21 minute read
COVID
from Insider Edition 119
by R6 Digital
include the following expenses which you will need to calculate separately: • Phone and internet • Consumables and deprecation of equipment l Actual costs method – As the name suggests you keep a record of the actual costs incurred to work or operate your business from home.
I’m only working from home due to COVID-19
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To support taxpayers in this situation the ATO has introduced a shortcut method which provides a simple way to calculate these expenses with minimal recordkeeping requirements. This shortcut method applies from 1 March 2020 and can be applied up to 30 June 2021.
Using the shortcut method, you can claim a deduction of 80 cents for each hour you worked from home for the period between: l 1 March 2020 to 30 June 2020 in your 2019–20 tax return l 1 July 2020 to 30 June 2021 in your 2020–21 tax return.
If you: l Were working from home to fulfill your employment duties and not just carrying out minimal tasks such as occasionally checking emails or taking calls l Incurred additional running expenses as a result of working from home.
The shortcut method doesn’t require you to have a dedicated work area and covers all additional deductible running expenses.
What are my record-keeping requirements when working from home?
You will need to keep appropriate records to substantiate your claims for all your running and occupancy expenses. This will depend on the method you use to claim your expenses, written evidence may include: l Written diary including hours usage or explain floor space allocation and measurements l Rental contract between homeowner and business (occupancy expenses) l Mortgage interest, rent, insurance and council rates (occupancy expenses) l Receipts for purchase and repairs of office equipment and invoices for utility bills.
PHOTO BY MICHAEL SOLEDAD ON UNSPLASH
When I sell my home do I have to pay CGT if I claim home office expenses?
CGT generally will not apply when you sell your home. However, if you used any part of your home for business purposes, you may have to pay CGT.
You will generally only have to pay CGT for periods when you used your home for your business. For example, if you owned your home for 10 years but only used it for business for 3 years then you will only need to calculate capital gains tax for the 3-year period. The amount of taxable capital gain will usually be calculated using the same proportional method you used to calculate your deduction for occupancy expenses.
CGT won’t be payable if any of the following apply: l You only claimed running expenses as an employee l You operated a business from home, but you didn’t have a dedicated area set aside l Your business was operated through a company or trust.
In addition to this, you may be able to apply one or more of the small business CGT concessions to reduce your taxable capital gain. l
If you have any questions in regard to claiming home office-related expenses, pleasecall Bishop Collins on 02 4353 2333
KBH Group sells self storage portfolio, plans East Coast expansion
On 4 May KBH Group, a Western Australia based developer and operator of self storage facilities and marinas, sold its self storage portfolio to DBI Storage. The sale settled on 15 April 2021.
As part of the deal, valued at more than $84 million, KBH signed a fiveyear management agreement with DBI Storage for the five self storage facilities. These include KeepSafe Storage Balcatta, KeepSafe Storage O’Connor, KeepSafe Storage Wangara, KeepSafe Storage Welshpool, and Welshpool Self Storage.
KBH retains the rights to branding, intellectual property, proprietary systems, and their people. KBH Group is a one-stop-shop for self storage owners. Consistent with its mission to ‘Develop, Manage and Grow’, KBH Group plans to deploy additional KeepSafe Storage facilities across Australia – either KBH owned, or managed by KBH on behalf of 3rd party owners.
In addition to self storage facilities, KBH Group owns and operates Pier 21 Marina in North Fremantle. KBH Group operates under an
Australian Financial Services Licence, and remains 100% Western Australia owned and operated. The business offers consistently strong returns to shareholders and investors, with over 40% per annum IRR delivered by its property funds over the past four years.
KeepSafe Storage has twice won the Facility of the Year award at the annual Self Storage Association of Australasia Awards Night, as well as Small Operator of the Year across Australia and New Zealand.
“We’re extremely proud of what we have been able to achieve in a relatively short period,” said Shaun Bain, Managing Director of KBH Group. “We have developed greenfield sites, acquired and improved existing sites and undertaken management of 3rd party sites. In each of those facilities, we were able to deliver an industry leading experience to our customers, and exceptional returns to our shareholders and investors, in what has been a difficult trading environment (pre-COVID-19).”
The combined deal total of $84+ million includes the purchase price and management fee income for five years. l
Cyber crime
by Australian Federal Police
Information and communications technology (ICT) is an integral part of our daily lives. Whether people have a computer at home, use online banking services or simply receive electricity supplies, the community’s reliance on technology is increasing. A safe and secure online environment enhances trust and confidence and contributes to a stable and productive community.
Government and business also take advantage of opportunities for economic development through increased use of information technology.
The Australian Federal Police (AFP) sees the increasing use and dependence on technology as one of the major influences on the domestic and international law enforcement operating environment.
What is Cybercrime?
In Australia, the term ‘cybercrime’ is used to describe both: l crimes directed at computers or other information communications technologies (ICTs) (such as computer intrusions and denial of service attacks), and l crimes where computers or ICTs are an integral part of an offence (such as online fraud)
Just as the internet and other new technologies are opening up tremendous possibilities, they also provide opportunities for criminals to commit new crimes and to carry out old crimes in new ways. On the evidence available, it is clear that the number, sophistication and impact of cybercrimes continues to grow and poses a serious and evolving threat to Australian individuals, businesses and governments.
Online, criminals can commit crimes across multiple borders in an instant and can target a large number of victims simultaneously. Tools that have many legitimate uses, like high speed internet, peer to peer file-sharing and sophisticated encryption methods, can also help criminals to carry out and conceal their activities.
The AFP is responsible for detecting, preventing, disrupting, responding to and enforcing cybercrime offences impacting the whole of the Australian economy. It focuses on investigating cybercrime threats against Commonwealth Government departments, critical infrastructure and information systems of national significance, with a key element being the banking and financial sector. The AFP is guided by Commonwealth priorities for combatting cybercrime.
In general, the investigation of fraud against an individual is a state police responsibility. However, where there is a crossover between the investigation of a fraud against an individual and the investigation of an organised attack against critical banking systems, the AFP will work together with the local jurisdiction and the banking and finance industry.
The AFP also works closely with State and Territory Police and international policing agencies in the fight against all types of cybercrime.
For the latest advice on the types of cybercrime currently impacting Australians visit the Australian Cyber Security Centre website (cyber.gov.au).
The presentation by Federal Agent Daniel Rodriguez discussed resources available to members of the SSAA to protect their businesses and where to seek help if they encounter a cyber issue. It is up to individuals and business alike to take the first step in protecting themselves from the dangers of the online environment. Increasing your own awareness of what can occur and how to deal with these issues can make a significant difference in protecting you, your business and your customers. l
Andrew Catsoulis
As Managing Director of National Storage REIT (NSR), Andrew has had a profound and transformative impact on the self storage industry. The strong commercial standing of the Australian and New Zealand self storage industry has been substantially influenced by Andrew’s vision and his guidance of National Storage for over 25 years.
Andrew is a qualified lawyer, admitted to the Supreme Court of Queensland and the High Court of Australia. He had extensive experience in the fields of finance, commercial and property law during his early career at major law firms in Australia and overseas. As a founder of the original National Storage business, he has more than 30 years’ experience in the self storage industry.
Andrew’s involvement in the self storage industry started with the development of a storage facility on family land on the Ipswich Motorway at Oxley in Brisbane’s south-west in 1995. This was followed with a second facility at Aspley. These centres were branded Stowaway Self-Storage.
Andrew had the foresight to see the advantages and opportunities in operating a network of facilities and with that in mind purchased National Mini Storage from a small ASX listed company. With the assistance of his financial advisers, he stripped out the company’s self storage properties for direct ownership. This portfolio comprised seven properties in south east Queensland and three Adelaide properties and was purchased with the assistance of the Bryan Family who then owned Premier Self-Storage. National Mini Storage, Premier Self-Storage and Stowaway Self-Storage formed the original nucleus of what has become National Storage today.
In 2003 the APN National Storage Property Trust was formed. The National Storage properties were sold into the Trust and National Storage Operations Pty Limited took a longterm lease back of the properties in the Trust. The Trust originally comprised 20 properties but with an active acquisition programme this grew to 44 properties with a value exceeding $350 million.
The Trust operated through a demanding economic environment including interest rate peaks and the Global Financial Crisis. Andrew acknowledges that the APN National Storage Property Trust experience impressed on him the importance of holding direct ownership of self storage properties and influenced his planning of the later National Storage REIT. National Storage eventually bought back the properties in the APN National Storage Trust.
Andrew was instrumental in the formation of National Storage REIT which listed on the Australian Stock Exchange in December 2013. National Storage REIT was formed as a stapled security combining direct property ownership with skilled operational management. Andrew has led the National Storage REIT as Managing Director since its inception. NSR originally comprised 60 operating businesses and 38 owned storage properties with the balance being held in joint ventures or though longterm lease arrangements.
Under Andrew’s guidance the REIT has grown rapidly and as of 30 June 2020 National Storage REIT operated 188 storage facilities, over 95% of which are wholly owned by NSR, throughout Australia and New Zealand with a book value more than $2,280 million. Recent reporting shows continuing strong growth in acquisitions.
Andrew has maintained a consistent growth strategy for National and explains that the strategy is based on the following four principles: l organic growth through a balanced approach to occupancy and fee rate management; l a strong commitment to the acquisition of established storage facilities; l development of new facilities and expansion of existing facilities; and l technological innovation including development of call centre operations, introduction of revenue management systems and implementation of centre operation automation.
The establishment and success of the National Storage REIT has had a profound impact on the self storage industry. National has led change that has transformed the industry from a small-scale private investment medium to a wellrecognised, institutional grade asset class. It has raised awareness of the self storage industry in banking, finance and investment sectors. The increased awareness of self storage as an investment class has benefited the whole self storage industry and resulted in value growth across the industry.
Andrew takes great pride in the National Storage REIT team. Many of his senior executives have been with the organisation since the inception of the National Storage in 2000. Andrew has great confidence in the capabilities of his executive team and has applied a management philosophy where he provides clear guidance in an environment that allows a high level of individual responsibility. l
WHY RENT WHEN YOU CAN BUY?
by Andrew Work, Executive Director, Self Storage Association Asia
This is the question that Don Leung, CEO of 100Storage, is putting to the people of Hong Kong. The Chinese city has some of the world’s most expensive real estate in any category. With parking spots costing up to $160,000 (AUD), even a small flat can be out of reach. But now, 100Storage is bringing a new option to would-be real estate moguls: self storage.
“Many Hong Kongers aspire to start building wealth through real estate ownership, but recent price rises have put even the smallest flats out of their reach. Now they have another option in a fast growing asset class that answers the real needs of the people in Hong Kong,” says Mr Leung.
He has created Hong Kong’s first self storage for sale. Consumers can buy a storage unit and then use it for themselves, become mini-self storage operators and rent it out, or opt to have 100Storage rent it out for them, sometimes valet style, and secure an income stream. With land title to the property, they can get a mortgage to buy or purchase outright. The first location, “Now that we have proven that the concept works, we expect that more property owners will see the value of this new concept and choose to support the growth of self storage in this manner.
The Storage One, was launched in April and two more projects are in development. The Storage One has 125 units on the 8th floor of an industrial building. Self storage in Hong Kong is found in industrial buildings, giving them a new life after the wholesale relocation of manufacturing to China in the late 20th century. Mr Leung had to bring a range of interested parties across the line to implement the new concept. The Lands Registry had to be convinced of the merit of subdividing property title into very small units within the overall space owned by a larger landlord who still owns the lobby, corridors and other parts of the space.
The landlords had to be convinced that the business model would work. Of course, the first project is always the hardest. The second location, The Storage Village in another part of Hong Kong is already selling units to strong demand while construction is underway. The third location has been selected and is in development. As the concept becomes proven, Mr Leung expects more landlords with unrealised potential in their real estate will look to this model.
“Now that we have proven that the concept works, we expect that more property owners will see the value of
this new concept and choose to support the growth of self storage in this manner,” says Mr Leung.
Ownership changes the way people think about their storage space. Mr Leung’s company has been able to justify higher costs associated with supplying electrical power and a broadband connection to each unit. Customers can install their own cameras and environmental sensors on top of the fire alarm that comes with each unit. Storage units are built using expensive fire retardant paneling and top rated construction materials all around. This means that the units far exceed minimum fire safety standards.
Mr Leung is a Hong Kong native, but spent formative years in Australia. He graduated from the University of Queensland in Brisbane, home of many of Australia’s great self storage entrepreneurs.
“Hong Kongers don’t have the luxury of space that I got used to in Australia. But they do have a similar enthusiasm for real estate investment. This is shared by people across Asia and I aim to bring this model to other countries across the region”, says Mr Leung. With a strong start in Hong Kong, that seems entirely possible and this company will be one to watch in the next few years. l
Left: 100Storage founder Don Leung shows off the storage units for sale, including the fire detection and features including power and broadband connection. Valet boxes are visible on the right. Above: The Storage One has applied to the SSAA programme, S.A.F.E. Self Storage Standards and anticipates passing the inspection to receive a Gold Status, indicating compliance with all government fire safety regulatory requirements. Top right: Onwards and upwards! The launch of The Storage One with founder Don Leung (4th from left), SSAA (Asia) Executive Director Andrew Work (2nd from left) and Kevin Shee, founder of SC Storage (2nd from right).
A NEW ALTERNATIVE
For facility owners in Australia
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Mice infestation
by Michelle Nguyen, Hunt and Hunt Lawyers
After one of its worst wildfire seasons and a global pandemic, Australia is now facing its latest end-of-days challenge: a “monumental” plague of mice.
Millions of rodents are running amok particularly in parts of Australia’s eastern states, with residents sharing horror encounters on a daily basis and the storage industry has also had issues.
So what are a facility’s liability if stored goods are damaged as a result of the mice infestation?
In the event that damage occurs to a Storer’s goods, the Standard Self Storage Agreement provides some protection for the Facility. Assuming the Facility is using the latest version of the Agreement, clause 16 states that:
The Storer acknowledges that to the extent permitted by law, having regard to any non-excludable consumer guarantees under any applicable consumer protection laws (Non-Excludable Guarantees), the Storer’s goods are stored at the sole risk and responsibility of the Storer who, except to the extent of any negligence by the FO, is responsible for any and all theft, damage to, and deterioration of its goods … The Storer, except to the extent of any negligence by the FO, bears the risk of any and all damage caused by flood, fire, leakage or overflow of water, mildew, mould, heat, spillage of material from any other storage space, removal or delivery of the goods, pest or vermin or any other reason whatsoever.
Generally speaking, the Facility will not be found liable to a Storer unless the Facility is negligent or has breached a consumer guarantee under the ACL. Consumer guarantees are a set of rules that apply to goods and services purchased by consumers. The Facility provides a storage service.
At a high level, the service the Facility provides must be: l provided with due care and skill; l fit for any specified purpose (express or implied); or l provided within a reasonable time (when no time is set).
One way the Facility can demonstrate that it provides its
services with due care and skill is by taking all reasonable steps to prevent any damage by the mice. For example if the facility has undertaken both trapping and baiting measures to mitigate the degree of the infestation at the facility.
While a Facility’s liability is determined on a case by case basis, we believe that these preventative measures will assist in showing that the facility has taken active steps to try and prevent damage. On that basis, we strongly recommend you continue with your trapping and baiting procedures.
In anticipation of an increase of mice during the winter season, we recommend the facility take any other measures it believes are appropriate to reduce the risk of damage. For example, the facility may send a notice to its storers which: l addresses the current mice problem; l refers to clause 16 in the
Agreement regarding the storing of goods at the Storer’s own risk; and l encourages Storers to make their own arrangements to protect their goods. l
Self storage pricing and revenue
management: Real world opportunities
by Warren Lieberman and Jim Mullin, Veritec Solutions
We often think we know more about our customers than we do. Common misperceptions include: l If I raise rents above the street rate or by more than X%, my customers will move out l My competitors are lowering their prices, so I need to lower mine l My prices are higher than my competitors so I can’t charge more for more conveniently located units
Although there is some truth to these expectations, the tendencies noted above are usually not ‘all encompassing’ as often anticipated. For example, when analyzing the impacts of rent increases, many operators discover that when raising rents above the current street rate, fewer customers move out than expected. What we remember, however, are the instances where customers complain, tell us the rent increase is too much, and move out. In fact, the tendency to ignore general information (e.g., many customers continue to rent despite receiving a rent increase) and focus on information relevant to specific cases (e.g., customer complaints about rent increases), even when the general information is more important has a name: base rate bias.
Base rate bias often operates in conjunction with other aspects of reasoning errors, such as confirmation bias (looking for and interpreting information in a manner that confirms preconceptions), the tendency to avoid revising beliefs even when presented with new evidence, as well as other behavioral biases. In total, these biases often result in the perpetuation of various pricing myths. For those willing to invest time and energy in data analysis and make decisions informed by ‘what the data show,’ opportunities to increase revenues and profits emerge.
Let’s test this. Suppose you have two available units of the same size on the second floor of your self storage facility. Unit A is one hallway turn from the lift; Unit B is two hallway turns away. What percent of your customers would pay 10 percent more for the unit closer to the lift, a slightly more convenient unit?
Was your answer 10 percent? Perhaps 20 or 25 percent?
Our experience in the US and Australasia shows that 25 – 45 percent of new customers are willing to pay more for convenience. Many operators underestimate the importance of convenience to their customers.
With regards to rent increases, the biases noted above often result in operators being more cautious than they need to be. That does not mean everyone’s rent should be increased by a greater amount. In a data-driven world, operators are better able to determine (i) whose rents should be “For those willing to invest time and energy in data analysis and make decisions informed by ‘what the data show,’ opportunities to increase revenues and profits emerge.
increased by a greater amount and (ii) whose rents should be increased by a lesser amount (or not at all)? By refocusing the rent increase process and decisions, operators can increase the total revenue generated by rent increases while simultaneously reducing the number of move-outs due to rent increases because they can better identify which leases merit an aggressive rent increase and which do not.
It’s good to be reminded that sometimes, what we think we know isn’t an accurate depiction of how our customers behave. Capitalising on that knowledge through data analysis can lead to higher revenues and profits. l
www.VeritecSolutions.com
