Illegal super schemes

Australian taxpayers should be aware that some promoters claim to offer early access to super savings by transferring a person’s super into a self-managed super fund.

These schemes are illegal and heavy penalties will apply to those who participate in such schemes.

Generally, individuals cannot access their super until they retire or meet a condition of release.

Some people promoting illegal super schemes will say that they can help access a person’s super now to pay off credit card debt, buy a house or car, or go on holiday. These schemes are illegal and may cost those who engage in them a lot more than the super they access.

Illegal super schemes usually involve a promoter offering to help a person access their super early. Promoters of illegal super schemes usually:

• encourage people to transfer their super from their existing super fund to a self-managed super fund (SMSF)

• target people who are under financial pressure or who do not fully understand Australian superannuation laws

• claim that a person’s super can be used for anything (which is not true)

• charge high fees and commissions

Those who participate in one of these schemes may become a victim of identity theft. Identity theft happens when someone uses another person’s personal details to commit fraud or other crimes. Once a person’s identity has been stolen and misused, it can take years to fix.

Quarterly GST reporting

Businesses with a GST turnover of less than $20 million who have not been asked by the ATO to report their GST on a monthly basis can report and pay their GST quarterly. Businesses who report and pay their GST quarterly have three reporting options:

1. Calculate and report GST quarterly
This option allows businesses to calculate, report and pay their actual GST amounts quarterly. Businesses can use either the accounts method or the calculation worksheet method to work out their GST outlay. Business owners must report amounts at the following labels on their activity statement:

• total sales (G1)

• export sales (G2)

• other GST-free sales (G3)

• capital purchases (G10)

• non-capital purchases (G11)

• GST on sales (1A)

• GST on purchases (1B)

Those who have a WET or LCT liability or entitlement must also report these amounts each quarter (labels 1C, 1D, 1E and 1F).

2. Calculate GST quarterly and report annually
This option allows businesses to report less information on their quarterly BAS, but still calculate and pay their actual GST amounts quarterly. Owners can use either the accounts method or the calculation worksheet method to work out their GST amounts. Business owners must report amounts at the following labels on their quarterly activity statement:

• total sales (G1)

• GST on sales (1A)

• GST on purchases (1B)

Those who have WET or LCT obligations must also report these amounts each quarter (labels 1C, 1D, 1E or 1F).

Business owners must also complete an Annual GST information report to report annual amounts at the following labels:

• export sales (G2)

• other GST-free sales (G3)

• capital purchases (G10)

• non-capital purchases (G11)

3. Pay GST instalments quarterly and report annually
This option is available to all businesses with a turnover of $2 million or less. Those who choose this option will pay a quarterly GST instalment that the ATO determines and will report their actual GST information annually on an Annual GST return. Business owners must report amounts at the following labels on their Annual GST return:

• total sales (G1)

• export sales (G2)

• other GST-free sales (G3)

• capital purchases (G10)

• non-capital purchases (G11)

• GST on sales (1A)

• GST on purchases (1B)

Those who have WET or LCT obligations must also report these amounts on their Annual GST return (labels 1C, 1D, 1E or 1F).

Making the final hour of your workday the most productive

Office productivity is not a sprint; it’s a marathon. And while some people are blessed with the power of concentration, most of us aren’t. By the time the workday starts winding down, a person’s willpower badly needs replenishing. That’s why it is so hard to finish the day as strong as it was started.

Luckily, forming habits can help preserve a person’s willpower. Creating and following a specific routine can help you get the most out of your last hour at work without having to think about it too much.

Here are six strategies (broken up into two categories) every worker can implement at the end of the working day:

Before the last hour

1. Check your emails: Review any unread messages and respond to the ones that need to be addressed before the end of the day. Mark the remaining emails requiring a response as unread so you remember to deal with them later.

2. Leave your communication channels: Signing out of your inbox and leaving other messaging applications is crucial to keeping your concentration. Not being able to view your notifications means you’re not left wondering what they’re about and thus, avoiding being distracted.

3. Take a quick break: Take a couple of minutes to drink some water, eat a healthy snack or go to the bathroom. Make sure you stretch your legs, as you’ll need to stay put to ensure the last hour is as productive as possible.

During the last hour

4. Reprioritise your to-do list: Use this time to assess your list. Identify what is most important and what could be pushed to tomorrow. See if there is anything that can be entirely removed from the list. If you need to, move items so you can determine what your real priorities are.

5. Review tomorrow’s schedule: Before you get to work on the next step, make sure there’s nothing you’ve forgotten about today. Have a quick glance at your schedule for the next day to gain a sense of how busy you’ll be and what priorities will need to be addressed.

6. Do the thing: Pick the most important of your priorities to finish now and leave everything else for later. Spend the last hour making as much progress as you can.

The advantages and disadvantages of family SMSFs

Many small business owners who run a family business and are nearing retirement face the significant decision of whether to include their adult children in their self-managed super fund (SMSF) as part of their personal and business succession planning.

Including children in a family SMSF can have a critical impact on family relationships and finances, especially if parents and adult children work together and share ownership of a family business.

While potential benefits exist through well-planned intergenerational SMSFs, it is crucial for owners to compare the possible advantages and disadvantages of intergenerational SMSFs.

Potential advantages

• Estate planning and business succession

A popular strategy among family business owners is to hold their business premises in a family SMSF indefinitely so the ownership and management of the business can pass to the next generation. This strategy can also help build-up enough assets in the SMSF to be used to pay out the parents’ retirement and death benefits if necessary.

• Cost minimisation

Having two generations of a family in the same SMSF means a fund’s fixed costs are shared over a greater number of members.

• Assistance in running the fund

Including adult children in ageing parents’ SMSF can help when making administrative and investment decisions for the fund. For example, parents can grant their children the authority to become their enduring power of attorney to make any financial decisions should the parents lose their mental capacity.

Potential disadvantages

• Family conflicts

Family conflicts can include disagreements over investment choices or family business decisions, break-up of parents’ or adult children’s marriages or even personality clashes. Family conflicts can also trigger the division of fund assets and, sometimes, the forced sale of fund assets.

• Different investment goals and ideas

Differences in investment goals and ideas can make running an intergenerational SMSF quite difficult. While it is possible to run different investment segments for different members depending upon a fund’s trust deed, this can add further costs and complications.

• Limit on SMSF membership

The four-member limit on SMSF membership can be quite an obstacle for families with three or more adult children. A way of dealing with this limit is to have multiple intergenerational SMSFs within the same family, which are called “parallel” funds.

Under such an arrangement, parents are usually members of all the family’s SMSFs. The funds typically have a share in the same assets such as business premises.

Preparing for the FBT year-end

With the end of the fringe benefits tax (FBT) year fast approaching, business owners need to be aware of the FBT and gross up rates when preparing for their FBT return.

The FBT rate increased from 47 per cent to 49 per cent from 1 April 2015. The rate increase was due to the introduction of the Temporary Budget Repair Levy imposed on individuals for a two year period (1 April 2015 to 31 March 2017).

Consequently, the gross up rates were increased from 1 April 2015 to 2.1463 for Type 1 benefits (GST-creditable benefits), and 1.9608 for Type 2 benefits (no entitlements to a GST credit).

The FBT rate will return to 47 per cent from 1 April 2017, as a result of the discontinuation of the Temporary Budget Repair Levy. The gross up rates from 1 April 2017 will be 2.0802 for Type 1 benefits and 1.8868 for Type 2 benefits.

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.

Improving employee attendance

Employee absenteeism can create an unhealthy business culture and burden your workplace with lost productivity and high replacement costs. It can become a sensitive issue for employers to deal with and when not managed properly can escalate into a chronic issue frustrating both employers and other staff members who do the right thing.

Here are some ways to tackle employee absenteeism in your business:

Highlight attendance expectations
To help eradicate attendance issues, employees first must be made aware of their attendance expectations and the consequences of their non-attendance on other staff members and productivity. A clear policy should be implemented with explanation of the procedures to follow when absent such as:

• Who the employee should inform of their absence, for example, their manager. It should be clear how they are expected to contact them, for example, a phone call rather than a text message.

• The employee should advise the contact person within a certain time frame of the nature of their illness and when they expect to return to work.

• If a medical certificate or statutory declaration is required, employers must keep up to date with employment laws regarding evidence requirements, as it may be considered unreasonable to request employees produce evidence in some circumstances.

Analyse records and identify trends
Keeping track of when employees are absent can help to identify patterns such as certain days of the week that employees are absent, or whether it is before or after a public holiday. Monitoring trends can assist in identifying whether there is a problem and if it is appropriate to discuss the issue.

Improve your communication
Communicating with employees is in a business’s best interest to better understand employee’s needs and situation. Effective communication can help identify root causes of excessive sick leave, such as family issues, not coping with workload, drug and alcohol problems and so forth.

Succession planning for SMSF trustees

A responsibility that does not immediately spring to mind when managing a self-managed super fund is working out what will happen if a member becomes incapacitated and unable to perform their trustee duties.

Succession planning for an SMSF can become quite complicated if not managed on an ongoing basis. It not only requires having a plan; trustees also must stay in touch with Australian superannuation rules as time passes.

Finding a replacement trustee can be difficult, and since appointing a replacement trustee, whether as an individual trustee or director of a corporate trustee, gives that person control over the super fund’s assets; particularly its investments and bank accounts, trustees should choose wisely.

Some may opt to appoint an enduring power of attorney (EPoA) as a replacement trustee. An EPoA is someone who is appointed to look after a member’s interests if they can’t do it themselves and can assume the member’s responsibilities (if that is how the fund is structured).

However, for an EPoA nominee to be appointed, legal documents i.e. the succession documents appointing the replacement director must be in place before the member loses their capacity to be a member.

A common misconception surrounding SMSFs is that a trustee’s legal personal representative (LPR) who is appointed under an EPoA can immediately assume the role of trustee of a self-managed super fund.

This is not entirely true, and ultimately depends on the provisions of the fund’s trust deed and whether there are appropriate legal documents in place to make this happen.

Essentially, a fund’s trust deed and corporate trustee company constitution should include the ability to easily appoint a successor trustee or director who assume the role of a member, should that member lose the capacity to perform their trustee duties.

Managing flexible working arrangements

In a rapidly changing business environment, it is essential that owners of small businesses get flexible working schemes right. Today’s employees continue to look for more balance between their personal and work lives. While some employers may think this may have a negative effect on their business, flexible working arrangements have been shown to benefit both the employee and the business they work for.

Nonetheless, it remains the employer’s responsibility to address how flexible working arrangements can be implemented in their business so all employees remain happy and satisfied. Here are some suggestions as to how employers can manage flexible working within their company:

• Get to know your employees

No two employees are the same, which means employers shouldn’t take the same approach to every situation. Some workers may need to modify their working hours due to parental commitments, and some others may be more proactive with work if they are allowed to work remotely due to travel time or mobility issues.

• Implement a system for reviewing performances

If flexible working arrangements will see employees working more outside the office than inside, then it is vital for employers to keep communication consistent. Scheduling regular performance reviews and using a system to calculate work productivity can make employees more productive since they have measurable targets to aim for.

• Recognise your legal obligations

Flexible working schemes are also an obligation under Fair Work Australia. Employers must recognise that there are statutory legal requirements that cover flexible working arrangements for people like parents, those living with a disability and those who are 55 years or age, or older. Therefore, employers need to have the latest updated legal documents, contracts and processes to ensure their business continues to work within legal requirements.

Avoiding CGT in your SMSF

It may be beneficial for trustees who buy and sell assets through their self-managed super fund to start a transition to retirement pension to escape the burden of capital gains tax.

Capital gains are profits that an SMSF makes on the sale of an asset. Capital gains tax (CGT) is a tax on the profits that a fund, or an individual, makes on the sale of an asset. According to the ATO, CGT refers to the income tax an SMSF pays on any net capital gain it makes e.g. when the fund sells an asset as part of a CGT event, the fund becomes subject to CGT.

While CGT is payable in Australia’s superannuation environment, different rates apply to different situations.

Before a pension is established within an SMSF, any assets the fund has held for less than 12 months will be taxed at 15 per cent, and assets the fund has held for more than 12 months will receive a 33 per cent discount. Therefore, the CGT rate will be 10 per cent.

Once an SMSF trustee is in pension mode, there will be no CGT payable on any transactions. This also goes for all account-based pensions and all transition to retirement pensions, making it one of the main reasons why putting money into superannuation as the lower tax rate will guarantee better returns.

For the reason outlined above, it may also be in a trustee’s best interest to start a transition to retirement pension as soon as they turn their preservation age, which is currently 56 years old.

The email metrics your business should be tracking

At the end of the day, it doesn’t matter how optimised your business’s emails are if you can’t track the results of your efforts.

Before sending an email, businesses should review the purpose of their email marketing and figure out which metrics they will need to track to determine how they’re progressing toward their overall goal.

Since the goals of email marketing campaigns will differ from business to business, here are three basic metrics every business should be paying attention to, regardless of their overall goal:

Click-through rate (CTR)
An email’s click-through rate is the percentage of email recipients who clicked on one or more links contained in an email. To calculate an email’s CTR, businesses need to divide an email’s total clicks by the number of emails delivered e.g. 500 total clicks ÷ 10,000 delivered emails = 5 per cent CTR.

CTR lets businesses quickly calculate the performance of every individual email they send. CTR is an important metric for all businesses engaging in email marketing to track, as it provides a direct insight into how many people on their email list are engaging with the email’s content and are interested in learning more.

Conversion rate
An email’s conversion rate is the percentage of email recipients who clicked on a link within an email and completed a desired action, such as downloading a newsletter or purchasing a product.

An email’s conversion rate is tied to the email’s call-to-action, and since the email’s call-to-action is linked to the overall goal of the email campaign, the conversion rate can help determine the extent to which a business is achieving its objectives.

Bounce rate
The bounce rate is the percentage sent emails that could not be successfully delivered to the recipient’s inbox. There are two types of bounce rates businesses should track; “hard” bounces and “soft” bounces. Soft bounces happen due to problems with valid email addresses, such as an inbox being full or an issue with a recipient’s server.

Hard bounces happen due to invalid, closed, or non-existent email addresses. It is critical that businesses immediately delete hard bounce addresses from their email list as internet service providers (ISPs) use bounce rates to determine an email sender’s reputation. A sender with a high hard bounce rate will look like a spammer in the eyes of an ISP.