By David Rose
Welcome to the May edition of VIN-sight – delivering small business advice to our clients on a regular basis that moves beyond the accounting foundations we already provide and focuses on business strategies that help automate, simplify and advance systems, procedures and profits.
In this issue we will:
- Re-visit the highlights of this month’s Federal Budget release;
- Learn how our Business Advisory Staff are adapting to the changes in Financial Services Licencing requirements to enable us to continue to deliver end to end client SMSF solutions for our clients;
- Remind clients of HELP and TSL loan repayment obligations that now apply for those moving overseas from 1 January 2016; and
- Discus ways in which employers can deal with staff that come to work but are not engaged in their job.
As always, please contact your usual Vincents advisor if you would like more information on any of the issues raised in this edition of VIN-sight.
Budget Overview – still room for some rabbits
Despite its pre-Budget claims aimed at reducing expectations, the Government has managed to produce two rabbits from its Budget hat earlier this month – sweeping changes to superannuation and a complex set of reductions in company tax.
At a glance
- Deficit – The Budget forecasts a significant deterioration in the Budget outcome in the next three financial years, with a major deterioration in the outcome in 2018-19 compared to last year’s Budget, although less so than compared to the Mid-Year Economic and Fiscal Outlook (MYEFO) in December.
- Economy – A continuation of current economic conditions with continued moderate economic growth over the current and next two financial years, little change in household consumption spending and modest employment growth.
- Growth – Economic growth (GDP) will be 2 ½ per cent for 2015-16 and 2016-17 – up from 2.2 per cent in 2014-15, and then rising to 3 per cent in 2017-18.
- Business investment – The outlook for business investment will continue to be dominated by shrinking mining investment, which is expected to fall by 27½ per cent in 2015-16 and 25½ per cent in 2016-17.
- Employment – Employment growth is forecast to fall to 1 ¾ per cent in both 2016-17 and 2017-18, from 2 per cent in 2015-16 (and 1.6 per cent in 2014-15). The unemployment rate is forecast at 5 ¾ per cent in the current financial year, dropping to 5 ½ per cent in each of the two[CL1] following years.
- Company tax – The Government will reduce the company tax rate to 27.5 per cent in 2016-17 for companies with a turnover of less than $10 million. Under the complicated arrangements for a rolling series of company tax cuts out to 2026-27, the income threshold for the lower rate will rise each year until 2022-23 when it will cover businesses with a turnover of $1 billion. In addition, the tax rate will start falling from 27.5 per cent in 2024-25 until it falls to 25 per cent in 2026-27.
- Superannuation – The Government has announced a number of changes to superannuation arrangements, imposing stricter limits on contributions, lower income thresholds for concessional taxation and stricter limits on the amount of superannuation to be available in the pension phase of superannuation. However the Budget also contains a number of increased superannuation concessions and benefits, including measures allowing high income earners to top up the superannuation balances of their low income spouses, increased opportunities for people aged 65 to 74 years to contribute to their superannuation and a Low income Superannuation Tax Offset (replacing the abolished Low income Superannuation Contribution), giving low income earners a tax offset for voluntary superannuation contributions.
Financial Services Licensing – continuing to deliver end to end client SMSF solutions
From 1 July 2016, Vincents will be embarking on an exciting change in the way we provide SMSF advice to our clients.
The introduction of the Financial Services Regime in 2002 meant that anyone who provided advice to clients on superannuation, securities, managed funds, life insurance and basic deposit products was required to hold a licence in Financial Planning.
Exemptions to this were accounting practices like our own who offer advice on self-managed superannuation funds. This exemption, however, will end when this financial year comes to a close.
To ensure that we are able to continue to provide general advice to you on your current and future self-managed superannuation fund needs, The Vincents Business Advisory directors and managers have been undertaking study for some 12 months to obtain a Diploma of Financial Services.
This means that by 30 June 2016, our senior staff will be Authorised Representatives of Vincents Financial Advisory, an independent Australian Financial Services Licensee – thereby allowing the provision of advice in all of the above areas, either directly or via our Financial Advisory designated specialists.
Whilst many accountants appear to have opted to refer the bulk of their SMSF matters to financial advisers or not to provide advice in this important area, at Vincents we simply view this as another important element to being your trusted advisor, helping you to further understand the opportunities and complexities in this growing sector and to continue to become leaders in the SMSF licensing space.
Should you have any queries about the financial services licensing changes or your SMSF matters, please contact us.
Education Legislation Amendment (Overseas Debt Recovery) Act 2015
On 26 November 2015 the Education Legislation Amendment (Overseas Debt Recovery) Bill 2015 received Royal Assent and was enacted by the Parliament.
The stated objective of this legislation is to amend the Higher Education Support Act 2003 (HESA) and the Trade Support Loans Act 2014 (TSL Act) to allow for the government to recover Higher Education Loan Programme (HELP) and Trade Support Loan (TSL) debts from those who are residing overseas.
Prior to the introduction of these legislative amendments there was no requirement for individuals with HELP or TSL debts to make repayments while residing overseas, regardless of the level of their income. These amendments will mean that Australians living overseas will be subject to the same repayment obligations as those residing in Australia.
The new arrangements apply from 1 January 2016 at which point individuals with HELP or TSL debts who leave Australia with the intention to remain overseas for more than six months (183 days) will be required to notify the Australian Taxation Office (ATO) no later than 7 days after leaving Australia.
Those already living overseas on 1 January 2016, and intending to remain overseas for at least a further 183 days, must notify the ATO no later than 1 July 2017.
Repayment obligations will commence from 1 July 2017 for income earned in the 2016–17 financial year, with non-resident taxpayers being required to assess their Australian and their foreign-sourced income for the year. If this income exceeds the applicable minimum HELP or TSL repayment income threshold for the year, they will be liable to make a repayment.
Example: Individual living in the United States
Australian income (interest)
US income (salary and wage)
Assessed worldwide income
|Repayment income rate (per ATO 2015-16)|
The legislative amendments refer to the registration and notification with the ATO to be in the “approved form” without defining the term.
While the “approved form” is not specified in the legislation, Christopher Pyne MP stated at the introduction of the Bill to the House of Representatives:
“From 1 January 2016, all Australians with current and new HELP and TSL debt who move overseas for six months or more will be required to notify the ATO via the myGov website to facilitate repayments”.
The media release from Mr Pyne MP on 17 September 2015 also states:
“The Australian Taxation Office will provide a simple online tool to enable debtors to easily assess their repayment income and make repayments.”
- We recommend that all individuals with either HELP or TSL debts that are intending to leave Australia after 1 January 2016 for an extended period of time look into their notification and registration requirements and ensure they are able to satisfy those requirements.
- We recommend that anyone who knows an Australian resident already living overseas that has a current HELP or TSL debt gets in contact with this individual to ensure they are aware of these changes. While such individuals have until 1 July 2017 to notify the ATO, the Tax Office acknowledges that their access to this information and their likelihood of being made aware of these changes may otherwise be limited.
Present but not productive
As employers we’re aware that absenteeism (sick days/personal leave) can impact on the productivity of the business. But what happens when your employees are on the job but not producing the work and achieving goals as you would expect? This may be a case of Presenteeism.
This term is used to describe people that come to work but are not engaged in their job. Your staff may demonstrate presenteeism through good attendance accompanied by a lack of enthusiasm, being distracted (e.g. personal internet browsing, using their mobile phone, chatting too much), taking excessive time to complete tasks or coming to work even if they are unwell. All of these examples affect performance on the job and can lead to the employee losing hours of productivity during the day. When this occurs it also causes broader disruptions and disharmony within your team and can be more costly than a sick day.
Another form or Presenteesim is if your employee attends work unwell and this may raise the cost further by exacerbating their condition leading to a longer period of illness and the possibility of infecting others around them. On the other hand if they are generally well but distracted on the job it affects the morale. The key is to address perceived issues promptly as they occur. Keep an eye on the productivity of your team, if there is a shift in motivation, a drop in output, missed deadlines, mistakes, accidents or conflict these can be signs that there is a problem with the individual.
Start with asking the employee if everything is ok, both at home and at work. There is a correlation between presenteeism and stress and wellbeing. If work is a stress trigger, openly discuss why this is and together establish what can be done to address the problem. Solutions may be looking at a workplace flexibility agreement, reviewing their role, resources, remuneration or their team structure. If there are issues at home these may need interventions beyond the business, perhaps an Employee Assistant Program or other personal support services can assist.
In terms of handling sick employees strive to foster a culture that discourages employees from coming to work sick, the genuinely unwell should stay home until they have recovered. On return to the office always ensure you personally check in the employee to enquire if they are feeling better. This will allow you to personally assess if they are fit for work, foster feelings of inclusivity and caring and discourage those who perhaps weren’t quite as sick as they described on the phone if they know you’re going to visit their workspace the next day.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.