Make Your Business Stand Out
On a recent webinar, we invited Paul Dunn to talk all things about making your business stand out.
Here’s what he said –
When you become a Standout, people would love to buy from you, you become a magnet for talent, and they would want to work for you. This is a triangle that you should put up on your whiteboard or wherever it is so that you get how important this story is.
And what happens is, when you are that, people look to you because you’re standing out, you stand for, people will respect and recommend you. When more people love to buy from you, then profit and growth would generally be the result.
When people love to work for you because of where you are in your story, They are getting engaged and connected in a way that they’ve not been engaged and connected before, because you’re standing for something more than the dollars that come in the door.
When people respect and recommend you, there will be more profit and growth. So, when you do this, it is good for business.
Watch the full webinar replay, “It’s Not What You Sell, It’s What You Stand For” on our Facebook Page or Book a FREE Strategy Call with an Inspire Accountant.
FBT Exemptions For Work Christmas Parties
The costs of food and drink associated with Christmas parties are exempt for FBT if they are provided on a working day on your business premises and consumed by current employees. The property benefit is only available for employees and not associates of the employees, or family and friends.
Note: Even though there’s no FBT on this, this is not a tax-deductible expense.
If you’ve got a training session at work, but not a Christmas party, and you are training them on something that your business does. And if you provide sandwiches on the lunch for them, then that would be a tax-deductible expense and not entertainment. It will cost you about a third less in profit before tax.
Watch the full webinar recording on our Facebook Page or Book a FREE 20-minute Strategy Call with an Inspire Accountant today.
Fringe Benefit
A fringe benefit is a payment to an employee but in a different form to salary and wages.
Examples include:
- Allowing an employee to use a work car for private purposes
Generally, there are exemptions and reductions for this stuff - Giving an employee a discounted loan
- Paying an employee’s gym membership
- Providing entertainment by way of free tickets to concerts
- Reimbursing an expense incurred by an employee, such as school fees
- Giving benefits under salary sacrifice arrangement with an employee.
There are certain salary sacrifice things that you have to pay fringe benefits on, but there’s a lot that you don’t as well,
If they aren’t exempt fringe benefits and you end up paying fringe benefits tax, it’s the equivalent to paying the highest marginal tax rate on the expenses anyway before you give the benefit to the employee.
Imagine you had a situation where you’ve got a good employee, and you want to give them, not a cash bonus, but to say thanks in a different way. And you end up buying them a Lamborghini – then that could be a fringe benefit.
If they didn’t have these rules to stop that, you could give that fringe benefit to them. Because they’re an employee, you could kind of argue that it was to do with their employment at work so you should be able to claim a tax deduction for it. Since it’s not salary and wages, why should they get taxed on the Lambo?
So what they’ve said is, If you’re going to do and structure that sort of arrangement, we’ve got this thing called FBT or fringe benefits tax. It’s going to tax you on the value of that asset or whatever you’re giving to your employees.
Watch the webinar replay, ‘Christmas Parties & Tax – How wine is tax deductible’ on our Facebook Page
Explore & Learn
Work Christmas Parties and FBT - What You Need To Know
- There are no FBT implications as it is an exempt property benefit
- For employees – there are no FBT implications as it is an exempt property benefit, and the minor benefit exemption could also apply
- For associates – there are no FBT implications as the minor benefit exemption applies
- For employees – there are no FBT implications as it is an exempt property benefit
- For associates – a taxable fringe benefit will arise as the value is equal to or more than $300
- For clients – there is no FBT payable and no income tax deduction
- There are no FBT implications as the minor benefits exemption applies
- There are no FBT implications as the minor benefits exemption applies
- For employees – a taxable fringe benefit will arise
- For associates – a taxable fringe benefit will arise, nd
Are Christmas Gifts FBT?
For tax purposes, a Christmas gift may also be considered as an entertainment.
There are two kinds of gifts:
Entertainment gifts
Items such as movie tickets, concert, airline, theatre tickets may be subject to FBT and not deductible for tax purposes.
Gifts that are more than $300 are subject to FBT. It is likely tax deductible if you are paying an FBT and you can claim the GST. Keep in mind that you will be paying the equivalent of 47% tax on it. If gifts are less than $300, then it’s not subject to FBT and we can’t claim the GST either.
Examples of entertainment:
- Theme park tickets
- Sport/golf
- Leisure activities
- Dinner/drinks
- Movie/concert tickets
- Cruise
- Gift cards for the above things
Non-entertainment gifts
If your business sends chocolate, gift vouchers, pens, or Christmas hampers, this stuff falls outside of the entertainment criteria and you won’t have FBT on it, and it’s most likely tax deductible.
Gifts for employees or clients under $300 are tax deductible without FBT.
Examples of non-entertainment:
- Gift voucher (groceries, health & wellness, books etc)
- Wine or champagne
- Flowers
- Hamper
- Skincare/beauty products
- Perfume
- Computer/TV equipment
Watch the webinar replay, ‘Christmas Parties & Tax – How wine is tax deductible’ at https://www.facebook.com/InspireCA/videos/1544736652557674
It's Not What You Sell, It's What You Stand For
What To Watch Out For With Family Funds
In SMSF, it used to have up to 4 members but now it’s gone up to 6 members in the Superfund.
6 people’s balances are better than 1. If you have an average of 100 grand per person and you have 2 people in it, then you’ll have a 200 grand in your fund. And since you got 6, then that would be 600 grand in total. So it’s a lot more money to play with so to speak.
You need to be careful of a few things here:
- Death – What if someone dies and there are 5 members in the fund? How are they going to manage that dead person’s assets and estate when it comes to their superannuation?
- Disability – Are they going to be working together constructively to manage that self-managed super?
- Divorce – If you have two people in the fund like a husband and wife, and they get divorced, they have to act in the best interest of the fund and each other. What if you invited your son or your daughter into your fund and they got divorced but whoever they were with was also in the fund. You need to be very careful when dealing with that situation. You can have up to 6 members but there’s a reason why there’s an average of 2members per fund.
If there are more people, then it equals to more decision-makers or people with their own opinions, and that is another layer of complexity.
You can reduce this risk by a leading member fund and we’ve seen this thing that we can set up called a ‘Leading member fund’ where there is an overall decision maker if people can’t agree. It’s kind of a cool thing to lock in if you want to take better control and you’ve got a few more members than just yourself, and your spouse. And you can convert an existing SMSF to a leading member fund as well so if you’ve already got one, we can change that and set that up to a leading member.
Need to speak to an accountant? Book a ZERO cost 20 minute strategy call with an Inspire Accountant at https://inspire.accountants/chat
The Tax Benefits Of An SMSF
In a recent webinar, “Become an SMSF millionaire” we run through the SMSF tax benefits.
SMSFs have a very low tax environment.
Under trust, it says 0% because trusts like discretionary trusts, give their profit to other entities or people in their family group and they pay the tax. 0% is not quite correct for trust but it actually gives it away.
With an SMSF, an SMSF pays 15% tax or 0% tax on the money it makes. So, they are much lower than the other tax rates and that is kind of a high-level overview of the differences between the tax rates.
Why are there two rates for an SMSF?
The first one is 15% when you’re accumulating your balance over the majority of your lifetime. Then you switch into 0% tax when you’re drawing a pension and when you are over a certain age. You can only get that 0% concessional rate on up to $1.7 million per member in pension. So, if you have $3 million in your own fund balance and in your member balance, then you can’t get that 0% concession on the whole lot.
On the difference. So, on the remaining $1.3 million, if you’ve got the total of $3 million in super, you will still pay the 15%. It’s still low and it’s just not zero. Even if you had $50 million in your own pension account, whatever it earns is taxed at 0%.
Benefits of drawing a pension or being in 0% tax mode plays out if you earn dividends from owning shares in super, then you will pay 0% tax. But some other instances are if you own a business through super, or part of a business, then the profits that go back to the SMSF in that pension account are at 0% tax and similarly if you sell an asset.
So what we see is if you buy a commercial property in your forties or fifties, hold it for 20 years and sell it when you are retired and in pension mode, you can make a massive gain and you can do that without paying any CGT.
Pros & Cons Of Paying Insurance Through Super
The benefit of paying insurance through Super is cash flowed from super, so you don’t have to pay it personally and it may be tax-effective. If there is a portion of life insurance that’s usually deductible in super and if you pay for that outside of super, then it is not tax-deductible.
The con is it reduces your super balance, the insurance payments, or it could suck up a lot of your contributions that you put in straight to insurance.
“Payment made to fund” means that if you die, your life insurance pays out. If you’re paying it from super, and if super is the policy holder, then the life insurance payment will be paid to the super fund, but not on your estate. It has to be dealt with by the fund and you can get it to the estate if you’ve set it up that way. But keep in mind that there are two steps if your wish is to get it into your estate.
Need to speak to an accountant? Book a ZERO cost 20 minute strategy call with an Inspire Accountant at https://inspire.accountants/chat
How Your Super Compares To An SMSF
A lot of people ask, “How much do I need in super to consider setting up an SMSF?”
If you Google that question, the suggestions for the normal range is about $200,000 to $250,000 in super. But the idea is breaking even, comparing the costs of your current super to the cost of running an SMSF.
A lot of industry or corporate super funds charge a percentage of your balance. So the bigger your balance is, the bigger your dollar figure in fees will be in the financial year.
If you put $500,000 into your super fund as a contribution, rarely would your accounting fee go up in that proportion. It’s more of a fixed fee for the SMSF.
Regardless: Do you have a good chance of outperforming your current super?
If you are not just looking at the fees and trying to save on the fees, if you go and invest in shares or property that you can’t get in your current super fund, then you will outperform if you do it yourself. Then the fees become still relevant but that’s not the only thing to compare when considering setting one up.
The “SM” in SMSF stands for Self Managed and it requires diligence to set up and run. So, it doesn’t happen by itself. As advisers for clients with SMSF, we are there for a sounding board and they assist with certain functions but we can’t transfer money, and we can’t make investment decisions, you need to self-manage it.
For compliance requirements, there are rules of the game with super and there are big penalties if you stuff it up or you do illegal things. You have to work with someone who can guide you through what’s allowable, and what’s not. And they do require an annual audit by a third-party auditor. So, when we prepare the financials and tax returns for our client, we send that off to a third-party auditor, and they give that a second check that everything is compliant.
Watch the full webinar, ‘Become an SMSF millionaire’ at
Get Cashed Up
