Illegal early release of super on ATO watch-list

Illegal early release of super (IER) is one of the risk areas that the ATO has identified as being of most concern and in need of action.

Each year, the ATO analyses its data to identify the areas of high risk that will form part of its compliance program. Aside from illegal early release, another key risk area is non-lodgement. In the last year, the ATO has targeted individuals and promoters who register self-managed super funds with the intention of using the fund to illegally access super benefits.

In the 2019 financial year, the ATO cancelled the registration of 609 newly registered SMSFs who intended to use the funds for IER. They also withheld the details of 352 funds from the Super Fund Lookup, meaning they couldn’t receive payments and rollovers.

The ATO has warned of severe consequences for you and your fund if super is accessed before you are legally entitled to it. These include disqualification of trustees, administrative penalties, the fund deemed as non-complying, or even prosecution.

Fund trustees or members who have knowingly been involved in a scheme or been approached by anyone claiming that they can withdraw their super early should contact the ATO immediately to advise of the situation and avoid further penalties.

Posted on 6 August '19 by , under super. No Comments.

Supporting mental health in the workplace

Business owners have a responsibility to look after their staff and ensure they have a healthy working environment. This extends to mental health as well as physical. With one in five people experiencing a mental health issue at some stage in their life, there is a greater need to have mental health support specifically within the workplace environment of small businesses.

While most workers can successfully manage their illness without it impacting on their work, some may require support for a short period of time and others may require ongoing workplace strategies. Employers should be aware of mental health issues they can encounter and how best to approach them. Research is key in helping to understand what your employee is going through, how to recognise the illness and ways to successfully manage it.

Employers need to recognise the role in which work can play in an individual’s mental health. An ‘unhealthy’ work environment or a workplace incident can cause considerable stress and possibly contribute to or worsen mental illness. Under the Disability Discrimination Act 1992, employers must make changes to the workplace to enable someone with anxiety and/or depression to remain at or return to work, provided they can continue to meet the core requirements of their role. These changes can be temporary or permanent.

Further ways to promote mental health initiatives within your business include encouraging members of your workplace to seek help, reducing the stigma surrounding mental illness, and fostering connectivity and communication. Managing mental health within your business by avoiding conditions that lead to excessive stress and encouraging awareness and support can have many positive outcomes and cultivate a mentally safe and healthy workplace. Employers should also familiarise themselves with the work health and safety regulatory body in their state or territory.

Posted on 29 July '19 by , under business. No Comments.

Tax requirements for capped defined benefit income streams 

Members who receive income from one or more capped defined benefit income streams may have additional tax liabilities. They would then need to calculate their entitlement to the 10% tax offset if the income from all their capped defined benefit income streams exceeds their defined benefit income cap.

SMSF’s who pay a capped defined benefit income stream to members with a cap will need to provide the ATO with a PAYG withholding payment summary annual report, due by 14 August 2019. Members will have a cap if they have income from a capped defined benefit income stream and are 60 and above or under 60 and receiving a death benefit income stream from a person who died aged 60 or over.

When preparing their individual tax return, members need to:

  • Consider all income they receive from capped defined benefit income streams.
  • At label 7M, include half of the income from the tax-free component and taxed elements of all their capped defined benefit income streams which exceeds their defined benefit cap.
  • At label 7N, include any untaxed element.
  • At label T2, calculate and include their entitlement to the 10% tax offset (the amount may be nil).

The defined benefit income cap will be $100,000 for most individuals. It may be less in some circumstances, such as if they turned 60 during the year or were over 60 and then started receiving income from a capped defined benefit income stream for the first time partway through the year.

SMSF’s must ensure all obligations are met, include registering for PAYG, providing members and the ATO with payment summary information, and making sure to comply with withholding obligations of their activity statement.

Posted on 29 July '19 by , under super. No Comments.

New tax toolkit for rental property owners

The ATO has developed a new rental property owners toolkit for property investors to ensure that mistakes are avoided in their tax returns.

Each year, the tax office identifies fairly common mistakes being made with tax claims made in regard to investment properties. In a recent review of individual tax returns, nine out of 10 taxpayers with a rental property were found to have made a mistake in their tax return.

The newly developed toolkit focuses on areas were mistakes are most commonly being made. These include:

  • Renting out a room, a unit, or a whole house on an occasional basis through the sharing economy (such as Airbnb).
  • Repairs, maintenance and capital expenditure.
  • Any borrowing expenses incurred when taking out a rental property loan.
  • Interest on a loan that is taken out to purchase a rental property.

Fact sheets within the toolkit are also available to be downloaded individually. The toolkit is designed to assist rental property owners to get the information they need in order to lodge correctly and to avoid any lodgement mistakes in the future.

Posted on 29 July '19 by , under tax. No Comments.

Managing business growth

It can be exciting and reassuring when your new business venture achieves growth and success. When things reach a certain threshold, however, you may no longer be able to oversee everything as a business owner. Here are some key things to consider in order to manage the development of your business.

Key performance indicators:
As your business expands, determine some key performance indicators (KPIs) to evaluate certain tasks and how you will get regular data for each. Some examples include:

  • Absenteeism: by creating a great working culture and attendance perks, you can encourage your staff to take less time off.
  • Sales: offering bonuses or other perks to employees who exceed sales expectations could improve overall performance.
  • Complaints: Implement a system for dealing with complaints individually to help ensure they don’t happen again.

Develop your skills:
In addition to making changes that improve how your business operates, you should also focus on adjusting your own leadership style. In areas where you recognise you could improve on, think about delegating tasks to your employees to maintain growth. Brainstorming with your staff and other advisors may open you up to different perspectives and insights, facilitating a diversity of ideas within your organisation.

Anticipate competition:
Growth will inevitably attract competition. If the growth of your business begins to take away your competitor’s market share, they may implement strategies to counter your success such as lowering their prices, increasing advertising or adding new products. Be prepared for this and pay attention to the other businesses in your market.

Posted on 22 July '19 by , under business. No Comments.

What SMSF records should you keep?

A key responsibility for trustees of self-managed super funds (SMSFs) is to ensure proper and accurate tax and superannuation records are kept for the fund. When you have been running your fund for a long period of time and have amassed a large amount of information, it can be hard as a trustee to know exactly what records to keep, how long for and where to store them.

The ATO requires SMSF trustees to keep the following records for a minimum of five years:

  • Accurate accounting records that explain the transactions and financial position of the SMSF.
  • An annual operating statement and statement of the SMSF’s financial position.
  • Copies of all annual returns and transfer balance account reports lodged.
  • Copies of any other statements the fund trustee is required to lodge with the ATO or other super funds.

The following records are required to be kept for a minimum of 10 years:

  • Minutes of trustee meetings and decisions if matters affecting the fund were discussed, such as the fund’s investment strategy.
  • Records of all changes of trustees, and members’ written consent to be appointed as trustees.
  • Trustee declarations that recognise the obligations and responsibility of any trustee or director of a corporate trustee, appointed after 30 June 2007.
  • Copies of all reports given to members.

Your SMSF’s records must be kept in Australia, in writing and in English. If your SMSF does not keep the records for the minimum time required, you may be subject to penalties and fines.

Posted on 22 July '19 by , under super. No Comments.

What is replacing AUSKey?

The ATO is developing new online services systems as AUSKey will be retired in March 2020

Replacing AUSKey will be myGovID and Relationship Authorisation Manager (RAM).

MyGovID is an authentication service that will allow individuals to prove who they are online. This system will work by establishing your identity once online and then using your myGovID credentials to access government services you need online.

Relationship Authorisation Manager (RAM) is an authorisation service that allows you to link your myGovID to an ABN, managing authorisations across government services, for businesses and their staff. RAM gives you the ability to add multiple businesses, access the business portal on behalf of multiple businesses, modify authorisations, customise and delegate the level of business authorisation for employees and nominate who can act on behalf of your practice.

MyGovID and RAM are currently available in a public beta for eligible businesses to access the ATO Business Portal and will soon be available for online services for agents. AUSkey can still be used to access online ATO services while myGovID and RAM are being developed.

The ATO advises that in preparation for the changes you check your ABN details are up-to-date in the Australian Business Register (ABR).

Posted on 22 July '19 by , under tax. No Comments.

What makes a successful business plan

When starting a new business, there are many elements you need to consider. Careful planning is essential to ensuring the longevity of your business, but what exactly goes into a good business plan?

A good business plan is one that is detailed. Sections should include; an executive summary, company description, market analysis, organization and management, service or product, marketing and sales, funding request and financial projections. These topics cover as much of the business as you can in the planning stage.

Showing attention to detail in your written plan demonstrates a commitment to the business going forward. When writing a business plan, there are a few ways to ensure you are creating the best guide for your idea. Researching the industry and other companies in the market you are looking to step into can give you an insight into more than just the competition. As a business owner, it is your responsibility to know how and if audiences will respond to you.

If you aren’t presenting your plan to investors or potential partners, determine what purpose your business plan will serve. A good business plan can be used not only as a sales document but a map for the business into its future. Writing a business plan that makes projections for the first five years can keep you on track and show you areas in which you need to focus on.

A business plan is a guide to help you create and maintain the best business you can. Even if things don’t go exactly as planned, a successful business plan is one that teaches you the things you want to get out of the business and ways in which you can achieve them.

Posted on 15 July '19 by , under business. No Comments.

SMSF rollovers in SuperStream to be deferred

The 2019-2020 Federal Budget suggested a deferral of the extension of SuperStream to self-managed superannuation fund (SMSF) rollovers from 30 November 2019 to 31 March 2021. The commencement of this deferral has recently been confirmed by the government.

The deferral will coincide with the $19.3 million that will be provided to the Australian Taxation Office (ATO) over three years from 2020-21, enabling electronic requests to be sent to superannuation funds for the release of money required under a number of superannuation arrangements.

With the combined date for both bringing electronic release authorities into SuperStream and allowing SMSF rollovers, changes needed to update SuperStream will only need to be undertaken once. The deferral aims to reduce administrative costs for funds and allows for a more integrated design of SuperStream.

First introduced in 2015, SuperStream is a government standard for processing superannuation payments electronically in a streamlined manner. Currently, SuperStream can only process rollovers between two APRA funds electronically but with the change will see this process extend to SMSFs.

Regulations for the deferral to put into effect will be made promptly.

Posted on 15 July '19 by , under super. No Comments.

Maximising your tax return as a home-based business

Small business owners may be able to claim deductions for the costs of using your home as a principal place of business when filing your 2019 income tax return.

Tax deductions may be claimed for the business portion of expenses that include electricity, cleaning, rent payments or mortgage repayments. However, it can be difficult to ensure you are claiming expenses you are entitled to. How you operate the business out of your home will determine the types of expenses that may be claimed. Your business structure will also affect your entitlements and obligations when claiming deductions on home-based business expenses.

Individuals that operate a business as a sole trader or partnership are entitled to claim a deduction for the costs of running their business from home. There are two types of expenses that can be claimed, running expenses or occupancy expenses. Running expenses refer to the increased costs of using your home’s facilities for the running of your business. Occupancy expenses are those that you pay to own or rent your home.

Typically, those that are eligible to claim occupancy expenses can also claim running expenses. Records that need to be kept include written evidence, tax invoices and receipts, which should substantiate your claims for all home-based business expenses. You may consider consulting a trusted advisor or registered tax agent to ensure that you meet all obligations when claiming deductions in your tax return.

Posted on 15 July '19 by , under tax. No Comments.