Falling Australian dollar currency
The RBA has pinned its hopes on a falling Australian dollar currency boosting corporate activity in export dependant industries such as manufacturing education and tourism, but economists aren’t sure the broader economy will benefit.
Companies will not regard the weaker currency as permanent and will therefore still be reluctant to invest, “targeted deprecation policy” amounts to “a transfer from households through imported inflation to firms through higher profitability,” pointing to rising food and fuel costs as a result of the weaker currency.
The bottom 50 per cent of income earners have the highest proportion of imported products in their spend,
The data would suggest at least 80 per cent of that 50 per cent work in domestic services so they won’t benefit from the increased competitiveness but they will suffer from [things like] higher petrol prices.
Buying a Franchise
It’s a buyer’s market when it comes to finding a franchise, so there is every opportunity to ask all the right questions and find a franchise that fits you.
Australia has the highest concentration of franchises in the world.
There are about 1100 franchise systems in Australia .That’s four times the number of franchise systems per head of population than the United States, which is the home of franchising.
It is important buyers do their research into franchise systems that are stable and successful. Potential franchisees should look at the length of time the franchise has been established, the number of franchises in the network and how many have closed. They should also look at the banks’ lending criteria for individual franchise systems.
Age discrimination in the workforce
Does an insidious form of age discrimination operate in your company or industry, and if so, when does it kick in? Is 60, 50 or even 40 in some industries the age where you suddenly feel like a “veteran”’ and at the end of the queue for pay rises, promotions and other office perks?
What about in recruitment? Is there an age in your industry at which recruiters consider you a relic, or too overqualified for the role, even though your knowledge, experience and networks are terrific assets – certainty worth a lot more than the salary you will accept to be employed?
And is the unofficial “use-by” date in your company or industry dropping quickly? Are the 50-year-olds who in previous decades would have been at the peak of their career, now an endangered species if they can easily be replaced by younger and cheaper people?
Contractor or employee?
One of the most common ways people have tried to avoid tax on employment income is to reclassify salaries and wages as business income. This has often been done by reclassifying an employee as a contractor so that the business income can be distributed among family members to lower the marginal rate of tax payable.
This is why the alienation of the personal services income rules were introduced. There have been many legal cases over the years interpreting these rules deciding whether someone was an employee or an independent contractor. When these cases fail there is often tax consequence for not only the contractor but also the business that contracted them.
For a person to be classed as running a business, and therefore not classed as employed and caught by the personal services income rules, they must pass several tests. These require the contractor to:
- be paid to achieve a specific result rather than working for an hourly rate.
- fix any mistakes or defects in their work at their own expense.
- supply all the equipment and tools necessary for them to achieve the required result.
There have been many court cases related to whether a person was running a business as a contractor or whether in fact they were really an employee. In addition to the three main points listed above, several other requirements have been established, especially with regard to whether the contract was an employee and therefore the business paying the contractor is liable for superannuation guarantee contributions.
These include that the arrangement between the contractor and the payer is based on a written contract, the ability of the contractor to delegate or subcontract the work to be done, and the degree the contractor has been integrated into the organisation for which they are working.
When these tests are not passed and a person is not classed as an independent contractor, but is classed as an employee, there can be serious ramifications for them and the business to which they are contracting.
For the contractor any tax deduction for self-employed super contribution will all be denied and, where a business entity such as a company or trust has been used, any tax advantage by having income received by family members will be lost.
The business using this contractor will become liable for superannuation guarantee contributions on behalf of the contractor and will also possibly likely incur penalties. In addition. the value of the payments to the contractor will be classed as employment income and, including the value of the superannuation contributions that they must make, will be added to their total payroll and their WorkCover insurance premium will increase.
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