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New interview techniques

The entire recruitment and interviewing process is currently undergoing a lot of changes. Social networking sites such as LinkedIn are becoming an increasingly mainstream way to identify job candidates, and the entire workforce is becoming more fluid. There have also been a lot of exciting new ideas about how best to conduct interviews, many of which might be able to give you a much better idea of how a candidate will perform in the role.

Multiple interviewers: It can be a great idea to invite other staff members to sit in on interviews, either as silent observers or active interviewers. Not only will this give you the benefit of a second opinion, but they may be able to hone in on qualities or skills that will be valuable to the company’s inner workings.

Behaviour based interviews: This can be anything from asking a candidate to describe their behaviour in past roles and situations to setting a test or activity for them to complete. Setting a common activity for all of your candidates to complete can be a particularly insightful way to differentiate between the competition.

Reframing traditional job interview questions: Most interview candidates will have rehearsed their answers to traditional job interview questions, making it hard to get an accurate reading of their abilities. If you present a question in a slightly different way to normal, you will get a more natural answer that is reflective of the candidate’s adaptability. For example, instead of asking someone what they think their weaknesses are, ask them to describe how they have resolved a situation where they lacked knowledge or experience.

Posted on 17 September '14, under Business. No Comments.

Crackdown on cash economy

The ATO is cracking down on businesses that operate off the books in order to avoid paying their fair share of taxes, also known as operating within the black, underground or cash economy. Businesses are known to use a wide range of strategies to skirt their tax responsibilities. This may include underreporting takings and paying staff in cash. Several businesses have also been caught using EFTPOS terminals that are not registered to the main company.

The ATO has appealed for the broader community to report any behaviour that they think is suspicious, for example, businesses that regularly conduct transactions without putting them through the cash register.

Techniques such as data matching and benchmarking businesses against similar operations will also be used by the ATO in their attempt to catch out businesses who are not paying their taxes.

The ATO has identified particular geographic areas, usually hospitality hotspots, and particular industries known to favour cash that will subject to particularly close monitoring.

Posted on 17 September '14, under Tax. No Comments.

Crackdown on multinational corporate tax evasion

Treasurer Joe Hockey has announced that he has requested the Tax Commissioner ramp up his efforts to prevent multinational corporations from generating profits in Australia before moving them offshore to avoid tax responsibilities.

Tax evasion tactics by multinational corporations have been an ongoing problem in Australia. There has recently been a renewed interest in the issue as revelations about the negligible Australian tax paid by high profile companies, such as Google and Apple, have come to the fore.

The plan to tackle this issue includes reinforcing Australia’s capitalisation rules, collaborating with other countries and strengthening communication between the government and the Tax Commissioner.

Multinational corporate tax evasion is not just damaging to the Australian budget. It also means that there is unfair competition for Australian businesses who are doing the right thing in meeting their tax obligations.

Posted on 8 September '14, under Tax. No Comments.

Super guarantee frozen

Over the past week, the government has confirmed its decision to freeze the compulsory superannuation guarantee at 9.5% for the next seven years. It will rise to 10% in 2021 and then increase incrementally before plateauing at 12% in 2025. Previous to this, the superannuation guarantee was planned to reach 12% by the 2019/20 financial year.

In light of these changes, individuals may have to reconsider their approach to superannuation if they want to maintain their current retirement plans. If it is possible for you in your current circumstances, you may want to consider salary sacrificing into your super. This is also known as making concessional, or before tax, contributions. The advantage of salary sacrificing into superannuation is that it will be taxed at the low rate of 15% (as long as it is below the concessional contributions cap), which for most people is far less than their marginal tax rate. Even salary sacrificing as little as $10 a week into your superannuation can go a long way in counteracting the impact of the frozen superannuation guarantee.

Posted on 8 September '14, under Super. No Comments.

Potential delay for superannuation increases

Currently, there are plans to increase the level of compulsory superannuation contributions, paid by employers, from the current rate of 9.5% of salary to 12%. The increases, as currently planned, would occur in 0.5% increments over the next five years.

However, due to pressure on the budget, the government wants to delay the first 0.5% increase for three years. This is because the significant tax concessions that are offered on superannuation contributions place an additional burden on government revenues. Treasurer Joe Hockey is proposing that the increases should be introduced at the discretion of the Treasurer, without the need to consult parliament.

The new provision, which has yet to be presented to the senate, would not allow any scheduled increases to be delayed by over four years and would also not allow the Treasurer to decrease the rate of compulsory contributions.

Posted on 2 September '14, under Super. No Comments.

Using the CGT discount

A capital gain is a profit made from the sale of an asset, for example, real estate investments (the family home is exempt), a business or shares. Your capital gain is calculated as the difference between what you paid for the asset and what you eventually sold it for. A capital gain is considered by the ATO as part of your assessable income and is taxed at your marginal rate.

There is, however, a discount that may be applied to capital gains. If you have held the asset for over twelve months, you may be eligible for a 50% discount on the CGT. The CGT discount is also available to trusts and superannuation funds, although for superannuation funds the discount is only 33.3%. The discount is not available to companies.

Of course, there are occasions where you may have to dispose of an asset for less than you originally paid for it. Unfortunately, you are unable to use ‘capital losses’ to reduce your assessable income. However, you are able to carry the loss over to the subsequent income year and use it to offset future CGT liabilities.

Posted on 2 September '14, under Tax. No Comments.

Outsourcing for SMEs

Outsourcing jobs used to be something that was only done by large corporations, as economies of scale were required to make it profitable. However, as technology has progressed, an increasing number of small to medium businesses have been outsourcing administrative and customer service roles, including outsourcing some jobs offshore, with the Philippines being a popular destination.

Outsourcing your customer service or administration is something you need to consider carefully. It is advisable to consider what your business might lose, for example, a personal touch with some customers, and weigh this up against the savings you might make. Outsourcing administrative costs can be particularly cost effective for businesses who do not require a full-time administrative staff member.

Additionally, if you need to complete a specific project, for example, the design of a new website, it is no longer necessary to limit your recruitment of freelancers to your locality. Interstate and even international freelancers may be able to perform the work just as effectively, and possibly for a lower rate.

Posted on 25 August '14, under Business. No Comments.

Advantages of an SMSF

For most Australians, superannuation is one of their most important assets, usually only coming second to the family home. Superannuation is a great way to plan for your retirement, offering you a lot of tax breaks and ensuring that you are putting money aside for the future you want.

However, it can be unsettling when you do not know exactly where and how this crucial asset is being invested. It is natural to want to have more control over your super, and to understand exactly where your money is invested.

Unfortunately, many industry, retail and corporate funds can be very vague in letting you know where your money is, for example simply saying ‘Australian shares’. Additionally, the choice of risk categories offered to members are often not specific enough to fully reflect your individual investment needs.

Starting an SMSF is not just about choice, but also control. You can create a more sophisticated investment strategy that is perfectly aligned with your risk appetite, ensuring that your money is doing precisely what you want it to do.

Recently, it has become possible for SMSFs to borrow money in order to purchase property. This means that when members reach pension age, they will be able to take control of the property, something that is not possible in other types of funds.

SMSF members also have a greater degree of control over the tax liabilities of their superannuation, and there are many effective tax minimisation strategies available to SMSFs.

There are also some advantages that are specific to business owners. Under some specific circumstances, your SMSF can even  purchase your business premises, and the business can, in turn, lease the property from the SMSF.

Posted on 25 August '14, under Super. No Comments.

ATO releases ruling on bitcoin

The ATO has issued its decision on the treatment of bitcoin, and other crypto-currencies, for tax purposes. Bitcoin is a form of virtual digital currency that has been gaining popularity worldwide. Based on the  average number of daily transactions, bitcoin has overtaken western transfer and is fast approaching PayPal as the world’s most popular form of online transaction.

Bitcoin is unregulated and operates outside of the global financial system. The ATO has ruled that making purchases with bitcoin essentially amounts to bartering, and as such the virtual currency will be treated as an asset, rather than as money, for tax purposes.

In the eyes of the ATO, bitcoin will be treated similarly to shares. There is no need for individuals to declare bitcoin to the ATO until they dispose of it, in which case it may be be subject to capital gains tax. Individuals may also use bitcoin to purchase up to $10 000 worth of personal items, and it will be considered as personal assets use. If an employee receives bitcoin as part of their remuneration package then this may be subject to fringe benefits tax.

Bitcoin enthusiasts across the country have expressed disappointment in the decision, claiming that it will drive investment in bitcoin offshore, and cut Australia our of the emerging digital currency economy.

Posted on 25 August '14, under Tax. No Comments.

Finding your lost super

Many Australians have superannuation that they have lost track of over the years. The ATO estimates that the total amount of lost super in Australia adds up to billions of dollars.

If you have ever changed your name or address it is possible that you have chunks of super that you’ve completely forgotten about. The same is true for super accumulated in a part-time or casual job, particularly if it was a long time ago.

If you think that you might have some lost super, you should track it down as soon as possible. By splitting your super between funds, you are most likely paying unnecessarily high fees.

Finding your lost super is easy with the ATO’s online SuperSeeker tool. You can also use the ATO app to do a quick search to determine whether or not you do have lost super. To do this, you will need to provide your name, date of birth and tax file number (TFN).

Posted on 18 August '14, under Super. No Comments.

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