July 2020

Happy New Financial Year!  Welcome to our July newsletter.  In this quarter’s issue, we have provided articles on the following topics:

If you have any topics you wish to know more about or something you would like us to write about, please contact us at admin@veritassolutions.com.au

Staff and Office Updates

With the ACT returning to normal, our office hours have changed back to our standard hours of 9am to 5pm Monday to Friday.  Some of our staff will be working part of the week from home, however we are always contactable by email.

In trying to be COVID-safe, our building has hand sanitiser near the lift and in our reception area and we request that you use it upon entering our office.  We are happy to have face to face appointments however if you are unwell, we request that you please reschedule until a later date. If you would prefer not to meet in person, phone appointments are also available.

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Home Office Deductions

During the pandemic, a lot of employees have been asked to work from home in order to help stop the spread of the virus.  As you are using some of your own resources, the ATO allows a deduction for home office expenses. 

There are some costs you can’t claim, for example, tea, coffee and milk which you may have been provided with at work and anything your employer paid for directly.  You also can’t claim occupancy expenses such as rent, mortgage interest, water and rates.

There are 3 methods to claiming home office deductions:

  1. Shortcut method
    Operating from 1 March 2020 to 30 June 2020, this method is temporary and designed to make claiming home office deductions easy for those who have never done it before. You can claim 80 cents per hour for each hour you worked from home.  This amount covers all your work from home expenses such as phone, internet, depreciation of equipment and furniture, and electricity and gas for heating, cooling and lighting.  If you use this method, you cannot claim any other expenses for working from home. You must keep a record of the number of hours you worked from home.  This could be a timesheet, roster, diary or documents that set out the hours you worked.
  2. Fixed rate method
    You can claim 52 cents per hour which covers your expenses for decline in value of furniture, electricity and gas for heating, cooling and lighting, and the cost of repairs for your home office equipment.  You must keep records of either your actual hours working at home, or a diary for a representative 4 week period to show your usual pattern.  You need to have a dedicated work area such as a home office.  This doesn’t include phone, internet, computer consumables and stationery or decline in value of equipment, so these items can be claimed separately.  You must keep receipts or written records of expenses, phone accounts identifying work related and private calls and a diary that shows small expenses and work related internet use.
  3. Actual cost method
    If you don’t have a dedicated work area, you will generally only incur minimal additional running expenses that you can claim.  You must keep a record of the number of actual hours you work from home, keep a diary for a representative 4 week period to show your usual pattern, calculate your decline in value of assets and keep receipts, work out the cost of your cleaning expenses by adding receipts, then multiply it by work related percentage (the floor area of your work area divided by the whole area of the house), work out the cost of heating, cooling and lighting by calculating the average units used per hour and multiplying that by your actual hours worked and determine your work related phone and internet use.

You may choose the method that gives you the best outcome each year.  For the 2020 financial year you may also use a combination including the shortcut method.

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2020-21 Super Contribution Caps

For the 2020-2021 financial year, the $25,000 concessional contribution cap has remained the same. Your concessional contributions are made up of employer contributions (including any salary sacrifice arrangements), and any personal contributions that you claim a deduction for in your personal tax return. The $25,000 cap is for your total concessional contributions, regardless of if they go in to one super fund or multiple.

If your super balance was less than $500,000 on 30 June 2020, and you did not contribute the full $25,000, you can carry forward the unused portion of your concessional cap to 20/21, up to the value of $22,000. Therefore, if you did not make any concessional contributions in the 19/20 financial year, you may have the option of contributing up to $47,000 in the 20/21 financial year. If you think this is an option you would like to take up this financial year, please talk with one of our financial advisors to make sure you are eligible.

The non-concessional (after tax) contributions have also remained steady for 20/21, with the cap remaining at $100,000. Also unchanged, is the need to satisfy a work test for those aged 65-74 before making the contribution. To satisfy a work test you need to have worked a minimum of 40 hours during a consecutive 30 day period, through gainful employment. Unpaid work does not count towards a work test.

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Temporary Reduction in Minimum Pension Requirements

In response to the COVID-19 pandemic, the minimum pension withdrawal requirement for those super funds in pension phase has been lowered for the 2019-20 and 2020-21 financial years, to give people the option to boost their superannuation balances. As a result, the minimum pension withdrawal requirement has reduced by 50%.

At this stage, there is no information available as to whether or not it will be an incremental increase over a number or years, or if it will go back up to the normal rate from the 2021-22 financial year. If you are unsure of your minimum pension withdrawal requirement, please refer to the cover letter of your super fund accounts, or alternatively, contact our office to discuss your minimum requirements.

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Passwords: staying safe in a digital era

As working and socialising online becomes more common, it is more important than ever to protect your digital identity. 

Most people know that using the same password or a variation of it is a risk, however two thirds of people do it anyway.  People are afraid of forgetting their passwords and want to be in control of their login details so try to memorise them but about a quarter of us need to reset our passwords each month because they are forgotten.  More than half of us have not changed our passwords in over a year.

The top tips for keeping your digital identity safe include:

  • Use different passwords for each account
  • Keep your anti-virus and anti-malware software up to date
  • Always log off if you leave your device when someone else is around
  • Don’t tell anyone your passwords
  • Change your passwords periodically
  • Use a combination of upper and lower case letters, numbers and symbols
  • Avoid using obvious personal information such as your spouse or children’s names, pets or birthdates
  • Don’t use sequential numbers or letters such as 12345 or qwerty and don’t use the word ‘password’
  • Do not click links from emails and enter your passwords into websites, even if it looks legitimate. Always navigate to the website from the browser and then enter your password
  • Try to choose multiple and random words that are uncommon, or a phrase that has meaning to you personally

Trying to remember or keep track of passwords is challenging so it is no surprise that we reuse the same password for multiple accounts.  A password manager does all the remembering for you, except for your log in to the password manager!  There are many options available such as LastPass, Avast Passwords and Dashlane.

If you suspect an account has been compromised, immediately change your passwords.

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Increased Age Limits for Super Contributions

For contributions made from 1 July 2020, the age limit of 65 has been increased to 67.  If you are under 67 years of age, you are able to make employer or personal concessional and non-concessional contributions to your super fund without having to pass the work test.  Previously you had to be under 65.

People under 67 years of age may also access the bring forward provisions in relation to non-concessional contributions.

The age limit for spouse contributions was 70 years of age, however this has increased to 75 years, aligning it with other voluntary contributions. 

These age limit increases apply from 1st July 2020 onwards.  If you have any questions about your eligibility to contribute, please contact our office.

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Importance of Binding Death Benefit Nominations

A binding death benefit nomination is a legally binding nomination that directs the trustee who to pay your superannuation benefit to in the event of your death. In order for a nomination to be binding, it must be ‘valid’.

How to make a valid binding death benefit nomination

To make a valid nomination you must follow the procedures explained below.

The nomination must:

  • be made to the trustee in writing and clearly set out the proportion of the benefit to be paid to each person nominated. It may also include the type of benefit payment (such as a lump sum and/or an income stream)
  • each person nominated must be a dependant under the SIS Act (a spouse or child) or your Estate
  • be signed by the member in the presence of two witnesses over 18 years of age and who are not nominated as beneficiaries
  • contain a signed witness declaration
  • be sent to the trustee (a nomination will not be valid until it’s received by the trustee)

Once you have made the nomination, it will be valid for three years from the date it was signed, or non-lapsing depending on the superannuation trust deed options. You can renew, change, update or revoke a nomination at any time.

If the nomination is valid, the trustee must follow it, even if your circumstances have changed. For example, if you nominate your spouse and you separate, but have not yet obtained a divorce, the nomination remains valid and binds the trustee unless the nomination has been amended, revoked or has expired.

The role of binding death benefit nominations in estate planning

Providing certainty – One of the biggest benefits you receive from having a binding death benefit nomination in place is peace of mind. This is especially the case if you have multiple beneficiaries (eg children from previous marriages) who may have a claim on your death benefit. In this case, you can nominate with reasonable certainty who you wish to receive your death benefit or, if being paid to more than one beneficiary, who receives what proportion.

Ease and speed – If your beneficiary needs quick access to your benefit, a binding death benefit nomination may allow a more timely distribution of your assets and your beneficiary won’t have to wait for the trustee or the deceased estate to determine the distribution.

If you would like to speak to someone about a binding death benefit nomination for your super fund, please contact our office.

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