Counting down to June 30

It’s been a year of change like no other and that extends to tax and superannuation. As the end of the financial year approaches, now is a good time to check some new and not so new ways to reduce tax and boost your savings.

With so many of us confined to our homes over the past year, the big deductible item this year is likely to be working from home expenses.

Home office expenses

If you have been working from home, the Australian Taxation Office (ATO) has introduced a temporary shortcut method which can be used for the 2020-21 financial year. This allows you to claim 80c for each hour you worked from home during the year.i

The shortcut method covers the additional running costs for home expenses such as electricity, phone, internet, cleaning and the decline in value of home office furniture and equipment.

Some people may get a better result claiming the work-related portion of their actual working from home expenses using the actual cost method.

Alternatively, if you do have a dedicated home office, you can claim using the fixed rate method. The fixed rate is 52c an hour for every hour you work at home and covers things like gas and electricity, and the decline in value or repair of office furniture and furnishings. On top of this, you may be able to claim the work-related portion of phone and internet expenses, computer and stationery supplies, and the decline in value of your digital devices.ii

Pre-pay expenses

While COVID has changed many things, some things stay the same. Such as the potential benefits of pre-paying next year’s expenses to claim a tax deduction against this year’s income.

Some examples are pre-paying 12 months’ premiums for your income protection insurance and work-related expenses such as professional subscriptions and union fees. If you are unsure what you can claim, the ATO has a guide for a range of occupations.

If you own an investment property, you might also consider pre-paying 12 months’ interest on your loan and other property-related expenses.

Top up your super

If your super could do with a boost and you have cash to spare, now is the time to check whether you are making the most of the contribution strategies available to you.

You can make tax-deductible contributions up to $25,000 a year, including Super Guarantee payments by your employer. You can also contribute up to $100,000 a year after tax. From July 1 these caps will increase to $27,500 and $110,000 respectively, so it’s important to factor this into decisions you make before June 30.

For instance, if you recently received a windfall and are considering using the ‘bring forward’ rule, you might consider holding off until after July 1. This rule allows you to bring forward two years’ after-tax contributions. By holding off until July 1 you could contribute up to $330,000 under the new limits.

Also increasing on July 1 is the amount you can transfer from your super account into a pension account. The transfer balance cap is increasing from $1.6 million to $1.7 million.

So if you are about to retire and your super balance is close to the cap, it may be worth delaying until after June 30. Finally, from 1 July 2020, if you are under age 67 you can now make voluntary contributions without meeting a work test. And if 2020-21 is the first year that you no longer satisfy the work test, you may still be able to add to your super if you had a total super balance below $300,000 on 1 July 2020.


Manage investment gains and losses

Now is a good time to look at your portfolio for any loss-making investments with a view to selling before June 30. Any capital loss may potentially be used to offset some or all of your gains.

Of course, any decisions to buy or sell should fit with your overall investment strategy and not for tax reasons alone.

For all the challenges of the past year, there are still many ways to improve your overall financial situation. So get in touch with an Adviser on 03 5120 1400 to make the most of strategies available to you to before June 30.

https://www.ato.gov.au/general/covid-19/support-for-individuals-and-employees/employees-working-from-home

ii https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/home-office-expenses/

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

Opportunities amidst the COVID-19 disruption

small plant growing out of a crack in the ground.

COVID-19 is resulting in significant disruption to well-established business models, impacting businesses, sectors and stocks across the board.

However as Albert Einstein once said “in the middle of difficulty lies opportunity”. That certainly rings true in 2020 as analysists predict significant changes in the types of businesses that will prosper through the crisis, with certain sectors dominating others.

At a time where our movement has been constrained in an unprecedented way, sectors relating to the movement of goods, data and people are being heavily impacted by the crisis. However, they are also well positioned to capitalise on the changes brought on by the pandemic.

Supply chain and logistics embrace technology

The pandemic has significantly impacted many bricks and mortar businesses, yet online shopping has boomed. Australia’s e-commerce industry had a growth of over 80% in the two months after the COVID-19 pandemic was declared by the World Health Organisation.i

Yet this boost to e-commerce has brought its own challenges. Back in April 2020, Australia Post was delivering an estimated 1.8 million parcels each day, which resulted in lengthy delays to delivery times.ii Meeting the demand for timely deliveries, avoiding supply chain disruption and bottle necks has called for innovation in logistics.

While demand may not remain at the heightened COVID-19 levels, experts are predicting long-term shifts to micro supply chains and the decentralisation of manufacturing capacity. Also critical to the creation of smart and nimble supply chains is the use of technology to drive efficiencies and manage significant fluctuations in demand.

Data movement and security a focus for business

It’s clear that where people’s physical mobility is limited, fast and secure movement of data is critical. 2020 has seen innovation being applied to find new ways to secure, verify and exchange business-critical information.

With many workers based at home, this shift to a hybrid workplace means a change in workflows as well as the immediate need for security measures to protect networks, as staff are no longer using their corporate networks. The increase of Zoom calls, for example, has meant becoming more aware and prepared for the potential of cyber hacks.iii

Businesses need to ensure their systems are robust and well-tested as we move to an increased reliance on technology. Expect a stronger emphasis on collaboration tools, workflow management and data protection.

Challenges and opportunities for travel

Suffice to say the travel industry has been one of the hardest hit during the COVID-19 pandemic. There’s no doubt travel will surge once restrictions loosen, although this industry is one that will see profound change as it adapts to the post-COVID landscape.

Airlines are struggling to navigate uncharted territory. The ones that survive this crisis will have to be strategically creative to find a way to prioritise public health and sustainability, all the while maintaining profitability.

With more rigorous sanitation requirements, the quick turnaround times budget airlines have relied on may not be possible. This will result in fewer flights at a higher cost, making travel less accessible for some.

Longer term trends emerging from the crisis will include greater automation driven by public health and budget constraints, and changing consumer preferences such as holidaying closer to home.

Public transport will also be impacted, as the need for distancing will restrict the number of passengers allowed to travel. Less congestion on our roads may be the silver lining to more flexible working arrangements, with some people continuing to work from home. This ability to work from anywhere will make it possible for an increasing number of Australians to relocate to regional areas.iv

The term ‘new normal’ has been expressed many times already and for good reason – lives have changed permanently. Only time will tell what life will look like post-pandemic. There will be more changes as society emerges from the pandemic that will impact how we live, and these will drive innovation in the way businesses and industries operate.

If COVID-19 has affected how your business operates, get in touch with our team on 03 5120 1400.

https://which-50.com/huge-spike-in-ecommerce-once-covid-19-hit/

ii https://www.abc.net.au/news/2020-04-22/waiting-on-a-parcel-from-australia-post-why-its-taking-so-long/12172772

iii https://www.deccanchronicle.com/technology/in-other-news/170720/vulnerability-in-zoom-could-allow-hackers-to-target-devices-cyber-sec.html

iv https://www.realestate.com.au/insights/eight-regional-areas-set-to-boom-after-covid-19/

Material contained in this publication is a summary only and is based on information believed to be reliable and received from sources within the market. It is not the intention of RGM Financial Planners Pty Ltd ABN 36 419 582 Australian Financial Services Licence Number 229471, RGM Accountants & Advisors Pty Ltd ABN 69 528 723 510 or RGM Finance Brokers Pty Ltd ABN 81 330 778 236 (RGM) that this publication be used as the primary source of readers’ information but as an adjunct to their own resources and training. No representation is given, warranty made or responsibility taken as to the accuracy, timeliness or completeness of any information or recommendation contained in this publication and RGM and its related bodies corporate will not be liable to the reader in contract or tort (including for negligence) or otherwise for any loss or damage arising as a result of the reader relying on any such information or recommendation (except in so far as any statutory liability cannot be excluded).

Liability limited by a scheme approved under Professional Standards Legislation.

Post COVID-19: How Business Will Change Forever

Joe Auciello RGM Partner

COVID-19. Coronavirus. Daily press conferences from our Premier. Stage 4 lockdown. Who would’ve thought 8 months ago that this is where we’d be? 

That thought in itself is scary because, in all honesty, who knows what the world will look like in 2021. Will face masks form part of what we will come to know as the ‘new normal’? At a local level, what will Gippsland look like? How will our interactions change between one another? On a broader level, how will Australia recover financially from the multitude of State and Federal monetary intervention?

These are all questions that quite frankly should concern us all. That’s not to say we won’t recover, but what is evident is that we must find comfort in the eventuality of a ‘new normal’. So, here’s my take on this “new normal”. 

Working from home – is it that bad? 

For those that own or work for a business that operates predominantly with computers, working from home is a concept that you would have had to become accustomed with – and not by choice. Who would’ve thought teachers would be able to work from home? I mean, they can’t teach kids from their lounge rooms so there’s no way that can work, right?  

If this pandemic has taught us anything, it is to expect the unexpected. Business owners around Gippsland were probably of the view that they needed their staff within earshot at all times so they can keep an eye on them for fear of them becoming unproductive. It’s amazing how our perspective changes when we’re forced down a path that we ought not dare go down in normal circumstances, to then find it’s not so bad after all.  

The overall view of our clients is that working from home has actually improved productivity. Yes, that’s right – improved. Why you may ask? Here are some examples: 

  • “I’m far more focused at home with less distractions”; 
  • “I’m not wasting an hour of my day travelling to and from work”; 
  • “My work day is far more flexible with my kids whereby I can work later at night to make up for time I spend with them during the day to home school them”; and 
  • “I’m less anxious because the chance of catching COVID-19 is a lot less at home than being at work.” 

I’m sure there’s a number of other examples but I’ve found these to be the most common. Now of course there are instances where some of you are more productive at work due to supervision, lack of technology available at home or various other distractions at home. By no means am I saying that everyone should work from home! However, what I am suggesting is to be more fluid in your view.

If you own a business, be open to at least considering this as an option for your staff. If you’re an employee, be reasonable in your expectations! Remember, the business owner has many stakeholders to consider. 

But what about post-COVID-19? Should we go back to our old habits and be rigid in our views? Short answer – a blunt no! If you’re more productive now working from home, why change? Perhaps a hybrid approach of working 3 days from home and 2 days from your workplace would appease all parties. With modern technology, the excuses of not being able to work from home are fast diminishing.  

How Zoom and Microsoft Teams have become ‘in vogue’ 

I’d love to know how many new subscribers Zoom has had in the last 6 months. Same goes for Microsoft Teams. For those that are unaware (not many of you I bet), Zoom and Teams are video communication programs that all you to talk to another person or people at one time. If only I was given a dollar every time I’ve heard the remark “imagine if I had invented or owned shares in Zoom!”. 

In Gippsland, it is common to conduct our business face-to-face such is the ease of travel without the added stress of navigating through peak hour traffic. Given this, conducting meetings via video has largely been ignored because it was seen as unnecessary, and fair enough. We’d rather drive half an hour to see someone in Traralgon even if we lived in Drouin. Even one minor glitch in using technology has the propensity to turn anyone off from using it if the default option is available. But, if this year has taught us anything, it is to embrace change.  

Roll forward to the present day. Members of our community of all ages are now Zoom experts! Why? Because they’ve been forced to use the technology that’s always been available to them and more often than not, the feedback is that the experience is not that painful after all. 

Now that more of us are accustomed to using the technology, will that be the default mode of communication post-COVID-19? 

Electronic Signatures – can they be trusted? 

Electronic prescriptions from your doctor. Clicking a button on your email to sign your tax return or sell your house. These are just some examples of how society has had to adapt to continue to transact on a daily basis. When it’s forced upon us we have no choice but to comply, but the question still remains; can electronic signatures be trusted? 

I don’t profess to be a technological wiz, however I think it’s fair to say that an electronic signature will never be as secure as an original, or “wet”, signature. But like anything, we must compare the risk versus the expediency that electronic signatures provide. In my view the risk is only marginally greater than that of a wet signature, but the efficiency it provides is far greater. Society has changed in such a way that we’re all time poor. The more opportunity to save time, the better off we’ll be in my view. 

RGM – an insight to how we’ve changed for the better 

Through crisis comes opportunity. This common saying has never been more appropriate than now. I’ve been in the privileged position to see many different businesses from many different industries adapt to ensure that their financial future wasn’t materially impacted. RGM has been no different, and nor have we been immune to being impacted by COVID-19. 

Our biggest challenge was advising our clients on the varying impacts the virus was either having or going to have on their business, not to mention the angst in their voice due to the uncertainty of everything. With face-to-face appointments and onsite visits essentially off the table, we had to find new ways of going about communicating with our clients. We implemented a telephone appointment system, Microsoft Teams and Zoom meetings and for anything that needed to be signed we used our MYOB Portal that has been a raging success.  

Lastly, working from home became necessary due to rules put in place by the State Government but once again we adapted by just changing how we communicated with each other. I must say, not having to put on work clothes on and travel to work was a big winner for the team, and constant Microsoft Team meetings between each other soon became common place.

Whilst we cannot say for sure what the future may hold, you can rely on RGM to support you through it. To get in touch with Joe or any of our other advisers, contact 03 5120 1400.