Client Login
Ph: 08 9921 8218 | Em: info@encompasscpa.com.au

Photography by Debra Mitchell

Firm News

Older Entries

Pros and cons of hiring an intern 

With so many eager school-leavers looking for employment opportunities, hiring an intern can seem like a good way to offer work experience to someone without the risks of a long-term commitment of a regular employee. However, you should consider whether hiring an intern would be the best move for your business. Here are some pros and cons you may run into:

Pros:

Potential employment: If you feel that the intern fits into the workplace well, you could offer them employment later on. This is often a smoother introduction to employment as they are already trained and familiar with the business. However, you are not obligated to offer them a job if you don’t feel they are a good fit.

Social media insight: Most interns are young and tech-savvy and could offer important insights into the world of social media for the new generation. They could help you devise relatable, trendy content for your social media that you may not have considered.

Cons:

Inexperienced: If you’re looking for some to take on roles that require knowledge and experience, an intern may not be the right choice as they often have limited work experience in career based roles.

Less flexible: If an intern is still studying, then the hours they can offer you can be limited and variable depending on their timetable. As well as this, when exam periods arrive they could have an exam on a day they would normally work, or may ask for time off to study.

Posted on 4 December '19, under Business. No Comments.

2019 Updates to the Pension Loan Scheme 

Changes have been made to the Pension Loan Scheme (PLS) under the federal government that came into effect 1 July 2019. The updates aimed to improve the previous scheme and help more retirees boost their retirement income and pay for extra expenses such as home care.

The key features of the new Pension Loan Scheme are:

To be eligible for the PLS, the following criteria must be met:

Posted on 4 December '19, under Super. No Comments.

Paying tax on term deposits

The interest you earn from term deposits is subject to tax, just like your regular income. You have to declare investment income on your tax return, including interest in the year it was credited or received.

The amount of tax you need to pay depends on the amount of interest you earn on your term deposit as it is part of your overall taxable income and will, therefore, be taxed at the same marginal tax rate that applies to the rest of your income. The ATO’s marginal tax rates for the current financial year are:

If you decide to roll over your interest earnings into a new term deposit, you will still need to declare the interest on your tax return if you choose to reinvest the money instead of accessing it.

Term deposits run under a joint account will have the ATO assuming each person has equal ownership to the funds in the account. This means that the interest earned is equally split between you and your account partner(s), where you will have to pay tax on your portion. If the funds in your account are not split equally, you can provide the ATO with documentation proving the amount you each earn and be taxed different amounts accordingly.

Posted on 4 December '19, under Tax. No Comments.

What you need to know about investment bonds

Investment bonds are a practical investment option for those who earn a high income and seek long term tax efficiencies.

Investment bonds, also known as tax-paid, insurance or growth bonds, work similarly to a managed fund, except they are combined with an insurance policy. There is a ten year rule which allows tax free earnings on the bond if no withdrawals are made in the first ten years and contributions do not exceed 125% of the previous year’s contribution. Most investment bonds offer a range of investment options to cater for differing risk levels such as cash, fixed interest, shares, property or a range of diversified investment options.

Investment bonds are particularly suitable for high income earners with a marginal tax rate higher than 30% who want to build wealth without increasing their personal tax liability. They are also useful for estate planning purposes as beneficiaries other than dependants can be nominated and will not incur tax upon receiving proceeds.

Investments held in an investment bond are generally not subject to capital gains tax (CGT). Where an investment does not qualify for a CGT discount, the maximum tax rate of 49% may apply on earnings whereas an investment bond generates a maximum rate of 30%.

However, investment bonds do carry some risk that individuals should consider before making a decision. Common fees such as establishment, contribution, withdrawal, management, switching and adviser service fees may be applicable depending on your provider and the investment options you choose.

Posted on 27 November '19, under Money. No Comments.

What to include in a business partnership agreement

Entering into a business partnership can come with conflicts and misunderstandings between you and your new associate. This is why having a written agreement that clearly outlines your rights and responsibilities is important for maintaining a healthy business relationship between partners. Here are some key areas to include in your partnership agreement:

Posted on 27 November '19, under Business. No Comments.

Does your SMSF meet the sole purpose test?

If you have a self-managed super fund (SMSF), then you need to meet the sole purpose test to be eligible for the tax concessions that are normally available to super funds. The sole purpose test aims to ensure that SMSFs are maintained for the purpose of providing benefits to members upon retirement or for beneficiaries if a member dies before retirement.

When a sole purpose test is contravened, the fund will lose its concessional tax treatment and be subject to the highest tax rate. Members could also be disqualified as a trustee and face civil and criminal penalties such as fines or imprisonment. The test is divided into core and ancillary purposes, where regulated funds must be maintained for at least one core purpose and can add one or more ancillary purposes but cannot be run only for ancillary purposes.

The core purposes are paying benefits to:

The ancillary purposes are:

Posted on 27 November '19, under Super. No Comments.

Making NRAS claims

The national rental affordability scheme (NRAS) started on 1 July 2008, encouraging large-scale investment in affordable housing. It offers tax and cash incentives to providers of new dwellings for 10 years, granted they are rented to low and moderate income households at 20% below market rates.

Though the NRAS is no longer taking new investments, property owners within the scheme will soon be receiving letters from the ATO to remind them of their claim requirements.

The two key elements of the NRAS are;

Owners of NRAS rental property are eligible to claim a refundable tax offset if:

Deductions can be claimed for expenses incurred with a NRAS rental property, excluding the contribution amount received from the state or territory. The contribution amount is non-assessable, non-exempt (NANE) income for tax purposes.

Posted on 27 November '19, under Tax. No Comments.

CGT concessions for shares and trust interests

For taxpayers wishing to access the small business capital gains tax (CGT) concessions for shares in a company or interests in a trust, they must first meet the standard requirements as well as further conditions in place for such entities.

A taxpayer can apply for small business CGT concessions to lower or dismiss their capital gain from the disposal of CGT assets. If the CGT asset is a share in a company or interest in a trust, further conditions that will need to be met are:

The share or interest must satisfy the modified active asset test which looks through to the activities and assets of the underlying entities. The asset of an underlying entity will only be an active asset if the previous conditions have been met

Posted on 25 November '19, under Business. No Comments.

Super when you’re self-employed 

If you are a sole trader, or in a partnership, then you are not obligated to make super guarantee (SG) payments for yourself. However, you should still consider making personal contributions to super to help you save for retirement.

Your methods of contributing to super can depend on how you pay yourself. For example, if you receive a wage, then you can set up a regular transfer into super from your income before tax. If your income is from business revenue, you can periodically transfer a lump sum into your super depending on your cash flow.

When contributing to personal super contributions with your after-tax income, you may be eligible to claim tax deductions on them. Before claiming a deduction, you must give your selected super fund a ‘Notice of intent to claim or vary a deduction for personal contributions’ form, and received an acknowledgement from your fund.

You can contribute up to $25,000 a year in concessional super contributions, which are the contributions you can claim tax for, and an additional $100,000 a year in non-concessional super contributions, which you don’t claim deductions for. If you are aged 75 years or older, you are only able to claim tax deductions for contributions you made before the 28th of the month after you turned 75.

Posted on 25 November '19, under Super. No Comments.

Introducing ASFP

Plans are underway to carry out a system change during the December closure of the ATO, to introduce Activity statement financial processing (ASFP). This change will move the majority of taxpayer financial information into one accounting system that will have multiple accounts.

ASFP will shift activity statement and franking deficit tax accounts from the current ATO system into their primary accounting system, covering all the different taxes they administer. This change is intended to help improve ATO digital services by delivering simplified transaction descriptions and summary views of “statement of account transactions” with the ability to view full account transaction if required.

During the closure, a number of ATO online services will be unavailable. These include;

Posted on 25 November '19, under Tax. No Comments.

« Older Entries   

Contact Us

You can contact us at the following;

Office Location
18 Francis Street
GERALDTON WA 6530

Mailing Address
PO BOX 1865
GERALDTON WA 6531

Phone: 08 9921 8218
Fax: 08 9964 3818
Email: