How A No Interest Loan Works

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Sometimes there are a few unexpected expenses that can impact on our financial situations, and make things just a little more difficult to deal with. The refrigerator breaking down the same week that the car registration is due could be too much of a financial burden for many individuals. With many credit-providing schemes and dubious loans advertised to the public, there is a simpler way to solve your financial issue if you are applicable.

The No Interest Loan Scheme is provided by the Australian government for individuals and families to have access to safe, affordable credit.

No interest loans are designed to assist people in getting back on a more stable footing financially, allowing them to borrow up to $1,500 to pay for essentials. The term for this loan is between 12 and 18 months, with no credit checks, interest, fees or charges. Repayments for no interest loans are affordable as you are only paying for what is borrowed.

To receive a no interest loan, you must:

  • Have a Health Care Card, a Pensioner Concession Card or an income less than $45,000
  • Have lived at your current address for more than 3 months
  • Show that you can repay the loan.

There are only a couple of steps that need to be completed to apply for a no interest loan under the scheme. A meeting must be arranged with a NILS provider through a telephone or website enquiry, in which you will be interviewed and helped through the application process. Then they will assess your eligibility and present you with an outcome. Loan assessments generally take between 45 and 90 minute, with the loans being approved within 2 days. If all paperwork is provided on the day, it can sometimes be same-day approval.

No interest loans can only be used for essentials. These can include:

  • Household items, like a fridge, washing machine, computer or furniture
  • Educational materials e.g. tablet or textbooks
  • Some medical and dental services
  • Car repairs and tyres

Retirement Planning Schemes and What They Can Do To Your Super

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With a significant number of Australians approaching retirement and looking at the best ways to maximise their retirement assets and income from their super for it, retirement planning makes sense.

Unfortunately, there are those who want to target people approaching and planning for their retirement with schemes designed to ‘help’ retirees and prospective retirees avoid paying tax by channelling their income through a self-managed super fund.

Retirement planning schemes are designed to help people avoid paying tax on the income earned through their assets (often in an illegal manner). Those schemes may seem like a simple get-rich-quick solution in maximising assets and income for retirement but can put people’s entire retirement savings at risk.

Anyone can fall prey to a retirement planning scheme. Anyone who is looking to put significant amounts of money into superannuation can be at risk of being ensnared, particularly those who are over 50, and who are:

  • SMSF trustees
  • Self-funded retirees
  • Small business owners
  • Professional service providers
  • Individuals who are involved in property investment

Checking for standard features of retirement planning schemes can be an excellent way to avoid becoming tangled in one. Retirement planning schemes usually:

  • Are artificially contrived and complex, with SMSF members often targeted and encouraged to use their SMSF as part of the scheme
  • Involve a lot of paper shuffling
  • Are designed to leave the taxpayer with a minimal or zero tax, or even a tax refund
  • Aim to give a present-day tax benefit by adopting the arrangement
  • Sound too good to be true – in most cases, they are.

Currently, there are a number of schemes targeted towards those individuals who currently have an SMSF, as they have a high level of control and autonomy in the way that their retirement savings are invested (subject to applicable tax and super laws).

Some examples of retirement planning schemes include:

  • Some arrangements involving SMSFs and related-party property development ventures.
  • Refund of excess non-concessional contributions to reduce taxable components
  • Granting legal life interest over a commercial property to SMSFs
  • Dividend stripping
  • Non-arm’s length limited recourse borrowing arrangements
  • Personal services income
  • Liquidating an SMSF

To avoid becoming a part of a retirement planning scheme, seek professional advice on super or SMSFs from an accountant.

Are You A Maximiser Or A Satisficer In Your Decision-Making?

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Critical decisions are often made in the workplace. It’s highly likely that at one point or another, a decision has had to be made by you to result in an outcome that could impact performance or some other aspect of the business.

Generally there are two ways in which people make decisions. These are known as maximising or satisficing, and both have drastically different approaches and impacts for how individuals make decisions.

Those who use maximising in their decision making process are more likely to weigh/compare choices to carefully assess which is the best one.

When a decision is made by a maximiser, often it’s a well-informed one that could potentially lead to a better outcome overall. Their decisions may look the most logical or efficient as their time has been spent deliberating potential results and possibilities.

A drawback to the maximiser process is that a lot of time can be wasted in the process of getting it right. Decision paralysis and regret is also a common occurrence for those who overthink their options.

Satisficers are those who would prefer to make decisions quickly – the decision is made promptly, and is usually acceptable but not the best choice or course of action that could be taken. In the workplace, it’s also commonly known as the “good enough” approach.

Those who can be classified as satisficers in the way they decide may make decisions faster, weigh up less options when comparing and go more so with their gut feeling on what is appropriate. Satisficed decisions may not necessarily be the best approach to a problem, but is a solution that is provided more quickly.

Workplace decision-making could have various outcomes, depending on the approach taken towards them. Deciding on what kind of coffee to have during a break is appropriate for satisficing, but figuring out the best way to handle a business meeting with an important client is probably better suited to a maximised decision-making process. It is always necessary to consider the gravity of the choice needing to be made, and what could be impacted if these choices aren’t made in accordance with this.

Creating A Talent Acquisition Strategy To Suit Your Business Needs

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It’s a daunting task, seeking someone who can fill a specific position that your business needs filled. It’s important that irrespective of how the economy is performing, the state of the workforce and what your business currently consists of, the employees that you hire are the best and most-talented people that you can get.

Though often we think of recruitment as a valid strategy of employment, it often seeks to fill gaps or vacancies that might be caused by staff turnover or insufficiency. This is still a valid strategy for businesses that need immediate solutions to staff/skill shortages.

However, hiring for your business shouldn’t just be about filling an immediate need – it’s about ensuring that your business attracts and retains talented employees for the long-term, to help your business grow to its full potential. A talent acquisition strategy should be put in place by your business to assist in addressing this issue.

Essentially, a talent acquisition strategy should be tailored to reflect and suit your business goals over the course of the next five years. It’s important to consider how the business is going to expand in the future, and what employees you need to join you in journeying towards that goal. Investing in the right talent now will pay off dividends for your business in the long term.

It’s all well and good to know what you need for your business in terms of talent – but how do you convince them to join you? Just as marketing campaigns are important for selling whatever your business produces, it’s important to consider how to market your business towards the talent you want to acquire.

There are plenty of ways to use data to strengthen your strategy, such as figuring out where your current top talent came from and using that information to focus your talent acquisition efforts on certain academic programs or professional networking sites. Data can also be used to refine job descriptions, career pages, emails and more, as it can eliminate in the application process any questions or phrasing that could be deterring qualified candidates.

Identifying where to find the majority of your top talent is an important step in the process of acquiring talent. It’s also important to ensure that you are utilising and expanding on our sourcing strategies when trying to find better talent.

Sometimes to recruit a skillset, you have to be a little adventurous in where to reach out to. Diversify your talent searching approach by looking outside of the usual LinkedIn profiles, and seeking out talent at specialised job boards, academic programs or networking events.

Above all, ensuring that your business has a reputation that draws potential talent is critical to engaging with those you want to acquire. Promoting aspects of your business that could draw in potential talent through multiple channels could be what convinces them to sign up with your business. Drawing attention to perks, the company culture and other work-life balance benefits or growth opportunities could be a way to highlight what sets you apart from the rest.

How Your Tax Return Could Be Affected By Your Work In The Sharing Economy

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In Australia any income earned by a job may be considered to be taxable income. Those who receive their income via the sharing economy are no exception to the rule. In fact, there can be further complications that result from incorrect understandings of how the income tax and goods & services tax may apply to those individuals.

The sharing economy is a socio-economic system built around sharing resources, often through a digital platform like a website or an app that others can purchase the right to use for a fee.

Popular sharing economy services and activities that could be subject to income tax include

  • Being a Driver for popular ride-sharing/ride-sourcing services and obtaining fares for those services
  • Renting out a room, whole house or a unit on a short term basis
  • Sharing assets (such as cars, parking spaces, storage space or personal belongings) through platforms such as Camplify, Car Next Door, Spacer, Toolmates or Quipmo.
  • Creative or professional services provided by individuals through online platforms to fill a need of others (also known as the gig economy)

Here are some of the things you need to bear in mind about the income and goods & services tax for these popular sharing economy services.

Ride-Sourcing/Ride-Sharing

If you’ve ever caught an Uber or gotten a Lyft, you’ve been on the passenger side of ride-sourcing. The income received from ride-sourcing is subject to goods and services tax (GST) and income tax is applied to it. All drivers on ride-sourcing platforms in Australia must have an Australian business number and be registered for GST.

GST requires:

  • An ABN
  • GST to be registered from the day that you start, regardless of how much you earn.
  • GST to be paid on the full fare.
  • Business activity statements (BAS) to be lodged monthly or quarterly.
  • To know how to issue a tax invoice (any fares over 82.50 must be provided one if asked).

Income tax needs to:

  • Include the income you earn in your income tax return
  • Only claim deductions related to transporting passengers for a fare, including apportioning expenses limited to the time you are providing a ride-sourcing service
  • Keep records of all your expenses and income.

Renting out all or part of your home

Renting out all or part of your residential house or unit through a digital platform can be an easy way to supplement your income, especially if you aren’t using the property at that particular time. If you do this, you:

  • Need to keep records of all income earned and declare it in your income tax return
  • Need to keep records of expenses you can claim as deductions
  • Do not need to pay GST on amounts of residential rent you earn.

Sharing Assets (Excluding Accommodation)

Assets that can be shared through a platform can include personal assets (e.g. bikes, caravans), storage or business spaces (e.g car parking spaces) or personal belongings like tools, equipment and clothes.

When renting out or hiring these (share) assets that you own or lease through a digital platform, you:

  • Need to declare all income you receive in your income tax return
  • Are entitled to claim certain expenses as income tax deductions
  • Need to keep records of the income you earn and of the expenses you can claim as deductions

Providing Services

Providing time, labour or skills (services) through a digital platform for a fee requires you to report income in your tax return. Deductions for expenses directly related to earning this income can be claimed, and records need to be kept to support these claims.

The following services that can be provided are considered to incur assessable income that needs to be reported in your tax return:

  • Delivering goods
  • Performing tasks and activities
  • Providing professional services

If the thought of trying to navigate your way through your tax return is a little daunting, consider speaking to us for assistance.

Choosing Your Business’s Outsourcing Model

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When a business cannot deal with the workload in house, a candidate or party outside of the business is often hired to assist in performing those services. This is called outsourcing, and it’s a practice that companies sometimes use to cut costs – especially if it’s easier to do this than to train up another employee.

The best model of outsourcing is one that meets the needs of the business. Clearly identifying those needs is a strategic step to take to ensure that the model chosen is the right one. There are four types of models when it comes to outsourcing.

Freelance

The freelance model of outsourcing assigns work to a freelance worker, which can be long-term, short-term, part-time or full-time. Jobs can be posted to freelance sites, freelancers can bid on them and you can select who you would like to work with. This model is a quick and easy way to get one-off projects completed that require special skills or obtain a little extra help during the busy season.

Pros: Cost-effective, quick and the skills needed for the job can be sourced

Cons: Overselling skills, difficult to brief, and jobs can be further outsourced by freelancers.

Project-Style Work

This model focuses on project-based work and involves outsourcing entire projects to a specialised outsourcing centre. Essentially all you have to do is provide the centre with the project requirements, and they will carry out the development work, project management and quality control through to the project’s completion.

Pros: Less work to be done by you, cost-effective in money and time, new staff aren’t needed and there is a fixed cost for the project.

Cons: May lack local knowledge if located overseas, time zone and language barriers can be difficult to overcome

Business Process Outsourcing

With the business process outsourcing model, a service provider sets up and operates an offshore office for you that they hand over when it is ready. Essentially, it’s contracting a business or organisation that hires another company to perform a process task required by the hirer for the business’ operational success. The provider has the facilities, setup, office environment and management required for global team members to work.

Pros: offers improved productivity, increased capacity, no need to worry about other sectors, inexpensive and an easy way to grow your team.

Cons: Large-scale BPOs can be more expensive to run and can be difficult to communicate needs and wants if the BPO doesn’t understand your industry or business.

Build-Operate-Transfer Model

This model is the model you want to employ if you’d like to build a separate office outside of your home country with more than 25 staff. To begin with, and much like a BPO, a provider ensures that there is a workspace and office equipment, and hires the employees. Rather than have the provider run the business for you, they then transfer the operation back to you.

Pros: Create work culture and environment among global team members, costs are less expensive than a BPO if there are more than 15 employees.

Cons: Can be expensive to set up, operating under foreign work ethics and work cultures can impact team management and requires time and effort to invest in the business in person.

Always consider what is best suited for your business, and confer with professional advisors before implementing a strategy regarding outsourcing

Boosting A Spouse’s Super With Co-Contributions

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Marriage and de facto relationships come with a number of perks – but did you know that if your partner earns less than you or is not currently working, you could contribute to their super fund savings?

Many households in Australia, either as a result of unemployment, maternity/paternity leave or by choice, have single-income households. As a result, the retirement savings held in super for one member of these households may not be increasing as exponentially fast as the working member. The good news is that when in a relationship, a spouse can boost their non-working partner’s super fund with their own contributions.

The best part? It could be a tax write-off for the working spouse.

Under Australian superannuation law, a spouse can be a legally married partner with whom you live or your de facto partner. That gives additional benefits to those in de facto relationships, who can choose (if one member of the relationship isn’t working or earns less) to boost their partner’s super fund. A spouse must also be younger than their preservation age or between 65 and their preservation age and not retired.

There are two ways that someone can help their partner’s superannuation grow:

  • Making a Spouse Contribution to their super account
  • Arranging for Contribution Splitting (also known as Super Splitting)

Spouse superannuation contributions can now be made for spouses earning up to $40, 000 per year. If a spouse earns less than $37, 000, the maximum tax offset of $540 can be claimed when contributing a minimum of $3, 000 to their super. Anything contributed that is more than $3, 000 will not receive the spouse contribution tax offset.

This tax offset cannot be claimed if:

  • A spouse has exceeded their non-concessional contributions cap for the financial year.
  • Their super balance is $1.6 million (for 2020/21) or more on 30 June of the previous financial year in which the contribution was made.

Another way to inject funds into your spouse’s super is to choose to have some of your own super contributions put into their super account. This is fine as long as they have not reached their preservation age yet, or are between their preservation age and 65 years and not retired.

Super contributions can only be split in the financial year immediately after the year in which the contributions were made or in the same financial year as the contributions were made only if your entire benefit is being withdrawn before the end of that financial year as a rollover, transfer, lump sum or benefit.

There are two types of contributions that can be split:

  • Employer contributions – the most common form of super contributions to split
  • After-tax contributions – money that you voluntarily deposit into your super after tax.

Always discuss starting spousal co-contributions to super with your accountant or financial advisor for help and guidance prior to starting this process.

3 Design Principles To Help Your Small Business’s Website

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As a business owner, it’s important to understand how your customer base is interfacing with your business’s online presence, and if there are any glaring user-unfriendly issues that could impact their experience. It may even drive them towards competitors of your business who understand the value of a well-designed website.

Here are three design principles for your website to implement to ensure your customers are satisfied with their online experience.

Responsive Design

A responsive design or mobile-friendly website is mandatory for any business’ website. Since many customers may interact with your website while on the go and via their phone, ensuring that your site renders appropriately on mobile devices will boost that interaction. A non-responsive website has less engagement, poor conversion and a lower ranking in the search results – mobile-friendly websites boost your SEO.

UX Optimisation

Ensuring that the user experience is optimised for their engagement can be the difference between a successful website and a poorly-performing site. For this, a user-friendly layout, an obvious site structure that does not require additional instructions and a clear path for information to flow through are critical components. The other design choices can come later.

Call To Action

A call to action is a must-have for websites – it’s a way to prompt your customer to take the next step. It’s also an easy way to guide conversion and ensure that your customers are interacting with the elements of a page that could assist.

How To Do Deal With Presenteeism At Work

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Sometimes, being absent from work is better for you and the business you work for than if you were present that day.

When someone shows up to work but is unproductive as a result of feeling unwell, are distracted by personal issues, or are disengaged from their role, it’s known as presenteeism.

Presenteeism is difficult to detect among employees as they may appear to be working but can be producing less overall over a period of time than they otherwise would. It’s a fairly common issue across many industries in the workforce, where productivity is lost while these staff underperform.

One of the most common causes of presenteeism is ‘company culture’. In situations where you may be ill or would be better off not going to work, you may feel an invisible pressure to go into work regardless. This may be because not going in would place strain on your teammates, taking time off is frowned upon, or that time-sensitive work may not be completed if you were absent. There is a cultural expectation surrounding workplaces about attendance at work – so what can be done to address this?

To combat this, consider:

  • If working full or part-time, you are entitled to taking sick days – using these for illness or for mental health recovery can benefit you and your employer in the long run.
  • Using unused leave time for ‘recovery breaks’ to let you regain yourself
  • Destigmatising the concept of taking time off in the workplace
  • Discussing alternative ways for you to work to prevent burnout and continued presenteeism

As an employee, it is important that you understand your own value and worth – a day off for you is worth more to the employer than a day worked while sick. Discuss with your employer best practices for ensuring that you can be at your best, and whether or not it might be beneficial to take advantage of the proposed sick days above.

Tax Deductible Interest From Your Home Loan

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It’s a simple, step-by-step process used by many Australians to increase their income. Borrow money from a financial institution, invest in a second property and pay off the loan with the profit accrued from the investment property (ie. rent from tenants).

But did you know that the interest on a home loan for the purchase of an investment property can be claimed as tax-deductible?

To clarify – claiming a tax deduction on the interest of a loan can only be used on the loan that was used to purchase the investment property. It also must be used to earn income, because a property that is solely residential isn’t eligible for any tax deductions (except in certain situations where the residence may be used to produce income, like home business or office).

Here are a few examples of when tax deduction claims on your property are not allowed:

  • If the secured property is being used for living as a primary residence, and no income is made from it.
  • Refinancing your investment loan for some other purpose (like buying another property).
  • Using the loan for private purchase, other than the purchase of a home.
  • If the investment property is a holiday home that is not rented out, then deductions cannot be claimed as it doesn’t generate rental income.

As an example, if borrowing against your main residence for the purpose of purchasing an investment property, then the interest on that loan is tax-deductible. Conversely, if the loan was against the investment property to buy a car for your personal use, then the interest from that loan will not be tax-deductible.

The only way that a tax deduction on a home loan’s interest is possible, is if there is a direct, unbroken relationship between the money borrowed and the purpose the money was used for. Any money that resulted from a home loan, for instance, should have been invested into a property.

If you happen to redraw (make extra repayments into your loan that reduce the loan balance) against an investment loan for personal use, the tax-deductible interest is watered down. This is because the new drawdown (transfer of money from a lending institution to a borrower) is deemed to not be for investment purposes.

It is important that any investment loans are quarantined from your personal funds to maximise tax deductions on interest. Though it may be tempting to pull additional funds from the loan for additional finances, it’s shooting yourself in the foot.

A better strategy (if there is only investment debt that has been incurred, and you wish to pay it off), is to place funds in an offset account (a bank account that is linked to your home loan) and then redraw those funds for your personal use. It’s also important to ensure that the offset account is a proper offset – a redraw that is disguised as an offset account can be a major drawback for investors looking to capitalise on their tax threshold.

If you or someone you know has recently purchased an investment property with a home loan, speak to your accountant or financial advisor to see how your tax return can benefit from it.