Posted in: money
As individuals struggle with cash flow through the coronavirus, the Australian Bankers Association records that repayments on almost 500,000 mortgages have been deferred for six months. While repayments can be delayed, they cannot be avoided altogether.
Lenders can send you a default notice the day your repayment is overdue. However, they could also wait until your repayment is overdue by 90 or more days. When you receive a default notice, you are given 30 days to repay the amounts you have missed in addition to the regular repayment on your loan. Individuals who are struggling with their home loan repayments can avoid mortgage default by considering the following.
Contact your lender
Lenders are generally willing to work with you through financial hardship. Don’t be afraid to contact your lender to discuss your situation and find out what options are available for you. Lenders are often willing to negotiate short-term variations to repayment schedules that both parties can agree to. However, make sure that you do not agree to unrealistic repayment conditions that cannot be met.
Many Australian banks are offering a six-month deferral on mortgage repayments (including interest) for customers who are experiencing financial hardship as a result of COVID-19. If this is you, contact your bank to see if this is an option.
Apply for a hardship variation
Mortgage holders may be able to change the terms of their loan or temporarily pause or reduce their repayments under a hardship variation. A hardship variation can still be requested after you receive a mortgage default. To apply for one, contact your lender’s “hardship officer” and tell them that you wish to change your loan repayments due to financial hardship. This will usually require you to explain why you are struggling to make payments and to estimate how long your financial problems will continue to determine how much you can afford to repay.
After submitting a hardship variation request, your lender must contact you within 21 days with the outcome of your request. They may ask you for more details regarding your request; in this case, they must contact you again within 21 days from when you provide the additional information.
Consider selling your home
Selling your home is a tough decision, but in some cases this may be the better option if your circumstances are unlikely to improve. If you get to the point where your lender takes possession of your home and sells it, it’s likely that you won’t make as much as if you sold it yourself. When you sell your house on your own terms, chances are you will get a better price and avoid having to pay the legal fees passed on by your lender. Inform your lender if you decide to sell your home; they may ask for proof, such as a copy of the contract with your real estate agent or property advertisements.
Renting out your home until you can afford to make repayments again may also be an option if you are able to live somewhere else during this period.
Posted in: business
Maximising returns on investments is the primary goal for every business owner who invests in a marketing campaign for their brand. Learning how to properly test and troubleshoot your budget according to your business needs can help you save a failing campaign from costing you money.
The first step to budget optimisation is being clear with the goals you are trying to achieve through this campaign. These can include generating qualified leads, driving content downloads or building awareness of your brand. Understanding your objectives can help you decide what aspect of your campaign needs more finances.
Deciding how to set a maximum and minimum spend per day on your campaign can be challenging. A two to four week testing period can help in narrowing down the range that works best to deliver the results set in your objective phase. A common strategy is to start with a mix of ad formats including sponsored content, text and message advertisements. This testing method can help in identifying the types of ads and content that provides optimal results for your brand.
Adapting your budget
Budgeting for marketing campaigns may present a range of issues even after the testing phase. It should be noted that constantly changing and adapting parts of your campaign to run smoothly is a part of digital marketing. It may help to start with a daily budget that is higher at the start of the campaign, and use these insights to then optimise your campaign and lower daily limits if required.
If your campaign is exhausting its budget too quickly, consider lowering your daily limit. If your campaign is not spending its budget, then you may need to automate your bidding option or set more competitive bids. Automated bidding aims to deliver the most results while spending your daily budget in full. This can also help to provide fast results, which can be useful if your marketing content is time-sensitive. However, this will also lead to faster spending of your budget.
Posted in: super
The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.
Before consolidating your super, it is important to do the following:
Research your funds’ policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:
- Exit fees
- Insurance policies
- Investment options
- Ongoing service fees
- Performance of the funds
Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.
Gather the relevant information
When consolidating your super, you will need to have the following details ready:
- Your tax file number.
- Proof of identity. This could include your driver’s license, birth certificate or passport.
- Your fund’s superannuation product identification number (SPIN).
- Your fund’s unique superannuation identifier (USI).
- Details of your previous fund.
Posted in: tax
The Government has introduced additional changes to JobKeeper to help more businesses qualify for the relief payments.
One of the key changes was moving the relevant date of employment for an eligible employee from 1 March to 1 July 2020, to extend employee eligibility. This allows those who were full time employees on or before 1 July 2020 and employees who became long-term casual workers between 1 March to 1 July 2020 to be eligible for JobKeeper. This will increase the amount of employees that are eligible under the current JobKeeper Scheme, and will also expand the eligibility criteria under JobKeeper 2.1.
Businesses originally needed to show that they have met the decline in turnover test in the June, September and December 2020 quarters to receive JobKeeper payments. To qualify for the first phase of the JobKeeper Extension (28 September 2020 to 3 January 2021) businesses need to show that they have had a decline in turnover only for the September 2020 quarter, in comparison to the previous year.
To qualify for the second phase of JobKeeper Extension (4 January 2021 to 28 March 2021) businesses need to show that they had a decline in turnover for the December 2020 quarter only to be eligible for payments.
This change can be particularly useful to businesses that may not have met the decline in turnover test in the June or September quarter, but suffer significantly in the December quarter.
The improved accessibility to JobKeeper payments comes from the impacts of economic downfalls in Victoria. It is predicted that more than 80 percent of these payments will flow towards assisting Victorian businesses and employees.
Posted in: business
When business is going well, it can be easy to procrastinate planning for the bad times. However, preparing for disaster before it strikes by having a contingency plan can be the key to business survival.
A contingency plan can help businesses prepare for possible circumstances such as natural disasters, employee theft, negative publicity or staff injuries. Having a plan for these contingencies can help your business react faster to unexpected events to prevent ongoing damages, recover from disruptive events, and resume regular business operations as quickly and easily as possible. When writing a contingency plan, consider incorporating the following tactics:
Identify the risks
Think about the key risks that your business could face. This could involve researching your business market, competitors, economy trends, security threats or employment issues. It is a good idea to work with members of different departments in your business in order to foresee potential risks in all sectors.
Once you have identified potential risks, prioritise the ones that are most likely to affect your business. This will ensure that the most relevant issues are addressed first to provide you with a plan if they occur. One way to do this is by creating a risk assessment to identify the most pressing risks.
Create a plan
After identifying the key risks to your business, you can start drafting a contingency plan to mitigate their effects. This should include a clear guideline that outlines what to do when a contingency occurs and how to continue operating the business. The plan should also clarify employee responsibilities, key contact details, timelines of when tasks should be done, restoration processes, and existing resources that can be drawn upon to prevent damage, such as insurance coverage.
Consider the resources you may need in order to resolve a contingency. This could include extra staff, insurance, PPE, or technical support. In order for the resolution process of a contingency to go smoothly, it is important that you have enough equipment and support so that you don’t have added stress and time going towards finding extra resources.
Share the plan
Once you have written a contingency plan, ensure that they are accessible to your employees and stakeholders. Be receptive to any feedback your employees or stakeholders may have about your plan as there may be room for improvement. It is also important to review your plan over time to ensure that it stays up to date.
Posted in: super
Self-managed super fund (SMSF) trustees are required to appoint an ATO-approved SMSF auditor no later than 45 days before lodging their SMSF annual return. An SMSF auditor is a professional who assesses your fund’s compliance with superannuation law and examines your fund’s financial statements.
SMSF auditor eligible requirements
Your SMSF auditor must be:
- Independent. SMSF auditors cannot audit a fund that they hold financial interest in, or have a close personal or business relationship with the SMSF members or trustees.
- Registered with ASIC (Australian Securities & Investments Commission) and holds an SMSF auditor number for you to provide on your annual return.
What will your SMSF auditor do?
An SMSF auditor provides you with an independent opinion on the existing assets in your SMSF and whether or not your fund complies with the rules outlined in the Superannuation Industry (Supervision) Act 1993.
When preparing for an audit, an SMSF auditor will issue a Terms of Engagement Letter to the trustee(s) of the fund, which includes the roles and responsibilities for parties involved in the audit as well as the range of the audit. In the case that your SMSF auditor’s primary contact is your accountant, your accountant will be issued a separate Terms of Engagement Letter.
By clearly outlining each parties’ capabilities, a Terms of Engagement Letter helps you, your accountant and your auditor to avoid any misunderstandings and also protects audit evidence provided by your auditor from unintended alterations. In turn, SMSF auditors who fail to follow standards or take shortcuts can be sued or imposed penalties by the Court.
The Terms of Engagement Letter also acts as a contract to keep parties accountable during compliance breaches and prevents cases of ‘opinion shopping’ where trustees look to other auditors for unqualified opinions. Trustees may end up being audited by the ATO in the event that they breach the Terms of Engagement Letter and ‘opinion shop’, as it comprises auditor independence.
Posted in: tax
Transferring the ownership of assets from one party to another may attract CGT. However, in the event that a change in ownership occurs due to the breakdown of a relationship, you may be eligible for a rollover of the asset.
A rollover allows taxpayers to defer or disregard a capital gain or loss that would normally arise on a CGT event. Specifically, a same asset rollover can occur when an individual transfers assets to their ex-spouse, as the transferee already has an involvement with the asset. The spouse who receives the asset will make the capital gain or loss when they dispose of the asset in future. They will also receive the cost base of the asset (the cost of the asset at the time of its initial purchase), as well as expenses incurred when acquiring, holding and disposing of the asset.
The rollover applies to CGT events that occur as a result of:
- An order of a court or a court order made by consent under the Family Law Act 1975 (foreign laws with similar logistics may also apply).
- A court order under a state, territory, or foreign law relating to the breakdown of a relationship.
- A binding financial agreement, or a corresponding written agreement.
Separating couples transferring assets in accordance with a binding financial agreement will not require court intervention, however, for rollover to apply, the following must be true at the time of transfer:
- the involved spouses are separated,
- there is no reasonable expectation of cohabitation resuming,
- the transfer of assets occurred for reasons directly related to the breakdown of the relationship. For example, the transfer may not be directly connected to the separation if the spouses already agreed to the transfer before the breakdown of their relationship.
Couples with informal or private agreements related to the transfer of assets will not be eligible for a rollover, and CGT will apply to these ownership transfers. The parties cannot choose whether or not the rollover applies to their situation.
Posted in: business
A successful sales strategy plan will provide your business with clear priorities, goals, and outcomes that can help you increase sales.
Outline your mission and goals
What’s your business’ mission statement? What are the goals and objectives that will help you achieve this? Your mission statement should define what your business stands for and what it aims to achieve, while your goals and objectives should be aimed at executing your mission. Consider using the S.M.A.R.T. framework when developing your goals to ensure that they are specific, measurable, achievable, relevant, and time based.
Identify your ideal customer
Knowing your ideal customer persona is crucial as it will be the basis of your marketing strategy. Assess your ideal audience by researching their demographics, needs and wants while thinking about how your products or services have to offer them. Don’t limit your demographic research to age, location, and gender, but also consider their attitudes, aspirations, and lifestyle.
Conduct a SWOT analysis
Assessing your business by using a SWOT analysis can help you identify areas to consider when developing a sales strategy plan, by addressing:
- What are your strongest assets?
- How skilled is your sales and marketing team?
- What advantages does your business have over competitors?
- What resources are available to you?
- What are your areas of improvement?
- What types of complaints do your customers have?
- Where do you fall behind from your competitors?
- Are you working with limitations on resources or skills?
- Are there changes in the business environment you can benefit from?
- Have there been changes in the market that could present an opportunity?
- Do your competitors have weaknesses or gaps you can fill?
- Are your competitors expanding or getting stronger?
- How satisfied are your customers?
- Are there changes in the economy, consumer behaviours, or government regulations that could affect your sales?
Posted in: super
Using SMSFs to buy property has become increasingly popular among Australians in recent years, particularly since it became possible for SMSFs to borrow money to fund a direct property purchase.
A residential property owned by an SMSF has some limitations as to who it can be leased to.
To buy property through your SMSF, the property must meet the following requirements:
- It meets the ‘sole purpose test’ of solely providing retirement benefits to members of the fund.
- It is not acquired from a related party of a fund member.
- It is not to be lived in or rented by a fund member or a party related to a fund member.
A commercial property owned by an SMSF can be leased to a wider range of tenants than residential properties. Commercial property purchased for business purposes can be purchased from a member of the SMSF or a related entity. This allows small business owners to use their SMSF to purchase the premises from which their own business is run, enabling them to pay rent directly to their fund. This can be preferable to paying rent to an alternate landlord. However, keep in mind that rent must be at market rate and be paid promptly and in full at each due date.
SMSFs can borrow money to purchase a property, however, the borrowing criteria for an SMSF is generally much stricter than regular property loans taken out by individuals. All loans must be undertaken through a limited recourse borrowing arrangement (LRBA). An LRBA involves an SMSF trustee taking out a loan to purchase a single asset, such as a residential or commercial property. Under the Superannuation Industry (Supervision) Act 1993, super fund trustees can use borrowed money to pay for regular repairs and maintenance. However, borrowed money under the LRBA cannot be used for property improvements or renovations that result in the acquirable asset becoming a different asset. This may include adding additional rooms to the property or completely renovating a room.
Buying and renting property through an SMSF also comes with tax consequences. SMSF funds are required to pay 15% tax on rental income from properties purchased through the fund. However, properties held for over 12 months receive a one third discount on any capital gains made upon the sale, bringing any CGT liability down to 10%.
Expenses such as interest from loans, council rates, maintenance and insurance can be claimed as tax deductions by the SMSF.
As well as this, once SMSF members reach pension phase, any rental income or capital gains arising in the fund will be tax-free.
SMSF property costs
SMSF property sales often attract higher fees that can end up reducing your super balance. Fees and charges can include:
- legal fees,
- property management fees,
- bank fees,
- advice fees, and
- stamp duty.
Posted in: tax
The Taxable Payments Annual Report (TPAR) is an industry-specific report through which businesses inform the ATO of the total payments made to contractors for services in that financial year. This information is then used by the ATO to match the contractors’ income declarations to improve their compliance efforts.
A TPAR is generally required by businesses that have an Australian Business Number (ABN), have supplied a relevant service and have made payments to contractors for services completed on your behalf. Contractors can be operating as sole traders, partnerships, companies or trusts. The following services are considered relevant:
- Building and construction services
- Courier or Road freight services
- Cleaning services
- Information Technology services
- Investigation or surveillance services
If your business provides these services, regardless of whether it is only a part of the services you offer, or if it is a federal, state, territory or local government entity, you are obligated to report the payments made to third parties through a TPAR.
It is important to remember that not all payments need to be reported. Your taxable payments annual report does not require details of:
- Payments for exclusively materials
- PAYG withholding payments
- Contractors who do not provide an ABN
- Incidental labour costs
- Invoices that are unpaid as of 30 June
- Payments within consolidated groups
- Payments for private and domestic projects.
Only payments made to contractors for work that is relevant to carrying on your business needs to be reported. Your TPAR is due by 28 August each year, and fines may apply for not lodging the report by the specified deadline.
If your business does not need to lodge a TPAR for a particular financial year, consider submitting an optional non-lodgement advice through the ATO business portal to avoid unnecessary follow-up about TPAR lodgements.