Intentionally underpaying Employees is now a criminal Offence

A NEW criminal offence for intentionally underpaying employees in Australia was a change, commencing 1 January 2025, made to the Fair Work Legislation Amendment (Closing Loopholes) Act 2023. Employers found guilty could face substantial fines or even a custodial sentence.

Honest mistakes, assessed by the Australian Taxation Office (ATO), may be deemed exempt. Employers will ideally act in good faith to ensure payroll errors, if any, are accidental, are corrected quickly and are well-documented to show no intent to underpay.

YML Business Services offers a team of dedicated and trained professionals who, using cloud-based technology to work seamlessly, partner with employers to help businesses streamline and manage their day-to-day accounting activities, including payroll.

For many small to medium Australian businesses (SMEs) accessing highly skilled accounting professionals is made easy by adopting virtual bookkeeping services to monitor their business’s financial health.

Using your company’s established internal resources alongside external specialists – namely outsourcing and co-sourcing – to manage your payroll functions and mitigate the risk of underpaying your employees could be a wise decision for your business considering the recent change to the Fair Work Australia legislation.

YML Business Services can provide expert, specialised know-how to assist you with:

• Using reliable and compliant payroll software systems – Single Touch Payroll (STP)
• Reviewing employees’ work arrangement classifications – casual, part-time, full-time
• Keeping accurate payroll records
• Paying superannuation correctly and timely
• Guidance on paying employees correctly
• Guidance on workplace laws and entitlements
• Keeping up with Fair Work Australia updates

How can you be a first-rate employer?

By adopting virtual bookkeeping services through YML Business Services, you can gain and maintain better control of your payroll and other financial operations, as well as ensure your business is abiding by the latest Fair Work Australia legislative changes.

How can YML help?

Talk to our YML Business Services Team today to see how YML Group can assist you with your payroll obligations. For more information, view our website and contact us on (02) 8383 4455 or by using our Contact Us page on our website.

How to boost your spouse’s balance and make the most of contribution caps

Why boost your spouse’s balance?

1. Maximising the opportunity to contribute to super

The option to carry forward unused concessional contributions is restricted to those with a total super balance below $500,000 on 30 June of the prior financial year. If one spouse’s balance is coming close to the threshold and they are at risk of losing this opportunity, contribution splitting can be used to transfer funds out of their super balance.

Also, individuals with a total super balance above the general transfer balance cap (currently $1.9 million) cannot add further non-concessional contributions to super. Spouse contribution splitting and/or withdrawals after retirement can reduce the balance of a partner that would otherwise exceed this limit, so they can retain the option to make non-concessional contributions.

2. Equalising balances

At retirement, the transfer balance cap places a per-person limit on the amount that can be transferred into the tax-free retirement phase. Equalising balances can maximise the total a couple can transfer if only one of them would otherwise have a balance above the cap (currently $1.9 million).

Example – maximising tax-free super

Terry and Gillian are currently aged 50, and planning retirement at 60. Terry’s balance is much lower than Gillian’s because he took some time out of the workforce recovering from a serious injury and now works part time earning a lower wage.

Based on projections if they take no action, Gillian’s expected balance at retirement is $2.5 million and Terry’s is $900,000 (in today’s dollars).

Their financial planner recommends they employ a range of strategies to reduce the gap in their balances. If they put these in place, their expected retirement balances are $1.8 million for Gillian and $1.6 million for Terry.

This will ensure that both partners can transfer their whole balances into the retirement phase at age 60 and enjoy tax-free investment earnings.

Without action, Gillian would have $600,000 in super at retirement that she could not transfer to the retirement phase. She could either retain this amount in a super accumulation account (where earnings would be taxed at up to 15%) or cash the amount out of super where earnings would be subject to income tax. She may also consider the option of cashing a lump sum to contribute to Terry’s super, but would be limited by the non-concessional contribution cap.

3. Enhancing Age Pension

When one partner is older than the other, retaining super in the account of the younger spouse can enhance Age Pension entitlements while the younger spouse is under the Age Pension age (currently 67).

Using contribution splitting and/or cashing benefits from the older spouse’s account to contribute to their partner’s super reduces the amount counted in Centrelink’s income and asset tests because the superannuation balance of a person under the pension age is not assessable.

With a lower amount being assessed in means tests, the older partner may receive a higher rate of Age pension or qualify for a pension that would not otherwise be payable.

Split your super contributions

One way to boost your spouse’s super account balance is to split the concessional contributions made into your own super account and transfer some of them into your spouse’s account.

This can be a good way to equalise your super account balances if your spouse has less super than you, or if they are on a lower income and receiving lower SG contributions. It may also be of benefit if your spouse is younger than you and transferring your contributions into their account will help you qualify for higher Age Pension payments.

Contribution splitting is different from splitting or dividing your super in the case of a relationship breakdown or divorce. The division of super (or payment split) in these situations is part of a financial agreement reached under the Family Law rules.

You can split contributions where you are any age, but your spouse receiving those split contributions needs to be less than their preservation age, or age between preservation age and 65 and not yet retired. So that rule is just to stop us splitting contributions to a spouse who can then immediately withdraw the money.

Split super contributions remain preserved until the receiving spouse reaches their preservation age.

Splitting your concessional (before-tax) contributions with your spouse does not reduce the amount counted towards your annual concessional contributions cap ($30,000 in 2024-25).

Your super fund still reports all the super contributions made into your account during a financial year, including any contributions later transferred to your spouse.

What super contributions can be split?

You can ask your super fund to transfer up to 85% of your taxed splittable contributions from a particular financial year into your spouse’s super account.

Taxed splittable contributions are generally any employer contributions (including salary-sacrifice contributions) and any personal super contributions you have claimed as a tax deduction in your income tax return.

Need to know

The maximum amount of taxed splittable contributions you can split with your spouse in a particular financial year is limited to your concessional contributions cap for that year ($30,000 in 2024-25).

You can only split the lesser of 85% of your concessional contributions for that year, or the amount of your concessional contributions cap for that year.

Contributions that cannot be split with your spouse generally include:

• Personal contributions for which you can’t claim a tax deduction
• Contributions made by your spouse to your super account
• First Home Super Saver Scheme and downsizer contributions
• Government co-contributions and LISTO contributions
• Contributions with a CGT cap election for small business
• Contributions made for you if you are aged under 18 unless they are from your employer
• Transfers and allocations from foreign funds and reserves
• Rollover super benefits
• Temporary resident contributions
• Super benefits subject to a payment split due to a relationship breakdown
• Contributions you make with a personal injury election
• Contributions that have already been split.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF estate plan. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

Why comparing your Business with Others in the same Industry is good for Business

To ensure tax compliance and fairness among Australia’s small businesses, the Australian Taxation Office (ATO) sets out two types of business benchmarks – performance benchmarks and input benchmarks. These benchmarks exist to assist small businesses in meeting their taxation obligations, to help small businesses measure their financial health and identify how to improve financial performance.

What are the ATO’s Small Business Benchmarks?

The ATO analyses data from tax returns, Business Activity Statements (BAS) and other sources to establish an industry’s benchmarks. Using these industry benchmarks, the ATO can determine which businesses fall outside the expected range for a specific industry and investigate further, possibly leading to financial audits and or penalties.

Being above or below benchmarks does not automatically mean an issue with a business, but it may raise a red flag and prompt the ATO to look further into a business’s financials, typically conducting an audit.

To check if a business’s financials align with industry standards, performance benchmarks measure key financial ratios such as:

• Cost of Goods Sold (CoGS) to turnover
• Total expenses to turnover
• Gross profit margin
• Net profit margin

To help the ATO assess if reported income by a business is realistic within its industry, input benchmarks are calculated using the appropriate price or charge for a service based on the relevant labour and materials used. Turnover is estimated based on business inputs, such as materials purchased for a job. This benchmark is most often used for tradespeople, and high cash transaction businesses such as cafes and hairdressers and other cash-based businesses where there might be under-reporting of cash income.

What raises the ATO’s interest in a small business?

Small businesses should be aware that the ATO looks for significant deviation from industry benchmarks, including underreported income and sales, hidden income, inflated expenses, false deductions, and discrepancies between a business’s financials and its owner’s lifestyle.

How small businesses can benefit from the ATO’s Small Business Benchmarks

Next Steps

The ATO encourages voluntary tax obligation compliance by making its small business benchmarks and associated data publicly available for ease of comparison by small businesses. Access small business benchmarks on the ATO website Benchmarks A–Z | Australian Taxation Office.

Small businesses may self-correct any reporting issues found when making regular comparisons. Self-correction may reduce the likelihood of a business being audited by the ATO.

Review your record-keeping practices and how your income is reported. If you find your business is outside a benchmark, seek professional advice from YML Chartered Accountants for guidance.

How can YML help?

Talk to our YML Chartered Accountants today to see how YML Group can assist you with your small business. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Refinance with YML Finance for a Cash Boost

If you refinance now with YML Finance, we can get you up to $4000 as a cash boost to help you repay your loan.

Learn more about how we can help you by calling us on (02) 8383 4466 and requesting a callback or making an appointment with the YML Finance Team.

How can YML help?

Talk to our YML Finance Team today to see how YML Group can assist you with a loan. For more for more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.

Payday Superannuation Reform – What does it mean for you?

As part of the government’s Securing Australians’ Superannuation package to commence from 1 July 2026, employers will be obligated by law to pay their employees’ superannuation contributions on the same day – and be received within seven (7) days – as wages and salaries are paid.

Payday refers to the date that an employer makes an ordinary time earnings (OTE) payment – weekly, fortnightly or monthly – to an employee.

Currently, superannuation contributions are paid quarterly, with employees waiting up to four months to see those contributions in their superannuation accounts. For employees, the new system will provide greater transparency, enable real-time contribution checks and tracking, and enhance retirement savings outcomes.

For businesses, the new system will streamline payroll processes and reduce the risk of non-compliance – unpaid contributions – which attracts the Superannuation Guarantee (SG) charge penalty.

The reform will take effect on 1 July 2026 when employers will need to deposit superannuation contributions into employees’ accounts within seven (7) days of each payday. Non-compliance will result in penalties including paying unpaid contributions, daily interest on unpaid contributions and administrative fees under a newly updated policy change to the Superannuation Guarantee (SG) charge.

What can employers do now?

The Payday Superannuation reform is a significant change to the management of employee superannuation contributions and will require employers across all Australian organisations to transition from the current quarterly payment system.

Employers who are currently using SuperStream, an ATO-regulated software for making electronic superannuation payments, should plan for upcoming software and payroll updates to accommodate the Payday Superannuation reform before 1 July 2026.

Employers can continue to keep accurate payroll and superannuation records, and ensure they continue to pay timely superannuation contributions within the current quarterly deadlines. This will put employers in good stead to transition without delay to the new payment system and thereby meet their ATO obligations from 1 July 2026.

How can YML help?

Talk to our YML Business Services Team today to see how YML Group can assist you with your SG obligations. For more information, view our website and contact us on (02) 8383 4455 or by using our Contact Us page on our website.

FBT Year ends 31 March – What Employers need to know about providing Fringe Benefits to Employees

Fringe Benefits Tax (FBT) is a tax levied on Australian employers for the benefits they provide to their employees, typically in addition to salary and wages. FBT is based on the taxable value of various fringe benefits provided during the FBT year – 1 April to 31 March.

FBT is a separate tax from income tax and is not payable by employees but rather by employers.

It is important for employers to understand and manage their FBT obligations to optimise their business costs and to remain in compliance with the Australian Taxation Office (ATO).

Understanding and managing FBT is crucial to ensuring that business costs are effectively administered because paying tax whilst providing benefits to employees can affect a company’s balance sheet.

What benefits qualify for FBT?

Common fringe benefits provided by employers include:

• Vehicle benefits – Use by an employee of a company car for private purposes
• Loan benefits – Interest- or low-fee loans to employees
• Housing benefits – Provision of housing or other accommodation to employees
• Paid expenses benefits – Payment of health insurance or school fees on behalf of employees
• Entertainment benefits – Provision of meals, event tickets or leisure activities

What benefits are exempt from FBT?

Electric vehicles (EVs) bought by businesses for use by employees do not currently incur FBT, provided that the car is zero- or low-emission, was first sold after 1 July 2022 and is below the luxury car tax threshold. Employers should check any potential or planned EV purchase meets the ATO’s criteria for exemption.

However, from 1 April 2025, one type of EV will no longer be exempt from FBT: plug-in hybrid electric vehicles (PHEVs). If a business already has a financially binding agreement prior to 1 April 2025, then applying for an exemption from FBT is allowed. Any new financially binding commitments for PHEVs after this date will be subject to FBT.

Other benefits that are exempt or receive concessional treatment include:

• Work-related items – Computing equipment such as laptops and mobile phones
• Minor benefits – Incidental items that cost less than $300
• Relocation and travel expenses – Relocation and travel benefits for employees

Registering for FBT and how to pay FBT

Businesses that provide fringe benefits to their employees must register with the ATO.

If an employer has a FBT liability, they must lodge a FBT return by 21 May after the FBT year ends on 31 March.

Any FBT payable by an employer to the ATO may be paid in quarterly instalments through their Business Activity Statement (BAS).

Failure to register or failure to pay FBT when required may result in penalties.

As the FBT year-end is fast approaching, now is the time for employers to review their FBT obligations.

Make sure to have kept detailed records – vehicle usage logs, expense receipts – and seek professional financial advice.

Reach out to us at YML Chartered Accountants and we will review and assess your fringe benefit provisions to employees to check whether those fringe benefits qualify for or are exempt from FBT in preparation for lodging a FBT return by 21 May 2025.

How can YML help?

Talk to our YML Chartered Accountants today to see how YML Group can assist you with your FBT obligations. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

A Trump Presidency – What it means for Australian Investors

A Trump presidency in the US may have been a surprise for many but some international financial markets have been predicting the outcome with bond yields, the US dollar and Bitcoin all being ‘up’ over the past month, and likely to influence Australian interest rates and investment returns​.

Overall, a Trump presidency could also mean a potential ramping up of trade wars and general increased economic uncertainty.

AMP Head of Investment Strategy and Chief Economist Shane Oliver* says the likely investment market implications of Trump’s proposed policies are:

• • Upward pressure on US bond yields from a bigger budget deficit, higher inflation and higher interest rates

• • Upward pressure on the value of the US dollar (putting downward pressure on the Australian dollar) because of higher tariffs, higher than otherwise Fed interest rates and increased global uncertainty

• • Upward pressure on Bitcoin and other cryptos as Trump is seen as supportive of crypto

• • Ambiguity for the US share market - While tax cuts and deregulation will be positive in the short-term, trade wars and higher bond yields will be negative over the longer-term

• • US shares are likely to outperform global shares reflecting the tariffs and increased global uncertainty

• • Upward pressure on US financial and energy shares relative to clean energy shares

• • Upward pressure on US small caps relative to large caps as small caps will benefit most from the lower corporate tax rate on domestic profits and large caps are vulnerable to a trade war

YML’s Approach to managing our Clients’ Investment Portfolios

At YML we pay close attention to fund manager briefings and Webinars to understand their take on the global financial market and what actions are being taken in response to market influences. We constantly review macro commentary and regularly confer with our consultants at Morgans.

We agree with the comments made by Shane Oliver and have been allocating our clients’ funds to small caps and international shares over the past eight months. We continue to focus on investing in and holding shares in sound and quality businesses, as well as allocating investment funds to highly rated, ‘good record’ fund managers.

We remain mindful of ensuring diversification across various local and international asset classes as this bodes well for short- and longer-term results.

We welcome the opportunity to advise and manage our clients’ superannuation, personal and trust funds. As Trump’s presidency begins, our bespoke investment portfolio design and ongoing management will reflect you and your financial objectives for your life stage.

* Super news for November 2024

How can YML help?

Talk to our YML Financial Planning Team today to see how YML Group can assist you with your financial investments. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.

Not-for-Profits and Deductible Gift Recipients – Eligibility

Organisations in Australia that are created as not-for-profits (NFPs) focus on reaching charitable, social and humanitarian goals within their communities. Both NFPs and other Australian businesses can register as deductible gift recipients (DGRs) to receive donations that are tax-deductible by the donors who contribute to them.

NFPs must operate for a purpose, commonly charitable work, community support, education, religion, and any profits or surplus funds are used to further their purpose. Directors, members and shareholders may not receive a distribution of profits.

Setting up a NFP requires:

• outlining a mission and objectives that meet the definition of a charity
• ensuring compliance with relevant laws for NFPs – seek professional advice
• registering with the Australian Charities and Not-for-profits Commission (ACNC)
• funding a NFP which typically relies on grants and donations for financial support
• applying for tax concessions through the ATO, including DGR status, if eligible

DGRs are NFPs or funds which are eligible to receive donations from donors who may claim their donations as tax deductions. Being granted DGR status can be advantageous to an organisation because it encourages public donations for their charitable programmes, in areas such as health, education, environment, welfare. Receiving donations from the public can benefit a DGR by improving their financial ability to support their charitable work.

Becoming a DGR involves an organisation:

• meeting eligibility requirements, including falling into one of the general DGR categories listed in the Income Tax Assessment Act 1997
• registering with the Australian Charities and Not-for-profits Commission (ACNC), if required
• applying for DGR status with the ATO
• establishing public funds, if relevant to an organisation’s financial strategy for funding its causes or mission

A DGR-endorsed organisation has been officially recognised by the ATO as having a special taxation status that enables an organisation’s donors to generally – exceptions apply – claim their donations over $2 as tax deductions.

Compliance of NFPs and DGRs

Annual reporting is required by the ACNC to comply with fundraising regulations. It is therefore important to maintain accurate records of income, expenses and donations. Finally, transparency with donors is essential to ensure that an organisation retains both its integrity and legality to provide the incentive of tax deductions to the donating public.

How can YML help?

Talk to our YML Chartered Accountants today to see how YML Group can assist you with structuring your NFP and applying for DGR endorsement. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.

Is it a good time to think about fixing your loan and will it help your borrowing capacity?

No one really knows how low they will go. 

But some banks will not wait. We are already seeing low fixed rates. As low as 5.69% fixed for 2 years with Principal and Interest repayments for home loans. 

If your current loan is 6.45% pa or above, the difference is 3 rate drops of 0.25% each.

Also, some lenders will use the actual fixed rate to assess your borrowing capacity, allowing you to borrow more if you fix your home loan on the lower rate.

How can YML help?

Talk to our YML Finance Team today to see how YML Group can assist you with your financial investments. For more information, view our website and contact us on (02) 8383 4466 or by using our Contact Us page on our website.

How Transition-to-Retirement (TTR) works

Retirement is in your sight, and you would like to either a) wind back your work hours, or b) keep working full-time to contribute more to your superannuation fund. Both these scenarios might be possible with an income stream from a transition-to-retirement (TTR) pension.

What is TTR?

A transition-to-retirement strategy allows individuals who have reached their preservation age (55 if born before 1 July 1960, rising to 60 if born after 1 July 1964) to access their superannuation in the form of a TTR income stream whilst continuing to work beyond their preservation age.

If you’re looking to reduce your work hours, then a portion – between 4% and 10% – of your superannuation can be rolled in to a TTR pension account from which you can draw a regular income to supplement your income from working.

Benefits of TTR

By supplementing your work income because you decide to work less, TTR can make up for reduced income. You won’t have to compromise your lifestyle, providing you with a smoother transition to retirement.

A TTR income stream can help you to increase your superannuation contributions via salary sacrifice (after-tax contributions), creating a larger retirement fund and giving you possible taxation savings. Your contributions will be taxed at the concessional rate of 15% up to an annual cap of $30,000.

TTR and Taxation

From 1 July 2017, superannuation investments underlying a TTR pension are taxed at up to 15% (as in a superannuation accumulation account). However, the earnings on your TTR income stream are tax-free after age 60 if you are a member of a taxed superannuation fund.

Disadvantages of TTR

The more of your superannuation funds that you withdraw into a TTR pension account, the less money you will have available when you retire.

A TTR income stream may affect any Centrelink entitlements you receive.

Voluntary contributions into your superannuation fund may not be worthwhile – providing minimal taxation savings – depending upon your work income level.

Starting and stopping a TTR Income Stream

Transferred funds from your superannuation fund into a TTR pension account are not counted towards your transfer balance cap until you turn age 65 or you fully retire, when the TTR pension will convert to retirement phase.

Whilst you are under age 65, a minimum of 4% of your TTR pension account balance must be withdrawn each year and at least one withdrawal must be made each year.

Once you reach age 65, your TTR pension becomes a retirement phase pension, and you will be entitled to tax-free investment earnings and no upper limit on withdrawals.

You may transfer your TTR pension account balance back into your accumulation account at any time, so long as you have withdrawn at least 50% of that year’s minimum payment.

Approaching retirement? A TTR strategy can be a flexible way to ease into retirement or boost your retirement savings. YML Super Solutions can help you decide whether a TTR strategy aligns with your working life and retirement planning.

How can YML help?

Talk to our YML Super Solutions Team today to see how YML Group can assist you with your TTR strategy. For more information, view our website and contact us on (02) 8383 4444 or by using our Contact Us page on our website.