Category: Newsletters
NEW Superannuation Contribution Caps from 1 July 2021
Since 2017 Australia’s superannuation concessional contributions cap has remained steady at $25,000 for all ages. It has been announced that from 1 July 2021 new indexed changes will see the concessional contributions cap rise from $25,000 to $27,500 for all ages. This means that a cap of $27,500 of your concessional contributions will be tax-deductible.
Concessional contributions include employer contributions and salary sacrifice contributions, as well as personal contributions claimed as a tax deduction. It is important to remember that all concessional contributions – from any and all funds you hold – are added together to determine whether your amount falls below or above the concessional contributions cap.
In addition, Australia’s non-concessional contributions cap limit will increase from $100,000 to $110,000 from 1 July 2021.
Non-concessional contributions are your after-tax income contributions and are not taxed in your superannuation fund.
A superannuation fund member who was under 65 at the start of the year could benefit from the bring-forward rule change which will see the non-concessional contributions cap rise from $300,000 to $330,000 from 1 July 2021.
The bring-forward rule allows under-65s to contribute up to three years’ worth of after-tax (non-concessional) contributions in a single year. If your total superannuation balance is less than the non-concessional threshold and you are deemed an under-65, then you may use the bring-forward rule.
Finally, the non-concessional threshold or general transfer cap will change from $1.6 million to $1.7 million from 1 July 2021.
For those superannuation fund members using the bring-forward rule, the non-concessional threshold will require them to think about their timing strategy – making contributions before and after 1 July 2021 – to maximise their superannuation balances.
Remember to consider small amounts you might have contributed throughout the year that could impact your cap.
Consult YML Group to help you review your 2020-21 contributions and manage the timing of your contributions – and their cumulative effect on your superannuation balance – under the changes to be applied from 1 July 2021.
How can YML help?
Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
CBA has increased its 4-year Fixed Rate – Is now the time to fix your loan
On 2 March 2021, the Reserve Bank of Australia (RBA) held interest rates at 0.1 per cent. Rates continue to stagnate and are unlikely drop again. Homeowners and property investors should consider taking the time now to examine locking in a fixed rate on their loans.
Why move to a fixed loan?
- Banks are currently offering some of the lowest fixed rates on record – under 2.0%
- Owner-occupiers can benefit from very low fixed rates advertised in the market
- Borrowers with low loan-to-value ratios can benefit from lowest rates
NOW seems to be a time for healthy optimism about fixed loans.
So long as the Reserve Bank of Australia continues to broadcast that the official cash rate will remain at current low levels for the foreseeable future, is it time for you to fix your loan?
To help you decide whether to fix your loan, consult YML Group for expert financial advice. With expert financial advice, a fixed loan can be an attractive proposition and might well work for you.
How can YML help?
Talk to our YML Finance Team today to see how YML Group can assist you with your home loan. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
Land Tax NSW – Have you registered? Will you pay a surcharge?
If you own or jointly hold a property in NSW that is not your principal place of residence – that is, your home – on 31 December in any year, then you may be liable to pay land tax to Revenue NSW. Land tax is payable on the total taxable value of your land exceeding the General threshold of $734,000 in 2020 and of $755,000 in 2021. You do not have to be earning income from a property to be liable for land tax.
Land Tax
You do not need to receive a Notice of Assessment for land tax before registering. If you are liable for land tax and do not register, you may incur interest and/or penalties. To engage YML to register you for land tax with Revenue NSW, go to https://app.hellosign.com/s/6iABAMQh
When is it required?
Land tax is levied on NSW landowners at midnight (12am) on 31 December of each year and is payable on land values exceeding the General or Premium thresholds:
General threshold for 2021 – $755,000
Premium threshold for 2021 – $4,616,000
How much is it?
The Valuer General imparts Revenue NSW with land values which are determined on 1 July each year. Your unimproved land’s value is taken and thereon a calculation using the relevant NSW land tax rate is made to work out your land tax amount.
Land tax on a property’s value over the General threshold amount is $100 plus 1.6 per cent of land value above the threshold and up to the Premium threshold.
Land tax on a property’s value over the Premium threshold is $61,876 plus 2.0 per cent of land value above the threshold.
Is your registration correct?
It is important to register your land ownership status accurately. A correct registration can avoid errors in your Notice of Assessment.
If you move out of your home and lease it, you may no longer claim a residence exemption, so make sure your registration details are updated. You might also consider clarifying the type of trust in which your land is held; declaring company group structures accurately; and, declaring foreign person status if applicable.
Should there be an error in your Notice of Assessment, you may lodge an application for a reassessment or, if necessary, lodge an objection.
SURCHARGE Land Tax
You may be liable to pay a surcharge on residential property you own if your discretionary trust holding the property is deemed a ‘foreign person’.
When is it required?
Residential property and/or land held in trust wherein any person is deemed to be ‘foreign’ – 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 a surcharge land tax.
* For a full definition of ‘foreign person’, see https://www.revenue.nsw.gov.au/help-centre/resources-library/g009
How much is it?
Two surcharges are payable by a ‘foreign person’ owning a residential property in NSW:
- Surcharge Purchaser Duty – currently 8% of the market value of the residential property – payable once upon acquisition.
- 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.
Where it is the case that a trust deed includes a ‘foreign person’, a trust may be varied by drawing up a Deed of Variation to exclude any foreign party from benefiting from a trust. You might like to consider your trust deed this year but remember to amend it prior to 31 December 2021.
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.
To engage YML to create a Deed of Variation – NSW Surcharge Land Tax – Already Registered for Land Tax, go to https://app.hellosign.com/s/Lb65Fdsq
To engage YML to create a Deed of Variation – NSW Surcharge Land Tax – Not yet Registered for Land Tax, go to https://app.hellosign.com/s/6TVJ3h6w
How can YML help?
Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your land tax. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
Refinance and get up to $4k bonus OR renegotiate with your current lender?
If you are unsatisfied with the home loan rate you are paying or you just want to find a better home loan deal, then now is the time to act. With a competitive home loan market, there are options that might benefit you:
Refinancing
You could shop around different lenders to reduce your repayment amount. This is known as refinancing. One way is to find a lower interest rate – some lenders offer a lower introductory rate. Currently, many lenders are offering a cashback incentive of up to $4,000 for refinancing with them.
Up to $4k Rebate
$2,000 Refinance Cashback for each property you refinance on applications received between 1 April 2020 and 31 March 2021. Properties must be settled by 30 June 2021.
One-off $2,000 Bonus Cashback on initial applications received from Owner Occupiers and Investors between 18 September 2020 and 31 March 2021. Properties must be settled by 30 June 2021.
Check with your independent (from your lender) financial adviser about tax consequences of these cashbacks.
Renegotiating
When you talk to your current lender about changes to your home loan rate, you are renegotiating.
Right now, rates are below 2% making it a great time to have a discussion with your own lender and renegotiate a new lower rate, either variable or fixed, over the next year or so whilst rates remain low and before they swing up again.
To help you decide which method – refinancing or renegotiating – to improve your home loan, consult YML Group for expert financial advice.
How can YML help?
Talk to our YML Finance Team today to see how YML Group can assist you with your home loan. For more for more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
Australian Director Identification Number (DIN) – Introduction
In the Digital Business Plan announced by the Australian Government in 2020, the Modernising Business Registers (MBR) program will bring together the Australian Business Register (ABR) and 31 registers administered by the Australian Securities and Investments Commission (ASIC). All these registers will unite on a new digital registry system, making it easier to access company and business data. This new system will fall under the maintenance of the Australian Securities and Investments Commission (ASIC).
Companies, businesses, Australian Business Numbers (ABNs) and the new Director Identification Number (DIN), along with all relevant data, will be moved on to the digital registry system. The DIN is a new requirement of company directors and is set to create a more regulated, verifiable and traceable profile of Australian businesses and their directors.
What is a DIN?
A Director Identification Number (DIN) is a unique number assigned by the ASIC to a director for eternity. The DIN will be given to existing directors and incoming directors of a company or a registered entity under the Corporations Act. If you are not sure if your position in a company requires you to register for a DIN, consult a qualified financial adviser. A DIN will stay with you even if you change companies.
What will a DIN mean for a director?
A director’s DIN means their directorship has been verified, their identity has been confirmed and their company relationships are transparent. For these reasons, directors will be able to readily interact with government agencies and other regulators using their DIN.
The DIN system will help businesses operate in a fairer economy wherein directors who operate inappropriately or illegally can be discovered early. Directors who conduct business ethically may feel confident that they can know with whom they are dealing during intercompany business matters.
What are the benefits of a DIN?
One of the aims of the DIN system is to stamp out illegal phoenixing activity – the creation of a second company mimicking the first company but without monetary debts and liabilities being carried over from the first to the second company. How? The DIN system will track – in real time – the history of director/s in any new company registration.
Fairness is another benefit of the DIN system because if any wrongdoing can be readily prevented, then directors and their companies will operate in a much more equitable business environment.
Next Steps
The ASIC requires all directors and would-be directors to register for a DIN within the first 12 months of the new MBR program. After an initial transitional period allowing an extra 28 days to apply for a DIN, a director must apply for a DIN prior to being appointed as a director.
A request for your Tax File Number (TFN) will be made of you and this will assist with the verification of your identity as part of the process of acquiring a DIN.
Should you need assistance with your application for a DIN, YML Group has the expertise to determine your company position status and to assist you with your DIN application.
How can YML help?
Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with your DIN. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
HR in the Australian Hospitality Sector – Specialist Service Available
Human Resources (HR) in the hospitality industry requires specialist knowledge and knowhow to achieve optimum workforce retention, pay and benefit compliance, as well as safety and occupational wellbeing of all employees.
Managing employees and administrating staffing are central roles for a hospitality business to succeed in a world that relies on the reception and satisfaction of guests, clients and tourists. There are administration rules and regulations specific to the hospitality industry to which companies must adhere. An understanding of the Australian HR requirements means your business may need a qualified HR person or service to lend a helping hand.
YML Group’s Business Process Outsourcing (BPO) services can provide your business with experts in HR administration and assistance. Our team has a broad knowledge of Australia’s HR requirements in the hospitality industry. As it is important to follow government standards, our team can bring their experience and proficiencies to your business and improve your business’s compliance in this area and many other disciplines.
Other areas of hospitality HR include hiring new employees, preparing employment contracts, data management of employees’ profiles, management of payroll including making sure workers take the required breaks during their workdays. As staffing is such a big area, there will need to be consideration of staff training practices and mitigation of any HR litigation, both areas demanding HR protocols are closely followed.
Our YML Group BPO team has the capabilities to handle your business’s HR concerns including the day-to-day tasks such as: end-to-end recruitment, sourcing and selection of potential employees, initial staff screening, scheduling of trials, onboarding of new staff, as well as preparation and delivery of employment contracts. We can also assist your Payroll team with staff hiring and dismissal reporting, early morning computation and finalisation of pay.
In addition, our team has the capacity to provide your HR team with general administration tasks such as: data management of employee records, email management and document management.
As your HR department works – within a full scope of responsibilities – to distribute the workload between experienced and inexperienced employees, to manage seasonal employee requirements, to foster a safe-work environment and to balance HR budgets, let YML Group’s BPO services assist your business to maintain its HR administration in good order and in accordance with Australian HR regulations.
How can YML help?
Talk to our YML Business Services Team today to see how YML Group can assist you with your HR administration requirements. For more for more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
JobMaker Hiring Credits – Explained
In November 2020, the Australian Government passed the JobMaker Hiring Credit scheme in Parliament, launching a new incentive for small and medium businesses to expand their workforce and employ younger Australians in need of a job.
The Australian Government intends this new scheme to support Australia’s economic recovery by encouraging businesses to create jobs for younger Australians who have been out-of-work, as well as to deliver growth potential for businesses looking to hire additional employees and increase their business productivity output.
Eligible employers must register with the Australian Taxation Office (ATO) who are administering the scheme. Credits will be paid each quarter and the first JobMaker Hiring Credit claims may be lodged from 1 February 2021.
How much is a Credit?
For each additional eligible employee hired, eligible employers may claim $200 a week for an employee aged 16 years to 29 years of age AND $100 a week for an employee aged 30 years to 35 years of age.
New jobs created for eligible employees hired between 7 October 2020 and 6 October 2021 will mean a business may be able to claim up to $10,400 over a 12-month period (employee aged 16 to 29 years) AND up to $5,200 over a 12-month period (employee aged 30 to 35 years).
Employee Eligibility
To qualify for the JobMaker Hiring Credit scheme, each new employee of a business must:
- Be between 16 years and 35 years of age at the time of being hired.
- Have been receiving a government payment for at least two fortnights (or four weeks out of 12 weeks prior to being hired). Qualifying payments are JobSeeker, Youth Allowance and Parenting Payment.
- Work at least 20 paid hours of work per week on average during the JobMaker Hiring Credit period.
To qualify for the JobMaker Hiring Credit Scheme, an employer must:
- Have an Australian Business Number (ABN).
- Be registered for PAYG Withholding Tax.
- Be up-to-date with tax payment obligations.
- Use Single Touch Payroll (STP) to report to the ATO.
- Not be claiming JobKeeper.
- Demonstrate increased employee headcount (due to a new JobMaker hire).
- Demonstrate increased payroll (due to a new JobMaker hire).
The JobMaker Hiring Credit scheme has been designed with conditions to ensure that a genuine additional job is created for each new eligible employee. By making headcount and payroll increases compulsory, an employer can not simply expel a full-time employee and take on two or more part-time employees under the JobMaker Hiring Credit scheme.
To determine whether a business meets its overall headcount increase and overall payroll increase, reference will be made to a comparative ‘baseline’ headcount and ‘baseline’ payroll from 30 September 2020 and tested quarterly:
- Total employee headcount on 30 September 2020 must be greater than 30; and
- Total payroll in any reporting period (quarter) must be greater than in the quarter to 30 September 2020.
An employer’s payroll department will need to consider these abovementioned factors during each reporting period and over the duration of a business’s participation in the JobMaker Hiring Credit scheme.
As a result of this $74 billion scheme, the Australian Government expects there to be improved national economic stimulus, creating jobs for younger Australians, increasing skill levels of workers and helping businesses to increase productivity and to grow their revenue.
So if you are a small to medium enterprise (SME), consider the advantages, noting that as each Credit claim period of the scheme may not be claimed retrospectively, make sure your business is registered with the ATO for maximum benefit of the scheme.
How can YML help?
Click on the link below to engage us.
https://app.hellosign.com/s/8qkWmCLT
Or
Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with JobMaker Hiring Credits. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
ATO Increased Audit Activity – Including JobKeeper
Deborah Jenkins, the ATO’s Deputy Commissioner, Small Business, stated in October 2020, “We want to keep building confidence by supporting small businesses when they need it, but we need to start shifting the focus back to ensuring good compliance for the health of the system,” and this means audits have recommenced.
As we navigate the latter half of the 2020-21 financial year, what do you need to know about the ATO’s audit focus this year?
Single Touch Payroll (STP) gives the ATO the ability to flag those businesses who have underpaid JobKeeper or who have mismatched JobKeeper payments. Many businesses have not kept up with their Superannuation Guarantee (SG) payments this past year. As with JobKeeper, SG anomalies will be visible to the ATO via STP.
As STP data capture becomes more comprehensive, STP will be a significant tool used by the ATO to assess which businesses they will audit.
It is important to ensure your STP reporting is up-to-date and that your employee details, including payments made, are entered accurately.
JobKeeper
Businesses are most likely to be audited on their eligibility for government payments such as JobKeeper, cash payments and other stimulus payments such as those offered in the more recent JobMaker Hiring Credit scheme.
Government benefit schemes are notoriously audited. This year’s schemes will be no exception. JobKeeper 2.0 continues until the end of March 2021 and eligibility to receive these payments may be readily checked via a business’s STP.
Should your business fail to meet its eligibility criteria or obligations under JobKeeper, such as:
- Falsifying financial records to meet the fall-in-turnover test OR
- Failing to fully pass on the $1500 JobKeeper payment to an employee OR
- Applying for JobKeeper despite not carrying on a business
Other taboo areas related to JobKeeper eligibility will include:
- Increasing staff levels after 1 March 2020 whilst receiving JobKeeper
- Restructuring ownership of assets to meet the reduced turnover test
- Reducing management fees to meet the reduced turnover test
- Changing supplier payment conditions to meet the reduced turnover test
Maintaining correct financial records, timely lodging BAS statements and keeping track of every employee’s hours worked and payments will be advantageous to a business.
Superannuation Guarantee (SG)
Those businesses who did not use the SG amnesty in 2020 and who have fallen behind on their SG payment obligations because of decreases in their cash flow or other reasons during the pandemic will need to expect that through STP reporting and other means, the ATO will be looking closely at them.
Next 5,000 Tax Performance Program
In late 2020 the ATO commenced its Next 5,000 Streamlined Assurance Review Program targeting individuals, and their private group associates, with wealth of more than $50 million. This program is likely to be rolled out extensively in 2021.
The program uses a method undertaken by the ATO to secure assurance that the correct amount of tax is being paid by looking at all financial activities, be they trading, transaction or event. The review proceeds according to the ATO’s defined Next 5,000 Streamlined Assurance Review approach.
Compliance with the ATO should be your first step in protecting your business from any financial misadventure. Your STP reporting is another area you could verify in advance of the 30 June 2021. As official auditing practices become more prevalent this year, you can avoid uncomfortable conversations with the ATO’s auditing team by first talking to YML Group about the best course of action in the event of an audit on your business.
How can YML help?
Talk to our YML Chartered Accountants Team today to see how YML Group can assist you with ATO audits. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
Divorce Order – Self-Managed Superannuation Funds (SMSF
Divorce proceedings usually include the division of assets between parties. For self-managed superannuation fund (SMSF) members, whether a separation is amicable or acrimonious, it is essential that a court order is sought upon division of any or all superannuation assets.
SMSF trustees and their financial advisers should ensure that a divorcing SMSF member solidifies a division of superannuation assets with a binding agreement and a court order. Seeking a court order is a judicious step to help avoid future disputes about how equitably assets were split at the time of divorce.
It may feel embarrassing to a divorcing couple who have harmoniously parted to present before a court, but it is extremely important to undertake an irrevocable agreement in the matter of superannuation assets. Why is this important?
If, in the future, one divorced party becomes resentful that they have been hard done by in a financial settlement, then a court order can prevent a secondary claim on the other party’s financial assets. An order, approved by a court, will generally avert any potential future claim that there was not an equitable split at the time of the initial pact.
SMSF trustees may wish to confirm that the language used in a court order regarding division of superannuation assets is unambiguous and clear to all parties, thereby providing a smooth transition for a divorcing member and their spouse.
YML Group can help SMSF trustees administrate during the time of a fund member’s divorce.
How can YML help?
Talk to our YML Super Solutions Team today to see how YML Group can assist you with your SMSF. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
Would your business withstand one of its key people falling ill or dying?
‘Key Person’ insurance is an insurance policy taken out and owned by a business to protect a business from the loss of an important – ‘key’ – person from a company. Such a loss might be caused by death, total and permanent disability or a critical illness.
A ‘key’ person is someone whose work within a business is critical to the financial wellbeing of the company or whose work generates a major portion of the company’s profits. It might be anyone from a company director to a salesperson, but they must be someone who would be considered irreplaceable in the short term.
When a ‘key’ person’s value to a business is measured in years of experience and essential skills, the impact when that person is no longer there can be consequential, resulting in falls in revenue, profits and even goodwill with customers and shareholders.
Human assets, just like material assets, are crucial to a company’s financial health, so insuring against the loss of them is equally vital. ‘Key Person’ insurance is a standard Life Insurance, TPD Insurance or Trauma Insurance policy, active during a ‘key’ person’s employment at a company. It compensates a company with a fixed amount, rather than covering actual losses incurred, however this insurance policy can make a marked difference to the continuity of a healthy business after the loss of a ‘key’ person.
The purpose of ‘Key Person’ insurance must be attributed to:
- Protection of Revenue – replacing lost revenue and profits
- Protection of Capital – paying debts and expenses (recruitment/training)
- If the main purpose is Protection of Revenue, then the insurance premium is tax-deductible.
- If the main purpose is Protection of Capital OR it is duel-purpose (part Revenue/part Capital), then the insurance premium in NOT tax-deductible.
It would be reassuring to know that your business is adequately protected, so you will need to estimate the value of a ‘key’ person to your business. This will help you decide the level of cover needed in the insurance policy.
All businesses need to minimise their financial risk, so to be certain of your ‘Key Person’ insurance variables, consider seeking certified financial advice. YML Group’s Financial Planning can review your current insurance strategy, including ‘Key Person’ insurance.
How can YML help?
Talk to our YML Financial Planning Team today to see how YML Group can assist you with your ‘Key Person’ insurance policy. For more information, view our website and contact us on (02) 8383 4400 or by using our Contact Us page on our website.
