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How to make up your superannuation shortfall & fatten your fund
Andrew Stubbs • Nov 04, 2018

Have you been doing the numbers and panicking a little recently?

If your super fund is a little 'light' as you start to think ahead to your golden years, you're not alone.

Millions of Australians are reviewing their retirement plans. We have been taught to believe that the money that flows into our super fund (equivalent to 9.5 per cent of our salaries) will look after us when we retire.

But many Australians are finding out that the numbers simply aren't adding up. We're living longer; many of us have more lavish lifestyles and higher expectations; the cost of healthcare and utilities is rising dramatically; and suddenly those golden years aren't looking so shiny.

The superannuation guarantee (SG) is scheduled to climb in increments until July 2025 (more about this below) – but this is unlikely to be enough to cover the shortfall.

The Association of Super Funds of Australia currently estimates that around $545,000 is required as a healthy average balance to retire on. This figure would be more if you need to pay rent.

Unless you are supplementing your super employer contributions with money from other sources, it is likely that you're in a similar boat to over half of Australians, who will be struggling to meet this requirement.

That spells trouble in your later years.

So it's important to consider ways of fattening up your fund in your remaining working years so that it's better positioned to look after you and your loved ones.

How can you do that?

You're probably familiar with a few of the ways that you can swell your fund – but there may be a few you haven't considered…

Note that the following information is of a general nature and should not be considered to be advice specific to your situation. You should always consult a qualified financial advisor when making changes to your superannuation contributions or structure.

Employer contributions

Get the obvious one out of the way.

If you are an employee over the age of 18 earning more than $450 per month, your employer must pay the equivalent of 9.5 percent of your 'ordinary time earnings' into your super fund.

These compulsory contributions are called Superannuation Guarantee contributions and they will gradually rise to 12 percent by July 2025.

These earnings include:

  • Over-award payments
  • Bonuses
  • Commissions
  • Allowances
  • Some paid leave

For every $10,000 that you earn, it equates to $950 into super. Your employer must pay this in once a quarter at least – most will pay more often than that.

As a contractor, if you're paid mainly (or wholly) by the hour, your employer is still obliged to pay the 9.5 percent into your super.

There is not much you can do with this in terms of topping up your super – other than working longer hours, getting a second job, or pushing for a salary increase.

The equation is quite simple: the more you get paid the more goes into your super!

Salary sacrificing

By voluntarily electing to pay a larger proportion of your salary into your super fund, you can boost it AND receive tax benefits.

This is called 'salary sacrificing' or 'concessional contributions' and it is a practice that is looked upon favourably by the Australian government.

It needs to be arranged through your employer so that the amount is automatically deducted from your salary.

Anything you pay into your super fund under this method is calculated before income tax and after only the 15 per cent super contributions tax.

For individuals other than low income earners, this means that you get to keep far more of your money from the taxman!

Spouse super contributions

Does your spouse or partner work part-time? Do they earn a relatively low salary? Are they out of work or a stay-at-home parent?

If so, it might be beneficial for you both if you contribute to their superannuation fund.

For professionals whose spouse or partner has a super fund that is not growing at all or very little, this can create problems in retirement.

One way to address this is to contribute some of your own money to their fund and thereby claim tax offsets.

While the regulations on this do change, the tax benefits are accessible to couples who are both Australian residents and you are:

  • Able to make an after-tax contribution to your spouse's super account (who is under 65 and receives under a certain income – check the latest limits here )
  • Married or in a de facto relationship where you are living together

Personal tax-free contributions

Another tax-friendly way to boost your super fund is to make 'non-concessional contributions'.

These are lump sums paid into your super account. They are tax-free because they are considered to be savings from income that you have already paid tax on. It is different to salary sacrificing, which covers contributions made before tax.

Just arrange with your super fund to pay in. It can be on an ad hoc basis and can usually be arranged directly through your bank account (by BPay or cheque).

Again, non-concessional contribution limits do change, so check the latest guidelines on the ATO website.

Co-contribution

The co-contribution scheme is an excellent way to boost your fund if you're considered a low or middle-income earner.

Making an extra (after-tax) contribution to your fund triggers a tax-free contribution from the Australian government. This is paid automatically after lodgement of your tax return, if you have provided your Tax File Number to your super fund.

This can be especially effective for low-income earners who start early and contribute over many years to accumulate the extra benefits.

The amounts and limits of these contributions change over time but check the ATO's superannuation pages for the latest regulations and eligibility guidelines.

Rollover and save

At present, there are almost three superannuation accounts per Australian of working age. Clearly, many Australians have more than one super fund.

It's quite easy to forget about your super and let it tick over, not doing much.

Get proactive with it. Understand the super funds you have and analyse the investment returns and the fees you pay (admin fees, investment fees, life insurance premiums etc.)

You may find that you will both save AND make money by rolling over into one solidly performing super fund.

Simply getting smarter with your funds can help you grow what you have quicker.

Downsize and divert money into super

One strategy that might work for you if the numbers aren't adding up quite how you'd like is to downsize and start channelling money into your super fund.

This may be a good option if you are already over 65 or if you have a home that is currently under-utilised: perhaps your children have moved out or other circumstances changed?

Downsizing to a smaller home may have tax benefits and/or release lump sums that can be used for contributions into your super.

Grow your super - starting today!

If you've read this far, it's likely that you're concerned about your super fund going the distance to look after your loved ones in later life.

After all, you might live into your 90s or beyond 100!

Don't panic. It's a positive sign that you want to do something about it.

Super gets preferential tax treatment and it just takes a little planning, juggling of priorities and action to start channelling money into your fund and growing it.

The immediate peace of mind you will experience from the knowledge that you are securing your future will be just as valuable as the financial benefits you'll receive later in life.

Assess the current status of your fund(s); understand if there is a shortfall between where you are now and where you should be for the lifestyle you are planning; and then start doing what needs to be done to grow what you have, considering the methods outlined above.

If you need assistance with growing your super fund, feel free to contact us for professional advice.

Why Your Business Needs to Invoice Using the New Peppol Network

By Andrew Stubbs • 05 Jun, 2022
Here's some good news if your business sends invoices to business or government customers. Peppol* is on its way. (That's Peppol, not Peppa .) Ever had this conversation in your business? You or one of your team: "Hello, I'm calling to follow up the invoice we emailed to you last month. It hasn't been paid yet." Customer: "Really? We didn't receive that invoice?" In addition to the time and expense of following up, the cash flow delays create stress for you and they hurt your business. Thankfully, the adoption of Peppol will solve this problem. What is Peppol? Peppol is an obscure acronym for Pan-European Public Procurement On-Line. What's more important than what it stands for, is what it enables. Peppol is an international 'eProcurement' framework for the electronic exchange of information. It creates a standard approach for governments and businesses to structure and exchange information such as invoices and other documents. What Peppol means for you and your business Peppol makes electronic ordering, invoicing and shipping between governments and private companies faster, simpler and more secure. This means your business will get paid faster when dealing with government and larger businesses. In 2019, Australia and New Zealand adopted this platform for e-invoicing which, when implemented, will make 'we never received your invoice' issues virtually impossible. The new e-invoicing system is more secure than email and provides many other benefits. Which countries are adopting Peppol? There are currently 40 OpenPeppol member countries: 32 countries in Europe plus Australia, New Zealand, USA, Canada, China, Japan, Mexico and Singapore. Each country has a Peppol authority. For example, in Australia that's the Australian Tax Office (ATO). Is Peppol already in use? Yes it is. For example, the SuperStream system in Australia-which many businesses are currently using to automate the payment of employee superannuation contributions-is based on the Peppol protocol. How does e-invoicing work? The system connects the accounting systems of all businesses and government departments via the secure Peppol network.  Suppliers generate sales invoices in their accounting systems which are sent to Peppol.

Company Director? Why You Need to Apply for Your DIN

By Andrew Stubbs • 04 May, 2022
If you're a director of an Australian company-or you plan to be-take 5 minutes now to read this article. All existing directors (and intending directors) of Australian companies need to be aware that the Australian Government has announced the introduction of a new mandatory Director Identification Number (DIN) system. (You'll notice the term director ID is also used for DIN.) This system is the initial step in the Modernising Business Registry (MBR) Program which has been established under the Treasury Laws Amendment Act which was legislated by the Australian Government in 2020. More information on the MBR program can be found here . What is the DIN system trying to achieve? The DIN aims to provide accountability and traceability of a director's relationships over time, across all companies and will provide information on a director's involvement in what may be repeated unlawful activity, including illegal phoenix activity. It should also solve the problem of false or fraudulent director identities. What are the key features? It is mandatory for all directors, foreign directors and alternate directors of Australian companies to hold a DIN. The DIN is a unique 15 digit number. The first 3 digits will be 036 which is the identifier for Australia. The last digit is a check digit to help with accuracy when quoting your DIN. Like your tax file number, you will only be issued with one DIN which you will hold for life - even if you cease acting as a director for any period. To obtain a DIN, you will need to prove your identity so you will not be able to hold multiple DINs. Other office holders (e.g. company secretaries) are not required to register. The director is responsible for updating the DIN records for any changes in personal information within 7 days of the change. The director must apply personally. The process cannot be completed by your accountant, lawyer, spouse or executive assistant. There are significant penalties for non-compliance. How do you apply for a DIN? Directors have 3 options for applying. You can apply online from 1 November 2021. To use this method, you must first establish your identity via myGovID (an app you download on your smart device which is different from myGov). Once set up, your myGovID will make accessing a wide range of government services easier. (It's not just for your DIN application). For information on how to set up a myGovID please go to https://www.mygovid.gov.au/set-up During the DIN application process, you will need additional information such as your tax file number (TFN) and your residential address as per ATO records. It would also be advisable to have other personal details such as bank account details, medicare card or a recent income tax assessment available in case these are required. You can also apply by phone ( 13 62 50 ). During the call, the operator will ask for the identity documents you would have used to obtain your myGovID (passport and driver licence) as well as the additional information listed above. These details will be confirmed with the records held on existing government databases and, assuming the details agree, your DIN will be issued. Or you can apply by mail, but this is not recommended because the process for doing this seems vague ("Write to us") which means you can probably expect a lengthy process of certifying documents and coping with the vagaries of the postal system. One of the other two methods would be a better choice. When will you need to apply for a DIN? Transitional arrangements will allow directors to become familiar with the new requirement. When you need to have a director ID will depend on when you were appointed as a director.

7 Best Practices for Setting Your Small Business on the Success Track

By Andrew Stubbs • 07 Apr, 2022
If you're a small business owner, you're always on the lookout for better ways to go about routine tasks to boost growth and underpin reliability. So, yes, you have the will; now, what are the ways? What are those consistent routines you can instill that will have the most benefits? This article looks at the top 6 things you can do to help your business thrive. We're going to cover finances, goals, marketing, technology and you ! So, let's take a look… 1. Your finances are a scorecard … and a predictor Boil it all down and dollars in the bank are the report card on the health of your business operations. Surprising then that so many people don't really pay much attention to how much they've earned, nor how much they're likely to earn. As much as it might feel like a chore, reviewing your sales and financial projections and then using them to ascertain if you need business financing is a discipline worth cultivating . If you suspect that your cash flow is precarious, you should be checking out your options today. First metric to check: your credit score. If it is too low, you need to take steps to shore it up. Next, check in with your bank or finance broker about what loans are available. 2. Goal setting, goal achieving, goal celebrating So, if you're using current and future dollars in the bank to keep score, the next thing is to do something about it. This is where goal setting comes in. If thoughtfully set and persistently pursued, goals help you orientate your willpower and your energy at each moment of the business day. This is the hidden power of goals: giving you a good sense of direction and a way to channel your instincts towards wise objectives. Constantly checking in with your goals makes them a benchmarking tool to keep your business pointed in the right direction. Yes, just having goals helps. Actually achieving a goal helps too, of course! 3. Increasing the impact of your marketing Marketing is not magic. It is not a mystery. It is not an art. However, many less-than-reputable marketers will try to claim that it is. They do so to gain wiggle room to pad their invoices and cover up their lack of skill. What this means is that it is easy to waste money on ineffective marketing. The good news is that there are many low-budget marketing strategies that actually work to help grow your brand and reputation. Scout around on the internet and choose one or two new tactics. Deploy them and test them. If they work, double down. If they don't, try something else. If you can't tell if they're working, also try something else. Social media is the obvious starting place for these low-stakes experiments and the old classics of LinkedIn, Facebook and Twitter are where to trial them. 4. Bringing your business up to date technologically The ability of modern productivity and project-management tools to give small players the same capabilities as the big boys simply cannot be ignored. Harness them properly and they'll let your small businesses operate with the same productivity as the titans of your sector. And, if your business is in the services sector, the increased controls that business technologies can yield also lets you be highly agile - that's something the big boys can't do. So, ask yourself: are you taking full advantage of what's out there? Don't worry, the answer to this question is always 'no' - the field is simply moving too fast for anyone to be able to take full advantage. However, if you have a realistic view of your needs, then you have a yardstick to help assess all the solutions out there. When you know what you need the technology to do, then you can wisely choose what hardware, software, platforms and techniques to introduce. 5. SEO has changed and it is going to change again Google - indeed all platforms offering broad search functions, from Youtube to Facebook - are constantly altering and optimising their algorithms. This, in turn, means SEO practice must constantly evolve to keep pace. So, if your SEO approach hasn't been overhauled in a few years, the time has come to give it some attention. Do a review of best practice and score how you cater to SEO in your online presences. Yet, because the underlying concept of SEO has not changed, the corrective actions you need to take may not be major. Then again, they might be! It is better to know unpleasant news sooner than outright bad news later. 6. Download the right new apps The remote work trend has gone mega and this means mobile productivity apps are very much of-the-moment. See, you can get a surprising amount done with just your phone and tablet. And apps are how it all happens … plus connectivity and a full battery, of course! Usually, apps are best for keeping an eye on things, boosting effectiveness on the "busy" tasks and enabling you to give your stamp of approval to work that needs your say-so to progress. In general, these are not value-adding tasks, just the value-neutral tasks that get in the way of the value-adding tasks. Now, there is no end of apps out there. So, as always, don't bother looking until you have some idea of what you need. 7. You are the ultimate business tool Health is the single most important aspect to consider for anyone running a business. It's the non-negotiable factor that governs everything else you are capable of. To adapt a quote from Arnold Schwarzenegger, being fit and healthy is "a status symbol. It reflects you worked hard for it; no money can buy it. You cannot borrow it, you cannot inherit it, you cannot steal it". This means that you must get enough sleep every night (most people need 7 hours or more). This means a healthy diet must become your preferred way of eating. This means that you should exercise every single day (except when sick). This means you must give your mind a rest too . Meditation isn't some mystic monkish thing, it's simply the practice of letting your thoughts come and go while you - the observer - stay peaceful and undisturbed by them. Think of it like this, meditating is mediating your mind. Take stock, choose wisely, make small steps in the right direction In this article, we've talked about some improvements you can make to what you're already doing. You don't have to do all of these at once. Start with the one that seems easiest and then stick with it to see if it works. Remember, it's not always about big changes. Often, you can make major improvements in outcome by making small changes to input. Doing the little things better. So take stock, choose wisely and be sure to make those small steps in the right direction for success today, tomorrow and the next day.
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