Month: January 2020

Is Your SMSF Investment Strategy Compliant?

Once a SMSF trustee has developed and executed a fund’s investment strategy, the Australian Taxation Office (ATO) recommends reviewing a fund’s investment strategy at least annually. A review will be necessary over time anyway due to naturally occurring changes of circumstances. For example, a change in management or members, market changes, government rule changes and investment fluctuations.

The ATO is concerned that some trustees are not considering the diversification of their fund’s assets, potentially exposing a fund’s members to risk if more than 90% of a fund’s investments are held in a single asset class.

As of August 2019, the ATO has written to thousands of SMSF trustees to alert them to their obligation to review and diversify their investments for the health of a fund and for the benefit of a fund’s members.

Where a trustee has reviewed a fund’s investments, the ATO requires that the reasons behind investment decisions are provided in a written document for the ATO’s approval.

To be in accordance, under the law, an investment strategy is required to meet Sub-regulation 4.09(2):

”The trustee of the entity must formulate, review regularly and give effect to an investment strategy that has regard to the whole of the circumstances of the entity including, but not limited to, the following:

(a) the risk involved in making, holding and realising, and the likely return from, the entity's investments, having regard to its objectives and expected cash flow requirements;

(b) the composition of the entity's investments as a whole, including the extent to which they are diverse or involve exposure of the entity to risks from inadequate diversification;

(c) the liquidity of the entity's investments, having regard to its expected cash flow requirements;

(d) the ability of the entity to discharge its existing and prospective liabilities;

(e) whether the trustees of the fund should hold a contract of insurance that provides insurance cover for one or more members of the fund.”

As a trustee it is important that you carefully and comprehensively review your SMSF’s investment strategy and document clearly your decision-making behind said investment strategy – including objective, method, risk, liquidity vs illiquidity and diversification options.

So long as you can provide evidence to support your investment strategy, the ATO – joint (with ASIC) regulator of SMSFs – may deem your approach compliant and thus no administrative penalties would be meted out to you.

For more information, see also ‘Does your SMSF have an investment strategy?’ in YML Group’s July 2019 newsletter: https://ymlgroup.com.au/does-your-smsf-have-an-investment-strategy/

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with reviewing your SMSF investment strategy. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

Deed of Variation – NSW Surcharge Land Tax

In June 2016 the NSW government introduced two surcharges payable by a ‘foreign person’ purchasing and/or owning residential property in NSW:

  1. Surcharge Purchaser Duty – currently 8% of the market value of the residential property – payable once upon acquisition;
  2. Surcharge Land Tax – currently 2% of the unimproved value of the residential land – payable annually on such land owned as at 31 December each year.
Trust Deeds

Residential property and/or land held in trust wherein any person is deemed to be ‘foreign’ – an individual, a corporation, a trustee ‘not ordinarily resident in Australia’ and who holds a ‘substantial interest’ of 20% or more, including beneficiaries of a trust* – means the trust is liable to pay the surcharge/s. Where this is the case, a trust deed may be varied by drawing up a Deed of Variation to exclude any foreign person/s.

* For a full definition of ‘foreign person’, see https://www.revenue.nsw.gov.au/help-centre/resources-library/g009

Deed of Variation

By now, many discretionary trust deeds have been amended to exclude foreign person/s from benefiting from a trust. Did you amend your trust deed prior to 31 December 2019?

If you have not yet reviewed and considered your trust, it may be time to consult YML Group for an assessment of the ‘foreign’ status of your trust. A Deed of Variation may be used – going forward – to reduce and/or exempt your trust’s surcharge liabilities.

How can YML help?

Talk to our Accountants today to see how YML Chartered Accountants can assist you with your Trust Deed of Variation. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.

5 Everyday Examples of IPA in Practice

Enhanced focus and productivity by your employees is achievable with the introduction and integration of Intelligent Process Automation (IPA) – software capabilities – and IPA applications can help mitigate human error in your business transactions with your clientele. How ‘real’ are these benefits of IPA?

Here are five examples of IPA in the workplace:

  1. Human Resources (HR), both in the recruitment industry and in dedicated departments within organisations, use IPA for hiring new employees and for onboarding – domestic and/or remote employee induction.
  • Office set-up without human intervention
  • Sharing of information and central data access ‘across the miles’
  • Enhanced data security, speedy data collection
  • Enjoy scalability when increasing workforce
  • Monitoring of remote processes

  1. Payroll Processing utilises IPA through the Australian Taxation Office’s (ATO) Single Touch Payroll (STP) software. Accounting departments are increasingly using IPA to perform numerous tasks, including data collection from timesheets, calculations of wages and payment of superannuation, to name but a few applications.
  • Accurate payslip generation
  • Simplified EOFY PAYG statement generation
  • Improves compliance with ATO reporting obligations
  • Stores payroll data accurately and securely
  • Easily accessible payroll data for management and employees

  1. Customer Service, a vital department of many retail and service companies, uses IPA functions for slick interaction with customers. One highly-efficient use of IPA is the handling of customer email queries. Thousands of email queries may be sorted and amalgamated according to the level of critical response required. Promotional and other email campaigns may be automatically generated using CRM data analytics.
  • Increases customer value through improved communication
  • Broader email scope and shorter response times
  • Greater customer order value and goodwill
  • Motivates staff and improves productivity
  • Enables strategic solutions to customer needs

  1. Order Fulfilment in small and large retail businesses is easier and well-regulated via IPA. With reduced human intervention, robotics can handle the fulfilment process and provide systematic updates of orders to customers, accelerating despatch communication.
  • Eliminates errors and manual data entry time
  • Reduces accounting costs
  • Improves inventory data records
  • Enables faster shipping to customers
  • Remote order processing possible

  1. Social Media Management helps businesses grow – new leads, conversions to sale – and there are various IPA software platforms available to make keeping abreast of a target market easier, faster and more comprehensive without the need for 24/7 manpower. Businesses can manage multiple social media channels all at once, providing their audiences with timely, relevant and engaging content.
  • Collaborative digital platform, minimising time
  • In-built reporting on target audience analytics
  • Real-time posting to multiple channels
  • Scheduling capabilities, publishing calendar to maintain engagement
  • Manages content from any location

IPA, encompassing Robotic Process Automation (RPA), saves businesses time and money, as demonstrated in these five examples of workplace process automation. Where tasks are rule-based, repeatable, manual and repetitive, IPA and RPA are the future of more efficient and smarter workplaces for all stakeholders.

How can YML help?

Talk to our YML Innovation Team today to see how YML Group can assist you with your IPA strategy. Contact us on (02) 8383 4400 or by visiting the Contact Us page on our website.