers to develop an understanding of what data is required, in the multitude of STP 2 labels and codes in order to properly drive STP 2 software. All told, there are 16 new reporting labels and approximately 100 different codes and reporting options. STP2 reported data will help shape employee social security, Child Support Agency and income tax outcomes. It may the case that the complexities around STP 2 will be too great for many small business owners, and they will need input of their accounting or bookkeeping advisor

You should follow your digital service provider’s instructions to upgrade your solution. 

Checklist 

  • Commence reporting from 1 March 2022
  • No penalties for genuine mistakes apply until the start of 2023; the main thing is to commence reporting
  • Consult with your existing STP 1 provider about the transition to STP 2
  • Seek input from our office around the reporting itself. 

 

Consolidate your super 

Did you know that there are approximately 10 Things to consider before consolidating million unintended multiple super accounts, which represents around 35% of all member accounts held by funds?

While in some cases this outcome may be intended, more often than not the creation of multiple accounts is unintended and mainly occurs when employees change jobs and do not nominate the same (or any) account for their super guarantee to be paid into.

These multiple super accounts are costing Australians an extra $690 million in duplicated administration fees and $1.9 billion in insurance premiums per year, which is eroding many Australians’ hard earned super benefits.

If you are one of these individuals with multiple super accounts, there may be benefits to rolling your accounts onto one super fund. 

The benefits of consolidating funds

There are a number of benefits of rolling your accounts into one fund, including:

■ Prevent duplicated fees – having one super fund means one set of fees, potentially saving you hundreds and thousands of dollars over your lifetime.
■ Easier to manage – having all your super in one account makes it easier to manage as there is less paperwork and administration to worry about.
■ Maximise your investment returns– once you have consolidated your funds, it will be easier to manage your investment strategy and you’ll be able to maximise the funds to invest.

Things to consider before consolidating

Before you consolidate your funds, there are a few things you should consider, including:

■ Check whether you have any insurance cover – you may hold life, total and permanent disability cover and income protection through your super funds. When changing funds, you may lose this cover or not receive the same level of cover in the new fund. Individuals with pre-existing medical conditions and those aged over 60 need to be particularly vigilant.
■ Compare your super funds – it is important to compare your super funds to check on things like fees, insurance premiums, variety of investment options available, performance data, etc before you choose a super fund that meets your needs.
■ Check if you can rollout of your current fund – it may not be possible for you to transfer your money out of your account eg, if you have a defined benefit fund.

Speak to your licensed financial advisor to help you make the right decision, particularly if you’re not sure about the adequacy of your new or existing insurance coverage.

HOW TO CONSOLIDATE

Consolidating your super is now easier than ever, using ATO online services or your myGov account. If you’re not sure whether you might have other super accounts, you can also search for lost or unclaimed
super via the ATO or by logging into your myGov account linked to the ATO and clicking on Manage my super.

 

What does Temporary Full Expensing (TFE) of assets mean for me?

As Australia looks to get back to work and continue its recovery, the Temporary Full Expensing (TFE) measures are available to support business and encourage investment. Eligible businesses can claim an immediate deduction for the business portion of the cost of most assets in the year they are first used or installed ready for use.

Businesses (in this case with an aggregated turnover less than $5 billion) can deduct the full cost of eligible assets acquired after 6 October 2020 (Budget night) in the 2020-21 and 2021-22 income years. Legislation is currently before Parliament to extend this to the 2022-23 income year as well. Small businesses that use the simplified depreciation rules will also claim a deduction for the balance in their small business pool during this time.

Can I deduct any assets?

There are some assets that are excluded from the TFE measures, the main ones being:
■ certain assets in low-value or software development pools
■ capital works (building improvements) that are deducted under Division 43, and second-hand assets used to produce income from residential property
■ Primary production assets that fall under Subdivision 40-F and 40-G and horticultural plants
■ assets leased on long term hire arrangements
■ trading stock and CGT assets, and
■ assets not used or located in Australia.

How does it work?

Consider the following example of a tour bus business:

On 1 February 2021 it purchases a coach for $160,000. The business can claim the entire amount as a deduction under TFE.

In March 2021 it constructs a customer wait lounge at its office for $50,000. Because the expenditure is on capital works, the business can’t claim a deduction under TFE (it will be subject to a claim under Division 43 instead).

On 15 April 2021 it incurs $10,000 while improving an existing depreciating business asset. The business can claim a deduction for these costs under TFE.

On 20 June 2021 it purchases a work vehicle (SUV) for $65,000 which will be used solely for business use. This asset is eligible for TFE, but the deduction will be subject to the car limit ($59,136 in the 2020-21 income year). The excess is not available as a tax deduction.

This is in contrast to the earlier example where a $160,000 coach was purchased. Such a vehicle is not a car for depreciation purposes and therefore a full deduction can be claimed because it is not subject to the car limit.

At the end of the 2020-21 income year, it had a balance in its small business pool of $100,000.

The business will deduct the balance of the pool under TFE.

What’s my benefit?

As these examples show, the brought-forward deductions available under TFE can be substantial. It’s important to note though, that the main benefit to businesses of TFE is one of timing. It brings forward the deduction on assets that would normally be spread over several years. This means the business may pay less tax, or no tax, now (but more in the future). All told, the immediate benefit is that TFE can assist cash flow.

The business can then potentially use that extra cash flow to make further investment or support operations.

We note that it is possible for some businesses to opt out of TFE (for example, for a number of reasons, it may not be advantageous from a tax perspective to generate substantial tax losses that TFE may generate).

Ultimately, any decision to opt out will usually rest with you and your accountant.

 

Topping up your concessional contributions

Thinking about making up for lost time and making extra contributions to top up your super? The good news is that the “catch-up” concessional contribution (CC) rules can help individuals who feel they have missed out on building their retirement savings to make extra before-tax contributions.

Remember, CCs can include super guarantee contributions from your employer, salary sacrificed amounts and tax-deductible personal contributions.

What are catch-up CCs?

You can carry forward any unused CC cap amounts that have accrued since 2018/19 for up to five financial years and use them to make CCs in excess of the general annual CC cap (currently $27,500 in 2021/22).

You can then make a CC using the unused carry forward amounts provided your total super balance at the end of the previous financial year is below $500,000.

Once you start to use some of your unused cap amounts, the rules operate on a first-in first-out basis.

That is, any unused cap amounts are applied to increase your CC cap in order from the earliest year to the most recent year. So, when you use some of your unused cap from prior years, the unused cap from the earliest of the five-year period is used first. And remember, if you don’t use your accrued carry forward amounts after five years, your unused cap amounts will expire. So it’s best to use it before you lose it! (See example overleaf.)

Who can benefit from catch-up contributions?

Catch-up contributions may assist individuals who:
• Previously couldn’t afford to make additional contributions
• Have spent time out of the workforce to study, look after children or elderly family members
• Work part-time or are casual employees
• Have interrupted or non-standard work patterns (ie, self-employed people)
• Dispose of an asset and want to reduce their tax and further maximise their contributions to super
• Receive a windfall/inheritance and want to contribute the funds to super.

If you finally have capacity to make extra contributions and want to build your super, utilising the catch-up CC rules can allow you to make up for lost time and be an easy way boost your super for retirement

 

Your Business Structure

At the start of each year, business owners typically review their affairs, including at times their trading structure. Others may be going into business and choosing their initial structure. There are four main business structures – sole trader, company, trust, and partnership (or a combination of these).

Sole trader

This is how many businesses commence. Under this structure, an individual operates the business and is liable for all aspects of the business including income, debts and losses. These can’t be shared with any other individual.

Advantages of this structure include simplicity, and minimal set up or ongoing costs.

Disadvantages include personal liability, and also an inability to take on a business partner, noting however that as a sole trader you can still employ workers.

Company

Here, the directors (and mainly in the case of small businesses, shareholders) run the business. The company itself pays tax on the income at a reasonably low company tax rate of 25%, though directors can be personally liable for tax if they are caught by the personal services income (PSI) rules.

These rules can come in to play where the business income is a result of your personal effort, expertise or skills. Subject to any personal guarantees or any director penalty notices being issued, companies provide asset protection for the owners, potential legal tax minimisation, they easily allow the admission of new business partners, and they can trade anywhere in Australia.

On the downside, companies are not eligible for the 50% CGT discount, are highly scrutinised and regulated, and are reasonably expensive to establish, maintain and wind up.

Trust

This is quite a common business structure whereby the trustee holds your business on trust for the benefit of the beneficiaries (usually the business owners, but can include other parties such as family members, companies etc). The trustee can be a person or a company and is responsible for the operation of the trust including compliance with its deed. In practical terms, the beneficiaries pay tax on the trust income that they receive from the trust at their own tax rate. Note however that trust income may be caught by the PSI rules, see earlier The advantages of a trust include asset protection (even more so when there’s a corporate trustee), potential legal tax minimisation, and for family trusts compliance is relatively straightforward. On the downside, trusts can be complex, costly to establish, and on the tax front losses are trapped inside the structure and can only be used to offset future income.

Trusts are also a strong focus of the ATO.

Partnership

A partnership is a group or association of people who carry on a business and distribute income or losses between themselves (between two and up to 20 people). The partners themselves are liable for tax on
the income from the partnership commensurate with their share of the partnership, however this is again subject to the PSI rules – see earlier. The losses and control of the business are also personally shared.

Partnerships are governed by a partnership agreement which should be in writing and deal with all aspects of how the partnership operates.

Some of the advantages of operating a partnership is that they are easy to understand, reasonably inexpensive to set up and maintain, and other individuals can easily be admitted. On the other hand,
there is no real asset protection, in that each partner is ‘jointly and severally’ liable for the partnership’s debts (that is, each partner is liable for their share of the partnership debts as well as being liable for all the debts). Each partner is also an agent of the partnership and is liable for actions by other partners.

Closing comment

Aside from tax, there are many factors to consider when determining the best structure for your business, including ease of understanding, set up and compliance costs, the ability to admit new owners, asset protection etc.

You can change your business structure at any time, however there may be costs involved such as capital gains tax and stamp duty. Contact our office if you are considering changing your structure or if you are going into business and choosing your initial structure.

Click here to view Glance Consultants February 2022 Newsletter via PDF

 

 

1 in 5 say accountants are your key to business survival

 

The Intuit’s Back to Business findings that were recently made available for us all have found that we are largely confident about business health moving forward and out of the pandemic.

With continued measures such as vaccination mandates, border control and financial support from the government, 81% of businesses are comfortable with the prediction that they will return to pre-pandemic levels in some 6 months.

According to the research, accountants and bookkeepers play an integral part in sustaining that kind of confidence, with 70% of those surveyed commenting on the valuable support of one or both of these professionals throughout the pandemic.

Whether it was advising businesses on the support packages available and guiding them through the timely application process, providing financial advice on where to cut expenses whilst maintaining jobs and supporting communities or simply being a stable support system, we have continued to provide valuable and up-to-date information designed to keep businesses not only surviving, but even thriving.

A further 1 in 5 businesses reported that they would not have survived if it wasn’t for their accountant or bookkeeper.

But our support doesn’t end now that measures are in place allowing us to see the light at the end of the tunnel. 84% of those responding to the survey believe that we are crucial to helping businesses return to pre-pandemic levels.

As conditions continue to improve and we can gain a little more assurance from the government about longer term guidelines, businesses can take the opportunity to seek financial advice and support to make the most of their position and begin aiming for growth.

Digital take up is now an expectation from businesses and their supporting services. If you did not pivot your business to seek new revenue streams online, then you either had them in place already or needed to close your doors for some period of time.

From the 37% of respondents who indicated they did looked into new revenue streams, 85% stated that they will continue to use this in the future.

Growth is certainly possible for these businesses and we ourselves are pivoting to ensure that we have the most appropriate and capable tools available at your disposal so that you can take charge of the situation.

At Glance Consultants, we look forward to striving towards excellence and enjoying the ride with you. 

Call us now on 03 98859793 

Tax offsets for the low/middle income earners

 

With the upcoming elections looming, a few concessions have been put on the table, including the extension of the popular tax offset for low and middle income earners. 

The low and middle income tax offset (LMITO) was previously set to expire in 2020, but due to the pandemic has already been extended. 

The LMITO gives all eligible Australians a $1,080 tax benefit when they lodge their tax returns on time. This is a huge boost for those who are financially more vulnerable than others and a welcome blessing where working restrictions caused by lockdowns and financial uncertainty through inflation can cause worrying times. 

It is now set to expire on 20 June 2022 and there are hopes that although the Prime Minister did not commit to an extension, he did not rule it out either. 

With businesses only now starting to recover from the strain of the past few years, many believe that if you want growth to continue, tax concessions are needed. There is widespread support for the continuation of the LMITO to support those lower income earners still struggling financially because of the pandemic. 

But this tax offset was initially seen as a temporary fix to a growing concern regarding bracket creep, with Phase 2 tax cuts being the permanent solution. 

Phase 2 tax cuts were in fact brought forward from the 2022-2023 income year to the 2021-2022 financial year and the LMITO continued from its 2020 expiration date. We have been reaping the benefits that both provide and unfortunately, concerns of double dipping from a taxation point of view have been raised. 

Tax relief boosts confidence and the entire economy, but the longer this temporary fix remains in place, the more difficult it will be to remove it in the future. 

We look to the government for more clarity on this issue in the coming months, with discussions being made on it closer to the time.

Here at Glance Consultants, we certainly see both the benefits and potential complications that the LMITO offers in conjunction with the Phase 2 tax. Call our office on 03 98859793 or fill out our contact form.

How business spending changed during the pandemic

 

After looking through the last 18 months of data, we are able to make evaluations regarding many of the habits that businesses and customers adopted throughout the pandemic. Spending is one such habit that provides us with a lot of information. We can determine customer, business confidence and resilience throughout turbulent times.

The Australian Business Spending Report, included in the overall Business Health and Habits Report of 2021, revealed that Australian businesses continued to show increasing resilience to the economic effects of the lockdown.

Three lockdowns were analysed. Lockdown 1 was from March to May 2020, lockdown 2 from June to October 2020 and lockdown 3 covers June 2021.

Here are a few key points that we have seen.

  • Lockdown hit smaller businesses the hardest
  • Average spending plummeted after the announcement of the first lockdown, as it did almost everywhere across the globe
  • But by mid 2020, a change was seen and by December 2020, spending had increased past pre-pandemic levels
  • For most sectors, transaction spend is now higher than it was before pandemic conditions occurred.

Supplier spending was assessed between key suppliers Telstra, Metcash and Symbion. For Telstra, following a 57% spending decrease during the first lockdown, it has yet to recover to the same level. Spending in Feb 2021 is down 64% year on year.

However, Metcash and Symbion are a little different. There was an increase in spending following the first March 2020 lockdown, with trends continuing upwards. This is to an astounding increase of 231% for Metcash in March 2021 year on year.

Transportation spending after taking an initial lockdown hit has climbed to new highs, with the report citing FedEx experiencing a huge increase of 1166% in August, compared to a relatively low average spend in 2020, including pre-pandemic.

Most industries were hit with a sharp drop in spending during the March 2020 lockdown, with property spending the most volatile. Not surprisingly, digital marketing grew each lockdown, but was an outlier in the general advertising industry, with spending down 9% year-over-year.

Specific businesses, such as Zoom, saw spending increase to accommodate for growing customer demand.

We take a keen interest in spending data to understand the trends in Australia’s business economy. It gives valuable insight and allows us to make forecasting models designed to support your business. Let’s look at ways to ensure you are as confident as you can be with your business’s financial health for 2022.

 

Government release rules on new super portfolio holdings

 

Transparency is becoming more important to Australians. The government has recently released new rules ensuring that all super funds are to disclose their portfolio holdings to members. 

This means that Australians will have access to the information regarding how superannuation funds are utilising their funds, where and how they are investing it. This clarity can give people more confidence over the process, a feeling of more control and a deeper understanding.

In particular, the regulations require that superannuation funds disclose information about their identity, value and weightings of their investments. This was confirmed by superannuation minister Jane Hume. 

She went on to say that all members will be able to clearly see where their money is being placed. That they will be able to see how much of their retirement savings are being invested across a diverse range of asset classes and derivatives. 

Under the regulations, superfunds need to report their first holdings by 31st March 2022, with disclosure statements occurring every 6 months or so. It was found that our current system was painfully opaque and did not meet global best practice. 

Superannuation funds have become an important part of Australia’s financial system, so it is necessary for us to have the ability to understand the use of derivatives, for example, and any implications on our financial system that could come as a result. 

It also allows local funds to be able to compete on an even footing in the global market. 

This all means that investment considerations made by Australians can continue to have a positive influence on their future and as a result, on the economy.

The team at Glance Consultants are happy to discuss the impact of these changes with you. Call our office on 03 98859793 or fill out our contact form.

 

Do I need a Director ID?

 

Being introduced in November 2021 in Australia, a Director ID is a way in which to detect unlawful activity. If you’re a company director, take a look below.

 

What is it?

A Director ID is a 15 digit identifier that all Australian company directors will need to possess. It is unique to that person and will follow the individual across any companies that they are a part of.

 

Why are they being introduced?

They are designed to track the activity of directors, rather than just the company. This is so any unlawful behaviour can be more easily identified and stamped out.

Phoenixing is one such illegal activity that will be tracked and eliminated with the introduction of the Director ID in Australia. This is when a director transfers assets from one company to another with the intent of avoiding debt. They continue their business under a new company name whilst the original company goes into liquidation.

 

Do I need one?

If you are the director of an Australian business, a registered foreign company, a registered Australian body or Aboriginal or Torres Strait Islander corporation, then yes. You will be required to register for and receive a Director ID in the coming weeks and months.

If you run a business as a sole trader or partnership or you are the director of an incorporated association without an ABN, a company secretary or acting as an external administrator of a business or are registered with the Australian charities and Not-for-profits commission, then you are not required to apply.

 

How do I apply?

You must apply yourself because part of the process is confirming your identity. This doesn’t mean you need to do this on your own, the team at Glance Consultants can help you through this new process.

You can apply online, by phone on 13 62 50, or through the post. Please have all relevant, identity documentation handy with certified copies being included with any postal forms.

Applications are open for the Director ID from the 1st November 2021. We encourage all directors to get onto this immediately for peace of mind and again.

You have until November 30 2022 to receive your Director ID. For new directors between now and  April 4, 2022, you have 28 days to apply and those who become a director of a company from the 5th of April 2022, they must have a Director ID before their appointment as a Director.

For more information please contact Glance Consultants on 03 9885 9793

 

 

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