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Repairing errors in your credit score

Your credit score can affect loans and credit you apply for. You are able to have errors on your credit report fixed for free. 

The following are typical errors in credit reports, that you are able to get fixed for free.

Errors by the credit reporting agency – there may be instances where the agency that reports your information has done so incorrectly. This can lead to errors about:

• Your name, date of birth or address
• Debt listed twice
• Amount of debt

This type of error can be fixed by contacting the agency directly.

Errors by the credit providers – there may be instances where the credit provider incorrectly reports information. This can lead to errors about:

• How long your credit is overdue
• Whether you were notified about an unpaid debt
• If your debt was defaulted as overdue when it is in dispute
• Changes in your payment plan that were not appropriately represented 
• Accounts that were created as a result of credit fraud

These types of errors can be corrected by contacting the credit providers. If they agree that there has been a mistake, then the agency will adjust the details. If there is disagreement, then contact the Australian Financial Complaints Authority (AFCA) to file a complaint and receive a resolution. 

Posted on 18 February '21, under Money. No Comments.

Business management styles you should avoid

The business management style you adopt will depend on the needs of your business, what motivates your employees, and your style of work. Therefore, you do have some flexibility when it comes to the choices you make and how you manage your business. However, there are some which you should always avoid due to the relationship they foster between employers and employees. 

Autocratic

This style of top-down management leaves all decision-making to managers and expects full cooperation from employees. Any sort of criticism from employees will be received with public disapproval. This management style relies on fear and guilt and seeks to micromanage employees rather than allowing flexibility. 

This sort of strategy limits innovation and inhibits employees’ loyalty and personal motivation to progress as employees do not share the company vision. 

Servant

This type of management values people first and tasks second. Overvaluing emotions and wanting to avoid conflict at all costs is detrimental to effectively completing work. 

This sort of strategy places no focus on success and goal completion. It can damage the business if performance is not to par and employees are not encouraged to do their best at the tasks assigned to them. 

These two management strategies sit on opposite ends of the spectrum when it comes to valuing employees. You should regularly make an effort to interact with employees and ask them for suggestions to improve company performance as collaboration can be extremely valuable. However, don’t get carried away in developing personal relationships with employees that can be detrimental to business success. 

Posted on 18 February '21, under Business. No Comments.

What is the transfer balance cap?

The transfer cap refers to the amount of money that can be transferred from your superannuation account to your tax-free ‘retirement phase’ account.  

At the moment, the transfer balance cap is $1.6 million and all individuals have a personal transfer balance cap of $1.6 million. 

Exceeding the personal transfer balance cap means that you have to:

• Commute the excess from one or more retirement phase income streams. 
• Pay tax on the notional earnings related to that excess

The amount in your retirement phase account may grow over time, due to investment earnings. Although this may grow beyond the personal transfer cap, you will not exceed the cap. However, if you have already used all your personal cap, and then your retirement phase account goes down, you cannot ‘top it up’. 

The rules applied to capped defined benefit income streams are different from other income streams – this is because you can’t usually transfer or commute excess amounts from other streams. 

Posted on 18 February '21, under Super. No Comments.

Records you need to keep on rental properties

When you own a rental property, keeping records is important. These will help you meet tax obligations. Generally, only individuals with their name on the title deed declare income and claim expenses. 

Remember that the records must be kept in English or should be easily translatable into English, and kept for a minimum period of 5 years. 

The records you need to keep include: 

• Dates and costs of buying the property: These will help work out any capital gain or loss when the property is disposed of – the date entered into the contact is the purchase date, not the settlement date. 
• Any rent and rent-related income: This will be required to report tax return.
• Expenses associated with the property: These are important to claim deductions you may be entitled to. These records should include the name of the supplier, the amount of the expense, nature of the goods or services, the date the expense was incurred, date of the document
• Significant changes: These include repairs or improvements or partial or all sale of the property – the cost of repairs and improvements should be kept separate from depreciation costs so that deductions and capital gains and losses can be calculated correctly.
• Costs of selling or disposing of property: To be able to work out any capital gain or loss

Posted on 18 February '21, under Tax. No Comments.

The types of benefits businesses should consider for their employees

n Australia-wide survey asked employees what benefits they would most want from their employers. 

The following are the top 10 benefits:

• Flexible working
• Discounts on electricity, gas and water
• Continued education options
• Petrol discounts
• Free meals
• Supermarket discounts
• Mental wellness initiatives
• Subsidised massages, yoga, and gym memberships
• Special company deals on loans, mortgages, health insurance
• Discounts on mobile phones and data services

Many of these benefits are difficult to arrange and may be costly. However, the top benefit desired by employees is flexible working, which small businesses can also adopt easily. 

Further, due to COVID-19, there are many more resources available to facilitate flexible working and it has become more normalised than ever. 

Offering flexible working will make your workplace more attractive to potential employees and increase the loyalty of current employees as they can work according to times that suit them.

Employers should also consider providing other benefits that are accessible to them – this will improve employee satisfaction and inevitably contribute to productivity in the workplace.

Posted on 15 February '21, under Business. No Comments.

Choosing investment options in your super

Many Australians ignore the decision of choosing investments for their super and often end up in the ‘default’ option as they make no effort to choose otherwise. 

Default options that aim for ‘balanced’ or ‘growth’ investments tend to have 60-80% of funds invested in shares and property. This approach for investment is based on the best-suited strategy for a large number of members across the years they will be investing. 

However, the default options may not be the best for your financial circumstances and risk profile. Understanding different investment options and how risk assessments work will help you choose better investment options. 

Further, aim to change investment options over time rather than sticking to the same one. For example, you could consider changing options once you begin receiving a pension. 

Posted on 15 February '21, under Super. No Comments.

The amounts you don’t need to include as income

Amounts which are not classified as income are split into 3 categories.

Exempt income

This is income that you do not pay tax on, although, some exempt income may be taken into account when determining:

• Tax losses of earlier income years that you can deduct
•  Adjusted taxable income of dependants

Some examples include certain Government pensions, certain Government allowances, certain overseas pay, some scholarships, etc. 

Non-assessable, non-exempt income

This is also income that you don’t pay tax on – it does not affect your tax losses. 

Some examples include the tax-free component of an employment termination payment (ETP), genuine redundancy payments, super co-contributions, etc. 

Other amounts

There are also other amounts that are not taxable. 

Some examples include: Rewards or gifts received on special occasions, prizes won in ordinary lotteries, child support and spouse maintenance payments, etc.

Posted on 15 February '21, under Tax. No Comments.

Types of partnerships

There are four types of partnerships. The partnership type you choose will depend on what best suits the partners involved. 

General Partnership (GP)

All partners involved will be equally responsible for the management of the business. Each member has unlimited liability (personally liable) for the debts and obligations that the business incurs. 

Limited Partnership (LP)

Liability of partners is limited to the amount of money they contributed to the partnership. Limited partners tend to be ‘passive’ investors who don’t play a role in the day to day management of the business. 

Incorporated Limited Partnership (ILP) 

ILP partners have limited liability for the debts of the business. However, there must be at least one partner with unlimited liability. If the business is failing to meet its obligations, then the general partner (or partners) will become personally liable. 

Choose a business by discussing what and how each partner can contribute. Based on this, choose a structure which accommodates these differences. 

Posted on 4 February '21, under Business. No Comments.

SMSF Pensions

SMSF funds can provide pension or lump sum benefits during retirement. Retirement is a condition of super release if you have reached your preservation age. Depending on your date of birth, your preservation age will be between 55 and 60. The benefits from your super are tax-free once you are over the age of 60. 

If you plan to start a super pension income stream, then the funds from your accumulation account need to be transferred to your retirement account to fund your pension. Your retirement account has a cap of $1.6 million, so you can transfer that amount as a lump sum but no more. The earnings on these funds are tax-free. 

Each year, you need to withdraw a minimum percentage of your account balance from the retirement fund. This minimum percentage will depend on your age.

Alternatively, you can start your Transition-to-retirement pension if you have reached your preservation age but you are still working. However, unlike the funds that support your super pension once you begin retirement, these are taxed at 15%. 

Posted on 4 February '21, under Super. No Comments.

Tax treatment of insurance payments for damaged or destroyed property after a disaster

The Australian weather can be unpredictable, resulting in intense weather conditions. Bushfires, severe storms or floods can cause personal properties and assets a lot of damage. In the case that this does occur, individuals need to determine the tax treatment of any insurance payouts or relief payments that they may receive. 

Usually, individuals are unlikely to experience tax consequences for payments for personal property or assets. Personal property or assets include your home and household assets.

On the other hand, if an individual’s income-producing assets incur damage, then they will need to determine the proper tax treatment of the payouts or relief payments that they receive and the costs involved in repairing or replacing the assets.

If you have been working from home and using personal assets to produce income (such as a personal laptop you are repurposing) then determining which tax treatment applies could get complicated. You may have to talk to the ATO or an advisor to clarify the specificities of your situation. 

Posted on 4 February '21, under Tax. No Comments.

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