Australian Business News and Times

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Superannuation

Tax Talk: How to Handle Taxation as an Australian Business Owne

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tax time australia

Taxation is one of those things that most of us dread. Let’s face it – it’s not the most fun of activities and requires a great deal of accuracy. If you are a new business owner, sorting your taxes out for the first time can be an incredibly daunting experience. Thankfully, today we’re here to guide you through all the steps you need to take as a small business owner when it comes to handling your taxes. Read on to find out more!

  1.    Do Your Research

The best thing you could do for your business taxes is to do your research. Do you know other business owners? Why not ask them for tips or guidance on how you can go about sorting your business taxes in the easiest and most efficient and compliant way possible. We also highly recommend looking up various Australian tax invoice templates to get a rough idea on how you should go about organising and preparing your small business taxes.

  1.    Ensure You Are STP Compliant

As of 2019, all businesses in Australia are required to be STP compliant. STP, or Single Touch Payroll, is a system that was introduced by the ATO in 2018. STP requires business owners to send employee payroll information including wages, salary, superannuation and PAYG withholding to the ATO on a payment-to-payment basis. Previously, employers only needed to do this on an annual basis. Ensuring that you are STP compliant is incredibly important in order to not land your business in hot water or accrue fines from the ATO.

  1.    Keep Strong Records

Keeping strong records is always recommended to any business owner as this allows for ease of filing taxes at the end of the financial year. It is never too early to start keeping records, and we highly recommend utilising various software such as payroll software, invoicing software and so on to ensure that your data is as accurate as possible. Most software can now integrate with one another (including automated STP software), ensuring that your processes are automated and kept complaint at all times.

  1.    Get On Those Deductions

It is always recommended that small business owners claim as many appropriate deductions as they can. This can include costs for utilities, rent, legal services and repairs for your business. It is also recommended by experts that business owners pre-pay for these expenses if possible, in order to bring forward as many expense deductions prior to the July 1st deadline. Always remember that anything deducted has to be directly related to earning your business income and that you have full and in-depth data on how you have calculated these costs.

  1.    Get Superannuation In On Time

The golden rule is to always get your superannuation in on time and before the 30th of June. Failing to do so will result in the loss of your opportunity for a deduction. Always remember that superannuation needs to be paid to your staff 28 days after the end of each yearly quarter. Failing to meet these guidelines will result in you losing your eligibility for tax deduction.

  1.    Utilise Income Tax Offset

The income tax offset can see you shaving up to $1000 off your taxes if you earn a revenue of under 5 million dollars annually. At this moment in time, the offset is set at 8% of tax payable, but it is estimated that this figure will grow up to as much as 16% over the next decade or so. This offset applies to sole traders and micro-business owners and is an incredibly helpful resource and tool for new business owners.

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Handling your taxation as an Australian business owner needn’t be a stressful or miserable task. We hope that the tips we have brought to you today have assisted you in further understanding the process of sorting out your business taxes.

Making your retirement money work harder

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Falling interest rates have hit retirees hard, and according to forecasters even more cuts may be in the pipeline. Particularly for self-funded retirees, it is now more important than ever to make retirement funds work harder.

banking high returns

Making smart choices about personal savings and savings products is vital, according to Greg McAweeney, Executive General Manager of RaboDirect Australia and New Zealand.

“Take the first step by moving excess money from your transaction account into a high interest savings account,” McAweeney says. “Aussies are losing out on billions of lost interest by leaving their money in low interest accounts. Take control of your money by doing the simple things.”

Generating higher returns

Chasing higher returns can be a dangerous game, particularly when you don’t have another 20 to 30 years of working life to cover any losses.

Instead, set an investment strategy with diversified investments while ensuring optimum tax and social security outcomes. A typical portfolio might comprise 50 per cent Australian shares, with the remainder made up of overseas managed funds, property and fixed interest.

Shares

“Blue chips” such as bank stocks have been popular with investors recently due to their high yields and fully franked dividends. According to a recent study by the Australian Securities Exchange, shares outperformed other investments including residential property, fixed interest and cash over the 20 years to December 2011.

Bonds

Gavin Madson, Director of Infrastructure and Fixed Income Research at FIIG Securities, says the latest cut to official interest rates made most short-term rates unattractive.

“Investors should be out of short-term fixed investments, be they bonds or term deposits, which will reflect the drop in rates fully, and instead invest in bonds around the five-year maturity mark, which are offering stronger returns on the higher base rate,” Madson says.

As well as inflation-linked bonds, he suggested indexed annuity bonds that offer an annuity-style payment stream from infrastructure projects at attractive rates.

Property

It is possible to extract wealth from your home using a reverse mortgage. Generally, the older you are the more you can borrow, with a 70-year-old likely able to borrow around 25 to 30 per cent of the property’s value.

The 2013 Federal Budget also introduced an incentive for retirees to downsize. Under the scheme, retirees can invest up to 80 per cent of the profit to a maximum $200,000 in a special account for 10 years and still receive the pension.

Government incentives

Even if ineligible for the pension, the government offers a range of benefits for retirees covering travel and medicine costs. There are also incentives for working past the pension age, including the mature age tax offset and transition to retirement.

Make sure you don’t run out of money in retirement by maintaining a mixture of income and growth assets. By maximising returns, it can be possible to enjoy the lifestyle you deserve.

This article is presented to you by Australian Business Times in conjunction with RaboDirect. For more information about investing in term deposits or utilising self managed super funds, visit RaboDirect.

it’s not all super

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Yes that’s true .Our “superannuation system” though  seems to be quite good is not the  best in the world. From teh results from the recent “Melbourne Mercer Global Pension Index” which Mercer surveyed 14 countries, the Netherlands was ranked first, followed by Switzerland, Sweden, Australia, Canada, UK, Chile, Brazil, Singapore, the US, France, Germany, Japan and China.

Australia Superannuation system rating

In the duration of the  12 months since the first Melbourne Mercer Global Pension Index was completed, not only has Australia’s raw score dropped, but australia has also taken a tumble down the rankings. The Netherlands obtained top ranking in the Melbourne Mercer Global Pension Index with a score of 76.1 out of a maximum of 100, followed by Australia (74.0), Sweden (73.5) and Canada (73.2).

The Melbourne Mercer Global Pension Index compares retirement income systems around the world and rates them based on their adequacy, sustainability and integrity.

http://www.mercer.com.au

Superannuation australia

Mercer’s Report stated five things that Australia could do to “improve” its Superannuation system.

1. Raise the level of mandatory contributions to improve the level of benefits while also increasing the level of household savings.
2. Introduce a requirement that part of the retirement benefit must be taken as an income stream.
3. Increase the labour force participation rate among older workers.
4. Introduce a mechanism to increase the pension age as life expectancy continues to increase.
5. Reduce the costs of the system by encouraging greater efficiency

How the the Superannuation report was compiled

In 2010 the Melbourne Mercer Global Pension Index was expanded to cover fourteen countries, with the addition of Brazil, France and Switzerland.

In this year’s study four new indicators were included in the calculation of the Index. These were an assessment of the costs of each country’s system; the level of home ownership; asset allocation; and the effect of divorce on the provision of retirement benefits.

Superannuation in australia

Superannuation is a retirement (including pensions) program in Australia. It has a compulsory element whereby employers are required by law to pay an additional amount based on a proportion of an employee’s salaries and wages (currently 9%) into a complying superannuation fund, which can be accessed when the employee meets one of the conditions of release contained in Schedule 1 of the Superannuation Industry (Supervision) Regulations 1994.