Claiming travel expenses relating to rental properties

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When making a claim in relation to your residential rental property, there are specific circumstances for when you can and cannot claim travel expenses. The law about claiming travel expenses for rental properties changed in July 2017. In the last year alone, the ATO received more than 70,000 incorrect claims for travel to and from residential rental properties.

A residential property is defined as land or a building that is either occupied as a residence or intended for and capable of being occupied as a residence.

Owning one or several rental properties is not usually considered to be in the business of letting rental properties, with receiving income from letting property to a tenant being considered a form of investment rather than a business. Unless you have an ownership interest in the rental property, you cannot claim travel expenses, even when travelling for the purposes of maintenance or inspections. You can only claim travel expenses if you are in the business of letting rental properties or are an excluded entity.

Entities that can claim travel expenses are:

  • Corporate tax entity.
  • Superannuation plan that is not a self-managed superannuation fund.
  • Public unit trust.
  • Managed investment trust.
  • Unit trust or a partnership.

For those who are eligible to claim travel expenses, claims can be made on the following:

  • Preparing the property for new tenants (except the first tenants).
  • Inspecting the property during or at the end of the tenancy.
  • Undertaking repairs, where those repairs are because of damage or wear and tear incurred while renting out the property.
  • Maintaining the property, such as cleaning and gardening, while it is rented or available for rent.
  • Collecting the rent.
  • Visiting an agent to discuss the rental property.

Attracting return customers

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Pouring money into advertising to attract new customers only works up until a point, what you really need to think about is retaining a customer once you have them. Treating all customers in a way that makes them want to return is more likely to generate success in the long-term.

Be a business they can’t refuse:
Giving customers more than they expect and aiming to exceed their expectations is a great start for attracting return customers. Building up a portfolio of unbeatable products and services, displaying exemplary customer service and providing guarantees for loyalty can help you attract and impress prospective clients.

Customer incentives can also be a great way to keep people coming back. This may be as straightforward as implementing a loyalty program, offering discounts, running special events and promotions, early access to sales or even freebies. Customers appreciate a business that acknowledges their loyalty, it shows that a business is paying attention and makes them feel valued and included.

Knowing your product or services better than anyone in your marketplace can also put you in a position of expertise in your field. By establishing your brand or business as a leader in product knowledge, customers return on the basis of stronger support, trusted expertise and valued insight.

Show your appreciation:
Clients notice even the smallest of thoughtful gestures. Some companies make follow up calls or emails following the conclusion of a transaction. Thanking customers for buying or using a service goes a long way in cementing in the customer’s mind that they are not just another faceless number. By delivering an experience that makes your customers feel valued and appreciated is a great way to gain repeat, loyal customers.

Communicate effectively:
With the prevalence of social media, small businesses are able to reply directly to customer complaints or issues. Rather than ignoring these or responding with PR spin, it is best, both from a customer service and internal viewpoint, to acknowledge the complaints and see what can be done to remedy the issue. Client complaints can be the first sign that things need to be fixed, and constructive criticism should be encouraged.

Dealing with a bad day at work

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Bad days can happen to the best of us, but that doesn’t stop work from needing to get done. Whilst working when you’re feeling down is the last thing you want to do, here are a few ways to pick yourself up and carry on with tasks you need to do.

Take a break:
Stepping away from the office to think can drastically improve your mood and help you look at the day more clearly. Going for a walk or sitting in the park on your lunch break can help you feel relaxed and better energised to go back to work. Even stepping out of the office for a moment to the bathroom can help remove yourself from a stressful situation. Don’t let yourself think about what has gotten you into a slump, think instead of what you can proactively do once you return to the office.

Express emotions appropriately:
Expressing your emotions is ok and necessary to feel better. It can be very easy to rant to colleagues or friends when you are feeling rough but there is a line between venting and gossip. Strong emotions such as anger can see you act out instead of thinking a problem through. Try to observe the problem through an objective lens before discussing it with colleagues or management and keep it strictly professional. This can help you to communicate better and avoid getting caught up in office politics. If you feel the need to express what you are feeling, write down how you are feeling just for yourself and throw it away when you are done.

Practise gratitude:
Regardless of the reason behind your bad workday, there is always something you can be grateful for. Switching to a gratitude mindset helps you to focus less on the bad things that occurred and accept the situation for what is, one bad day at work. Try to leave your negative feelings at work, and spend your evening doing something you enjoy.

Learn from the day:
Problems or unforeseen circumstances are opportunities to learn and grow. After a particularly trying day, take a moment to reflect on what didn’t go so great and possible reasons why. Evaluating what went wrong can help you to better understand how to avoid doing the same thing in the future, teaching you to be proactive, rather than reactive.

Defamation law in Australia

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Defamation is a statement published or spoken that negatively impacts the reputation of a person. Individuals or corporations that employ less than 10 people, not related to another corporation, can sue another person in court for defamation.

As there is no constitutional right to free speech, defamation in Australia is harsher and more difficult to avoid than in other countries. Each state and territory has slightly different rules regarding defamation, with Tasmania being the only state in which the estate of a deceased person can sue for defamation. Usually handled as a civil case solved financially, defamation is rarely treated as a criminal issue with jail time. The cap on general damages allowed to be received is currently $389,000, although aggravated damages and costs can be awarded on top of the cap amount.

There are three areas of defamation that can be used in a case:

  • Imputation
    The act of accusing, defamation through an imputation can be a statement or a visual. Imputation has to injure the defamed’s ability to make money or induce a loss of work as well as affect other people’s opinions of them.
  • Identification
    Identification is specific to a person or group of people, usually by adding personal details such as their place of work or physical description. There is no need for the defamed to outrightly be named if there are enough details to reasonably identify them.
  • Publication
    Defamatory material is made known to a third party other than the person being defamed. The publication can be oral, written or in picture form, where every time the material is viewed or heard, a separate publication occurs.

Whilst defamation in Australia is easier to come across, there are means of defence, the most common being truth. Truth as a defence is the justification, with evidence, that the defamatory material doesn’t lower a reputation but rather, corrects it. There is a standard of proof upheld in regards to this defence.

Returning to work after accessing your super

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Retirement isn’t necessarily a permanent thing as even the best-laid plans can collapse when circumstances change. The Australian Bureau of Statistics (ABS) has found the most common reasons retirees return to employment are financial necessity and boredom. But what does this mean when you have already dipped into your superannuation funds?

Individuals are able to access their super once they have reached their preservation age and retired, ceased an employment arrangement after age 60, or turned 65. Depending on your circumstances, there are rules regarding how you can return to work after retirement.

For those who genuinely retired with no intention of ever returning to work but found that circumstances required them to, you can return provided that you work on a casual basis up to 10 hours per week. By meeting this requirement, you can still access your super whilst working, however, additional contributions made to your account after you met the definition of retirement will be preserved until you meet another condition of release.

In the event you access your super after an employment arrangement comes to an end once reaching age 60, you are able to work in a new position as soon as you like, provided the first arrangement ended. Subsequent contributions made after your employment arrangement came to an end will be inaccessible, however, you will have access to the benefits that became available as a result of your first employment arrangement coming to an end.

When you turn 65, you don’t have to be retired or satisfy any special conditions to get full access to your super savings. This means you can continue working or return to work if you have previously retired, provided you complete the work test requirements before going back. If you return to work and earn more than $450 a month, your employer will be required to make superannuation contributions at the current rate of 9.5% until you reach age 75 where you can still work but receive no further super contributions, either voluntary or from your employer.

As returning to work and continuing to receive super is circumstantial, individuals considering their options should consult their accountant or financial advisor for information specific to their situation.

Are you meeting the Active Asset Test?

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To qualify for small business CGT concessions, an asset must meet the conditions of the Active Asset Test to apply. An asset is considered active when you own it and it is used or held ready for use in relation to a business. You can also have an intangible active asset if it is inherently connected with a business you carry on.

An active asset of yours has been held for a certain amount of time, based on how long you have owned the asset and the test period to meet the requirements of the Active Asset Test. The test period begins when you acquired the asset, and ends at the earlier of

  • the CGT event, or;
  • when the business ceased, if the business in question ceased in the 12 months before the CGT event.

Assets owned for over 15 years need to have been held for at least 7.5 years within the test period and assets owned for 15 years or less need to have been held for at least half of the test period to satisfy requirements.

When the assets are shares or trusts, passing this basic active asset test is not enough to qualify for CGT concessions. In addition, the asset will need to pass a further test, called the 90% test, to determine whether it is to be counted as an active asset or not. The test is satisfied if CGT concession stakeholders in the company or trust in which the shares or interest are held have a total small business percentage in the entity claiming the concession of at least 90%.

The periods in which the asset is active does not have to be continuous, however, they must total the minimum periods specified. An asset does not need to be active just before the CGT event.

Tracking the success of your email marketing

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Following the best email marketing tips and practices can help create successful email campaigns that keep readers engaged and eager for more, but it won’t matter how optimised your emails are if you aren’t tracking the results.

When sending an email, businesses should review the purpose of their email marketing and figure out which metrics they will need to track to determine how they’re progressing toward their overall goal.

Open Rate:
The open rate is the percentage of recipients who opened your email. By tracking this, you get an insight into how engaged your subscribers are. Your subject line is the most important factor affecting your open rate so if your open rate is particularly low you might want to re-examine your subject line strategy. Using a compelling or creative subject line will make readers want to read the content. Don’t settle for overused lines like ‘February newsletter’; use language that will engage readers to read further. Decent open rates range between 15% and 25%.

Click-through rate (CTR):
An email’s click-through rate is the percentage of email recipients who clicked on one or more links contained in an email. To calculate an email’s CTR, businesses need to divide an email’s total clicks by the number of emails delivered. CTR lets businesses quickly calculate the performance of every individual email they send. CTR is an important metric for all businesses engaging in email marketing to track, as it provides a direct insight into how many people on their email list are engaging with the email’s content and are interested in learning more.

Conversion rate:
An email’s conversion rate is the percentage of email recipients who clicked on a link within an email and completed the desired action, such as downloading a newsletter or purchasing a product. An email’s conversion rate is tied to the email’s call-to-action, and since the email’s call-to-action is linked to the overall goal of the email campaign, the conversion rate can help determine the extent to which a business is achieving its objectives.

Bounce rate:
The bounce rate is the percentage sent emails that could not be successfully delivered to the recipient’s inbox. There are two types of bounce rates businesses should track; “hard” bounces and “soft” bounces. Soft bounces happen due to problems with valid email addresses, such as an inbox being full or an issue with a recipient’s server whereas hard bounces are due to invalid, closed, or non-existent email addresses. It is critical that businesses immediately delete hard bounce addresses from their email list as internet service providers (ISPs) use bounce rates to determine an email sender’s reputation. A sender with a high hard bounce rate will look like a spammer in the eyes of an ISP.

Unsubscribe Rate:
The unsubscribe rate is the percentage of recipients who have unsubscribed from your emails. Tracking this will allow you to see how relevant your email marketing is and if it is keeping audiences engaged. A good way to discover the reasoning behind a subscriber leaving is to add a question or short survey for when people unsubscribe. This may help to improve your email marketing and reduce further people unsubscribing.

Getting to know your credit score

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Your credit score is an important number in your life as it can affect many financial aspects of your life. The three-digit number is a representation of your credit history, based on an analysis of your credit file, that helps a lender determine your credit worthiness. When an individual applies for a loan, such as a mortgage or car loan, the provider will use a credit score to help them decide whether to lend the money, the amount to lend and the interest rate.

An individual’s credit score is calculated by credit reporting agencies who collect financial and personal information and document it on a credit report. The information is then used to calculate your credit score. Areas agencies assess are;

  • Your personal details; age location, etc.
  • Types of credit providers previously used; bank, utility company, etc.
  • The amount of credit borrowed.
  • The number of credit applications and enquiries made.
  • Any unpaid or overdue loans or credit.
  • Any debt agreements or personal insolvency agreements relating to bankruptcy.

A credit score is rated on a five-point scale with the position of your credit score on the scale helping lenders work out how risky it is for them to lend to you:

  • Excellent: highly unlikely to have any events harming your credit score within the next 12 months.
  • Very good: unlikely to have a negative event in the next 12 months.
  • Good: less likely to experience a negative event in the next year.
  • Average: likely to experience a negative event in the next year.
  • Below average: more likely to have a negative event in the next year.

Credit scores can change over time whether or not you have changed your personal spending habits. Applying for a new loan or credit card, changes to your credit limit on an existing loan or credit account or late repayments are some of the things that can affect your credit score. In turn, your credit score can affect mortgage rates, bill rates and whether or not you are approved for certain utility companies.

To prevent a negative credit score, individuals should try to spread applications over a larger amount of time; lower credit card limits; ensure their credit card is paid in full each month; and pay their rent, utilities and other loans on time.

Hiring working holiday makers

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In Australia, there are approximately 100,000 working holiday makers employed each year. Any employer can hire working holiday makers provided they meet the requirements to do so. Employers must confirm the working holiday maker has a valid visa subclass, either 417 (Working Holiday) or 462 (Work and Holiday).

Register:
Employers will need to register to apply the 15% working holiday maker tax rate and declare they are aware of the obligations associated, including complying with the Fair Work Act 2009. Working holiday makers can’t claim the tax-free threshold and must provide their tax file number (TFN). Employers who do not register must withhold tax at 32.5% from every dollar earned up to $87,000 and foreign resident withholding rates apply to income over $87,000. Those who do not register may be subject to penalties.

Working holiday maker tax rate:
Once registered, employers can withhold 15% from every dollar that a working holiday maker earns up to $37,000. Tax rates change for amounts above this. The tax rate applies to all payments made to working holiday makers, including:

  • Salary and wages.
  • Termination payments.
  • Unused leave.
  • Back payments, commissions, bonuses and similar payments.

Super payments:
Eligible workers are entitled to receive super payments from their employers. When leaving Australia, working holiday makers can apply to have their super paid to them as a Departing Australia Superannuation Payment (DASP). The tax on any DASP made to working holiday makers on or after 1 July 2017 is 65%.

Payment summary:
Unless reporting through Single Touch Payroll, employers are required to provide a payment summary to every working holiday maker they employ. All payments to a working holiday maker must be shown in the gross income section of the payment summary and identified using H in the gross payment type box. This is to help your worker to prepare their income tax return. Employees who previously held a working holiday visa but do not anymore will need two payment summaries for the financial year, one for the period they held a 417 or 462 visa and the period when they did not.

Super for different visas

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Australian employers are required to pay super to their employees when they earn $450 a week or meet specific criteria based on age or industry. Employer requirements can get confusing however when dealing with international workers or sending employees overseas. Here are the requirements employers must follow when handling super payments to workers with different visas.

Temporary residents:
Temporary residents working in Australia may be eligible to receive super from their employer. Eligibility criteria is the same as it would be for a permanent Australian resident, you must be 18 years or older and have been paid $450 or more (before tax) in a month. Working holiday makers holding a 417 (Working Holiday), 462 (Work and Holiday) or an associated bridging visa can access the super paid as a departing Australia superannuation payment (DASP).

Employees working overseas:
For an Australian employee sent to work overseas, their employer must continue to pay super contributions in Australia for them. The other country may require the employer or employee to pay super there as well if Australia does not have a bilateral agreement with that country. To gain exemption from the super payment in the other country, the employer needs to show the authorities in the other country a certificate of coverage gained from the ATO.

Employees not eligible for super:
There are some international employees that will not be entitled to receive super payments from their employer. These include:

  • Non-resident employees that are paid for work they do outside Australia.
  • Some foreign executives who hold certain visas for entry permits
  • Employees temporarily working in Australia who are covered by a bilateral super agreement. Employers must keep a copy of the employee’s certificate of coverage to verify this arrangement.