May 2012 HFS Informer - Budget 2012-13 summary

Federal Treasurer Wayne Swan has handed down his fifth Budget promising to deliver a surplus of $1.5 billion in 2012-13.
This will be the first surplus since Labor came to power in 2007. The fiscally conservative Budget will save $33.6 billion by reducing spending across
almost every Government department and portfolio.

Superannuation
Higher tax on concessional contributions for very high income earners.
From 1 July 2012, the Government proposes that individuals with income greater than $300,000 will have the tax on nonexcessive concessional contributions increased from 15% to 30%. What this means is that high income earning clients will pay an increase of up to $3,750 (ie 15% of $25,000) on concessional contributions. At this stage, individuals on the highest marginal tax rate may still choose to make excessive concessional contributions (ie contribute over the concessional contribution cap) in the knowledge that the overall tax of 46.5% is the same as receiving that income as taxable income.

Individuals on the highest marginal tax rate who will not be subject to additional tax on super contributions are those on incomes between $180,000 and $299,999.

Higher concessional contributions deferred
The Government's previously announced proposal to provide a higher concessional cap for individuals aged 50 and over, with super balances below $500,000, will be deferred for a further two years. From 1 July 2012 to 1 July 2014, the general $25,000 concessional cap will continue to apply to these individuals. With this delay, it is expected that the general cap will increase to $30,000 in 2014/15 with the higher cap commencing at $55,000. Table 1 summarises the concessional caps for the current and subsequent three financial years.

Table 1 Concessional contributions caps 1 July 2011 to 1 July 2014

* Where the individual's super balance is less than $500,000

Lower concessional caps will reduce the tax-effectiveness of super contributions strategies in varying degrees for clients aged 50 or more. This is summarised in Table 2.

Table 2 Effect of reduced concessional caps

Note: Assumes $50,000 of pre-tax income used either wholly for concessional contributions or contributions are reduced by $25,000 due to the reduction in the concessional cap and taxed at marginal tax rates.
Further impacts will be felt by those clients implementing transition to retirement (TTR) strategies, particularly those aged 60 or over whose ability to swap significant levels of tax-free pension income for concessionally taxed super contributions will be limited.
While TTR remains an effective strategy, its benefits are reduced, as shown in Table 3.

Table 3 Effects of reduced concessional caps on TTR strategies

Note: Assumes client starts with $500,000 in super and implements a TTR strategy to salary sacrifice up to the relevant cap and draw a pension payment to maintain net income. Compares outcome with a $50,000 concessional cap against that with a $25,000 cap. Earnings in super of 7% pa after fees and before tax of 15% in accumulation phase. Results after two financial years.

Taxation
Means testing of net medical expenses tax offset
From 1 July 2012, people with adjusted taxable income above the Medicare levy surcharge thresholds will be means tested. This applies to singles earning over $84,000 and couples earning over $168,000 in 2012-13. People with income below the surcharge thresholds will not be affected.

The threshold above which a taxpayer may claim net medical expenses tax offset will be increased to $5,000 and indexed annually thereafter. The reimbursement rate will be reduced to 10% for eligible out of pocket expenses.

Consolidation of dependency offsets
From 1 July 2012, the Government will consolidate eight dependency tax offsets into a single, streamlined and nonrefundable offset that is only available to tax payers who maintain a dependent who is generally unable to work due to carer obligation or disability.

This new consolidated offset will be based on the highest rate of the existing offsets it replaces and will result in an increased entitlement for many of those eligible.

Mature age worker tax offset
For workers born on or after 1 July 1957 (ie 65 or over), the mature age worker tax offset will be phased out from 1 July 2012. Access to this offset will be maintained for taxpayers who are aged 55 or older in the current financial year, 2011-12.

Increased Medicare levy low income thresholds
The Government will increase the Medicare levy low income threshold to $19,404 for individuals and $32,743 for families for 2011-12, back dated to 1 July 2011. The additional amount of threshold for each dependent child or student will also increase to $3,007.

The Medicare levy threshold for single pensioners below age pension age will also increase to $30,451.

Family
Schoolkids Bonus
From 1 July 2012, the Government will introduce a new Schoolkids Bonus that will replace the Education Tax Refund. The bonus payment will be made from January 2013 in two equal instalments (in January and July each year). To ensure a smooth transition, a one-off lump sum payment will be paid in June 2012 to replace the Education Tax Refund for the 2011-12 financial year. From January 2013, these payments will be automatic and every family with a child at school will be guaranteed $410 per annum for each primary school student and $820 per annum for each secondary school student.

Eligibility for the payment will remain open to families with children enrolled and attending school who are in receipt of the Family Tax Benefit A (or other qualifying income support payments or allowances under a prescribed educational scheme that precludes the family from receiving the Family Tax Benefit A).

Eligibility and increase for the Family Tax Benefit A
From January 2013, eligibility to Family Tax Benefit A will be limited to those students under 18 years of age or where a young person remains in secondary school to the end of the calendar year in which they turn 19. Families with children in school will be the primary target group for Family Tax Benefit A payments. Youth Allowance will be the primary form of assistance for those young adults 18 years and over.

The maximum rate of Family Tax Benefit A will be increased by $300 pa for families with one child and $600 pa for families with two or more children. Single child families on the base rate will receive $100 pa, those with two or more children will receive $200 pa.

Low income Family Tax Benefit and Commonwealth Seniors Health card recipients not required to lodge a tax return
From 1 July 2012, streamlined income reporting processes will be implemented within the Department of Human Services. This will allow people in the $6,000 to $18,200 income range (who will no longer be required to lodge an income tax return) to provide estimates of their income online, via telephone or in person without providing proof of income.

New income support supplement
From 20 March 2013, recipients of certain Government support payments will receive a non-taxable payment to assist with cost of living pressures. The new supplement will provide $210 pa for singles and $175 pa for each member of a couple. Eligible Government payments include Newstart Allowance, Sickness Allowance, Youth Allowance and Parenting Payment.

Social Security and Aged Care
Liquid Assets waiting period
From 1 July 2013, the maximum reserve amount for the liquid assets waiting periods for Newstart, Youth Allowance, Sickness Allowance and Austudy will be increased to $5,000 for singles and $10,000 for couples combined or those with dependants. The increase will provide those who have become unemployed earlier access to income support payments as it means that the
full waiting period is not imposed until liquid assets are $11,500 for single and $23,000 for couples or those with dependents.

Previous proposals shelved
In this 2012 Budget, the Government has announced that it will not implement three measures it had previously announced in the 2010 Budget. These are:

Standard tax deduction of $1,000 for work-related expenses
and the cost of managing tax affairs.
50% discount for the first $1,000 of interest income.
Reduction of the corporate tax rate to 28%. The corporate
tax rate will remain at 30%.

Call us on 08 8373 1702 or email reception@hern.com.au if you would like to discuss the Federal Budget announcements and how it may be impacting your investments.

Quote of the month:

"It has been said that politics is the second oldest profession. I have learned that it bears a striking resemblance to the first."
Ronald Reagan (1911-2004)

April 2012 HFS Informer Articles

Join us at our end of financial year open office
Get your FREE financial health check
End of financial year tax strategies for small business
Do you claim GST?
Private health and Medicare levy surcharge changes
Xero wins 2012 new accounting product
Modern Business
Transition to retirement info session
Quote of the month

Drop in and welcome the new financial year with a drink, nibbles and a bit of a social chat.

Friday 29 June, 2012
5:00pm - 7:00pm
Please RSVP to Elena by Ph: (08) 8373 1702 or email: elena@hern.com.au

Get your FREE financial health check

As part of our total financial services, we offer you a free initial assessment* of your financial situation.

Simply click here to go to our Initial Financial Questionnaire and once you are done, return it to us or bring it with you when you visit us at tax-time, and we will contact you if we identify any areas which require further attention.

Alternatively, contact us today to make an appointment, or call: 8373 1702, if would like to discuss your financial circumstances further.

* NB: This free consultation does not include tax and accounting services.

End of financial year tax strategies for small business

When times are tough, small businesses need all the help they can get. We look at tax concessions that may be available to your small business, and strategies you may be able to use to minimise your end of financial year tax liability.

What qualifies as a small business entity?
Small businesses are those with an aggregated turnover of $2 million or less. To meet this definition, the business must satisfy one of the following criteria:

aggregated turnover for the previous income year was less than $2 million
aggregated turnover in the current income year is likely to be less than $2 million (note that this test cannot be used if business income in the last two years was greater than $2 million)
aggregated turnover for the current income actually less than $2 million, calculated at the end of the income year.

If your small business qualifies as a small business entity, you may be eligible to access a number of tax concessions that could help reduce your business's end of financial year tax liability.

Small business tax concessions
A range of tax concessions are available to small businesses that meet the small business entity definition outlined earlier.

Asset depreciation
In addition to the tax measure on depreciating assets outlined below, small businesses can depreciate assets over $1,000 at 15% for the year in which they were purchased and then at 30% for each year afterwards (for assets with an effective life of less than 25 years). Depreciating assets valued at less than $1,000 are generally 100% tax deductible in the year of purchase.
Loan prepayments
Eligible businesses can claim an immediate deduction for loan prepayments, as long as the service period of the loan is not more than 12 months.
Goods and Services Tax (GST)
Small business entities can account for GST on a cash basis.
Capital Gains Tax (CGT)
Small businesses may be eligible for a range of CGT concessions, which may provide small businesses with substantial tax savings. These concessions are available to small business owners who have disposed of active assets in the current financial year, or who are looking to dispose of an active asset.

To be eligible for these concessions, the business must qualify as a small business entity or have net assets of $6 million or less.
Pay as you go (PAYG) Tax
Small businesses should review their PAYG installments and notify the Australian Taxation Office (ATO) if the expected profit for this financial year is lower or higher than previous years, so installments can be adjusted accordingly.

Other considerations
There are a number of other ways small businesses can look at reducing their income tax liability at tax time.

Lease repayments
Make repayments before 30 June to ensure a deduction can be claimed.
Office expenses
Purchase any necessary office equipment and expenses before the end of the financial year so you can claim a deduction, and perhaps utilise tax concessions on depreciating assets. Ensure you have kept receipts for purchases made throughout the year. However the new changes to small business depreciation rules on the 1st of July, 2012, should be kept in mind.

In 2011, the Government proposed changes to small business deprecation from 1 July 2012. The package of tax law amendments includes:

depreciating assets valued at less than $6,500 will be immediately deductible
depreciating assets valued at more than $6,500 depreciated in one pool at a rate of 15% in first year and 30% in future years
the first $5,000 of a motor vehicle (with a cost of more than $6,500) purchased for a business is an immediate deduction.

Superannuation
Ensure any superannuation contributions are made no later than 30 June so you can claim the deduction in this financial year.
Ensure that required super guarantee contributions for employees of the business should be made by no later than 28 days after the end of the quarter, to ensure that the contribution is deductible and no super guarantee charge becomes payable to the ATO.
Log books
Check that all of your motor vehicle log books satisfy
the substantiation requirements.

Speak to us for more information and if you would like to know more about which end of financial year strategies may be appropriate for your small business. Email: reception@hern.com.au

Do you claim GST?

We have noticed lately that some clients are claiming GST input credits on fully exempted expenses or where the expenses have either no GST component, or have a partial exemption.

Some common examples we have found have been:

GST deductions on bank interest.
Full GST deducted from insurance where stamp duty costs should be exempted.
Motor vehicle registration where stamp duty costs should be exempted.
Workcover payments where these expenses include a non-GST component such as stamp duty on OH&S.

We take this opportunity to remind you that although auditing of your business accounts is not part of our terms of engagement, we are also mindful of the responsibility to keep our clients informed of the types of discrepancies we find through-out the year when preparing financial reports.

As a guide, we strongly recommend that when you enter payments into your accounting software systems, you do so with the invoices alongside you to ensure the GST is calculated correctly on the expenses you input.

If GST paid and GST free items is difficult to program in your current software, and you require assistance, please do not hesitate to contact us for support by calling 08 8373 1702 or by email to: reception@hern.com.au.

Private health insurance and Medicare levy surcharge changes

The government has introduced changes to the private health insurance rebate and the Medicare levy surcharge.

From 1 July 2012, the private health insurance rebate and Medicare levy surcharge will be income tested against three new income tier thresholds. Higher income earners will receive less private health insurance rebate or, if they do not have the appropriate level of private patient hospital cover, the Medicare levy surcharge may increase.

More information can be found at the Australian Taxation Office website

Xero wins 2012 top new accounting product from Accounting Today

Accounting Today is America's leading provider of business news for the tax and accounting community with over 60,000 subscribers and it recently recognised Xero as being amongst the best accounting-related products across the US. But don't just take their word for it, this is what a Xero user has to say:

"Xero is fantastically easy to use. It's probably one of the best-built applications I've ever seen."
Peter Grimshaw, Managing Director, BTM Innovations Pty Ltd

Modern Business

A revolution in modern business software is coming in late May. Register your details to be the first to receive the latest news and an invitation to the exclusive launch. Email your details to Elena at elena@hern.com.au today!

Transition to retirement info session

A transition to retirement strategy can give you more flexibility and allow you to take advantage of tax concessions to help achieve the lifestyle and super balance you want.

If you have reached preservation age (generally 55 years), TRPs enable you:

to continue working the same numbers or fewer hours.
to access your super early, via a pension.

you pay no tax (if you are over 60 years old) on payments that are drawn from your super as pension.
you can cut back your working hours and still maintain your income level by supplementing your lower salary with your pension.
you can still make contributions to your super.
you can start or stop your pension at any time.
you can potentially make significant tax savings by salary sacrificing.

Want to know more? Contact us to reserve your place today!
Thursday 10 May, 2012
at 5:00pm - 7:00pm
Cost : FREE
Please RSVP 4 May by email to: elena@hern.com.au

Quote of the month:

"Lack of money is no obstacle. Lack of an idea is an obstacle."
Ken Hakuta

Protecting you and your dependants
Real people talk about Xero
Transition to retirement account based pensions
What does Work Life Balance mean to you?
What do you think about our customer service?
Coming events
Quote of the month

Insuring your car, home or other possessions makes sense. So why do so few of us insure ourselves?

If illness or injury stopped you from working for an extended period, could you keep paying your bills? Personal risk insurance provides peace of mind that if the unexpected occurs, you and those who depend on you will be provided for. Personal risk insurance provides peace of mind that if the unexpected occurs, you and those who depend on you will be provided for.

What is personal risk insurance?
Personal risk insurance is an important way of ensuring you and your dependants will be financially supported in the event of serious illness, disability or death. If your ability to earn an income is affected, a personal risk insurance policy may enable you to maintain your current lifestyle and continue supporting those who depend on you.

Do you need insurance?
While we recognise the emotional impact of events such as serious illness or death, the financial consequences can be equally devastating.

If the unexpected did occur, having personal risk insurance can go a long way to helping you meet your basic living expenses such as your mortgage, groceries, petrol or school fees. Depending on the event, you may also need to cover significant medical expenses, rehabilitation, modifications to your home or services to help maintain your lifestyle.

Types of personal risk insurance
There are four main types:

Life insurance: a lump sum payable on death or terminal illness. This can help support your dependants to maintain living standards or pay off debts.
Total and permanent disability (TPD) insurance: a lump sum to help support you if you are totally and permanently disabled due to illness or injury.
Income protection/salary continuance insurance: a monthly income stream to help support you if you are unable to work because of illness or injury whether it be permanent or temporary.
Trauma insurance: a lump sum to help support you if you are diagnosed with a specified major medical condition (eg: heart attack, stroke or cancer).

Speak to us for more information
Working out how much insurance you need is not easy. It's important to assess your needs. We can help you tailor an appropriate selection of insurance policies to suit your individual circumstances.Contact us today to arrange an appointment to discuss the options available to you.You have probably heard us talk about Xero before but there is nothing like hearing from someone who is using actually using it.

We thank Peter Grimshaw, Managing Director of BTM Innovation Pty Ltd., for sharing his thoughts and experiences with Xero.

BTM Innovation is an Adelaide-based company that develops software for the classical music publishing industry. Founded in 1995, the company develops digital publishing and personalised software, and provides information warehousing, and copyright and licensing advisory services.

"We have been using Xero for about 8 months and it has been invaluable for myself and my international partners to track our Zinfonia project wherever we are in the world and to provide direct integration of the two systems" stated Mr. Grimshaw recently.

What attracted you to Xero?
"There are a number of things that brought me to Xero. The main one was the ability to share my financials with all the Directors of my company along with my accountant."

What are the advantages of using Xero?
"Everything you need is there. It's quick. It's reliable and has streamlined my accounting practices."

How would you compare using Xero to previous packages?
"I think functionality there isn't a huge amount of difference. That's probably a good thing because Xero doesn't in any way take away from what I've used before. What it does add is a whole heap of functionality that I didn't have before. The main one giving me access to my account team wherever I am in the world."

How has Xero saved you time?
"The main efficiency is the direct connection between my accountants and myself. Now all my accounts are in real time and connected with Matthew (Partner, Hern Financial Services) so if I have a problem he can be on the phone looking at the same accounts at the same time."

Would you recommend Xero to other businesses?
"Xero is probably one of the best packages I've ever seen so certainly I would recommend it."

Click here for a case study of the Zinfonia project that explains a little more about how it works.

Contact Hern Financial Services to arrange a complimentary one-on-one appointment to see what Xero can do for your business! Call 8373 1702 or email: reception@hern.com.au
Click here for more information about Xero

STOP PRESS:
A revolution in modern business software is coming late May, 2012. Register your details to be the first to receive the latest news and an invitation to the exciting launch. Email your details to elena@hern.com.au today!

How they can help YOUR retirement

Many pre-retirees are in a good position to take advantage of a tax-effective super strategy - Transition to Retirement Account Based Pensions (TRPs).

If you have reached preservation age (generally 55 years), TRPs enable you;

to continue working the same numbers or fewer hours.
to access your super early, via a pension.

If you choose a Transition to Retirement Account Based Pension ...

you pay no tax (if you are over 60 years old) on payments that are drawn from your super as pension.
you can cut back your working hours and still maintain your income level by supplementing your lower salary with your pension.
you can still make contributions to your super.
you can start or stop your pension at any time.
you can potentially make significant tax savings by salary sacrificing.

If you think the time is now right for you to dip your toe in to a more flexible lifestyle, join us Thursday May 10 at 5:00pm to hear guest presenter Tom Huntley discuss what options are available to you. Register you place today. Email your details to: elena@hern.com.au or call 8373 1702.

Abbie Allen from Lifestyle Elements recently helped us reflect on what Work Life Balance really means - and how we can achieve it.

The free twilight session generated a great deal of interest as the desire to achieve a healthy Work Life Balance is becoming a greater priority for many of us these days. Ironically, the main reason given for not attending the session was "too busy". Perhaps, these are the ones who stood to benefit the most from the session. But for those who did manage it make it, the session certainly conjured up a lot of food for thought.

So, what is Work Life Balance? It seems the answer is not a simple one. However, Abbie graciously shared tips and her insightful presentation provided the opportunity for our guests to reflect and evaluate as to what Work Life Balance means to their lifestyle.

A lifestyle typically reflects an individual's attitudes, values or worldview. Therefore, a lifestyle is a means of forging a sense of self and to create cultural symbols that resonate with personal identity.
Many thanks to our event supporters: The Little Hair Boutique; Everett Brookes Custom Jewellers; Plush Hair & Beauty Studio; and of course Abbie Allen from Lifestyle Elements.

(above) Guests at the twilight Work Life Balance session ponder what it means to them.

Vote for us in the Messenger Local Business Awards and you could win $1,000!

Be sure to click here before March 30 to place your vote online.

Transition to retirement information session

Thursday 10 May
at 5:00pm

Entry is free. Please contact Elena on 8373 1702 or email: elena@hern.com.au to reserve your place.

End of financial year open office

Friday 29 June
5:00pm - 7:00pm

Drop in and welcome the new financial year with a drink, nibbles and a bit of a social chat.
Please RSVP to Elena on 8373 1702 or email: elena@hern.com.au

"The ladder of success is best climbed by stepping on the rungs of opportunity."
~ Ayn Rand (1905 - 1982)

How is your new years checklist going?
Redundancy planning - seeing the positives during a difficult time
Personal Property Securities Register sneaks up on companies
What to say when a co-worker loses his or her job

A new website is coming
Events for March and May

How is your new year's checklist going?

We are happy to announce that we are extending our New Year's checklist bonus to our loyal informer subscribers!

Call us to arrange your complimentary Financial Planning session before March 30 and not only will we work with you to create a solution that will optimise your wealth building opportunities but we will also give you a BONUS Double Gold Class movie pass* so you can take a bit of time out and spoil yourself too!

Call us today to arrange your appointment or email: adam@hern.com.au

As part of your checklist, let us review your:

Savings Plan - set goals and achieve them.
Personal budgeting - Xero is the easiest way to remain on target with your finances. Click here to read more about Xero.
Mortgage health check - chances are we can improve on your current rate. Click here for your free online mortgage health check.
Wealth protection - ensure you and your family are protected with life, trauma and disability insurance.
Superannuation - will you have enough when you retire?
Salary Sacrifice - are you aware of the benefits available to you?
Transition to retirement - a way to tip your toe in to a more flexible lifestyle.
Qualifying for the age pension - maximise your potential benefits.
Estate planning - ensure the wealth you have built is transferred smoothly and according to your wishes.

Redundancy planning - seeing the positives during a difficult time

An unexpected redundancy can come as a nasty shock, but careful financial planning can help you to maximize your benefits and plan for the future.

Firstly, if you are made redundant and receive a redundancy payment from your employer, it is important to seek financial advice as soon as possible on how to manage what may be a large sum of money.

Consider strategies in dealing with your redundancy payout which maximize the after tax sum left in your pocket as well as any Centrelink benefits you may be entitled to, and ensure you have sufficient savings to see comfortably through the rest of your life.

Having a financial plan in place before and/or following a redundancy can also help. It can ensure you will have adequate savings so if you are made redundant, your financial goals will remain within reach. If you are made redundant late in your career, you may not even have to return to work.

Tax effective structuring:

A redundancy payment may be subject to a lower rate of tax than other income. Part or all of the payment may be tax free. For example, in 2011/12, the tax free amount is $8,435 plus $4,218 for each completed year of service.

In some cases, tax savings can be achieved by rolling your redundancy payment into superannuation. However, this is only possible if your payment qualifies under the transitional provisions. A financial planner can assist in identifying these opportunities.

Centrelink experience:

Be aware that waiting periods and financial tests may apply for various Centerlink benefits. One strategy that may reduce the Centrelink waiting period can be to deposit the redundancy payments into a mortgage redraw account, which is not considered a liquid asset. Rolling over the payment to superannuation may also help maximize available Centrelink benefits. However, it is best to seek tailored financial advice regarding what options are best for your circumstances.

Contact us today to discuss how we can help.

Personal Property Securities Register sneaks up on companies

It is a radical change in the way business is done in Australia, yet many executives have not even heard of it, let alone prepared their companies for it.

The Personal Property Securities Register (PPSR) is the register where details of security interests in personal property can be registered and searched and replaces 40 registers and 70 laws around Australia.

If you are a business owner, the PPSR can help you:

manage credit risk.
check whether property you plan to buy has a security interest in it, and
register assets used to secure a loan you have made, or where goods are supplied on credit terms.

Onto the PPSR will pour all the company charge documents now registered with the corporate regulator, the Australian Securities and Investments Commission; all the motor vehicle encumbrance information held by states and territories; and a host of other documents showing who has claims on assets held by individuals and corporations around the country.

For the first time, there will be a central registry of retention-of-title claims, in which suppliers keep ownership of goods until they have been paid for.

Read "Register sneaks up on companies" by Ben Butler theage.com.au (dated 25/01/2012)

What to say when a co-worker loses his or her job
Losing a job can be very difficult and stressful experience for those involved. So how is the appropriate way to deal with the circumstances? The following do's and don'ts can provide some guidance.

Don't:

Don't pretend to ignore the situation. The worst thing you can do is say nothing.
Don't make promises about job possibilities you can't absolutely keep (eg: "my friend has a friend …")
Don't indulge in company gossip or speculate on who else might get cut.

Do:

Simply say "I'm very sorry" or "I just heard the news and I don't know what to say". It may seem simple but it can be very helpful.
Listen. It is so much more important than talking
React quickly so you don't look insensitive.

A new Hern website is coming!
We are constantly looking at how we can improve our service to you.

As part of our on-going improvements, we are creating an exciting new website which will allow for greater interaction with our clients. And we want to start the interaction now. We would love to hear from you with ideas and suggestions for our future website.

Let us know what you would like to see included by March 12 and the most innovative suggestion will receive a Gold Class Double Movie Pass as a reward for the effort.
The winner will be published in the March issue of the Business Informer. Email your suggestions to elena@hern.com.au

We can all do with a better Work Life Balance - Tuesday 6 March at 6:00pm
Have you registered to attend our FREE twilight session yet? Abbie Allen from Lifestyle Elements will be sharing valuable tips and insights. Light refreshments will be served and all attending will receive a gift bag and the opportunity to win a 3 hour concierge voucher. Pre-registration is essential as places are strictly limited. Email elena@hern.com.au today!

Transition to Retirement - Thursday 10 May at 5:00pm
Dip your toe in a more flexible lifestyle. Presenter Tom Huntley will discuss what options are available to you. Reserve your place by emailing elena@hern.com.au

"If you haven't found it yet, keep looking. Don't settle. As with all matters of the heart, you'll know when you find it. And like any great relationship, it just gets better and better as the years roll on."
Steve Jobs (1955~2011)

7 tips towards a happy financial NYE 2013
2012 Events
Coming in the next issue

7 tips towards a happy financial NYE 2013

According to a recent bank survey, more than half of two-thirds of Australians who have made a New Year's resolution for 2012, have focused on their finances. If you are concerned about your financial outlook - or you simply think it is time you took greater control - it is not too late to make that resolution that could see you celebrating NYE2013 in greater comfort. Following are some simple tips:

1 - Make a budget
The beginning of a new year is an ideal time to work out where savings are possible and where your money goes. Having a well-planned budget for the year can be the key to good financial health. A budget, no matter how simple, will give you a more disciplined approach and will be more likely to avoid waste. It will also help you set priorities - such as holidays and other activities - and make them easier to reach.

A good place to start to take control of your finances is with Xero Personal.
Xero allows you to organize your banking and billing in one place as well as create budgets and savings plans. And you can access it any place, any time, from the convenience of your PC, laptop, tablet or smart phone! Click here for more information about Xero

2 - Get professional financial advice
Good financial advice can save you many times more the cost of the advice through tax savings, strategies, or avoiding the traps that penalise innocent savers and investors. Be wary however of online "experts", as anyone can establish a web page or post a comment in a chat room.

There is no time like the present! Make your appointment today by calling Adam on 8373 1702 or via email: adam@hern.com.au to arrange a suitable time.

3 - Review your superannuation
Ensure your needs and retirement goals are on course.

When do you plan to retire? What are your plans for when you retire - travel, etc.? Will you have enough when you retire to live the lifestyle you expect or want? Current global economic trends have played havoc on Super funds and it is difficult to keep track of the constant government changes. Now is a good time to review your superannuation and ensure you are getting the returns you expect from it.

Have you considered making extra contributions? Did you know that the compulsory employer contributions may not be enough to fund your retirement? A little extra from you now could make a big difference when you really need it.

4 - Make a will and plan your estate

Ensure the wealth you are working so hard to build is transferred smoothly, tax-effectively and according to your wishes when the time comes. A complete estate plan will also allow you to retain control of your assets and determine who will make decisions on your behalf should you become unable to in the future.

Our Estate Planner, Lester Jarmyn, is returning to our offices in 2012 and can provide advice on not only estate planning and administration but also will and power of attorney as well as trustee and attorney services. Times are available; Wednesday 8 February, Thursday 1 March and Tuesday 27 March but hurry as they will fill fast. Please contact Adam on 8373 1702 or email adam@hern.com.au to make an appointment.

5 - Review your debt
A good New Year's resolution is to get rid of bad credit card debt, ideally by budgeting to repay it as soon as possible.

Avoid adding short-term debt incurred by spending on consumables to a long-term mortgage. Redraws on your mortgage should not be used as a solution to over-spending. Even with good debt – such as that used to produce income or accumulate investment assets quicker - it's still important to be careful of taking on too much.

6 - Revisit personal insurance
Make sure you have appropriate life insurance, income protection insurance, and trauma or disability insurance in order to protect your loved ones if anything happens. It is worthwhile reviewing your insurance arrangements every few years to take account of changed circumstances.

"Our lives were perfect, and then ..." one person's real-life account on the importance of income protection. Click here to read more.

7 - Plan for a "rainy" day with an emergency fund
It looks like it will be a tough year for households on the debt front and experts advise to have three months' salary tucked away for safekeeping to meet any unexpected costs such as sky-rocketing power bills. That may be unrealistic for some but even putting a little bit of money aside towards an emergency fund - and ensuring that it isn't touched - is a good start.

Want to know more? We can help ...
Contact Hern Financial Services today to arrange your complimentary Financial Planning Session and make 2012 the year where you take control of your finances!
Call Adam on 8373 1702 or email: adam@hern.com.au today.

2012 Events

Learn about Xero: 16 Feb, 2012
Beautiful software that will revolutionise your accounting!

What is Xero? How will it help my business? How can accounting software be beautiful? Join us for a free introductory session on Thursday 16 February at 4:30pm to find out the answers to these questions and more.

Please email your details to Elena on elena@hern.com.au if you wish to attend this session. Click here for more information about Xero.

Work Life Balance Twilight Session: 6 March, 2012
It IS possible to have a work / life balance and we can tell you how! Join us to hear guest speaker Abbie Allen from Lifestyle Elements share tips and insights on how you can start living your life as you want to live it.

Tuesday 6 March at 6:00pm
Door prizes, networking, gift bag, light refreshments

Places are strictly limited so please RSVP today! Call 8373 1702 or email Elena elena@hern.com.au and why not ask your friends to come along too!
Click here for more information about Abbie and Lifestyle Elements

Coming in the next issue:

Redundancy Planning, and more.

Christmas is a time for giving. Unfortunately, when many of us are buying gifts for our loved ones, we often find we are also buying ourselves a huge credit card debt.

For many of us, credit cards are a dangerous trap, especially around Christmas. It is all too easy to hand your card to the shop assistant and pile up the dollars without realizing. And. if history is any guide, many Australians will find themselves with a plastic-induced financial headache by the time the new year starts.

In May 2011, the Reserve Bank of Australia statistics revealed the national credit card debt had climbed 42 per cent in the past five years to a whopping $49.3 billion, with $36 billion accruing interest. The $2.87 billion increase has stunned experts with figures showing the average credit card debt of $3,321.

To help you avoid the Christmas Credit surprise before it begins, here are a few tips to consider when heading out to do your Christmas shopping:

Make a list and set a budget.
Before you head out make a list of all the people you need to purchase for and set a budget per person. One you've made this list, add up the totals and check to ensure that the total amount you are planning to spend fits within what you can afford to pay or repay.

Develop a plan to repay any amount you may owe after Christmas.
There are often many legitimate reasons to get into a debt, but Christmas is not one of them. However, if a little debt is unavoidable this Christmas make sure you implement a payment plan to pay back any money you owe. This payment plan should include a short timeline for when you want the amount paid off by, so as not incur too many interest charges with your regular pay. Setting up a direct debit is a good way to ensure you don't accidentally spend the money elsewhere.

Decide where to shop.
Having an idea of what you want to get people means that you can do research to ensure you get the best price. Often a quick look on the internet will give you an idea of how much you can expect to pay on average, and may prevent you being ripped off in your Christmas present buying haze.

Understand your credit card terms and conditions.
If you have a credit card, you should know your repayment terms and interest charges like the back of your hand. Terms and conditions brochures are boring to read but knowing your cards positive and negative attributes can make a massive difference to your bank account.

Of course, by far the best approach to Christmas is to put money aside throughout the year or join a Christmas Club savings account with your bank or credit union. These often are directly debited from your pay and depending on the account can sometimes even earn you additional interest to help buy an extra gift or two. Planning for your spending reduces stress and helps to manage your finances. So, if this year you are one of the many relying on your credit card to get you through your festive season make it one of your new year's resolutions to be better prepared next year.

Get yourself financially organised with Xero
Would you like to see all your finances at a glance? Keep up-to-date with your spending, saving, bills and utilities? Xero Personal Finance is the easy online tool that helps you budget and keep track of your personal spending habits.

With Xero, you are able to organise your bank accounts in one place, create budgets and savings plans, organise your billing and keep on track with your finances. Xero allows you to see all your bank accounts and finances in real time from the convenience of your PC, laptop, tablet or smartphone.

Xero - the ideal business solution
Xero is being hailed as the world's easiest to use business accounting software. With great features that include:

Online accounting
See your cashflow in real-time.
Bank reconciliation
Automatically import and code your bank transactions.
Invoicing
Create and send invoices automatically.
Add-ons plus more!

Want to know more? Please go to the Xero page on our website. Or why not contact us about attending the next free Xero introductory information session - Thursday 16 February, 2012 at 4:30pm and see how it will transform your business practices!

How ready are you for the "cloud" revolution?

"A strong incentive in moving to the cloud was reducing IT expenditure," said Hern Financial Services Partner Matthew Carberry to BoxFree IT recently.
Read more

So, what is "cloud" computing?
Cloud computing is the delivery of computing as a service rather than a product. It is a marketing term for technologies that provide software, data access, and storage services that do not require end-user knowledge of the physical location and configuration of the system that delivers the services. A parallel to this concept can be drawn with the electricity grid, wherein end-users consume power without needing to understand the component devices or infrastructure required to provide the service. Cloud computing providers deliver applications via the internet, which are accessed from web browsers and desktop and mobile apps, while the business software and data are stored on servers at a remote location.

The Benefits of Cloud Computing
Cloud-based services can help dramatically reduce software and other computing costs. Storing files on a secure, reliable, cloud-based service helps eliminate backup worries and gives you anytime access to your files. Usually, cloud-based services are simple to use - the only things you need are a computer (or in some cases, a mobile handset), a browser, and an Internet connection. And such services require no maintenance from the user. Easier collaboration with colleagues in distant locations is another cloud benefit.

Many are taking the move to cloud computing cautiously and it certainly makes sense to approach any big change in how you do business carefully. But the world is already making the transition to cloud computing. Considering current economic conditions. now is a good time to make the transition. If not, you could be missing out on the opportunity to prepare yourself, and your business, for the future.

Your Superannuation - why the minimum is NOT enough!
We look at why just the 9% Employer Super Guarantee may not be enough to get through retirement comfortably.

One-third of Australia's entire population, or 3.4 million people, are still failing to take the necessary action to ensure they have an adequate nest-egg for retirement, according to the AMP Superannuation Adequacy Index.

Did you know?

Men who are already 60 can expect to live until they are 81.
The current average life expectancy for men is around 78.
The current average life expectancy for women is around 83 years of age.
Women who are now 55 can expect to live until they are 84.
50% of the population will spend at least 35 years in retirement.

Source: Australian Government Actuary

Still not enough?
Getting by on just the current 9% employer contribution definitely will not be enough for most people. Contact us today to arrange an appointment with either Matt or Brian to talk about setting up the best super contribution strategy to achieve your retirement goals, including; when you want to retire, how you want to spend your retirement, and how much you think you will need per year to live the life you want to lead.

Super ways to secure your retirement savings ....

How is your Work Life Balance?
Do you feel that life is getting just a bit much for you lately?

Feeling that you are merely trying to get through the day? Are you barely making it to the end of the week and feeling completely exhausted by the time you get home? Feeling that you are on the merry-go-round of life and just want to get off? Do you feel as if you are falling behind and never catching up in the game of life? If this sounds like you, then, now is the time to:

Start doing, do more, do differently.
Stop doing, continue doing, do less.

Want to know how you can achieve a good Work Life Balance? It IS possible! the time to act is now and the best place to start is by joining us at our first "twilight" seminar sessions for 2012 this coming March 6. Guest speaker Abbie Allen from Lifestyle Elements will share tips and insights on how you can achieve a Work Life Balance. For more information about Abbie and Lifestyle Elements go to www.lifestyleelements.com.au

Register your details today to be one of the first to be invited to this exciting and fun evening. Hurry as places are strictly limited.

Coming in the next issue:

Financial New Year resolutions
Redundancy Planning

and more!

Quote of the month:
"Making money is art and working is art and good business is the best art of all."
Andy Warhol (1928~1987)

* All information correct at time of preparation and only intended as a guide to be used for discussion purposes. Please seek professional assistance before making any financial decisions . E&OE

November 2011 HFS Business Informer Articles

Planning a Work Christmas Party

Even though it is only November the Christmas season is coming quickly. Christmas parties are a great way to spread cheer and celebrate the achievements of your staff. When planning a work Christmas party, you should also be considering your Tax and Occupational Health & Safety (OH&S) obligations.

Being aware of the tax implications and ways to minimise your obligations may benefit your business when it comes to submitting your taxes. As Christmas parties can attract fringe benefits tax (FBT), you should consider:

the benefits of hosting the party at your business premises
the value of any gifts you choose to give to staff
whether to invite clients and other associates
the cost of catering per person.

Typically, you will avoid FBT if you host the Christmas party on your business premises, or keep the cost of the party to below $300 per person.

It's also important to remember that as an employer, you have a duty of care to your employees at the party whether it's held onsite or not. To ensure that your employees remain safe, you should identify potential hazards and minimise these as much as possible. If you are serving alcohol, proper risk management strategies may save your business from costly compensation bills and absent staff in the future.

Find out if your party will attract FBT by visiting the Tax Office website.

For more information on your OH&S requirements, visit Safe Work SA. http://www.safework.sa.gov.au/home.jsp

ATO Updates the Small Business Benchmarks

In October the ATO updated their Small Business Benchmarks for businesses with different turnover ranges across more than 100 industries. Many business owners are aware of the benchmarks but are still unclear as to exactly why they exist, so here is a comprehensive overview of why small business benchmarks are used and how they can be useful for your business.

Small business benchmarks (SBB) are designed to help businesses meet their tax obligations by enabling them to compare their performance against other similar businesses.

SBBs show key business ratios for more than 100 industries reporting within all turnover ranges from low to high. In comparing your business to the benchmarks for your industry, you can assess your business performance which can prove to be an invaluable tool for business owners, assisting them to make decisions.

The following benchmarks have been created for the small business sector:

* Performance Benchmarks: provide key business ratios for different industries
* Cash Sales Benchmarks: show the ratio of cash sales to total sales for different industries
* Input Benchmarks: show an expected range of income for tradespeople based on the labour and materials they use

The Australian Tax Office also finds the SBBs useful to help identify businesses that may be avoiding their tax obligations and not reporting some or all of their income. The SBBs then prove themselves to be increasingly useful in business by creating a level playing field for all businesses within an industry and making it harder for dishonest taxpayers to get away with not reporting cash transactions.

Businesses that report outside of the benchmarks set for their industry will usually attract the attention of the ATO so if you find you are outside the benchmarks for your industry, you should establish if you have recorded and reported income and deductions for your business correctly. If you can still not establish why your business is outside the benchmarks for your industry, speak with your accountant.

SBBs cover a range of industries including:

Building and construction
Education, training and recreation support services
Accommodation and food services
Health care and personal services
Retail trade
Manufacturing
Transport , postal and warehousing
Other Services

To find out more about how your business compares to the benchmark visit the ATO website:
http://www.ato.gov.au/content/00214689.htm?headline=smallbusinessbenchmarks&segment=home

October 2011 HFS Business Informer Articles
5 Things You Must Know About Protecting Your Lifestyle
Common Superannuation Mistakes Outlined by the ATO
HFS Welcomes Adam to the Team

5 Things You Must Know About Protecting Your Lifestyle

We all work hard to earn an income, and we value our lifestyle, our family, leisure time, and our ability to do things we enjoy.

However, many Australians live with long-term health conditions. While not all deadly, they are common causes of disability and reduced quality of life. As at 2009, there were 1 in 5 Australians (4 million people) living with some degree of disability! 1

Providing yourself with the right type and amount of financial protection can play a significant role in how you and your family mange your lives, if such an event occurs.

Five truths and misconceptions Australians have about protecting their quality of life:

1: Workers Comp will look after me.

While Workers Comp will cover you if something happened at work, or on the way to and from work, the fact is more than 70% of injuries actually happen when people are not working!² Workers Comp will not cover you for a non-work related illness that requires you to take extended time off work.

Also, even if Workers Comp does cover you, will it be enough? In South Australia if you are totally unfit for work, for the first 13 weeks you are paid in line with your Average Weekly Earnings (AWE), from 14- 26weeks you are paid 90% of AWE and after 26 weeks you are paid 80% of AWE³. They do take into account basic wages, allowances, overtime (if ongoing) and superannuation salary sacrifice.

Here is an example from WorkCover SA:

Average weekly earnings (AWE) - $500
First 13 weeks (100% of AWE) - $500
14 to 26 weeks (90% of AWE) - $450
After 26 weeks (80% of AWE) - $400

2: Private Health Cover will look after me.

While Private Health Cover may assist you with medical bills, how will you continue to pay for your everyday bills?

3: I think I already have enough cover through my Super.

Most super funds do have automatic levels of Death and TPD Cover in place. However is this enough to pay off your mortgage, provide your family with enough to cover the financial shortfall of replacing your income, and cover any one-off expenses?

If you also have Income Protection, this may only cover you for a short period (eg 2 years). What if you had a serious illness that required you to take extensive time off work?

4: Centrelink will cover me

The requirements to meet Centrelink benefits are very strict. The maximum payment is $689.00 per fortnight⁴. To receive this you would have to qualify under the eligibility criteria employed through Centrelink's Assets and Income test.

5: I don't know how much is enough…

You need to consult a financial planner, like myself, to properly calculate the correct amount of insurance for you. Contact me on 08 8373 1702 to arrange an obligation-free initial appointment today and discuss how you can ensure your financial future is protected.

1& 2. Australian Bureau of Statistics . (www.abs.gov.au)
3. WorkCover SA (www.workcover.com/site/home.aspx)
4. Based on a single, homeowner. Centrelink online information, (www.centrelink.gov.au) as at 20/09/11.

Hern Financial Services Pty Limited (ABN 38 520 386 088), is an Authorised Representative of Count. 'Count' is the trading name of Count Financial Limited, ABN 19 001 974 625. AFS Licence Number 227232. Principal Member of the Financial Planning Association of Australia Limited. General advice warning: The advice provided is general advice only as, in preparing it, we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should read any relevant PDS and consider how appropriate the advice is to your particular investment needs, and objectives.

Common Superannuation Mistakes Outlined by the ATO

In the recent SME Communicator published by the ATO, they outlined some common mistakes they see employers make when it comes to superannuation.

These mistakes include:

· paying insufficient super contributions for eligible employees

· missing the quarterly cut-off dates of 28 October, 28 January, 28 April and 28 July

· not understanding that in some circumstances super should be paid for contractors, even if the contractor quotes an Australian business number

· not keeping accurate records

· not passing on an employee's tax file number to their super fund

· not lodging a Superannuation guarantee charge statement - quarterly if they have not paid their employees super to the fund by the due date, or don't pay the correct amount.

Employee's Tax File Numbers

You must provide your employee's tax file number to their super fund within 14 days of receiving it. If you don't supply the tax file number, the employee's super contributions will be subject to extra tax and may not be accepted by the super fund. Employers may also be penalised for not providing an employee's tax file number.

Superannuation for Contractors

Please be aware that you also need to pay super contributions for contractors employed under a contract that is wholly or principally for the contractor's labour, even if the contractor provides an Australian Business Number (ABN)

As an employer it's important to understand all your superannuation obligations. For more information on employer super obligations please visit the ATO's Employers Superannuation - Home Page If you have any queries about superannuation, please don't hesitate to contact us on 8373 1702.

HFS Welcomes Adam to the Team

Hern Financial Services welcomes Adam Drinkwater to the Financial Planning team.

Adam joins us as the new Client Services Officer and will be helping clients with Financial Planning review appointments, queries and administration.

He has a BA (Hons) Degree in Business from John Moores University, Liverpool UK and is currently studying his Diploma of Financial Planning.

He looks forward to meeting or talking to our clients soon.

Make Your Business Stand Out!
Is Your Mortgage Right For You?

Make Your Business Stand Out!

What is it about your business that sets you apart from your competitors?

What is your Unique Selling Proposition (USP)?

Your USP identifies what makes your business unique and what makes it distinct from other businesses of its type. Your USP is your competitive edge; it is the reason people should deal with you rather than someone else.

Coming up with the perfect USP

The possibilities are endless! The best thing to do is to adopt a USP that fills an obvious need in the marketplace. Focus on a gap in the market or create your own niche.

Creating Your USP

Write down all the positive aspects of your business, such as good service, quality products, reasonably priced. Also list the benefits your business could bring to customers. These could be things like family friendly, free delivery, after-hours service, fast turnaround time, locally produced, convenient location. Make sure that the benefits you list are things you can achieve and deliver.

Check out your competition. If a competitor is offering one or more of the benefits that you have written down, cross it off the list. Narrow down your list until you find a benefit that is truly exclusive.

It's not always easy to come up with a new concept. So take your time, look closely at your business and think about:

· what it is you really want to offer

· who you want to target

· why you want people to come to you

· how you propose to help them

Here's a good example

Josie wants to open a hair salon in an inner city suburb where there are already several other well-established salons. Why should people go to Josie's salon instead of the others?

Josie lists her business strengths as being welcoming, competitively priced, excellent service by stylists with years of experience. However, Josie soon learns that not only do all of the other salons have experienced stylists charging competitive rates, most of them offer beauty services too. Josie knows she needs something unique.

Based on her market research, Josie discovers an untapped niche in the market – she decides to 'go organic'. Josie sources organic hair products and colour treatments. She even decides to serve organic coffee, tea and chocolates!

Josie's USP is that her salon is totally organic. Therefore, she can focus her marketing towards people who are sensitive to harsh chemicals or people who are environmentally conscious. She can then advertise in places such as health food shops or pharmacists where she is likely to find interested customers.

Hern Financial Services can help you develop and improve your business with our Business Advisory Services. To learn more please visit our website http://www.hern.com.au/our_services/business_advisory_services or contact Matthew or Brian on 8373 1702.

Follow Matt on

Is Your Mortgage Right For You?

Professional Home Loan Packages can be a very cost effective way to borrow money, especially for property investors.

The most significant benefit of a Professional Home Loan Package is that, in exchange for an annual fee, the borrower receives a discounted interest rate for the life of the loan, or for as long as the loan is included in the package.

Originally, professional packages were offered by only a limited number of lenders and were available to borrowers engaged in professional occupations such as lawyers, doctors, engineers and accountants earning at least $75,000 per annum.

Professional Packages are now available through many lenders and do not require the borrower to be employed in a particular industry, or to be earning a minimum income. Usually, the only requirement is that the loan is established with a minimum amount, which can be as low as $150,000.

The specific products available in each lender's professional packages vary, but all lenders charge an annual package fee, typically ranging from $350 to $700 depending on the features offered.

Borrowers receive discounted interest rates on a range of loans which can include variable and fixed term loans, as well as lines of credit. These discounts depend on the individual loan size and can range from 0.15% up to 0.9%.

Professional Packages can also offer additional features:

100% offset accounts,
Fee-free credit cards and transaction accounts,
No establishment fees, and;
Discounted building and contents insurance premiums.

Multiple loans can be included under the same package with all on-going fees covered by the one annual fee. Some lenders restrict the maximum number of loans within a package to five, whilst others have no limit.

This can provide significant savings on application fees and valuation fees for new purchases, loan restructuring or splitting and equity access, which can be particularly useful for investors with numerous properties.

Complete our FREE Mortgage Health Check and we can discuss if your current package is right for you.

Hern Financial Services is a member of Finconnect (Australia) Pty Ltd ABN 45 122 896 477. Australian Credit Licence 385888. Head Office: Level 19, 1 Alfred St, Sydney 2000. General advice warning: The information provided is general information only and does not take into account your objectives, financial situation or particular needs. Before making a decision on the basis of this information, you should consider how appropriate it is to your particular situation.

Lease Your Vehicles and Equipment the Right Way!

The carbon price is designed to discourage Australia's top 500 major polluters from producing excessive amounts of carbon. It is hoped that by doing this, more environmentally sustainable practices will be adopted, leading Australia to a greener future. Starting on July 1 2012, the carbon price will be set at $23 a tonne and will increase at a rate of 2.5% annually in real terms. From July 1 2015 the scheme will complete a transition to become an Emissions Trading Scheme (ETS) at which point the price of carbon will be set by the market. Permits will need to be bought and surrendered for every tonne of carbon pollution that is produced.

Transport fuels will be excluded from the carbon pricing scheme. In saying this however, an equivalent carbon price will be applied to transport fuels in fuel tax credits or excise to those sectors not exempt. A carbon price will be applied to domestic aviation, domestic shipping and rail transport. It should be noted however that in the case of domestic aviation, the additional price of the carbon tax is expected to only be around an extra $3.50 on average in addition to the cost of a normal ticket.

Whether you go out and buy that next car for yourselves, replace that equipment for your business or make any major purchase; there is a right way and a wrong way to do it.

The right way is making sure your cash flow isn't adversely affected, the asset is held in the right structure or person's name and you aren't missing out on additional benefits at tax time.

The wrong way can cost you thousands, both in tax and missed opportunities.

Hern Financial Services can assist you in this area as well as preparing your tax so you can be sure that

- Your financial details stay in safe hands (Not with a Car/Equipment Dealer)
- You haven't given any hidden guarantees that stifle you later on down the track
- You've maximised the possible benefits- and most importantly been able to minimise any disruption to your business.

To make your purchases work as hard as you do please give Matthew a call on 8373 1702, or alternatively you can email him on mcarberry@hern.com.au

For more information on our leasing services click here

Our lending services are provided in association with Count's subsidiary finconnect (australia) pty ltd, ASIC License Registration No 352230, ABN 45 122 896 477. Head Office: Level 19, 1 Alfred St, Sydney 2000.

Important 2011 Year-End Obligations
SA State Budget 2011 - What it means for SA Business
Meet the Team - Suresh Rajani Accountant

Important 2011 Year-End Obligations

Another financial year has just come to an end!

As a business owner, there are many important obligations that you need to consider and act on over the next few weeks.

We have outlined some of these below to assist you.

1. 2011-12 TAX RATES – HAVE YOU UPDATED YOUR PAYROLL TAX TABLES?

The new 2011-12 tax year individual income tax rates began on 1 July 2011. The following Australian Taxation Office (ATO) website lists the 2011-12 Pay-As-You-Go (PAYG) withholding tax tables:

http://www.ato.gov.au/businesses/content.aspx?doc=/content/33283.htm&alias=taxtables

All applicable payments made from 1 July 2011 to employees and other workers must reflect the new tax withholding amounts.

While the Personal Income Tax Rate and thresholds remain the same as the 2010-11 tax year, the new tax tables incorporate the temporary flood and cyclone reconstruction levy.

Action Step: Review and update your tax withholding calculations for your employees. If you use a computerised payroll system, update your payroll tax tables.

2. BE AWARE OF THE 2011 PAY-AS-YOU-GO (PAYG) PAYMENT SUMMARY CHANGES

You need to provide your 2011 PAYG Payment Summaries to your employees and other workers by Thursday 14 July 2011.

Please note that this financial year the Flood Levy (2012) will apply to employees with an income over $50,000. The flood levy will be incorporated into the new withholding tax tables you would use to withhold amounts from their salary or wage.

Please click here for the ATO website for Flood Levy information for employers.

It is vital that all details on your PAYG Payment Summaries are correct. The ATO website has details on how to complete each part of the PAYG Payment Summary.

Action Step: Review your payroll records, and consider how the above changes affect your business. If you are not sure about how to correctly complete your 2011 PAYG Payment Summaries, please contact us BEFORE you prepare and issue them.

3. PAYG WITHHOLDING OBLIGATIONS – SUMMARY OF KEY YEAR-END DATES

Please note these important PAYG Withholding year-end dates:

14 July 2011

PAYG Payment Summaries (formerly known as "Group Certificates") must be issued to all employees and other workers by this date.

Each 2011 PAYG Payment Summary must show the grossed-up taxable value of Fringe Benefits provided to an employee during the Fringe Benefits Tax (FBT) year (from 1 April 2009 to 31 March 2010). This only applies if the total taxable value of Fringe Benefits provided (excluding meal entertainment and car parking) to an employee and/or their associate in the FBT year exceeds $2,000.

For PAYG Payment Summary purposes, the grossed-up taxable value of Fringe Benefits equals the taxable value of the Fringe Benefit multiplied by 1.8692.

28 July 2011

Your June 2011 PAYG Withholding must be paid to the ATO by the due date of your June 2011 BAS. This due date is 28 July 2011, unless you are eligible for the tax agent concession due date of 11 August 2011, or the electronic lodgement concession due date of 25 August 2011. For more details of these and other BAS concession due dates, see the ATO website

14 August 2011

A completed "PAYG payment summary statement", together with an ATO original of all PAYG Payment Summaries issued to employees and other workers, should be sent to the ATO by this date.

However, if you only employ related parties, and satisfy other criteria, you may be eligible to lodge these documents to the ATO by the due date of your business tax returns. For more details, see the ATO website

Action Step: Ensure that you meet the above PAYG Withholding obligations. Please contact us before the above deadlines if you have any queries about these issues.

4. SUPERANNUATION GUARANTEE – SUMMARY OF KEY YEAR-END DATES

Please note these important superannuation guarantee year-end dates:

30 June 2011

All employee superannuation guarantee contributions actually paid by this date will be eligible for a tax deduction in the 2011 financial year.

Superannuation guarantee contributions paid between 1 July 2011 and 28 July 2011 will count towards your superannuation guarantee obligations. However, these contributions will not be tax deductible until the 2012 tax year.

28 July 2011

All employee superannuation guarantee contributions for the April-June 2011 quarter should be paid by this date. It is vital to meet this deadline!

Please note that an employee for superannuation guarantee purposes may include an individual, or sole trader, contractor. If you pay an individual under a contract that is wholly or principally for their labour, you are required to make superannuation contributions for them, even if they quote their ABN. For more details on this issue, see the ATO website

If you fail to meet all your employee superannuation requirements by this date, you must complete a "Superannuation guarantee charge statement - quarterly" form. This form must be sent to the ATO, along with a payment for the superannuation guarantee charge, which is the underpaid superannuation plus administration fees and interest, by 28 August 2011.

Superannuation guarantee contributions are tax deductible, but superannuation guarantee charge payments are NOT tax deductible!

As a reminder, the compulsory superannuation guarantee contributions are required to be paid quarterly. You should also advise your employees via their pay slips of the amount and the payment details of any superannuation guarantee contributions made on their behalf.

Action Step: Ensure that you meet the above superannuation guarantee obligations. Please contact us before the above deadlines if you have any queries about these obligations.

5. IS YOUR BUSINESS REQUIRED TO PAY PAYROLL TAX?

Payroll tax applies to all entities that have an Australian payroll expense that exceeds state-based limits, called thresholds. For this 2011 financial year, the annual thresholds vary between each state, ranging from $550,000 to $1.5 million. You need to register if your weekly or monthly payroll expense exceeds the applicable proportionate threshold. It is important to review your payroll expenses if you are close to reaching your applicable state-based threshold.

When you are calculating if payroll tax applies, or when you are preparing your Annual Return (or Annual Reconciliation), your payroll expense ("wages") generally includes not only normal employee salaries and wages, but also the following items:

fringe benefits, usually based on the grossed-up taxable value of the benefits;

all employer contributions to superannuation on behalf of employees; and
some contractor or sub-contractor fees.

However, the exact definition of "wages" varies between states.

If you need more information about your state-based payroll tax threshold, or whether payroll tax applies to your business, please contact our office.

Action Step: Determine if your business is required to pay payroll tax. If it is, ensure that you lodge the completed Annual Return (or Annual Reconciliation) for payroll tax by 21 July 2011 with your State Revenue Office.

6. WORKCOVER/WORKSAFE (WORKERS COMPENSATION) – ANNUAL RECONCILIATION

Your WorkCover/WorkSafe insurer sends an annual reconciliation to all registered employers at the end of the financial year, or at the anniversary of the policy.

In completing your annual reconciliation, you will generally need to include the following items in addition to normal salaries and wages:

fringe benefits, usually based on the taxable value (not grossed-up) of the benefits;

all employer contributions to superannuation on behalf of employees; and
some contractor or sub-contractor fees.

However, the exact definition of "wages" varies between insurers.

Once the reconciliation is received and processed by your WorkCover insurer, you will be issued with a final assessment or a refund depending on the instalments you have paid during the year.

Action Step: Complete the WorkCover annual reconciliation. For more detailed information about what items to include in the reconciliation statement, please contact our office.

7. GOODS AND SERVICES TAX (GST) – ANNUAL RECONCILIATION

A reconciliation of GST should be performed as at 30 June 2011 to determine if there has been an under or over-payment of GST in the 2011 tax year. If a discrepancy has arisen, then you need to either revise a previous Business Activity Statement (BAS), or adjust a current BAS, to correct the error. There are time limits, and amount limits, imposed by the ATO on adjustments that can be made in a current BAS.

Remember that you are required to substantiate all BAS claims for GST credits on purchases with a valid tax invoice. However, if a purchase costs $82.50 (including GST) or less, you can keep a document such as a cash register docket, invoice or receipt instead of a tax invoice. You need to retain all these GST records for a minimum of 5 years.

Action Step: Complete the annual GST reconciliations, and verify that you have kept all the required supporting documents.

8. ATO AUDIT ACTIVITY

The ATO and State Revenue Offices are constantly increasing their review and audit activities. These reviews and audits range from an all-encompassing audit to a review of a particular area, such as income tax, PAYG Withholding, superannuation, payroll tax, WorkCover, GST and Division 7A loan accounts from companies.

We are able to offer a review of your records and record-keeping procedures if you are concerned about your ability to satisfy an audit or review.

Action Step: Please contact our office if you would like to request this service from us.

Remember, our team at Hern Financial Service are available all through the year to assist you with any accounting, taxation, and financial planning requirements. We're here to help you!

SA State Budget 2011 - What it means for SA Business

Sadly the SA Business community did not receive many benefits from the latest State Budget.

Although the SA Government pledged $1 million dollars in funding to support small and medium businesses with overseas trade missions, business matching and language support, it has ignored lobby groups request to reduce the payroll tax rate and the land tax rate.

The Government expects to receive $1.04 billion from payroll taxes in the new financial year and receive $1.76 billion in property taxes.

From 1 July there will be a move to index land tax brackets in line with average site value increases, which will cost the Government $170.7 million over four years.

For businesses with vehicles motor vehicle registration fees would increase by between 3.9 and 4.3% while the standard compulsory third-party premium would increase by 2.7% For a four-cylinder car, this would mean an increase in annual fees from $578 to $595 – a 2.9% rise overall.

Meet the Team - Suresh Rajani Accountant

Suresh started at Hern Financial Services in January this year and many of you have already had the opportunity to meet him.

Suresh is available for appointments this tax season and he looks forward to meeting many more clients.

Here are a few quick questions with Suresh:

Role at Hern Financial Services - Accountant

How long have you been with Hern Financial Services – 5 months

Qualifications - Master of Commerce

Proudest Moment - Yet to come
Favourite Holiday Destination – Sydney
Favourite Movie - INVICTUS
Favourite TV Program – Apprentice & 24
Favourite Quote - If you set limits on your imagination then you will have to settle for less than the best, less than perfect, less than you deserve!
I intensely dislike - Negativity
When I retire, I will… do loads of travelling around Australia and around the world
In my spare time I… read books
Favourite saying - U can't expect to hit the jackpot if u don't put a few nickels in the machine. U can't expect to be rewarded without putting in the effort!
Greatest achievement - Yet to come
I hope to become a… great business leader
I hope to work with people who are… future paced, innovative, proactiveness, brave and honesty.
In life it's important to... appreciate what you have
As a child, what did you want to be when you grew up? Lawyer
How would you like to be remembered? The advisor who took our business to the next level
What do you like most about your job? In a position to positively influence peoples lives
What do you like least? Love my job

June 2011 HFS Business Informer Articles

The 2011-12 Federal Budget and Small Business
30 June is Nearly Here! Have You Made Your Government Co-Contribution Yet?
Suresh's BAS Tips to Help You Avoid Penalties

The 2011-12 Federal Budget and Small Business

This year's Federal Budget only delivered a number of minor amendments, with the main focus being on building Australia's workforce and also spending cuts designed to bring the budget into surplus in 2012-13.

While there wasn't a big change to small business there were a few points that will affect them.

Entrepreneurs' Tax Offset

The Government has decided to abolish the Entrepreneurs Tax Offset for small business owners from 1 July 2012. The Government's reasoning for this being the offset was poorly targeted and too complex for many to understand. This will save the Government $370 million over the next 4 years.

Fringe Benefits Tax on Salary Packaged Cars

If you have a salary-packaged car, sometimes you may have driven further than usual near the end of the financial year to improve your tax benefits. You will no longer have to go that extra mile!

The Government is changing the current method for determining the taxable value of car fringe benefits and replacing it with a single rate of 20% regardless of the distance travelled. The new tiered reform will apply to contracts started after 10 May 2011. This reform will be phased in over 4 years as the table shows:

Distance Travelled

Current Rate

From

10 May 2011

From

1 April 2012

From

1 April 2013

From

1 April 2014

0-15,000km

26%

20%

20%

20%

20%

15,000 – 25,000 km

20%

20%

20%

20%

20%

25,000 – 40,000 km

11%

14%

17%

20%

20%

> 40,000 km

7%

10%

13%

17%

20%

New Vehicle & Equipment Purchases

In the 2012-2013 financial year the Government will allow small business to claim up to $5000.00 an immediate deduction for motor vehicles purchased. The vehicle will then be depreciated at 15% in the first year and then 30% the year after.

Also in the 2012-2013 year the Government announced that any new business asset worth less than $5000.00 can be written off immediately from the 2012-13 Financial Year.

Employment

A big focus in the budget was to build Australia's Future Workforce. There will be a big push to retrain and employ the long term unemployed. The Government will be offering wage subsidies to businesses to take on the long term unemployed or hire people with a disability.

30 June is Nearly Here! Have You Made Your Government Co-Contribution Yet?

In the recent Federal Budget the Government announced that the Superannuation Co-contribution indexation will remain as is for an additional year to 2012-13. The maximum the Government will match is $1000 for people with incomes up to $31,920 with the higher threshold remaining at $61,920. The Superannuation Co-contribution is based on personal non-concessional contributions (which means contributions made with after-tax money)

Whilst it's good that the Government is still willing to co-contribute, it is up to you to make sure that you make your personal non-concessional contribution in time. The cut-off date for Superannuation funds to process co-contributions is 30 June to be eligible to receive the co-contribution for this financial year. If you choose to make your contribution via direct debit or Bpay it is recommended that you make your contribution at least a week before 30 June so that your payment is processed in time.

If you would like to calculate your Superannuation Co-contribution, visit the ATO calculator at this link:

http://www.ato.gov.au/individuals/content.aspx?doc=/content/44186.htm

If you are eligible to make a personal non-concessional contribution this year and want to take advantage of the Government Superannuation Co-contribution we recommend that you act now to avoid the 30 June rush at the end of the month.

Suresh's BAS Tips to Help You Avoid Penalties

A high number of businesses are getting their Business Activity Statement (BAS) wrong and as a result running a high risk of mounting tax penalties. Below are some tips to make sure that you are not one of them.
When claiming GST take note of the following:

You can't claim GST for GST free expenses. Some of the common GST free expenses are bank fees & charges, ASIC fees, insurance and interest. You must always refer back to the tax invoice so that the correct GST component is recorded.

You can only claim for the business portion of the expense, if you use assets such as motor vehicle for private use too then only the business portion of the GST credits can be claimed.

You cannot claim GST credits where the contractor or supplier of the goods or services is not registered or required to be registered for GST as no GST is included in the price.

You must hold a valid tax invoice when you make your claim as the Taxation Office will disallow claims for GST credits on expenses if there is no evidence of a tax invoice.

GST credits may only be claimed at the time a repayment is made for a hire purchase or lease contract, when accounting for GST on a cash basis.

When reporting Non- Capital Acquisition on the BAS take note of the following:

Wages and superannuation contributions should not be reported in the GST section of the activity statement. Wages are to be reported at W1 and superannuation contributions need not be reported on the BAS.

May 2011 HFS Business Informer Articles

Can't Buy Me Love - How to Plan For Your Royal Wedding
Brian's Top 5 Tips to Take Advantage of Tax-Effective Opportunities before 30 June

Can't Buy Me Love - How to Plan For Your Royal Wedding

Some of you may have tuned into the Royal Wedding of Prince William and Kate Middleton on 29^th April. Although the couple were opting for a more low key event it was still pretty spectacular. In 2010, research company, Ibisworld quoted that weddings are a $4 billion dollar industry in Australia. 'The Beatles sang, money can't buy me love… but when wedding season comes around money can definitely buy you an elaborate wedding,' says Matthew.

"The further you get into wedding planning, the need to watch costs becomes much more obvious. Starting to plan as soon as possible definitely takes out some of the stress, but it's also important to be realistic in what you can afford, and to look at your finances beyond the wedding."
The average cost of a wedding, according to the Bride to Be Magazine 2008 Survey, was $49,000, which is more than 10% of the average national mortgage, or close to the national average income. With expenses like these, how can people budget, keep on top of added expenses, and still plan the honeymoon?

How to be financially prepared

Brides everywhere will admit that there is more than one cause of stress before the big day, and the financial aftermath can still be felt long after the ceremony. "It's not so wonderful to have the wedding that you have always dreamed of, if you are left with a huge debt afterwards."

The best place to start is to work out the cost of each item and see where it fits into your budget, and to discuss as a couple ways to minimise costs and compromise. He also adds that the time of year can have a dramatic effect on cost, with the more expensive booking time of year starting from September and heading into summer.

"You may find that your ideal wedding day isn't compromised by leaving out some extras. Be careful of getting caught up in the hype and stick to your budget - it can really help the whole process and you will be glad later that you have money left over for your post-wedding goals such as buying a home or starting a family".

Making 'cents' of wedding plans

Many Australian couples have a financial plan in place, but saving for a wedding is often a kick-starter for this. Consider setting up a savings fund specifically for the wedding, such as a term deposit, or a managed fund and try to avoid getting a loan from a bank or financial institution.

"Borrowing money may be tempting but if you're not careful you may still be paying off the wedding years later."

Remember that rent, household bills, credit card bills, or a mortgage can't be postponed until after the wedding, with debt management an ongoing issue for many couples even before the vows, talk with your adviser about drawing up a budget and reviewing your long-term financial goals for the future.
For richer or poorer – preparing for life as a couple
Becoming part of a couple, socially, legally and financially, there might be unrealised consequences ahead. At some point there may be bank accounts, school applications to consider, Wills, insurance, and superannuation should definitely figure in your future planning process as a couple.

Matthew says to let financial discussion become a part of your wedding planning process, because a wedding is about more than just one day.

"If brides put as much time into planning their future as they did their wedding day, they would be surprised at how much they could save money, create wealth and build up their superannuation for their later years. The first step can be to talk to your financial adviser about your budget and financial goals beyond the wedding."

In the lead up to the wedding:

Work out a wedding budget and how much each wedding item costs

Discuss as a couple how you can minimise costs

Think of ways to compromise, eg monetary gifts, or a honeymoon contribution, reduce guest numbers

Preparing for life after the wedding

Work out a double-income budget if you have not already been living together.

Set household financial goals together

Review banking, loan, investment and tax arrangements

Speak with your financial adviser about consolidating loans and minimising tax

Matthew Carberry is an Authorised Representative of Count Financial Limited, an Australian Financial Services Licence Holder (No. 227232) and Australia's largest independently owned network of financial planning accountants and advisers.

The advice provided is general advice only as, in preparing it, we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, objectives and financial circumstances.

Brian's Top 5 Tips to Take Advantage of Tax-Effective Opportunities before 30 June

Have you made the most of opportunities to invest wisely and reduce tax? It is essential to act now to take advantage of these opportunities before the new financial year - and 30 June is approaching fast!

1. Save tax by investing in Super
Superannuation has the potential to be a very tax effective investment, and is one of the best vehicles to fund retirement. But what are some options to consider?

·         Employees: Salary sacrificing into super. To 'salary sacrifice' means to contribute before-tax income, or to swap your salary for increased employer super contributions. This means that it is possible to avoid paying your own Marginal Tax Rate (or your income tax rate) in favour of the super rate of up to 15%. When you salary sacrifice your income into super, this type of super contribution is only taxed up to 15%. On top of this, salary sacrificing effectively reduces your assessable income – this could mean pushing your assessable income into a lower tax bracket and consequently paying less overall tax outside of super as well! For example, John is on a $90,000 salary (on a 39.5% Marginal Tax Rate (MTR). By salary sacrificing 20% of his income into super, his taxable income will reduce to $72,000, and be taxed in the lower MTR of 31.5%.

·         Self-employed: Claim your super contribution as a tax deduction. Since 1 July 2007, contributions for self employed individuals are 100% deductible but with limits of $25,000 per financial year if you are under 50, and $50,000 until 2012 if you are over 50. If you are considering a contribution to super, ask your adviser about the most beneficial timing and strategy for you.

2. Can you reduce your Capital Gains Tax?

Your capital gain is the profit made on an asset, or the difference between what you paid and the selling price. Assets that may attract Capital Gains Tax (CGT) can include real estate, business sales, shares in a company, units in a managed investment fund, and possibly even an inheritance.

·         Timing. When is the best time to sell an asset? If you have held the asset for at least 12 months, your CGT could be cut by 50%. Also, selling assets in a financial year in which your income is reduced (eg when you retire) could mean paying CGT on a lower Marginal Tax Rate (MTR).

·         Small Business. There are small business concessions for businesses owned for more than 15 years, which could eliminate your tax completely! Also, talk to your adviser about the CGT retirement exemption, which may allow a capital gain of up to $500,000 on the sale of small business assets held for less than 15 years to be exempted from CGT.

·         Self-managed super funds. If you have assets outside of your SMSF, talk to your adviser about transferring them into your SMSF to take advantage of the low tax rate on earnings of 15% or less within the super environment. Also, CGT within super is reduced to a maximum of 10% on assets held for more than 12 months.

·         Balance your gains and losses. Can you offset any capital gains with losses, for example, a loss from a previous financial year? Talk to your adviser about disposing of an asset that makes money in the same year that you dispose of an asset that loses money, so you could end up paying less in CGT this way as well.

·         Reduce taxable income. One option is to reduce your taxable income to move into a lower income bracket, such as through salary sacrifice or a tax deductible personal contribution, which can effectively offset a capital gain. This means you can reduce or in some cases eliminate CGT.

3. Borrowing to invest

A margin loan can help you invest more money in shares or managed funds than you might have been able to without the access to the money the loan provides. With more money invested, the aim is that you also see higher returns on your investment.

·         How is it tax effective? Using a margin loan can be a potentially tax effective strategy because the interest on the loan is generally tax deductible. Also, it may be possible for you to pay interest in advance, which will bring tax deductions forward, helping you with tax planning. Your adviser can help you stay on top of tax benefits and your interest repayments, but make sure you review with your adviser regularly and plan ahead.

·         What are the risks? Gearing into the share market or into the property market has the potential to increase your risks as well as the returns on your investment portfolio. Speak with your Count adviser to discuss your personal financial needs and goals.

·         What's the next step? Make sure you see your Count adviser as early as possible before 30 June to make the most of possible tax benefits to Margin Lending.

4. Protect your income

Unlike other insurance, Income Protection Insurance premiums are tax-deductible (when paid outside of super). Apart from giving you peace of mind should you experience unfortunate circumstances, this gives you another good reason to consider Income Protection where suitable.

Income Protection costs around 1-2% of your gross salary pa, and in the case of accident or illness which prevents you from working, it will provide you with up to 75% of your income, up until age 65. Your individual situation will be unique, so seek advice on appropriate cover.

5. Leasing vehicles and equipment for business – claim back your GST

Lease rental costs may be tax deductible, provided the equipment is used to generate assessable income for at least 51% of its use. The payments you make on a lease can extend over different tax periods, but each payment is treated separately for the purposes of each Business Activity Statement. You can generally claim the GST credit for a tax period when a lease payment is made in that same tax period. You may be able to claim the interest on your loan as a tax deduction, offsetting some of your interest costs.

What's the next step? The sooner you speak to your adviser, the more time you will have to plan and to take advantage of possible tax benefits this financial year. Talk to Brian or Matthew about how tax-effective opportunities before 30 June can help you.

'Count' and Count Wealth Accountants are trading names of Count Financial Limited, ABN 19 001 974 625, Australian Financial Services Licence Holder Number 227232. Lending services provided by Count's subsidiary, Finconnect (Australia) Pty Ltd, ABN 45 122 896 477, Australian Credit Licence Holder Number 385888. Head Office: Level 19, 1 Alfred St, Sydney 2000.

General advice warning: The advice provided is general advice only as, in preparing it, we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives.

April 2011 HFS Business Informer Articles

It's Time to Start Tax Planning

The end of the financial year is only 2 months away and it is a good time to start tax planning. As a business owner, it is important to be financially well organised and tax planning is a key element.

Reviewing your options to legally reduce your taxes before the end of the financial year can be very beneficial. This may include prepayment of expenses, superannuation contributions and other tax benefits. It also allows you to anticipate what your taxable income will be for the financial year so that you can determine your tax liability in advance.

Here are some things to consider before 30 June 2011:

Concessional Superannuation Caps

The concessional superannuation caps for 2011 are $25,000 for persons under age 50, and $50,000 for persons aged 50 and over. Do not go over these limits!

Note that employer super guarantee contributions are included in these caps. Where a contribution is made that exceeds these limits, the excess is taxed to the fund member's account at an effective rate of 46.5%.

In order to claim a tax deduction in the 2011 financial year, the contribution must be received by the super fund by 30 June 2011.

Tools of Trade / FBT Exempt Items

The purchase of Tools of Trade and other FBT exempt items for business owners and employees can be an effective way to acquire equipment with a tax benefit. Items that can be packaged include Handheld/Portable Tools of Trade, Notebook Computers, Personal Electronic Organisers, Mobile Phones, Digital Cameras, Briefcases, Protective Clothing, and Computer Software.

If structured correctly, the Employer will be entitled to a full tax deduction for the reimbursement payment to the employee (for the cost of the equipment), and the employee's salary package will only be reduced by the excluding GST cost of the items purchased.

You should buy these items before 30 June 2011.

Employee Superannuation Payments

To claim a tax deduction in the 2011 financial year, you need to ensure that your employee superannuation payments have CLEARED your business bank account by 30 June 2011.

For any last minute superannuation payments, we recommend that you arrange for a BANK CHEQUE made payable to your employee super fund prior to 30 June 2011. This ensures that your payment has actually cleared your bank account prior to 30 June, and will allow you to claim a full tax deduction in the 2011 financial year.

Investment Property Depreciation
If you own a rental property and haven't already done so, arrange for the preparation of a "Depreciator" Report to allow you to claim the maximum amount of depreciation and building write-off deductions on your rental property. Depreciator reports are available through Hern Financial Services – click here to learn more.

There are also many other tax planning strategies that can help your business. If you are interested in our tax planning service, please contact us on 8373 1702 to make an appointment before 31 May so that we can discuss and implement any tax planning strategies that may help you.

March 2011 HFS Business Informer Articles
The ATO Releases Their GST Compliance Program
Not Everyone Has an Oprah
MYOB and the Paid Parental Leave Scheme
Earth Hour 2011

The ATO Releases Their GST Compliance Program

In the 2010 Federal Budget the ATO were allocated an additional $445 million in extra funding to recover $3.2 billion in lost GST. Now the funding has been released and in early February the ATO released their plan to target businesses that have fallen behind in their business activity statements, property transactions and refund fraud as part of a 4 year GST compliance program.

The ATO have stated that they will focus on ensuring the timely lodgement of activity statements, verifying GST refund claims and cracking down on those who deliberately avoid GST and following up on old GST debts.

The way they will be chasing up these debts will be by:

Using SMS and letter reminders around lodgement time

Contacting taxpayers that have 1 or 2 activity statements overdue

Increasing contact with taxpayers with multiple outstanding activity statement debts with some cases leading to legal action.

Contacting third parties (such as your accountant) to verify refunds claims

Taking action against businesses that won't work towards or meet agreed debt arrangements (garnishee orders being part of their get tough strategy)

Matching sales and high value transactions (particularly property transactions) with data from State Revenue, Share Registries and Lands Title Offices

Comparing businesses to their small business benchmarks for their industry. If they do not report within their benchmarks they may not be recording or paying tax on all transactions, especially cash transactions. To learn more about how your business is benchmarked against others in your industry click here to the Small Business Benchmarks ATO Site

The ATO is also worried about GST Refund Fraud, where people attempt to claim GST credits they are not entitled to. Unfortunately GST Refund Fraud is a target for identity theft. People have used false, manipulated or stolen identities to obtain GST refunds. As part of the GST Compliance program, the ATO are working closely with government agencies to detect and address these issues.

The ATO's reason for this GST Compliance program is to ensure that every business is doing the right thing and everyone is paying their fair share of tax, making an even playing field for all taxpayers. If you have any queries about the ATO's GST Compliance program, please don't hesitate to contact us.

Not Everyone Has an Oprah

Millions of viewers were caught up in the Oprah Ultimate Australian Adventure recently. Oprah is such a generous person and it's always great to see her surprise people who are less fortunate. On the Friday episode she surprised cancer sufferer, Kristian Anderson, with $250,000. Kristian came into the public eye when he made a heartfelt birthday video for his wife featuring Hugh Jackman and the New Zealand PM John Keys, thanking her for all her support during his treatment. He posted the video on his blog, it went viral and people all over the world were talking about it, including Oprah.

He and his family were incredibly surprised by the money, humbled and definitely deserve the help. Kristian, a video producer, had been diagnosed with bowel and liver cancer in October 2009. He has a wife and 2 very young children. He was so ill that he was unable to continue working. They had to seek financial support from the Cancer Council and his wife had to return to work full time and care for the children by herself. He was self-employed and he did not have income protection insurance.
Some people think that because they are self-employed that they may not be able to take out income protection – that is not the case. Depending on the type of business they have and the physical aspects of their job they are able to apply for some form of protection insurance.

Income protection insurance can provide up to 75% of your income (less business expenses) if you injure yourself or become ill for longer than the waiting period of your policy. Self-employed people may be eligible for 2 types of income protection insurance. The first is an indemnity contract where the benefit is assessed on the last 2-3 years of financials for the business. However if the income has fallen in those years then the benefit will be paid at the lower income amount. For people who have been self employed for a number of years, an Agreed Value policy could be an option. The evidence of income is provided in the application and the policy offers a guaranteed minimum monthly sum (which cannot exceed 75% of gross income at the time of application). This is a good policy for those who have an established regular income history.

Another option for self-employed people is Business Expenses Cover. This insurance can cover the day to day fixed expenses of your business up to 12 months. These expenses can include: accounting fees, bank charges, equipment hire, rent, utilities, telephone costs, subscriptions or even the cost of a locum to work in your business.

Sadly, there are many other people with the same experiences as Kristian Anderson, but they don't have an Oprah. But we can all prepare for this kind of situation. If you are interested in protecting your financial future, please contact us to make an appointment on 8373 1702.

Kristian has a very honest and thoughtful blog called "There is a crack in everything, that's how the light gets in". He talks about his treatment, how he is coping and the support and love from his family and friends. He encourages readers to give generously to the Cancer Council who helped him with his finances and provided support.

Hern Financial Services is an Authorised Representative of Count. 'Count' is the trading name of Count Financial Limited, ABN 19 001 974 625. AFS Licence Number 227232. Principal Member of the Financial Planning Association of Australia Limited. General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.

MYOB and the Paid Parental Leave Scheme

The Paid Parental Leave scheme has now been active as of the 1st January 2011. For employers of eligible working parents, the government is paying the money directly to them to pass on the employee.

MYOB have released a step-by-step guide to set up the Paid Parental Leave scheme to your current MYOB software. Please click here for a pdf copy of the guide or visit the MYOB customer support website

For more information about the Paid Parental Leave Scheme please visit the Family Assistance Office webpage

Earth Hour 2011

Earth Hour started in 2007 in Sydney when 2.2 million homes and 2,100 businesses turned their lights off for one hour to make their stand against climate change. In 2010 hundreds of millions of people took part in the 4th Earth Hour. 4616 cities in 128 countries officially switched off to pledge their support.

Iconic landmarks also went dark for Earth Hour, including The Eiffel Tower, Buckingham Palace, Big Ben, The Sphinx & Pyramids of Giza, Empire State Building and the Sydney Opera House.
Hern Financial Services have signed up to show their support for Earth Hour. So join us and turn off your lights at 8.30pm on Saturday 26th March 2011. Click on the logo or go to www.earthhour.org.au to pledge your support.

PS. There are lots of good widgets, logos and banners that you can add to your website to spread the word.

February 2011 HFS Business Informer Articles
Flood Levy: How It Affects You
Brian Reminds You Why You Should Keep Good Records
Tax Effective Finance Solutions for Your Business

Flood Levy: How It Affects You

On 27 January 2011, the Government announced that it will introduce a one-off flood levy for the 2011-12 income year to help reconstruct the flood affected areas of Queensland, New South Wales and Victoria.

How This Affects The Taxpayer
Taxpayers who have a taxable income of $50,001 to $100,000 will be paying a levy of 0.5% on that part of their income and taxpayers with a taxable income above $100,001 will have a levy of 1% applied on that part of their income. For example if you have a taxable income of $60,000 you will be paying a levy of $0.96 per week.

The Government has said that the levy will only apply to the financial year, 2011-12 and will not extend the levy past this date.

Taxpayers with a taxable income less than $50,000 or who are in receipt of the Australian Government Disaster Recovery Payment for a flood event in 2010-11 are exempt from the flood levy.

Here is a table supplied by the Treasury of how your pay packet will be affected each week:

Taxable Income ($pa)

**Levy Amount Per Week* ($)

Taxable Income ($pa)

Levy Amount Per Week* ($)

55,000

0.48

130,000

10.58

60,000

0.96

140,000

12.50

70,000

1.92

150,000

14.42

75,000

2.40

160,000

16.35

80,000

2.88

170,000

18.27

90,000

3.85

180,000

20.19

100,000

4.81

200,000

24.04

110,000

6.73

250,000

33.65

120,000

8.65

300,000

43.27

How Do I Pay This Levy?**

Employees will have the levy payments deducted as part of their tax payments that are deducted from their usual pay cycle. So basically that means that you will have a little more tax deducted in each pay. Businesses will need to apply a new withholding schedule to their employees to withhold levy payments. Businesses are not required to pay the levy as it is applied to individual taxpayers only.

Brian Reminds You Why You Should Keep Good Records

A good way to start a successful new year is to have organised records. Not only is it a legal ATO requirement but it is also makes it easier to monitor the health of your business. Brian explains why…

Legal requirement
It is a legal requirement that you keep records relating to your business. That is why it is so important to make sure you have a practical record keeping system in place. By law, the ATO requires you to keep business records:
·         for five years after they are prepared, obtained or the transactions completed (whichever occurs later); and

·         in English, or in a form that the ATO can access and understand in order to determine your tax liability.

According to the ATO website, you should "keep records for a longer period if you use information from those records in a later tax return (for example, claiming a loss carried forward from a business activity in an earlier year). The records should be kept until the end of any period of review for that later return. Records relating to assets for capital gains tax purposes may also need to be kept for a longer period."

You can issue and store records in either electronic or paper form. Once a record keeping system has been set up, it should be a simple process to update records daily. Feel free to contact your accountant if you have any queries about your records.

"There are penalties for not maintaining the required records and for not keeping them for five years" warns the ATO website. "Keeping good records will help you avoid these penalties."

Other reasons for keeping good records

Some other reasons are cited on the ATO website, such as:

·         It makes it easier to complete your business activity statements and prepare your annual income tax and fringe benefits tax returns.

·         You are able to monitor the 'health' of your business and make sound business decisions because you can keep track of debtors and creditors to ensure your cashflow is adequate.

·         Good records will demonstrate your financial position to banks and other lenders, and also to prospective buyers of your business.

·         Rather than paying your accountant or tax adviser to sort through a box full of paperwork, provide them with well prepared records and pay them instead to help you grow your business or provide tax planning advice.

·         Well kept records will show the basis for any amendments you need to make to activity statements or tax returns you have already lodged.

Tax Effective Finance Solutions for Your Business

Need new farm or business equipment, but concerned about cashflow? The way you finance your business purchases can have a large impact on your after-tax profits. Matt tells how we can help with tax effective solutions…

However, the lowest rate does not necessarily mean the best deal. Other factors such as methods of calculating early termination figures, tax deductibility and matching the finance to the useful life of the asset in your business must all be taken into account.
Chattel mortgages can provide 100% finance for your farm or business equipment, plus allow you to claim back any GST paid in your next BAS.

A chattel mortgage can provide your business with a number of key benefits:

It provides finance for any type of business equipment.

You have two options regarding payment of GST - pay from your working capital OR fund as part of the purchase price.

You can claim back the cost of the GST in your next BAS, even if it was funded as part of the chattel mortgage - providing substantial cash flow benefits.

Payments can be structured to suit your cash flow or seasonal income. At the end of the contract you can choose between a residual value or a zero amount.

You can claim depreciation and interest to offset your tax.

If you would like to find out more about using a chattel mortgage facility to fund your future business equipment,
Hern Financial Services is ideally positioned to help. Please call Matt on 08 8373 1702 to arrange a no obligation quote or appointment.

Our lending services are provided by Count's subsidiary finconnect (australia) pty ltd, ABN 45 122 896 477. Head Office: Level 19, 1 Alfred St, Sydney 2000. Registered Finance Broker (ACT) #173 106 45. WA Finance Brokers Licence #4292. Count Advisers who provide Residential, Business, and Commercial Finance in WA must hold a WA Finance Broker's Licence.

January 2011 HFS Business Informer
Maria's 4 Top Tax Tips to Start the New Year
ATO Audits Are On the Rise
You Deserve A Holiday
HFS Clients Feature in the Count Report

Maria's 4 Top Tax Tips to Start the New Year

The ATO is cracking down on Small businesses, especially ones that are participating in the cash economy. This year the ATO will be reviewing and auditing more than 26,000 micro businesses. Taxes are one of the most important issues facing small, growing businesses. Business owners need to ensure that they are meeting all their responsibilities to the ATO – and also seizing every opportunity to reduce their taxes. Our Senior Accountant, Maria, has tax tips will help you make sure that you are meeting your responsibilities.

Remember important deadlines
We are all aware of that the ATO requires individual tax returns to be lodged by a certain deadline. Similarly, the ATO has deadlines for businesses to lodge activity statements, GST returns, FBT reports, PAYG withholding reports, superannuation and income tax returns. The HFS Business Informer updates important ATO deadlines in each issue. Also check our website for key dates.

Keep your books in order
Good record keeping is fundamental to a successful business. Business records which should be kept include invoices, receipts, cash register tapes, banking records, creditors invoices, wage records, cheque butts and cash books. Keep an asset register to record what assets you purchase for the business.

To make life easier, make good use of the wide selection of software packages and online facilities available these days. Remember to store all your documents in a safe place for at least five years. Work papers are also desirable as they assist in the preparation of proper accounting records for the determination of income tax liability.
Speak to us about the most appropriate software package to use in your business.

Deductions and charitable contributions
Some tax deductions are obvious, like office expenses, rent, employee wages and business travel. Also, keep in mind other deductions such as depreciation of assets, trips that combine business and pleasure and advertising costs. Be consistent with your deductions; things like lunch with a client or driving to meet with a client can sometimes be forgotten.

Charitable contributions can usually be claimed as deductions on your individual tax return. However, make sure the charities are endorsed by the ATO to maximise your return.

Regularly review with your accountant
Hern Financial Services can help with your tax planning, so don't leave it too late to provide us with your financial records and arrange a meeting. We can recommend a number of appropriate taxation strategies to ensure you pay no more tax than you should. Call us on 8373 1702 to arrange your tax planning meeting.

This document is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of a client's specific circumstances.

ATO Audits Are On the Rise

The Australian Tax Office (ATO) continues to announce significant increases in their audit activity. Individuals, Small Businesses and Self Managed Superannuation Funds are at risk of being selected for a random audit.

The ATO will be sending letters to business owners to encourage them to review their business records. They will focus on cash based businesses who have fallen outside the small business benchmarks set by their respective industries. For more information about your business benchmark go to the ATO Small Business Benchmarks

Random audits or investigations by the ATO will result in costs to you. Even if there are no adjustments to the return, there are costs in the preparation of the material for the ATO and the managing of the response process.

Audit Insurance is available, and covers professional fees incurred in preparing all relevant documentation and responses to the ATO, conducting an Audit, Review or Investigation. The policy, underwritten by Vero Insurance Ltd, covers these costs relating to the current year's returns and all previous years.

Please contact Brian or Matthew to discuss whether Audit Insurance is appropriate for your business.

You Deserve A Holiday

During the festive season some people take extended leave, for some businesses it is the busiest time of the year but some employees just never take a holiday.

"I'm saving up for a big trip...one of these days"

"I'd love a holiday, but there's no one to cover for me"

"What if there's an emergency while I'm away?"

These are some common reasons why people save up their annual leave rather than take a holiday each year. While they may seem justifiable, the effects of untaken annual leave on employers are a concern for several reasons:

Employers' liability
As wages increase and annual leave accrues, the liability on employers also goes up. An employee who leaves his job while he is owed a lot of leave can take a sizable chunk out of the salary budget – this is especially risky for small companies with low cash buffers.

Bad for the balance sheet
Businesses expose themselves to higher liabilities by not encouraging staff to take leave as it accrues. 'From an internal control perspective, it's a huge risk to have people who won't take leave on the balance sheet' says Sally Freeman, a risk and compliance partner at KPMG.

Productivity
Working too long without a break can not only be damaging to a person's health and wellbeing, but can also have a negative impact on the quality of their work. On the other hand, taking regular short breaks are relaxing, refreshing and can improve job satisfaction.

The problem of untaken annual leave in Australia is so great that the federal government launched a campaign entitled 'No Leave, No Life' which is designed to encourage workers to use their leave entitlements.

According to Tourism Australia, the current stockpile of leave stands at a staggering 118 million days, or $33.9 billion on the balance sheets of private and public enterprises around Australia.

Strange as it sounds, forcing employees to take a holiday is not easy! One large corporation manages leave accruals quite carefully. When employees accrue more than eight weeks leave, management seeks to find out why they haven't used it. In addition, all managers receive a report each quarter of the leave accruals of their staff and together with the chief executive they discuss why people aren't taking leave.

Interestingly, some corporations promote a happy work/life balance by offering flexible working hours for staff to either start early and finish late or work full time hours within 4 days. They offer health and fitness programs and incentives to reduce their accrued leave.

It's important for employers to recognise the issues that can arise from having too much accrued leave on their balance sheet. More importantly though, employers need to build good relationships with their staff and actively manage their business to ensure maximum productivity and minimal liabilities.

HFS Clients Feature in the Count Report

In December, Hern Financial Services was lucky enough to have our clients, John and Catherine Riggall, featured in the Count Report.

The Count Report is a national magazine released by our Licensee, Count Financial. The article focused on how Hern Financial Services partnered with the Riggalls to achieve business and personal financial goals. John and Catherine are the business owners of Prospect First National Real Estate.

Click here to read more...

Quote of the month:

April 2011 HFS Business Informer Articles It's Time to Start Tax Planning

April 2011 HFS Business Informer Articles

It's Time to Start Tax Planning