What you should know about Superannuation

Should borrowing (ie LRBA’s) be banned from super?

 

Banning borrowings in superfunds seems to be a popular political topic at the moment.  The argument seems to revolve around the idea that borrowing to buy property in a superfund is risky.  But does this make any sense in the context of which borrowings are made?

 

Let’s look at the two most common uses of LRBA’s

 

Purchase of Business Property

 

The first thing to note is that superfunds traditionally have been able to hold business property and that there is currently no debate on removing this as an investment class for superfunds.

 

Normally though when it comes to buying business premises they are most commonly acquired by either individuals, companies or trusts.   As the cost of acquiring property is generally high it is also typical that most of these purchases would be funded by borrowing.   This type of purchase is not out of the ordinary and isn’t something that is labelled as being risky.

 

However, if a superfund acquires a business property using an LRBA can it be considered more risky?  The asset itself is no more risky and if superfunds by nature are more risky why do we use them for retirement at all?

 

In fact you could argue holding a property in super is less risky as banks generally require greater equity contributions for the purchase of property in a superfund – this should reduce the risk.   Also if you need to increase your contributions to super to cover loan instalments this can be done through pre-tax contributions whereas outside super any additional repayments have to be made from after tax income.  Again this should only reduce the risk.

 

Purchase of Investment Property

 

Superfunds traditionally have also been able to purchase investment property.  Again there has been no argument to remove this as an investment class for superfunds.

 

Individuals (or other entities) can also purchase an investment property.  Again people have traditionally borrowed to buy an investment property and this is something which is commonly referred to as negative gearing.  As mentioned before this type of purchase is common and has never been under attack as being risky.

 

However, if a superfund acquires an investment property using an LRBA can it be considered more risky?  Basically it’s the same outcome – it’s just a different entity holding the property.

 

As per the business property example above banks generally require greater equity contributions for the purchase of property in a superfund – this presumably reduces the risk.   Also if you need to increase your contributions to super to cover loan instalments this can be done through pre-tax contributions whereas outside super any additional repayments have to be made from after tax income.  Again in my view this only reduces the risk.

 

Risk

 

So what is risky anyway – who decides and is it the same for everyone?  Sure the government can ban superfunds being able to borrow.  However, people being people will want to invest for the future and will borrow in other entities.  Will the government therefore successfully reduce the risk by this strategy?  Won’t this policy, if adopted, result in people simply investing in less tax efficient structures to hold and manage their retirement assets leading to less wealth to retire on?  Could this policy therefore create a new tax burden for future generations to deal with as social welfare dependence increases ?  And finally if people can’t borrow to buy property in their superfund as they don’t have enough funds to acquire a property outright – what will they do?  What will they invest in?  The share market?  Well isn’t that supposed to be more risky !!

New Superannuation Fund Reporting Requirements

As part of the package of reforms commencing from 1 July 2017, superannuation funds, (including self-managed superannuation funds), will have new reporting requirements to allow changes in members transfer balance caps to be tracked in real time. A member’s transfer balance is the total amount of superannuation benefits in retirement phase, (i.e. paying a pension). The ATO has confirmed that only events which affect an individual member’s transfer balance need to be reported.  Common examples include:

 

  • Income streams, (i.e. pensions), that a member was receiving on 30 June 2017 which continue to be paid to them on or after 1 July 2017 and that are in the retirement phase, (this does not include transition to retirement income streams)
  • New retirement phase income streams commencing on or after 1 July 2017; and
  • Commutations of retirement phase income streams on or after 1 July 2017.

The time at which an SMSF is required to report will depend on the value of the member’s total individual superannuation balances. Total superannuation balance refers to the total amount of funds in superannuation for an individual which may be across more than one fund and partly in retirement phase and partly accumulation.

 

SMSF’s with all members total balances  less than $1 million are not required to report during the year, and can instead report events which impact their members’ transfer balances at the same time that the SMSF is required to lodge its SMSF annual return, (usually 15 May of the year following the end of the financial year). They can report the event at the time it occurs if preferred.

On the other hand, funds with at least one member with a total superannuation balance above $1 million will be required to report events affecting members’ transfer balances within 28 days after the end of the quarter in which the event occurs. This could mean an SMSF with all member balances below $1m, is still required to report after the end of the quarter if at least one member has additional superannuation funds elsewhere totalling more than $1m.

 

The time at which a member’s total superannuation balance is valued is either 30 June of the financial year preceding the year the member first commences a retirement phase income stream, otherwise 30 June 2017 if a member was already in receipt of a pension at that date, or commences a pension in the 2017 -2018 financial year.

 

If a fund was paying a pension to a member as at 30 June 2017, and this continues to be paid into the 2018 financial year, (and is a retirement phase pension – not a transition to retirement pension), these must all be reported to the ATO by 1 July 2018, regardless of member total superannuation balance.

 

We will be providing further updates shortly to our superannuation fund clients, however in the meantime if you have any queries, please don’t hesitate to contact us.

 

 

Summer 2017/18

Our feature article this edition is also our client profile. RemiPeople is an Adelaide based business who has developed an automated recruitment application designed to help business’ select the best candidates for the role by eliminating bias from the screening process.

Uber

Uber is location-based private car hire app and one of the most convenient ways to travel in the modern day.

The app pinpoints the exact location of your phone and matches you to their closest driver. It provides you with a photo and name of your drivers, the car’s details and an average star rating from previous customers, making it not only competitively priced against most taxi services, but also significantly safer.

There are several types of services you can select using the app;

UberX: Regular sedans that seat up to 4 passengers.

UberXL: SVUs and minivans, which can seat up to 6 passengers.

UberBlack: Registered and insured livery luxury vehicles.

UberLUX: Ubers ultimate premium service with high-end luxury cars

Whether you need to get to the airport, a client meeting or the office, Uber provides a convenient, inexpensive and safe way to travel.

Tips on customising banking apps

Most of us use banking apps for both work and personal banking.  Here are some tips on making life easier by using some of the functionality of these apps –

  • Personalise the descriptions of your accounts
    Does your banking logon have numerous accounts attached to it? Do half of them have the same account description that was automatically listed when you opened the account? Is this super confusing? Personalise the descriptions of your accounts so that you can distinguish between all of your accounts easily and quickly. (Don’t worry, doing this only changes what you see on your screen, the official account name will stay the same…and if you decide later you don’t like the description you have chosen just change it to something more appropriate).
  • Reorder the accounts displayed on your screen so that the accounts you use most frequently appear first. This saves you scrolling through accounts to find the information you are after.
  • Use the copy transaction option to again pay the same supplier from the same account.  Just remember to change the amount and reference details.
  • Close old accounts! If you don’t need an account anymore close it. It makes life simpler and streamlines your banking experience…plus, a lot bank accounts these days have fees associated with them, whether you are using the account or not. So if you don’t have the account you will not be paying fees unnecessarily.

Thesaurus in Microsoft Word

Easy ways to access the Thesaurus:

 

  1. In your document, right-click to produce the shortcut menu, then click on ‘Synonym’, then ‘Thesaurus’. Or

 

  1. In the menu above your document, click on ‘Review’, then click on ‘Thesaurus’.

 

Either of these methods opens the Research pane.  In the ‘Search for:’ field in the Research pane type in your word and either click on the green arrow at the right, or hit the Enter key.  The system will provide you with a list of other words to choose from.

 

Easiest way to find a synonym for a word you’ve already typed in your document:

 

Highlight the word you want a synonym for, and while still in the highlighted area right-click to produce the shortcut menu, then click on ‘Synonym’.  It will automatically give you alternative words to choose from.  Click on the word you prefer, and the system will replace your existing highlighted word with the new one.

Client Information Newsletter – Tax & Super

Lodgment rates and thresholds guide 2017-18

To save you having to laboriously search for the right tax rate or relevant threshold, the essential information is right here in one place.

This guide includes tax rates, offset limits and benchmarks, rebate levels, allowances, and essential superannuation as well as fringe bene t tax rates and thresholds (including current gross- up factors). Student loan repayment rates and salary levels are also included.

Take Advantage of AI

Have you heard of Artificial Intelligence (AI)?  Think it’s year’s away?  Prepare yourself – because it is here and you may already be using it.  Every day you are interacting with some form of AI or robot, whether that is predictive text on your phone, Siri, Google Maps or targeted advertising. These algorithms are becoming more and more accurate and are learning our habits to be able to perform their tasks more effectively.

We use AI in our personal lives, but what about our businesses.  Small businesses need to be aware that AI isn’t something to be feared. This technology brings efficiencies and time savings that we can all benefit from. Automation is key to staying in the game and this automation stems from artificial intelligence.

Utilising cloud software and the ability to integrate multiple programs with each other is where AI is king. Manual internal processes are replaced by a form of AI or robot which does all the repetitive and time consuming data entry & analysis for you.

Look at the manual processes within your business, or focus on pain points to help you find the right software. For those who are wary of implementing AI systems in their business, it is worth trialling software externally yourself. Most software providers offer free trials for new members, use this time to play with the features and note what you like, dislike, and most importantly whether or not it suits your purpose.

As always, it’s very important to make sure that you are using up-to-date IT systems so that you are maximising the benefits of today’s technology. Sometimes it also helps to think outside the box – what are other businesses in your industry doing? What new products are out there? Be proactive and speak to a professional about your wants and needs so your business doesn’t fall behind.

CMS is a Partner with many cloud software providers.  We have researched the products, completed extensive training and have implemented and automated many businesses cloud eco systems.  In most cases this allows us to offer subscriptions at discounted prices. If you have any questions about how to develop or utilise the best cloud eco system for your business, contact our Cloud Solutions team so we can assist you.

Cloud Technology

It’s no secret that Cloud ecosystems are having a major impact  on all businesses and industries, especially Hospitality.

There are many benefits from adopting Cloud Technology into your business, such as reducing IT costs as well as accessibility of information and giving you time back.

Here are what we believe to be the 8 benefits of cloud computing for the hospitality industry;

  1. Reduction of  IT costs, allowing you to reallocate your investment to other priorities – The Cloud ecosystem is extremely affordable, timely and automated, no need for expensive accounting packages, hardware and spending hours and hours reconciling the books. With apps like Kounta and the use of ALBERT Eftpos tablet it makes running a hospitality business extremely efficient.
  2. Respond to new opportunities quickly, allowing you to introduce new menus faster, open new locations faster and for less – With the cloud you will be equipped to make informed decisions with timely and relevant information to allow you to snap up those opportunities. Can you currently track your bestselling item? What if you increased the price? The cloud can allow you to utilise your capacity and increase your success.
  3. Reduce the cost, time and impact of technology upgrades going forward – Gone are the days of desktop computer systems, having a cloud system in place means that all your accounting programs are updated automatically, with no down time for your business.
  4. Maintain consistency throughout your business, leading to reduced training and greater flexibility of your team – With automated procedures in place there is less training required for administration tasks. In some cases mundane tasks can be removed altogether with Cloud Technology. Timesheets and payroll can cause grief to any business but with the use of Deputy these reduces the pressure.
  5. Collect valuable data that will allow you to make better business decisions – The Cloud provides you with constant up to date financial information so you can make decisions now, rather than in a years’ time when your Financial Statements are prepared.
  6. Provide a better service to your customers, while reducing your staff turnover – Less time spent working IN the business allows you to work ON the business, enriching those key relationship with customers making you their ‘go-to’.
  7. More easily compliant with industry standards and regulations – Having automated wage rates and superannuation guarantee in the system makes your obligations easy!
  8. Improve your data security and protect your brand – The security that the cloud provides is imperative to all businesses. From two step authentication to encrypted passwords, you can be sure that your data is safe in the Cloud with a trusted provider.

Whatever stage of your business lifecycle you are in, there are always ways you can integrate the cloud into your business. Feel free to contact us to find out how we can help your business today.

 

Source: http://news.wanstor.com/8-benefits-cloud-computing-for-restaurants/