Creating an office of problem solvers

One major key to success is the ability to problem solve. Knowing how to respond to and resolve issues that arise creates stronger, more effective businesses. Whilst employees ought be highly skilled in their given fields, one trait that is truly invaluable is that of problem solving. As an employer, there are tips you can follow to encourage and develop the problem-solving abilities of your staff:

Trust your employees
There is nothing more damaging than micromanaging when it comes to building efficient problem solvers. When employees feel trusted and valued, they are more likely to challenge themselves when seeking out new and effective ways to resolve an issue that has arisen. Set goals for your staff rather than giving them rigid instructions to follow; you will lesson your own workload and you will be amazed at what solutions they can come up with.

Always look for hidden opportunities
We often follow the mantra, ‘if it’s not broke don’t fix it’. A problem arising in one area is actually a great opportunity to refine and improve existing surrounding processes and strategies. By viewing a problem arising as an opportunity to develop and strengthen the business, solving the problem often become less about what was failing to work and more about how much more efficient the process can be made.

Facilitate creativity
When employees are inspired to be creative, they are more likely to think abstractly and laterally, which is ideal for problem solving. This can be achieved through simple changes to the workplace, such as incorporating plant life, art, colourful furnishings; and providing opportunities to break up the monotony of a long day in the office through fun and quick activities such as tic, tac, toe or connect four.

Encourage effective communication
Fostering a workplace where employees are encouraged to speak their mind openly and honestly rather than one where employees only say what they think you want to hear is critical for effective problem solving. An environment where peer brainstorming and peer reviewing is encouraged is one where employees learn to think critically and build resilience.

Who is a ‘related party’ in an SMSF?

Self-managed super funds (SMSFs) have a number of investment restrictions which apply to transactions conducted within the fund.

One such restriction applies to transactions involving ‘related parties’ of the fund and ‘relatives of members.’

No one associated with the SMSF should obtain a present-day benefit from the fund’s investments. The fund needs to meet the ‘sole purpose test’ of providing death or retirement benefits to the SMSF members or their dependents.

A breach to the investment restrictions may result in significant penalties, such as the disqualification of a trustee and even prosecution.

The Tax Office considers a ‘related party’ as:

• all members of the fund

• associates of fund members, including:

           – relatives of each member

           – the business partners of each member

           – any spouse or child of those business partners

           – any company the member or their associates control or influence

           – any trust the member or their associates control

• standard employer-sponsors, which are employers who contribute to your super fund for the benefit of a member, under an arrangement between the employer and a trustee of the fund

• associates of standard employer-sponsors, which include business partners and companies or trusts the employer controls (either alone or with their other associates) and companies and trusts that control the employer.

The ATO considers a ‘relative of a member’ as a parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descendant or adopted child of the member or their spouse; or a spouse of any individual specified previously.

Generally, SMSFs cannot borrow money and cannot buy assets from, or lend money to, fund members or other related parties (although there are exceptions to this rule).

ATO to report unpaid debts to credit agencies

The Mid-Year Economic and Fiscal Outlook 2016-17 (MYEFO) announced that from 1 July 2017, the ATO will disclose tax debt information of businesses who have not effectively engaged with the ATO to credit reporting bureaus.

The new measure is aimed at enhancing the integrity of the tax system and ensuring businesses who are not compliant do not gain an unfair competitive advantage over those businesses who are.

The ATO will initially pass on unpaid debts from businesses with an Australian Business Number and with a tax debt of more than $10,000 which is at least 90 days overdue.

In addition, the Government will provide $1.6 million to establish a Black Economy Taskforce to develop an innovative, whole-of-government policy response to this problem. Black economy activities disadvantage honest taxpayers, undermine the integrity of Australia’s tax and welfare systems and reduce the amount of revenue collected by governments.

Offering employees non-cash benefits

Most small business owners would love to be able to offer their more valuable employees a pay rise.

Increasing an employee’s pay is likely to reduce staff turnover, increase job satisfaction and boost productivity by raising motivation and commitment.

Unfortunately, most small business owners are simply not in a position to offer their staff a larger pay packet. However, there are a number of non-cash benefits that you may care to consider as an alternative course of action for recognising and rewarding good work.

These non-cash benefits may not have a dollar value. For example, allowing employees to work from home once a week or rearranging their working hours to better suit other commitments. Non-cash benefits may also have an identifiable dollar value, and in this case employers need to be aware of fringe benefits tax (FBT) before they decide to offer a non-cash benefit.

Non-cash benefits that attract FBT include, but are not limited to, personal use of a company car, cheap or interest-free loans, and entertainment in the form of food and drinks. Typically, where an employee is provided with a fringe benefit, the cost of the benefit is deducted from their gross (before tax) pay and the employer must pay FBT on this amount.

Most employers will pass this tax cost onto the employee. In most cases, FBT will not apply to benefits that are provided to independent contractors.

There are also some types of benefits that are not subject to FBT or receive an FBT concession, including some types of work-related items, living away from home allowances, and benefits that are classified as ‘minor benefits’ (less than $300).

Investing on arm’s length

Running a self-managed super fund requires trustees to adhere to complex laws and follow a number of onerous rules.

One of the most fundamental investment rules for SMSFs is that the trustees must transact on an arm’s length basis to ensure no conflict of interest arises. An arm’s length transaction requires trustees to conduct on a commercial basis as if there was no relationship between the parties.

This means the purchase and sale price of fund assets should always reflect the true market value of the asset, and the income from the assets held by the fund should always reflect the true market rate of return.

SMSF trustees must obtain independent valuations for assets which are not listed on a public market. Furthermore, if a SMSF sells an asset to a related party or member of the fund, the sale price must be at market value.

Any non-arm’s length income is taxed at the highest marginal tax rate. The ATO considers non-arm’s length income as income which is derived from a scheme in which the parties were not dealing with each other at arm’s length and if it is more than the SMSF might have been expected to derive (if the parties had been dealing on a arm’s length basis).

Preparing for the FBT year-end

With the fringe benefits tax (FBT) year ending 31 March 2017, now is the time for business owners to get their FBT affairs sorted.

When calculating FBT liability, employers must gross-up the taxable value of benefits provided to reflect the gross salary employees would need to earn at the highest marginal tax rate (including Medicare levy) to buy the benefits after paying tax.

To calculate fringe benefits taxable amounts, employers must use two separate gross-up rates:

• Type 1: Higher gross-up rate is used where employers (or other benefit providers) are entitled to a GST credit for GST paid on benefits provided to an employee. The type 1 gross-up rate for year ending 31 March 2017 is 2.1463.

• Type 2: Lower gross-up rate is used where there is no entitlement to a GST credit. The type 2 gross-up rate for year ending 31 March 2017 is 1.9608.

The FBT rate for the year ending 31 March 2017 is 49 per cent.

Whether the benefits provided to the employee are type 1 or type 2, only the lower gross-up rate is used for reporting on employees’ payment summaries.

Social media etiquette

There is no denying that social media is fast becoming the most powerful way for businesses to communicate with their existing and potential customers.

Although it has become a new approach to communication, businesses should always remember to treat their customers as if they were dealing with them face-to-face.

Here are some important rules to remember when using social media for business:
Fill out details
Fill out the profile information completely, providing the name of the business, a way to make contact and some information on what services and products the business offers. This will assure the customer that the businesses profile is legitimate.

It is important to have an appropriate profile picture such as the company logo so that clients are able to easily identify with the brand. It is not a good idea to have the same profile for both business and personal use. Creating separate accounts will keep clients separated from friends and ensure that the business maintains a professional image.

Use manners
It may seem simple, however treating clients with respect online can go a long way. Things as simple as saying ‘please’ and ‘thank you’ can give a positive image of the business. It doesn’t matter that the interactions are occurring behind a screen, clients should be treated exactly how they would in person.

Offer something of value
Use the social media platforms to engage with customers and offer them something of value. Clients will become quickly bored with images and posts only about the business. Don’t just restrict content to only focus on the business, interact with clients about current events or topics that are relevant to the business, or find interesting quotes and images to share. Facebook and Instagram are also key platforms for offering competitions or giveaways. Clients will be eager to be active on the profile if they are getting something out of it as well.

Don’t over-share
Although businesses are keen to be active on social media to ensure that they are reaching their target market, this can be just as bad as not posting at all. No-one likes the friend who barrages their page with multiple posts a day and the same goes for businesses. Keeping posts to one or two a day will keep the business active on their clients feed; however will not annoy them enough so that they click ‘unfollow.’

It is a good idea for businesses to implement a content plan and map out when, and what, they will post to each social media platform. Also, think about the best time to post for the target audience. For example, if the business targets professionals it would be ideal to post in the morning and afternoon when they are commuting to work as they are likely on their own personal social media pages.

Reread what is written
Consider composing tweets or posts in a word document before posting them. This allows time to edit the text for grammar and spelling mistakes. Also, remember that the Internet never forgets and one post in the heat of the moment can go viral, damaging the reputation of a business and losing a lot of clients.

Tips for successful networking

Whether you are looking to make new contacts in your industry or searching for your dream job; networking is essential to forming new relationships and expanding your connections.

Here are three ways to improve your networking skills:

• Listen

Networking is all about building relationships. One of the best ways to establish a connection faster is to simply listen to the other person with no interruptions. Listening helps to understand the other person’s concerns and identify opportunities where you can offer them value.

• Ask for an introduction

Ask friends and acquaintances for introductions to people they know or people who you would like to meet. Being introduced through someone else can help ease nerves and take the pressure off approaching a stranger.

• Prepare questions

Preparing a few ice-breaker questions can help to get the conversation going and avoid small talk. If you are attending a networking event, do some research ahead of the event about the people who will be there and formulate your questions around their interests, knowledge etc. Having a list of well-prepared questions also helps to increase your confidence and demonstrate your enthusiasm.

Transitional CGT relief for SMSFs

Self-managed super funds can access Capital Gains Tax (CGT) relief to provide temporary relief from certain capital gains that might arise as a result of individuals complying with the transfer balance cap, and Transition to Retirement Income Stream (TRIS) reforms, commencing on 1 July 2017.

Easier GST reporting for food retailers

Many small food retailers buy and sell products that are both taxable and GST-free. Depending on the point-of-sale equipment used, identifying and recording these sales can be difficult for business owners.

The ATO has introduced a series of simplified accounting methods (SAMs) to make it easier to account for GST and work out the amount of GST that is liable at the end of each tax period.

There are five SAMs to choose from. The SAM you choose will depend on your business’ turnover, the nature of your business and the nature of your point-of-sale equipment (except for the purchases snapshot method).

These methods help you work out the information you need to correctly complete the GST section of your activity statement. However, they can only be applied to sales and purchases of trading stock.

Here is a summary of the five SAMs you can choose from:

1. Business norms

Turnover threshold: SAM turnover of $2 million or less.
How you estimate your GST-free sales and/or purchases: You apply the standard percentages to your sales and purchases.

2. Stock purchases

Turnover threshold: SAM turnover of $2 million or less.
How you estimate your GST-free sales and/or purchases: You take a sample of purchases and use this sample.

3. Snapshot

Turnover threshold: SAM turnover of $2 million or less.
How you estimate your GST-free sales and/or purchases: You take a snapshot of your sales and purchases and use this.

4. Sales percentage

Turnover threshold: GST turnover of $2 million or less.
How you estimate your GST-free sales and/or purchases: You work out what percentage of GST-free sales you made in a tax period and apply this to your purchases.

5. Purchases snapshot

Turnover threshold: GST turnover of $2 million or less.
How you estimate your GST-free sales and/or purchases: You take a snapshot of your purchases and use this to calculate your GST credits.

After electing to use a SAM, you cannot change your method of GST accounting in the first 12 months.