Welcome to the next edition of our 2006 Newsletter.
We hope you find the following information of benefit to you and your Organisation.
ACCOUNTING AND TAXATION MATTERS
- Practice Update - August 2006
- Practice Update - September 2006
FINANCIAL PLANNING
- Investor Focus Newsletter - August 2006
- Investor Focus Newsletter - September 2006
FINANCE AND LENDING
HUMAN RESOURCES
ARM TEAM AND OFFICE MATTERS
P r a c t i c e U p d a t e - August 2006
New FBT gross-up rates
As a result of the reduction in the FBT rate from 48.5% to 46.5% as from 1 April 2006, the Tax Office (ATO) has now released new gross-up rates for calculating the grossed-up value of fringe benefits provided to employees.
Type 1 benefits: 2.0647 (previously 2.1292)
Type 2 benefits: 1.8692 (previously 1.9417)
Editor: The Type 1 gross-up rate is used where the benefit provider is entitled to a GST credit in respect of the provision of a benefit.
The Type 2 gross-up rate is used if the benefit provider is not entitled to claim GST credits.
Note that only the Type 2 gross-up rate is used for reporting on employee’s payment summaries, regardless of whether the benefits provided are Type 1 or Type 2 benefits.
FBT on accommodation for accompanying spouse
The ATO has accepted that, where an employee travels on business and has a spouse accompany him/her, there will only be FBT on the additional cost of any accommodation for the spouse.
Depending on the circumstances, the 'otherwise deductible' rule should operate so that there is no FBT on the employee’s accommodation costs (because the employee would otherwise be able to claim a deduction on his or her portion).
Example
The cost of accommodation for the employee only is $100, but the cost including the spouse as well is $120.
As the extra $20 is an additional cost for the spouse over and above the cost that the employee would otherwise incur, the ATO agrees that the $20 would generally be a taxable fringe benefit amount.
Example
The cost of accommodation for the employee only is $100 and there is no additional cost for the accompanying spouse.
Where there is no additional cost for the spouse as the room rate covers both single and dual occupancy, the ATO has agreed that there would generally not be a taxable fringe benefit in relation to the spouse.
Editor: Unfortunately, the ATO has also advised that the cost of a travel insurance policy, paid for by an employer on behalf of an employee when the employee is travelling on business, is a private expense, and therefore subject to FBT.
Car depreciation limit
The car limit for the 2006/07 financial year is $57,009 (the same as that which applied in the 2005/06 financial year).
The car limit of $57,009 is used to calculate depreciation deductions under the income tax law.
Editor: Note that this amount (i.e., $57,009) is also used to determine the luxury car tax threshold.
ATO compliance focus for 2006
The Commissioner of Taxation has stated that, in the relation to the 2006 year of income, the ATO was again focusing on:
- deductions for rental property expenses;
- capital gains from the sale of property and other assets; and
- work-related expenses, such as deductions for motor vehicles, self-education, home-office and travel expenses.
In addition, this year the Tax Office will focus on:
- business professionals;
- hospitality industry service workers;
- factory, store and process workers;
- mechanical, automotive and electrical tradespersons;
- information technology professionals; and
- mining site employees.
Note: The ATO cross-checks tax returns against a range of data including financial institution data, state and territory revenue and property sales information and Australian stock exchange data.
Costs of hiring furniture and ornaments included in cost base
The ATO has recently confirmed that where a taxpayer sells a rental property, they can include the costs of hiring furniture and ornaments used in marketing the property as part of the cost base of the property, when calculating Capital Gains Tax.
Hiring furniture and ornaments can be part of a marketing strategy to sell a property by displaying the saleable qualities of the property to greatest advantage.
For example, furniture can be used to demonstrate the good qualities of the property (such as the size of the rooms) or to show that the less-desirable qualities of the property can be managed in a practical or pleasing manner.
Although there has been doubt whether the hiring of furniture constituted ‘costs of advertising to find a buyer’, the ATO accepts that it is now arguable that the costs of hiring the furniture and ornaments can be included as part of the cost base of a property where the purpose of the expenditure is to find a buyer by demonstrating, displaying, exhibiting or featuring the saleable qualities of the property.
Editor: Not all costs associated with selling an asset can be included in the cost base – the Tax Act basically sets out a list of what can be included.
Taxpayers win insurance payout, lose much more in tax
In a recent case, a husband and wife had reported a robbery of various valuables worth around $650,000 and made an insurance claim, eventually involving the Federal Police.
The subsequent investigation revealed that they had not declared over $2 million in income over 12 years, and the ATO issued amended assessments for them over this period, using the figures in their insurance claim as evidence of undeclared income used to acquire the valuables.
Although the Administrative Appeals Tribunal held that the ATO should reduce the assessments a little, the couple can still look forward to amended assessments totalling up to $2,000,000 plus a 75% penalty on the tax shortfall.
Editor: Moral of the story? If you want to hide something from the ATO, maybe keep the police out of it. Better yet – declare your income!!
Benchmark interest rate for Div 7A
The benchmark interest rate for the income year commencing 1 July 2006 is 7.55% p.a. (up from 7.30% p.a. for the 2005/06 income year).
It is generally used to determine if a loan made by a private company to a shareholder in the 2006 income year is deemed to be a dividend (although certain loans from trusts can also be deemed 'dividends').
Such a loan can be deemed to be a dividend if there is no written loan agreement between the company and shareholder which has interest calculated at the benchmark interest rate or higher.
The benchmark interest rate is also used to calculate the amount of the minimum yearly repayment on such a loan for the 2007 income year.
Editor: If your company's accounts include such loans to its shareholders and we haven't discussed this already, please contact this office.
P r a c t i c e U p d a t e - September 2006
CPI for June quarter 2006
The CPI indexation factor for the June quarter 2006 was 154.3 (up from 151.9 for the March 2006 quarter).
Entrepreneurs’ tax offset and PSI
To be eligible to claim the new entrepreneurs' tax offset, an individual who receives personal services income (PSI) must be a simplified tax system (STS) taxpayer.
The ATO has recently stated that individuals who receive PSI directly (as opposed to receiving PSI indirectly through a partnership, trust or company) are not automatically eligible to enter the STS and claim the offset.
To be eligible to be an STS taxpayer, the individual must be carrying on a business, which will depend on the facts of each case.
Editor: This is quite a complicated area, so if you are receiving PSI, directly or indirectly, you should contact us to ensure you can claim the offset.
Self-help service to pay tax debt by instalments
Taxpayers who owe the Tax Office less than $25,000 can use a self-help service to call the ATO and enter into a payment arrangement with them.
A taxpayer may be eligible to pay their tax debt by instalments if they meet the following conditions:
- the outstanding debt is less than $25,000;
- the taxpayer is unable to pay the debt off in full by the due date;
- the debt can be paid off by instalments within two years; and
- the taxpayer has adequate funds to enter into the payment arrangement and meet any future tax obligations on time.
Editor: If you would like us to assist you to enter into a payment arrangement with the ATO, please contact this office to discuss details of the arrangement you would like to make (such as the first payment date, payment frequency and payment amounts).
New child care benefit tax rebate
Editor: As you are no doubt aware, the Government introduced a 30% child care benefit tax rebate after the last election.
Under the conditions of this complex rebate, eligible taxpayers can claim a rebate for child care expenses incurred in 2004/05 in their 2006 tax return.
The following case study, adapted from a number of case studies provided by the ATO, sets out some of the issues associated with claiming the rebate.
Ben and Robyn both worked full time in 2004/05 and had two children in approved child care: David and Bella.
As Robyn claimed Child Care Benefit (CCB) she may claim the rebate in her 2006 tax return.
Robyn's tax agent has access to the Family Assistance Office data, and can obtain the data she needs to claim her rebate on her tax return, being her ‘Total fees for eligible Child Care Benefit hours’ and her ‘Child Care Benefit entitlement’.
David’s after school care fees were $5,650 and Bella’s long day care fees were $15,000.
Robyn’s Child Care Benefit entitlement was $420 for David and $2,550 for Bella.
Robyn’s rebate for her 2006 income tax return is calculated as follows:
|
David |
Bella | |
|
Total fees |
$5,650 |
$15,000 |
|
less CCB entitlement |
$420 |
$2,550 |
|
Out of pocket expenses |
$5,230 |
$12,450 |
|
X 30% |
$1,569 |
$3,735 |
Robyn’s total rebate for both David and Bella is $5,304 ($1,569 + $3,735).
Also, Robyn wants to transfer any unused rebate to Ben to help reduce his tax liability.
To transfer her unused rebate (in case there is any), Robyn's tax agent completes the relevant information in the Spouse Details section of her tax return, showing Ben’s TFN at the correct label.
Ben and Robyn also complete the transfer agreement (in the approved form provided by the Tax Office), and file a copy of the agreement with their 2006 tax return records.
Ben does not need to provide any additional information on his tax return for him to receive any unused rebate, as the Tax Office will automatically transfer any amount to which he is entitled once Robyn’s income tax return has been processed.
Note: According to the Family Assistance Office, all eligible families can receive some Child Care Benefit regardless of income.
Simplified GST accounting method
The ATO has set out a new simplified GST accounting method for eligible restaurants, cafes, and catering businesses with an annual GST-exclusive turnover of $2 million or less.
From 1 October 2006, eligible retailers can basically choose to calculate their input tax credits on trading stock by taking a sample of acquisitions over two 4-week periods and using this sample to establish the percentage that represents their GST-free acquisitions.
Eligible food retailers won’t need a tax invoice for any input tax credits claimed using this method.
Editor: If you are interested in this simplified accounting method, or would like to discuss some of the other simplified accounting methods for GST, please contact this office.
Main residence exemption: More than meets the eye!
Editor: The main residence exemption is a very valuable CGT exemption, which, if the criteria are met, can mean there will be no tax on the sale of a taxpayer's home.
However, although it sounds simple, the application of the exemption can be very complicated. If you are considering selling or have sold your home, or even a rental property, please contact us to ensure you don't pay more tax than you need to.
The ATO has recently decided that a taxpayer was entitled to a full main residence exemption on the sale of their house, even though they had rented the house out at one stage, and the house was not the same house that had been on the land when they first moved in!
In this case, the taxpayer:
- purchased a house in late 1996 and lived in that house until mid 1998;
- rented the house out until early 2002;
- demolished the house and built a new house in mid 2002 that became their main residence in late 2002; and
- continued to live in the new house until it was sold in late 2004.
Due to the way the main residence exemption works, the ATO accepted that there was an unbroken period of main residence occupancy on the land from the time the original house became the taxpayer’s main residence in late 1996, until the new house was sold in late 2004.
Therefore, even though the taxpayer rented out the original house, and it was then demolished and replaced by a new house, the taxpayer was entitled to a full main residence exemption.
If you require further information regarding the above please contact Dennis Malcolm, Michael Ryan, Greg Cusack or Marita James on (03) 9551 2822 for their expert advise.
You can’t miss what you never had
Personal income tax cuts from 1 July 2006 are an unexpected windfall for most Australians. From the beginning of the new financial year, our pay packets will have a little extra in them. A little extra that we haven’t had before and perhaps something we’re used to living without.
We all have a choice about what we can do with this windfall. Some people may sensibly use the extra cash to reduce their debts. This is an admirable strategy – especially if we’re talking about credit card debts that incur high interest charges.
Other people might seek to enhance their lifestyles by spending their increased after-tax wages. This is not necessarily wise especially as we’ve been living on the reduced amount all this time. Why increase your spending now, just because you can?
Before you get used to the extra cash in your pay after 1 July, you might want to consider another strategy. This strategy maintains your current lifestyle by keeping your after-tax (net) salary the same as what it was before the new tax cuts, but enables you to tax effectively put some money away for your future. This is called salary sacrificing.
Salary sacrificing is simply where you ask your employer to make extra contributions (above the 9% compulsory contribution) to your super fund from your gross salary. These extra contributions made on your behalf are in place of paying you in cash. This can result in a reduction of the total amount of income tax you pay, because these contributions are taxed at only 15%. This may be a lot lower than your average income tax rate. Not only do you pay less income tax, but more of your money is invested to help you achieve your goals.
Now the trick here is you can make a salary sacrifice contribution that is the equivalent amount of your tax cut and you’ll never know the difference! The reason for this is that your net salary is exactly the same as it was before the new tax rates were introduced.
Consider the opportunity
With the recent Budget announcements, the Government has given us the opportunity to make a real difference to our future. Worthwhile considering, don’t you think? You may even feel that you can afford to salary sacrifice more than just the value of your tax cut. With the abolition of the Age-Based Deduction Limits, you can contribute up to $50,000 of deductible contributions (including the 9% compulsory employer contributions) each year.
How to go about salary sacrificing into super
Before implementing a superannuation strategy, you may want to consider seeking financial advice to get the most out of your savings. Once you are comfortable with your strategy, it is necessary for you and your employer to draw up a formal agreement to commence reducing your gross salary by the amount of the salary sacrifice contributions. A formal agreement establishes that these contributions will be entitled to the tax benefits that apply to superannuation. Once the agreement is in place, your employer can then organise these pre-tax contributions to be made on your behalf, through their payroll system.
Case Study
Saving a little more now could make a big difference later
Craig is 40 years old and earns $70,000 pa working as an employee of a communications company. He decides that he doesn’t want to spend his extra after-tax income from the recent tax cuts. Instead he wants to top-up his super by salary sacrificing. He asks his employer to reduce his gross salary by $1,928 each year and add this amount to the 9% compulsory super contributions that his employer makes. The $1,928 represents the amount of his gross salary equivalent to his recent tax cut of $1,350. Craig’s net (after-tax) salary is exactly the same as the amount he received before the introduction of the tax cuts.
Over 20 years, Craig has contributed the equivalent of $27,000 (20 x $1,350) of after-tax salary in his super fund as salary sacrifice (pre-tax) contributions. And by making these additional contributions regularly, Craig could end up with $62,125* more to live off in his retirement.
The results vary quite significantly depending on the amount of the gross salary. The table shows the extra amount you could have in your super fund after 20 years of salary sacrificing your tax cut.
Please note that over long periods of time, inflation can reduce the purchasing power of your money. For example, $62,125 in 20 years time would buy a similar amount to $37,913 today, if inflation averaged 2.5% pa.
|
Gross Salary |
Annual tax saving for 2006/07 |
Monthly tax saving for 2006/07 |
Equivalent annual salary sacrifice amount |
Equivalent monthly salary sacrifice amount |
Salary sacrifice amount as a % of gross salary |
Extra amount you’ll have in super after 20 years* |
|
$60,000 |
$510 |
$43 |
$729 |
$61 |
1.2% |
$23,478 |
|
$70,000 |
$1,350 |
$113 |
$1,928 |
$16 |
2.8% |
$62,125 |
|
$80,000 |
$2,050 |
$171 |
$3,417 |
$285 |
4.3% |
$110.058 |
|
$90,000 |
$2,250 |
$188 |
$3,750 |
$313 |
4.2% |
$120,793 |
|
$100,000 |
$2,700 |
$225 |
$4,500 |
$375 |
4.5% |
$144,948 |
|
$110,000 |
$3,400 |
$283 |
$5,667 |
$472 |
5.2% |
$182,521 |
|
$120,000 |
$4,100 |
$342 |
$6,833 |
$569 |
5.7% |
$220,094 |
|
$130,000 |
$4,800 |
$400 |
$8,000 |
$667 |
6.2% |
$257,668 |
|
$140,000 |
$5,500 |
$458 |
$9,167 |
$764 |
6.5% |
$295,241 |
|
$150,000 |
$6,200 |
$517 |
$10,334 |
$861 |
6.9% |
$332,815 |
* Calculations are based on the following assumptions: investment return 6.0% pa after fees and taxes, no contribution fees apply and contributions remain constant over the period. These calculations do not reflect the actual returns, if any, that will be achieved for any investment or the value of an investment at any time. The value of an investment can rise and fall over time.
For more information please contact Michael Ryan and the team at Focus Financial Planning.
Investor Focus - September 2006
Aged care fees – what you should know
With our much talked about “ageing population” more and more of us have to face up to and understand the cost of aged care. Whilst this might not be the reality for us yet, our parents may well be confronting it.
Aged care costs can vary enormously between facilities and from resident to resident. Understanding the rules so that costs are minimised is a specialist task, and one that your financial planner is well equipped to help you with. Get it wrong and you could pay thousands in additional costs and lost pension payments. Additionally, correct structuring of assets can mean they grow rather than depreciate, during the time you (or your parents) are in aged care. Also an important consideration for estate planning.
Both Income and Financial Assets effect your entitlements, usually it is the ‘Income Test’ that is the first to reduce these entitlements (And new ‘asset test’ thresholds announced in the 2006 budget will enhance this). Let’s look at the impact of income on entitlements:
? Your pre-aged care affairs may have been subject to a reduction in age pension due to the income test (40 cents for every dollar of income over the Centrelink threshold),
? Once in the aged care system, there is 25 cents of income tested fees to be paid. Hence for every extra dollar over the Centrelink threshold you earn you are effectively penalised 65 cents.
With specialist advice to correctly structure assets, you can minimise, and perhaps avoid the effect of this penalty.
Centrelink plays the central role in assessing your level of income and assets which in turn determine the cost of care and the maximum level of accommodation bond for pensioners and self funded retirees. The rules are complex and again there are ways of structuring your financial assets to maximise your pension and minimise the income tested fees.
Selling the family home?
Questions usually arise about selling the family home to fund aged care -often a valid strategy. However, after paying the accommodation bond, the balance of the sale proceeds can reduce your pension entitlement and increase income tested fees due to the application of the income ‘deeming’ rules. It is essential to structure your assets to minimise ‘deemed income’.
One little known strategy is to place financial assets into an Insurance Bond as the sole asset of a Family Trust. This works because Family Trusts are assessed by Centrelink for income purely on ‘taxable income’ not ‘deemed income’ basis. Insurance Bonds do not distribute ‘taxable income’ and the funds in them therefore (provided they are structured properly as an asset of a family trust), are not assessed for income by Centrelink, (They are still assessed as an asset under the asset test). This structure also has the advantage of allowing access to the funds if required, so your money is not locked away.
Case Study
Let’s have a look at Shirley’s case. She is a widow and has sold her home to move into aged care after paying the accommodation bond she has $268,000 in financial assets:
|
Shirley’s assets – before using a Family Trust and Insurance Bond: |
|
• Bank accounts $20,000 |
|
• Term deposits/managed funds $248,000 |
|
• Contents/Car/Personal Effects $10,000 |
|
Her pension entitlement is: |
|
• Under the Asset Test $505.50 |
|
• But the Income Test reduces this to $361.98 which is what she will receive. |
|
|
|
Her cost of aged care is: |
|
• Income Tested Fee $89.70 per fortnight or $6.39/day |
|
• Total = $13,008.60 p.a. ($29.25 Daily Care Fee + Income Tested Fee $6.39/day) |
If we restructure Shirley’s assets using an insurance bond within a family trust the outcome is quite different:
|
Shirley’s assets after restructuring: |
|
Bank Accounts $20,000 |
|
Term Deposits $50,000 |
|
Insurance Bond through Family Trust $198,500 |
|
Contents/Car/Personal Effects $10,000 |
|
|
|
Her pension entitlement is: |
|
Asset Test $505.50 |
|
Income Test $505.50 |
|
Her cost of aged care will be: |
|
• Income Tested Fee $0 |
|
• Total = $10,676.25 p.a. ($29.25 Daily Care Fee) |
|
Shirley will be better off by $6,063.87 p.a. |
Importantly, the deficit between Shirley’s pension entitlement and Shirley’s cost of care under the first structure is $3,597.12 p.a. which must be funded from her investment income. Whereas after restructuring Shirley’s cost of care is funded fully by her pension and she has $2,466.75 p.a. as surplus income.
For more information please contact Michael Ryan and the team at Focus Financial Planning.
Over the last month ARM Finance Pty Ltd has continued to increase the number of lenders that we can deal with. As a result of this we now have access to a lender that will provide finance to 106%. This allows the client to purchase their own owner occupier property onr investmen property with minimal outlay of funds.
Now we can provide a larger range of personal lending products. These products include consumer finance & car loans, which can be useful in providing to your own clients to provide funding for purchases.
Also available is insurance premium funding helping your business to free up some needed cash flow and allow for a better tax benefit. This is available over a period of 12 months.
If you would like to discuss these new options please contact our office on:
Phone (03) 9370 9811, Fax (03) 9370 9803 or Email info@armfinance.com.au
or alternatively you can contact one our consultants on:
Graham Lee 0417 115 611 (Commercial, Leasing, Residential) Jeff Messer 0409 217 002 (Commercial, Leasing, Residential) Shane McFarlane 0411 754 091 (Residential, Leasing)
Tell me about yourself (Source: Charter Magazine August 2006, Story by Lucinda Schmidt)
Tell me about yourself
Successful retention of staff begins with the recruitment process; early identification of personality traits is vital for finding, and keeping, good staff.
When Owen Firth was working as a financial controller for a fast-growing IT company, he kept making the same recruitment mistake: not allowing enough time. Now, as the managing director of finance industry recruitment specialists FinanceMark, he sees his clients doing exactly the same thing.
“Everyone recognizes that it’s a high priority to find the right person, but they don’t block out any time in their diary for it,” says Firth, a former Chartered Accountant. “It’s such a candidate-poor market now. Candidates have multiple choices, so a delay means you can lose the right person. You have to plan it in advance and commit the time.”
The next step is to develop a target profile. Firth says the approach has to be about the type of person you are targeting and what sort of job they are probably in today, rather than ‘I’m looking for a financial accountant’. For example, the target may be an assistant accountant in a big company who wants to step up to a higher role in a smaller company. “Too many clients say ‘I want someone who has done it all before’,” says Firth. “Why would that person come to you? Work out the skill! Competency gaps you’re comfortable with, and present it as an opportunity for them.”
PRE-SCREENING
Bob Olivier, a director of finance industry recruitment firm Olivier, says the initial job ad is crucial. ‘This market is less about screening people out and more about bringing people in,” says Olivier, also a former Chartered Accountant. “You don’t just write a shopping list of what you want; you have to make the role sound unique and interesting.”
He also suggests that once the job ad responses have been culled, an initial telephone ‘pre-screening’ might reduce the face-to-face interviewee list, by weeding out those who are obviously not suitable within five minutes of talking to them.
Once you’ve sorted out a short-list of candidates to interview, preparation is the key. Nicole Gorton, a director of Robert Half Finance & Accounting, says this includes: reading the curriculum vitae (CV); knowing in advance what questions to ask; and following a logical sequence. Also, make sure you have a professional environment in which to conduct the interview. (Olivier advised one rather drab insolvency office to put a vase of flowers in reception and paint the walls).
FACE-TO-FACE
When the interview begins, Dominic Moore, the principal, executive finance, for Hamilton James & Bruce, says the most important thing is to try and relax the candidate. “Break the ice by asking for information on a more personal subject, such as sporting interests or hobbies,” he suggests. “Then set an agenda as soon as the formal interview starts — this will help you both to get as much out of the hour you spend together as possible.”
As for what to ask, all the experts emphasize the importance of asking open-ended questions to try and get to know more about a candidate’s personality, rather than concentrating on technical competence, Use a mix of hard and easy questions to relax and stretch the candidate,” says Gorton. ‘What are your key areas of responsibility? What areas have you enjoyed? What have you achieved? How did you add value? What was your biggest challenge? What have you gained from the company? What are your main strengths? How has the role changed and what in this were you responsible for? What was the most difficult issue you recently had to address? Remember to let the candidate do the talking and be a good listener.”
Gorton says warning signs to watch for include indecisiveness, criticizing previous employers, jobs, colleagues and courses, negativity to everything and unrealistic claims to accomplishments.
You also need to spend some time working out the candidate’s motivation, preferred working environment and cultural fit with your firm. ‘Often candidates are hired for their skills, but leave due to the culture or management style,” Gorton says. “You want to discover what it is about a culture that brings about the best in the candidate. Under what circumstances will they thrive and fail?” Sample questions include: what is it about this opportunity that interests you? What is it you enjoy most about your current role? Why are you looking to leave? How does the role compare to other opportunities you are considering at present? What is it about the opportunity that attracts you the most? What is your ideal role/company? What motivates you to exceed expectations? What unmotivates you in the workplace?
LEARN FROM THE PAST
Many human resource professionals are now using behavioral interviewing techniques to extract information about particular traits, such as teamwork or meeting deadlines. They will ask candidates to describe a real-life situation in the past where they had to display a particular trait, what the candidate did and the outcome. The theory is that past behaviour is a predictor of future behaviour, when the candidate may be working for you.
“The benefit is that you are matching the candidate to the role based on factual evidence, rather than hypothetical scenarios,” Gorton says. “How did you do that, versus what would you do if ... These questions are highly specific and require the candidate to search their memories for examples and validate their outcomes.”
Gordon Whyte, associate director of Michael Page International, says the key with this type of questioning is to leave no stone unturned. “Keep probing and asking for examples.” He also notes that the set of questions must be designed to test the qualities and skills you are seeking, and every candidate should be asked for the same examples.
Don’t forget that the interview is also an opportunity to sell your firm to the candidate and differentiate it from competitors. “Clients often forget they have to sell their company and excite the candidate,” Firth says. But over-selling the opportunity can be a disaster. ‘The hardest thing of all is to balance selling your opportunity without over-promising,” Olivier warns. “You might tell them they’ll be promoted by Christmas and they’ll never have to work late on Friday, but they’ll be gone within six months (if that’s not true).”
Bringing successful potential role models into the interview can also help, says Mike Ewart, a director of Lloyd Morgan/Parker Bridge (part of Candle Australia).”The key to success in recruiting professional staff is to have ‘case studies’ for people in similar situations who have gone on to great success within your firm. Even better, get the ‘case study’ to become involved in the recruitment process at some stage. This then becomes less of a generic statement but more a tangible and very real bene1t of working with your firm.”
SAMPLE QUESTIONS TO IDENTIFY SPECIFIC TRAITS
- Can you provide an example of an unproductive team you have worked with, and your role in changing or shaping its direction? (Gordon Whyte, Michael Page International)
- Can you tell me of a time when you had to deal with conflicting deadlines and how you coped? (Domenic Moore, Hamilton James & Bruce)
- Tell me about a specific situation when you had to deliver some unwelcome news (Nicole Gorton, Robert Half Finance & Accounting)
- Give me an example of when you’ve been faced with a moral dilemma in the workplace, and how you resolved it. (Owen Firth, Finance Mark)
- Tell me about when you have had to display the highest level of honesty in your role. (Mike Ewart, Lloyd MorganParker Bridge)
- For a reference check: if you had the opportunity to rehire this person would you do so, and why? (Bob Olivier, Olivier)
TIPS ON INTERVIEWING
- Before recruiting, spend time developing an ‘employment value proposition’
An interview is not just about screening candidates, it is also an opportunity to brand and position your firm as an attractive employer.
- Ensure that everyone who will interview candidates has adequate training
Hiring managers need professional interview training, so candidates will bond emotionally with them rd the firm. They also need an interview framework to work from, so they have the best opportunity to showcase all that is best about the firm.
- Get candidates to answer questions using the ‘SAO’ technique (situation, action, outcome)
Ask candidates to provide concrete examples of when they have demonstrated behaviour in he past, such as teamwork. Ask them to describe the situation, their actions and the outcome: Keep the questions open ended and generic, and judge how the candidate approaches the answer.
- Use role-plays
Role-pIays are another strong way of tapping in to personality traits. For example, ‘Tell me about the process you would put in place in order to solve the following problem ‘You can then judge their approach to teamwork, delegation, decision making etc.
- Have a standardized scoring method
It is important to have a pre-prepared ‘scoring’ technique or you will find yourself relying primarily On ‘gut feel’.. You should be making notes and comparing things such as confidence, detail of answers, strength of decision making process and so on — a simple score out of 10 could be an example
There were two new additions into our ARM families in August and September.
Marita and Jean-Marc welcomed their new baby daughter Amelia Chantelle a sister for Lucas into their family on 15 August, and she weighed a healthy 7 pounds and 13 ounces.
Neil (Senior Accountant) and Lisa Wilde welcomed their new baby son Rayne a brother for Beth into their family yesterday morning. A long awaited arrival into their family as he was 14 days overdue !
Congratulations are also in order for Mark Langham, one of our Accountants as he successfully completed his Graduate Diploma (ICAA).
Our first, second, and third positions on our Footy Tipping Ladder at the completion of the 2006 Footy Tipping Competition were as follows:
First Position: Nathan Batty (ARM employee) finished with 122 tips and won $1,250
Second Position: Adrian Patane (ARM employee) finished with 119 tip and won $439.25
Third Position: Ben Anderson (Friend of ARM employee) finished with 119 tips and won $439.25