"Don’t wait too long for your redundancy!" by Steve Marsten

What a week it’s been! Gladstone has a very new look council. Congratulations to all the successful candidates. I hope and trust the people of Gladstone have elected a group of positive and proactive City governors.

Meanwhile, unfortunately there are still many companies in the city shedding employees –which brings me to the topic for this week. Recently we have had several clients who have come in with their redundancy packages querying the high level of taxes being applied.

In many cases the redundancies are being offered to long standing staff. Many people don’t realise that where an employer offers a genuine redundancy package, it usually comes with concessional tax rates attached. Genuine redundancy payments comprise a tax free amount and an assessable amount. The Tax Free component is usually non-assessable and the amount above the non-assessable component is considered to be an employment termination payment or ETP if it qualifies as such a payment under the Tax act.

Now - everyone’s entitled to the concessional tax rates for a genuine redundancy unless of course you are 65 years or over. Those who are over 65, unfortunately miss out on the concessional rates that apply to the severance payment. For example – looking at 2 employees aged 66 and 63. If both commenced on the same day – let us say 2^nd January, 1977.  Assuming all things are otherwise the same, both receive gross redundancy packages of about 94,160. The 66 year old gets a cheque for $78,420 while the 63 year old gets to pocket about $93,730. A difference of $15,310!

This suggests that those who are leading up to 65 years of age and are seeing redundancy packages being offered to their fellows workers, perhaps need to give serious consideration as to whether it is actually worthwhile considering redundancy early, especially when the packages are reasonably attractive.

It is so important to give additional consideration to getting professional advice on this issue. Feel free to call the team at Sothertons on 4972 1300 to maximise your take home package and ensure the timing works for you.

Being in Business can be Lonely by Tina Zawila

When we talk to our small to medium business owners they often reflect on how it can be quite lonely in business.  Often they are the only one in their group of close friends that are in business, or even if they do know others that are in business, they feel that they cannot openly talk about the challenges they may be facing.  Sometimes they are even reluctant to talk to their husband/wife/partner about their business.

That’s where a trusted business advisor can help!

Not only do we advise business owners day in, day out, but we are in business too, so we know only too well the challenges that owners face on a daily basis.  We also recognise the value and importance of a listening ear, an outsider’s perspective and access to fresh ideas.

However, when times are tough sometimes we choose not to engage our trusted advisor due to the investment required in one-on-one mentoring and advice, or sometimes because we may be embarrassed or unsure what to ask or who to turn to.  Unfortunately, it is during these tough times that you are likely to need the advice and support the most, and sound advice and practical solutions are exactly what you need!

With this in mind we (Sothertons Gladstone), decided to launch the eClub.   This service offers business owners the opportunity to access professional advice, while leveraging the investment, and harnessing the power of collaborating with other business owners.  Ideally suited to small to medium business owners, budding entrepreneurs that are just starting out, or those thinking of getting started in business.

A small group of business owners will meet fortnightly (initially for four sessions after hours on a Tuesday) or for an intensive one-day workshop on a Saturday, where Steve and Tina (Sothertons Gladstone Directors) will share information and offer advice, and where the business owners can ask questions and interact with the other members of the group.

To find out more about how you can be involved in the eClub, the topics to be discussed and the date that are available, call our professional team at Sothertons on 4972 1300. 

Who gets my super when I die? by Steve Marsten

I was asked recently – “who gets my super when I die?” Often it can come as a surprise to know that the payment of your interest in a superannuation fund is not always governed by your will, but rather your Binding Death Benefit Nomination (BDBN).

Many people don’t realise that superfunds are really just a special type of trust and they have to comply with numerous rules and regulations, hence your interest in super is an interest in a trust and your rights are therefore governed by the actual Trust Deed document.

Even more disconcerting is to know that you do not personally own the wealth in your super even if it’s a Self Managed Superannuation Fund (SMSF). The Trustee(s) have the discretion over the payment of benefits from the superfund and as a result; sometimes your super instructions will override your will. You see - your will cannot deal with the SMSF interest unless the Trustees of the fund, in their discretion, decide to pay the superannuation interest on your deceased estate.

Trust Deeds set out various circumstances under which the trustee will usually follow a direction given by you. That Direction is best given by a BDBN. Hence a BDBN tends to support a will and it is advised to have both.

Trustees tend to be contractually bound to follow BDBN in paying death benefits from the fund. That said, it’s often recommended to make your Death Benefit Nomination a Binding Death Benefit Nomination.

The other important thing to note is – do not let the BDBN lapse! Usually this should be renewed every three years. Organised Financial Planners will make sure their clients BDBN’s never lapse.

And finally, some BDBNs can implement special and creative strategies for SMSF’s such as creating a life estate over the super interest in favour of your spouse or provide contingencies for children etc. as long as the SMSF Trust Deed is kept up to date, BDBN strategies can usually be built into a BDBN.

To discuss estate planning and superfund issues, call Sothertons and Professional Investment Services on 4972 1300 and speak to our Directors.

On the Edge of Discomfort by Tina Zawila

Over the last few weeks, we have heard various stories of some businesses (and even some individuals) experiencing financial distress with the recent downturn in the economy.   Whist this is never a pleasant experience, it's important to make prompt decisions and take appropriate actions to improve your position as best you can.

When I was enjoying a yoga class this week, the instructor said "you should be at the edge of discomfort to get the most benefit out of this stretch", and how many times have you heard the quote "no pain, no gain" in respect to improving physical performance?  

Maybe we should consider this in terms of our business or financial performance?

If you are in financial discomfort (or dare I say pain), or your business isn't performing as you would like it to, you may need to change your thinking to look at this as an opportunity for growth and consider how you can build or improve your business as a result of this experience?  

Maybe you need to carefully review all fixed costs and overheads - are there any opportunities to trim excess or negotiate a better deal with your suppliers?

What about sales strategies to improve your top line?  Are there opportunities for different products or services for your clients/customers that are more relevant to this economic cycle?  

Great businesses that withstand the test of time, take advantage of opportunities even in the tough times.  Or dare I say, they become great, because of the tough times they have endured!

In fact, I would suggest that if you are in your "comfort zone" and things are going along without much disruption or any discomfort, then quite possibly you are missing opportunities for improvement and future success.

Remember the magic happens outside of your comfort zone!

If you need help leveraging off the discomfort you may be experiencing right now, call the professional team at Sothertons on 49721300 and let us help you identify opportunities to improve your financial position.

Is this the year of the drone? by Steve Marsten

Last week I heard one of the most interesting stories I’ve heard in a long time.  I was talking to a neighbour of a friend in Brisbane and his 14 year old son was flying his newly purchased drone down the street about 70 to 80 metres in the air. We watched on his iPad console other neighbours mowing their lawns, a junk mailer walking up the street filling up the mail boxes and children playing cricket across the street. Suddenly the drone came up the street and the lad had it hover over my friend’s roof.  We could see some cracked tiles and his gutters were full of leaf matter.

We suddenly started talking about the commerciality of such devices. The neighbour suddenly realised the benefits of using a drone to check out sites as he himself is a roof painter. We suddenly realised the many ways that this simple toy (or highly sophisticated piece of technology?) could be used by so many different businesses. For example a real estate agent could use a drone to check in on sites for owners and monitor progress remotely. Electricians could use drones to inspect high level wiring on housing. During the conversation – the lad who was operating the drone and listening in on the conversation, reminded his Dad how they founds their lost dog with the drone – apparently the dog broke out and was in the next street!

I took the time to do some research on drones and found that in the US they are already selling drones that can fly up to 15-20 klms from the base unit and carry 9 kilos. A pharmaceutical business was using drones to deliver medication to its customers in the immediate area. Switzerland and Germany have tested drones in delivering supplies to storm affected.

Being an auditor in a past life, I can see the use of drones by some larger accounting firms to audit stockpiles such as woodchip and coal. A local football coach told me it’s worthwhile thinking about a drone over the top of his team’s football game so he could give his players better tips on strategy. Maybe the NRL may have an issue with that!

Drones will explode as the next big gizmo and then there will be the add ons – like drone mechanics, drone pilot schools and the government will get involved and charge people for licences and the like.

I think we are a few years away from the drone getting me a drink from the fridge however the new landscape is very exciting. As a business owner of Sothertons I love discussing innovation with other business owners. Call us on 4972 1300.