It’s November, and all eyes will be looking towards the “race that stops a nation” and the Reserve Bank who meet on the same day. As the days get longer as we head towards summer the countdown for the approaching holiday season begins.
In this issue:
– Keeping your small business cyber secure
– How to start a conversation about money
– Tax and the super after-life
– Aged care challenges in the home
As always if you would like to discuss any of these matters, please don’t hesitate to contact us.
Keeping your small business cyber secure
Cybersecurity has been in the news a lot lately. Australia recently witnessed large-scale data breaches that affected some of the country’s most prominent corporations. These highlighted that no business is impervious to cyber-attacks, which is why it’s especially important for small business owners to protect their businesses against cyber threats.
The Australian Cyber Security Centre (ACSC) Small Business Survey revealed that a staggering 62 per cent of the small to medium business owners surveyed had been victims of cyber-crime.i
And these attacks come at a significant cost to businesses. Companies lost over $300 million last year due to cyber-attacks. Notably, the average cost per cybercrime reported to the ACSC rose to over $39,000 for small businesses.ii
Given that digital data breaches can have a massive impact on a business, what are the challenges faced by small business and what are the best ways to keep yours safe?
Antivirus and malware security is an obvious starting point but there is more to cybersecurity than signing up to a plan or downloading an app.
Identify what needs to be protected
It’s important to understand what data your business holds, and in what locations. You might have data stored across numerous devices or services whether they are cloud-based or not, which increases the number of applications you need to keep secure. Multiple and numerous systems can also create more opportunities for a cybercriminal to attack so streamline where possible.
Identify what information needs to be protected, thinking about legal requirements and confidentiality and security of information as well as what assets are most important to your company, including financial data, customer information and intellectual property.
Password protection and access management
The next step is protecting that information, which at the company level means encryption and using secure passwords. Consider implementing multifactor authentication for an additional layer of security to let the right people in and keep the wrong people out. This involves adding a secondary factor to your password, for example a mobile phone number to receive an SMS with an access code.
Once you’ve reviewed your password protection it’s time to think about how you keep track of them. Most businesses use a lot of applications, so password management tools are the best way to keep track of multiple, unique logins and passwords.
Back up data regularly
Backing up data doesn’t just protect against cyber-attacks but also against human error and malicious actions as well as hardware failures and natural disasters. If you are using cloud-based applications, data back-up may seem easier as you are not having to manually back up things like hard drivers and servers. However, a note of caution – while the cloud is extremely secure, some providers still recommend doing regular backups with third party services.
It’s also important to update software regularly to protect against the latest threats. You should regularly update your operating systems, web browsers, and other software to protect against malicious intent.
Staff training and education
Of course, maintaining a secure environment is also about educating your staff on how to avoid cyber- threats.
As well as having policies that describe how your business manages its infrastructure, it’s important that staff are up to date on how to actively avoid threats. All it takes is one person to click on a link in a dodgy email and your business could be vulnerable. The Australian government provides a useful resource for small businesses at www.cyber.gov.au/learn which includes modules and quizzes to help businesses educate their personnel.
Incident response management planning
Finally, despite your best efforts, there is always a chance that your business may experience a cybersecurity incident. In such a scenario, it is important to respond quickly and effectively to minimise the damage and get back up and running as soon as possible. Make sure you have a defined process in place that describes who responds and what happens in the event of a breach so that you can react quickly.
Given the cost and time involved in recovering from a cyberattack it’s worth putting a bit of thought into preventative measures.
The most common cyberattacks impacting small businesses are:
- Scam emails and phishing attacks designed to elicit passwords or confidential information.
- Business email compromise (BEC) emails impersonating a supplier requesting payment.
- Malicious software including ransomware, viruses, spyware and trojans.
How to start a conversation about money
Why it’s so important to talk about your finances
According to this research1, one in two Australians don’t sit down regularly to look at their finances and one in three say that money is a source of conflict in their relationship.
To put conversations about money back on the table, Australians should sit down for at least 45 minutes one Monday each month, either individually, with their partner or other family members, to get familiar with their financial situation.
Having regular discussions about money can help you manage your finances, reduce financial stress and improve your financial wellbeing.
To help, leading Australian psychotherapist Lissy Abrahams created a conversation guide to get people started.
Tips for starting a conversation about money
Follow these simple steps to help you start a conversation about money.
Make a date to discuss financial matters
Talking about finances doesn’t have to be boring. Find one Monday a month and pop it in your diary. When the day arrives cook a nice meal then turn off your devices for 45 minutes. Make sure you jot things down so you can go back to them later.
Set some boundaries around the conversation about money
At the start of the conversation set some boundaries. These include being:
- open and honest
- curious about each other’s views on money
- respectful – by being non-judgemental, not interrupting, and remembering no-one is right or wrong – just different.
Take a trip down memory lane to your childhood
Often our financial beliefs and behaviours are shaped from a very young age. From witnessing how our parents talked and/or fought about money and their spending habits, we’ve absorbed many messages about money.
Typically, we either adopt their behaviours or go the opposite way. Understanding this about yourself, your partner, or other family members, helps you understand your similarities and differences around money matters so you can create healthy financial plans together.
To understand how your attitudes are shaped by your childhood, ask questions like:
- How did your parents talk about money?
- What, if anything, did you see them fight or stress about with money?
- What did you save or spend your money on growing up?
- Were you more of a saver or a spender? Why do you think you were?
- Are you similar or different to anyone in your family when it comes to money?
- What’s the one thing you wish your parents told you or didn’t tell you about money when you were a kid?
Talk about your current attitudes towards money
Financial knowledge and skills are learned and continually need to evolve depending on your life stage. It’s important to find ways to navigate this.
To understand more about how you feel about money matters, ask questions like:
- What money concerns do you have? Saving? Spending? Debt? The future?
- How do you feel when you make a big purchase?
- What’s your initial reaction when thinking about having a loan or going into debt?
- What are three non-essential things you’d buy if money was no issue?
- How important are financial goals and do you have any you’re working towards?
Assess your current situation
Even though it may feel awkward or initially confronting, it’s important to know your numbers. Remember, there’s no right or wrong. If you are doing this with a partner or family member, expect to have different financial ideas and spending habits. Be curious about these differences as it’s about finding your way forward.
To understand more about your current situation, ask questions like:
- How much do you earn?
- What are your incoming and outgoing expenses?
- What debts or loans do you have, if any?
- How do you feel about joint finances? Should some bills or expenses be shared, and others separate?
- What’s your approach to managing money? Do you have a budget? Set savings goals? Bucket money? Are you secretive about any bank accounts?
- What opportunities are there to reduce spending?
Plan for the future
Whether it’s a holiday, saving for a home deposit, buying a new car, or paying off debt, create exciting goals to work towards. This’ll keep you motivated and in alignment with your goals.
If you need help getting this conversation started, give us a call.
1 Our research was conducted by NAB Economics and based on responses from 2,050 Australians weighted to the population, conducted from August to September 2022.
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/manage-money/money-basics/start-a-conversation-about-money
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
© 2023 National Australia Bank Limited (“NAB”). All rights reserved.
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Tax and the super after-life
Many people assume there is no tax payable on super benefits received after someone passes away, but that’s not always the case.
Whether or not tax is paid on a super death benefit depends on the beneficiary’s relationship with the deceased. Although some beneficiaries receive their money tax-free, others can find themselves paying significant amounts of tax on the funds they receive.
Dependant for tax purposes
The key point in understanding who will be required to pay tax on a super death benefit is whether or not the beneficiary is considered a death benefit dependant for tax purposes.
Although you are permitted to nominate a wide range of people as dependants under super law, the definition for tax purposes is different and narrower.
A death benefit dependant for tax purposes is limited to the deceased’s spouse, de facto, or former spouse or de facto; their child under age 18; any person with whom they had an interdependency relationship; and any other person financially dependent on them just before their death.
A common trap in this area is nominating financially independent adult children as death benefit beneficiaries, as this is permitted under super law. Under tax law, however, they are not defined as dependants for tax purposes and so are required to pay tax on the taxable component of any death benefit they receive.
Tax on lump sum death benefits
When it comes to paying a death benefit, your dependants for tax purposes are free to choose whether they want to receive your super death benefit as a lump sum or as an income stream.
If a beneficiary decides to take their benefit as a lump sum, the benefit will be free of any tax, provided they are considered a death benefit dependant under tax law.
If they are not considered a death benefit dependant for tax purposes, they must take the benefit as a lump sum. These lump sums are taxed at a maximum rate of 15 per cent plus the Medicare levy on the taxed element (which is super that has already had tax paid on it within the fund).
In addition, any untaxed elements of the taxable component in the lump sum will be taxed at a maximum rate of 30 per cent plus the Medicare levy.
If the benefit is paid to the estate, it is paid as a pre-tax lump sum and the estate is responsible for paying any necessary tax depending on the dependant status of the end-beneficiaries.
Death benefit income streams and tax
Some tax dependants prefer to take their death benefit as an income stream (or pension).
Death benefit income streams are tax-free if either the deceased or the beneficiary are aged 60 or older at the time the income stream payments are made.
Otherwise, beneficiaries will generally pay some tax on the death benefit income stream until they reach age 60, after which age the payments are tax-free.
For beneficiaries under age 60, there is no tax on the tax-free component of the death benefit income stream, but the taxable component is included in their assessable income with a 15 per cent tax offset.
Death benefits and the transfer balance cap
The transfer balance cap (TBC) rules also come into play when it comes to super death benefits.
These rules limit the amount of super savings you can transfer into the retirement or pension phase.
Tax penalties apply if amounts in excess of the beneficiary’s TBC are transferred into the retirement phase as an income stream.
The rules governing this area are very complex, so you should always seek professional advice before deciding on a death benefit nomination, as it can make a big difference in how much tax your beneficiaries will pay when they receive their death benefit payment.
If you would like more information about tax and super death benefits, call our office today.
Aged care challenges in the home
Aging at home with government-subsidised funding is made possible through the Home Care Packages program.
However, a crackdown on what the funds can be used for and a shortage of support workers, can make it challenging to understand the funding available.
If you are approved for a Home Care Package you will be assessed at one of four levels. These levels acknowledge the different types of care needed.
Current annual funding for packages is $10,271.10 for level one (someone with basic care needs); $18,063.85 for level two (low care); $39,310.50 for level three (intermediate care); and $59,593.55 for level four (high care).i
It can take up to six months for a Home Care Package to be assigned following the initial assessment. Once assigned, a provider must be chosen to design a package of aged care services that is best and most appropriate for you – within the home care package guidelines.
Providers charge care and package management fees, which were recently capped at a combined 35 per cent of the package funds.
Income tests apply
The packages are income tested, with part pensioners paying no more than $6,543.66 a year and self-funded retirees paying no more than $13,087.39 a year in fees. Full pensioners do not pay an income tested fee.
Older Australians can apply for a package directly, or through their GP, via the government’s My Age Care aged care gateway.
Due to high demand for Home Care Packages, you may be offered a lower level package while you wait for the one you are approved for. You may also be given access to the entry level government support known as the Commonwealth Home Support Program – where individual referral codes are allocated to you to access interim support such as cleaning, transport or personal care at highly subsidised rates.
A revised manual released earlier this year by the Department of Health clarifying what a Home Care Package can be used for is presenting additional challenges for some package recipients looking to maximise what they can get.ii
Generally, a requested support or service must meet an individual’s “ageing related functional decline care needs”. The main categories of care and services you can get from a Home Care Package are services to keep you:
- well and independent (nursing, personal care, food),
- safe in your home (home maintenance, goods and equipment) and
- connected to your community (transport and social support).
Exclusions and inclusions
One area that is becoming more difficult for those with Home Care Packages is gardening – which is one of the most popular subsidised service requests.
Once a regular prune and possibly some new planting was an approved service, but now only minor or light gardening services can be provided and only where the person was previously able to carry out the activity themselves but can no longer do so safely. For example: maintaining paths through a property or lawn mowing.
Other exclusions causing angst amongst recipients are recliner chairs (unless they support a care recipient’s mobility, dexterity and functional care needs and goals); heating and cooling costs including installation and repairs; whitegoods and electrical appliances (except items designed specifically to assist with frailty, such as a tipping kettle).
With an aging population it is no secret that there is a shortage of support workers. While there are government programs to try and fix this, a back-up plan is needed for when support workers call in sick or are unavailable and no replacement can be found.
Most people’s preference is to remain living independently at home for as long as possible. If you would like to discuss your options to make this happen, give us a call.