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18.01.2022 What You Need to Know About Superannuation As superannuation generally ends up being the second most significant asset for most people after the family home, it... is worth reviewing the options available for making contributions. While exceeding the contribution caps will generally lead to negative financial outcomes for members, there are particular circumstances where additional contribution strategies may be relevant and beneficial. The general contribution caps There are defined annual caps or maximum amounts that are prescribed for the various types of superannuation contributions. The two major contribution types are: Concessional contributions - $25,000 per annum. These include employer contributions, salary sacrifice and personal contributions claimed as a deduction. Non-concessional contributions - $100,000 per annum and only available if the Total Superannuation Balance of the member is below $1.6 Million. Consequences of exceeding the contribution caps It is not possible to simply withdraw excess contributions from the fund (even if they were made by mistake) and the individual concerned will need to wait until the Australian Taxation Office issues a determination notice. Briefly, the consequences of exceeding the contribution caps can be summarised as follows: Excess concessional contributions the excess contributions will be taxed at the members’ marginal tax rate and there is generally an additional charge which is effectively interest on the additional tax payable. Up to 85% of the excess contributions can be withdrawn from the fund and any excess amounts not withdrawn will be treated as non-concessional contributions with possible flow-on effects from excess non-concessional contributions. Excess non-concessional contributions there are basically two options here; (a) elect to withdraw the excess in which case 85% of the associated earnings on the excess amount will be added to the member’s personal taxable income and taxed at their marginal rate of tax, or (b) elect not to release the excess and have the full amount of the excess taxed in the fund at the highest marginal tax rate of 47%. Measures which allow contributions beyond the general caps It is clear that making excess contributions will generally lead to a situation of paying additional tax and produce an overall negative financial outcome for the member concerned. However, there are a number of specific measures which allow for contributions beyond the usual maximums and these can be incorporated into strategies with significant benefits to the member. Here are some examples: Example 1 utilising the 5-year catch-up provisions for concessional contributions Fred is employed on a salary of $86,000 pa and has had employer contributions of $8,170 made each year from 1/7/2018. His current total superannuation balance is $250,000. Towards the end of the 2022/23 financial year, Fred sells an investment property and makes a gross capital gain of $200,000. His accountant advises that he will be up for additional tax of around $39,300. Fred could consider a concessional contribution to his superannuation fund of up to $84,150 which is the amount of his unused concessional cap since 1/7/2018. This would reduce the additional personal tax to $6,000 and after allowing for the 15% contributions tax on the $84,150 into the fund, Fred’s net saving would be around $20,600. Example 2 using the CGT contributions limit for proceeds from the sale of small business and combining with the home downsizer contributions and other measures Rose took over the family farm 25 years ago and having reached the age of 66, decides to sell up and move to the coast to be near family. The farm is sold for $2.5 million and after taking advice, Rose decides to move the maximum amount possible into a newly established self-managed superannuation fund. Settlement of the farm is expected in May and she would like all the financial arrangements to be in place by 30th June. Rose’s goal of achieving the maximum possible superannuation balance in the specified time frame could be achieved using a combination of available strategies as follows: Make non-concessional contributions of $300,000 utilising the 3 years bring forward option (now available to those aged 65 and 66) Make a CGT contribution up to the maximum allowed for 2018-19 of $1.48 million Make a downsizer contribution of $300,000 (in relation to Rose’s home which was part of the farm). Note that these contributions are not treated as non-concessional and are not subject to the usual Total Super Balance Cap Make a concessional contribution of $25,000 Make a second concessional contribution of $25,000 (as per example 2) Total amount contributed is therefore $2,130,000 Rose then commences a retirement phase pension with a balance of $1.6 million, leaving $530,000 in the accumulation phase. Summary While each individual or family situation will be different, there may be ways that you can get additional funds into super that you weren’t even aware of. If you’d like to know more about these options, please don’t hesitate to contact us.

16.01.2022 Interesting. How ageing affects our 'fluid intelligence', and by extension, our ability to make sound decisions when it comes to financial management and investing #schuhgroup

15.01.2022 Contractor Versus Employee What Is the Difference? Clients are increasingly seeking our advice on issues applicable to workers engaged as independent contract...ors. This week we decided we’d delve into this topic a little further. The difference between an employee and a contractor depends on many different factors. No single factor or combination of factors will determine a worker’s status. In most cases, independent contractors: 1. work for themselves and are their own boss 2. are free to accept or refuse work 3. control their own working times 4. provide their own tools and equipment. In contrast, employees: 1. work in someone else’s business 2. are subject to controls on how, where and when their work is performed 3. are paid a wage 4. receive employee entitlements, such as sick and annual leave. Five common employee or contractor myths busted: Myth 1 - People who do short-term work are automatically a contractor. Just because someone is hired for a few hours or a couple of days at a time, doesn't mean they're automatically a contractor. Both employees and contractors can be hired for casual, temporary, on-call and infrequent work, busy periods, short jobs, specific tasks, and project work. Myth 2 - Workers with an ABN are always contractors. Having an ABN is not the deciding factor of whether or not a worker is a contractor. All of the conditions of the working arrangement are relevant. Myth 3 - If someone provides an invoice for their work, it means they are a contractor. Just because an invoice was submitted, it doesn't necessarily mean that the person is a contractor. Other factors also need to be considered. Myth 4 - The majority of people in your industry are contractors, which means you should be too. Just because contracting arrangements are common in the industry, it doesn't necessarily mean that a particular person should be treated as a contractor. Myth 5 - There is a written agreement that says a worker is a contractor, so they must be one. If a worker is legally an employee, having a written agreement will not override the employment relationships or make the worker a contractor, or remove an employer’s tax and super obligations. If you have any queries around this topic and how it might impact you or your business, please don’t hesitate to contact us on 5482 2855.

12.01.2022 Most people who have been in business a long time generally have a good grasp on financial management when it comes to planning, strategy, & cashflow (particula...rly if they have had good advisers along the way ). Yet, like the builder whose house is falling down around them, their own personal wealth management is commonly neglected. Business owners are acutely aware that starting, growing & running a successful business can be highly demanding of your time & resources, typically resulting in other aspects of life such as personal finances being pushed down the priority list. Setting aside the time to focus on your personal wealth management plan in the short-term can pay big dividends later on. It can also provide you with peace of mind that the hard work invested within your business is keeping you on track to achieve the broader goals that are important to you. The underlying wealth management strategies & tools utilised are quite consistent for those who run businesses and those who don’t, however for business owners, it is the link between their business & personal world that holds the key to effective management. Here are five key tips for business owners for managing wealth. 1. Ensure a degree of separation between your business & personal world As a business owner, you need to treat your own personal finances as being distinctly separate to those of your business, even if you are operating as a sole proprietor. This is often easier for businesses with multiple shareholders because they are typically forced to keep personal matters out of the business. At the most basic level, this means keeping your business & personal bank accounts & liabilities separate, not mixing personal expenses & business expenses, and having a clear strategy with defined objectives for both your business & personal plan. Maintaining financial separation between your personal & business affairs will not only minimise risk, but it will also give you a clearer picture of how your finances are tracking & the areas where improvement is required. 2. Shift your mindset from having all of your wealth within the business Business owners often think of their wealth management just in terms of their business. Superannuation is a classic example of this. Many business owners believe they do not need superannuation because their business is their super. Super is actually a great way to tax effectively extract profit out of your business & build wealth outside of the business, while potentially setting up wealth accumulation strategies that end up benefitting the business. In the early days, it may be necessary to focus on building your wealth inside the business, however as soon as it can be supported, you should look at ways of extracting wealth from the business in a disciplined & tax-efficient manner. 3. Have a personal wealth ‘business plan’ The best run businesses always have a business plan, with clearly defined short & medium-long term objectives. This will usually include financial & cash flow forecasting, risk management & strategies designed to help the business grow & prosper. As a business owner, you should apply the same philosophy to managing your own personal wealth. Your personal wealth management plan should set goals that are specific & are directly linked to what is important to you in life. It should include financial forecasting & budgeting to map out your personal wealth & set a plan to work towards both in the short & long term. As with a business, it’s important to monitor, evaluate & adjust what you are actually doing in relation to the plan on a regular basis to ensure that all risks & opportunities are considered. As with running a business, having a great handle on your personal cash flow is absolutely critical to ensuring that your plan is effective. 4. Understand the impact of your business performance Business owners need to understand the direct relationship between the performance of the business & their personal wealth. Profit forecasts are important to measure the success of a business, however, it is the net cash result of the business that has the greatest impact on your ability to achieve your personal objectives. You should understand the direct correlation that the financial results within a business provide you with personally, & regularly review & adjust these objectives so there is a link between business success & personal wealth success. Again, this comes back to maintaining separation between your business & personal wealth. If you have this separation & you do not reach your objectives, you can identify what went wrong & adjust your plan & your strategy accordingly. 5. Utilise technology & advice When you have limited time to focus on your personal wealth management, effectively utilising technology & the advice of trusted professionals is invaluable. This assistance will help you stay on track with your personal wealth management plan & provide ongoing insights into how you’re tracking. Working with a team that intimately understands your business & personal objectives, goals & circumstances will ensure that the right strategies & structures are put in place, & that risk is adequately addressed. By maintaining separation between your private & business wealth, developing a solid personal wealth management plan & having the right support in place, you can ensure that you minimise your exposure to risk, at the same time as maximising both your personal & your business wealth with the ultimate goal of enjoying life more in the process!

12.01.2022 There are four key elements to managing the complexity of your #business. Klaus Schopf, of Schuh Group , explains how they give businesses a #framework by which... they can continue to manage the #complexities that comewith contineud #growth : https://www.youtube.com/watch?v=Zyi7t5idmfU&t=173s See more

11.01.2022 Christmas is coming, and a great gift to yourself, is to start an investment strategy to grow your wealth. This can be tricky if you have no savings, but you ca...n use your tax return to start investing. It may come as a surprise to learn that the biggest regret most people have with their investing is not where they’ve placed their money. Nor is it the fees they’ve paid or the types of investments they’ve made. Instead, the number one regret people have with their investing is that they didn’t start sooner. When we make investment projections for our clients, we often look at what the projected result will be based on a number of years of investment timeframe. For example, if we invested $100,000 for 10 years and received 5% as an annual rate of return over that time, the end result may be around $163,000. Sometimes a client will answer by saying that’s all well and good, I just have to live long enough! and while this is true, it’s not the whole part of the story. The other way to extend your investment time frame is to begin at an earlier start date rather than wait until all the stars have aligned perfectly. So how do you start an investment plan earlier in life, particularly when that timing usually lines up with having the most financial commitments? There are certainly a lot of drains on cashflow in the younger years you may have mortgage repayments, kids to put through school, and simple living costs thrown in on top. It’s not always easy to find that little bit extra to put towards an investment. The message we’d like give this week is that you don’t necessarily have to start your investing with a large amount, but you do have to start! One practical investment amount for many people is that chunk of money that comes back into circulation after doing a tax return - which for many people will be on its way now or sitting in their bank account. But for this idea to work, you need to be willing to set that amount aside, rather than bringing it back into circulation for spending. This is generally possible to do, provided you remember you’ve already been without that money for 12 months and the world hasn’t stopped spinning. Did you know the average tax return figure in Australia is $2,300? So let’s see what this can grow to over time: If you invest your $2,300 and add to it every year with the same amount of tax return income, and you hold that investment for 10 years earning just a 5% rate of return, your lump sum at the end of 10 years is now almost $33,000. If you’re a couple and both working and you apply this idea, your investment amount is doubled. This is before assuming that the average tax return figure will likely increase over time. So who wouldn’t like a $66,000 lump sum that you’ve generated from money that you haven’t missed in the first place? Our suggestion is to make a start with your investing and to also make use of the resources available to you to do so. If you’ve felt hesitant about committing to an investment plan, however small, ask yourself the question If not you, who? And if not now, when? And if you’ve got any questions at all about this or any of our other ideas, please don’t hesitate to contact us for help on your personal position.

09.01.2022 Business owners get SO worked up about branding, but don't understand that branding follows sales (not the other way around), and marketing generates sales. This 3 minute video explains the difference.

08.01.2022 Brilliant tip, as always from Donald Miller. I highly recommend his daily videos "Business Made Simple". Each is only a maximum of 3 minutes long, and contains fantastic information for business owners and managers.

06.01.2022 Small business #heartbeatofthecountry

05.01.2022 What does all good marketing have in common? It is memorable. And don't be tempted to brain storm with your team to come up with something that is a quirky "in house" joke or understanding. If you want to know why your regular customer/ clients do business with you (why you are on their mind) ... ASK them! It's very simple. So make sure your messaging is something that people can quickly and easily remember, or you will be quickly and easily forgotten.

02.01.2022 #supportsmallbusiness