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Investing in shares is a popular method of growing your wealth, however, there are tax obligations you need to be aware of to get an accurate sense of how much you’ll need to put aside for your investments.
When you own shares, you need to declare all your dividend income on your tax return. It is possible to claim tax deductions for certain expenses you pay to receive income from your shares. The deductions you are eligible for will depend on if you are carrying on a business of share trading or if you are an individual share investor, but they can include:
- Management fees: the payment of ongoing fees or retainers to investment advisers are tax-deductible.
- Borrowing expenses: the expenses of borrowing money for shares may be tax-deductible. This can include establishment fees, legal expenses and stamp duty on the loan.
- Interest: if you received a loan to buy shares, you can claim a deduction for the interest incurred on the loan if it is expected that assessable dividends will be derived from your shares.
- Travel expenses: if you need to travel for the sole purpose of working on your share investment, such as travelling to consult with a broker, you may be able to claim a deduction for the travel expenses incurred.
Individual share investors cannot claim a deduction for the cost of acquiring shares, such as costs for brokerage and stamp duty, however, they can claim deductions on the prepayment of expenses related to the shares such as internet fees or seminars.
Buying and selling shares can involve capital gains tax (CGT), depending on whether you make a capital gain or a capital loss on your shares. Your capital gains or loss is the difference between the price you paid for the shares and the price you sell them for. If you end up selling your shares for more than you paid for them, then you make a capital gain which may be taxed.
How much CGT you need to pay varies depending on:
- How long you’ve owned the shares for: if you have held the shares for more than 12 months, you can usually discount a capital gain by 50%.
- Your marginal tax rate: your capital gain will be added to your assessable income in your tax return and taxed as part of your income at your marginal tax rate.
- If you’ve also made any capital losses: only your net capital gain will be taxed with your assessable income, meaning that if you’ve also made capital losses then they will be subtracted from your capital gains. If you have more capital losses than gains, you are generally able to carry the capital loss forward and deduct it from any capital gains you make in future years.
Social media marketing is a powerful way to promote your business and establish a connection with your target market. Your content should closely relate to what you’re trying to sell or provide.
A key to great content is that it must be consistent and regularly updated. This is important because it will keep the business relevant in people’s news feeds.
Content does not have to be completely original work. It can be a combination of new content developed by the business, and content sourced from other platforms. Sharing other relevant social media posts through Retweeting or Reposting content can also be a great way to demonstrate your engagement with the community. However, do not forget to link back to the source that the content was taken from.
Another good idea is to ask questions or share a quote or tip. This will entice the audience to respond, share and join in the conversation.
Good content should be interesting, informative and engaging. It is a good idea to steer clear of technical jargon as the majority of people may not be able to understand. Remember who the target audience is and use language that will appeal to them.
While short text is the easiest content to produce, utilising visual elements such as images and videos can be an effective way of capturing an audience’s attention and are also able to deliver more information. It is also an opportunity to create links across social media sites that allow customers to click through to the website, or share videos and pictures onto their own news feeds.
If you are a small business employer wishing to dismiss employees, you must do so according to the Small Businesses Fair Dismissal Code, as a breach of the code could result in legal action taken against you. If your business has less than 15 employees, it counts as a small business.
Employees can apply for unfair dismissal if they believe they have been unreasonably dismissed from their job. These cases could include when:
- The dismissal was harsh, unjust or unreasonable
- The dismissal was not a case of genuine redundancy
- The dismissal was not consistent with the Small Business Fair Trading Code.
Employees working for small businesses can only apply for unfair dismissal when they have been employed for at least 12 months. If the business had a change of ownership during their employment, then their time with the first employer may still count as service with the second employer when calculating the minimum employment period.
When dismissing an employee, there are three main valid dismissal reasons:
- Capacity (poor performance)
- Genuine redundancy.
Employers must also adhere to employee entitlements upon dismissal, meaning they must pay:
- Accrued leave and annual leave loading
- Accrued or pro-rata long service leave
- Redundancy pay if applicable
- Outstanding wages.
An employer can make objections to the unfair dismissal claim by submitting an Employer response to unfair dismissal application, or an Objection to application for unfair dismissal remedy.
If you’ve unintentionally been going over your superannuation concessional contributions cap in past years, you may not have to worry about it from now on. As of 1 January 2020, eligible individuals with multiple jobs can apply to opt-out of receiving super guarantee (SG) from some of their employers.
You may be eligible to apply if you:
- Have more than one employer.
- Expect that your employers’ mandatory concessional super contributions will exceed your concessional contributions cap for a financial year.
Employees who are eligible can apply for the super guarantee shortfall exemption certificate when they complete the Super guarantee opt-out for high income earners with multiple employers form (NAT 75067).
When you opt-out of SG contributions, you must still receive SGC from at least one employer. If other employers agree to use the SG exemption, then they may provide an alternative remuneration package instead, as to not be disadvantaged. However, the exemption certificate:
- Does not restrict the employer from making super contributions on behalf of the employee.
- Does not change the employer’s obligations or an employer’s agreement with their super fund.
- Cannot be varied or revoked once issued.
Hiring a new employee can interrupt the daily workplace routine while they need a little extra attention and help and learn how things work. Here are some ways you can make the training period more successful…
Onboard before the start date
It is likely that new employees will feel more comfortable and perform better if they are prepared for their first day on the job. New employees often worry about things like what they should wear or where they should go and are reluctant to already be asking trivial questions. To ease them into the workplace, you can send an email prior to their start date that outlines:
- The start time.
- Parking details.
- Dress code.
- A brief overview of what will be covered on the first day.
- Anything they need to bring and what will be provided.
Enlisting the help of senior employees to help train and mentor new employees can be a great way to efficiently train them. This can also help senior members of the team continue to feel valued and can promote friendly relations and coworker connections.
Provide regular feedback
Constructive feedback can go a long way for new employees as you can correct any mistakes before they turn into habits. When giving feedback, you can avoid demotivating the new employee by providing both positive and negative feedback and focusing on their behaviour and not them.
Train for culture as well as practice
Ensuring that the new employee has the right practical information is obviously important, however, if your company has a certain culture it wants to uphold, you can also train them for this. For example, if your business focuses on being an eco-friendly office, demonstrate how that is done and what eco-friendly procedures are taken in the workday.
Rebranding your business can seem like a daunting task, as it can involve a range of arduous tasks such as changing designs, updating clients, retraining staff and changing your marketing strategies.
However, rebranding can be an option for many businesses if:
- Your business is too similar to competitors.
- Your designs and values are updated.
- You want to outgrow a poor reputation.
- Your business is growing and changing.
- You want to tap into a new demographic.
- The market is changing.
To make the task of rebranding seem less daunting, consider these tips before starting to help you in your process.
Evaluate your need for rebranding
Make sure that the reason for your rebranding is valid and don’t act on impulse decisions. Rebranding can take a lot of time and resources and can often decrease your business if not done successfully, so it is important that you evaluate if rebranding is right for your business and outline the reasons why. It can be helpful to talk to staff about it to get ideas from people who are also invested in the success of your business.
Plan a budget
Before you rush into rebranding your business, make sure you have the funds to do so. Research and estimate how many resources will go into different areas of rebranding, e.g. marketing, website design, training staff etc. and outline a budget that can help you manage your finances through the process.
Have a strategy
Before you start rebranding, plan out a strategy that will guide you in the process and can increase the chances of success. This will help the process run more smoothly and prevent unexpected challenges that could detriment your business.
Solidify your mission and values
Having a clear understanding of the mission and values you want your business to have going forward can help you make important branding decisions and help build the foundation for your new brand. Having you and your staff on the same page with the business mission and values can improve efficiency and motivation when working on the rebrand.
Once you have met your preservation age (between 55 and 60 depending on when you were born), you can choose to take a super pension. There are six main types of super pension:
- Account-based pension: this is the most common type of pension. It is a regular income stream bought with money from your super when you retire.
- Transition to retirement pension (TTR): you can use this pension if you have reached your preservation age but are below 65 years old and still working,
- Defined benefit fund: with this pension, you are paid a guaranteed income stream for life, however, it is not commonly used.
- Annuities: this is a series of payments you receive at fixed intervals for a defined period or the remainder of your life. Annuity payments are purchased with a lump sum.
- Reversionary pension: this is an income stream you set up with your superannuation that automatically reverts to someone else (generally your partner) when you die.
- Death benefit pension: this is where your dependents receive your death benefits as a pension when you die. This is only available from some super funds.
The standard conditions of release for super pension withdrawals are:
- Turning 65 years old.
- Beginning a transition to a retirement income stream.
- Ceasing an employment arrangement after you turn 60, regardless of if you get a different job.
- Becoming permanently incapacitated.
- Being diagnosed with a terminal medical condition.
The amount you withdraw can have an impact on any Age Pension entitlements you have, so be aware of these implications when deciding to withdraw an amount. You should also be aware of the transfer balance cap of $1.6 million that you’re allowed to move to an account-based pension. For super pension income streams, you generally need to transfer funds from your accumulation account to your retirement account for your pension.
When someone dies, their superannuation usually gets transferred to their beneficiary as superannuation death benefits. Depending on who the beneficiary is, the benefits may be taxed in some circumstances.
If you are a beneficiary, the amount of tax you pay depends on factors such as:
- If the benefit is paid as a lump sum or pension.
- Your age and the age of the deceased at the time of their death (for income streams).
- Whether the benefit is paid from an untaxed superannuation scheme or a taxed scheme.
- Whether you’re a dependent for tax purposes.
Someone who is tax-dependant will:
- A spouse of the deceased.
- An underage child of the deceased.
- Someone who was financially dependent on the deceased at the time of their death.
- Someone who was in an interdependency relationship of the deceased at the time of their death.
Lump sum payments
Lump sum super benefits paid to tax-dependant beneficiaries are not taxed, whereas those who are not tax-dependent will need to pay more tax and will only be able to receive the benefit as a lump sum. Not all super death benefits paid to a non-tax dependant are subject to tax. There are tax-free components that are made up of contributions after-tax that the member made to their super.
The taxed element (where the member paid tax in their super) of the taxable component of the benefit is subject to a maximum tax rate of 15% plus the Medicare levy. The untaxed element (where the death benefit is being paid from an untaxed super fund or includes proceeds from a life insurance policy held by the fund) of the taxable component of the benefit is subject to a maximum tax rate of 15% plus the Medicare levy.
Income stream payments
If the death benefit is paid in the form of an income stream, the tax treatment of the payment is dependent on the age of the deceased and beneficiary at the time.
If the deceased or the beneficiary is aged 60 or over at the time of the benefactor’s death and the super is paid from a taxed super fund, then the payment will not be taxed. If the age of the deceased and the age of the beneficiary are both under 60, the taxable portion of income stream payments will be treated as assessable income but will be entitled to a tax offset equal to 15% of the amount.
A financial dilemma that is becoming increasingly common is finding a way to fund a comfortable retirement lifestyle without having to sell the family home. One solution to this is a reverse mortgage; a loan that allows homeowners to convert part of the equity in their home into cash.
Money from a reverse mortgage can then be received as a regular income stream, line of credit, lump sum, or a combination of these options. No income is required to qualify for a reverse mortgage, which makes them ideal for those who have retired from the workforce.
Given the nature of this type of loan, it is important that homeowners understand the risks involved and consider how they can protect themselves as much as possible. Risks associated with reverse mortgages include:
- The interest rates are usually higher than average home loans.
- Variable interest rates mean that there will be changes to what you are charged over time. Debt can rise quickly since the interest compounds over the loan term.
- The loan can affect your pension eligibility.
- Drawing funds from your property can reduce what you could potentially access later on, leaving little left for aged care or other future needs.
- For those who fix their interest, the costs to break the agreement can be very high.
- If you are the sole owner of the property and someone lives with you, that person may not be able to stay when you die (in some circumstances).
Cyber risk is one of the leading threats for small businesses in Australia, with the cost of a cyber incident averaging $276,000 for businesses.
Whether it’s marketing material, legal documents or customer details, businesses nowadays depend on the digital for operation. This is why it’s so important to make sure your digital assets are protected and safe from hackers, viruses and malware.
Keep track of all your digital assets
Listing all of your digital assets will make it easier to ensure that you’ve got everything covered, as we often don’t realise how many digital assets we have. These could include your social media accounts, trademarks, customer information, contracts and websites. You can prioritise these assets by which ones you want to protect the most to ones that wouldn’t affect your business if they were stolen.
Secure your servers
You can physically protect your servers by keeping server rooms cool, monitoring and limiting access to server rooms and keeping servers, switches and hubs locked. Securing your servers digital can be done by restricting the number of administrator passwords, using updates anti-virus software, regularly backing up data, setting up a firewall and keeping track of server reports to monitor changes and irregularities. You can see what security measures are available for your servers by seeking advice from a trusted supplier.
Implement two-factor identification
Two-factor identification requires a user to get through two layers of security in order to be allowed access. For example, having to enter a password and then entering a code sent to your phone. Implementing two-factor identification wherever possible will help add an extra layer of security, and for most online platforms such as Google and Mailchimp, no additional software is needed as you can choose to enable two-factor identification.
Protecting your network from unauthorised access can be done by using a firewall and reviewing firewall logs for unusual activity on your network. You can also restrict your staff from installing software and content for personal uses as they may allow remote access to the network and could bring in viruses and hackers. Additionally, it is important to always keep your operating system and security software up to date. Replacing any weak passwords with strong and unique ones can also go a long way.
Consider cyber insurance
Cyber insurance can be used to protect your business against digital breaches and risks, meaning that if your digital assets are lost, cyber insurance can cover related costs such as investigation and crisis management costs such as notifying customers and lawsuits. If you’re thinking of implementing cyber insurance, check if your current insurance company has the option to add it to your plan. If not, there are many separate cyber insurance companies you can use.