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May 2025 – Accounting and SMSF Roundup

May 2025 Round Up

With tax time approaching, we’re covering what’s worth reviewing now — and what to keep an eye on. This month’s articles look at super contribution strategies before 30 June, the kinds of deductions the ATO is actively cracking down on, and what the proposed $3 million super tax could mean for high-balance accounts (and why it’s not time to act just yet).

1. EOFY Super Checklist – What to Review Before June 30   Read the full article

2. Tax Time 2025 – Air Fryers, Yachts and other Deduction Fails Read the full article

3. Thinking About Changing Your Super? Read this First  Read the full article

EOFY Super Checklist: What to Review Before 30 June

The end of financial year is the perfect time to check in on your superannuation strategy — and make sure you’re making the most of your options. From tax-effective contributions to pending legislative changes, here’s what to know before 30 June 2025.

1. Maximise Your Pre-Tax (Concessional) Contributions

Concessional contributions (like employer SG, salary sacrifice, or deductible personal contributions) are taxed at just 15% inside super — which can offer big tax savings if you’re in a higher tax bracket.

For 2024/25, the cap is $30,000. This includes:

  • Employer contributions (including salary sacrifice)

  • Personal contributions you plan to claim as a tax deduction

  • Defined benefit fund contributions

Want to claim a deduction?
You’ll need to submit a Notice of Intent to Claim to your fund and receive confirmation before lodging your tax return (or by 30 June 2026, whichever comes first).

2. Use Carry-Forward Contributions If Eligible

Haven’t maxed out your concessional contributions in previous years? If your total super balance is under $500,000, you may be able to carry forward unused cap space from the past five years.

This can be especially useful if:

  • You’ve sold assets and made a capital gain

  • Your income is unusually high this year

  • You’re catching up on contributions before retirement

Any unused cap from 2019/20 will expire if not used by 30 June 2025.

3. Consider After-Tax (Non-Concessional) Contributions

Not looking for a tax deduction? After-tax contributions still offer a smart way to grow your super in a low-tax environment (0–15%).

The current cap is $120,000 for 2024/25.

You can also bring forward up to 3 years of contributions and invest up to $360,000 in one go, if eligible.

This can be useful if you’ve:

  • Received an inheritance or windfall

  • Sold a business

  • Built up funds outside super and want to consolidate

4. New Thresholds Are Coming in July

While contribution caps won’t increase next year, the Total Superannuation Balance (TSB) thresholds that determine contribution eligibility will. Here’s how the limits change:

Until 30 June 2025 After 1 July 2025
TSB < $1.66m → $360k allowed TSB < $1.7m → $360k allowed
$1.66m–$1.78m → $240k $1.76m–$1.88m → $240k
$1.78m–$1.9m → $120k $1.88m–$2m → $120k
$1.9m+ → Not allowed $2m+ → Not allowed

Tip: Know your balance before 30 June to determine your eligibility.

5. Planning to Start a Pension? Timing Matters

The general transfer balance cap (how much you can move into the tax-free pension phase) will increase from $1.9m to $2m on 1 July 2025.

Starting a pension after this date means a higher cap for life — which could increase how much you can keep in the tax-free environment.

6. Already in Pension Phase? Check Your Minimum Drawdown

If you’re already drawing a pension, you must withdraw the minimum amount for the financial year by 30 June to keep your account in pension phase.

Age Minimum Withdrawal
Under 65 4%
65–74 5%
75–79 6%
80–84 7%
85–89 9%
90–94 11%
95+ 14%

Missing your minimum could result in your account reverting to accumulation mode — meaning 15% tax on earnings.

7. $3M Super Tax: Where Things Stand

The proposed additional 15% tax on super balances over $3 million is still in limbo. While it passed the House of Representatives, it lapsed in the Senate. Parliament is not due to sit until after the proposed start date, so we will keep you posted with the progress as it comes to hand.

The most controversial part? It proposes taxing unrealised gains — something no other structure does in Australia.

For now, there’s no need to take action. We’re watching developments closely.

Need Guidance Before EOFY?

If you’re unsure what applies to you or how to get the most from your super before 30 June, now’s the time to get in touch so we can review.

Tax Time 2025: Air Fryers, Yachts, and Other Deduction Fails

As tax time approaches, the ATO has shared a list of deduction attempts that definitely didn’t pass the test.

If you’ve ever wondered where the line is between legitimate and laughable tax claims, here’s your answer. The ATO is reminding all taxpayers: if your claim wouldn’t pass the “pub test,” it probably won’t pass with them either.

What You Can’t Claim (No Matter How Creative You Are)

Over the years, the ATO has seen some wild claims, including:

  • A mechanic trying to deduct an air fryer, microwave, vacuum cleaners, a gaming console, and TV — all denied as personal expenses

  • A truck driver who claimed swimwear, arguing they needed it for a roadside swim during hot transit days

  • A fashion industry manager who attempted to write off over $10,000 in designer clothes to “stay well-presented” at events

All were rejected. Why? They were personal in nature and not directly tied to earning income.

🔎 The ATO’s 2025 Focus Areas

This year, the ATO will be paying close attention to:

  • Work-related expenses

  • Working-from-home deductions

  • Multiple income streams (including side hustles and gig work)

ATO Assistant Commissioner Robert Thomson says it simply:

“If it doesn’t pass the pub test — it’s probably not deductible.”

📌 Reminder: What Makes an Expense Deductible?

To claim a work-related deduction, you must be able to show:

  • A direct connection to earning income

  • Proof you spent the money (receipts, invoices, records)

  • You weren’t reimbursed by your employer

Personal expenses like commuting, childcare, and general clothing don’t qualify — even if they help you “feel productive.”

🏠 Working From Home Deductions: Two Options

The ATO has clarified the two ways you can claim working-from-home expenses:

1. Fixed Rate Method

  • Claim 70¢ per hour worked from home

  • Covers internet, electricity, phone, and stationery

  • Requires a record of hours worked

2. Actual Cost Method

  • Claim actual costs incurred, backed by receipts

  • You’ll need to calculate work-related use of each item

  • More accurate but more admin

Declaring All Income Is a Must

Got a side hustle? Sell services through an app? Provide rideshare or freelance work?
You’ll need to declare every source of income in your return.

“Each income stream may come with different eligible deductions — but only if declared,” says Thomson.

Real Claims from the Wild Side

Even outside the ATO, tax agents have seen some “creative accounting”:

  • A family tropical island holiday labeled a business trip

  • A luxury yacht claimed “in case business came up on the islands”

Chartered Accountants ANZ were clear:

“The ATO will not be laughing. Dubious claims aren’t worth the risk.”

Need Help Getting It Right?

If you’re unsure whether an expense qualifies, don’t guess — penalties and interest apply if you’re wrong. You’re better off to check with us than getting hit with a fine later. 

Thinking About Changing Your Super? Read This First

If your super balance is above $3 million — or getting close — you’ve likely heard about the government’s proposed new tax. While legislation is expected to pass soon, experts across the industry are urging caution: don’t make major changes just yet.

With the new rules potentially coming into effect from 1 July 2025, now is the time to understand what’s proposed, what’s still unclear, and what you can do to prepare without making costly missteps.

What’s Being Proposed?

The Division 296 tax is a proposed 15% additional tax on earnings from superannuation balances over $3 million. It applies only to the portion above that threshold — but controversially, it also taxes unrealised gains, something not seen elsewhere in our tax system.

This tax was previously blocked in the Senate but is now expected to pass with the Albanese government re-elected and likely to gain support from the Greens.

So, Should You Do Anything Before 30 June?

Short answer: Not yet.
Here’s what industry leaders are saying:

“Don’t pull the trigger on major changes until the final version of the law is passed.”

Here’s why that advice makes sense:

✅ 1. The Tax Isn’t Effective Yet

Even if the bill is passed soon, it won’t apply until the 2025–26 financial year.
What matters is your super balance on 30 June 2026 — not this year.

So, if your balance dips below $3 million before that date (even if it goes above temporarily), you may not be affected.

🤷 2. The Final Details Aren’t Confirmed

The Greens have previously pushed for stricter rules — including reducing the threshold to $2 million and banning certain SMSF borrowing strategies.

There’s a real chance the final version of the law will differ from what’s been proposed.

What You Can Do Now

While you don’t need to take action yet, there are smart steps worth discussing with your adviser:

  • Review contribution strategies — especially if equalising balances between spouses could keep you under the threshold.

  • Model the potential impact — so you understand what it could cost if your balance stays over $3 million.

  • Get your records in order — the ATO will require new reporting methods for some funds, starting next financial year.

“In most cases, staying in super will still be the best option,” says SMSF expert David Busoli. “But each case needs a personalised strategy.”

Don’t Forget: Death Benefits Tax Still Looms

Even if Division 296 doesn’t apply to you, another tax almost certainly will: the superannuation death benefits tax.

  • This applies when adult children inherit a taxable component of super.

  • It’s often larger than Division 296 — and it affects far more people.

For example, if Gary has $800k in taxable super and passes it to his kids, over $130,000 could be lost to lump sum tax — even though he never triggered the $3m rule.

Long-Term Strategies to Explore

If you’re looking to future-proof your super and broader estate planning, here are strategies worth considering:

  • Recontribution strategies — Withdraw taxable components and recontribute them tax-free, where eligible.

  • Balance equalisation — Keep both partners under the threshold.

  • Withdrawing excess amounts — To avoid Division 296 or future death benefits tax.

  • Early gifting — Pass on wealth pre-death to reduce the estate’s tax liability.

  • Exploring alternative structures — Outside super, personal investments can leverage tax-free thresholds more effectively.

“Australians won’t accept unfair tax policy quietly,” says Nicholas Ali of Neo Super. “It’s time to be proactive, not reactive.”

Bottom Line

Yes, Division 296 is likely coming — but it’s not law yet.
Before you restructure your super, withdraw funds, or trigger irreversible changes:

✔️ Wait for final legislation
✔️ Model different scenarios
✔️ Seek professional advice tailored to your situation

Have questions about your super or estate planning strategy?

We’re here to help you protect your wealth — and pass it on wisely.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

April 2025 – Accounting and SMSF Roundup

April 2025 Round Up

This month, we focus on important updates that impact businesses and SMSFs, from changes in tax deductibility to new superannuation requirements and climate-related reporting obligations. With ATO interest no longer tax-deductible starting 1 July 2025, businesses will need to adjust their financial strategies. Meanwhile, the government has released draft legislation for payday super, set to begin in 2026, which will align super contributions with regular pay cycles. Additionally, small businesses must be aware of the potential indirect effects of mandatory climate disclosures, as large businesses may request emissions-related data to meet new scope 3 reporting requirements. Stay informed and prepared for these upcoming changes that will affect your operations and compliance.

1. ATO Interest is no longer tax deductible: What you need to know  Read the full article

2. Government unveils draft legislation for payday super Read the full article

3. Indirect Climate Reporting: Why it matters for small business  Read the full article

ATO Interest is no longer tax deductible

What’s Changing?

From 1 July 2025, the General Interest Charge (GIC) and the Shortfall Interest Charge (SIC) will no longer be tax deductible, as outlined in a recent bill passed by Parliament.

  • GIC: Applies when a tax liability is paid after the due date, including under payment arrangements.

  • SIC: Applies when a tax return is amended, resulting in additional tax payable.

What This Means for You:

  • Any GIC or SIC incurred before 1 July 2025 will remain deductible.

  • The new law only affects GIC or SIC from 1 July 2025 onwards, including existing payment arrangements.

This change means businesses will no longer be able to claim a tax deduction on these charges, potentially increasing the overall cost of unpaid tax liabilities.

Current Impact: Rising Costs

The current GIC rate is 11.17%. Without the ability to deduct this interest, the cost of paying late will increase significantly for businesses.

What You Can Do About It:

  • Explore Alternative Financing Options: Businesses can still claim deductions on interest for loans taken to cover tax debts. Now may be a good time to consider alternative financing at lower rates, which could be tax deductible.

  • Plan Ahead: With this change, it’s important to review your tax obligations and ensure timely payments to avoid higher costs.

By staying informed and considering different financing options, small business owners can reduce the impact of these changes.

Government unveils draft legislation for payday super

Overview of the Reforms:

The Australian Government, through Assistant Treasurer and Minister for Financial Services Stephen Jones, has released draft legislation aimed at addressing the billions of dollars in unpaid superannuation each year. The reforms, which will take effect from 1 July 2026, will require employers to pay employees’ superannuation at the same time as their salary and wages.

Key Changes in the Legislation:

  • Introduction of ‘Qualifying Earnings’: The proposed legislation introduces a new term, qualifying earnings. This refers to the earnings on which individual Superannuation Guarantee (SG) contributions are calculated.

    • Qualifying earnings will include:

      • Ordinary Time Earnings (OTE) as defined under the current SG framework.

      • Sacrificed OTE in exchange for additional superannuation contributions through salary sacrifice arrangements.

      • Payments considered part of ‘salary or wages’ under the existing law for superannuation purposes.

  • New ‘QE Day’: The day that qualifying earnings are paid to an employee will be known as a QE day under the new rules.

Super Contributions and Payment Deadlines:

  • Employers will be required to ensure super contributions are received by the superannuation fund within seven days from the day the employee is paid their qualifying earnings.

  • SG Charge Calculation: The amendments also recalibrate the SG charge, making it more precise to ensure employees are compensated for lost earnings due to delayed contributions. This change will also include a late payment penalty if the SG charge remains unpaid after the specified period.

What This Means for Employers:

  • Simplified Payroll: Employers will now pay super at the same time as salary and wages, simplifying the process and ensuring better compliance with superannuation obligations.

  • Increased Penalties: Employers who fail to pay the SG charge on time will face more significant consequences, including penalties for late or missed payments, encouraging prompt action on late contributions.

Benefits for Employees:

  • Real-Time Super Growth: The new system will allow more than three million workers to see their superannuation grow in real-time, alongside their wages, reducing the chances of lost super.

  • Improved Retirement Outcomes: Employees will benefit from compounding investment returns due to more frequent super contributions. A 25-year-old median income earner could be $6,000 better off at retirement, or 1.5% better off, compared to the current quarterly payment system.

Consultation and Timeline:

  • The government is inviting public submissions on the draft legislation, with consultation closing on 11 April 2025.

  • The reforms are scheduled to take effect on 1 July 2026.

Industry Reaction:

  • ASFA’s Support: Mary Delahunty, CEO of the Australian Superannuation Funds Association (ASFA), welcomed the draft legislation, stating that payday super would help employees build their superannuation in real-time, reducing lost super and improving retirement outcomes.

    “Payday super means over three million workers will see their super build in real-time, alongside their wages,” said Delahunty.
    “It will mean less lost super and better outcomes in preparation for retirement.”

  • Commitment to Successful Implementation: ASFA emphasized its commitment to ensuring payday super is implemented smoothly and delivers long-term benefits for Australian workers’ retirement savings.

Next Steps for Implementation:

  • ASFA has pledged to engage in the Treasury consultation process and work through the details to ensure the reforms are implemented successfully by 1 July 2026.

What Business Owners Need to Do Now:

1. Prepare for Payment Changes

  • From 1 July 2026, super will need to be paid at the same time as wages. Update your payroll system to track qualifying earnings and ensure timely super payments.

2. Review Payroll Systems

  • Ensure your payroll can calculate qualifying earnings and handle the new super payment requirements. Work with your accountant or bookkeeper to make necessary updates.

3. Plan to avoid Penalties

  • There will be stricter penalties for late super payments. Review your current practices to ensure super is paid on time and avoid these penalties.

4. Manage Cash Flow

  • Super will be paid alongside wages, so adjust your cash flow planning accordingly to avoid any disruptions.

5. Stay Informed

  • Keep up with the draft legislation and consider submitting feedback before 11 April 2025. Be prepared for any further updates as the legislation moves forward.

6. Communicate with Employees

  • Inform your staff about the upcoming changes so they’re aware of how super payments will be made more frequently.

Indirect Climate Reporting Requirements: Why it’s important for small business

Small businesses may soon be impacted by climate reporting requirements, even if they aren’t directly subject to them. The Australian Securities and Investments Commission (ASIC) has reminded businesses that large companies they work with may request emissions-related information to meet their reporting obligations. Here’s what small business owners need to know to prepare:

Why Small Businesses Should Care:
While small businesses won’t be directly affected by mandatory climate disclosures, they may still be asked for climate-related information by larger businesses in their supply chains. Large companies will need to report on scope 3 emissions, which include emissions from small suppliers, both up- and down-stream in the supply chain.

What You Might Be Asked For:
For example, a large business may need to report on their energy use. To fulfill that obligation, they might ask you for records such as electricity bills to get a full picture of their emissions. If you’re asked for emissions-related information, make sure to clarify exactly what is needed.

How to Handle Requests for Information:
In some cases, large businesses can use estimates or industry averages for calculating scope 3 emissions. If you’re unable to provide exact figures, you may be able to offer estimates instead. If you’re unsure, accountants and tax advisors can assist with providing the correct data.

Benefits for Small Businesses:
The shift towards climate reporting can offer small businesses valuable insights into potential risks and opportunities. With improved transparency, businesses will be better prepared for climate-related challenges, such as changes in insurance arrangements or disruptions in supply chains. It can also help uncover new business opportunities, particularly as large companies invest in climate resilience and adaptation.

Long-Term Reporting Requirements:
Starting in 2028, businesses with $50M+ in revenue, $25M+ in assets, or 100+ employees will have direct climate reporting obligations. ASIC encourages these businesses to familiarize themselves with the regulatory guidelines now, to be prepared for the upcoming changes.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

March 2025 – Accounting and SMSF Roundup

March 2025 Round Up

With the ATO implementing new compliance measures and the upcoming budget creating even more economic uncertainty, keeping tabs on the evolving regulatory landscape is crucial for business planning. Combined with wage theft laws that now pack a serious punch and some businesses moving to monthly GST reporting – your accounting and SMSF obligations have the potential to cause potential headaches for the unprepared. This month, we  impact your business operations and explain strategic approaches to navigate the changing tax environment:

1. Monthly GST Reporting Changes  Read the full article

2. Tax Administration 3.0 – How It Will Reduce Your Compliance Burden Read the full article

3. Market Changes and their Affect on Your Bottom Line Read the full article

Monthly GST Reporting Changes: What Business Owners Need to Know

Starting 1st April 2025, the Australian Taxation Office (ATO) is implementing changes to GST reporting requirements for selected small businesses. Around 3,500 small businesses with a history of non-payment, late or non-lodgment, or incorrect reporting will be moved from quarterly to monthly GST reporting.

Key Details of the Change

  • This change specifically targets businesses with patterns of non-payment, late lodgment, or inaccurate reporting
  • The monthly reporting requirement will remain in effect for at least 12 months
  • Affected businesses will receive direct notification from the ATO by the end of March
  • A review process will be available for small businesses who don’t believe they have a history of poor compliance
  • Information about the review process, including objection rights, will be provided by the ATO

According to ATO Deputy Commissioner Will Day, “When GST is reported monthly rather than quarterly, it reduces the risk of falling behind.” The ATO views this initiative as part of their responsibility to create a level playing field for all businesses with the focus on helping small business owners get their tax and compliance right as part of their ‘Getting it Right’ campaign. 

If you receive notification about this change, or would like to know more, please contact our office immediately so we can discuss your options, including the review process.

Tax Administration 3.0: Plans for Digital Changes to Reduce Your Compliance Burden

In a move to prevent debt, reduce cost and compliance burdens and ensure businesses have certainty that they’re meeting their tax obligations correctly, The ATO is continuing to develop its “Tax Administration 3.0” initiative. 

Plans to move towards a more digitised future include:

  • Encouraging more frequent reporting of tax obligations
  • Developing digital solutions to help identify and address errors before lodgement
  • Improving the use of third-party data to support compliance
  • Streamlining the tax payment experience
  • Easier calculation of PAYG installment through software integration

With the ATO actively engaging with the accounting and tax profession to design the future digital tax experience, Michael Morton, Assistant Commissioner at the ATO, emphasised that this transition will be gradual, describing it as a “multi-step, multi-journey approach requiring incremental advancements and continual adaptation.”

The ATO is currently seeking ideas from small businesses and tax professionals about how digital tools could improve record-keeping practices and help navigate tax complexities. Morton encourages businesses and advisors to share thoughts with professional associations or contact the ATO directly.

 

Budget 2025: What You Need to Prepare For

With the 2025-26 Federal Budget brought forward to March 25th, an election will be held in either March or May 2025, but no later than May 17th, 2025. This transition period brings several important considerations for businesses.

Legislation in Limbo: What’s still uncertain

The final parliamentary sitting of 2024 saw 32 bills pushed through, including seven directly affecting businesses. However, the Small Business Asset Write-Off, which would enable businesses with an aggregated turnover of less than $10 million to immediately deduct the full cost of eligible depreciating assets costing less than $20,000, remains uncertain. Without this measure, the threshold returns to $1,000. The removal of this measure creates planning challenges for SME’s as they have no confidence about the tax treatment of investments in assets they might be looking to make, or have already made, in the current financial year. 

Confirmed Changes 

Foreign Resident Capital Gains Changes

From January 1, 2025, significant changes apply to property sales by foreign residents:

  • Withholding rate increased from 12.5% to 15%
  • Previously only applied to properties valued at $750,000+
  • Now applies to the sale of all Australian land and buildings by foreign residents, regardless of value
  • The reforms apply to acquisitions made on or after January 1, 2025

Superannuation Increases

  • The Superannuation Guarantee rate will increase to 12% on July 1, 2025
  • Superannuation will be paid on Paid Parental Leave payments from July 1, 2025

Economic Factors to Monitor

Interest Rates

At the last Reserve Bank Board meeting, RBA governor Michele Bullock recognised the easing of headline inflation from 5.4% to 2.8% over the year to September 2024, but suggested that the economy still has some way to go before inflation is sustainably within the 2% to 3% target range. Major banks have different predictions for rate cuts:

  • CommBank: February 2025
  • ANZ and Westpac: May 2025
  • NAB: June 2025

Cost of Living and Consumer Spending

The National Accounts released in early December took economists by surprise with living standards growing by a mere 0.2% in the September quarter – the expectation was much higher. Recent economic indicators show concerning trends:

  • Discretionary spending increased only 0.1%
  • The personal income tax cuts that came into effect from July 1, 2024 helped households, as did energy subsidies, but the impact is still working through the system
  • Australia’s economy grew 0.8% through the year – the lowest rate since the COVID-19 affected December quarter 2020
  • Economic activity in the Australian economy right now is heavily dependent on government spending
  • The outlook for 2025 is “slow and steady”

The ‘Trump Effect’ on Australian Business

President Trump’s administration will hold both the presidency and Congress, with potential significant impacts for Australian businesses:

Tariff Policies and Trade Relations

On social media, Trump has stated plans for substantial tariffs creating concerns for Australian businesses because:

  • China is Australia’s largest two-way trading partner, accounting for 26% of our goods and services trade with the world in 2023
  • A Chinese economic slowdown would impact Australia and the region generally
  • An immediate impact of the idea of a trade war has been the decline of the AUD/USD, currently sitting at around 64¢

Planning for Uncertainty

With the election approaching, the next step for Australian owned SME’s is to:

  1. Review capital expenditure plans considering the current uncertainty around asset write-offs
  2. Factor in the guaranteed superannuation increases for budgeting
  3. Monitor potential impacts from international trade tensions on your supply chain
  4. Ensure wage and superannuation compliance systems are robust
  5. Stay informed about post-election policy changes that may affect your industry
  6. Call us to clarify any of the above and plan for your specific circumstances

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

February 2025 – Accounting and SMSF Roundup

February 2025 Round Up

With significant shifts in the Australian dollar and changing consumer spending patterns affecting business costs and revenue, understanding the current economic landscape is crucial for business planning. Additionally, new government incentives for electric vehicle fleets present potential cost-saving opportunities. This month, we examine how these economic changes impact your business operations and explain how to access available funding that could benefit your bottom line:

1. Market Changes and their Affect on Your Bottom Line

  Read the full article

2. Electric Vehicle Fleet Funding: Government Incentives Available –  Read the full article

Market Changes and Their Affect on Your Bottom Line

The end of 2024 brought significant economic changes that affect business costs, consumer behavior, and investments. Here’s what you need to know:

Australian Dollar Drops to 62c – Impact on Business Costs

The Australian dollar fell 10% in just one quarter, ending the year at 62c USD. This marks one of the poorest performances among major global currencies.

What this means for you: If you import goods or services, your costs may increase. If you export, your products become more competitive internationally.

Consumer Spending and Economic Health

Retail sales came in weaker than expected for November, with signs of increasing mortgage stress affecting consumer spending patterns. However, employment remains strong with 36,000 new jobs (above the expected 25,000), and unemployment sits at 3.9%.

What this means for you: Consumers may be more cautious with spending, but strong employment suggests underlying economic stability.

Inflation Update

  • Overall inflation (CPI) increased slightly to 2.3% (up from 2.1%)
  • Service costs rose 4.2% (down from 4.8%)
  • Goods inflation at 0.8%

What this means for you: Price pressures continue but are showing signs of easing, particularly in the services sector.

Investment Markets – Your Super and Investments

[Graph: Equity Market Performance by Region]

The ASX200 finished 2024 up 7.5% despite a -3.3% retreat in December. Global markets, particularly the US (S&P500), performed strongly with a 25% gain. Government bonds are now offering yields over 5% – the highest in years.

What this means for you: Despite December volatility, investment markets delivered positive returns for 2024, benefiting both super funds and private investments.

Looking Ahead – Planning for 2025

Interest rate expectations have shifted, with just one rate cut expected in 2025. The weak Australian dollar will likely influence RBA decisions, and consumer spending patterns warrant close attention, particularly following Christmas trading.

What this means for you: Business planning should consider a potentially extended period of higher rates and currency impacts.

This market report provides market insights to help inform your business and investment decisions. For specific advice relating to your situation, please contact our team.

Electric Vehicle Fleet Funding: Government Incentives Available

The NSW Government is offering funding to help businesses switch to electric vehicles. While their competitive bid round has now closed, their kick-start funding program remains open for applications.

Current Status

  • Kick-start funding: OPEN until June 30, 2025 (or until funds run out)
  • All evidence must be submitted by June 10, 2025

Are You Eligible?

Your business needs to:

  • Operate a fleet of at least 3 vehicles
  • Be able to purchase and register vehicles before June 10, 2025

Available Kick-start Funding

Vehicle incentives:

  • Small vehicles (under $40,000): $5,000 per vehicle
  • Premium vehicles (over $40,000): $7,000 per vehicle
  • Commercial vans/utes (2.5-4.5t): $14,000 per vehicle
  • Trucks (up to 4.5t): $20,000 per vehicle

Plus charger funding:

  • AC smart charger: $4,000 per port
  • DC smart charger: $8,000 per port (commercial vehicles only)

Business Benefits

  • Save approximately $3,100 in running costs per vehicle annually
  • Reduced maintenance costs compared to petrol vehicles
  • Support your sustainability goals
  • Improved vehicle performance

How to Apply

Visit the NSW Government Energy website to:

  1. Complete the eligibility check
  2. Review the kick-start funding guidelines
  3. Submit your application
See full details of the program here. 
 

For full program details and to apply, visit the NSW Government Energy website or contact us for assistance with your application.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

January 2025 – Accounting and SMSF Roundup

December 2024 Round Up

With recent reports showing Australian business insolvencies up 39% in 2024 and increased ATO collection activity, understanding both your business options and director obligations has never been more important. This month, we break down the practical steps you can take to protect your business interests and meet your responsibilities as a company director:

1. SME Insolvencies: Smart Survival Moves for Your Business in 2025

  Read the full article

2. Director Liability for a company – how does it work? –  Read the full article

SME Insolvencies: Smart Survival Moves for Your Business in 2025

The business headlines tell quite a story lately. With business insolvencies across Australia up 39% in 2024, you might be wondering what’s next. But here’s the good news: there are practical steps you can take right now to keep your business strong and stable.

What’s Really Going On Out There? The ATO has definitely been flexing its muscles lately, sending out nearly 27,000 director penalty notices for $4.4 billion in unpaid taxes. Add in rising costs across the board, and it’s no wonder business owners are feeling the pressure.

Here’s What You Can Do About It

  1. Get Savvy with Your Cash Flow: Forget annual projections – they’re so 2023. Switch to a 13-week rolling cash flow forecast instead. It’s like having a GPS for your business finances, showing you exactly where potential problems might pop up before they become real headaches.
  2. Stay Ahead of the ATO Game: The ATO’s getting pretty serious about collecting debt these days. The smart move? Don’t wait for them to come knocking. With interest charges sitting at 8.77% per annum, it’s worth getting on the front foot with a solid payment plan. Trust us – they’re much more likely to play ball if you approach them first.
  3. Check Your Business Structure’s Still Working For You: With all these director penalty notices flying around, it’s worth making sure your business structure is protecting you properly. We’re seeing great results with dual-entity structures – keeping your trading activities separate from your assets can be a real lifesaver.
  4. Don’t Put All Your Eggs in One Basket: Here’s a scary stat: 25% of SMEs could go under if they lose just one key client. Time to spread those wings a bit! Whether it’s adding new services or branching into related markets, having multiple revenue streams can help you sleep better at night.
  5. Know Your Lifelines: If things do get tough, there’s more help available than you might think. The small business restructuring process has been a game-changer for many businesses, with 89% of companies who’ve used it still going strong. If your business has less than $1 million in liabilities, this could be your ace in the hole.

Ready to Take Action? Book in with us to:

  • See how you stack up against industry benchmarks
  • Check if you’re eligible for government support
  • Put together a solid risk management plan
  • Make sure your business structure is still serving you well
  • Map out your game plan for the next 12 months

Don’t wait until things get tight – the earlier we can help you plan, the more options you’ll have. Give us a call to get started – we’re here to help you make 2025 your business’s best year yet.

Director Liability for a Company – How Does it Work?

As a director, your responsibilities don’t end when your company ceases trading. Even after a business stops operating or is deregistered, you may still be personally liable for certain obligations. This includes situations where the company has debts or becomes insolvent.

If a company is insolvent—meaning it can’t pay its debts as they fall due—directors can be held accountable. Signs of insolvency often include low cash flow, delayed payments, and legal action from creditors. Directors are legally required to assess the company’s financial position regularly to determine if insolvency is a risk. Failing to take timely action can lead to personal liability for unpaid debts.

Directors can also face personal liability for company losses if they breach their duties. This could lead to civil penalties, criminal charges, or even disqualification from managing companies in the future. Breaching director duties includes failing to act in the company’s best interests or not meeting the required financial obligations.

Under the Director Penalty Regime, directors may be held responsible for unpaid taxes, particularly PAYG withholding and the Superannuation Guarantee Charge. This means that even tax debts can fall on directors personally if not addressed by the company.

Additionally, if directors have provided personal guarantees for company loans, they may be liable to repay those loans if the company defaults. Personal assets, such as a home, could be at risk if the company fails to meet its financial obligations.

In cases where the company acts as a trustee, directors may also be liable for any breaches of trust or if the company acts beyond its powers.

Finally, directors involved in illegal phoenix activity—transferring assets to a new company to avoid paying debts of an old one—may face severe legal consequences, including personal liability and criminal charges.

In short, being a director comes with ongoing responsibilities, and personal liability can extend far beyond the active life of a business. Understanding these obligations is crucial to protecting yourself and your assets. If you’re unsure about the extent of your liabilities as a director or need specific advice tailored to your situation, please don’t hesitate to contact us. Our team is here to help ensure you’re well-informed and protected in your role.

 

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

December 2024 – Accounting and SMSF Roundup

December 2024 Round Up

T’is the season to be jolly, and this month we’re focusing on a few topics that come up this time of year: 

1. Cash flow health check –  Read the full article

2. Planning for growth in 2025 –  Read the full article

3. Understanding the new wage theft laws –  Read the full article

Cash flow health check for 2025

Running a business often means juggling multiple responsibilities, and one of the most critical tasks is managing cash flow. Cash flow pressures can sneak up on even the most successful businesses, and how you handle them can determine your company’s long-term viability.

Here’s how to manage these pressures effectively to ensure your business remains financially healthy.

Understand Your Cash Flow

The first step in managing cash flow pressures is to clearly understand your cash flow. This means knowing how much money is coming in and going out on a regular basis.

Regularly reviewing your cash flow statements helps you identify patterns and anticipate potential shortfalls. It’s crucial to differentiate between revenue and actual cash available since expenses can often outpace incoming payments.

Tighten Up Your Invoicing Process

Late payments from clients can be a significant source of cash flow pressure. To address this, ensure your invoicing process is as efficient as possible:

  • Send invoices promptly.
  • Consider shortening your payment terms (e.g., from 30 days to 14 days).
  • Offer small discounts for early payments to incentivise clients to pay sooner.

These steps can help keep cash flowing into your business more consistently.

Maintain a Cash Reserve

Just as individuals benefit from an emergency fund, businesses should maintain a cash reserve. This reserve acts as a buffer during lean times, allowing you to cover unexpected expenses or bridge temporary gaps between outflows and inflows.

Building a reserve takes time, but even setting aside a small percentage of profits can make a significant difference in your ability to weather financial storms.

Review and Cut Unnecessary Expenses

When cash flow is tight, take a close look at your expenses. Identify areas where you can cut costs without compromising your operations.

This could include:

  • Renegotiating with suppliers.
  • Exploring more cost-effective marketing strategies.
  • Temporarily reducing non-essential spending.

Regularly reviewing expenses ensures every dollar spent contributes to your business’s growth and stability.

Communicate with Creditors and Suppliers

If you’re facing cash flow challenges, don’t hesitate to communicate openly with your creditors and suppliers. Many businesses have been in similar situations and may be willing to negotiate more manageable payment terms.

Options include:

  • Extending payment deadlines.
  • Setting up a payment plan.

Proactive communication can help you maintain strong relationships while alleviating financial pressure.

Final Thoughts

Managing cash flow is an ongoing challenge for every business. However, with careful planning and proactive strategies, you can navigate these pressures effectively.

By understanding your cash flow, tightening your invoicing, maintaining a cash reserve, reviewing expenses, and communicating openly with creditors, you’ll be better equipped to keep your business financially healthy, even during tough times.

Strategic Planning tips for growth in 2025

As the end of the calendar year approaches, it’s the perfect time to reflect on your business’s progress and set the stage for growth. Strategic planning is essential to ensure your business thrives in the coming year.

Whether you aim to expand your customer base, increase revenue, or streamline operations, here are some key tips to help you get started.

Budgeting for the Year Ahead

A well-structured budget is the foundation of your business’s financial health. Start off by reviewing your current financial statements to understand where your money is going. Look for areas where you can cut costs without compromising quality or efficiency.

Consider forecasting your revenue for the year ahead, considering any anticipated market changes or business developments. This will help you set realistic financial goals and allocate resources effectively.

Don’t forget to create flexibility for unexpected expenses or potential opportunities.

Reviewing and Optimising Operations

Taking a closer look at your day-to-day operations can reveal opportunities for efficiency improvements. Start by evaluating your current processes—are any bottlenecks or outdated practices slowing you down?

Consider investing in technology or tools that can automate routine tasks, freeing up your time to focus on strategic initiatives. Review your supply chain and vendor relationships to ensure you’re getting the best value and service.

Setting Clear and Achievable Goals

Goal setting is crucial for driving your business forward. Begin by assessing what you’ve achieved this year and identifying areas for improvement. Your goals should be specific, measurable, achievable, relevant, and time-bound (also known as SMART goals).

For example, instead of setting a vague goal like “increase sales,” aim for something more precise like “increase sales by 15% in the first quarter by expanding our online presence.” This approach gives you a clear target to work towards and a way to measure success.

Engaging Your Teams

Your team plays a vital role in your business’s success. As you plan for the New Year, involve your employees in goal-setting. This fosters a sense of ownership and ensures that everyone is aligned with the company’s vision.

Provide opportunities for professional development and encourage open communication to keep your team motivated and engaged. A committed and skilled workforce is one of your most valuable assets.

Monitoring Progress and Adjusting Plans

Once your plan is in place, it’s essential to monitor your progress regularly. Set a schedule for reviewing your financials, goals, and operational metrics. If things aren’t going as planned, be prepared to make adjustments.

Flexibility is crucial in navigating the challenges and opportunities that the new calendar year will bring.

The new year is a fresh start and an opportunity to set your business on a path to success.

By budgeting wisely, setting clear goals, optimising operations, engaging your team, and staying flexible, you’ll be well-positioned to achieve your business objectives. Take the time to plan strategically now, and you’ll reap the rewards in the coming months.

Understanding the new wage theft laws

On 1 January 2025, significant changes will come into effect in Australia regarding wage theft, as new criminal laws aim to combat the deliberate and systemic underpayment of employees. These laws not only tighten the screws on businesses that fail to meet wage obligations but also place the onus on employers to ensure compliance. Here, we delve into the details of the new legislation, outline pre-emptive measures businesses can adopt, provide steps to mitigate liability if non-compliance occurs, and explore the penalties for contraventions.

Overview of the Wage Theft Laws

The Fair Work Legislation Amendment (Closing Loopholes) Act 2023 was introduced to address growing concerns about workers being underpaid or denied their lawful wages.

Wage theft refers to situations where employers fail to pay employees correctly, whether through underpayment, unpaid overtime, or denial of entitlements. The offence requires proof of intentional conduct—accidental or unintentional underpayments will not constitute wage theft. Under the new framework, intentional wage theft is categorised as a criminal offence, carrying potential imprisonment and substantial fines for offenders.

Key Features of the Wage Theft Laws

1. Criminalisation of Wage Theft

For the first time, wilful underpayment or failure to pay employees their lawful entitlements may result in criminal charges. Prosecutions can be commenced by the Director of Public Prosecutions or the Australian Federal Police within six years of the offence.

2. Definition of Wage Theft

Wage theft involves intentionally paying employees incorrectly or late. However, the provisions will not apply to payments for:

  • Superannuation contributions
  • Taking long service leave
  • Leave related to being the victim of a crime
  • Jury duty leave
  • Emergency services duties

3. Extended Liability

Liability extends to individuals involved in decision-making processes, such as directors and managers, as imprisonment cannot be ordered against corporate entities. Instead, the “acting mind” of the organisation may face penalties.

Pre-Emptive Measures for Businesses

To avoid non-compliance, businesses should take proactive steps, including:

1. Conduct Regular Audits

  • Regularly audit payroll systems and employee classifications to ensure compliance.
  • Review payroll records against the Fair Work Act, Modern Awards, and Enterprise Agreements.
  • Seek legal advice for understanding complex obligations.

2. Invest in Training and Education

  • Train payroll and HR staff on the new laws and their obligations.
  • Remember, ignorance of the law is not a defence.

3. Implement Robust Payroll Systems

  • Use reliable payroll software to automate wage calculations and updates.
  • Engage legal experts to assist with historical audits under legal privilege.

4. Maintain Detailed Records

  • Keep thorough records of hours worked, wage rates, and entitlements.
  • Proper documentation can be a strong defence during audits or investigations.

5. Create Clear Policies and Codes

  • Establish clear policies for wage payments and entitlements, communicated to all employees.

6. Establish Safe Harbours

  • Self-report suspected wage theft to the Fair Work Ombudsman for cooperation agreements, which shield against criminal liability (though not civil penalties).
  • Small businesses can look to the forthcoming Voluntary Small Business Wage Compliance Code for protection.

7. Seek Legal Advice

  • Consult employment law experts to navigate complex regulations and implement best practices.

Steps to Mitigate Liability

In instances of non-compliance, businesses can take the following actions:

1. Seek Legal Counsel

Engage lawyers early to ensure privileged communications and reduce exposure during investigations.

2. Rectify Underpayment Immediately

Pay owed amounts promptly, including interest and penalties, to demonstrate good faith.

3. Document Corrective Actions

Maintain detailed records of actions taken to rectify underpayments.

4. Engage with Employees

Openly communicate with affected employees about steps being taken to resolve the issue.

5. Review and Revise Practices

Identify the root causes of non-compliance and implement improved processes.

Penalties for Contraventions

1. Criminal Charges

Directors and managers can face imprisonment of up to 10 years for wage theft.

2. Financial Penalties

Fines can reach millions of dollars for corporations or significant sums for individuals. If the value of underpayment is unclear, default penalties of:

  • $7.825 million for companies, or
  • $1.565 million for individuals may apply.

3. Reputational Damage

Wage theft can damage a business’s reputation, leading to loss of customers, reduced employee morale, and difficulty attracting talent.

Conclusion

The new criminal wage theft laws mark a pivotal moment for employee rights in Australia. Businesses must prioritise compliance to avoid harsh penalties and maintain their reputation. By conducting regular audits, investing in training, implementing robust payroll systems, and seeking legal advice, employers can reduce the risk of non-compliance.

Swift corrective actions and transparent communication with employees and regulators can also mitigate liability. With the 2025 deadline fast approaching, businesses must act now to prepare.

Here at Atkins Group we work with great experts in different fields. Henry William lawyers are our go to in the HR / employment space. Contact them here for advice on navigating these new legal requirements and ensuring your business complies with the law.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

November 2024 – Accounting and SMSF Roundup

November 2024 Round Up

This month’s round-up covers key updates on the ATO’s approach to unpaid tax and super as well as options to accessing super between ages 60 and 65. Click to read below: 

1. Changes to ATO Collection of Unpaid Tax and Super: The ATO has ramped up efforts to collect unpaid tax and super. Stay informed on what’s changing and how to avoid penalties.

Read the full article

2. Accessing Super from Age 60 to 65: From age 60 to 65, your options for accessing super change. Understand the nuances and how to make the most of this stage in your retirement planning.

Read the full article

The ATO is changing their approach to collecting unpaid tax and super

Not paying tax affects everyone, and the ATO are taking a stand to help prevent businesses from putting other small businesses and employees at risk.

Businesses that act early are often better placed to get back on track and sustainably manage their finances.

They’re making it fairer for businesses that do the right thing, as they change their approach to collecting unpaid tax and super. They are now focusing on businesses who refuse to engage with us and continue to ignore their SMS and letter reminders.

This means you may see the ATO taking different steps to those you have seen in the past. This is a deliberate and targeted approach, taking into account compliance history:

  • For businesses big and small, that don’t engage with the ATO or set up a payment plan for unpaid GST, pay as you go (PAYG) withholding or employee super, they will move more quickly to firmer actions such as Director Penalty Notices (DPNs) and garnishees.
  • Directors of multiple companies who allow amounts of GST, PAYG withholding and employee super to go unpaid, and do not engage with the ATO, can expect them to look at their debts more holistically. These directors can expect to receive DPNs capturing the total value of these amounts across all related entities. If these directors don’t take action, the ATO can recover these amounts directly from them, putting their assets at risk.

As the ATO changes their approach to collecting unpaid tax and super, they’re making it fairer for compliant businesses that do the right thing and fulfil their tax obligations.

To prevent these firmer actions, businesses should take action now to pay in full or set up a payment plan.

If you are experiencing genuine financial hardship, additional options are available, including deferring payment due dates and interest remissions.

The key message the ATO would like you to remember is, if you can pay, please do and if you need more time to pay, don’t ignore it – act now to check if you can put in place a payment plan online or reach out for help.

You can find out more about what happens if you don’t pay here.

Simplified rules for accessing super from age 60 to 65

From 1 July 2024, the rules for accessing superannuation became somewhat simplified: the preservation age when you can begin to access your benefits is now effectively age 60. However, until you reach age 65, there are still potential restrictions on how you can access your super. You’ll need to “retire” before you can make lump sum withdrawals from your super account or move it into the favourable “retirement phase” when investment earnings within the fund become tax-free.

If you’re aged between 60 and 65 and wish to access some of your super, it’s a good time to re-examine the rules.

For anyone born after 30 June 1964, preservation age is age 60. If you are between 60 and 65 years old but haven’t yet retired, you can commence a transition to retirement income stream (TRIS). This allows you to receive a regular income of between 4% and 10% of your pension account balance each year. If you want to access more of your super, or withdraw it as a lump sum, you’ll need to satisfy a further condition of release. This includes reaching age 65, or “retirement”. Meeting these conditions is also relevant for tax purposes. TRIS payments to a person aged 60 or over are generally tax-free – regardless of whether they are retired or not – but the TRIS itself does not move into the “retirement phase” until a further condition such as retirement (or reaching age 65) is met.

To satisfy the retirement condition, an arrangement under which you were gainfully employed must have come to an end. If you’d already reached age 60 when that position ended, there are no further requirements, and your future work intentions aren’t relevant. If you hadn’t yet reached aged 60 when the position ended, the trustee of your fund must be reasonably satisfied that you intend never to again become gainfully employed, either on a full-time or a part-time basis. “Part-time” means working for at least 10 hours per week, so you could intend to work for less than 10 hours per week and still meet the “retirement” condition.

Any withdrawal strategy should be carefully planned to ensure you understand the implications of accessing your super. There are many factors to consider, such as the ongoing requirement to withdraw minimum pension amounts each year if you start a pension, implications for your transfer balance account, and interactions with the Age Pension.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

October 2024 – Accounting and SMSF Roundup

6 new ways to keep your business profitable and relevant in the AI age

We all know AI is starting to evolve faster and faster with the use of neural networks, generative AI, and autonomous systems in robotics, and yet some experts predict we’re not even at the beginning of the AI age. But, whether we like it or not, soon, AI will be a necessity for businesses, seamlessly integrated into our daily operations to maintain relevance and competitiveness. Here are six ways you can leverage AI to enhance profitability in your business today:

1. Automate Manual Processes using DEAR Inventory

Instead of automating only basic tasks like invoicing, consider automating entire workflows. For instance, with the Xero + DEAR Inventory integration, you can manage inventory in real time. The system can trigger purchase orders when stock runs low, sync data with your accounting software, and alert you to discrepancies automatically. This automation eliminates time-consuming manual tasks and reduces costly errors, freeing up valuable time to focus on growth.

2. Offer Better Customer Service using Zendesk Sunshine Track

Take customer service beyond just answering queries—use AI to predict what your customers will need next. Tools like Zendesk Sunshine track customer behaviour and flag potential issues before they arise. If a customer has repeatedly contacted support, the AI can alert your team to offer proactive solutions. This not only reduces response times but also improves customer satisfaction and loyalty, keeping your business profitable.

3. Better Manage Inventory and Cash Flow Management with Fathom

AI-driven tools like Fathom help manage inventory and forecast cash flow based on real-time data, historical sales trends, and market conditions. For example, during slow sales periods, AI might suggest scaling back inventory purchases to conserve cash. Conversely, during busy times, it can recommend when to reorder stock to avoid running out. This real-time insight helps prevent costly cash flow issues and ensures smooth operations.

4. Attract Younger Talent with Notion and Slack

Younger generations expect businesses to use technology and AI to streamline operations. Tools like Notion for project management to incorporate AI to automate tasks like setting reminders, updating workflows, and managing communication. Offering a tech-savvy workplace demonstrates that you’re forward-thinking, which appeals to younger employees who value efficiency and innovation. This also reduces repetitive tasks, allowing your team to focus on strategic work.

5. Target the Right Leads with Hubspot’s Predictive Lead Scoring

Predictive lead scoring, as offered by HubSpot, helps you focus on leads with the highest potential to convert. AI analyses customer data—such as email opens, page views, and interactions—and ranks leads based on engagement. For example, if a customer interacts with your website multiple times and engages with your chatbot, they receive a higher score. This ensures your sales team prioritises the right leads, speeding up conversions and increasing revenue.

6. Save Time Creating Content with Descript

Descript saves you time and headaches in your content creation by allowing you to easily record your voice and use the Overdub feature to generate speech from text in your voice. With text-based editing, you can modify video and audio by adjusting the transcript, while automated audio cleanup removes filler words like “ums” and “ahs.” It also offers eye direction adjustment, screen recording for tutorials, and the ability to add graphics and text overlays, preventing the need to re-record things multiple times if you make mistakes. This makes it a user-friendly solution for producing professional-quality audio and video without the hassle of traditional editing.

If you’d like to dive down the ai rabbit hole a little further and find more tools specifically relevant for you, have a look at Future Tools. Whether you’d like to try out an AI virtual assistant, play with voice-changing technology for a marketing campaign or training video, or create personalised product recommendations for your customers, Future Tools has a range of fun, clever, and efficient tools to make your business more profitable.

Now, while ai advancements have a range of ways they can create more profits and streamline processes, it’s important to remember that ai is still in its infancy. When using it, always ensure that critical decisions involve human oversight to prevent errors. Keep communication open with your team about how AI is being used, and encourage them to ask questions and share feedback. Regular training sessions can help everyone stay updated on AI best practices and understand its implications. Additionally, establish clear guidelines for when and how to use AI tools, ensuring that employees know the limits of AI and the importance of their judgment in decision-making.

Business Mindset: The difference between winners vs losers

In business, mindset can make all the difference. While it’s easy to fall into the trap of excuses and limitations, true winners see opportunities where others see obstacles. Embracing a winning mentality not only transforms challenges into stepping stones but also fosters a more productive and positive environment. We find this philosophy particularly handy as we navigate our paths to success.

*The winner* – is always a part of the answer. 
*The loser* – is always a part of the problem.

*The winner* – always has a program.
*The loser* – always has an excuse.

*The winner* – says “Let me do it for you.”
*The loser* – says “That’s not my job.”

*The winner* – sees an answer in every problem.
*The loser* – sees a problem in every answer.

*The winner* – sees a green near every sand trap.
*The loser* – sees two or three sand traps near every green.

*The winner* – says “It may be difficult, but it’s possible.”
*The loser* – says “It may be possible, but it’s too difficult.”

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

September 2024 – Accounting and SMSF Roundup

September 2024 Round Up - “Aussie share market loses $100bn in bloodbath” Should we worry about our our super?

The short answer is no. But let us give you all the details based on a timely article from Shane Oliver.

Two weeks ago, there were lots of headlines like that after share markets fell sharply in response to US recession fears. But such headlines are nothing new. After such falls, the usual questions are: What caused the fall? What’s the outlook? And what does it mean for superannuation? The correct answer to the latter should be something like: “Nothing really, as super is a long-term investment and share market volatility is normal”.

But that can seem like a marketing spin. However, the reality is that – except for those who are into trading – shares and superannuation are long-term investments. Here’s why.

Super funds, shares & the power of compound interest

Superannuation seeks to provide maximum risk-adjusted funds, within reason, for use in retirement. So typical super funds have a bias towards shares and other growth assets, and some exposure to defensive assets like bonds and cash to avoid excessive short-term volatility. This approach seeks to take advantage of the power of compound interest.

The next chart shows the value of a $100 investment in Australian cash, bonds, shares and residential property from 1926 assuming any interest, dividends and rents are reinvested on the way, and their annual returns. As the return series for commercial property and infrastructure only goes back a few decades I have used residential property as a proxy.

Long-term asset class returns. (Source: ASX, Bloomberg, RBA, REIA, AMP)

Because shares and property provide higher returns over long periods the value of an investment in them compounds to a much higher amount over time. So, it makes sense to have a decent exposure to them. The higher return from shares and other growth assets reflects compensation for their greater risk (seen in volatility and illiquidity) versus cash and bonds.

But investors don’t have 100 years?

Of course, we don’t have one hundred years to save for retirement. Our natural tendency is to think very short term. And this is where the problem starts. On a day-to-day basis, shares are down almost as much as they are up. See the next chart. So, day-to-day, it’s pretty much a coin toss as to whether you will get good news or bad when you tune in for the nightly finance update.

But if you just look monthly and allow for dividends, the historical experience tells us you will only get bad news around a third of the time. And if you only look each year, you will only get negative news 20% of the time for Australian shares and 27% of the time for US shares.

And if you look just once a decade, positive returns have been seen 100% of the time for Australian shares and 82% for US shares. So, while it’s hard given the bombardment of financial news these days it makes sense to look at your returns less because then are you more likely to get positive news and less likely to make rash decisions or end up adopting an investment strategy that is too cautious.

Percentage of positive share market returns. (Source: ASX, Bloomberg, AMP)
This can also be demonstrated in the following charts. On a rolling 12-month ended basis the returns from shares bounce around all over the place versus cash and bonds.
Investment returns over rolling 12-month periods – Australia. (Source: ASX, Bloomberg, RBA, AMP)
However, over rolling ten-year periods, shares have invariably done better, although there have been some periods where returns from bonds and cash have done better, albeit briefly.
Investment returns over rolling 10-year periods – Australia (Source: ASX, Bloomberg, RBA, AMP)

Pushing the horizon out to rolling 20-year periods, returns from shares have almost always done even better, although a surge in cash and bond returns after the very high interest rates of the late 1970s/1980s saw the gap narrow for a while. Over rolling 40-year periods – the working years of a typical person – shares have always done better.

This is consistent with the basic proposition that higher short-term volatility from shares (often around periods of falling profits & a risk that companies go bust) is rewarded over the long term with higher returns.

But why not try and time short-term market moves?

The temptation to do this is immense. With the benefit of hindsight many swings in markets like the tech boom and bust, the GFC and the plunge and rebound in shares around the COVID pandemic look inevitable and hence forecastable so it’s natural to think “Why not give it a go?” by switching between cash and shares within your super to anticipate market moves. Fair enough. But without a tried and tested market timing process, trying to time the market is difficult. A good way to demonstrate this is with a comparison of returns if an investor is fully invested in shares versus missing out on the best (or worst) days.

The next chart shows that if you were fully invested in Australian shares from January 1995, you would have returned 9.5% pa (with dividends but not allowing for franking credits, tax and fees). If, by trying to time the market, you avoided the 10 worst days (yellow bars), you would have boosted your return to 12.2% pa. And if you avoided the 40 worst days, it would have been boosted to 17% pa! But this is hard, and many investors only get out after the bad returns have occurred, just in time to miss some of the best days. For example, if by trying to time the market you miss the 10 best days (blue bars), the return falls to 7.5% pa. If you miss the 40 best days, it drops to just 3.5% pa.

Missing the best days and the worst days, (Source: Bloomberg, AMP)

The following chart shows the difficulties of short-term timing in another way. It shows the cumulative return of two portfolios.

  • A fixed balanced mix of 70% Australian equities, 25% bonds and 5% cash;
  • A “switching portfolio” that starts with the above but moves 100 per cent into cash after any negative calendar year in the balanced portfolio and doesn’t move back until after the balanced portfolio has a calendar year of positive returns. We have assumed a two-month lag.

Comparison of constant strategy versus switching to cash after bad times, (Source: ASX, Bloomberg, RBA, AMP)

Over the long run, the switching portfolio produces an average return of 8.6% pa versus 10% pa for the balanced mix. From a $100 investment in 1928, the switching portfolio would have grown to $279,236, but the constant mix would have ended more than 3 times bigger at $931,940.

Key messages

First, while shares and growth assets have periods of short-term underperformance versus cash & bonds they provide superior long-term returns. So, it makes sense for super to have a high exposure to them. 

Second, switching to cash after a bad patch is not the best strategy for maximising wealth over time. It can just lock in losses. 

Third, the less you look at your investments the less you will be disappointed. This reduces the chance of selling at the wrong time. The best approach is to recognise that super and shares are long-term investments and adopt a long-term strategy to suit your circumstances – in terms of your age, income, wealth and risk tolerance.

Finally, anything that cuts your super balance early on can cut your super at retirement a lot. Eg, a $20,000 withdrawal from super at age 30 – say for a dental expense – can cut your super at age 67 by around $74,000 (in today’s dollars) due to the loss of compounding returns on that amount (using the assumptions in the ASIC MoneySmart Super calculator).  

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

August 2024 – Accounting and SMSF Roundup

August 2024 Round Up - Donations and gifts, Annual leave, Superannuation changes and written leases for SMSF held properties

Atkins Group has a working relationship with HLB Mann Judd and we often bounce ideas off them for specialised tax planning and other issue that we encounter. This month we’re bringing you some articles that have come across our desk from them that are worth a quick look. They cover how to deduct donations and gifts the right way at tax time, making sure you and your team are on the same page with annual leave entitlements, recent changes to Superannuation laws and why it’s essential to have a written lease agreement for SMSF held properties.   

1. How to deduct gifts and donations

2. Making sure you and your team understand annual leave entitlements

3. Recent changes in Superannuation

4. Why a written lease is essential for an SMSF holding a direct property

Deducting gifts and donations: getting it right at tax time. 

Have you made charitable gifts or donations in the past financial year? The good news is these items are often deductible, giving many Australians a welcome boost to their tax refund. Make sure you know the rules this tax time.

When gathering your donation receipts, it’s important to understand what can and can’t be claimed as a deduction. The first general rule is that a donation of money of $2 or more may be deducted if the donation was made to a “deductible gift recipient” (DGR). A DGR is an entity that has registered with the ATO as being eligible to receive deductible gifts and donations.

Some charities may not have DGR status, so check if you’re unsure. Many online crowdfunding platforms are also not DGRs, which means you typically won’t be able to claim your donation towards fundraising for individual causes, such as someone’s funeral or medical costs.

The second general rule is that a donation is only deductible if you didn’t receive a benefit in return. This means you can’t make a claim if you received things like raffle tickets or items that have an advertised price, such as toys and food items. However, you may receive a “token” promotional item such as a sticker or lapel pin and still qualify for a deduction. Note that donations to a school’s building fund won’t be deductible if you received benefits such as reduced school fees or a certain placement on a waiting list in return for the donation.

Small cash donations totalling up to $10 don’t require a receipt. However, beyond that you must be able to provide evidence of your claim. You aren’t required to keep an original paper receipt, provided you keep an electronic copy that is a true and clear reproduction. If you don’t have a receipt, you may be able to substantiate the claim with other documentation such as a bank statement evidencing the donation.

If you make donations through a “workplace giving program” operated by your employer, you can simply claim the amount of donations shown in your income statement or payment summary. You can claim this deduction in your tax return regardless of whether your employer has reduced the tax withheld each pay period. In both cases, your gross salary or wages and deductible donations for the year will be the same, but any difference in the tax withheld during the year will factor into your eventual tax refund. Workplace giving programs aren’t the same as salary-sacrifice, as they don’t lower your gross salary or wages.

Time for a superannuation checkup

The new financial year has begun, and with it have come some important changes to superannuation from 1 July 2024. With these changes coming into effect, it’s a good time to give your super a check-up. Your super could be one of the biggest assets you ever have, so getting into the habit of checking in regularly can help you stay on top of it and make better choices for your future.

On 1 July 2024, the superannuation guarantee rate increased from 11% to 11.5%. Employer super contributions are calculated on a worker’s ordinary time earnings, for payments of salary and wages. For employers, the maximum super contribution base increased from $65,070 to $62,270 (the limit on what you can earn each quarter before your employer can stop making super guarantee contributions). The concessional super contributions cap also increased from $27,500 to $30,000 and the non-concessional contributions cap increased from $110,000 to $120,000.

The ATO suggests the following steps as a good place to start in giving your super a check-up:

• Check your contact details: Make sure your contact details and tax file number (TFN) are up to date with the ATO and your super fund.

• Check your super balance and employer contributions: Checking your super balance and keeping track of your employer contributions can be done at any time through ATO online services or your super fund. Your employer should be paying your super at least every three months.

• Check for lost and unclaimed super: If you’ve changed your name, address or your job, you may have lost track of some of your super. Lost super is where your super fund hasn’t been able to contact you, or your account is inactive. Unclaimed super is where your fund has transferred lost super to the ATO.

• Check if you have multiple super accounts and consider consolidating: If you’ve ever moved jobs, you might have more than one super account. Each account will charge fees and may include insurance, so combining your super accounts may reduce fees, help you pay only for the insurance you need and make your super easier to manage.

• Check your nominated beneficiary: Make sure you have a valid death beneficiary nomination with your super fund, as this isn’t covered by your will. Check with your fund if there is an expiry on the nomination – some funds have options where the nominations don’t expire, while most nominations expire every three years. If you don’t have a beneficiary nominated, your fund will follow the law in determining where your super should go.

You should also take a careful look at how your fund is performing and check that you aren’t paying too much in fees. You might also think about evaluating how your super is being invested – does it match your stage in life, how much risk you are willing to bear, or even your ethics and values? If you have insurance cover with your super fund, regularly check that it still meets your needs.

Do you have enough super?

The Association of Superannuation Funds of Australia (ASFA) has developed a “retirement standard” which provides a broad approximation of how much super you need in retirement. As of March 2024, as combined amounts for couples retiring at age 67, ASFA suggests:

• $690,000 for a comfortable retirement (providing an income of $72,663 per year); and

• $100,000 for a modest retirement (providing an income of $47,387).

These figures assume that you will draw down all your super, receive a part Age Pension, own your home outright and are in good health. While useful as a baseline, your personal needs may differ significantly. Many people assume that they will just fall back on the Age Pension if there is not enough in their super. This is definitely a safety net; however, you may not be comfortable on the restrictive budget required to get by on the Age Pension. As at 1 July 2024, Age Pension for a couple is $43,752 per year.

For the most accurate assessment of your superannuation needs, it’s best to seek professional advice. Your adviser can consider factors such as your health and life expectancy, inflation and investment returns, wages growth and taxation, and fees and regular contributions.

Professional advisers have access to sophisticated tools and can provide customised forecasts based on your unique situation.

Why you should have a written lease agreement for an SMSF holding a direct property 

In the SMSF sector, some might consider a written lease agreement unnecessary if a verbal agreement has already been made, particularly because there is no legislative requirement from a trustee’s perspective to have a written agreement in place.

For trustees utilising fund-held assets, such as leasing property for business use, a written lease might also seem redundant, as it’s unlikely a trustee would terminate their own agreement.

However, the ATO mandates that auditors must have written lease agreements on file for compliance purposes.

While this requirement alone might not motivate trustees to invest time and resources in drafting a written lease agreement, there is a crucial reason for having one: proving that the agreement is made at arm’s length.

The arm’s length principle dictates that all parties involved in a transaction must act independently and make decisions based on their own self-interest, not personal connections, ensuring an equal footing in negotiations.

This principle is fundamental in SMSF transactions, and failure to adhere to it can result in non-compliance or penalties.

Given these potential risks, a written lease agreement is an effective way to demonstrate that the arrangement is properly structured, clearly defining the rights and obligations of all parties, along with terms, conditions, penalties, and breach procedures where relevant.

Additionally, a commercial property is exempt from in-house asset rules as long as it is used entirely for business purposes.

A written lease agreement will explicitly outline the intended use of the property, such as for an office, medical center, or restaurant, supporting the requirement that the property is used ‘wholly and exclusively’ for business, even when there is minor or incidental non-business use.

Clearly, a written lease agreement is a valuable tool for minimizing non-compliance risks and ensuring transactions are substantively correct.

While some might suggest that a terms sheet could suffice for auditor documentation, it lacks the comprehensive detail necessary to satisfy the arm’s length requirements or the ‘wholly and exclusively’ business use threshold.

The debate over whether a written lease agreement is essential from a trustee’s perspective is ongoing, often discussed at industry conferences and workshops. However, when considering the importance of maintaining arm’s length transactions, it’s prudent for trustees to ensure such a document is prepared and ready.

Important: This is not advice. Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. Liability limited by a scheme approved under Professional Standards Legislation. 

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