Bitcoin and other Cryptocurrencies



The number of cryptocurrencies available to buy and sell has risen from 66 in 2013 to 1,500 in 2019 and to more than 6,000 today.

The ten most important cryptocurrencies other than Bitcoin are Ethereum, Litecoin, Cardano, Polkadot, Bitcoin Cash, Stellar, Chainlink, Binance Coin, Tether, and Monero.

A comprehensive definition of cryptocurrency is virtual or digital money that takes the form of tokens or "coins." While some cryptocurrencies have ventured into the physical world with credit cards or other forms, most remain intangible.

Most Cryptocurrencies are designed to be free from government manipulation and control, although as they have grown more popular, this foundational aspect of the industry has come under fire. Bitcoin was the world's first decentralised cryptocurrency and is still the most popular, have the most extensive user base and market capitalisation.

Bitcoin

On January 3, 2009, Bitcoin was introduced by an anonymous computer programmer (or group of programmers) under the pseudonym "Satoshi Nakamoto". It is alleged that he owns or holds 1-million-bit coins, but as the identity of the person or persons who created the technology is a mystery, it is yet another unfounded truth of the coin itself.

How does Bitcoin work?

The Bitcoin network is a peer-to-peer electronic payment system that uses a native cryptocurrency called bitcoin to transfer value over the internet or act as a store of value. This storage characteristic has been in comparison to gold and silver. Bitcoin has a fixed supply of 21 million bitcoin, and the bitcoin in circulation cannot be destroyed. Holders who store their own bitcoins have complete control over them. Without the holder's cryptographic key or token, these bitcoins hold no value. Users can lose bitcoin and other cryptocurrency tokens due to theft, computer failure, loss of access keys, and more. Users must ensure that passwords or private keys are not lost, as they are irreplaceable. Once the 21 million coins have been mined, it has been insinuated that the total in circulation may fall as some may be lost in cyberspace forever. One of the safest ways to hold bitcoin is to use "Cold storage" or offline wallets (Paper, storage devices like USB drives, CDs, or bank vaults). They are not accessible via the internet but not very convenient. The most convenient is to keep it in a "digital wallet" that is hardware-based, like a computer desktop, or mobile phone. The wallet is only accessible via a set of "private keys" if the owner does not lose the key or having the key stolen. It would be best to keep in mind that a computer device can be hacked and information stolen, or the hard drive can crash, causing a loss of information if not backed up.

Bitcoin mining

Each bitcoin comprises of 100,000,000 Satoshis (the smallest units of bitcoin), making individual bitcoin divisible up to 8 decimal places. Bitcoins are either "mined" by a computer through solving mathematical problems, or algorithms are used to verify transaction blocks to be added to the blockchain. As bitcoin is intangible, value is transacted directly between the sender and the receiver, and there is no need for banking intermediaries to facilitate the transaction. Transactions are recorded on a Bitcoin "blockchain" ledger through a process called "mining." Miners make the Bitcoin payment network trustworthy and secure by verifying transaction information. Miners are provided with a small number of bitcoins. Currently, miners receive 6.25 bitcoins each time they mine a new block.

Before you dive in, please tread carefully


ASIC has recently issued a warning and urged Australians to avoid investing in crypto assetrelated financial products through unlicensed entities, such as options and futures. If you are dealing with a licensed entity, you have investor protections in place. The sale of binary options to retail clients was recently banned in Australia under an order that will remain in force for 18 months, after which it may be extended or made permanent. The ACCC has also recently reported that losses to investment scams involving Bitcoin have already reached $25.7 million this year, compared to $17.8 million across 2020, representing a 44 percent increase. Please ensure you seek financial advice before you look at investing in Cryptocurrency

Mental Health Support for Business Owners



The Pandemic effects business and mental health

Running a business can be an isolating experience. And, with COVID-19 lockdowns and disruptions to trade, the pressure can be intense.

NewAccess for Small Business Owners
is a free and confidential mental health program developed by Beyond Blue to give small business owners the support they need. Whether you're just feeling stressed, or completely overwhelmed about everyday life issues, they can help.

Understandably, a lot of small business owners are reporting that COVID-19 has negatively affected their mental health.

NewAccess is designed to appeal to people who might not otherwise seek support for their mental health and to provide support early, preventing symptoms from potentially getting worse.

Coaches of the NewAccess for Small Business Owners program all have a small business background and are trained in Low-intensity Cognitive Behavioural Therapy - a structured, evidence based psychological treatment. Put simply, it allows us to recognise the way we think, act and feel.

The program is open to small business owners (under 20 employees) who are not currently seeing a psychologist or psychiatrist. The program starts with an initial assessment, then works with you over five sessions to tackle unhelpful thoughts and behaviours, using an individual plan that you develop with your coach. Together you will develop an understanding of what is causing distress and then work on practical tools and strategies that can be used in day-to-day life.

For more visit: https://www.beyondblue.org.au/get-support/newaccess/newaccess-for-small-business-owners


Divorce, Superannuation and the Gender Divide

New legislation will help prevent superannuation assets from being hidden during divorce proceedings.

From 1 April 2022, the Australian Taxation Office (ATO) will be able to release details of an individual's superannuation information to a family law court.

The recently enacted laws are designed to ensure that there is procedural and economic fairness in divorce proceedings to prevent the under-reporting of superannuation assets. While a spouse's superannuation information can be obtained now through legal action, if it is not provided willingly, it is often expensive and time consuming to obtain factual information through subpoenas or court orders.

From April 2022, when a couple have entered into divorce proceedings, if one of the parties believes the other is not being forthcoming about the value of assets held in superannuation, they can apply to a family law court registry to request their former partner's superannuation information held by the ATO. They will then be able to seek up-to-date superannuation information from their former partner's superannuation fund.

What happens to superannuation in a divorce?

In a divorce, superannuation is treated like any other asset and included in the division of assets in a property settlement or financial agreement. Depending on how the total assets of the couple are split, the superannuation balances of each individual may remain intact with each party taking their respective entitlement from the asset pool, or split between the couple.

For superannuation to be split, there must be:

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An order from the Family Court or Federal Magistrate Court; or

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A superannuation agreement (a financial agreement that deals with superannuation interests)

If a superannuation account is split, it does not convert into cash unless the receiving spouse is aged 65 or over, or has reached preservation age and has retired. In most cases, the superannuation is immediately rolled over into the receiving spouse's superannuation account and remains there until they are legally able to access it.

The tax-free and taxable components of the super payment to a receiving spouse will be calculated immediately before the payment is made with the relevant payment retaining the tax components of the account the funds are being transferred from.

For self managed superannuation funds (SMSFs), generally an SMSF cannot acquire assets such as residential property from a related party but there is an exemption when the acquisition is a result of marriage breakdown. Where a property like a residential rental property is involved, the superannuation rules allow an in-specie rollover under a court order or financial agreement rather than forcing the former couple to sell the property. For example, where a couple have an SMSF together, it's common for one member to step down when they divorce (until that point it's important to remember that the trustees are legally obliged to act in the best interests of all members). This same member might then set up their own SMSF and utilise the exemption to receive the residential rental property as an in-species rollover.

Capital gains tax relief is also available where property is transferred to a spouse's superannuation fund as a result of divorce proceedings so that any potential capital gains tax does not apply on transfer. Instead, the spouse or former spouse who receives the asset will effectively 'inherit' the transferor's cost base of the asset for CGT purposes. That is, when the property is transferred, the tax implications are generally the same as if the receiving spouse or their superannuation fund owned the property from the time it was acquired.

If you and your spouse have an SMSF together and a divorce is imminent, it's important to get advice on the decisions that need to be made about your SMSF and their implications.

The superannuation divide

On average, women earn 14.2% less than men based on full time earnings. If you take overtime into account, the gap is 16.8%. When part-time work is taken into account, this figure blows out to 31.3%. And, the COVID-19 pandemic has only worsened the pay gap.

Given that 93% of all primary carer leave is taken by women, it's not surprising that there is a divide between the superannuation balances of men and women on retirement. While the gap is diminishing over time reflecting the positive shifts in work participation and the earning potential of women, it is currently estimated to be around 42%. That is, when a woman retires, she retires with around 42% less superannuation than a man.

While the situation is much better in SMSFs, a gap remains. Over the five years to June 2019, the average member balances of women increased by 28% to $654,000, however the average balance of a male was $784,000.

The Federal Budget proposal to remove the $450 threshold on superannuation guarantee payments (the minimum amount someone needs to earn in a month before an employer is required to pay superannuation guarantee) will help reduce the superannuation divide, but this is not intended to commence until 1 July 2022.

Superannuation equalisation

Where couples have significantly different superannuation account values but are of a similar age, there are practical reasons why they might look at evening out any gap.

Where one spouse is close to or likely to reach their transfer balance cap (between $1.6m and $1.7m), redirecting superannuation contributions to the spouse with the lower balance means that together, they maximise their tax-free income in retirement. Together, the couple can accumulate between $3.2 and $3.4 million tax-free.

You can make a contribution to your spouse's superannuation fund up to their non-concessional cap (currently up to $110,000 depending on their superannuation balance). If they are under 67 years of age, you might also be able to use the bring-forward rule and contribute up to 3 years' worth of non-concessional contributions in one year (up to $330,000 depending on their superannuation balance).

If your spouse is not working or a low income earner (assessable income less than $40,000), there is also a tax offset of up to $540 available on contributions you make on their behalf.

If your spouse is under 65 and not retired, you can split your superannuation with them. Up to 85% of your concessional superannuation contributions from your employer or salary sacrifice each year, can be directed to your spouse's fund.

Actively addressing the value of each spouse's superannuation account might also help to manage some of the issues that can occur when a spouse dies. While superannuation will pass to the beneficiary nominated in the death benefit nomination or estate, this does not always occur in the most practical or tax effective way.  The superannuation rules in this area are complex, particularly when there have been family breakdowns in the past. It's important to seek advice to ensure your superannuation is managed in a way that delivers the best possible outcome for your beneficiaries

Compensation payments for Superannuation Funds

Did your super fund receive a compensation payment?

Is a financial services compensation payment to your superannuation fund a contribution?

Of late, there have been several compensation payments made by financial services providers to customers that were inappropriately charged or overcharged for insurance premiums or services they did not receive, etc.

New guidance from the ATO helps decipher whether these compensation payments are treated as contributions to your fund. The problem for some people is that where these compensation payments are treated as a contribution to their superannuation fund, they may exceed their contribution cap or attract Division 293 tax (a 15% tax on super contributions imposed on those with combined income and super contributions of $250,000 or more).

In general, the treatment of the compensation depends on who engaged the financial services provider. In general:

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Super fund engaged the financial services provider and compensation paid to the fund – compensation not treated as a contribution.

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Individual engaged the financial services provider and compensation paid to the fund but not at member's discretion – compensation is a concessional contribution in the financial year it is received.

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Individual engaged the financial services provider and compensation paid to the fund at member's discretion - compensation is a non-concessional contribution in the financial year it is received

Where neither the member of the fund or the financial services provider had a right to seek compensation, the amount will be a concessional contribution in the financial year it is received by the fund.

If you have received a compensation payment from a financial services provider and the payment means you have exceeded your contribution cap, or are liable for Division 293 tax, there is a potential solution to avoid an adverse impact where you did not have control over the payment. In these cases, you can apply to the Tax Commissioner to exercise his discretion to disregard excess contributions or reallocate them to another year.

The Pandemic...

What now? Unwinding the Pandemic...

Australia's two largest states and the ACT are in lockdown as the Delta strain of COVID-19 takes its toll while others are standing firm on a policy of eradication. The result is a country at a policy impasse and divided by border restrictions.

And, it is not just businesses in lockdown that are in crisis. Tourism and hospitality businesses that rely on interstate trade are equally impacted but financial assistance is often limited or non-existent if they are not in a hotspot.

At the time of writing, Australia is on track to fully vaccinate the eligible population of 20.62 million adults in December 2021. Based on National Cabinet's four stage roadmap to normal, Australia should move to phase B of the plan when 70% of the eligible population have received their second dose of the vaccine. At Phase B, it is expected that lockdowns will be "less likely" and special rules will apply to the fully vaccinated. At Phase C, when 80% of the eligible population is vaccinated, the plan is for Australia to return to "baseline restrictions" with no caps on returning visitors, and a gradual opening of inward and outward international travel with safe countries (quarantine requirements will still apply but will be reduced).

The problem for "Team Australia" is that not all players are the same. While some regions remain in an eradication phase, the strategy for opening and returning to normal is necessarily different (assuming these regions remain Delta free).

In NSW and Victoria, hope of defeating Delta has been abandoned with the focus now on bringing the population up to the maximum vaccination level to prevent hospitalisations and death.

In QLD and WA however, the strategy for opening is more complex with the bar being raised well beyond the national plan (Queensland Premier Annastacia Palaszczuk has demand that children under 12 be included in vaccination targets).

Freedoms for the fully vaccinated and what it means to business

A major concern for many business operators is the expectation of policing vaccination status for both staff and customers.

Identifying vaccinated customers

Both the New South Wales and Victorian Premiers have stated that there will be greater freedoms for those who are double jabbed with new QR code check-in technology expected at the end of September. Instead of having to show a vaccination certificate or medical record, Victorian Premier Dan Andrews said that the QR codes, "don't store that information, but you either get a tick or a cross, and on that basis you are allowed in or not." This system might also assist those who are medically exempt from vaccination as they would not need to explain their medical history behind their exemption.

But is it discriminatory? The Australian Human Rights Commission (ARC) says, "Vaccine passports are more likely to be consistent with human rights when they are used as a tool to ease existing restrictions and improve public health outcomes. Rather than becoming a further requirement on top of existing restrictions, vaccine passports should generally operate in place of them."

"…the guiding human rights principles for considering measures taken to advance public health are:

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They must be reasonable, necessary, and proportionate.

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They must take into account the potential for discrimination."

While public health orders are likely to protect business operators from discrimination claims, not all are waiting. Qantas was the first major airline to state that it would require passengers to be vaccinated on international flights when borders open. Several sporting venues have also stated that the price of the return to live events is double vaccination for both staff and patrons.

A business operator has the ability now to refuse entry or service to a customer as long as anti-discrimination rules are not breached. Excluding an individual by vaccination status without a public health order however will be a question of whether the rule is reasonable, necessary, and proportionate.

Staff members and vaccinations

In general, vaccination will remain voluntary and free in Australia but there are some sectors where vaccinations are mandatory (see Legislation and public health orders requiring vaccination against coronavirus). Common sectors include aged care and hotel quarantine. In these sectors, the employer is generally responsible for enforcing the Health Orders.

Outside of a public health order an employer can mandate that employees are vaccinated but only if the direction to be vaccinated is "lawful and reasonable". In addition to being able to mandate vaccinations under the relevant Award or agreement, employers need to ensure that mandating vaccinations is reasonable for example, because the staff member's duties put them at increased risk of being infected or they have close contact with vulnerable people (see Can an employer require an employee to be vaccinated? on the FairWork website).

Qantas for example will require all frontline employees to be fully vaccinated by 15 November 2021 and all other employees to be vaccinated by 31 March 2022. The announcement followed a company wide survey of staff that revealed 89% planned to be fully vaccinated and only 4% were unwilling or unable to be vaccinated. Qantas is yet to release details of how medical exemptions will be applied.

In workplaces where vaccinations are not mandated, an employer can only collect information on an employee's vaccination status where it is reasonably necessary for the organisation's functions or activities or where it is required by law. In these cases, it may be possible for the employer to ask to see evidence of an employee's vaccination status without breaching privacy laws (see the FairWork website and the Office of the Australian Information Commissioner for further information).

Another question is whether an employee can refuse to come to work because their co-workers are not vaccinated. On this, FairWork says "If an employee refuses to attend the workplace because a co-worker isn't vaccinated, their employer can direct them to attend the workplace if the direction is lawful and reasonable." But, the Australian Human Rights Commission states that where someone is particularly vulnerable to COVID-19, a "blanket rule requiring all employees to attend a particular workplace may constitute indirect discrimination." Whether it's reasonable for an employee to attend their workplace is highly dependent on the facts and you should seek legal advice.

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What is a business exit strategy?

An exit strategy is a plan for wrapping up your involvement in a business. For most people, that means readying the business for a change of owner. Executing a well thought-out exit strategy can increase your sale price, while ensuring the business continues to thrive after you've left. This can also be called succession planning. What does it involve?

Succession planning definition and goals

The aim is to leave your business in the best possible shape for a new owner. That means it should be operating at peak profitability, the books should be spick and span, and all your processes will be written down so a stranger can come in and run the place. Oh, and the business won't need you anymore – no matter how important you once were.

It takes years to do all this. That's why it's never too soon to start on your succession plan, or exit strategy.

How to sell a business

Business advisors and brokers recommend these nine steps to help get a succession plan in place.

1. Pick a target buyer

There will be different priorities depending on who you're selling to. If it's family, take pains to make everything transparent and fair. You don't want the transaction to cause tension or conflict between children. If you're selling to staff, be prepared for staggered payments. They'll probably start with a deposit and pay you the rest from business income. If you sell to the highest bidder, then get all your records in order as otherwise they won't have any idea how you operate, or what sort of money you make.

2. Decide how fast you'll want out

Some buyers, such as family or staff, won't have the cash to buy you out straight away. You might have to keep an interest in the business and stay involved to protect your investment. If that's the case, you'll need to negotiate consulting fees. If you want a clean break, you'll probably be better off selling on the open market.

3. Get your accounting sorted

Smart buyers will ask to see at least two years worth of clean and dependable financial records. If your bookkeeping isn't all it could be, get it fixed now. And if there's something you can do to improve profitability, do it as soon as possible. You want that upswing to show in your accounts as a sustainable trend rather than as a recent spike. Use our balance sheet template to help get things in order.

4. Make yourself redundant

No one's going to buy your business if it can't survive without you. If you have staff, give them the training and authority they need to succeed. Scale back your involvement. Be less available to customers and clients. Delegate big decisions. Go into work less often.

5. Ensure your business is a well-oiled machine

Ensure you have formal (and efficient) processes for getting work done. Who does what, when, and how? Make sure there are protocols to guide all this. Potential buyers will be impressed if some things in your business happen automatically.  

6. Write down how everything happens in your business

Write a "how to" manual for your business, so that a stranger could pick up the reins and run everything tomorrow. Record every process, including admin. Make a note of the steps you follow for each of these tasks. While you're at it, write formal job descriptions for employees. And create templates for tasks that are repeated in your business.

7. Figure out how to drive up the valuation of your small business

What are the things that make your business great? Do you have a really outstanding product? Loyal customers? Amazing intellectual property? Find the strengths in your business and grow them, so that they become even more valuable. Similarly, figure out the biggest holdbacks and fix them. You'll need someone from outside the business to provide this assessment. Get your accountant involved. If they don't have the particular skills you need, they may be able to recommend someone who does.

8. Get a guideline business valuation

You won't know what you'll get for your business until the day it's sold, but you can get a rough estimate. Ask for a professional opinion. Your accountant should be able to introduce you to someone, or you could search for a local business broker. A guideline valuation will help satisfy your curiosity and set realistic expectations. If they predict a lower price than you'd hoped, you might delay your exit, and spend some time building value in the business.

9. Work on a sales pitch

Buyers need to be excited by your business, so come up with an elevator pitch that captures the essentials. Craft a story that explains why you got started, how you've grown, and what you've achieved. Paint a positive picture of the future, too, but keep it real. Incorporate stats and facts to support what you're saying.

Exits happen

Exiting your business is inevitable. It will happen whether you're in control of it or not. So make a plan now and start getting your business ready for the next owner. It'll help you command a better price, and increase the chance that your business survives.

And remember that anything you do to benefit your future buyer, will also benefit you. You'll have a more efficient, profitable and easier to manage business.

It's never too soon to build a business exit strategy. Speak to your accountant or business advisor today. If you don't have an accountant, look for one in the Xero advisor directory.

Setting goals and measuring performance

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Setting goals and measuring performance

Goals are what drive the long-term performance of your business.

Agreeing on clear targets, and measuring your progress over time via key performance indicators (KPIs), helps you to understand exactly where the business is going.

But how does this kind of performance management work in practice?

Track your performance with KPIs

Tracking your goals via KPIs show you where the company is hitting the mark and (importantly) where you need to do better – putting real drive and motivation behind your overall strategy.

To make performance management drive your profits and productivity:

  • Set targets and work to a long-term strategy – define your key goals for sales, profit, growth and cashflow etc. And ensure these target are closely aligned to your wider strategic business plan – so you're tracking the metrics that matter.
  • Track performance with real-time information – integrate a KPI reporting app with your accounting software, and monitor the key financial and non-financial metrics. Use this dashboard to regularly track your KPIs – giving you a current view of performance.
  • Motivate your team to be more productive – explain your key targets to the wider team, and keep them engaged in meeting these goals. Motivation and engagement levels are higher when staff can see what they're working towards.

Talk to us about setting up a KPI dashboard

If you're looking to track, monitor and boost your business performance, we can help. We'll help you choose the right KPI reporting app, and get you in control of your key metrics.

Get in touch to start boosting your performance.

What is Personal Services Income?



Personal services income (PSI) is income received as payment for individual personal efforts and skills. It applies to many contractors who provide services as their means of earning an income. PSI rules can apply to individual sole traders and other types of business entities, but not employees. If PSI rules apply, the entity is called a personal services entity (PSE).

The PSI rules ensure the income is attributed to the individual who performed the services and not apportioned across other entities.

There are several tests to work out if your income is PSI or if you are instead conducting a personal services business (PSB), which means the PSI rules don't apply. If a personal services entity qualifies as a PSB, the ordinary tax rules apply for that financial year.

At least one of these four tests must be satisfied for an entity to be classified as a PSB.

  • Results test: the individual must be paid to produce a result, is required to supply their own equipment and tools to produce that result and is liable for the cost of rectifying defects in the work.
  • Unrelated clients test: the sole trader or entity must be engaged by unrelated clients, and services must be advertised to the public.
  • Employment test: in general, a sole trader or other entity must engage one or more entities to perform at least 20% of the sole trader's principal work. Entities other than individuals must not be associated with the sole trader.
  • Business premises test: the entity must maintain and use business premises to conduct personal services. The business premises must be exclusively used by the PSE and physically separate from private premises and customers.

If more than 80% of income in a financial year is derived from one customer, the PSE must satisfy the results test to be classified as a PSB.

If none of the four tests are met, the income is classified as personal services income, and the PSI taxation rules apply. PSI rules restrict the type of allowable tax deductions made in relation to personal services income-earning activities.

If you'd like to know more about PSI, talk to us to see if the services you provide meet the tests for conducting a personal services business. We'll make sure you are claiming the maximum allowable deductions and being taxed correctly.

What do you want from your business?

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When you started your business, you probably dreamed about flexible hours and highly profitable, stimulating work.

Ideally, you would've adopted best practice and documented those dreams in a succinct Business Plan. The plan would specify how much cash you need from the business, your role, and the hours you'd be working. In other words, what the business was going to deliver to you personally as an owner.

But that was all before the world turned on its head and most plans went out the window.

Whatever you previously dreamed of or planned for must be reconsidered due to the impact of Covid. It's likely that what you want personally from the business hasn't changed, it will probably just take longer than expected.

Take the opportunity to reinvent your business to deliver what you want.

Trimming what you need personally from the business for the next year or two will give you the best footing to recover. Consider the following:

  1. Can you still have the lifestyle you want with less cash strain on the business? A walk with friends, as opposed to a dinner out, is great for your health and easier on your wallet.
  2. Are there personal costs that can be avoided? Do you need that second takeaway coffee each day?
  3. Can you refinance your personal and/or housing debts to achieve lower interest rates or reduced principal repayments?
  4. Can you spend less on holidays or travel in the next 12 months?
  5. Can you modify your role in the business to reduce stress or workload?
  6. Will these needs be different in the medium term? I.e. can you hunker down for 12-months or until the business's profitability and cashflow improve?

The best way to reduce the cashflow strain on your business is to revise your personal budget. Your budget will identify potential savings you can make and provides a benchmark against which your actual spending can be tracked in the future. The Business Plan and budget can then be built around how the business can deliver the level of personal cashflow you need.

There are no shortcuts here. The discipline of personal budgeting with ongoing monitoring of your expenditure is essential. The good news is that the process is both empowering and enlightening at the same time. You'll be amazed at where personal savings can be made and will feel much more in control of your business.

Contact us if you need help developing your Business Plan or personal budget.

"You must gain control of your money or the lack of it will forever control you." – Dave Ramsey

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Having a self-managed superannuation fund (SMSF) gives you control and flexibility over how you make investments and prepare for retirement.

 

It's important to get your deductions and record keeping correct for the SMSF audit process and the tax return, as there are strict laws governing SMSFs.

 

An SMSF must be set up as a trust and must also have a legal document called a trust deed. A super fund trust is set up for the sole purpose of providing retirement benefits to its beneficiaries. The trust deed governs how the fund is set up and how it will operate and must be used in conjunction with the superannuation laws.

 

There are many different investment strategies for SMSFs according to the fund's trust deed and operations.

 

Common Tax Deductions

 

Deductible expenses for SMSFs vary according to the nature of investments and the trust deed, however there are some general expenses that apply to most funds.

 

  • Operating expenses, such as management and administration fees, audit fees and ASIC annual fees.
  • Investment-related expenses, such as interest, investment advice fees, costs of servicing and managing investments, property fees and brokerage fees.
  • Tax-related expenses, such as preparing the SMSF annual return.
  • Legal expenses including amending trust deeds.
  • SMSF statutory fees and levies.
  • Insurance premiums for death, total and permanent disability, terminal illness and income protection.

 

The rules for tax deductibility for SMSFs are different to those for individuals and business. Many people are used to claiming deductions for certain things in business or property investment and find they don't apply to SMSF tax returns. We can help clarify what's deductible and what's not.

 

Expenses must relate to the sole purpose of the super fund being to provide retirement benefits to its members. There may be some items you want to query with us for the audit and tax return to see if they meet the sole purpose test, such as investment training courses, collectibles and artwork, travel expenses or personal computers.

 

SMSF Annual Return and Records

 

Once the formal audit of the SMSF has been completed, the annual return must be lodged with the ATO. The annual return is not only a tax return but also reports regulatory information and member contributions. You must keep all records relevant to the annual return.

 

  • Keep all transaction, tax, accounting and financial reporting records for at least five years.
  • Keep all records relating to trustee meetings, minutes, investment strategies and appointments or changes of trustees for at least ten years.

 

Make Your SMSF Management Easy

 

SMSF management can be time consuming. We can help with researching and managing investments, checking trust deed compliance, setting investment strategies, financial statement preparation and keeping records as well as organising the annual audit of the fund. Talk to us now and get ahead for your next annual SMSF return.