A little goes a long way with compound earnings. The earlier in your working life you start paying attention to your super, the better off you will be at retirement. However, it’s never too late to take an interest in your super fund’s performance and take action to grow your super!

While the best strategy is to get familiar with superannuation contribution options as soon as you start earning money, you can take strategic action to increase your super balance at any stage.

Your strategy will necessarily change over time as your work and financial situation evolve. When you’re not earning much at the start of a career, you may be unable to contribute extra. However, as soon as you earn more than you need to live off, start making extra contributions and reap the benefits of compound growth.

Compound Growth

Compounding happens when you contribute a specific amount to an interest-earning fund and leave the interest in the same account. This way, you keep earning interest on your interest. Check out this table for an example of compound interest earnings. This example clearly shows the advantage of starting to build your super early!

The compound earnings will naturally accumulate as you and your employer continue to contribute to the super fund.

Tips for Growing your Super Balance

• Consolidate super into one fund so you are not paying more fees than you need. If you’re unsure which fund you have accounts with, search for lost super in case you have multiple accounts that you can consolidate.
• Make contributions from your after-tax earnings – this may be a good option if you receive unexpected extra income such as a bonus. The government will also make a co-contribution of up to $500 for eligible low to middle income earners.
• Talk to your employer about sacrificing part of your salary into your super fund, which will reduce your taxable income and make it easier to commit to regular contributions that increase your super balance.
• Check options available for your spouse – it could benefit both of you if you’re able to contribute to their fund as well as your own.
• Take advantage of the bring-forward rules if you haven’t contributed the maximum amount of super in recent years.
• Make downsizer contributions from the proceeds of the sale of your home.
• Sole traders should consider making personal contributions as a tax deduction – this will require the ATO Notice of Intent form to be submitted to the super fund.
• Check whether your super fund is paying for any insurance – review and adjust or cancel if the insurance is not required.

Get Advice for Your Super Strategies

It’s important to get financial or tax advice before making any large payments to your super fund, to ensure you’re getting the most tax benefits from your contributions. There are limits to how much you can add to your super fund in a financial year and other thresholds that apply to different types of contributions.

One thing many of my small business clients know and accept is they realise that there are better ways and methods to accomplish their day-to-day and yet believe it is “too difficult” or “too much effort” to change (as we are creatures of habit, and it is a basic human instinct to be resistant to change).

As a general example from years as a business adviser, a statement I hear all too often is: “I’m so busy” (more on this topic under the “Automation and Artificial Intelligence” section below). There’s nothing inherently wrong about that statement, as I’ve seen it time and time again across every industry and business type: you could be a tradie, a director in a start-up, or even run a local “mum and dad” small business – that feeling of being constantly on the go. 

If you find yourself always on the phone or in meetings, busy coordinating with staff, suppliers, contractors, and then attempting to balance your personal life in-between, the notion of being “too busy” to think of anything more can be daunting. Finding yourself a good business adviser (such as a Virtual CFO or accountant) can provide you with the expert knowledge and experience to simplify the complex and take you in the right direction for change.

The Modern Accountant as an “Agent of Change” – Not Just Taxes and Numbers  

The distinction between a business advisor and a typical accountant has become increasingly blurred over the last three decades, with over 82% of accountants reporting in the last year that their clients demanded a “broader” service offering, including business and technology implementation guidance. This transformation has only been intensified in the current climate of remote working. 

The Accountant as a Business Strategist and Tech Guru

To solve these new and complex problems in an ever-changing world, there is an expectation for accounting firms to promote new and more efficient ways of working (which incorporates technology and change) – both internally and with their clients. As such, many “accounting” firms (from your local practices such as Solve Accounting to your mid-tier and big 4 accounting firms) have supplemented their traditional audit, tax, compliance and financial reporting service offerings with business advisory, technology, and management consulting. To do this, modern accountants are trained to move quickly and efficiently, with a firm grounding in technology, business acumen, and data analysis.

Businesses of all sizes are increasingly expecting their accountants to play a more active role in change management and cash flow forecasting months into the future. This enables businesses to address day-to-day difficulties while keeping an eye on what the post-COVID world will look like and the help they will require to recover and to succeed.

Speak with Philip Khao from Solve Accounting on 0412651779 or at philip@solveaccounting.com.au to find out more about your potential business opportunity.

Philip Khao is a Chartered Accountant (CA), Virtual CFO professional and Director at Solve Accounting with many years of accounting and business services experience at global accounting firms and multinational corporations. 

Benefits provided to employees or their associates in addition to salary or wages are known as fringe benefits. These benefits are paid for by the employer from pre-tax earnings, making the provision of benefits attractive to employees as it may reduce their taxable income while receiving payment in other forms.

Fringe benefits tax (FBT) may apply based on the type of benefit provided.

Tax is payable because the benefits are a different form of payment by an employer instead of salary and wages. The tax is calculated on the taxable value of the benefit, which reflects the grossed-up salary the employee would have had to earn to pay for the benefits from post-tax earnings.

Employers can generally claim a tax deduction for the benefits and related FBT payable.

Types of Benefits

There are many different types of fringe benefits employers may provide to employees. These include:

• Vehicle owned by the business provided for private use
• Vehicle lease arrangements
• Car parking
• Entertainment, such as golf club membership or tickets to major events
• Expense payments, such as credit cards or health insurance
• Other types include debt waiver, living away from home allowance, or property benefits.

Some benefits provided to employees don’t attract FBT. If you pay for expenses that an employee would otherwise have been able to claim as a work-related tax deduction, FBT won’t apply. For example, if you pay for employees to attend a professional development course, there won’t be any FBT liability on this benefit. COVID-19 tests required for employment are also exempt from FBT.

FBT Administration

The fringe benefits tax year runs from 1 April to 31 March. You must then include the reportable amount for each employee on their Single Touch Payroll finalisation by 14 July, so it flows through to their annual income statement.

As with all business transactions, keeping accurate records is essential to determining whether FBT applies or not and how much needs to be included on the employee’s income statement, if any.

If you’re interested in seeing how fringe benefits might apply to your business, talk to us about FBT registration and administration. We can advise on the types of benefits available, how much tax is payable or how to reduce the FBT liability. We’ll also get your bookkeeping software set up to make record keeping easy.

When someone typically hears the word “innovation”, many may instantly disregard it as a corporate buzzword or think of something traditionally done by big organisations (for example massive multinational corporations or enterprise-level companies), yet many growth-focused small businesses are making great use of the new tools and technologies out there to revolutionise the way they interact with their customers and streamline their day-to-day operations for the better – through digital transformation.

Some ways SMBs are implementing new and innovative ways of working and creating deeper relationships with their customers:

Small Business-centric Customer Relationship Management (CRM) Systems

CRM software has been around for decades for big business, and can be used to track sales, manage client information, evaluate data trends, generate reports and more.

In recent years, an increasing number of CRM solutions that cater exclusively to the needs of small businesses have arisen. These tools are affordable, user-friendly, and packed with capabilities. In addition, they can interface with practically every component of a company’s existing software (or “tech stack”) such as your website, email, social media platforms, and more. 

Artificial intelligence (AI) and Machine Learning (ML)

The words “artificial intelligence” and “machine learning” may be confronting or even scary to some.  Even though the ideas behind these technological advancements are relatively new and somewhat complex, that doesn’t mean that small businesses can’t benefit from them.

AI makes it possible for business owners to set up autonomous systems that can improve many customer-facing and internal processes. Some of the benefits are better customer journeys, efficient employee management, automatic data synchronisation between software, and more. ML adds an additional layer of automation that can save you and your staff many hours a week tweaking your software to suit your unique business needs, as it learns on-the-go. 

Robotic Process Automation (RPA)

Employees in small businesses typically spend hours per week on simple (and sometimes mundane) yet crucially important everyday activities. This might involve admin work, scheduling appointments, customer service and support, and many other repetitive tasks. RPA is typically quick to implement in most businesses and can be leveraged to expedite digital transformation. It’s also great for automating operations using legacy systems that don’t have APIs, virtual desktop infrastructures (VDIs), or database access.

Out-of-the-box workflow automation tools and software have empowered small enterprises to benefit from these new technologies even without in-house knowledge and relatively low investment costs. Leveraging external experts such as Virtual CFOs and small business consultants to complete all the technical implementation work and train staff with the new systems and processes ensures your new “tech stack” us set up for success.

Finance and Accounting Business Process Outsourcing (F&A BPO)

Outsourcing a business function to a third party rather than hiring a full-time person or team is known as Business Process Outsourcing (BPO). Finance and accounting are functions which a third-party specialist (such as a Virtual CFO) takes over one or more financial activities of a business, such as: management of cash and other assets, payroll, taxes, and shareholder or board reporting. 

Through the implementation of a data-driven, intelligent operating model, a Virtual CFO can help you in transforming your finance operations from a transactional service into a strategic asset.

Small and medium businesses (and their owners) value simplicity above all else when planning for the future. Aside from pricing, the most significant requirements for new technology are ease of use, the convenience of setup, and simplicity of maintenance. 

When it comes to considering new technology for their business, three-quarters of SMB owners and leaders (74%) think scalability is “extremely, very, or somewhat” mission-critical to the future success of their business. 58% SMBs prefer to deploy solutions that will fulfil their long-term needs than to implement solutions that would only address their company’s current demands.

In other instances, you may need to make new and somewhat drastic changes in the way that you operate to take advantage of these tech-friendly solutions. The good news is that once new processes are in place, the benefits frequently outweigh the short-term obstacles (and cost considerations) of the initial, transitional phase.

Whether you are a start-up in search of that next big jump or an established small business seeking opportunities to grow, understanding the trends of technology for small businesses in 2022 is vital for your next strategic move. Small business owners can leverage technology to make better use of their limited capital. In many cases, adopting a new platform or system can improve efficiency and flexibility in your everyday operations, a natural progression in the uplift of processes you may already have in place.

Speak with Philip Khao from Solve Accounting on 0412651779 or at philip@solveaccounting.com.au to find out more about your potential business opportunity.

Philip Khao is a Chartered Accountant (CA), Virtual CFO professional and Director at Solve Accounting with many years of accounting and business services experience at global accounting firms and multinational corporations. 

As humans and other types of tax-payer entities approach 30 June each year, there’s generally a mad scramble to make sure everything that can be done has been done on time to maximise tax refunds or minimise payables. While every client is different, a few summarised themes from our practice in financial year end tax planning discussions are as follows:

1. Deferring or bringing forward derivation of income (revenue): if you think or know that you’ll make more or less money next year, then it may make sense to ask your payroll manager to defer any bonus payment to 1 July or not send out your invoices for June work until 1 July.
2. Bringing forward or deferring deductions (revenue): you may be a high income individual who has maternity leave coming up. Accordingly, it might be good to pre-pay interest on an investment property mortgage or buy a business depreciating asset before 30 June to take advantage of the instant asset write off rules or the temporary full expensing concessions before they expire.
3. Book squaring (capital): if you have carried forward capital losses and are wanting to offset them against current year capital gains, you may choose to “square your book” before 30 June. By triggering A1 gains on sale of assets which have embedded capital gains you can cleanse your tax profile. Alternately, you may want to trigger current year capital losses on some assets and gains on others to offset any CGT payable. It should be noted with caution that wash trading is not book squaring. Wash trades are artificial and result in no material difference in economic exposure to an asset for a taxpayer. While book squaring is legitimate tax planning, wash trading is not and it should not be engaged in.
4. Concessional super contributions: this one is tricky but can be super high value. There are heaps of rules around how much a member can contribute and how much of that contribution can be deducted each year. There’s also rules around a 5 year rolling sunset for carried forward concessional headroom that are hard for most taxpayers to understand and will require professional advice to navigate. On top of all the tax law here, there are strict cash receipt rules so, if a taxpayer intends to claim a personal deduction, the trustee of their superfund needs to have physically have received the cash contribution before midnight on 30 June which is easier said than done because sometimes, thanks to delays in a clearning house, contributions can take up to a week to clear.
5. Division 83A income: people getting paid in > $1k of shares from their employer need to understand the implications of non-cash assessable income. There are many inter-related tax planning opportunities & pitfalls associated with deriving 83A non-cash income and you should seek professional advice if you are in this position.
6. Trust distributions: Trustees need to ensure that beneficiaries are made presently entitled to an identifiable amount of net trust income before midnight on 30 June each year. Generally, trustees should have held planning meetings with their tax accountants in the calendar month of May to decide on how the trust income for the year to date is likely to be distributed at year end. This meeting, along with the distribution decision, should be recorded with a signed minute which is filed for record keeping and future reference. There are complex rules around things called “reimbursement agreements” and how section 100A applies thereto. Trustees should seek professional tax advice.
7. ASIC fees are all indexed on July 1^st: if you have a private company and are thinking about doing a 10 year advanced payment of the annual company statement fee to ASIC, do so before 30 June to avoid the price increase. This one applies to all ASIC fees capable of being prepaid and taxpayers should seek advice from their registered ASIC agent here.

To discuss your situation and find out if there is anything you should do in the lead up to financial year end, call Chris at Solve on 0414 985 724 or email chris@solveaccounting.com.au

In the ever-changing world of this digital age, many sole traders and small & medium businesses (SMBs) can feel overwhelmed or left behind by the sheer amount of choice across the many types of apps, software, and systems available.

Although the thought of getting up to speed may be daunting for some, this feeling can be readily overcome by understanding the possibilities, opportunities, and positive impacts that investment technological innovation and integration can bring to your business. Taking advantage of these opportunities makes it is possible to set your business apart from the competition with the introduction and acceptance of these new and “innovative” ways of working.

All business owners – regardless of size and industry – can benefit from better use of their time by reviewing what manual procedures can either be improved or eliminated altogether with the implementation of new systems and processes.

Just imagine, all these common pain points found across all types of business (which generally involves a lot of double handling or redundancy) can be addressed, such as:

1. onboarding new clients and customers,
2. reducing general administrative tasks and automating repetitive tasks.
3. automating financial systems,
4. automating financial reporting,
5. streamlining everyday operations,
6. systemising compliance,
7. using a CRM
8. using Bots
9. using IOT to review data and make decisions
10. using Virtual C suites services

How many of the above 10 pain points do you have within your growing business? Now, you don’t merely have to “imagine” this future – as it’s all already being done today. Make an effort to speak to your trusted advisor and ask them how they can help with systemising you out of your business.

Speak with Philip Khao from Solve Accounting on 0412651779 or at philip@solveaccounting.com.au to find out more about Virtual CFO services.

Philip Khao is a Chartered Accountant (CA), Virtual CFO professional and Director at Solve Accounting with many years of accounting and business services experience at global accounting firms and multinational corporations. 

This statement by Ben Graham is a good one that deserves deeper consideration and commitment to memory. I’m interested specifically to know if it can be applied to real world scenarios, or if it is limited to the investment realm only. The rules that apply in the investment universe are very, very different to those which apply in the physical universe where all of us humans live and breathe. They’re parallel universe’s, but there is some crossover.

To explore this idea, one might ask, “is it enough to aim for a satisfactory result, or should we seek out super over performance in other areas of our “physical universe” lives?” e.g. formal education, family, sport etc. Specifically, if it is relatively easy to achieve a satisfactory result in any area of endeavour, then should we be studying and aspiring to the satisfactory achievers rather than the outliers? For me the answer to this question is “yes” for the following reasons:

1. Statistical outliers are not generally achievable. For every Ronaldo or Messi, there’s ten thousand guys who could have made a better living as a middle manager at a local supermarket rather than having slogged it out in the middle and lower divisions for the key years of their working life (late teens to late 20’s). However, those guys in the middle and lower divisions slogging it out for (maybe) $50K pa in match fees + win bonuses and working a day job to supplement their semi pro incomes, those guys should be studied more.
2. Lists of the worlds/country richest people deter satisfactory achievement and contentment / happiness with acceptable levels of personal wealth. The fact is that you don’t need a hundred million + dollars to live a financially independent and (extremely) comfortable life – in most cases somewhere around or even less than $5M will do it. This point is often lost in media noise.
3. Mohammad Ali said once that any little boy who wants to be a pro fighter should think again and “go, go now” and learn how to read and write because “in basketball, football, baseball or boxing there’s too much risk”. Unfortunately Floyd Mayweather makes the headlines – as does Ali’s knockouts. Sadly, the risks to which Ali referred prophetically physically materialised in his lifetime. We should never forget the advice from his younger self. See it in full here
4. The Ordinary (but solid) good people should be aspired to. If they are, it will likely lift the entire tide not just the ambitious few who come out guns blazing and shooting for the top.
5. Many super rich people are not good role models and have seriously messed up personal lives.

To understand your balance sheet and how you can put simple, low stress & scalable practices into place which will make your financial life more tax efficient and better over time, call Chris at Solve on 0414 985 724 or email chris@solveaccounting.com.au

From 1 July 2022, there are several changes to superannuation laws that you may be able to take advantage of.

Changes to voluntary contributions

If you are aged between 67 and 74, you will be able to make voluntary contributions into your superannuation without needing to meet the work test. Before 1 July 2022, if you were over the age of 67 you were required to work in gainful employment for at least 40 hours over 30 consecutive days in order to make a voluntary contribution.

The work test is only applicable from 1 July 2022, if you intend to claim a tax deduction for a voluntary contribution.

Bring-forward of non-concessional contributions

From 1 July 2022, you may be able to bring-forward 3 years’ worth of non-concessional contributions up to the age of 75.

If you are 74 years of age on 1 July 2022, and have a total superannuation balance of less than $1.48 million, your non-concessional contribution limit is $330,000 using the bring-forward rule.

Downsizer contributions

If you are over the age of 60 and you sell your family home, you may be able to make a downsizer contribution of $300,000 per person. Before 1 July 2022, the age limit was 65.

Certain eligibility requirements apply, such as owning the main residence for 10 years and making the contribution within 90 days of settlement.

Superannuation guarantee

The superannuation guarantee rate will increase from 10% to 10.5% for earnings after 1 July 2022. This rate is legislated to consistently rise up to 12% for the 2025–26 income year.

First home super saver scheme

From 1 July 2022, the maximum amount of contributions that can be released from your superannuation under the first home super saver scheme (FHSSS) will increase from $30,000 to $50,000. The increase will apply to withdrawal requests from 1 July 2022.

The yearly limit that an individual can apply to withdraw remains the same at $15,000 per year. To be eligible to access the FHSSS, these contributions must be voluntary contributions.

Any of these changes may greatly benefit your ability to grow your retirement savings, and we would be delighted to work with you in this matter.