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Financial Safety Checklist

You can do these things to improve your financial life: Reduce Credit Card Debt Why this is important You get charged around 20% interest on credit card balances. Unpaid credit card balances are the fastest way to go backwards financially. What action you should take Focus on reducing your Credit Card balances to NIL before you do anything else, and then keep your spending down so you can repay your credit card balance each month. Separate Bank Accounts Why this is important It’s too hard to know where you are financially with just one bank account. Using 3 different accounts to keep your Bills money and your Cash Savings separate from your Everyday Account helps you tell at a glance what you can afford to spend each week What action you should take Set up new bank accounts so you have an Everyday Account, a Bills Account, and a Cash Savings Account Set up auto bank transfers Why this is important Pay yourself first! Have your bills and cash savings covered automatically – and then spend what’s left in your everyday account. So easy to keep on track by this one simply strategy What action you should take Set up auto transfers using internet banking to transfer a set % of your wages each week into your Bills Account and into your Cash Saving Account Create a cash reserve Why this is important Aim to create a cash reserve to last you for 3 months. Most income protection insurance takes 1 to 3 months to start up – so you’ll need a cash reserve if anything stops you working. What action you should take Set up a Cash Savings account separate to your everyday account. Try to put aside into this account 5% of your weekly pay and build up a 3 month cash reserve. Lower Home Loan Interest Rate Why this is important Your bank won’t offer you an interest rate reduction on your loan unless you ask for it. So… ask for it! This could save you thousands of $ each year. What action you should take Contact your bank and ask for a reduction in your home loan interest rate. Quote a lower comparative interest rate from another bank and tell your bank if they don’t match or better it you’ll consider switching your home loan to the other bank Be tax Effective Why this is important Many people pay tax they shouldn’t have to. Being smart about where you keep your cash savings can reduce your overall family tax payable What action you should take Move your family savings into either a home loan offset account (you won’t be taxed on interest received) or into the name of a lower taxed spouse/partner to reduce your tax. Find your important documents Why this is important In an emergency, can you or your spouse/partner or trusted family members find your important legal documents? Where are the originals stored? Who has copies? What action you should take Know where all your original important documents are, including your Will, Enduring Power of Attorney, Advance Health Directive, etc. Plus: Scan and send a copy of these documents to your Accountant The Journey2 Team can assist you (along with our referral partners) with the following tips to improve your financial life: Keep Your Family Wealth in Your “Bloodline” Why this is important If your kids are married / in a relationship and it ends, any family wealth they inherit from you may end up going to another family and your kids miss out. We can help to set up a structure that keeps your family wealth in your family “bloodline” and protects everything you’ve worked so hard for. What action you should take Meet with us and our recommended Estate Planning Lawyer to discuss your options for your unique family circumstances. We will then prepare a Letter of Advice for you which includes your options, diagrams, actions and prices to protect your family wealth Set up Successor Directors for your Companies Why this is important If you die or are incapacitated – without the right documents in place your single director company can’t operate, and your family’s position in a multi director company may not be properly represented. What action you should take Request us to prepare a “Successor Director” pack of documents for you to sign now to nominate your successor director to take your place, if required. Protect your Family Home Equity Why this is important You’ve built up equity in your home – now it’s time to protect it using a “Family Protection Trust”. This can be done without triggering stamp duty and Capital Gains Tax. What action you should take Request a Letter of Advice from us to explain how the equity in your family home (and other investment properties) can be given the maximum protection available. Update Your Will Why this is important If you die without a Will – the Public Trustee will charge your estate (could be up to 5%) and your wealth may not go where you want it to. What action you should take Request us to facilitate the preparation of a new Will for you with our recommended Estate Planning Lawyers. Update your Enduring Power of Attorney Why this is important If you are unconscious or incapacitated and cannot make decisions – you need someone who can make financial decisions on your behalf. What action you should take Request us to facilitate the preparation of a new Enduring Power of Attorney for you with our recommended Estate Planning Lawyers. Update your Advance Health Directive Why this is important If you are unconscious or incapacitated and cannot make decisions – you need someone who can make financial decisions on your behalf. What action you should take Request us to facilitate the preparation of a new Advance Health Directive for you with our recommended Estate Planning Lawyers. Debt Reduction + Recycling Why this is important This allows you to focus on reducing your Read More

Scam Awareness week

Australians have lost over $192 million dollars to scams during the last year. This is an increase of 95.4% from last year.  This scam awareness week the ACCC is encouraging Australians to talk about scams with their family and friends to raise awareness. How to identify a scam Someone asks your for personal information, like your bank details or passwords, or access to your computer. Someone you’ve never met in person asks you for money or asks you to give them money by unusual payment methods such as gift cards, wire transfers, or cryptocurrencies. Something sounds too good to be true, like an online shopping deal, a competition you’ve won, an unclaimed inheritance, or being invited to invest in an ‘amazing’ opportunity. Someone threatens you with immediate arrest or deportation unless you transfer money. New scams are constantly emerging, and scammers are becoming increasingly sophisticated. Our growing reliance on technology has provided them with further opportunities to convince people into giving away their information. Keep yourself informed by visiting scamwatch.gov.au

Government moves on Budget Changes

The Federal Government announced a number of proposed changes to super and SMSFs in this year’s Federal Budget (2021-22). Many of these were lauded as positive for superannuation – expanding contribution opportunities, along with addressing long overdue SMSF issues with legacy pensions and the inequities in the existing residency rules. There was some thought that the introduction of these changes would be deferred until after the Federal election in the first half of next year. However, the Federal Government introduced Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021 into Parliament on 27 October 2021. The Bill includes the following measures: Measure Removing the $450 SG threshold for an employee earning salary and wages. Details The measure will start from 1 July 2022, unless Royal Assent is received after this date, where it will apply from the beginning of the following quarter. Measure Increasing the amount eligible to be released from the First Home Saver Super Scheme (FHSSS) from $30,000 to $50,000. Details This measure will apply to requests made after 1 July 2022 for the Commissioner to make a FHSSS determination.  No change applies to the limit on voluntary concessional and non-concessional contribution in any one financial year that can be released (being $15,000). Measure Reduces the eligible age from 65 to 60 years for an individual to make a downsizer contribution from the proceeds of the sale of their home. Details This measure will apply to downsizer contributions made on or after 1 July 2022.  All other existing qualifying conditions remain to be eligible to make the downsizer contribution. Measure Repeals the ‘work test’ for individuals 67 – 75 years of age for non-concessional contributions (incl. bring forward rule) or salary sacrifice contributions, subject to existing contribution caps. Details Work test will continue to apply to personal deductible contributions.  Shift in application of the ‘work test’ from SIS Regulations to ITAA 1997 for purposes of claiming a tax deduction on personal contributions.  Bring forward rule extended from 67 to 74 years of age, however will be transitioned out as individuals reach age 75 where ordinarily a member in ineligible to make further non-concessional contributions. Measure Provides ‘choice’ in respect to determining ECPI for an income year where a fund has both segregated and unsegregated periods during an income year. Details This measure will apply to the 2021-22 income year and later income years.  The default position will be the current law when the trustee does not make a ‘choice’ – i.e. using the segregated method where the fund is fully in retirement phase for periods of the year. This election will occur before submission of the SMSF Annual Return and is not a formal election (i.e. does not require any ATO submission). There are two budget announcements that impact SMSFs that do not form part of this Bill – these are: Legacy pension conversions – allowing for the conversion of defined benefit pensions and market linked pensions to account based pensions and/or accumulation, within the confines of the member’s transfer balance cap. Changes of the residency rules for SMSFs – removal of active member test and changes to the safe harbour from 2 to 5 years where the absence is temporary.

Doing Business with Wollongong City Council – upcoming information session for local suppliers

Just a reminder that Wollongong City Council will be hosting a free online information session this Thursday, 28 October at 1:30-3pm, open to all local businesses interested in supplying to Council. The session will be held using Microsoft Teams and registration is essential. If you would like to attend, please register here. The objective of the session is to engage with local businesses in order to: Assist with understanding ‘how to do business’ with Wollongong City Council. Increase awareness of the opportunities presented by Council’s Infrastructure Delivery Program, especially over the next 12 months. The size of the current program is $834M over the next four years (2021/2022 to 2024/2025). Raise awareness of Wollongong City Council’s procurement framework, including an increase to 10% weighting for local content in tenders and formal quotations. Increase awareness of opportunities of doing business with Local Government. The session will include a welcome from Council’s General Manager, Greg Doyle, as well as presentations covering the following topics: An overview of Council’s current Infrastructure Delivery Program, highlighting upcoming opportunities Council’s procurement framework, including tenders, formal quotations, panels and prescribed entity contracts How suppliers can improve their submissions to Council Local Government Procurement workshops for local suppliers WHS compliance and prequalification There will be an opportunity for Q&A during the session. All businesses that register for the online event will receive a follow up email with key resources.  

JobMaker Hiring Credits payments – Claim Now

JobMaker Hiring Credit payments are able to be claimed for additional eligible employees hired between the 7th of April 2021 – 6th July 2021. Claims must be made by the 31st of October 2021. Eligibility Criteria Employers may be found eligible if you meet all of the following: has registered for the JobMaker Hiring Credit scheme either operates a business in Australia is a not-for-profit organisation operating in Australia is a deductible gift recipient (DGR) endorsed either as a public fund or for a public fund you operated under the Overseas Aid Gift Deductibility Scheme (DGR item 9.1.1) or for developed country relief (DGR item 9.1.2) holds an Australian business number (ABN) is registered for pay as you go (PAYG) withholding has not claimed JobKeeper payments for a fortnight that started during the JobMaker period is up to date with income tax and GST returns for the two years up to the end of the JobMaker period for which they are claiming satisfies the payroll increase and the headcount increase conditions satisfies reporting requirements, including up to date Single Touch Payroll (STP) reporting does not belong to one of the ineligible employer categories. For further information regarding eligibility please see the ATO website If you business is eligible register – use ATO online services, Online services for business, or a registered tax or BAS agent nominate your additional eligible employees – run payroll events through your Single Touch Payroll enabled software claim – use ATO online services, Online services for business, or a registered tax or BAS agent. If your business is eligible you can claim the JobMaker hiring credit for up to a year for each additional eligible employee hired between 7th of October 2020 – 6th October 2021. If you require assistance in accessing the JobMaker hiring credit please contact the Journey2 team!  

NSW Government – Accommodation Support Grant

The NSW Government is offering accommodation providers whom have experienced cancellations during the June – July Public School holidays (25th June – 11th July 2021) an Accommodation Support Grant. If your business was impacted, you may be eligible for one of 2 grant amounts: $2,000 for cancellations of 10 nights or less $5,000 for cancellations of 11 nights or more. If you have more than one accommodation property in NSW, you’ll be able to apply for each property. To be eligible for the grant you must: Be an eligible business as defined by ANZSIC codes in the guidelines Have accommodation premises physically located in NSW Have an active ABN that is GST registered and held before 25th June 2021 Be able to show evidence of cancellations between Friday 25th June – Sunday 11th July. You may also be eligible for this grant if you run a private residence as an Airbnb or short-stay accommodation rental. You must meet the eligibility requirements for the grant and show that the income from the holiday accommodation is your primary income. Once approved, payment will be made to your nominated bank account within 10 business days. Applications are open until 30 November 2021.

Varying your PAYG instalments due to COVID-19

The below has been taken from the Australian Taxation Office website https://www.ato.gov.au/General/PAYG-instalments/In-detail/Varying-your-PAYG-instalments-due-to-COVID-19/ If you continue to be affected by COVID 19 and choose to vary your PAYG instalments the ATO will not apply penalties or charge interest if the varied PAYG instalment rate relates to the 2021 – 2022 income year. What are PAYG Instalments PAYG instalments is a system that helps you manage your expected tax liability on income from your business or investments for the current income year by making regular payments. You can vary your instalments if you think using the current amount or rate will result in you paying too much by instalments when compared to your estimated tax for the year. Why vary your instalments If you are a pay as you go (PAYG) instalment payer, you can vary your PAYG instalments on your activity statement. We will not apply penalties or charge interest on varied instalments that relate to the 2021-22 income year when you have taken reasonable care to estimate your end of year tax liability. This means making a reasonable and genuine attempt to determine your liability. When considering if a genuine attempt has been made, we consider what a reasonable person would have done in your circumstances. This applies to 30 June ordinary balancers for the 2022 income year and entities that have been granted a substituted accounting period (SAP). For an entity with a SAP, any variation must relate to instalments made during your 2022 income year. We encourage you to review your tax position regularly. You can vary your instalments multiple times throughout the year if your situation changes. Your varied amount or rate will apply for all your remaining instalments for the income year or until you make another variation. You should ensure the total of your instalments for the income year are as close as possible to your tax liability for that year and paid proportionally across the year. If you realise you’ve made a mistake working out your PAYG instalment, you can correct it by lodging a revised activity statement or varying a subsequent instalment. If you are unable to pay your instalment amount you should still lodge your instalment notice and discuss a payment arrangement with us to ensure you will not have a debt at the end of the year. If you are an amount payer As an amount payer, the amount on your activity statement is set as a dollar amount. You can vary your instalment amounts for the remainder of the year if either: you expect to have significantly less business or investment income (or both) than expected you expect your deductions against your business or investment income (or both) to be more than the income itself for the full year. How to vary your instalment amount On your activity statement, enter at: T8 – the estimated tax for the year (if this is nil, enter 0) T9 – the varied instalment amount for the quarter (if this is nil, enter 0) T4 – the variation reason code (use reason code 23 – significant change in trading conditions) 5A – your PAYG income tax instalment amount (if you’re filling in a paper form, enter the amount from T9). If you are a rate payer The instalment rate is a percentage applied against the income you received for the period. The amount you pay may go up or down. You can vary your instalment rate down if either: you expect to have significantly less income than expected you expect your deductions against your business or investment income (or both) to be more than the income itself for the full year. How to vary your instalment rate Follow these four steps to vary your instalment rate: Step 1 Estimate your instalment income for the year. Your instalment income is generally your gross business or investment income (or both) excluding any capital gains. See PAYG instalment income – T1 for a list of what it includes. Step 2 Estimate the tax on your instalment income for the year. You can use the PAYG instalments calculator or our instructions to estimate the tax on your instalment income. Step 3 Work out your varied instalment rate. You can work out your varied instalment rate by dividing your estimated tax by your estimated instalment income then multiplying by 100. On your activity statement, enter at: T1 PAYG instalment income – your instalment income T3 Varied instalment rate – your varied instalment rate (if varying to nil, enter 0) T11 – the sum of your instalment amount (multiply T1 by T3) T4 Reason code for variation – reason code 23 (significant change in trading conditions) 5A – your PAYG instalment income amount (if you’re filling in a paper form, enter the amount from T11). Step 4 Complete any other questions on your activity statement as required. How to claim a credit on PAYG instalments already paid Once you have varied down your rate or amount, you can also claim back a credit from the PAYG instalments you have already paid in your current financial year. To do this, complete the amount at label 5B on your activity statement. If you choose to not claim back your credits on your activity statement and you overpay your PAYG instalments, you will be credited with them after your tax return is processed. If you would like assistance in assessing whether you are in a position to vary your PAYG instalments contact the team at Journey2 today!

Update – JobSaver, Disaster Payments & Micro Business grants

The NSW and federal government have announced plans to phase out support payments and vaccination rates as NSW reach the 70% & 80% targets. JobSaver Grant – 70% Vaccination rate Payments will reduce from 40% to 30% of weekly payroll Minimum weekly payment will be $1,125 Maximum weekly payment will be $75,000, and Weekly non-employing business payment amount will reduce to $750 JobSaver Grant – 80% Vaccination rate Payments will reduce from 30% to 15% of weekly payroll Minimum weekly payment will be $562.50 Maximum weekly payment will be $37,500, and Weekly non-employing business payment amount will reduce to $375. Micro- Business Grant – 70% Vaccination rate No changes Micro- Business Grant – 80% Vaccination rate Fortnightly amount will half to $750 COVID – 19 Disaster payment – 70% Vaccination rate The payment will cease to automatically renew. Individuals must reapply each week to confirm their eligibility The payment amounts remain the same COVID – 19 Disaster payment – 80% Vaccination rate The payment will step down over two weeks from the first week after the target is reached. Week 1: Flat payment of $450 for those who have lost more than 8 hours of work The supplement for those on income support decreases to $100 from $200 currently Week 2: Flat payment of $320 (same as JobSeeker) for those who have lost more than 8 hours of work The supplement for those on income support is removed Pandemic Leave Disaster Payment The Pandemic Leave Disaster Payment remains in place until 30 June 2022. This payment provides support for individuals if they can’t earn an income because they must self-isolate, quarantine, or are caring for someone with COVID-19.

Director ID’s are now required

Director ID’s are now required for Directors of Australian Companies. If you were a Director on or before 31st October 2021 you will have until the 30th of November 2022 to apply.  Director’s who have been appointed between 1st November 2021 & 4th April 2022 will have 28 days from appointment to apply.  From the 5th of April 2022 you will need to apply for the Director ID prior to your appointment.  Please click here to read more about Director ID. How to Apply Step 1 – Set up myGovID You will need a standard or strong identity strength myGovID to apply for your director ID online. If you: don’t have a myGovID, you can find information on how to download the app at How to set up myGovIDExternal link have a myGovID, you don’t need to do anything until November when you can apply for your Step 2 – Gather your documents You will need to have some information the ATO knows about you when you apply for your director ID: your tax file number (TFN) your residential address as held by the ATO information from two documents to verify your identity. Examples of the documents you can use to verify your identity include: bank account details an ATO notice of assessment super account details a dividend statement a Centrelink payment summary PAYG payment summary. Step 3 – Complete your application Once you have a standard or strong identity strength myGovID, and your documents, from November 2021 you can log in here and apply for your director ID. The application process should take less than 5 minutes. Once you have a standard or strong identity strength myGovID, and your documents, from November 2021 you can log in here and apply for your director ID. The application process should take less than 5 minutes. If you are unable to get a myGovID please see the below process: Apply by phone From November 2021, you can apply by phone if you have: an Australian tax file number (TFN) the documents you need to verify your identity. Apply with a paper form If you can’t apply online or over the phone, you can apply using a paper form. This is a slower process and you will also need to provide certified copies of your documents to verify your identity. A downloadable application form will be available in November 2021.  

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