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How you spend your money determines how well you can save you money. Spending more than you have or buying unnecessarily can severely impact how efficiently you can save. Sometimes you aren’t even aware of the small habits that are actually limiting your savings capabilities. Here are a few bad money habits that are getting in your way.
Not having a budget:
Spending a substantial amount of money each month on purchases and experiences adds up. Not preparing and sticking to a budget is a common mistake, as many people believe that a budget isn’t necessary for their lifestyle and income. Regardless of how much you earn, individuals need budgets to know where their money goes and what needs to be set aside to achieve their goals.
Dining in restaurants or grabbing take away most nights in the week is a good way to deplete your finances. Save money by eating out one or two nights and cooking the rest of your meals in bulk at home. Preparation of food will help on those nights when you don’t want to cook and stops you from ordering food.
Purchasing items without a second thought is an easy way to lose money. A good way to avoid this can be to ask yourself if you are buying something because you ‘want’ it, rather than if you ‘need’ it? Learn how to recognise when you do the action and force yourself to wait. You can then consider if you have the extra money to spend on that item, giving you time to properly think about your decision.
Hiring an intern can sound like a win-win situation; the intern gets an opportunity to learn and boost their career, you get some extra help generally at a lower wage rate than regular employees. However, it is important to first think about if an intern would be right for your company before you make the commitment.
If an intern is hired in accordance with the law, then they do not always require compensation. Think about what kind of tasks they would do, how much they would work and their academic and professional experience to help you decide on appropriate remuneration. Many companies choose alternatives to regular payment, such as gift cards, free lunches, public transport remuneration or free company products.
Think about resources:
Do you have the time and resources to train and mentor an intern? Often, interns are part of educational programs which means they may also have to commit to their studies as well as the internship. This requires more flexibility as to which days they can work each week, as well as periods they wish to take off to study for exams. It is therefore important to think about if you have enough resources to not become dependant on the intern for certain tasks.
Divorce or separation can be emotionally draining and stressful as it is, but the legal and financial responsibilities you also need to think about add an extra burden to dealing with the spit. One key area that needs to be considered to protect your financial future is your superannuation and what happens to it after your divorce.
The superannuation splitting law treats superannuation as a different type of property. This means that like any other asset it can be divided between partners who were in a marriage or de facto relationships either through:
Splitting the super does not automatically give you a cash asset as it is still subject to superannuation laws.
There are three main options for dealing with your super in a split:
In the event that your records have been damaged or destroyed in a natural disaster, such as bushfires, there are a number of ways you can reconstruct them. The ATO is able to help with reconstruction in the event tax records have been lost or damaged.
Where the tax records are lost or destroyed as a result of a natural disaster, the ATO will allow time for individuals to get their more pressing issues in order. They provide support by:
The ATO holds and can re-issue or supply copies of tax documents, such as income tax returns, activity statements and notices of assessment. If you have lost your TFN, you can still access your tax information by phoning the ATO.
If you are unable to substantiate claims made in your tax returns or activity statements because records have been damaged or destroyed, the ATO can accept the claim without substantiation, where it is not reasonably possible to obtain the original documents.
The Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA), more commonly known as the unclaimed superannuation money protocol, has been updated recently to provide a clearer structure going forward.
SUMLMA provides guidance on in relation to unclaimed money, lost member accounts, superannuation accounts of former temporary residents and their associated reporting and payment obligations. The update has now added content on inactive low balance accounts.
The act now clearly defines what is an inactive low-balance account, how statements and payments work, the registering of lost members and various rules for special cases.
It is important to note that the information in the protocol does not apply to super providers that are trustees of a state or territory public sector super scheme, in which:
The protocol provides administrative guidance only and should not be taken as a replacement for the law or technical reporting specifications.
Probably the most important reason behind sound record-keeping is that it allows you to learn and grow from your own business experiences. Keeping your records in check will help you understand the current situations of your business and also project future profit or losses. In addition, good record keeping will also show you where your business needs improvement or re-invention. Here a few records to keep that will prove invaluable in the future.
Keeping accurate and up to date financial statements will help you at a time of lending applications. These finances include income statements as well as balance sheets that show assets, liabilities and the equities of your business at a specific date.
Purchases and expenses:
The items you buy and sell to your customers and the costs of running your businesses. Supporting documents for both of these include invoices, email records, credit card slips, cancelled cheques, cash registrar tapes and account statements. These can help you to determine whether your business is improving, which items are selling, or what changes you may need need to make.
The properties that you own and use in your business. These records verify information regarding your business assets, such as when and how you acquired these assets. They will also help you to determine the annual depreciation when you sell the assets. Examples of these records include the purchase or sales invoices and real estate closing statements.
Franking credits are a kind of tax credit that allows Australian companies to pass on the tax paid at a company level to shareholders. Franking credits can reduce the income tax paid on dividends or potentially be received as a tax refund.
Where a company distributes fully franked dividends (and those dividends are included in the taxable income of the taxpayer) the taxpayer can claim a credit against their taxable income for the tax that has already been paid by the company from which the dividend was paid.
Since the 2016-17 income year, the standard formula for calculating the maximum franking credits is:
Franking credit = (dividend amount / (1-company tax rate)) – dividend amount
Franking credits are paid to investors in a 0-30% tax bracket, proportionally to the investor’s tax rate. If an individual’s top tax rate is less than the company’s tax rate, the ATO will refund the difference. Therefore, an investor with a 0% tax rate will receive the full tax payment paid by the company to the ATO as a tax credit. Franking credit payouts decrease proportionally as an investor’s tax rate increases. Investors with a tax rate above 30% do not receive franking credits with dividends and may even have had to pay additional tax.
There can be eligibility requirements that must be met before franking credits can be paid, such as that you must hold the shares ‘at risk’ for at least 45 days to receive a total franking credits entitlement of $5,000 or more. There are also rules that can apply to buying, holding and selling shares with franking credits attached.
As the holiday season approaches, the workplace often gets more relaxed as things wrap up. However, closing the business for the holidays usually isn’t as simple as turning the lights off and heading home for a few weeks. There is often a lot of preparation and work that needs to be done before everyone leaves the office.
Giving your staff at least two to four weeks notice of business closing dates will allow them to prepare for the shutdown and organise their workload appropriately. Having reminders through announcements, in-office calendars, emails or signs on notice boards will allow employees to ensure their work is done on time and organise personal events.
Notify other stakeholders:
Important stakeholders such as customers, suppliers or vendors should also be informed in advance of when the business is closed for the holidays to ensure that any services or needs are completed prior to shutdown. Customers can be notified through your business’s website, emails, signs around the business or letters and phone calls for close clients.
Update your security:
If your business has a security team or service, make sure that they are kept updated about your closing dates, as well as an emergency contact list with the owner and key employee details so they know who to contact in the event of a security issue, even when the business is closed. It is also a good idea to ensure that all cybersecurity software is up to date before you leave to prevent hackers and viruses from damaging your assets while you’re away.
Backing up your servers will reduce the risk of losing crucial business assets to hackers, viruses or software malfunction while you’re away. By making backups of your data through tools such as cloud storage or hard drives, you don’t have to worry about coming back to a corrupted system.
Change automated greetings:
If you have an automated answering service for business dealings, consider recording a message letting people know that your business has closed for the holidays. It is also a good idea to detail what dates you will return.
Turn off equipment:
Don’t forget to shut down any equipment that won’t be used throughout the holidays, such as lighting, copiers, computers and kitchen supplies. However, be aware of equipment that shouldn’t be turned off, such as fax machines, security systems, servers and backup systems, and refrigeration units.
The ATO has issued a warning for Australians to be aware of scheme promoters that promise to allow you to withdraw your superannuation early, and illegally.
Individuals can legally withdraw super when they turn 65, even when they haven’t retired, are at their preservation age and retire, or under the transition to retirement rules while continuing to work. Super can only be accessed early under circumstances that mainly relate to specific medical conditions or severe financial hardship.
The ATO is taking action to shut down promoters who tell people they can gain access to their super before they are eligible to by setting up a self-managed super fund (SMSF), which is illegal. There has been a number of schemes that encourage individuals to channel money inappropriately and deliberately to avoid paying tax.
Penalties for involvement in illegal super schemes include fines up to $420,000 for individuals and up to $1.1 million for corporate trustees. An individual may also lose their right to be a trustee of their superannuation fund or, in some cases, jail time up to five years.
Fund trustees or members who have knowingly been involved in a scheme or been approached by anyone claiming that they can withdraw their super early should contact the ATO immediately to advise of the situation and avoid further penalties.
Changing your business or company name can be an exciting leap. You can find yourself thinking about things like redesigned logos, rebranding and new customers, but before that, you have to think about the steps required to officially change your name.
You cannot request to change the name of your existing business once it has already been registered under the Australian Securities and Investments Commission (ASIC). If you decide you want to trade under a new name, then you must register a new business application through the Australian Government Business Registration Service. If you choose to register a new business, you can cancel the existing registration through ASIC, however, the fees for a cancelled name will not be refunded.
If you’ve realised that a legitimate mistake has been made in your existing business name, then you can request for a correction to be made if there is a typographical error, the name of a place is incorrect, or the date of birth is incorrect. To support your correction request, you must provide evidence of the error, for example, a driver’s license or passport. You can request a correction through your ASIC Connect account.
If you have a company, which is a separate legal entity registered with ASIC, then you are able to change the name of your registered company without applying for a new company for a fee of $408. The new name you choose in this case is still subject to be rejected if it does not meet the following criteria: