Posts Categorized: General

Personal super contributions

Last year’s super tax changes certainly received substantial press coverage. Most of that though was in respect of the must do corrective (and negative) aspects such as commuting under the $1,600,000 pension balance cap.

There were however some sensible and attractive changes (you may wish to refer back to our 2017 Budget Briefing paper which explored these).

One of the attractive changes is that since July 2017 employees been able to claim a tax deduction for personal super contributions.  Until then, employees were denied a personal tax deduction where their employer had an obligation to pay SG (whether they paid it or not).  There was an exemption for those whose employment income was minor.

So who are personal super contributions attractive to:-

  • Those whose employer who won’t allow a salary sacrifice arrangement.
  • Small business owners who wish to pay the super in their own name rather than having their own business pay it (which would be subject to WorkCover).
  • Those who may wish to reduce the tax on their other income including interest, rent or capital gains.
  • Those who can use the money more efficiently – like pay down the mortgage during the year but pull it back at the end of the year to fund the super.
  • Those who are employees aged over 65 who have more than $1,600,000 in super (and are denied making further non-concessional contributions) and who have already satisfied the 40 hours in a 30 day work test during the year.

 Is making personal super contributions best for you?

Well that depends entirely on your personal circumstances.

And the younger you are the more careful you have to be as super is locked away until one reaches what is called preservation age (which can be as late as age 60 even for those who retire early).

There are also other considerations like Section 293 tax.

You don’t want to have excess super contributions as you will issued with an excess contribution notice which can easily happen if you don’t fully understand all the complexities.

Moreover, you should not make such a contribution without first seeking financial planning advice as that advice will consider all of our circumstances, explain the risk and rewards of all strategies (and do so in context of other strategies) and show you the long term results from advanced financial planning modelling software.

A word of warning

There is now just one concessional (deductible) contribution limit for all employees – it is now just $25,000. And that as assessed by when the fund receives the contribution.  So a contribution by an employer for the June 2017 SG quarter (which may include salary sacrifice contributions) paid into a super fund in July 2017 counts as a contribution in the 2017/18 year.

You should therefore disregard whatever appears on your pay slip as that just records what has been provisioned by your employer during the year. You must check what has been received by your super fund(s).

$2,345,900 of savings

tax planning process: money

$2,345,900 of savings is what the MRG group saved its clients as part of its June 2017 tax planning process.

That’s a lot of money to spend on the your business, your family, equipment, holidays, your kid’s education ….

How do we do this?

It was done by following a lengthy checklist which explored clients’ ability to obtain advantages and avoid pitfalls.  It was then followed by discussions and reminders to ensure plans were put in place.

And the $2,345,900 of savings doesn’t include all the other savings delivered from our advice given during the year.

While some of our work necessitates that we attend to compliance tasks, we believe the fees you pay your accountant should be an investment. In this regard, the savings we deliver to our clients were not only greater but multiple of what they paid us.

If you like to know more about how you may benefit from our tax planning process then please call us.

Great news – the $20,000 instant asset write-off has been extended

Great news – the $20,000 instant asset write-off has been extended for another 12 months to June 2019.

This concession was supposed to stop at 30th June 2018.  Now you have another 12 months in which you can claim a full deduction on assets costing less than $20,000 ex GST.  If you really need any asset(s), you might as well still buy it now.  Otherwise, you can now sit back and find the best time to commit a qualifying purchase.

If you want to know more about important considerations and traps, click on the following link:-

http://www.mrsaccountants.com.au/tips-traps-to-the-20000-asset-write-off/

We would welcome your call if you have any queries.

We will of course raise this as part of our year end tax planning process.

And on that subject, we have been quantifying the savings our clients received as part of our planning advise last June. We are both pleased and proud to report the collective savings to our clients has now been quantified to exceed $2,300,000.  And that is not even taking into account the savings from other advice during the year!

How To Protect Yourself Against Scammers

Last week was Scam Awareness Week.  It’s an initiative of the ACCC.  They gave great advice on how to protect yourself against scammers.

There are many forms of scamming. And the methods are continually changing and becoming ever more sophisticated.  It’s also on the rise as the losses to scammers last year increased by 23%.  Many are linked to computers and other electronic devices but can also include:-

  • Phone calls – you would be surprised how many clients have received a phone call like the above purporting to be from the ATO.
  • Door knocks.
  • Fake supplier invoices.
  • Stealing identity by stealing personal information from mail boxes.

So what are some of the keys ways you can protect yourself:-

  • Never give your personal details over the phone or by e-mail.
  • On your computer, run a virus checker and malware protector. Ensure these are set to update automatically and run a full scan at least once a week.
  • Use an e-mail washing program. It will allow you to safely preview the text of an e-mail and to check that the sender’s e-mail address is genuine.
  • Use a password protection program so you can set complicated passwords for all your logins. And change your passwords at least every month.
  • Email, just like a letterbox, is not safe. Google also reserve the right to use information contained within an e-mail to or from a Gmail email address. Use our client portal service to securely exchange information with us.
  • Do not accept emails from suspicious addresses.
  • Be very wary of all other emails. Spammers are now so specific in what they are attacking that we often receive e-mails from major software providers.
  • Use a banking token / toggle and perhaps set your daily limit lower.
  • Run a back-up system and regularly test that it is functioning properly.
  • Use two step software authentication wherever possible.

In short, adopt appropriate practices and always be on guard.

You may also wish to read the ACCC’s scam guidebook – Little Black Book of Scams. https://www.accc.gov.au/publications/the-little-black-book-of-scams

Please call us if you would like a referral to a trusted computer support technician.

Bitcoin & the blockchain – what’s next

Many are asking what is the future of Bitcoin? That is a very good question after the wild ride in its price.  After nearly touching $US20,000 just before Christmas it has since fallen to around $US8,000.  Some have made eye watering amounts based on when they got in and out; others have lost spectacular amounts.  There are more than 1,000 crypto currencies and most of those have also seen wild fluctuations in their price.  Bitcoin has certainly been subject to speculation. It’s rise was larger than that of the Dutch tulip bubble of the 17th century.  Arguably it’s more at risk than other famous asset price bubbles as nothing underpins the currency as does say the Reserve Bank to the Australian dollar.

The creator of Bitcoin Satoshi Nakamoto (or at least his/her pseudonym) announced Bitcoin to the world as “a new electronic cash system that’s fully peer-to-peer with no trusted third party.”  There is certainly appeal to such a system.

What interests me far more is the blockchain, the system which underpins Bitcoin. The blockchain is an encrypted open ledger which records all transactions.  There is no central storage system; it’s an open ledger system that is verified every ten minutes and in which every transaction is date stamped.  With transactions cleared every ten minutes, funds can knowingly be received on average in five minutes – makes a three day cheque clearance seem slow doesn’t it!

The co-founder of Netscape Marc Andreessen has been quoted as saying that the blockchain is one of the most fundamental inventions in the history of computer science. I think that that is an under-statement.  With seemingly everyone tapping to pay for even the cheapest item and with a verified transaction base, the ATO may seek to receive GST at the time of sale.  Various world governments are looking to store anything and everything on the blockchain – including such things as land titles.  Kodak, arguably the camera company most affected by the digital camera explosion last month had its share price surge some 70% after it had announced it was developing a crypto currency where the underpinning blockchain would enshrine photographers’ copyright.

I keenly await to see how others adopt the blockchain to revolutionise the way we do things.

At MRS, we will spend today planning for your success tomorrow.

 

 

Unclaimed monies – what to do

In 2012, we sent out a warning e-mail in respect of the then new unclaimed monies regulations. Those laws have now been in effect for 6 years, the importance of which will become clear as you read through the blog.

Today there is more than $1,100,000,000 in unclaimed bank accounts, shares and life insurance.

The balance of any bank account unused for more than 7 years is transferred to the government. So too is a life policy which is not claimed within 7 years of maturity also becomes unclaimed money.

It is not easy to reclaim one’s money as what one might think. So to avoid the problem of trying to recoup unclaimed monies, you need to:-

  • Transact on any bank account every seven years. Please remember that charges debited or interest credited by a bank to your account do not keep an account active so you need to either make a payment from or deposit into an account for it to be considered active.
  • In our initial post, the time limit was 3 years. Since December 2015, a bank account
  • Keep contact details up to date and after a move.
  • Create and check a list of bank accounts, shares and endowment life insurance policies.

If you want to know more or undertake a search on a closed bank account or shareholding or matured life insurance policy, go to http://tinyurl.com/qjozgon

At MRS, we will spend today planning for your success tomorrow.

 

The one thing

So you have had a Christmas break, recharged the batteries and come back to work with new ideas. Hopefully you have formulated a plan, or better yet, updated an existing one.  Hopefully you have followed up on last week’s blog.

No doubt you have identified one key thing you are going to do. Equally as important though, have you identified one thing you are not going to continue to do?

The reality of small businesses is that owners have to do and be good at so many things.

However, I often see time and costs demands as well as perfection desires of small business owners resulting them in:-

  • Doing some low level activity that someone else should be doing as they are equally or reasonably capable of doing – such as administration and book-keeping. The loss here is that an owner loses the chance to do something(s) more important that generates a greater return(s).
  • Doing something that should be done by someone else because they are better at it – such as recruitment and web development. The loss here is twofold in that a lesser result that consumes too much time.

So what are you going to stop doing?

Create a list of 5 that you should not be doing.  Against each item, state what the benefit will be from not doing that thing – whether that be freeing up time, generating more revenue or obtaining a better outcome.  Resolve which is the most important one and determine what the replacement action will look like and require.  Sign it off to commit yourself to action.  And add it to your 90 day plan so you can monitor your performance and results.

At MRS, we will spend today planning for your success tomorrow.

 

 

 

Business planning tools that work

I trust you had a great holiday. And like many other business owners, no matter how much you managed to switch off during the Christmas break, I bet you still had plenty of thoughts as to how to improve your business in 2018 and beyond.  I also bet you would love to have business planning tools that work.

The problem with thoughts though is that they so rarely amount to anything. Numerous studies over the years have shown that those who put their plans in writing are far more successful than those who don’t.

Why is this? Some reasons include:-

  1. Writing down goals helps identify goals. It also allows goals to not only be identified but to also be ranked.
  2. You can then drill down as to what are the most important actions that must be taken on a daily, weekly and monthly basis to ensure that you are moving towards achieving those key goals.
  3. It allows you to consider how you are going to measure and track how you are moving towards achieving those goals.
  4. It allows you to consider what can and can’t be done with the available resources. Do you get more resources or do you focus on the more important goals at the exclusion or deferment of others?
  5. It enables you to identify the things that you shouldn’t be doing?
  6. It allows you to share your goals and vision with your team.

Over the holidays, I read a book called Mastering the Rockefeller Habits by Verne Harnish (which has been more recently republished as Scaling Up).  It is short, concise, highly relevant across so many business areas and provides you with a link to suggested tools.  In fact, if I could recommend you to read just one business book, then this would be the one.

As important as developing a written business plan is, most plans are too long. Harnish’s tools are practical and simple.  They are also easy to update and refer to on an on-going basis.  We can help you with many of the subject areas.  We are also in the process of rolling out new business diagnostic tools to gain greater insight into your business (including your cash flow).  We look forward to assisting you on your path to making your business more successful.

At MRS, we will spend today planning for your success tomorrow.

 

 

How do you find lost super?

The ATO has reported that at 30th June 2017, there was $18,000,000,000 of lost super within 6,300,000 lost super accounts.  That’s an average of almost $3,000 per account!  So how do you find lost super?

Whilst super funds hold lost uncontactable and lost inactive accounts, the ATO holds unclaimed super monies.

You currently have two ways to find lost super:-

  1. Complete and send off the Searching for Lost Super form – which you can access at https://www.ato.gov.au/Forms/Searching-for-lost-super/
  2. Log into your or open a myGov account – https://my.gov.au/LoginServices/main/login?execution=e1s1

Most of these unclaimed super accounts tend to belong to younger people. Perhaps you may wish to check whether your kids know where all their super is.  Or perhaps they should just lodge an enquiry anyway – they have nothing to lose and the application won’t cost anything.

At MRS, we will spend today planning for your success tomorrow.

 

17 things you must have addressed – Part 2

Last month we began exploring the 17 things you must know the answer to. We now address the remaining 9 critical matters.

As we stated at the beginning of the last post, if you haven’t addressed the following points, then your estate planning is likely to lead to less than optimal outcomes, possible disputes and be more financially and emotionally costly to administer.

So have you understood and considered:-

9/.   I understand that a Will dictates what happens to assets that are owned by an individual. I therefore understand that assets owned jointly as joint tenants, the owner of life insurance policies and my superannuation cannot be dealt with by my Will.

10/.  I also understand that I control but do not own my trust(s). It will, subject to an 80 year perpetuity period, live beyond me. I cannot bequeath any asset owned by a trust through my Will; all I can bequeath is any unpaid loan account balance.

11/.  I understand that any unequal unpaid trust distributions to family members will not be automatically addressed by my Will and I have made provisions regarding current and future imbalances.

12/.  I understand that I can make one of three kinds of death benefit nominations in respect of my superannuation and that each nomination has its own advantages and disadvantages depending on one’s individual circumstances. I understand that there is no cookie cutter solution.

13/.  I understand that if there is some dispute about my superannuation within my self managed super fund, then it cannot be referred to the Super Complaints Tribunal; it must go before the courts (in other words, put five or six numbers between the $ sign and decimal point). I also understand that there is a recent procession of landmark cases in this area.

14/.  I understand that if not otherwise considered, a typical self managed super fund deed will give equal rights to each member – which means that two kids with balances of less than $100,000 each will have equal voting rights with my surviving spouse (even if their balance is over $2 million).

15/.  I understand the prudential advantages of setting out my overall wishes in a deed of family agreement.

16/.  I have made provisions for the disclosure of electronic passwords in the absence of which will make it difficult if not impossible for my executor/executrix to know of and transact on my assets.

17/.  I understand that once I’m dead there is nothing I can do to ensure that my wishes are carried out. No one can ask me; they can only guess. This will waste both time and money. Worse still, they may act out of self interest.

Simply put, estate planning is the process of ensuring that the right assets get to the right people in the most efficient manner. It requires thought and consultation.

If you don’t have a Will, your circumstances have changed since your last Will was made, or you fear that your Will doesn’t address one or more of the above issues, then your best course of action is to attend our upcoming seminar in which the above and many other issues will be examined.

Since our first post, we have held one day on the office where clients were booked back to back with an estate planning lawyer. This was best for everyone as whilst it is CRITICAL that we attend the meeting, we only need to chair the first 5 to 10 minutes and attend the de-brief.  Perhaps even some other questions need to be answered during the meeting.  Whilst our involvement is critical, we do not need to sit through the whole meeting.  It is dangerous for us not to be in the meeting.  The risk of not having one’s accountant at (part of) an estate planning meeting is that the structure is all too often not understood and not conveyed to the lawyer.  And having a Will that doesn’t account for trusts and super funds are as good as or worse than not having a Will.

So, does your will estate planning ensure the best outcomes?

At MRS, we will spend today planning for your success tomorrow.