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Negotiators Are The Key To Success For A Business – Here’s How To Be A Good One

Businesses use negotiation in a number of different ways. You can negotiate in business for both informal day-to-day interactions and formal transactions. These could include negotiating for things such as negotiating conditions of sale, lease, service delivery, and other legal contracts.

Negotiation should not be your enemy. In business, negotiation can be the difference between a deal that creates the best outcome, and a deal that leaves both sides exhausted, resentful and dissatisfied with the outcome.

Good negotiations contribute significantly to business success, as they:

  • help you build better relationships
  • deliver lasting, quality solutions — rather than poor short-term solutions that do not satisfy the needs of either party
  • help you avoid future problems and conflicts.

To be a good negotiator, you will need to be flexible, creative, a good planner, honest, win-win oriented and a good communicator.

It’s important to ensure that your negotiation skills are up to par. You will want to be certain that you are using them most effectively. The key here is to focus on three critical areas:

  • People –  Listen actively, and speak to be understood when negotiating. You need to both understand the other’s perception of what is involved, and keep a rational, cool head.
  • Opinion – Work with the other party to brainstorm a variety of options that could work towards an agreement. Look for ways to dovetail differing interests by exploring options that are of low cost to you and high benefit to the other party and vice versa.
  • Interest – Behind each negotiation position lies a compatible as well as a conflicting interest, so make sure you understand why the other person has taken their position.

Posted on 20 July '21 by , under business. No Comments.

Why Should You Use A Corporate Trustee Instead of Individuals For A Family Trust?

A family trust is a great structure.  It provides tax flexibility whilst giving you asset separation in two directions.  But what does asset separation in two directions mean? And why might we suggest it to you as a recommendation?

First of all, why do you want asset separation? If there are multiple assets, you want to make sure that if someone makes a claim against the owner of a particular asset that your other assets can be quarantined from that claim. This isolation will mean that they can’t gain access to the assets that are yours and separate from the claim.

If you own a business and have a successful financial claim made against your business where the claim is for an amount that is more than the assets of the business, you will first need to use the business to cover the claim, and then find something additional to supplement the shortfall. In this case, if you also own your own home, and its worth is enough to cover that shortfall, it may be used to meet the claim by combining the business assets’ worth and the family home’s value. You could lose your family home!

However, if we structure your business in a particular way then the person making that claim will only have access to the assets in the business and you will be able to keep your family home.

This is what is called asset separation. Generally, it’s a good thing to employ, but it does have one flaw – it usually only goes one way.

If someone claims on your business, they won’t get the house but if they successfully make a financial claim against you, they will successfully get all of the assets that you own, including those of your business.  This is a risk that you must be willing to take if you own a business.

When you operate a business through a family trust instead of owning that business, you will merely “control” it, and have but a “mere expectancy” of being considered in the distribution of any profits or capital from that business.

The good part here is that although you only have a mere expectancy to be considered, we would set it up so it is YOU that “considers” who gets the money.  This means that if someone makes a claim against you then they can’t get access to assets in the family trust. What this does is give you two-way asset protection.

There is a bit of an issue with family trusts though – although you will see the debts of the trust as debts of the trust at law, they are in actual fact the debts of the trustee. If you are the trustee, all of the debts of the trust are your personal debts. You can use the trust assets to pay down those debts, but if the trust assets are insufficient to pay the debts, it will be up to you to pay off the rest.

When you’re an individual trustee of a trust, you lose the perk of asset separation, which is why a company may be used as a trustee, as the company does nothing other than act as the trustee of the trust. If there are insufficient funds in the trust to cover the debts of the trust, then those debts fall on the trustee and the creditors have no access to your personal assets because you have no individual debts owing.

Want to know more about asset separation? Interested in trusts? We’re here to help.

Posted on 19 July '21 by , under super. No Comments.

Here Are The Reasons Your Superannuation Can Be Accessed Early

Last year, a number of Australians took advantage of the early access to their super that was a part of the financial support options offered by the government during COVID-19, and withdrew amounts to assist themselves. If individuals and sole traders had suffered financial hardship of at least 20 per cent due to loss of work or hours, they were able to access up to $10,000 from their retirement savings in the 2019-20 financial year. They were also able to access a further $10,000 during the second round of the scheme from 1 July 2020 – 31 December 2020.

This scheme is now closed, and Australians can now only access the funds within their superannuation fund under certain circumstances.

Access On Compassionate Grounds

Compassionate grounds will include needing money to pay for:

  • Medical treatment and medical transport for you or your dependant
  • Palliative care for you or your dependant
  • Making a payment on a home loan or council rates so you don’t lose your home
  • Accommodating a disability for you or your dependant
  • Expenses associated with the death, funeral or burial of your dependant

Access Due To Severe Financial Hardship

This is not a grounds that is administered by the ATO but rather by your super provider who must be contacted to request access to your super due to severe financial hardship.

You may be able to withdraw some of your super if you meet both these conditions:

  • You have received eligible government income support payments continuously for 26 weeks
  • You are not able to meet your reasonable and immediate family living expenses.

You can withdraw between $1,000 and $10,000, but only once in any 12 month period.

Access Due To A Terminal Medical Condition

A terminal medical condition may allow you to access your super if these conditions are met that proves its existence:

  • Two registered medical practitioners have certified, jointly or separately, that you suffer from an illness that is likely to result in death within 24 months of signing the certificate
  • At least one of the registered medical practitioners is a specialist practising in an area related to your illness or injury
  • The 24 month certification period has not ended

Access Due To Temporary Incapacity

If you are temporarily unable to work or need to work fewer hours because of mental health or physical condition, you may be able to access your super. This condition of release is generally used to access insurance benefits linked to your super account. Super payments will be received on a regular basis over the time that you are unable to work.

Access Due To Permanent Incapacity

Access in this instance is sometimes called a disability super benefit, and access to your super through this method generally occurs if you are permanently incapacitated. You must have a permanent physical or mental medical condition that is likely to stop you from ever working again in a job you were qualified to do by education, training or experience.

It can be received as either a lump sum or as regular payments (income stream)

Super Less Than $200

In the instance where your employment is terminated and the balance of your super account is less than $200, or you have found a “lost super” account with a balance less than $200, you may be able to access your super.

First Home Super Saver Scheme

Applying for the release of voluntary concessional and voluntary non-concessional contributions that you have made to your super fund since 1 July 2017 to help save for your first home is a valid reason for the early release of super.

You will have to meet eligibility requirements to apply for the release of these amounts. Under the First Home Super Saver Scheme, you can apply for a release of a maximum of $15,000 of your voluntary contributions from any one financial year, up to a total of $30,000 (but this amount is due to increase to $50,000 following an announcement in the May 2021 budget).

Posted on 13 July '21 by , under super. No Comments.

Receive A Relief Or Support Payment? Here’s What You Need To Watch Out For This Tax Season

Have you, over the course of the past financial year, received a government assistance payment, support payment or disaster relief supplement?

There have been a number of cases where people who received financial assistance from the government were hit with additional owed tax to the ATO, due to their payments increasing their income threshold.

When lodging your individual income tax return this year, you will need to declare certain Australian Government payments, pensions and allowances in your tax return. If you did not elect to pay tax on those payments, this could affect the payment received from your return (or mean that you actually owe money to the ATO).

Some of the taxable payments that you may need to include in your tax return include:

  • the age pension
  • carer payment
  • Austudy payment
  • JobSeeker payment
  • Youth allowance
  • Defence Force income support allowance (DFISA) where the pension, payment or allowance to which it relates is taxable
  • veteran payment
  • invalidity service pension, if you have reached age-pension age
  • disability support pension, if you have reached age-pension age
  • income support supplement
  • sickness allowance
  • parenting payment (partnered)
  • disaster recovery allowance (but not in relation to 201920 bushfires)

Most of these pensions, payments and allowances will pre-fill in your tax return if you lodge online. You will need to make sure that all information submitted is correct though. Verify the pre-filled information with your own records to ensure that you are lodging the right information, and not missing anything.

Do you have concerns about your tax return this year? Uncertain about deductions, or if certain taxes will apply to you? Want a little more help or information about your government payments?

Be prepared for your individual income tax return with a consult with us. We can advise you on your tax returns, and potentially help you minimise the tax you will end up paying.

Posted on 12 July '21 by , under tax. No Comments.

Your Future, Your Super – What Does This Mean For Your Superannuation?

There has been a shakeup within the superannuation industry after the latest government reform passed through the Senate. You may have heard of Your Future, Your Super, which was introduced during the Federal Budget announcements of 2020-21, and wh

Your Future, Your Super was introduced during the Federal Budget 2020-21 announcements as a reform measure to address growing concerns about the performance of the superannuation industry.

Under the reform, superannuation funds will now face an annual performance test, public ranking by the Tax Office and the loss of an easy source of new members.

One of the most notable changes that have been introduced (as of 1 November 2021) is that Australians will no longer be required to fill out paperwork to avoid getting a new super fund when they switch jobs.

This measure has been designed to reduce the prevalence of unintended multiple superannuation accounts. The onus will be on the employer to check with the ATO if their employee has an existing super account, known as a ‘stapled super fund’, to pay the employee’s super guarantee into.

Super funds will also be subjected to a new annual performance test run by the Australian Prudential Regulation Authority (APRA), and underperforming products (those who show returns below 50 points ) will be labelled as underperformers. If your super is sitting in a dud fund and your nest egg is in an underperforming product, the trustees will be required to notify you within 28 days. Funds that fail the test twice in a row could be blocked from taking on new members.

Worried about how your superannuation fund may be performing, and not sure who to ask? Come have a chat with us.

Posted on 8 July '21 by , under super. No Comments.

Choosing A Structure For Your Business: The Co-Operative Explained.

Sometimes you might want to set up a structure where you will share in the spoils with everyone that deals with that structure.  There is a specific type of structure for this and it is known as a Co-Operative

A co-operative business structure (or co-op) is a legally incorporated business entity that is designed to serve the interests of its members. Co-operatives may be profit-sharing enterprises or not-for-profit organisations.

A cooperative business serves members by providing goods and services that may be unavailable or too costly to access as individuals. There are two types of cooperatives that businesses can be set up as.

Distributing cooperatives are able to distribute any annual profits to members of the cooperative. They are required to share the capital that they make, and members of this type of cooperative must own the minimum number of shares specified in the co-op’s rules.

Non-distributing cooperatives cannot share their profits with members of the cooperative. All profits must further the cooperative’s purpose, and the cooperative may or may not issue shares to the members. Members may be charged a subscription fee if there is no share capital

Some popular cooperatives business structures include:

  • Consumer co-operatives, which buy and sell goods to members at competitive prices in a variety of sectors.
  • Producer co-operatives, which may process, brand, market and distribute members’ goods and services, or supply goods and services needed by their members, or operate businesses that provide employment to members.
  • Service co-operatives, which provide a variety of essential services to their members and communities.
  • Financial co-operatives, including co-operative banks, credit unions, building societies and friendly societies, which then provide investment, loan and insurance services to their members.

Posted on 5 July '21 by , under business. No Comments.

Tax Treatments Will Differ Depending On Payment Types, Says ATO

The ATO is looking to make tax season a little bit easier this year, particularly in light of the unique but significant challenges that Australians have been facing over the last year, and are continuing to face. If you received a financial assistance payment, grant or scheme package during the 2020 financial year, you need to be aware of your taxable requirements. There are different tax treatments for different payments that you may have received.

Jobkeeper

Payments that were received from Jobkeeper as an employee will be automatically included in your income statement as either salary and wages, or as an allowance. Sole traders who have received a Jobkeeper payment on behalf of their business will need to include the payment as assessable income for the business.

Jobseeker

All information will be included in your tax return (in the Government Payments & Allowances question) when ready. Lodging your return prior to the information being available will require you to add it yourself. Leaving out income will slow your return, so it is important to ensure that you have all of the information when lodging.

Stand Down Payments

If you were the recipient of a one-off or regular payment from your employer after being temporarily stood down due to COVID-19, these payments will be automatically included in your return as they are taxable.

COVID-19 Disaster Payment For People Affected By Restrictions

The Australian Government (through Services Australia) COVID-19 disaster payment for those who were affected by restrictions is a taxable payment. This must be included when lodging your tax return.

Tax Treatment Of Other Assistance Payments

The tax treatment of other assistance payments may vary according to what is required and how the income is assessed as. It is best to double-check on the ATO’s website directly to determine how different disaster payments may impact your return.

Early Access To Superannuation

If you received early access to your superannuation under the special arrangements resulting from COVID-19, you do not need to declare that amount in your tax return. Any eligible amounts withdrawn under this program are tax-free.

If you require assistance with determining what is taxable income and what is not, or you’re not sure what payments that you received may be applicable to the ATO’s different tax treatments, come speak with us. We’re here to help.

Posted on 2 July '21 by , under tax. No Comments.

Planning Out Succession For Your Family-Run Business

Family-run businesses form an essential part of the economy. Tradition, success and history along with their unique dynamic can create a thriving business that many may wish to see continue.

However, as with any business, the conversation about succession and how to continue the business into the future needs to be had.

With only 1 in 4 family-operated businesses considering their approach to succession formally, succession in a family business is one of the greatest viability risks to the actual business and needs to be addressed accordingly.

Every family and family-run business is unique, and every transfer or succession of a family business will also be executed differently. If you are thinking about what your family business’s plan is for succession, you may want to consider keeping these critical factors in mind:

  • Where is your business going? What do you want for your family and business? What are your goals and your time frames for achieving those goals?
  • Is the vision you have for your business shared by your family? It is important to consider this for the succession of your business, as a mutually shared vision will ensure that the business continues on the projected path even after the business has been passed onto the next generation.
  • What obstacles and challenges will your family business face? You need to be able to understand the different perspectives and motivations of each individual that the succession impacts. Ongoing communication is vital to gaining this understanding, but an advisor can be employed to unbiasedly look at the situation independently and take the emotion out of a conversation.
  • Create a plan to plot out the path of the business’s future, and the challenges that the business may face along the way as well as what it is currently facing.
  • It’s important to remember that a family business does not have to be succeeded by a family (though it’s an outcome you may want). Always consider what the members of your family wish to do, and consider alternatives if none wish to take over the business.

A succession plan for a family business needs to be created to move forward and should detail all of the actions you intend to take (including the steps involved with both management and ownership succession).

It needs to be flexible, adaptable and ready to evolve, as businesses (as well as families), change over time. Your succession planning process should be transparent and understand and align with the goals you have set out for the business’s further development across the generations.

The most effective succession plans:

  • Preserve and generate family wealth
  • Minimise disharmony and disruption
  • Minimise the impact of tax
  • Encourage personal growth of family members
  • Fund the retirement and family lifestyle
  • Bring clarity to where the business and the family are heading.

Posted on 1 July '21 by , under business. No Comments.

ATO Says Different Payments Will Have Different Tax Treatments.

The ATO is looking to make tax season a little bit easier this year, particularly in light of the unique but significant challenges that Australians have been facing over the last year, and are continuing to face. If you received a financial assistance payment, grant or scheme package during the 2020 financial year, you need to be aware of your taxable requirements. There are different tax treatments for different payments that you may have received. 

 

Jobkeeper

Payments that were received from Jobkeeper as an employee will be automatically included in your income statement as either salary and wages, or as an allowance. Sole traders who have received a Jobkeeper payment on behalf of their business will need to include the payment as assessable income for the business.

 

Jobseeker

All information will be included in your tax return (in the Government Payments & Allowances question) when ready. Lodging your return prior to the information being available will require you to add it yourself. Leaving out income will slow your return, so it is important to ensure that you have all of the information when lodging.

 

Stand Down Payments

If you were the recipient of a one-off or regular payment from your employer after being temporarily stood down due to COVID-19, these payments will be automatically included in your return as they are taxable. 

 

COVID-19 Disaster Payment For People Affected By Restrictions

The Australian Government (through Services Australia) COVID-19 disaster payment for those who were affected by restrictions is a taxable payment. This must be included when lodging your tax return.


Tax Treatment Of Other Assistance Payments

The tax treatment of other assistance payments may vary according to what is required and how the income is assessed as. It is best to double-check on the ATO’s website directly to determine how different disaster payments may impact your return. 

 

Early Access To Superannuation

If you received early access to your superannuation under the special arrangements resulting from COVID-19, you do not need to declare that amount in your tax return. Any eligible amounts withdrawn under this program are tax-free.

 

If you require assistance with determining what is taxable income and what is not, or you’re not sure what payments that you received may be applicable to the ATO’s different tax treatments, come speak with us. We’re here to help. 

Posted on 30 June '21 by , under tax. No Comments.

Recent Changes To Your Superannuation That You Need To Know

There were a few changes to superannuation that were passed by the Senate recently.

 

You can now use the bring-forward rule to make three years’ worth of non-concessional contributions (where you don’t claim a tax deduction) up until the age of 67.  

 

Last year the rules had changed to permit a person to make non-concessional contributions up to the age of 67 but the use of the bring forward rule had stayed at an age limit of 65 years old, as it required a full Bill to be passed by both Houses of Parliament.  

 

This new age limit will apply to contributions made on or after the 1st July 2020.  This is particularly good news for people that turned 67 during the year and utilised the three year bring forward rule in anticipation of the law being passed.

 

From the first quarter after receiving royal assent (most likely to occur from 1st July), Self Managed Superannuation Funds will be allowed to have up to six members.  The limit is currently four members. For larger families, this will be of particular use and relevance, as the parents involved in the fund may wish to include more than two children (this could potentially be up to four children involved in this case). 

 

Pauline Hanson’s One Nation Party also passed through an amendment into the changes that will remove a charge on excess concessional contributions. Concessional contributions are those where you or your employer can claim a tax deduction on a contribution. 

 

If you or your employer currently contribute over the allowable caps (usually limited to $25,000 but moving to $27,500 on 1 July) to your super, you are charged an amount of around 3% of the excess you contributed and it is calculated from the 1st of July in the year that you made the contribution up until the day your assessment is due.  

 

There are still other charges that will apply to exceeding contribution allowable caps, such as Shortfall Interest Charge and General Interest Charge. The biggest is usually the Excess Concessional Contributions Charge.

 

This change was never announced and was not part of government policy but made it through anyway.  One Nation also tried to increase the maximum allowable tax-deductible contributions for persons aged over 67 years old, but that amendment did not go through.

 

Another change that had not been previously announced was that if you had an amount released from super under the Covid Relief package ($10,000 per year for two years) then you will not be able to claim a tax deduction for the same amount that you contribute back into super up until 2030. 

 

For example, Peter took his $20,000 under the Covid Release package.  Peter contributes $1,000 per month into his superannuation fund and usually claims a tax deduction for that amount.  

 

The first $20,000 that Peter contributes after 1st July 2021 will not be able to be claimed as a tax deduction. This only applies to personal contributions, so if your employer contributes on your behalf this will not impact you.

 

Want more information about super contributions, but not sure where to start? Come speak with us – we can help you with any questions you may have about superannuation.

Posted on 28 June '21 by , under super. No Comments.