New tax policy set to hit Australia’s wealthy

Wealthier individuals in Australia may have to pay higher taxes on their superannuation in the near future, with the government hinting that superannuation tax concessions will be reorganised to target those who are most at risk of relying on the age pension in retirement.

Industry groups are expected to be advised of the proposed changes this coming week.

Some industry observers believe that the government will tax super contributions at people’s marginal rates minus a discount to ensure everyone receives the same tax benefit on super contributions, regardless of their level of income.

At present, super contributions are taxed at 15 per cent. The presumed discount approach would reduce benefits for the country’s highest-income earners and provide larger tax breaks for low-income workers.

While setting the discount at 15 per cent would save the Australian government $5.8 billion a year, 9.5 million Australians would have to pay more in contributions tax than they do presently.

One alternative to the suspected tax changes would be to reduce the amount of money and individual can save in super. This practice would immediately decrease costs and lower the cost of tax breaks over earnings in the future because the amount of money covered when people retire would be lower.

Under current superannuation rules, people under the age of 50 can contribute up to $30,000 a year into their super accounts.

Customer acquisition mistakes you might be making

It can be easy to waste a lot of time and money investing in the wrong marketing channels. But a business can only thrive through smart marketing. Here are five common mistakes that can emerge through the customer acquisition process you should avoid:

Assuming first-time visitors will become loyal customers
Savvy customer engagement involves retargeting. Once you have attracted a customer to your website, for example, make sure you retarget them again by including a call to action, which will provide an invitation to interact with a brand.

Getting impatient about ROI
New products need time to attract the interest of customers. When $1,000 spent in marketing doesn’t result in a $1,000 return one week later, don’t implement drastic changes.

Customer acquisition can be a lengthy process; from the moment a new customer discovers your brand until they choose to buy something, they are likely researching competitor and looking for discounts. So be patient.

Setting the financial resources bar too low
Many new businesses have unrealistic expectations about how much money it takes to bring in prospects. Entering a new market also comes with a price tag. Be prepared to pay for the learning curve. Venture into unknown business territory with caution and realistic expectations.

What are profit drivers?

Profit drivers are determinants that have a significant impact on a business’s bottom line. They are often categorised as financial and non-financial drivers.

Financial profit drivers are directly connected with dollar figures and are most commonly considered in relation to profit. Examples of financial profit drivers include:

• price

• fixed and variable costs

• sales volume

• inventory

• cost of debt

Non-financial profit drivers also impact a business’s bottom line, even though they’re not expressed in dollar terms. Client satisfaction and bad weather are two examples of non-financial profit drivers that can have an impact on sales and an increase or decrease profit. Non-financial profit drivers include:

• productivity

• client satisfaction

• quality of a product or service

• training of employees

• employee satisfaction

• business culture and values

• product and process innovation

• market share

• employee safety

Businesses should keep track of their profit drivers and their relative importance. Working out why they’re important to the success of a business and regularly measuring their impact can help owners evaluate the success of a business’s strategies.

Being smarter, not just smaller

Over the last couple of decades, few things have changed the landscape for small businesses as much as the advent of huge megastores. Small businesses now need to get consumers to understand the importance and benefit of buying local; to recognise the ripple effect on the entire community that local purchases and local businesses have on the economy and what happens when those close.

Small, local businesses also need to get smarter. It is not just enough to complain about supersized stores, you have to beat them. While it’s difficult to survive in today’s retail environment, it’s not hopeless, and many small companies are managing to thrive. Here’s what the survivors are doing:

Specialise
Big stores aim at big markets; they can’t afford to market to and serve niche markets. You can. Identify a segment of the market with special needs and tailor your offerings and service for them.

Compete on your terms, not theirs
You won’t be the low-price leader; they will. So don’t try. Instead, clearly differentiate yourself from them. Make the experience of doing business with you as different as possible from going to a superstore. That means you’ll have to be more convenient, more service-oriented, more responsive.

Differentiate what you sell
Offer a mix of products and services that are clearly distinct from the big competitors. Make it hard for a shopper to find the exact same thing elsewhere.

Outsmart them
Big businesses move slowly; you can adapt to new trends and market developments more quickly. Stay abreast of industry and market trends and keep informed. You can’t just take care of day-to-day business; you have to plan a strategy for even the smallest company.

Use inexpensive marketing approaches
Big businesses have to spend a fortune on marketing. Keep your marketing costs low by using approaches such as trade shows, public relations, customer retention and referral programs.

Improve employee training
Megastores often provide better training — at least in sales techniques — to their workers. Small companies often neglect to train their workers adequately. Make sure they know the products and know how to interact positively with customers.

Five tips for creating a successful SMSF

There are many advantages to having a self-managed superannuation fund (SMSF). Increased flexibility and control over your savings are the most obvious benefits, with many SMSF trustees and members appreciating the ability to make their own investment decisions.

Here are five tips that can help set your SMSF up for success in 2016:

 Have a written investment strategy and review it annually
While having an investment strategy is mandatory for all SMSFs, not having one that is adequate enough is a common mistake among most SMSFs. An SMSF’s investment strategy should be specific and suitable for all members of the fund, including adult children or younger spouses whose investment goals may be different from a retiree.

Don’t mix personal assets with your super fund’s assets
Trustees need to manage their fund’s investments separately from member’s personal or business investments and ensure that the fund has clear ownership of its investment assets. To protect fund assets in a creditor dispute  and prevent costly legal action to prove who owns them, assets should be recorded in a way that:

• distinguishes them from your personal or business assets
• clearly shows legal ownership by the fund.

Make sure your fund is compliant
Never forget that you are the person who is in control of your fund. With that control, comes responsibility. You are responsible for ensuring that your trust deed is up to date, your tax returns are submitted on time, your binding death nominations are up to date (or reversionary), your contribution caps are in line with laws and minimum pensions are drawn if in pension mode.

Learn as much as you can
Education is always beneficial when it comes to looking after your money.  There are many websites that have publish information designed to help individuals better understand their SMSF or potential SMSF.

Seek professional advice
If you’re having problems with your SMSF, or you don’t understand how it works, it is important to ask questions. Professional advice can be quite valuable as you learn how to manage your money in the most tax-effective and effective way possible. Always remember that there is no such thing as a silly question when it comes to your money.

How do franking credits work?

Franking credits are a kind of tax credit that allows Australian companies to pass on the tax paid at company level to shareholders.

Franking credits can reduce the income tax paid on dividends or potentially be received as a tax refund.

Where a company distributes fully franked dividends (and those dividends are included in the taxable income of the taxpayer) the taxpayer can claim a credit against their taxable income for the tax that has already been paid by the company from which the dividend was paid.

For example, an individual who owns shares in a company receives a fully franked dividend of $700 from the company. The dividend statement says that there is a franking credit of $300 (the tax the company has already paid). This means the dividend would have been $1,000 ($700 + $300) before company tax was deducted.

At the end of the financial year, the individual must declare $1,000 (the $700 dividend + the $300 franking credit) in their taxable income.

If the individual’s marginal tax rate was 15 per cent, they would have to pay $150 tax on the dividend. But because the company has already paid $300 in tax, the individual receives a refund of the difference, which is $150.

If the individual was in a higher tax bracket, they may not have been entitled to a refund of any of the franking credit, and may even have had to pay additional tax. However, if they are a low-income earner, it is possible to be refunded the full amount of the franking credit.

Using social media as a tool to enhance the business

With everyone jumping on the social media bandwagon, there is no surprise that businesses are using the continually evolving digital platform as a valuable marketing tool.

For those who are yet to be swept up in the hype of our radically changing cyber space, the question is not whether they will join the masses, but when.

With around 1.59 billion Facebook users alone and hundreds of social media sites worldwide, it is impossible to deny its prevalence, and increasing dominance and influence in society.

Because of the internet’s immediacy and anonymity, businesses are able to gain a virtually accurate reading of how customers perceive the business.

Social media allows businesses to gain a real understanding of your customers.  It is also a great platform to throw out new ideas and see how customers respond. What would they like to see from the company, what would they like to be improved, or abandoned altogether.

LinkedIn is a great business networking site for both communicating with the target market and also seeking prospective staff. This site, which is aimed at business professionals, directs potential customers through their connections with others. Each user compiles a list of connections, which they trust and therefore promote to their own connections.

Businesses can also recruit for prospective staff, or request for referrals through their personal network of professionals on LinkedIn.

What to consider before starting an SMSF

There are a lot of advantages to having a self-managed superannuation fund (SMSF). Increased flexibility and control over your savings are the most obvious benefits, with many SMSF trustees and members appreciating the ability to make their own investment decisions.

Other advantages include the possibility of investing in a property, the ability to manage administrative costs, and, in some cases, tax breaks.

However, there are also a lot of responsibilities associated with running a SMSF, and it is not necessarily an advisable choice for everyone. Here are some things to consider if you are interested in starting an SMSF:

• To justify the costs associated with running a SMSF, you should have a relatively sizeable amount, or be anticipating a rapid accumulation of funds. The ATO suggests having a minimum of $200,000, however this is often debated amongst industry representatives.

• If you want to manage your own super, you should have a relatively robust understanding of finance and the confidence to make your own investment decisions.

• Managing your own super fund is generally a time-consuming endeavour. There are many compliance issues you need to be aware of, and you also need to ensure that you remain abreast of any current changes to legislation.

Tax office uncovering Australia’s wealthy

The ATO is currently working with insurance providers in a bid to identify wealthy Australians with policies that cover an expanded range of asset classes.

Last month, the office launched a data-matching program, which involves contacting insurers to distinguish policy owners of various classes of insured assets that are often associated with wealth.

Insurance policies that cover damages or losses related to marine, aviation, enthusiast motor vehicles, fine art and thoroughbred horses will all be coming under the tax office’s radar.

The ATO will use the information gained through the data-matching process to create a more accurate estimate of individual taxpayer’s actual wealth, so the office can provide tailored services to ensure that everyone meets their tax obligations.

The ATO anticipates that it will receive 100,000 records where the different asset classes meet certain threshold amounts.

Elements of modern website design

Modern website design is made up by various elements, styles and designs that change over the years to keep up with user wants, needs and expectations.

Some elements of website design help to explain what a business is and what it does; others serve to improve how a website looks on a specific device.

While it is not necessary to keep up with every trend by including it on your business’s website, many do have the potential to improve a visitor’s experience and keep them coming back for more.

However, with so many options of website design to choose from, it can be difficult for businesses to know which ones are worth considering and will set their website apart from others.

Here are three elements of modern website design that businesses may want to consider including on their websites to improve the site’s performance:

Unique typography
Using a unique style of typography can help customers immediately identify your business against competitors. The typography your website features can indicate subtle hints about who your business is. But make sure you choose a font that is supported by common browsers and computers; not being supported could result in your website displaying awkwardly on different devices.

Large and responsive hero images
A hero image is a large banner image that is prominently placed, usually front and centre, or a website. Responsive hero images can create a strong visual experience amongst readers, encouraging them to scroll down to read more. Ensuring your website’s images are responsive makes for a good user experience. Website visitors should be able to look at different images and get the same experience no matter the device they are using.

Card design
Using individual cards on a website distributes information in a visual way so visitors can easily consume bite-sized pieces of content with feeling overwhelmed with information. Breaking up different pieces of content into cards means users can pick and choose which articles they want to expand. This helps keep a website’s homepage feeling clean and organised.

Card design is becoming more popular across websites because it delivers chunks of information for users that are easy to read and understand. The design can help highlight multiple products or solutions.