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Identifying competition

In today’s fast-paced and ever-changing business environment, it is becoming increasingly important to be aware of your competition. It is not just the activities of competitors you are currently monitoring that you should take notice of, but also the potential that new, indirect competitors may emerge. The rate at which new technologies are being developed, in addition to becoming increasingly affordable, means that competition may arise suddenly, and from unexpected places.

A good place to start is by listing your top five direct competitors and your top five indirect competitors. A direct competitor is someone who offers a very similar product to your own, while an indirect competitor is someone who may steal market share from you by offering a different product.

Once you have listed your major competitors, you should make a comprehensive list of all of their strengths and weaknesses. From here, you will easily be able to see what advantages and/or disadvantages your business is facing, and hopefully succeed in addressing any issues before they become seriously detrimental.

You should also consider how you can capitalise on singular advantages that your business may have, for example, your location or a consistently loyal customer base.

Posted on 30 July '14, under business. No Comments.

Things to consider before starting a SMSF

There are a lot of advantages to having a self-managed superannuation fund (SMSF). Increased flexibility and control over your savings are the most obvious benefits, with many SMSF trustees and members appreciating the ability to make their own investment decisions. Other advantages include the possibility of investing in a property, the ability to manage administrative costs, and, in some cases, tax breaks.

However, there are also a lot of responsibilities associated with running a SMSF, and it is not necessarily an advisable choice for everyone. Here are some things to consider if you are interested in starting an SMSF:

-To justify the costs associated with running a SMSF, you should have a relatively sizeable amount, or be anticipating a rapid accumulation of funds. The ATO suggests having a minimum of $200 000, however this is often debated amongst industry representatives.

-If you want to manage your own super, you should have a relatively robust understanding of finance and the confidence to make your own investment decisions.

-Managing your own super fund is generally a time-consuming endeavour. There are a lot of compliance issues you need to be aware of, and you also need to ensure that you remain abreast of any current changes to legislation.

Posted on 30 July '14, under super. No Comments.

Changes to fuel tax credits

Backdating to July 1 2014, the carbon charge will be removed from all fuels. The ATO has indicated that this will result in some changes to fuel tax credits. There will be an increase in fuel tax credits available for a range of off road activities, while credits will no longer be available to specified non-transport activities in agriculture, fishing and forestry. Businesses that are registered for GST are also now able to claim more for gaseous fuels used for transport purposes.

If you are unsure as to how the changes may impact you the ATO has provided a range of online calculators and tools that you can access when completing your business activity statement, ensuring that your claim is accurate.

It has also been proposed, under the Fuel Indexation (Road Funding) Special Account Bill 2014, that there will be a reintroduction of bi-annual indexation of excise and excise equivalent customs duty on all fuels. The indexation would be aligned to the consumer price index (CPI) and aviation fuels would be exempt. The additional revenue would be directed into improving roads and infrastructure, with the aim of improving national productivity.

Posted on 30 July '14, under tax. No Comments.

Renovating a property owned by your SMSF

While an SMSF may borrow money to purchase a property using a limited recourse borrowing agreement (LRBA), there are strict regulations surrounding the use of borrowed funds to renovate and improve properties. While you may be able to purchase an older property and renovate it using borrowed money, you are restricted from ‘improving’ the property, for example by building an additional storey or adding a swimming pool. If you are unsure as to whether the changes you have planned would be considered an ‘improvement’, it is advisable to seek the advice of the ATO.

You are, however, permitted to improve a property using funds from other sources, typically the accumulated contributions to the fund. For this reason, if making improvements to the property is central to your investment strategy, you need to ensure that your fund has sufficient cash flow to see these changes through.

Here are some other tips for renovating a property owned by your SMSF:

-All of the materials must be purchased in the SMSF name, even if you are carrying out the renovations yourself

-You may not be paid for any work you complete unless you are a professional tradesman who offers the same services to the public

-you may not live in the property at any stage, even if you are renovating it yourself

Posted on 25 July '14, under super. No Comments.

Carbon tax repealed

The Abbott government has delivered on its long-standing election promise to repeal the carbon tax, effective from July 1, 2014. A condition of the repeal receiving crucial crossbench support from the Palmer United Party (PUP) was that savings be directly passed on to consumers and small businesses. As a result, the ACCC (Australian Competition and Consumer Commission) has been given extended powers to fine parties failing to do so.

Initially this stipulation created anxiety amongst the business community, as the government failed to clarify whether or not all businesses would be required to provide proof of passing on savings. However, it has now been established that the ACCC is only required to ensure that electricity, natural gas and refrigerant gas companies pass on their carbon tax savings.

The repeal has been largely welcomed by the business community, with predictions indicating that electricity prices will fall by approximately 9%, and gas prices by 7%. However, energy providers have indicated that there may be other factors that are contributing to rising prices, including increased electricity infrastructure spending and new legislation allowing the international sale of Australian gas. This means that the energy savings from the carbon tax repeal may not be as significant as originally thought.

Businesses operating in other industries have indicated that their capacity to pass savings on to consumers will be largely dependent upon the savings that they incur from their suppliers. Some small business owners, in particular providers of luxury goods, have expressed the hope that they will experience a boost in business as consumers experience an increase in their disposable incomes. Whether or not this eventuates will depend largely on whether or not there is, in fact, a significant decrease in energy costs, as well as the fate of the tax breaks and cash handouts implemented by the Gillard government to counteract the costs of the carbon tax for households.

Posted on 24 July '14, under tax. No Comments.

Business awards

Winning a business award can bring about a lot of opportunities for your business. It can be a huge marketing boost and can also help to generate industry recognition, which may help you to attract new and exciting business partners. Employee pride is another major benefit of winning a business award, and it may well help you to attract and retain talent in the future.

There are many business awards that you may be eligible to apply for, but you should always carefully research the reputation of the administering institution. There are several business awards that have attracted criticisms for being non-selective in choosing their finalists, all for the purpose of raising revenue from ticket sales.

As applying for a business award can be an onerous task, you should also carefully consider which award categories you are the most likely to succeed in, as well as which ones are the most closely aligned with your business aims. While application process itself may seem tedious, you should strive to view it as an exciting opportunity for you to examine your business from an overarching perspective, considering your long-term performance, achievements and potential for improvement.

Most award applications require a written submission, typically answering a series of questions and/or addressing criteria. It is advisable to illustrate any claims you make with a concrete example of your achievements. The inclusion of testimonials and relevant case studies will go a long way in making your submission stand out.

Posted on 24 July '14, under business. No Comments.

Australians paying too much in superannuation fees

It has been revealed that Australian superannuation fees are amongst the highest in the world. Many leading economists, including Treasury director David Gruen, are making a call for fees to be reduced, in line with national interests and an aging population.

Cumulatively, superannuation fees cost Australians approximately $20 million per annum. This represents about 1% of GDP and equates to an average of $726 per person each year. Our superannuation fees are three times higher than their British equivalents.

Recent research, conducted by the Grattan Institute, estimates that by halving super fees, funds would be, on average, 15% bigger by the time they reach pension phase.

According to the Grattan Institute, an indication that the Australian superannuation industry is insufficiently competitive lies in the fact that there has been no reduction in fees as superannuation savings have soared. Theoretically, it should not cost significantly more to run a fund managing $1 billion than it should to run a fund managing $100 million.

Posted on 8 July '14, under super. No Comments.

Using myTax

The ATO has introduced a new streamlined online tax return process for individuals with very straightforward tax affairs. MyTax is made up of just ten screens and is intended for people whose only income derived from wages, salary, dividends, bank interest, allowances,  and/or other Australian government payments.

To use myTax your only tax deductions need to be from work-related expenses, expenses related to income from interest or dividends, gifts/donations, and the costs associated with handling your own tax affairs. The only tax offsets that can be used in myTax are the senior Australians and pensioners’ tax offset, the zone and overseas forces tax offset, and/or the private health insurance rebate.

If you wait until early August to file your tax return with myTax, the ATO will be able to pre-fill all of your relevant tax information from the past financial year. This means that all you will have to do is provide your identification details, review the information and then submit.

In order to use myTax, you will need to have an existing myGov account. Both myGov and myTax are available on smart phones and tablet devices.

If you are unsure whether myTax is appropriate for you then the ATO has provided a full set of questions that you can use to determine whether or not you meet the criteria. Individuals who have tax affairs that are too complex for myTax should use the existing eTax system.

Posted on 8 July '14, under tax. No Comments.

The importance of reference checks

A recent high-profile scandal, involving Myer executive recruit Andrew Flanagan and his fictionalised CV, has drawn attention to the importance of checking the references of prospective employees. Mr. Flanagan was dismissed on his first day after it was revealed that his impressive career history was almost entirely fabricated.

The first step you should take when checking references is to confirm the concrete facts presented on the prospective employee’s resume, for example dates of employment, job title, level of responsibility and level of reporting. Wherever it is possible, you should try to get the referee to give you concrete examples to back up their claims about the employee. It can also be helpful to ask them to provide examples of the employee’s performance and behaviour in stressful situations.You should contact multiple referees whenever possible, and attempt to construct an image of any patterns of behaviour that the prospective employee might display.

Be aware that many referees will be cautious in giving their responses, especially to questions that are primarily subjective. Many people will also be reluctant to devote a significant amount of time to answering your questions, so you should carefully consider which questions are the most crucial to shaping your opinion, and be time efficient in the way you present them.

Posted on 8 July '14, under business. No Comments.

Warning issued over tax avoidance schemes

The ATO has recently advised taxpayers to seek a second opinion on before entering into any tax avoidance schemes.

According to the ATO tax avoidance schemes are designed to appear legitimate, even to savvy investors. In particular taxpayers should be wary of complex financing schemes that rely heavily upon round robin financing schemes and non-recourse loans. Essentially, if the scheme involves reducing you’re your taxable income by declaring deductions that you are not entitled to, it is likely to be illegal.

If a provider tries to dissuade you from telling people about the scheme, or discourages you from seeking a second opinion, you should take this as a warning sign. Claims of ‘risk free’ or ‘zero risk’ tax avoidance schemes should also be treated with suspicion.

Entering into an illegal tax avoidance scheme, even if you were unaware that it was illegal, can result in a hefty tax burden.

Posted on 30 June '14, under tax. No Comments.

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