How is your super going, ready for retirement?

How realistic are your goals? Tools on this site will help you monitor how you're going. Click on the Financial Tools / Calculator button to login, or register, to use this powerful resource.

Most Baby Boomers have missed out on a life time of superannuation contributions which leaves many with a gap between how they'd like to retire compared to what their assets can deliver. This is not uncommon, see article below titled 'Lack of literacy promotes unrealistic goals'. Often a better understanding of your position, and given some time, is like turning on a light and is a call to action. For many this might even mean seeking professional help.

Preparing for the retirement you want is complex and often difficult.

On this website there are tools you can use to review how your Superannuation is going compared to your retirement goals. These Tools are available 24/7 and are accessed via the Financial Tools / Calculator button. All you need do is enter the information required (this might take a bit as no one's life is that simple) and the software will automatically fill, where it can, some of the forms for you.

Once done you can go to the Toolbox and modify the Super Optimiser tool to see what might be needed to be retirement ready. While doing this you can ask you planner or accountant a question or two using the contact form on the right.

You can also prepare a budget and analyse your cash flow at the same time. 24/7 access is also very handy.

Also all information you enter is available when you next login. This means you can build a very accurate picture of your financial position over time. Once done then this information is readily available to you by simply logging back in to our site at any time of the day or night.

Don't forget either that time is important when building a 'nest egg' so offer these tools to your children as well. Every little bit helps.

Finally, if you have any questions after using this resource then simply ask us as we can help.

Your financial planner

Australia’s leading causes of death – ABS

Not the sort of topic one might normally come across but keeping an eye on the 'big' picture is always good for keeping things in perspective. Census data from 2006, 2010 and 2015.

Please click on the following link to view content, data and charts on this topic. Information is supplied by the ABS.

Australia's leading causes of death. Census data from 2006, 2010 and 2015.

Source: ABS

ATO increasing data exchange with international regulators

Data sharing between tax regulators in different countries is rapidly increasing with the ATO turning in around 30,000 US expats to the IRS just last year according to a US tax lawyer.

Moodys Gartner director Roy Berg explained that under the Foreign Account Tax Compliance Act, all banks are obligated to work out who their US customers are and then turn them into the regulator in their own country who then turns them into the Internal Revenue Service (IRS) in the US.

“Last year the ATO turned over 30,000 individuals with account balances totalling $25 billion to the IRS,” said Mr Berg.

“FATCA is this worldwide snitching program that is getting people turned in and making them quite nervous. The world has changed very, very quickly in the last five years”

Mr Berg said the FATCA isn’t the only agreement like this, with the OECD creating its own initiative for the automatic exchange of tax and financial information, called the Common Reporting Standard (CRS).

Atlas Wealth Management managing director Brett Evans said even countries like Panama, British Virgin Islands, Luxembourg and Liechtenstein that have traditionally been tax haven-type environments, have signed up to this reporting standard.

“As a result of that they'll be passing on data to the ATO and we've already started to see a lot of clients both domestically and internationally,” said Mr Evans.

Under this reporting standard, Mr Evans said individuals are asked by their account provider, whether it’s a bank or an investment account, if they’re a citizen of another country and if that’s the case they’ll be asked to provide their tax file number.

“Once they do that they’ve got a record of the fact that the individual is based in Denmark for example, but they are an Australian citizen, they’ll pass that information back through to the ATO,” he said.

“Even though you may not have any required lodgements with the ATO, the ATO will still be aware of what's happening.”

Interestingly, Mr Evans said the only developed country that hasn’t signed up to the reporting standard is the US.

“So virtually the United States is in the box seat, because everyone has to pass information to them by way of the FATCA agreement but they don't have to pass information back again,” he said.

“Technically speaking the US could be the last tax haven in the world from a developed country point of view because they don't have to do it.”

MIRANDA BROWNLEE
31 Aug 2017
accountantsdaily.com.au

Our ‘hardest’ SMSF tasks

What are the hardest aspects of running your self-managed super fund (SMSF)? There are certainly more and more tasks and professional help my be needed to manage them properly.

Are they the seemingly ever-changing rules, the paperwork and administration or the challenge of choosing where to invest?

If you named dealing with the changing rules and choosing investments as your two hardest jobs, you are among hundreds of thousands of other trustees.

Comprehensive surveys for the 2017 Vanguard/Investment Trends Self Managed Super Fund Reports, released during the past week, asked SMSF trustees to list the hardest aspects of running an SMSF. Their responses include:

Choosing investments (31 per cent).
Dealing with regulatory uncertainty (31 per cent).
Finding time to research investments (16 per cent).
Handling paperwork and administration (16 per cent).
Finding time to plan and review for their SMSFs (12 per cent).

The most positive finding was that a quarter do not find any aspect of running their fund hard.

It should be emphasised that trustees could give multiple responses to the survey conducted by specialist researcher Investment Trends. For instance, other responses dealt with such specific challenges as having too much exposure to certain asset types (9 per cent) and sticking to an investment strategy (4 per cent).

The findings that many SMSF trustees have difficulty choosing investments and in dealing with regulatory uncertainty partly explains another finding from the survey that a large proportion of SMSFs recognise that they have unmet needs for advice.

Investment Trends estimates that 277,000 SMSFs – out of 585,000 funds at the time of the survey – had unmet needs for advice. This is the highest number to date based on past annual surveys.

An estimated 152,000 SMSFs have broad unmet needs for advice on tax and super while 113,000 have unmet needs for advice on retirement strategies. And an estimated 103,000 funds have unmet needs for investment advice.

Many SMSFs recognise their unmet need for advice on inheritance and estate planning (an estimated 59,000 funds), strategies in response to recent super changes (51,000), tax planning (50,000), investment strategy/portfolio review (50,000) and identifying undervalued assets (50,000).

Other unmet advice needs include investing for a regular income (46,000 funds), Exchange Traded Funds (46,000), SMSF pension strategies (45,000), offshore investing (43,000) and longevity protection (38,000).

The finding that almost half of Australia’s SMSFs recognise that they have unmet needs for professional advice is a critical acknowledgement by trustees that they need professional guidance.

In turn, this will hopefully lead to more trustees actually going the next step of gaining that advice.

Robin Bowerman,
Head of Market Strategy and Communications at Vanguard.
22 August 2017
www.vanguard.com.au

Uber drivers hit for 10% tax

In a recent decision, the Federal Court has held that the UberX service supplied by Uber’s drivers constitutes the supply of “taxi travel” for the purposes of GST.

The Australian Taxation Office (ATO) has now advised that people who work as drivers providing ride-sharing (or ride-sourcing) services must:

keep records;
have an Australian Business Number (ABN);
register for GST;
pay GST on the full fare they receive from passengers;
lodge activity statements; and
include income from ride-sharing services in their tax returns.

If you work as a ride-sharing driver, you are also entitled to claim income tax deductions and GST credits on expenses apportioned to the services you have supplied. Whilst the record keeping for income should be straight forward, total vehicle costs requires greater effort and apportioning those will require justification.

You must register for GST if you earn any income by driving for a ride-sharing service. The usual $75,000 GST registration threshold does not apply for these activities.

And don’t think you will avoid detection by ATO – Uber and their bank(s) provide very detailed information direct to the ATO.

AcctWeb

Lack of literacy promotes unrealistic goals

A large proportion of Australians have unrealistic retirement goals. (NB: There are financial tools on this site that can help as too can a financial planner)

Australians’ lack of financial literacy is contributing to unrealistic expectations about their retirement, with more than half of consumers saying they want to travel regularly in their retirement despite the fact 63 per cent say they do not have a financial plan to guide their savings.

Sunsuper’s “2017 Australian Employee Insights Report”, based on a survey of over 1000 Australians, found that although 51 per cent of consumers had nominated travel as a key retirement goal, more than 40 per cent had not thought about how they were going to use their superannuation to fund their retirement.

At the same time, the report revealed 73 per cent of Australians thought they would have to rely on the age pension when they gave up work.

Speaking to financialobserver, Sunsuper head of advice and retail distribution Anne Fuchs said a lack of financial literacy was most likely to blame for the apparent gap between what many consumers wanted to achieve in retirement versus what their actual financial situation would be.

“Because financial literacy is quite low, Australians as a consequence have quite misguided expectations about what we think we can achieve,” Fuchs said.

“In Australia we are often brought up not to speak about money and because we are not speaking about it, we don’t understand our full financial position so we are prone to having unrealistic expectations.”

At the same time, she said many Australians were reluctant to seek financial advice as they were embarrassed or afraid of having third-party confirmation that their financial situation was not ideal.

“People have dreams about what they want to do in retirement and they are scared to speak to someone because they don’t want to be told it’s not possible – living in denial can be a happy place,” she pointed out.

To that end, Sunsuper had developed a “nudge” strategy to engage small groups of fund members around the importance of specific aspects of their finance to ensure even those who avoided seeking full financial advice were being encouraged to take action to improve their situation.

“We have good data around where [a member] is at a point in time and where they should be, and we take insights from that and get small groups of people around a boardroom table to have a conversation,” she said.

“If we take that approach, we find we have greater success as opposed to a generic presentation about the value of advice – we develop trust with the members so they don’t view us with a lens of suspicion and they are quite open to it.”

By Sarah Kendell
22 Aug 2017
financialobserver.com.au

Taxpayer failed to prove that payments were “loans”

In a recent case, the Full Federal Court has found that several taxpayer companies had not discharged the onus of proving that assessments the Commissioner of Taxation issued to them were excessive.

The amended assessments added income of some $4 million that the Australian companies received from overseas sources, which taxpayers had claimed were loans.

In agreeing with the Commissioner, the Court majority held that it would not be appropriate to find that the taxpayers had provided the required proof that the payments were genuine loans; in fact, they had made inconsistent or “alternative” arguments about the nature of the payments.

This case again demonstrates – good evidence gives the taxpayer a chance (of winning a tax debate).

AcctWeb

New STP dates confirmed as ATO goes on compliance blitz

The government has confirmed that the Single Touch Payroll will now roll over to small businesses with less than 20 employees, as it seeks to up its efforts to monitor employer payment obligations.

As part of a package that will give the government increased funding and penalty powers with instance of non-compliance – such as not meeting superannuation guarantee (SG) obligations – the introduction of STP will now apply to employers with less than 20 employees from 1 July 2019.

“Employers who deliberately do not pay their workers’ superannuation entitlements are robbing their workers of their wages. This is illegal and won’t be tolerated,” Minister for Revenue and Financial Services Kelly O’Dwyer said in a statement yesterday.

Employers with more than 20 employees will transition to STP from 1 July 2018.

Institute of Public Accountants chief executive Andrew Conway, who has been vocal on the subject, has criticised the lack of consultation with stakeholders in implementing such important structural reforms.

“We have long acknowledged the need for a more efficient payroll reporting system, however such a dramatic change needs appropriate consultation on the compliance cost and regulatory impact,” Mr Conway told Accountants Daily.

“For micro businesses this will pose significant compliance pressure.

“We need to see the detail of this impact and the outcomes of the Single Touch Payroll pilot program. We are particularly interested in the incentives the government will provide small business to transition to Single Touch Payroll.”

BDO tax partner Mark Molesworth also highlighted that the introduction of STP would add yet another layer of red tape to small business owners.

“Obviously, that’s a large increase in the amount of reporting that employers need to do for the tax office because at the moment employers only report that data once a year, at the conclusion of the year,” said Mr Molesworth.

“The increased regulation is designed to provide better assurance that parties within the tax system are meeting their obligations, however it is coming at the cost of requiring participants to make sure that their systems are up-to-date, so that they produce reports that can then be provided to the tax office on a periodic basis which don’t currently have to be provided.”

However, Ms O’Dwyer said the changes are necessary to give “Australians confidence that the superannuation system is working in their best interests”.

JOTHAM LIAN
30 Aug 2017
accountantsdaily.com.au

ATO flags compliance project for FY17/18

The ATO will be upping its superannuation guarantee (SG) casework by one-third, and is poised for increased audits and penalty notices of up to 200 per cent for non-compliers.

About 95 per cent of SG payments are being made without regulatory intervention, but deputy commissioner James O’Halloran told Accountants Daily there is sufficient evidence to justify a significant increase in compliance activity.

The ATO will be increasing its “proactive” SG casework by about one-third this financial year, Mr O’Halloran said. This will involve reviews and audits, and employers who are found to have breached their obligations will be subject to penalties.

“Certainly, by the time it gets to an audit, we would be looking at the application of some form of penalty. In terms of debt collection… we often issue a garnishee notice or a director penalty notice,” he said.

The tax office will also be focusing on getting better and more timely data to assist its compliance activities.

“We are also working toward receiving better and timelier data on super guarantee obligations and payments and using predictive analytical techniques. These will enable us to be more targeted and tailored in order to influence employer behaviour and payment of super guarantee,” said a report from the ATO, released this morning.

Penalties can apply of up to 200 per cent per employee where an SG payment is not met. There is an interest component to this also.

The tax office estimates that the net superannuation gap — which is the difference between the value of SG gaps required to be paid by law minus what is actually paid — is about $2.85 billion.

The net gap has increased from 3.8 per cent in 2009/10 to 5.2 per cent in 2014/15 of the total amount that was owed to employees.

Also, about 20,000 reports of unpaid superannuation are made to the ATO each year, with key non-compliance drivers including poor cash flow management by employers, poor record keeping, and insolvency.

Education can also be a contributing factor, as can low levels of business experience.

The ATO doesn’t have an exact breakdown of problem industries, but its fieldwork indicates that problem hot spots are with small businesses in accommodation, food services, construction and retail.

Government funding

The Turnbull government confirmed this morning it will be providing additional funding to the ATO for its compliance work.

A statement from the Minister for Revenue and Financial Services, Kelly O'Dwyer, said the government will move to boost the ATO's recovery powers, which includes strengthening director penalty notices and use of security bonds for high-risk employers.

The government will also give the tax office the ability to seek court-ordered penalties “in the most egregious cases” of non-payment, including employers who are repeatedly caught but fail to pay superannuation guarantee liabilities.

The package reflects the key recommendations in the Final Report of the SG Cross-Agency Working Group released on 14 July 2017. The government did not accept the Working Group’s recommendations to soften penalties for non-compliant employers.

“Employers who deliberately do not pay their workers’ superannuation entitlements are robbing their workers of their wages. This is illegal and won’t be tolerated,” said Ms O'Dwyer.

KATARINA TAURIAN
29 Aug 2017
accountantsdaily.com.au

Government ‘undermines’ tax system in new moves on property expenses

Newly-released draft legislation, which firms up the 2017 budget move to limit investors’ ability to claim travel expenses and depreciation deductions, will “upset the fundamental basis behind our tax system” according to an accounting body.

The Turnbull government on Friday released exposure draft legislation and explanatory material for the housing affordability and tax integrity measures it announced in the 2017-18 budget.

You can read the full draft here.

The legislation means that property investors will no longer be able to claim travel expenses to inspect residential investment properties, and there are limitations to the depreciation deduction claims investors will be able to make on properties purchased after 9 May 2017.

Speaking to Accountants Daily, Institute of Public Accountants' senior tax adviser, Tony Greco, said that the changes go against the basis of Australia’s tax system.

“The premise behind our tax system is the ability to claim an expense against the revenues, so what they're doing is they're altering that fundamental right,” Mr Greco said.

“They’re basically saying we're not going to allow you a deduction against these kinds of expenditures, so it does upset the fundamental basis behind our tax system by excluding certain expenses.”

Mr Greco said that while these changes are essentially negative ones, many investors will be pleased that the government didn’t do more to tackle negative gearing.

“They didn't attack negative gearing in the federal budget, they didn’t make any changes other than these two measures, so some people were quite relieved on budget night that it just amounted to these two changes only,” he said.

“It does have a financial impact on the returns going forward, so it will have a negative impact, but if you thought they were going to dismantle negative gearing then you'd probably say it's not as bad as the expectation was.”

Mr Greco said that accountants must communicate these changes with their clients as soon as possible .

“Clients do claim travel for visiting and inspecting rental properties and some of those properties could be interstate, so accountants must communicate to their client that it's no longer deductible,” he said.

“Clients may not have realised, or may misunderstand, that with the travel one, irrespective of when you bought your property, it's just a total outright ban on deductibility, whereas the plant and equipment one depends on when you purchased the property.”

The government is accepting submissions to the draft legislation until 10 August 2017.

LARA BULLOCK
17 July 2017
www.accountantsdaily.com.au