Budget 2016 – Superannuation

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Budget 2016 – Superannuation

Last week, in his budget speech, Federal Treasure Scott Morrison put forward a number of proposed changes to superannuation.

Here is a brief roundup of what the proposal are.

  • Lifetime cap on non-concessional contributions
  • Concessional contributions cap reduced
  • 30% tax on super for high income earners
  • Tax free super balances capped at $1.6m
  • Tax deductions on super contributions expanded

You can see by the dates to take effect only the lifetime cap on non-concessional contributions has an immediate impact.

If you are planning to make a non-concessional contribution to your super fund prior to 30 June 2016 and have made previous contributions of this nature please contact us to ensure you don’t breech this cap.

Regarding the other changes they will not take effect until 1 July 2017, so there is plenty of time to plan.

Remember, proposals are not set in stone and could change as legislation passes through parliament.

Once these changes are passed we recommend you strategically review how these changes impact your current circumstances.

If you require assistance with this do not hesitate to contact myself or Susan Stainwald.

Sunshine Coast: 07 5474 8955

JOHN SIEMON

John Siemon

(Partner)


Lifetime cap on non – concessional contributions

Applies to all non – concessional contributions made on or after 1 July 2007
Date of effect: 7.30 pm (AEST) on 3 May 2016

  • The current contributions cap will reduce to $25,000 from 1 July 2017.

A lifetime $500,000 non-concessional contributions cap will be introduced from Budget night.

The current system of annual non-concessional contributions of up to $180,000 per year (or $540,000 every three years for individuals aged under 65), will be replaced with this new lifetime cap.

The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007 and will commence at 7.30 pm (AEST) on 3 May 2016.  Contributions made before commencement will not result in an excess.  However, excess contributions made after commencement will need to be removed or will be subject to penalty tax.  The cap will be indexed to average weekly ordinary time earnings.

The lifetime cap is available up to age 74.


 Concessional contributions cap reduced

Date of effect: 1 July 2017

  • The current concessional contributions cap will reduce to $25,000 from 1 July 2017.

Age: Under 50
Current concessional gap: $30,000
From 1 July 2017: $25,000

Age: 50 & over
Current concessional gap: $35,000
From 1 July 2017: $25,000


30% tax on super for high income earners

Date of effect: 1 July 2017

At present, individuals with combined income and superannuation contributions of more than $300,000 pay an additional  contributions tax of 15% on concessional contributions. From 1 July 2017, this income threshold will reduce to $250,000.


Tax free super balances capped at $1.6m

Date of effect: 1 July 2017

A new $1.6 million cap will apply to how much can be transferred into a retirement phase account. Earnings on amounts within the account will continue to be tax-free.  Transfers in excess of this $1.6 million cap (including earnings on these excess transferred amounts) will be taxed in a similar way to the tax treatment that applies to excess non-concessional contributions.

Where an individual accumulates amounts in excess of $1.6 million, they will be able to maintain this excess amount in an accumulation phase account (where earnings will be taxed at the concessional rate of 15%).

Members already in the retirement phase with balances above $1.6 million will be required to reduce their retirement balance to $1.6 million by 1 July 2017.  Excess balances for these members may be converted to superannuation accumulation phase accounts.

The amount of cap space remaining for a member seeking to make more than one transfer into a retirement phase account will be determined by apportionment.


Tax deductions on super contributions expanded

Date of effect: 1 July 2017

All individuals up to age 75 will be able to claim an income tax deduction for personal superannuation contributions from 1 July 2017.  This effectively allows all individuals, regardless of their employment circumstances, to make concessional superannuation contributions up to the concessional cap – partially self employed, employees whose employers don’t offer salary sacrifice arrangements, etc.This is a sensible move, which means that it will no longer be necessary for individuals to pass a 10% test in order to be able to claim a deduction for personal superannuation contributions.  Currently, an individual can only claim a deduction for personal contributions where less than 10% of their adjusted income for the year relates to employment activities.  The 10% test can make it difficult for people who have started their own business to make deductible superannuation contributions where they also have part-time work.

(Source: The Knowledge Shop)

Using EOFY to strengthen your business

McAdam Siemon Business Accountants Upper Mt Gravatt, Noosa Heads & Maroochydore. Specialising in Accounting, Taxation, Management Rights, SMSF Administration, Business Advisory, Business Valuations , Management Rights specialist accountants

Using EOFY to strengthen your business

(source: Sean O’Meara) 

With the end of the financial year quickly approaching it is critical that small business owners use this time to make a strong plan for the year ahead. It is vital to analyse your business and try to find any opportunities and improvements that can be made, no matter how small they may seem.

The additional administration time required at EOFY can make the lead up to 30 June extremely stressful. So the keep your business goals in check. Here are some strategies that will improve your business to maximise your growth in 2016/2017.

It’s time to review your businesses situation 

You are probably already using reporting throughout the year to track your revenue, gauge your sales trends etc but it is important to take a second look at how your business performed on the whole and compare this to previous years.

“By looking at year-on-year sales and revenue we can see how public holidays or seasonal changes affect the business and enables us to do more accurate forecasting, rostering and budgeting for the year ahead. It also helps us make informed decisions on whether to spend now or later,”

Take advantage on the low interest rates

Interest rates remain low so it could be an opportunity to invest in capital equipment and paying off debts. 

Review business partners and suppliers

Ensure you are getting an excellent price for quality products. New businesses keep coming into the market, so be sure to do your research and renegotiate with your present partners and suppliers.

Your customers are probably reviewing their own strategic plan and making changes for next year so don’t forget to let them know that their business matters to you.

Take a long – term view of your cashflow 

  • How is your cashflow?
  • Is your business seasonal, with peaks and troughs?

Do some advanced planning -review your budget and anticipate what may happen in the year ahead. It may be all that is needed to free up liquid assets and ensure ongoing profitability. This is the best way to ensure you have safeguards in place to keep your business afloat during low times. 

Capitalise on tax breaks 

  • Have you any expenses that can be pre-paid?
  • Think about maximising your superannuation contributions to the relevant caps.
  • Consider investing in areas that will support your business; new equipment and/or technology that will provide your business with greater efficiencies and productivity The Government still has an immediate tax deduction on assets coasting less than $20,000.

Don’t hesitate to give us a call if you would like to discuss anything EOFY’s.

Kind regards

The Team at McAdam Siemon

If you have one employee but less than 19

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If you have one employee but less than 19, You must be Super Stream ready by 30 June 2016

  • Do you have 19 or fewer employees?
  • Are you an SMSF Trustee? Self-managed super funds (SMSFs) must be able to receive employer contributions and the associated data electronically.
  • APRA – regulated funds

From 1 July 2016, the ATO’s SuperStream standards are set to be enforced.

A reminder:

  • If you are a larger employer, you should already be using SuperStream.

A Brief Overview

These new rules require employers to pay and report contributions to superannuation funds electronically. Both the payment and the reporting will need to be completed on the same day.

  • These measures don’t apply to individuals who are making personal contributions direct to their superannuation funds, only employers.

SuperStream will make it easier for you. 

  • You need to use SuperStream when paying employees super.
  • With SuperStream contribution payments are made electronically and you can pay all your employees super; sending all their information through one clearing house; saving you time and effort.
  • Providers must be approved by the ATO and are listed on the ATO website.

You should have already started transitioning by choosing an option to make super contributions electronically: 

  • Your payroll system
  • Your super funds online system, or
  • The Small Business Super Clearing House (SBSCH). This is a free service administered by the ATO whereby you can make super guarantee contributions as a single payment to the clearing house and it distributes the payments to the employees fund/s.

Next: You need to collect the following information on your employees. 

  • Their Tax File Number (TFN) and,
  • A Unique Super Identifier (USI)
  • Super fund ABN
  • For employees who have selected a SMSF for their contributions, they will also need to provide their Fund’s Bank Account details and Electronic Service Address (ESA)

Once this is done, these details must be entered into your preferred clearing house site.

For new employees, the ATO has updated the Super Choice form to include collection of the extra information required.

Start using SuperStream as soon as this process is completed so that any problems can be solved before 30 June, 2016.

If you any questions on setting up SuperStream super contributions for employees, please contact McAdam Siemon.

2016 represents the 20th year of McAdam Siemon

Well Christmas seems but a distant memory and Easter is just around the corner (I think Hot Cross buns hit the stores on 6 January), kids are back to school and the year is well and truly underway.

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2016 represents the 20th year of McAdam Siemon when John  and I opened our doors on 1 January 1996 at Kangaroo Point and a hole in the wall at Noosa Junction with 4 staff. 

Today we operate out of Upper Mt Gravatt, Noosa Junction and have just opened an office in Buderim.  Sam Hodgetts joined us as a partner in 2013, having started work in the Noosa Office and 12 staff.

It has been an amazing 20 years with us still acting for clients from our inception.

John, Sam, and I certainly appreciate and never underestimate the loyalty shown by our clients through the good times and bad. (luckily lots more good times.) 

This year the team at McAdam Siemon will be focusing on working with our clients so that they can focus and achieve your goals.

To help you achieve this we have developed a number of tools that will allow you to have a better understanding of your business and focus that is required. 

1. Breakeven analysis

2. Using your accounting package effectively and efficiently to save time and money. 

3. Tax planning tool

4. Fathom – to truly understand your business and set goals 

We will discuss these in more detail in future newsletters and of course our experienced team will discuss them in more detail when they meet with you. 

We look forward to our continued close working association with you.

Are you thinking about buying a franchise?

 

Are you thinking about buying a franchise?

Before you do, you should assess whether or not you are the right kind of person to own a business.

  • Have you a passion for a particular type of business?
  • Are you dissatisfied in your present occupation?
  • You would like to work more flexible hours, more or less?
  • You want to be your own boss?
  • Will the pressures of a new business affect your significant others? Research shows that franchisees with highly supportive families perform better than those that don’t have this.
  • Do you have a strong desire to build wealth?
  • Do you have an ability to be creative and entrepreneurial but remain within the boundaries of a brand or a system?
  • Do you know how to lead a team?
  • Do you have strong organisational skills?
  • How much money are you thinking of investing?

The list goes on ……..

McAdam Siemon understands that a franchise business has unique features that differ from other businesses.

For that reason, we have established a franchising division and are members of the Franchising Accountants Network, so timely and accurate advice can be provided to you.

So that you can make informed decisions, we have a structured approach to the way we deal with franchising from buying through to selling.

These have been specifically designed for the franchise industry sector and you will be advised of the costs upfront.

If you would like to discuss buying into a franchise, do your due diligence first, and/or give Rob a call to find out how I can help you.

 Upper Mt Gravatt: 07 3421 3421

5 Essential Elements of Business Success

What succeeds in Business land?

 

Recently I joined a interested group involved in franchising for drinks, nibbles and networking event hosted by Peter McLaughlin, (Director of redchip Lawyers); on behalf of FAN.

We heard from Peter McLaughlin & Peter Knight, Founder of the Franchise Accountants Network and his business partner Katie Groom. They spoke about the 5 Essential Elements of Business Success

It was an enjoyable and informative couple of hours we all had, hosted in redchips’ sensational architecturally designed premise.

 

What were the 5 Essential Elements of Business Success that were talked about?

 

  1. Adaptability

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change”

Charles Darwin

One of the franchisors in the room had recognised “That if you fail for adapt, your business will pay the price”.

  • Does the bore of social media come to mind?
  • Have you investigated the use of cloud based accounting software. We have a number of case studies that show significant cost savings and real time financial data.
  • Do you keep a watch on the economy?
  • Is your business up to date with technology?

2. Planning

Think about this: “Doing things right vs Doing the right thing”

When it comes to business is there a difference in doing the right thing and doing things right? You need to do the right thing in your business as a business owner for it to flourish and grow.

  • Where is your business heading? Your likes vs dislikes.
  • How do I get to where I want my business to be?

Essentially you need a Business Plan.

Rather than try and plan out for the next 12 months break your plan down into 4 x 90 days per year (less than 100 if you hate large numbers). Your BAS is due every 3 months, so this is a great time for a review.

FAN publish weekly business tips which will help you: http://franchiseaccountants.net.au/

3.Business & Financial Disciplines

Regular weekly meetings are a must. Which day works for you?

These meetings get the team focused on achieving the goals for the week and dealing with any issues.

It is also recommended that a monthly meeting looking at the 3 key elements of your business:

  • Sales & marketing
  • Operations & productivity
  • Business & financials

4. People Development

How are you developing your team (staff & associate staff) to make them more productive?

Why bother with staff training when it can be expensive and they might leave? Because your staff are your primary customers. Creating a great culture in your business will be very rewarding.

Training is a must because it:

  • improves loyalty –  staff need to feel valued
  • builds productivity –  insufficient staff training can increase how much value you are getting from your staff which can increase your costs.
  • helps attract new employees – have you thought about a staff succession plan?

The suggestion on the night was once or twice a year take some time to assess your “people development” Is the culture/vision of your business on track?

5. Sales

While number 5 this is the most important one.

Without sales everything else is meaningless.

Your business should constantly be in sales mode.

The whole perspective of your business should be being proud of the services you provide to your customers – that special moment between you and your customers.

This is the special moment that will influence whether your client or potential clients will decide to do business with you!

Whilst we practice the 5 Essential Elements across the range of our businesses…..

It was a great reminder on how important these elements are.

If you have hit a stumbling block in any of these areas or would just like to touch base, please give me a call:

07 3421 3421

Rob McAdam