Legislation has recently been passed to ensure that any goods or services provided by a trustee of a superannuation fund is at arm’s length.
Non-arm’s length expenses incurred by a superannuation entity in gaining or producing assessable income will result in such income being taxed at 47%.
This can include for example a real estate agent providing management services or a builder providing their labour to build or repair an asset owned by the fund.
Individuals with more than one employer, who expect their employers’ compulsory super contributions will exceed their annual concessional contributions cap for a financial year, will be able to apply for an exemption certificate to release some of their employers from their SG obligations.
Individuals will still need to receive SG payments from at least one employer.
From 21 October 2019, eligible individuals will be able to download an application form from ato.gov.au.
Legislation has been passed recently to deny deductions for losses or outgoings incurred that relate to holding vacant land by individuals, partnerships, trusts or self-managed superannuation funds.
Various exclusions apply including where land is for primary production or where it is held available for use in the course of carrying on a business.
The amendments apply from 1 July 2019.
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https://youtu.be/U7D62IDQJ8Y
Termination is often a complicated and awkward issue for any business owner, but is a situation that needs to be handled thoughtfully and compassionately.
There a number of situations where termination can occur. It is important that each situation is carefully managed to ensure that the process is compliant with employment laws. Often, it may be a good idea to seek legal or HR advice before initiating the termination process.
If a business fails to comply with the provisions of a termination they can be liable for legal action, as well as fines and penalties. Employers should consider the various ways to terminate an employee’s role within the business and the legal requirements that will follow before making any decisions.
Redundancy
Redundancy occurs when an employee’s role within a business is no longer required. This can occur due to a reconstruction of the business, or technology taking the role of an employee. A redundancy is based on the operational needs of the business, not the personal performance of the employee. When an employee is made redundant they are often entitled to compensation and other entitlements. It is important the employer follows the correct protocols when making an employee redundant, which are laid out in the award or enterprise agreement.
Abandonment of employment
This form of dismissal occurs when an employee is absent from work for an extended period of time without providing a reasonable excuse. This could occur if an employee does not return to work after a leave of absence, or for walking off the job without providing an explanation. If an employer wishes to terminate an employee under abandonment of employment they must show that they have taken steps to contact the employee before terminating them.
Summary dismissal
A summary dismissal is when an employee is immediately terminated from employment due to a serious breach or misconduct, such as theft or assault. Generally there is no period of notice or financial compensation in lieu of notice. Although this type of dismissal does occur quickly it is still important that the correct formal process is followed, and that any allegations against the employee are thoroughly investigated before the employee is dismissed.
Dismissal for a cause
A dismissal for a cause is less serious than a summary dismissal. It is used when an employee is terminated for under-performance or other issues such as inappropriate behaviour. Leading up to a dismissal for cause there must be a disciplinary process which can include warnings and performance management in an attempt to correct the employee’s actions.
Termination by notice or agreement
This is when an employee’s role in the business is terminated by one party giving notice to another. This can occur when an employee resigns, or if an employer informs a casual employee or contractor that they wish to terminate their agreement. Termination agreements often come with various provisions that must be complied with, for example, the timeframe for notice. There may also be other steps to follow listed in the relevant award.
Between ongoing expenses and bills, managing a healthy cash flow can be challenging, but understanding the differences between short and long-term financing can help refine an effective cash flow strategy.
There are various sources of financing available, with each being useful for different situations. Choosing the right source and mix is key for good cash flow, with financing options often being classified into two categories based on time period: short-term and long-term. To find the right plan for you, determine your needs and then match a financing option to meet those needs.
Short-term financing
Short term financing, or working capital financing, look at needs that arise in relation to financing current assets – for a period of less than one year. Working capital is the funds that are used in the day-to-day trading operations of a business. Short-term financing can help you to pay suppliers, increase inventory and cover expenses when you do not have sufficient cash on hand. Depending on your business’ requirements you might consider using one of the following options:
Overdraft – extends your cash resources and protects your business’ credit rating.
Line of credit – funding when you need it that is then paid back when you have surplus cash, offering flexibility, value and control.
Business credit card – a convenient, fast payment method.
Long-term financing
Long-term financing options can help you invest in overall improvements to your business, for a period of more than 5 years. Capital expenditures, such as upgrading equipment, buying additional vehicles and renovating are funded using long-term sources of finance. Businesses can consider using the following options;
Leasing – structuring a lease to match the useful life of the asset. This will help to preserve your cash and working capital for other uses.
Term loans – from financial institutions, government and commercial banks. These allow you to accurately forecast your monthly cash flow through regular payments.
Today’s financial environment demands a regular review of strategy and a focus on execution.
