Boosting your super contributions

Superannuation is still one of the best ways to accumulate savings for retirement. To make the most of your super, members need to be ‘super savvy’ and be aware of tax-effective strategies that can help boost their super and achieve their financial goals.

1. Review your super fund and insurance options to determine if it is the right fund for you. If you have ever had more than one job, it’s likely that you also have more than one super fund. Consolidating could lower your fees and make a big difference to your end balance.

2. Salary sacrificing is a great way to grow your super and minimise tax at the same time. Advise your employer to allocate a portion of your before-tax salary into your super account, which are only taxed at a maximum of 15 per cent.

3. Spouse contributions, where you contribute an amount to your partner’s super, can help reduce your family’s annual tax bill.

4. Be aware of the contributions caps. The Government recently made changes to the treatment of excess non-concessional superannuation contributions, which may affect how much you contribute each year.

5. Take advantage of Government co-contributions. Individuals who earn less than $49,488 per year and make a non-concessional contribution to their super are eligible for a Government co-contribution.

Self-managed super fund mistakes to avoid for EOFY

It is important for investors to have a good understanding of their SMSF to help reduce tax bills and maximise their wealth. To avoid being issued an SMSF audit by the ATO, investors should take the following advice on board:

– Read the trust deed to gain a better understanding of how the fund works.

– Have a regularly revised investment strategy, which takes into consideration liquidity, risk and return, diversification, meeting liabilities and insurance.

– Update binding death nominations to ensure that trustees pay the income and capital of the trust to intended beneficiaries.

– Utilise the transition-to-retirement pension if you’re still working and aged between 55 to 64. Any assets invested in a pension are free from capital gains tax and earnings tax. Also, investors will be able to reduce their mortgage and increase their tax-free contributions.

– Optimise contributions into the SMSF. Investors who turned 49 on June 30 last year are eligible to invest $35,000 into their fund and claim a deduction. The contribution limit remains $30,000 under that age. Self-employed members can contribute a lump sum, but if they are employed under a salary arrangement, they must have salary sacrificed that amount during the year.

– Submit SMSF tax returns on time.

ATO cracks down on holiday homes

The ATO is targeting holiday-home owners who are over-claiming on tax deductions for periods when their property isn’t being leased.

Some owners have been rejecting tenants so that their holiday home is available for them to use. They provide their accountants with authority to rent documents to make it appear that they are trying to rent the house. They then use the tax deduction to claim ongoing property maintenance costs to upkeep it for potential tenants.

For example, an investor rented out their holiday home to friends and family at a lower-than-market rate and tried to claim a deduction.

The ATO has risk detection models in place to alert them when taxpayers have unusual rental income and deduction patterns compared to taxpayers with properties in similar locations. The tax office is advising investors to keep thorough records and only claim on a deduction when they have made a reasonable effort to get tenants in their holiday home.

Avoid these 4 business plan mistakes

A business plan is like a roadmap, essential for keeping owners focused and on the right track. Unfortunately, many inexperienced owners often send business plans to investors before they are ready to be shared. Below are four common business plan mistakes to avoid when writing up a business plan.

Unrealistic financial projections: If a plan doesn’t have a realistic financial picture of the anticipated growth of a company, then it may be shelved by investors. Owners must be realistic with their financial projections, and make sure they are consistent with any growth in the industry.

No defined target audience: A business cannot appeal to ‘everyone’. Business plans must clearly define their market and potential customers, and include evidence as to why customers would buy the product or service.

Poor research: The research a business plan is based on must be accurate, up-to-date and verifiable. A plan based on little or poor research can lose much of its credibility.

Not addressing the competition: A business plan cannot ignore the competition, or be under the impression that there is no competition. Plans should clearly outline who the competition is and how the business will perform better than its rivals so it can capitalise on it’s advantages.

The seven numbers every business should know

Every small business should keep a close watch on the seven basic figures that can help predict business success. Businesses that do not take these numbers into consideration will never be able to progress as quickly as they should.

1. Cash flow
Cash flow gives business’s an overview of the economic state of the business. Small business owners should always make sure they have the necessary cash flow to meet all business expenses.

2. Net income
Just like cash flow, a business’s net profit provides a good indication of whether a business is earning or losing money.

3. Profit and loss
Knowing the profit and loss of a business can assist owners in making realistic short term and long term plans for the future.

4. Sales
Monitoring sales is important, as increases or decreases in sales could be a sign of a changing market. Reacting quickly to changes in sales allows businesses to determine what needs to be done to sustain growth.

5. Price point
Business owners need to know exactly how much it will cost them when purchasing and selling goods in order to make a profit.

6. Gross margin
If a business’s gross margin is low, and not sufficient to cover operating costs, then it’s likely that the business is not charging enough for the products and services.

7. Total inventory
Tracking the business inventory on a regular basis means any problems that arise can be spotted early on, and negative effects can be avoided.

Lost or destroyed tax records

Taxpayers are responsible for safely storing a written backup copy of their tax record in case the original electronic form becomes inaccessible or unreadable.

Where the tax records are accidently lost or destroyed from a burglary or fire, the ATO will allow a taxpayer to claim a deduction for certain expenses. The conditions are:

– The taxpayer has a complete copy of a lost or destroyed document.

– The ATO is satisfied that the taxpayer took acceptable precautions to avoid the loss or destruction of the form. If the tax record was a written document, it is not reasonably possible to attain a substitute document.

It is important that taxpayers keep a record of these circumstances and inform the tax office in writing to back up the claim.

The importance of Landlord insurance

It is vital for property investors to have Landlord insurance to protect their investment in case something unfavourable occurs.

It not only allows investors to rest assured that their investment property will be kept in top-notch condition, but that they will be able to redeem their losses when their property has been badly damaged and abandoned by its tenants.

Property investors should consult with their insurance provider to confirm they are covered for all types of destruction. Most standard building and landlord insurance policies will not account for malign acts or theft by tenants, loss of rent and legal expenses incurred from loss of rent. Though, some insurance providers will cover these costs as an optional extra.

To assist with the claim process in certain circumstances, it is worth having a rental agreement with your tenants to be able to use as backup evidence. Ensure it cites the lease terms, the amount of the rent payment and the bond.

SMSF and investing in property

While using a self-managed super fund (SMSF) to buy an investment property has become increasingly popular, members must carefully consider whether it supports their overall investment strategy before they go ahead with this investment approach.

There is a condition that the SMSF trustee or any of their relatives cannot buy the property with the intention to live in it. The sole purpose of using an SMSF to buy a property must be to build wealth for retirement. With this in mind, a member must buy an investment property for logical reasons and not because they are emotionally attached to it. The importance of the property’s return on investment outweighs the property’s views and facilities.

Before purchasing an investment property, a SMSF member must evaluate how long it will take them to repay the debt. Current rent rates and the level of superannuation payments made by members should provide an indicator of whether it will be paid off in time for retirement. Otherwise, they may need to factor in selling the investment at the time of retirement or putting off their retirement.

Members must also take into consideration that some investment properties are more suited to a SMSF, such as properties with low ongoing and maintenance cost and a high gross rental return. They should avoid buying investment properties with high ongoing maintenance cost as these will only increase unnecessary costs and reduce the net rental income.

Overcoming difficult workplace conversations

Contrary to what many of us would like to believe, difficult conversations in the workplace are inevitable. And while it’s tempting to put them off for as long as possible, the key to resolving any disagreements in the workplace is to address the issue early.

Here are some of our top tips to help you prepare for a difficult conversation:

– Pick the right time: Avoid having the conversation in the heat of the moment. Plan to talk with the other party when you both are calm and have enough time to discuss the issue.

– Know the problem: You need to be clear about what the issue is if you wish to reach an agreement or reconciliation.

– Look for solutions: Try to work with the other party to reach a solution that suits you both. If this isn’t possible, be prepared to give a little, and see if the other party will do the same.

The essentials of a modern website design

Businesses who keep their websites up to date with emerging trends and technologies are more likely to increase their opportunities for traffic and exposure. Those who allow their websites to become outdated, not only miss out on these opportunities, but also risk being penalised by search engines.

Below are four website design elements businesses should consider when designing or redesigning their website to keep up with the changing nature of the online landscape.

– Navigation: Online visitors will not stay on a site for very long if they can’t find what they are looking for. A website’s navigation should be easy to find and be consistent across every page.

– Content: Publishing great content on a website can improve the reputation of a business, and result increased visitors, sales and SEO benefits as well.

– Mobile-Friendly: Web users have moved to using mobile devices to browse the internet. Making sure a website is mobile-friendly can avoid any losses in potential website traffic.

– Social media integration: Incorporating social media into a website may allow a business to reach and interact with potential clients in ways that a website simply does not offer.