Blog | Walsh Accounting | Accountants Barcaldine Queensland

Sham Contractors

Wed, 01 Apr 2026 00:56:02 GMT

The ATO and Fair Work Australia are investigating sham contracting, which is when employers classify workers as contractors when they are actually employees. The penalties are savage, up to $19,800 for individual employers, $99,000 for businesses with 15 or fewer employees and, for larger business, the greater of $495,000 or three times the underpaid amount. In addition, employers risk penalties such as PAYG withholding and super guarantee penalties.

Workers who are treated as contractors might be deprived of super, overtime, penalty rates and leave entitlements. Sometimes the employer simply does not want all the paperwork and pays a contract rate high enough to cover all these benefits (and more). The bad news for those employers is that all the penalties still apply.

Data-matching, tip-offs and complaints from sham contractors increase the risk of detection. The best advice we can give to businesses is to take this very seriously. Assess whether your contractors are really in the nature of employees. Are the paid on an hourly or weekly rate or are they paid to produce a result?

Who controls when and how they work? Can the contractors delegate or sub-contract? Who carries the risk of defects? Who supplies the major tools (minor tools do not usually influence the outcome)? Seek advice.

If there is a significant risk of your contractors being classified as employees, make them employees. Eliminate the risk. It is not worth it. If you do choose to accept the risk, make sure you stay very friendly with your contractors. A falling out could result in a complaint to the ATO and Fair Work Australia. Once this happens, an audit will investigate every one of your workers, not just the one who complained. It does happen.

Negative Gearing Means Losing Money

Wed, 11 Mar 2026 03:53:39 GMT

Negative gearing is getting some bad press lately

Nobody in Australia wants to be negatively geared and no-one has a goal of being negatively geared, because negative gearing means losing money and no-one sets out to lose money.

Suppose you have $100,000 in the bank (lucky you). You want to invest this money for your financial future, so you decide to buy a rental property which is for sale for $500,000. Your cash purchasing power is, obviously, $100,000. You can gear your purchasing power up several notches by borrowing $400,000, so your purchasing power is now $500,000.

This is gearing.

Negative gearing is when the interest on your loan is greater than the net income from your rental property.

Suppose you charge $20,800 rent per year. Your expenses for rates, insurance, pest control, repairs etc. total $5,800 per year so your net income is $15000. The interest charged on your $400,000 loan at 7% is $28,000, so your loss for the year is $13,000.

At present, you can claim this $13,000 as a tax deduction, saving perhaps $4,000 tax. Even after this tax saving, you are still losing $9,000.

As you can see by these results, nobody would set negative gearing as a goal. The only reason why you would use negative gearing is because you hope that when you have finally paid off the loan, you will own an asset which is likely to increase in value or which will provide you with a positive income stream. Even then, it is a long, hard haul to get to that stage.

The Government at present is putting out feelers about abolishing negative gearing as a tax deduction. The inference is that negative gearing is some kind of tax dodge. It is not. It is a costly means to an end. Would you ever ring the bank to ask it to increase your interest rate so you can be more negatively geared? Of course not.

Rents are far too high in Australia, but the reason is the cost of a houses, not negative gearing. The landlord and the tenant are both suffering. If the landlord has to pay an additional $4000 tax because negative gearing deductions have been abolished, he is going to try to recover it from the tenant. In the end, landlord and tenant will both be a little worse off.

Tradies Beware

Wed, 03 Dec 2025 01:06:57 GMT

Tradies Beware

On 28 November 2025, the Australian Taxation Office released Practice Compliance Guideline PCG 2025/5. It is long and complicated, but here is a summary.

This guideline sets out a tougher approach to common business structures used by tradies and contractors.

The ATO will focus on situations where –

· One person does all or most of the work

· The income is earned mainly (more than 50%) because of that person’s skill or labour

· The income is then split or re-directed to another person or entity (for example, a trust, company or family member)

· The outcome is less tax payable

The ATO refers to these as income splitting or income-diversion arrangements

The ATO focus will be on

· tradies operating through a company or trust

· Arrangements where profits are paid to a family member with little involvement

· Contactors working mainly for one client, but using a company or trust.

The ATO has flagged higher risk arrangements where –

· One person does most of the work

· That person is not paid a reasonable wage for the work

· Profits are distributed to someone else

· The business has the characteristics of a sole trader operation, but with a company or trust added

· There is no significant reason for the structure other than the tax saving

The ATO is less concerned where –

· The tradie pays employees or contractors to do a significant part of the work

· The contractor (not another entity) is paid a commercial, market-rate salary or wage

You are less likely to have an issue if –

· You operate from business premises

· You employ workers to perform part of the work

· You engage contractors to perform part of the work

· You are paid a contract rate rather than an hourly or daily rate

· You are responsible for remedying defects

· You advertise and have several customers as a result of advertising.

· You operate major equipment such as a grader.

None of this is new law. The ATO is simply forewarning that it will be taking a tough new approach to these arrangements.

Walsh Accounting can offer an opinion on whether your arrangement is high, medium or low risk.

Personal Services Income (PSI)

Tue, 18 Nov 2025 00:42:12 GMT

Personal Services Income (PSI)

The Australian Taxation Office (ATO) introduced Personal Services Income (PSI) rules to restrict individuals from diverting income through companies, partnerships or trusts to gain tax advantages from strategies such as income splitting, accessing business deductions or lower tax rates.

The core issue is whether you are earning money as a business or from personal services (similar to wages).

You have personal services income if more than 50% of your income in a contract comes from your own personal skills, labour or services.

If you do have personal services income, it is not quite the end of the world. You might be able to retain the taxation benefits if you can pass the 80% test and one of the following four tests:

Results Test

You pass the results test if ALL the following apply

· You are contracted to deliver a result, such as building a shed, rather than being paid for hours worked

· You provide all the plant, equipment and tools needed.

· You are responsible for rectifying any defects in your work (at your own cost)

Unrelated Clients Test

· You must have received PSI income from two or more unrelated clients and there must be a direct connection between the offer to the public and

· you being engaged to perform the work

Employment Test

To pass the employment test, you must meet one of the following conditions

· at least 20% of the principal work must be performed by others

· One or more apprentices must be employed for at least six months of the year

Business Premises Test

You pass the business premises test if at all times in the income year you maintained and used a business premises which meets all the following conditions. It must be

· used mainly to gain PSI

· used exclusively by you

· physically separate from your private premises

· physically separate from your clients’ premises

For the unrelated clients test, the business premises test and the employment test, you first have to meet an 80% test. If 80% or more of your personal services income is derived from one client (and associates) you cannot self-assess anymore. If you still believe that you can pass one of the tests, you must apply to the ATO for a Personal Services Business (PSB) determination.

If you pass the 80% test, you can self-assess the Unrelated Clients Test, the Employment Test and the Business Premises Test. Of course, this is no guarantee that the ATO, on audit, will reach the same conclusion as you.

If you are an individual with an ABN and you are thinking about income-splitting with your spouse or operating through a company, partnership or trust, please make sure you are not breaching any of the above rules.

Otherwise, it might not end well.

Celebrating 45 Years in Business

Sat, 08 Nov 2025 23:48:37 GMT

Why did Walsh Accounting open its doors on a Sunday?

Walsh Accounting commenced business on 9 November 1980. It was not even Walsh Accounting at that stage. Here is Lionel’s story.

I was Manager of the Barcaldine Hospitals Board in 1980. Marg and I had seven children aged from four to sixteen. Marg had to be a stay at home Mum which was, of course, a full-time job. For example, she had to wash between 90 and 100 items of clothing every day (I counted them). We were therefore a single income family and were nearing the stage when our children would have to go to University if they wanted to continue their studies. There did not seem to be any way that we would be able to pay the costs involved.

Early in November 1980, out of the blue, Geoff rang me at the hospital office and asked me if I would like to buy his accounting practice. He also had another full-time job. His accounting practice was a side hustle which he had only started a few months beforehand, so it was very small. Geoff and his wife were leaving town. He wanted $1500 for the practice.

Marg and I had a discussion. We agreed that this seemed like a good opportunity to earn extra income. Marg said that she could man the office on weekdays (in addition to her household duties) and I could take interviews and prepare financial statements and tax returns on weekends and in the evenings.

We did not have $1500 so I went to the Commonwealth Bank and was granted a loan. We paid Geoff his $1500 and opened to clients on Sunday 9 November 1980. Why a Sunday? Because I was working at the hospital from Monday to Friday. We had to set up on Saturday so Sunday had to be our first day.

I was not a registered Tax Agent, so I had to engage a Tax Agent in Brisbane to lodge the returns in his name. His name was Vic Hill and our first business name was A.V. Hill & Associates. Later it became Wilkes and Stewart (accountants in Emerald).

Our office was on the top floor of the building now owned by Yachatdac (next to the Radio Theatre) It was difficult trying to look after the children at home while Marg was away from home all day and I was away from home evenings and weekends, so we decided to build an office in our front yard where we would be near the children. This made life somewhat easier. By 1986 we had both been working about 90 hours a week since 1980 and neither we nor the children had had a holiday for seven years. It was unsupportable. We made the decision to leave the Hospital and practice fulltime, which was a scary move as our accounting revenue was only $26,000 per year.

I had a commerce degree but I needed more accounting qualifications and Tax Agent registration. I contacted CPA Australia for advice in November 1985 and was told that my last opportunity to gain the necessary qualifications quickly was to attend a full week course in Brisbane and pass an exam. If I missed that, the rules were changing and I would have to do two more years’ study. It was lucky that I inquired in 1985 when we were still thinking about our options. I did the course and successfully applied for Tax Agent registration.

My last day working at Barcaldine Hospital was Friday, 4 July 1986. I missed it. I was called to the Department of Health in Brisbane to offer advice on medical services in the West. I was due to fly home in time for my farewell party but the planes were grounded because of fog so by the time I arrived home the party was over. The dirty dishes were still on the verandah.

Thus ended one chapter of our lives (after 27 years). A new chapter was beginning.

Payday Super is now law

Thu, 06 Nov 2025 02:54:51 GMT

On 4 November, the Treasury Laws Amendment (Payday Superannuation Bill) 2025 passed parliament. From 1 July 2026, employers will be required to make superannuation contributions for their employees as the same time as they pay their salary or wages.

The new law changes the rules about when super must be paid. The current default rules do not change. Importantly, employers still have options if an employee does not have a fund or does not provide the fund details to the employer.

For employees, this is very good news. Currently, it is estimated that super guarantee contributions totalling more than $5 billion dollars remain unpaid each year. Under the present quarterly payment system, the ATO is not alerted to unpaid super until 28 days after the end of the quarter and often much later if BASs are lodged late. In some cases, BASs are not lodged for years. Often, the business runs out of cash so the super payments are never made.

For employers, it is good news and bad news. The super guarantee has to be paid much earlier than before, which could cause cash flow problems. On the other hand, it is the ultimate budgeting solution. The employer is less likely to pay super guarantee late with resulting penalty and interest payments.

Excess contributions tax de-mystified.

Tue, 28 Oct 2025 04:13:32 GMT

Excess contributions tax de-mystified

You might be one of those fortunate and unfortunate taxpayers who receives excess contributions tax assessment. Fortunate, because it almost certainly means you are a high-income tax earner. Unfortunate because, well, nobody likes getting a tax bill. You might find in your Notice of Assessment that your expected refund has been reduced because of an excess contributions tax or you might get an Amended Notice of Assessment after you have received your refund. This depends on whether your super fund has notified the ATO of the excess contributions before or after you have lodged your tax return.

The ATO lists your options when you receive an excess contributions tax assessment, but taxpayers generally find these confusing and often ask their Tax Agent to recommend an option.

It helps to understand the ATO position. Firstly, it provides tax incentives for taxpayers to accumulate enough money in super to fund a decent retirement. On the other hand, it does not want multi-millionaires to be totally tax-free in retirement, so it sets a limit on the amounts a taxpayer can contribute to super. With some exceptions, taxpayers can contribute up to $30,000 per year in concessional contributions and $120,000 in non-concessional contributions. Concessional means taxable or tax-deductible.

Suppose Beryl contributes $31,000 in concessional contributions to super during the 2024-25 year. She can claim a deduction of $30,000. That is straightforward. Beryl can then leave the excess $1,000 in super and pay the excess contributions tax or she can elect to release the $1,000 from super. Where most taxpayers struggle is in trying to work out which option costs them the least tax. Here’s the thing. The tax will be the same whichever option Beryl chooses.

Beryl happens to be in the tax bracket where she pays 37% tax plus 2% Medicare levy, so her actual tax rate is 39%. The ATO is going to collect 39% of $1000 ($390) whether she chooses to leave the excess in the fund or whether she releases it from the fund. There is no point agonising about the tax consequences. If Beryl releases $1,000 from the super fund, this means, in effect, that her employer has paid her an extra $1,000 (via the super fund). This is added to her assessable income and she pays tax on it at 39%. (In practice, she pays 24% because her super fund has already paid 15% contribution tax to the ATO).

If, on the other hand, Beryl chooses to leave the $1,000 in the fund, she receives an excess contributions tax assessment of 24%. The fund has paid the 15% contribution tax when it received the contribution, so the total tax paid is still $$390.

Beryl’s options only relate to whether she leaves the cash in the fund or withdraws it. The fund has already paid $150 to the ATO so if she chooses to release the excess contribution she will receive only $850.

In the end, and cutting through all the jargon, the only issue for Beryl to consider is whether to leave $850 in the fund or whether to withdraw it.

I should mention that, if Beryl’s total super balances were less than $5000 and she had unused concessional contributions from previous years, she could use these to offset the current $1,000 excess and avoid an excess contributions tax assessment.

I should also mention that, in rare circumstances, the ATO may disregard the excess contribution entirely, but these cases are few and far between.

The ATO's new Tax Toolkit for small business owners

Tue, 09 Sep 2025 23:18:19 GMT

The ATO's new Tax Toolkit for small business owners

the buck stops firmly at your desk as the owner, CEO or company director.

The Australian Taxation Office (ATO) has just published its latest Tax Time toolkit for small businesses, with guidance and advice on keeping your tax affairs compliant.

How the Tax Toolkit helps your tax planning and compliance

The ATO knows the realities of running a small business. So the Tax Toolkit is designed to give you all the information and advice you need to stay compliant.

Angela Allen, Assistant Commissioner for small business experience at the ATO, outlines the aims of the Tax Toolkit and how the ATO supports your tax planning.

“Our role in helping you get your tax right is important. We're here to help you boost your tax and super knowledge. We want you to be more resilient to the unexpected challenges that small businesses face. We'll keep doing this through tailored and timely advice, and through our informational and educational support resources.”

What resources does the Tax Toolkit contain?

The ATO’s Tax Time toolkit gives you key resources to help you meet your tax obligations. The advice, information and support included is updated throughout the year, so you always have the correct tax rates and rules to refer to.

You can also find 300 free short courses in the ATO’s Essentials to strengthen your small business, helping you learn the skills and gain the knowledge needed to run your business and your tax affairs as smoothly as possible.

Helping you plan your tax and stay compliant

The ATO’s Tax Time toolkit is an invaluable resource that helps you get to grips with all the basics of business taxation.

If you do not have the inclination or time to study the Tax Toolkit or the 300 short courses, Walsh Accounting is a good alternative.

Customer Service

Tue, 09 Sep 2025 03:52:37 GMT

Customer Service

We formed the Barcaldine Business Council in the 1980s. At one stage we had over 100 financial members. A record 68 members attended one night-time meeting. The two big issues on the agenda were “buy local” and “customer service”. All members pledged to buy from each other wherever possible. Our main goal was to persuade people to buy local. After a number of years, it became apparent that only (at a guess) 15% of people would almost always buy local. The figure had hardly moved from what it was before our buy-local campaigns. Even members were not buying from other members causing some resentment.

We learnt a lesson. No matter how much work we put into the campaigns, in the end most people buy in their own best interests. It took a further while to understand that this is how it should be. People can only live their best lives if they act in their own best interests. We should not want people to live less than their best lives in our town. This is a bitter pill for businesses to swallow. It means that local businesses somehow have to convince consumers that it is their best interests to buy locally. In some cases, this is just not possible. There are better deals elsewhere. However, there are strategies which can at least improve the odds.

(I understand that it is difficult for small business owners. 75% of them earn less than the average wage and 43% make no profit at all, despite working long hours with no leave entitlements and often no super. There is no magic wand. I hear you. I know that the strategies below are easier to write than they are to fulfil. Do what you can and I hope it helps. Let me know).

Customer Service

Outstanding customer service reaps rewards. Do not give customers a reason to look elsewhere. They might stay elsewhere.

Convenience

It is not only a material world, it is a convenience world. Barcaldine has thousands of products and services that you can access in a few minutes rather than waiting for the item to arrive from a distant city. Sometimes the shop assistant will say “We are out of stock but we can have it here next Wednesday”. In most cases, that is still far more convenient than ordering online.

Consistency

It is not an ideal world. If you break a leg, you might also have to break some promises. The goal is to get as close to reliability as possible. Nobody is perfect all the time. However, based on anecdotal evidence, consistency of opening hours, products and services seems to be the number one issue with consumers. A very common comment is “We don’t care what the opening hours are as long as they are consistent”.

Courtesy

A hairdresser once said to me “We have to be the world’s most hypocritical people because we agree with everyone”. She was on the money, but it is not limited to hairdressers. It applies to everyone. You do not have to betray your own beliefs to be a sympathetic listener. You do not have to curtsey to be courteous.

I remember buying two flat pack-chairs from the old Meacham and Leyland. I could not work out how to screw them together so I went back to Chook to ask him. We knew each other well enough to have a go at each other so, in a spirit of playfulness, Chook called out to a shop full of customers “Look at this clown. He can’t even screw a chair together” All the customers chuckled a big haha and I said haha too but not quite so big. It turned out that I had bought the last of those flat-pack chairs so I drove home to get one of them. After some head-scratching, Chook said in a small voice “Oh we gave you the wrong screws”. At this stage I wanted to say “OH YOU GAVE ME THE WRONG SCREWS” but when I looked around, all the customers had gone. I was literally the only customer left in the shop. Theoretically, therefore, there could be people still living in Barcaldine and perhaps their descendants who are of the opinion that I cannot screw a chair together. That was sixty years and five months ago.

It’s water off a duck’s back to me. I expect to shrug it off shortly.

The point is, some take offence more easily than others. You can not only lose a sale if you offend a customer, in a small town you can lose a customer for life and in some cases, you can lose a whole family.

“The customer is always right”. We all know that is a load of hogwash, but would you rather show him the error of his ways or take his money?

Cooperation

Do try to buy in town wherever you can. The seller might become your customer. What goes around comes around in different ways. If you shop out of town, take the freight into account. Sometimes single item freight is many times the freight if the item is on a pallet or one of a bulk delivery.

Communication

Communication = Sender – >Message –> Receiver. Be a sender and a receiver. As a sender, let people know your opening hours and your products and services in as much detail as possible. You cannot be too detailed. As a receiver, listen closely to what your customers want. Ask them. Do not limit your products to the ones you like. You can do that in a big city but not in a small town (unless you have a very special product).

Cast your net

Obviously, if you are in the food business you cannot sell Friday lunches to people in Brisbane, but if you work on a computer or sell special products or services, utilise the internet. If only one person in a million in Australia likes your offerings, you have 24 customers you would never have had otherwise. There are success stories.

I wish success to you all.

I’m not sure my wife thinks I can screw a chair together.

By Lionel Walsh

Are Legal Expenses Tax-Deductible for Your Business?

Tue, 09 Sep 2025 01:54:35 GMT

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Can You Claim Legal Fees if a Business Purchase Falls Through?

Tue, 09 Sep 2025 01:45:42 GMT

Can You Claim Legal Fees if a Business Purchase Falls Through?

When you’re looking to buy a business, it’s common to spend money on lawyers, accountants, and other advisers before the deal goes ahead, but what happens if the purchase never takes place? Can you claim a tax deduction for those costs?

No Immediate Tax Deduction

Legal and professional fees can only be deducted straight away if they’re directly related to earning your assessable income. If the business never started, there’s no link to income yet.
�� Result: No immediate deduction under the normal rules.

Not a Capital Loss

Some people think these costs can be treated like a capital loss. Unfortunately, that’s not the case. For a capital loss, there needs to be a "CGT event" (like selling an asset). If the purchase didn’t happen, you never actually acquired a CGT asset, so there’s nothing to trigger a capital loss.
�� Result: No capital loss claim available.

Blackhole Expenditure – Deductible Over 5 Years

Here’s the good news. The tax law has special rules for what’s called “blackhole expenditure” – capital expenses that don’t fit anywhere else.

If your legal or professional fees were incurred:

in investigating or trying to buy a business, and
the business was one that you intended to operate for a taxable purpose (i.e. to make income), then you may be able to claim these costs under section 40-880 of the tax law.

The deduction is spread evenly over five years (20% each year).

Example

Sarah spent $12,000 on legal and accounting advice while trying to buy a café. The deal fell through at the last minute.

She cannot claim the $12,000 straight away .
She cannot treat it as a capital loss .
But she can claim $2,400 per year over five years as blackhole expenditure.

Key Takeaways

Upfront deduction? ❌ No.
Capital loss? ❌ No.
Blackhole deduction? ✅ Yes, spread over 5 years.

This makes it especially important to track these costs carefully, even if your deal doesn’t go ahead.

Need Advice?

The rules around deductibility can be complex, especially when you’re buying or restructuring a business. At Walsh Accounting , we can help you structure your costs and make sure you don’t miss out on available deductions.

�� Contact us today to discuss your situation.

Disclaimer: The above is general information only and is not financial advice. You should seek advice specific to your circumstances before acting.

Family and Discretionary Trusts

Sun, 31 Aug 2025 23:55:40 GMT

There are family trusts. There are discretionary trusts. A family trust is a discretionary trust. A discretionary trust is a family trust.

A family trust might or might not have made a family trust election. A discretionary trust might or might not have made a family trust election.

There is no clue in the names, but the consequences of not knowing that a family trust election exists can be enormous. Zero tax can become 47% tax.

Accountants must sometimes be detectives, trolling through decades of records to find the trust deed and a possible family trust election.

And you thought that accountants lead boring lives.

Tax Deduction for Personal super Contributions

Sun, 31 Aug 2025 23:31:59 GMT

If you are claiming a tax deduction for personal super contributions, make sure that you have the letter of acknowledgement in your hands before you lodge the tax return. Alternatively, your tax agent might be able to verify that the ATO has received the notification from the super fund that you will be claiming the tax deduction. Super Central this week reports the case of a taxpayer who gave the Notice of intent to claim a tax deduction (NOI) to his super fund before the end of June. This Notice of Intent can be submitted at any time until the tax return is lodged. However, it cannot be submitted after the tax return is lodged.

The taxpayer quickly lodged his 2025 tax return but he forgot to date the NOI, so the super fund rejected it. He could not then lodge a valid, dated NOI because he had already lodged his tax return.

The taxpayer applied for relief but it appears that, even though this was a harsh result based on a technicality, “the Commissioner of Taxation has no discretion or administrative authority to correct the defective NOI”.

Customer Service

Tue, 12 Aug 2025 00:13:24 GMT

Customer Service

Outstanding customer service reaps rewards. Do not give customers a reason to look elsewhere. They might stay elsewhere.

Convenience

Consistency

Courtesy

It’s water off a duck’s back to me. I expect to shrug it off shortly.

“The customer is always right”. We all know that is a load of hogwash, but would you rather show him the error of his ways or take his money?

Cooperation

Communication

Cast your net

I wish success to you all.

I’m not sure my wife thinks I can screw a chair together.

By Lionel Walsh

Division 7A

Mon, 11 Aug 2025 23:53:38 GMT

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Common ways of borrowing

Mon, 11 Aug 2025 23:49:51 GMT

Common ways of borrowing

Overdrafts

Overdrafts provide flexible access to funds. You can withdraw money as needed (up to the approved limit). Interest is charged on the overdrawn amount, not on the limit, although interest is generally higher than for many other sources of finance. there is no fixed repayment amount required. In fact, overdraft limits can remain in place for many years, although the lender might retain the right to cancel the overdraft or reduce the limit. The overdraft interest is deductible. GST is not applicable.

Unsecured loans:

Unsecured loans allow you to borrow funds without offering any form of security. Because there is no collateral required, unsecured loans will generally be for smaller amounts, with higher interest rates. The loan interest is deductible.

Secured loans:

Secured loans require collateral, such as business assets or property. Due to the lower risk for the lender, you will generally be able to access larger sums of money and lower interest rates with a secured loan. Secured finance is commonly used to fund significant investments, such as the purchase of expensive machinery, land and buildings or the expansion of operations. Interest is deductible.

Chattel mortgage:

Chattel means "goods" and mortgage means "loan agreement", so a chattel mortgage is a loan agreement for the purchase of goods (such as plant and equipment). You own the asset immediately, unlike some other types of finance. Chattel mortgages became much more popular after GST was introduced in 2000, because you can claim all the GST on the purchase price up front (in the next BAS).

The interest component of the repayments is deductible.

Hire purchase:

Hire purchase means what it says. Each payment has a hire component and a purchase component You do not own the asset until you have made the last payment. You can only claim the GST incrementally over the term of the repayments. The interest component of each payment is deductible

Operating lease:

Operating leases are indicated when you have no intention of owning the asset. Typically, you only need the use of it for a specified period of time. You can claim the GST on each lease payment and you can claim a tax deduction for the GST-exclusive amount of the lease payments.

Finance lease:

A finance lease is where the lender retains the ownership of the assets for the term of the lease. It is similar to an operating lease except that you can own the asset when the lease period expires. The interest component of each payment is deductible.

Commercial property loans:

Commercial property loans are usually long-term mortgages that you can use to buy commercial premises. The interest component of each loan payment is deductible.

Bridging loans:

These are commonly used to ‘bridge’ the gap when waiting for other finance to be secured. An example might be where you need short term finance to bridge the gap between when you have to pay for a new property and when you are going to receive the sale proceeds from the old property. Interest on the loans is deductible.

Line of credit:

A line of credit is a credit facility enabling you to draw money when needed. It is there if and wen you need it.

Business credit cards:

These are so widely used that no explanation is required.

Other funding:

Not all means of financing involve debt financing. In some situations, there are government grants and tax incentives that can be used to fund your company’s growth.

Choosing a method of financing is not a one-size-fits-all situation. You need to take your estimated future cash flows into account as well as the income tax and GST implications into account.

Wherever the word deductible appears, it assumes that the finance is used for business purposes.

Capital gains tax and holding costs

Mon, 11 Aug 2025 23:30:27 GMT

Capital gains tax and holding costs

Did you know that if you sell an asset such as a vacant block of land, you can add holding costs such as rates, insurance and loan interest to the cost base when calculating the capital gain or loss. You can only claim these holding costs if they were not deductible in any year.

For example, if the property was rented out at any time, the holding costs related to the time it was rented cannot be included in the cost base even if you did not actually claim them at that time.

These holding costs can even be used to create a bigger capital loss, which you can use to reduce the tax on other capital gains in the current year or in future years.

The proposed new Division 296 Super Tax

Sun, 27 Jul 2025 23:40:02 GMT

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How to claim tax deductible expenses as an individual

Tue, 15 Jul 2025 01:58:41 GMT

How to claim tax deductible expenses as an individual

Work-related expenses

The clue is in the name. These types of expenses must be sufficiently related to earning your income. To claim a deduction for a work-related expense:

You must spend the money yourself and not get a reimbursement
The expense must directly relate to earning your income
You must have a record to prove it (usually a receipt)

Costs that you may be able to claim against include:

Cars, transport and travel expenses
Tools, computers and items you use for work
Clothes and items you wear for work
Working from home expenses
Education, training and seminar expenses
Memberships and subscriptions
Telephone and internet expenses
Some meals while working overtime

Not all tax deductible expenses relate to your employment. There are other areas where you may be able to reduce your taxable income. These include:

Gifts and donations
Expenses related to earning income from investments
Personal super contributions
Income protection insurance
The cost of managing your tax affairs.

How to make a claim for expenses

Keeping records is a vital part of making a claim for expenses. On audit, the ATO will need to see receipts and records that show you incurred the expense. The rules are complicated.

T alk to our team about setting up the right record-keeping processes and claiming the appropriate expenses.

Energy Bill Relief Fund: How do you claim relief?

Tue, 15 Jul 2025 01:38:54 GMT

Energy Bill Relief Fund: How do you claim relief?

In March 2025, the Government announced an extension to the Energy Bill Relief Fund for every Australian household, and around 1 million eligible small businesses.

This rebate on your energy costs takes effect from 1 July, with a $1.8 billion extension of the Energy Bill Relief Fund for the six months leading up to the end of 2025.

How big will your energy rebate be?

The rebate will be up to $150 and will be payable to all Australian households and small businesses that meet the eligibility criteria.

Who is eligible for the rebate?

1. Households:

Australian households are eligible for the relief if you receive an electricity bill and are connected to the grid. This includes households in the external and non-self-governing territories and will apply until the end of 2025.

2. Small businesses

To qualify, your small business must meet the state and territory definition of an electricity ‘small customer' for your state and territory. This is defined by your annual electricity consumption threshold. If you’re eligible, you should receive the rebate.

How can you claim your rebate?

Rebates will be automatically applied to your electricity bill in two $75 quarterly instalments. You shouldn’t need to take any action to make use of the rebate.

You can find out more about eligibility for the small business energy relief here

Accounting basics: the profit and loss and balance sheet reports

Thu, 10 Jul 2025 03:15:22 GMT

Accounting basics: the profit and loss and balance sheet reports

Understanding your finances is a vital part of managing your business. The profit and loss report and the balance sheet are key reports in this regard.

What is your profit and loss statement?

Your profit and loss statement is commonly called your P&L, but is also referred to as your income statement or statement of earnings. It is a full breakdown of your company’s revenue (money coming into the company as sales and other business income) and your expenditure (direct costs, overheads, expenses and other costs).

The profit and loss statement is good for:

Letting you know your profit (or loss)
Highlighting areas where you might be able to increase income or reduce expenses
Comparing current year results with previous years.
Providing information you need to include in your tax return

What is your balance sheet?

The balance sheet offers a snapshot of the financial health of your business on the last day of the year or period.

The balance sheet shows shows you:

Assets (what you own)
Liabilities (what you owe)
Equity (the net worth of the business)

The balance sheet is helpful for:

Assessing your current financial position (It is also called the Statement of Financial Position)
Assessing whether you can pay your debts as they fall due (by comparing current assets with current liabilities).
Assessing longer term solvency (by comparing total assets with total liabilities)
Tracking growth
Supporting loan or other finance applications
making informed investment decisions
Providing a foundation for the value of a business (for succession planning or sale of the business).

Nothing is as simple as it seems. You might sell an item for $1000. That $1000 will be included in sales in the profit and loss statement whether you have been paid for it or not. If you have not been paid, it will still be included in your net profit, but it will also be included in debtors in the balance sheet. You have to look at both the profit and loss and the balance sheet to assess the true result of the sale. You have not made the profit until the $1000 is in your bank account.

You might buy an asset for $10,000. That asset might stay in the balance sheet at original cost for years or decades. It might currently be worth scrap value or it might be worth $50,000. You have to take that into account when reading the balance sheet.

The Australian Taxation Office (ATO) often has rules about income or expenses which are different from accounting principles. If you prepare the accounts to suit the ATO they might prove to be misleading in assessing your true profit or net worth.

Time is the enemy of the accounting profession. At any point in time, how do you assess the value of a tractor which was purchased five years ago and which has a useful life that can only be estimated.

Both the profit and loss and the balance sheet have to be interpreted in order to glean useful information.

Please get in touch if you would like an analysis of your profit and loss and balance sheet.

Artificial Intelligence (AI). The Good, The Bad and The Ugly

Wed, 02 Jul 2025 06:03:19 GMT

Artificial Intelligence (AI).

The Good, The Bad and The Ugly.

There was a little girl,

Who had a little curl,

Right in the middle of her forehead.

When she was good,

She was very, very good,

But when she was bad she was horrid.

In no way am I inferring that AI is a girl, but otherwise the cap fits.

if you define AI as information produced by a machine, it has been around for decades.

The Ugly

Between 2000 and 2015, the UK Post Office wrongfully prosecuted more than 700 sub-postmasters and postmistresses for theft, false accounting or fraud. Many of the accused were financially ruined, wrongfully imprisoned, lost their homes and reputations and suffered mental health issues. Some committed suicide.

They were innocent. A flawed accounting system was incorrectly reporting shortfalls in takings. The UK Post Office believed the system and not the victims. To this day many of the victims have not been compensated. The full story is heart-breaking. Do yourself a favour and research it, or you might be able to find a four-part 2024 ITV drama titled “Mr Bates vs the Post Office”.

Was AI or IT the problem? No. The software was flawed, but humans were the problem. This is the most horrific example you will ever find of how not to use AI.

In Australia, you might remember the Robodebt Scheme, which the Royal Commission condemned as “crude and cruel” and “neither fair nor legal.”

The Bad

Firstly, do not give AI any information you do not want to be in the public domain (or in the hands of the baddies).

Secondly, AI does consume enormous amounts of electricity worldwide, although currently not as much as cryptocurrency.

Thirdly, AI “hallucinates” which is the term used for getting it wrong. You need to verify. If you press the wrong buttons on a calculator you get the wrong answer. You own the problem. If you blindly believe AI, you own the problem.

The Good

When it is good it is very, very good. Try it. Choose your most difficult problem, one that might take days to research. Then ask AI. I can almost guarantee that it will provide you with an answer within four seconds. It is next level and then some. Of course, you must verify, but overall it is a massive time-saver.

I do not think anybody knows the future of AI, but it will certainly change the nature of many jobs. I am hopeful that it will be for the common good because I cannot envision a time when humans will not be needed. When calculators first came on the scene, the general opinion was that this would cause problems because people would not know how to add up anymore. When computers arrived, there was fear that many jobs would be lost. Now everyone embraces calculators and computers as useful and in fact essential, and the number of jobs has proliferated. I am hopeful that it will be the same with AI.

One thing is certain. Ignore AI and you will be left behind.

Rise in the minimum wage: the impact for your business

Wed, 02 Jul 2025 05:52:25 GMT

Rise in the minimum wage: the impact for your business

On 3 June 2025, the Fair Work Commission’s Expert Panel announced the National Minimum Wage and award wages will increase by 3.5% from 1 July 2025. This wage increase follows on from the 2024-25 Annual Wage Review and its recommendations.

This increase in basic pay is great news for Australian workers, especially with the country facing an ongoing cost-of-living crisis.

But how will an increased wages burden affect your small business?

What’s the new minimum wage?

The 3.5% increase will mean that the National Minimum Wage will increase by:

$0.85 to $24.95 per hour
$32.10 to $948.00 per 38-hour week
$1,669.20 to $49,296.00 per year.

How will the wage increase impact your payroll costs?

If your workforce includes a large percentage of employees that are currently on the minimum wage of $24.10, that jump of 85 cents per hour will put extra pressure on your cashflow.

For example, if you’re currently employing 20 people on the minimum wage, and pay them every two weeks, the salary component of your payroll will jump from $36,636 to $37,920. That’s an extra $1,284 on your payroll bill every fortnight – and that’s before you factor in super contributions and other benefits.

Talk to us about preparing for the wage increase

If you’re concerned about the cashflow impact of an increase to the minimum wage, please do come and talk to the team.

Your BAS refunds are under scrutiny after ATO extends notification period

Thu, 19 Jun 2025 00:01:23 GMT

Your BAS refunds are under scrutiny after ATO extends notification period

The Australian Taxation Office (ATO) is now allowed additional time to notify taxpayers when their business activity statement (BAS) refunds are withheld for verification of information.

From 1 April 2025, the notification period for the Commissioner has extended from 14 days to 30 days, allowing more time for ATO to assess high risk BASs and to align with the notification period for refunds arising from income tax returns.

The Commissioner may retain a refund if it would be reasonable to require verification of information relating to the refund amount under s 8AAZLGA(3)(a) of the Tax Administration Act 1953. If the Commissioner does not notify the taxpayer that the refund is being retained before the end of 30 days (previously 14 days), the refund must be released to the taxpayer.

Factors determining retention of refunds

The factors the Commissioner considers in deciding whether to retain a refund are:

the likely accuracy of the information — for example, unusually high or low claim amounts
the likelihood that the information was affected by fraud, evasion or intentional disregard of a taxation law
the impact of retaining the amount on the entity’s financial position — for example, solvency needs
the complexity that would be involved in verifying the information, and
whether the information provided by the taxpayer is consistent with information previously provided.

Risk mitigation steps

If you are lodging a BAS with a large refund, note that the refund may be delayed as the ATO may scrutinise that BAS and identify it as high risk. It is important in all cases to have the necessary records on file to justify the information in the BAS.

Any legitimate refunds retained for over 14 days would result in the ATO paying interest to you (as is currently the case).

If you have any queries in relation to this measure, please feel free to contact our office.

Family Trust Elections

Sun, 08 Jun 2025 23:07:08 GMT

Family Trust Elections – How to avoid the 47% tax rate

If your family trust has made a Family Trust Election, please read this.

Family trusts and discretionary trusts are the same. Either might, or might not, have made a Family Trust Election (which limits the range of beneficiaries to a specific family group)

Typically, trusts distribute income to individual beneficiaries who are on low rates of tax. This is a very common strategy. Trusts also distribute income to “bucket” companies to take advantage of the 30% company tax rate.

Here is how it can go wrong.

The Smith Family Trust has made a Family Trust Election limiting the range of beneficiaries. To manage tax, the trust distributes part of its income to a bucket company Smith Holdings Pty Ltd which is wholly owned by John Smith and his wife and children who, of course, are all within the family group.

This is fine.

John’s daughter sells one of her shares to her new spouse, Peter, for $1, just to “get him involved”. Peter is not in the family group.

The next year the trust makes a distribution of $20,000 to Smith Holdings Pty Ltd. Because the company is no longer 100% owned by family group members, the trust distribution is now treated as going (indirectly) to someone outside the family group. The Smith Family Trust is therefore liable for $9,400 in addition to the $6,000 payable by the company ($20,000 x 30%).

Even though the “outsider” Peter might eventually benefit by a mere handful of dollars, the full Family Trust Distribution Tax of $9,400 will be levied.

Here is why it can go wrong. A Family Trust Election might have been made twenty or more years ago. Family members change and memories dim. Do you even know whether your Trust has made a Family Trust Election? If not, you would be well-advised to find out by 30 June 2025, which is the last date for you to document your proposed distributions for the year ended 30 June 2025.

Trust Distribution Resolutions must be dated no later than 30 June 2025. Otherwise, there could be more really bad news. If there is a default beneficiary in the trust deed, that person might be assessed on 100% of the trust income even though he or she did not receive it. If there is no default beneficiary, the trust itself will pay tax at 47%. If its net income is $100,000 it will pay $47,000 tax.

Trusts have risks and rewards. Please make sure you have the risks covered so you can enjoy the rewards with a peaceful mind.

Banks can create money

Tue, 03 Jun 2025 01:35:29 GMT

Banks can create money

Did you know banks create money when they lend it?

It might sound surprising, but banks don’t just hand out money that people have deposited. When you take out a loan, the bank actually creates new money.

�� Here is a simple example:

You are approved for a $500,000 home loan.

The bank does not take that money from someone else’s account.

Instead, it simply adds $500,000 to your account as a deposit.

That money did not exist before—it is created when the loan is made.

This is how most money in the economy is created: not by the government, but by commercial banks through lending.

But banks cannot create unlimited money. They are tightly regulated in Australia to keep the financial system safe.

Key limits include:

✅ Capital adequacy requirements – Banks must hold a certain amount of their own money (called capital) as a safety buffer.

�� Example: If a bank has $100 million in capital and the capital ratio is 10%, it can only lend up to around $1 billion. This limits how much money it can create through loans.

✅ Liquidity rules – Banks must hold enough cash or assets they can quickly turn into cash to meet withdrawals.

✅ Borrower demand – If customers do not want to borrow, or cannot repay, lending stops.

✅ Interest rates – Set by the Reserve Bank of Australia. Interest rates influence how much borrowing takes place.

The re-elected Labor government to extend the instant asset write-off for small businesses

Wed, 21 May 2025 04:05:53 GMT

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Proposed $1,000 work-related deduction

Wed, 21 May 2025 03:58:58 GMT

Labor's $1,000 instant tax deduction aims to simplify claiming work-related deductions

As promised in its election campaign, the Labor Government may introduce a $1,000 instant tax deduction for work-related expenses from the 2026–27 income year.

Simplifying claiming work-related deductions

The proposed measure will allow taxpayers to choose to claim a $1,000 instant tax deduction instead of claiming individual work-related expenses.

Taxpayers who choose to claim this instant deduction will not be required to collect receipts for deductions less than $1,000 in total.

Eligibility

To be eligible for the instant tax deduction:

a taxpayer must earn labour income for example salaries and wages
a taxpayer must not exclusively earn business or investment income.

Taxpayers who earn business or investment income may continue to claim their tax deductions in the usual way.

Other deductions

Charitable donations and other non-work related deductions would continue to be claimed on top of this instant tax deduction.

This concession will be welcomed by many workers, but it does not seem to make sense from the Government point of view. If a taxpayer has under $1,000 in deductions, he or she can choose the $1,000 deduction. If the actual deductions are more than $1,000 he or she will naturally claim the higher amount. From the ATO point of view, this seems to be a case of "Heads the taxpayer wins and tails we lose".

The concession is not peanuts. it is expected to increase tax refunds by $2.4 billion "over the forward estimates" which is code for the next three years, but as it does not start until 2026-27 tax returns, that appears to translate to $1.4 billion per year.

Perhaps we should not get to excited until we see the wording of the actual legislation.

Have queries? We are here to help you navigate through them, please feel free get in contact with us.

It’s now a criminal offence to intentionally underpay your employees.

Tue, 08 Apr 2025 00:03:27 GMT

Here’s the lowdown on the new Voluntary Small Business Wage Compliance Code and what it means for your business.

Paying your employees the correct amount is an important part of being an employer. To tighten up this process, the Australian Government has just introduced a new Voluntary Small Business Wage Compliance Code , that makes underpaying your employees a criminal offence.

So, what counts as an underpayment? And are there any exemptions to the new Code?

What is the Voluntary Small Business Wage Compliance Code?

From 1 January 2025, intentionally underpaying an employee’s wages or entitlements can be a criminal offence. This doesn’t include honest mistakes – for example, if accidental payroll errors are made. But the new Voluntary Small Business Wage Compliance Code (or the Code) does now make it an offence to intentionally underpay a team member.

The Fair Work Ombudsman can investigate suspected criminal underpayment offences and refer suitable matters for criminal prosecution. If, as an employer, you’re convicted of a criminal offence, a court can impose fines, prison time, or both.

What constitutes ‘underpaying an employee’?

No employer wants to be faced with criminal proceedings for failing to pay an employee correctly. So, what does underpayment mean in this specific context?

Underpayment may include:

Not paying sufficient wages, including penalty rates, overtime rates and allowances (or not paying them at all).
Not paying amounts required by the applicable award or enterprise agreement.
Not paying other entitlements, for example superannuation for some employees.

Are there any exemptions?

There are some exemptions to the new Code. In some limited circumstances, the criminal offence won’t apply to particular entitlements.

The exceptions broadly apply to:

Employees in New South Wales, South Australia, Queensland, Tasmania and Victoria who are employed by sole traders, partnerships, other unincorporated entities, or non-trading corporations. Most Victorian state government employees. Tasmanian local government employees.

Get up to speed with the Code and wages compliance

You can get a full breakdown of the new Code, and your wages compliance responsibilities as an employer in the new Guide To Paying Employees Correctly .

If you’re concerned about meeting this new compliance checklist, or how it will affect your day-to-day payroll activities, please do get in touch with the team.

Concessional and Non-Concessional Super Contributions Explained

Thu, 20 Mar 2025 03:29:01 GMT

Concessional and Non-Concessional Super Contributions Explained

When it comes to growing your superannuation savings, there are two main types of contributions: concessional and non-concessional. Understanding the difference can help you make the most of your retirement savings.

Concessional Contributions

Concessional contributions are made before tax and include employer contributions (such as the Superannuation Guarantee), salary sacrifice contributions, and personal contributions you claim as a tax deduction. These contributions are taxed at 15% within your super fund, which is usually lower than most people’s income tax rate. However, there is an annual limit of $30,000 , and contributions above this cap may be taxed at a higher rate.

Non-Concessional Contributions

Non-concessional contributions are made from your after-tax income. They are not taxed within the fund because you’ve already paid tax on this money. These contributions are capped at $120,000 per year , but if you’re under 75, you may be able to bring forward up to three years’ worth of contributions, allowing up to $360,000 in a single year.

Choosing the right mix of concessional and non-concessional contributions can help you maximise your tax benefits and grow your retirement savings. It’s always a good idea to seek professional advice to ensure you stay within the contribution limits and make the most of your super strategy.

The Backbone of Every Business: The Unsung Heroes in Admin

Thu, 20 Mar 2025 03:26:32 GMT

The Backbone of Every Business: The Unsung Heroes in Admin

Behind every successful business, there is an efficient and hardworking admin team keeping things running smoothly. While clients often see the accountants, consultants, or business owners as the face of the company, it’s the administration professionals working behind the scenes who ensure operations flow seamlessly. At Walsh Accounting, we know firsthand how essential our admin team is to keeping our business functioning at its best. Here’s why every business should recognise and appreciate the contributions of their administrative staff.

1. Keeping Everything Organised

From scheduling meetings and managing emails to maintaining accurate records, admin staff keep the business structured. Without them, important details could slip through the cracks, leading to inefficiencies and missed opportunities.

2. The First Point of Contact

In many businesses, the admin team is the first interaction clients have. Whether they’re answering phone calls, responding to inquiries, or greeting clients in the office, they set the tone for the client experience. A friendly and efficient admin team creates a strong first impression and fosters trust.

3. Ensuring Compliance and Accuracy

In industries like accounting, where accuracy and compliance are critical, admin staff play a key role in ensuring that documents are correctly processed and filed on time. They help keep track of deadlines, lodge forms, and maintain confidential records securely.

4. Capturing All Billable Work and Ensuring Accurate Billing

One of the critical functions of an admin team is ensuring that every billable service and sale is recorded and invoiced correctly. In professional services, it’s easy for small tasks, quick advice, or additional work to go unbilled, leading to lost revenue.

Admin staff play a crucial role in:

✅ Tracking billable hours and services provided to clients

✅ Ensuring invoices are sent out promptly and correctly

✅ Following up on overdue payments to maintain cash flow

✅ Identifying billing discrepancies or missing charges

Without a diligent admin team managing billing, businesses risk leaving money on the table, which can significantly affect profitability.

5. Freeing Up Specialists to Focus on Their Expertise

Without admin support, accountants, consultants, and business owners would spend hours on administrative tasks rather than focusing on their core work. By handling administrative duties, the team allows professionals to concentrate on high-value tasks that drive business growth.

6. Problem Solvers and Crisis Managers

When unexpected issues arise—whether it’s a last-minute reschedule, an IT glitch, or a missing document—admin staff are often the ones who step in to resolve the problem. Their ability to troubleshoot and adapt ensures the business continues to run smoothly, even under pressure.

7. Enhancing Workplace Culture

Admin team members contribute to a positive and productive workplace. They help maintain internal communication, organise team events, and support staff with their needs. Their eyes and ears are everywhere, identifying potential issues before they even become issues. Their efforts create a more cohesive and enjoyable work environment.

Appreciating the Admin Team

Too often, the work of administrative professionals goes unnoticed. However, businesses that acknowledge and support their admin staff see the benefits in overall efficiency, client satisfaction, and team morale.

At Walsh Accounting, we understand that our success is a team effort. Our admin professionals are an integral part of our business, ensuring that every process runs smoothly and every staff member and client is supported. We truly appreciate the work they do every day.

If your business has an outstanding admin team, take a moment to thank them—you wouldn’t want to run your business without them.

Depreciation De-mystified

lionel@walshaccounting.com.au (Lionel Walsh) — Sun, 09 Mar 2025 22:42:52 GMT

Depreciation De-mystified

Depreciation De-mystified

Thor Clift purchased a forklift for $20,000. At the end of the year, his bookkeeper Ima Sinner, who was a beginner, said to Thor “You expected to make a profit of $30,000 but you only made a profit of $10,000 because you bought that forklift”.

This made poor Thor Clift sore. “Wait a minute” said he, “that forklift is going to last 20 years and you have charged the full cost against the first year. That makes my performance look much worse than it really is. That’s not fair. You should spread the cost over 20 years”.

“Well, said Sinner the Beginner “What am I going to call it, perhaps Forklift – 1/20 ^th ?

Thor said “No. Its value depreciates each year so let’s call it by a generic name “depreciation”, then we can also use that name for every asset.

This is the way depreciation was born and the way it is still used to day, and it is quite logical and easy to understand.

Then, some seriously intelligent accountants said “In addition to using depreciation to spread the cost of the forklift over its useful life, we can also use it to let Thor know how much it might cost him to replace the forklift at the end of its useful life”.

This is not so simple. First, Thor has to decide whether he will still be in business in 20 years. Then he has to decide whether he will still need a forklift at that stage. He needs to forecast whether technological advances might make forklifts more efficient at less cost or even obsolete. Then there is inflation to estimate. If, in the end, he decides that, on balance, he probably will need a replacement forklift, how much will it cost him?

Let’s assume that, after doing all their forecasts, predictions and estimations, the seriously intelligent accountants inform Thor that in 20 years’ time, he will need $45,000 to replace the forklift. Make no mistake, this is useful information, but it does nothing to produce the $45,000. It is a message.

At this stage, depreciation has done its job. Thor has been properly forewarned. Now it is up to him to work out how he is going to fund the forklift, but at least he will not get a nasty surprise in 20 years’ time.

Then, along comes the Australian Government. It realises that it has the power to influence the flow of money in the economy by increasing depreciation rates (less taxes) or reducing depreciation rates (more taxes). This has nothing to do with the reality of useful lives.

So, there you have the three uses of depreciation

· to spread the cost of an asset over its useful life,

· to give management the forecast it needs to prepare for the future or

· to increase or reduce taxes.

What Are Concessional Contributions?

Fri, 07 Mar 2025 01:54:54 GMT

What Are Concessional Contributions?

Concessional contributions are an effective way to grow your superannuation while taking advantage of tax benefits. These contributions are made into your super fund before tax is applied, helping you save for retirement while reducing your taxable income.

Types of Concessional Contributions

Employer Contributions : These include the Superannuation Guarantee (currently 11.5%, increasing to 12% from 1 July 2025) that your employer must pay into your super fund.
Salary Sacrifice : You can arrange with your employer to have a portion of your pre-tax salary paid directly into your super. This reduces your taxable income and can increase your retirement savings.
Personal Deductible Contributions : If you’re self-employed or want to make extra contributions, you can add to your super and claim a tax deduction for these amounts.

Tax Treatment

Concessional contributions are taxed at 15% within your super fund, which is often lower than your marginal tax rate. However, high-income earners (those earning more than $250,000 annually) may pay an additional 15% tax on these contributions.

Contribution Caps

The annual cap for concessional contributions is $30,000 . Exceeding this limit may result in additional taxes, so it’s important to track your contributions.

Benefits of Concessional Contributions

Tax Savings : By contributing before tax, you reduce your taxable income.
Boost Your Retirement Savings : Consistent contributions can significantly increase your super balance over time.

You need to know that, under most circumstances, you cannot withdraw money from your super until you retire.

To make the most of concessional contributions, consider speaking with a financial adviser or your accountant to ensure your contributions align with your financial goals and stay within the caps.

What Are Non-Concessional Contributions?

Fri, 07 Mar 2025 01:39:37 GMT

What Are Non-Concessional Contributions?

Non-concessional contributions are an important way to boost your superannuation savings using after-tax money. These contributions allow you to grow your retirement nest egg without being taxed again within your super fund.

Key Features of Non-Concessional Contributions

Made from After-Tax Income : Unlike concessional contributions, non-concessional contributions come from your income that has already been taxed. Because of this, these contributions are not taxed within your super fund.
Contribution Cap : The annual cap for non-concessional contributions is $120,000 per year . However, if you’re under 75, you may be eligible to use the bring-forward rule. This allows you to contribute up to $360,000 over a three-year period.
No Immediate Tax Benefit : Since these contributions are made from after-tax income, they do not reduce your taxable income. However, they grow within your super fund, where earnings are taxed at a concessional rate of 15% .

Who Benefits from Non-Concessional Contributions?

Non-concessional contributions are ideal for individuals who want to make additional contributions to their super after maximising their concessional contributions. They are also useful for people receiving inheritances, selling assets, or looking to invest surplus funds for retirement.

Contribution Limits and Penalties

It is essential to stay within the contribution cap to avoid extra tax. If you exceed the cap, the excess contributions may be taxed at your marginal tax rate less a 15% rebate to reflect the tax already paid by the fund.

Restrictions

There are some restrictions on making non-concessional contributions:

You cannot make these contributions if your total super balance exceeds $1.9 million .
Contributions must be made before the age of 75, and additional rules apply for those aged 67 to 74 if you are claiming a tax deduction.

Non-concessional contributions can be a great way to boost your retirement savings, but it’s crucial to plan carefully and stay within the caps. Consider consulting a financial adviser to ensure your strategy aligns with your retirement goals and complies with the rules.

Super Guarantee and Freedom of Choice of Super Fund

Fri, 07 Mar 2025 01:39:14 GMT

Super Guarantee and Freedom of Choice of Super Fund

Understanding your rights when it comes to superannuation is important, especially regarding the Superannuation Guarantee (SG) and your ability to choose your own super fund.

What is the Superannuation Guarantee?

The Superannuation Guarantee is a legal requirement for employers to pay a percentage of your earnings into a superannuation fund to help you save for retirement. Currently, the SG rate is 11.5% , and it will increase to 12% from 1 July 2025. These contributions must be paid at least quarterly and are calculated based on your ordinary time earnings.

Freedom of Choice of Super Fund

Most employees in Australia have the right to choose their own super fund. This freedom allows you to select a fund that aligns with your preferences, whether it’s based on fees, investment options, or ethical considerations. When you start a new job, your employer should provide a "Superannuation Standard Choice Form," giving you the option to nominate your preferred fund.

If you do not choose a super fund, your employer will pay contributions into their default super fund. It’s worth reviewing this default fund to ensure it meets your needs, as it may have higher fees or limited features compared to other funds.

Key Benefits of Choosing Your Own Fund

Control : You can pick a fund with investment options that suit your financial goals.
Lower Fees : Compare funds to find one with competitive fees to maximise your retirement savings.
Consolidation : By consolidating multiple super accounts into one fund, you can reduce duplicate fees and simplify account management.

Exceptions to Fund Choice

In some cases, your ability to choose a fund may be limited. For example:

If you are part of a defined benefit scheme.
If your super contributions are governed by a specific workplace agreement or enterprise agreement.

Take Charge of Your Super

Choosing your own super fund ensures that your retirement savings work harder for you. Review your options carefully and make informed decisions about where your Superannuation Guarantee contributions are going. If you’re unsure, speak to a financial adviser to understand your options and make the best choice for your future.

Conditions for Withdrawing Super Before Retirement

Fri, 07 Mar 2025 01:38:08 GMT

Conditions for Withdrawing Super Before Retirement

Superannuation is designed to provide financial security in retirement, but there are specific circumstances where you may be allowed to access your super early. These conditions are strict and intended to address significant financial hardship or life events. Here are the main scenarios where early withdrawal is possible:

1. Severe Financial Hardship

You may be eligible to withdraw some of your super if you meet the following criteria:

You have been receiving eligible Centrelink or Department of Veterans’ Affairs payments continuously for 26 weeks.
You are unable to meet immediate living expenses.

The amount you can withdraw is limited to between $1,000 and $10,000 in a 12-month period.

2. Compassionate Grounds

Compassionate grounds allow early access to super for specific situations, such as:

Paying for medical treatment or transport for you or a dependent.
Preventing the forced sale of your home due to mortgage arrears.
Covering funeral costs for a dependent.

Approval from the Australian Taxation Office (ATO) is required for withdrawals on compassionate grounds.

3. Terminal Medical Condition

If you are diagnosed with a terminal illness, you can access your super tax-free. Two medical practitioners, including one specialist, must certify that you have a life expectancy of 24 months or less.

4. Permanent Incapacity

If you are permanently unable to work due to a physical or mental condition, you may be able to withdraw your super early. This requires medical evidence and approval from your super fund.

5. Temporary Resident Departing Australia

Temporary visa holders who permanently leave Australia can apply to withdraw their super under the Departing Australia Superannuation Payment (DASP) scheme. Taxes apply to these withdrawals.

6. First Home Super Saver Scheme (FHSSS)

If you’re buying your first home, you can withdraw voluntary super contributions under the FHSSS to help with a deposit. Specific rules and limits apply.

Important Considerations

Early withdrawals often come with tax implications, and accessing your super early may significantly reduce your retirement savings. It’s essential to understand the long-term impact and seek financial advice before proceeding.

Super is a vital part of your financial future, so early access should be a last resort. If you’re facing financial difficulties or need assistance, consider exploring other support options first.

Withdrawing Super on Retirement

Thu, 27 Feb 2025 02:46:53 GMT

Withdrawing Super on Retirement

When you retire, your superannuation becomes a key resource to support your lifestyle. There are several ways to access your super, depending on your financial needs and personal circumstances. Here’s an overview of your options and the rules around withdrawing super at retirement.

When Can You Access Your Super?

You can withdraw your super when you meet a condition of release, such as:

Reaching Preservation Age and Retiring : Your preservation age depends on your birth year and ranges from 55 to 60.
Turning 65 : Regardless of whether you’re still working, you can access your super once you reach 65.

Ways to Access Your Super

Lump Sum Withdrawal

You can withdraw all or part of your super as a lump sum. This option provides flexibility for large expenses, such as paying off a mortgage or traveling. Keep in mind, withdrawing a large amount may deplete your retirement savings.

2. Account-Based Pension

Convert your super into an account-based pension. This option provides regular payments, similar to a salary, allowing you to spread your super savings over your retirement years. You can choose the frequency and amount (within minimum limits set by the government).

3. Annuity

Purchase an annuity with your super. This provides guaranteed income for a set period or for life, offering stability and peace of mind.

Tax Implications

If you are 60 or older , withdrawals are usually tax-free.
If you are under 60, some withdrawals may be taxed, depending on the components of your super (tax-free, taxable, or untaxed).

Planning Your Withdrawals

Withdrawing super is a significant decision that impacts your financial future. Here are some tips:

Consider Longevity : Your super may need to last for several decades. Plan your withdrawals to ensure long-term financial stability.
Seek Professional Advice : Speak to a financial adviser to structure your withdrawals in a way that meets your needs while minimising tax and maximising Centrelink benefits.
Review Your Budget : Align your withdrawals with your retirement goals and ongoing expenses.

Superannuation is a valuable tool to fund your retirement. By understanding your options and planning carefully, you can make the most of your hard-earned savings and enjoy a comfortable retirement.

Is a Company the Right Structure for Your Small Business?

Thu, 27 Feb 2025 01:57:57 GMT

Is a Company the Right Structure for Your Small Business?

Accounting and Tax Considerations

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Understanding Superannuation Pensions

Wed, 05 Feb 2025 04:00:17 GMT

Understanding Superannuation Pensions

Superannuation pensions, also known as income streams or account-based pensions, are a popular way to access your retirement savings once you stop working. They provide a regular income and can be tailored to suit your financial needs during retirement. Here’s everything you need to know about superannuation pensions.

What is a Superannuation Pension?

A superannuation pension is a regular income paid from your super fund once you’ve retired or reached a condition of release. It allows you to convert your lump sum savings into manageable payments, ensuring a steady income during your retirement years.

Types of Superannuation Pensions

Account-Based Pension :

This is the most common type of super pension. You draw a regular income from your super while the remaining balance stays invested, continuing to earn returns.
You can choose your payment amount (above a government-mandated minimum) and frequency, such as monthly, quarterly, or annually.

2. Annuities :

An annuity provides guaranteed income for a fixed period or for life. It’s purchased with your super balance and offers certainty but less flexibility compared to account-based pensions.

Key Features

Tax Benefits : Super pensions are tax-free for individuals aged 60 and over. If you’re under 60, part of your income may be taxed.
Minimum Drawdown Rates : The government sets minimum withdrawal rates based on your age. For example, retirees aged 65 to 74 must withdraw at least 5% of their super balance annually.
Investment Growth : With account-based pensions, the balance that remains in your super continues to be invested, potentially growing your savings further.

Benefits of Superannuation Pensions

Regular Income : They ensure you have a steady stream of money to cover your living expenses.
Flexibility : With account-based pensions, you can adjust your payments to suit your lifestyle needs.
Tax Advantages : They offer significant tax benefits, especially for retirees aged 60 and over.

Considerations

Longevity : Your pension needs to last for your lifetime. Carefully plan your withdrawal amounts to avoid running out of money.
Market Risk : With account-based pensions, your balance remains subject to investment market performance, which can fluctuate.
Fees : Some super funds may charge fees for managing your pension account.

Is a Superannuation Pension Right for You?

Superannuation pensions are an excellent way to convert your retirement savings into a manageable income. However, the right choice depends on your financial situation, retirement goals, and risk tolerance. Consulting with a financial adviser can help you choose the best option for your needs.

By understanding how super pensions work and planning carefully, you can enjoy a stable and comfortable retirement.

Crypto and Tax

Wed, 05 Feb 2025 03:58:20 GMT

Crypto and Tax

by

Lionel Walsh

We are now finding that the ATO is letting us know that our clients have crypto currency even before the clients come in for interview.

If you understand the principles of capital gains tax (CGT) you have gone a long way towards understanding the tax consequences of trading in cryptos. Crypto has currency in its name, but it is not a currency for CGT purposes. It is a CGT asset. Trading gains or losses must be reported in your income tax return just like most other capital assets.

We have a licence to prepare your crypto capital gains tax schedule in your tax return but I do not have a licence to advise you whether or not to invest in crypto. However, I can give you some facts. BHP is a well-known Australian company. If BHP makes profits, all the millions of shareholders benefit. Crypto is not like that. It does not make profits. It does not actually do anything. It is as active as a $50 bill sitting on the table.

Does this mean that you cannot make money by investing in crypto? Of course not. The evidence is there for all to see. Huge fortunes have been made (and lost) by investing in cryptos.

I wish I had known about it in 2009.

You can make money, but only because some other investor is willing to pay more for your crypto than you paid for it. In fact, it is equivalent to a pyramid scheme or a Ponzi scheme as this is now more commonly known.

In addition, there are hackers and scammers and gamers who are taking their share of the cut, all of which reduces your chances of making profits. If you are considering investing in crypto, please ignore social media and get the facts from reliable independent sources such as the Reserve Bank of Australia.

The Very Modern Accountant

Wed, 05 Feb 2025 03:49:46 GMT

The Very Modern Accountant

By Lionel Walsh

Once upon a time, children, a long time ago, accountants wrote letters. They received letters too. Every weekday morning, there was great excitement when the mail arrived. Envelopes were opened with the gold letter-opener to reveal their interesting contents. Holes were carefully punched in each letter using a hole-punch. There were two-hole hole-punches, three-hole hole-punches and even, believe it or not, four-hole hole-punches. Each letter was filed in the appropriate folder by guiding the prongs in the folder through the holes in the letters. The folders were then taken to a room called the Records Room.

Sometimes, a letter could not be found when needed. It might have been in the wrong place in the Records Room or it might have been on some-one’s desk. On these occasions, there was pandemonium as people searched their own desks for the errant letter, all the while being certain that they did not have it, while at the same time harbouring strong suspicions about who the culprit might be.

In one instance, a secret camera was installed above the desk of an accountant. The camera recorded the fact that this particular accountant spent eight hours in a single week looking for letters that were actually on his desk at the time.

On another occasion, an accountant went to work on a Sunday and spent seven hours flicking through paper files until he found an important letter which had somehow slipped into the wrong file.

Accountant would write letters in longhand or dictate into a machine called a Dictaphone. Ladies known as typistes would then sandwich a piece of carbon paper between two pieces of white paper and roll the lot into a machine called a typewriter which made a clickety-clack sound as the typiste rapidly and expertly typed her letter. The clickety-clack sounds reverberated throughout the building. This noise was very satisfying because it signified a busy and productive office.

Then, suddenly, everything changed. Letters dried up. The gold letter-opener sat neglected in its pigeonhole. Typistes disappeared. The Records Room became an office, because a Records Room with no records was otherwise a room.

The paperless office had arrived.

Emails replaced letters. The Very Modern Accountant can file or retrieve emails with a few tiny twitches of his index finger. He no longer has to detach his derriere from his plush executive chair in order to function efficiently. All his records are accessible in something called The System. Of course, the accountant has no idea what “The System” is, but this matters not one whit. It is not necessary to understand pistons and crankshafts to be able to drive a car.

Sometimes, the System “runs slow”. After a finger-twitch, it might take three, or even four, seconds for a page to load onto one of the accountant’s huge screens. On these occasions, the Very Modern Accountant drums his fingers on his desk and thinks “Heavens, The System is slow today. Is it even worth coming to work with a system this slow?”

Understanding Account-Based Pensions

Wed, 29 Jan 2025 04:34:08 GMT

Understanding Account-Based Pensions

Account-based pensions are a flexible and popular way to access your superannuation savings during retirement. They provide a regular income stream while allowing your remaining balance to stay invested. Here’s what you need to know about account-based pensions.

What is an Account-Based Pension?

An account-based pension is a retirement income product that allows you to withdraw money from your superannuation savings in regular payments. Once you meet a condition of release, such as reaching preservation age and retiring, you can convert your super into an account-based pension.

How Do Account-Based Pensions Work?

Flexible Payments : You can choose the amount and frequency of your payments, provided they meet the government’s minimum drawdown requirements. These requirements are based on your age and super balance.
Investment Growth : Your remaining super balance stays invested, giving it the potential to grow. However, it’s also subject to market risks.

Minimum Drawdown Rates

The government sets minimum withdrawal rates for account-based pensions to ensure funds are used for retirement. For example:

Ages 65–74: Minimum 5% of your account balance annually.
Ages 75–79: Minimum 6% of your account balance annually.

These rates may vary during specific financial years due to government adjustments, such as during economic downturns.

Key Benefits

Tax Advantages :

If you are aged 60 or older, your account-based pension income is generally tax-free.
Earnings on investments within the pension account are also tax-free.

2. Flexibility :

You can adjust your payments to suit your lifestyle needs, provided they meet the minimum withdrawal requirements.

3. Estate Planning :

Any remaining balance can be passed on to your beneficiaries as a lump sum or income stream upon your passing.

Considerations

Longevity Risk : Your account balance may run out if withdrawals and investment returns are not carefully managed.
Market Fluctuations : The value of your pension depends on market performance, which can affect your balance over time.
Fees : Some super funds charge fees for managing account-based pensions, which can affect your returns.

Is an Account-Based Pension Right for You?

Account-based pensions are an excellent option if you want flexibility in managing your retirement income. However, careful planning is essential to ensure your savings last. Consider consulting a financial adviser to create a tailored strategy that aligns with your retirement goals.

By understanding how account-based pensions work, you can make informed decisions and enjoy a financially secure and comfortable retirement.

Superannuation Strategies and Small Business Capital Gains Tax Concessions

Wed, 29 Jan 2025 04:34:05 GMT

Superannuation Strategies and Small Business Capital Gains Tax Concessions

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An Overview of Self-Managed Superannuation Funds (SMSFs)

Wed, 29 Jan 2025 04:34:01 GMT

An Overview of Self-Managed Superannuation Funds (SMSFs)

Self-Managed Superannuation Funds (SMSFs) are a popular choice for Australians who want greater control over their retirement savings. In 2023, there were 594,334 SMSFs in Australia, with 1.1 million members and $869 billion in super. Unlike traditional super funds managed by institutions, an SMSF allows you to manage your investments directly, offering flexibility and the ability to tailor your fund to suit your financial goals. However, managing an SMSF comes with significant responsibilities and obligations. Here’s what you need to know.

What is an SMSF?

An SMSF is a private superannuation fund with up to six members. All members are typically trustees, meaning they are responsible for managing the fund and ensuring compliance with super laws. Alternatively, a corporate trustee structure can be used.

Key Features of an SMSF

Control : SMSFs provide full control over investment decisions. You can choose from a broad range of investments, including property, shares, and cash.

Flexibility : Tailor your investment strategy to align with your retirement goals and risk tolerance. SMSFs can also be used for estate planning.

Costs : SMSFs are not for everyone. They can be expensive to set up and maintain, with costs covering accounting, audits, and legal advice. Generally, they are more cost-effective for individuals with larger super balances (e.g., over $200,000).

Compliance Responsibilities : Trustees must ensure their SMSF complies with Australian Taxation Office (ATO) regulations. This includes lodging annual tax returns, conducting independent audits, and adhering to the sole purpose test (using the fund solely for retirement benefits).

Advantages of an SMSF

Investment Control : Choose and manage your own investments.

Tax Benefits : Like other super funds, SMSFs benefit from concessional tax rates, with investment earnings taxed at 15%.

Estate Planning : Greater control over how your super is distributed to beneficiaries.

Disadvantages of an SMSF

Time Commitment : Managing an SMSF requires significant time and expertise.

Costs : The setup and ongoing costs can outweigh the benefits if the fund balance is too small.

Compliance Risk : Non-compliance with ATO rules can result in penalties.

Is an SMSF Right for You?

An SMSF can be a powerful tool for those with the expertise, time, and resources to manage their own retirement savings. However, it’s not a decision to be taken lightly. Poor management or non-compliance can lead to significant financial and legal consequences.

Before setting up an SMSF, seek advice from financial and legal professionals to ensure it aligns with your goals and circumstances. With careful planning and diligent management, an SMSF can provide flexibility and control, helping you maximise your retirement savings.

Superannuation Strategies and Small Business Capital Gains Tax Concessions

Fri, 10 Jan 2025 01:57:17 GMT

Superannuation Strategies and Small Business Capital Gains Tax Concessions

For small business owners, superannuation offers an excellent opportunity to maximise retirement savings while taking advantage of tax benefits. The Australian government provides specific concessions to help small business owners contribute the proceeds from the sale of their business into their superannuation fund. Here’s an overview of these strategies and how they work.

What are the Small Business CGT Concessions?

Small business capital gains tax (CGT) concessions allow eligible small business owners to reduce, defer, or eliminate the capital gains tax payable when selling an active business asset. These concessions are particularly beneficial for boosting superannuation contributions.

The four key concessions include:

15-Year Exemption : If you’ve owned a business asset for at least 15 years and are aged 55 or older, you may be exempt from paying CGT on the sale.
50% Active Asset Reduction : This allows you to reduce the capital gain on the sale of an active business asset by 50%, even if you don’t meet the 15-year exemption criteria.
Retirement Exemption : Up to $500,000 of capital gains can be exempt from tax if you use the proceeds to fund your retirement. This amount can also be contributed to your superannuation without affecting your non-concessional contribution cap.
Rollover Relief : You can defer the capital gain by rolling it into the purchase of a replacement active business asset or into your super fund.

Contributing Sale Proceeds to Superannuation

Under the small business retirement exemption and the 15-year exemption, you can contribute proceeds from the sale of your business directly into your superannuation fund. These contributions are referred to as CGT cap contributions and are separate from the standard concessional and non-concessional caps.

The lifetime CGT cap is currently $1.78 million (for the 2024-25 financial year).
Contributions under the CGT cap must be made by the later of:
30 days after receiving the proceeds, or
The time your tax return is due for the financial year in which the sale occurred.

Key Benefits

Boost Retirement Savings : Using these concessions, you can make significant contributions to your super fund, ensuring a more comfortable retirement.
Tax Efficiency : The proceeds contributed under the CGT cap are not subject to the usual contribution caps, and the super fund’s concessional tax environment applies.
Flexibility : The concessions allow you to defer or reduce CGT liability, freeing up funds to invest in your future.

Eligibility Criteria

To qualify for the small business CGT concessions, your business must meet certain conditions, including:

A maximum net asset value of $6 million , or
An annual aggregated turnover of less than $2 million .

Considerations

Timing is Critical : Ensure contributions are made within the required timeframes to qualify for the CGT cap.
Seek Professional Advice : These rules can be complex, and it’s essential to consult a financial adviser or tax professional to ensure compliance and maximise benefits.
Super Contribution Limits : Ensure contributions under the CGT cap are properly reported to your super fund to avoid exceeding limits.

Conclusion

The small business CGT concessions and superannuation strategies provide powerful tools for small business owners to transition wealth into their retirement savings. By leveraging these concessions, you can minimise tax liabilities and enhance your super balance, securing a more financially stable retirement. Proper planning and professional advice are crucial to making the most of these opportunities.

Making the Most of Carry-Forward Concessional Contributions

Fri, 10 Jan 2025 01:57:08 GMT

Making the Most of Carry-Forward Concessional Contributions

Carry-forward concessional contributions are a valuable opportunity to boost your superannuation savings, especially if you haven’t used your entire concessional contributions cap in previous financial years. This strategy allows you to catch up on contributions and maximise tax benefits, making it particularly useful for those with irregular incomes or those who have taken time out of the workforce.

What Are Concessional Contributions?

Concessional contributions are contributions made to your super fund before tax, including:

Employer contributions (e.g., Superannuation Guarantee).
Salary sacrifice contributions.
Personal contributions claimed as a tax deduction.

These contributions are taxed at 15% within your super fund and are capped at $30,000 per financial year (as from 1 July 2024).

What Is the Carry-Forward Rule?

The carry-forward rule allows you to use any unused concessional contribution cap amounts from the past five financial years , provided your total superannuation balance is less than $500,000 at the end of the previous financial year. This can significantly increase the amount you can contribute in a single year.

For example:

If you only contributed $10,000 in the 2022-23 financial year, you have $17,500 of unused cap.
This unused amount can be carried forward and added to your 2023-24 cap, allowing you to contribute up to $44,000 concessional contributions that year.

Key Benefits of Carry-Forward Contributions

Catch Up on Contributions :

Ideal for those who couldn’t make the maximum contributions in previous years due to financial constraints or career breaks.

2.Tax Savings :

Claiming a tax deduction for personal contributions can reduce your taxable income.
Super contributions are taxed at 15%, which is lower than most marginal income tax rates.

3. Boost Retirement Savings :

By making larger contributions, you can accelerate the growth of your retirement nest egg.

4. One-Off Increases in Taxable Income :

Additional income such as:
A large bonus.
Back-pay.
A capital gain on the sale of a rental property.
These can be heavily taxed, but by using the carry-forward rules to make contributions to super over and above the contribution limits, you may be able to save a significant amount of tax.

Eligibility Criteria

To use the carry-forward rule, you must:

Have a total super balance of less than $500,000 as of 30 June of the previous financial year.
Ensure contributions do not exceed your available cap for the current year and unused amounts from previous years.

How to Use the Carry-Forward Rule

Check Your Unused Cap :

Log into your MyGov account linked to the ATO to view your concessional contributions history and unused cap amounts.

2. Make Contributions :

Arrange additional salary sacrifice contributions or make personal contributions and claim them as a tax deduction.

3. Report Correctly :

If claiming a tax deduction, submit a "Notice of Intent to Claim or Vary a Deduction" form to your super fund.

Considerations

Contribution Timing : Ensure contributions are received by your super fund before the end of the financial year to count toward your cap.
Exceeding the Cap : Contributions above your available cap may attract additional tax.
Financial Advice : Consult a financial adviser to determine the best strategy for your situation and ensure compliance with superannuation rules.

Conclusion

The carry-forward concessional contributions rule provides an excellent opportunity to maximise your super savings and enjoy significant tax advantages. Whether you’re catching up after a career break, managing a variable income, or simply aiming to grow your retirement fund faster, this strategy can be a powerful tool. Plan carefully and leverage professional advice to make the most of your available caps and secure a comfortable retirement.

What is the Superannuation Guarantee Charge (SGC)?

Mon, 23 Dec 2024 01:37:04 GMT

What is the Superannuation Guarantee Charge (SGC)?

The Superannuation Guarantee Charge (SGC) is a penalty that employers must pay if they fail to meet their superannuation obligations. It ensures that employees receive the super contributions they are entitled to by law. Here’s a breakdown of what it is and how it works.

Employers are required to pay superannuation contributions on behalf of eligible employees at the current rate of 11.5% (rising to 12% from 1 July 2025). If these contributions are late, unpaid, or underpaid, the employer must pay the SGC to the Australian Taxation Office (ATO).

The SGC is more than just the unpaid super. It includes:

The shortfall : The unpaid or underpaid super contributions.
Nominal interest : Currently 10% per annum, calculated from the start of the relevant quarter.
An administration fee : $20 per employee, per quarter.

Unlike regular super contributions, the SGC is not tax-deductible for employers, making it a costly mistake.

To avoid the SGC, employers must keep accurate records and ensure super is paid by the quarterly due dates. If you’re an employee, checking your payslip and super account regularly can help you spot any issues early.

The SGC highlights the importance of compliance, ensuring that employees receive the retirement savings they deserve while encouraging employers to meet their obligations on time.

What is the Superannuation Guarantee (SG)?

Tue, 17 Dec 2024 23:42:23 GMT

What is the Superannuation Guarantee (SG)?

If you’re starting your first job, you might hear about something called the Superannuation Guarantee (SG). Here’s a simple guide to help you understand what it is and why it matters.

The Superannuation Guarantee is a law in Australia that requires your employer to contribute a percentage of your regular earnings into your superannuation account. This helps you build up savings for your retirement, even while you’re working.

Currently, the SG rate is 11.5% of your ordinary earnings, and it’s scheduled to increase to 12% from 1 July 2025. For example, if you earn $1,000 in a week, your employer must contribute $115 to your super fund. This is on top of your regular pay.

You’re eligible for SG contributions if you’re 18 or older. If you’re under 18, you must work at least 30 hours a week to qualify. Note that the $450 threshold no longer applies.

Your employer will usually ask for your super fund details when you start a job. If you don’t provide them, they will create an account for you with their default super fund. It’s a good idea to keep track of your super to ensure you’re getting paid the right amount.

The SG is a simple way to ensure that everyone in Australia is saving for their future, so don’t forget to keep an eye on your super contributions.

A Beginner’s Guide to Types of Superannuation Funds in Australia

Tue, 17 Dec 2024 23:42:16 GMT

A Beginner’s Guide to Types of Superannuation Funds in Australia

Superannuation (or “super”) is Australia’s way of helping you save for retirement. While it may seem complicated at first, understanding the basics is essential, especially when you’re just starting your career. Here’s a quick overview of the main types of super funds in Australia:

Employer Super Funds : These are often set up by your employer, particularly for government jobs or large corporations. They are tailored to specific workplaces and may offer extra benefits like insurance or reduced fees.
Retail Funds : Run by financial institutions like banks or investment companies, retail funds are open to anyone. They often provide a wide range of investment options but may come with higher fees.
Industry Funds : Originally created for workers in specific industries (like construction or healthcare), these funds are now open to most people. They usually have lower fees and focus on simple investment options.
Self-Managed Super Funds (SMSFs) : If you want more control over your investments, you can manage your own super fund. However, this option requires time, expertise, and compliance with strict rules.

When you start a job, your employer will ask for your super details. If you don’t have one, they’ll create one for you, but it’s worth researching which type of fund suits you best.

Lifestyle assets data-matching program

Wed, 04 Dec 2024 01:35:48 GMT

Own a luxury boat? Do you buy and sell fine art? The ATO is collecting this information through insurance policies to ensure you are meeting your tax obligations.

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Data-matching program for rental properties

Wed, 04 Dec 2024 01:22:44 GMT

Data-matching program for rental properties

Recently, the Australian Taxation Office announced that they are undertaking a data-matching program with property management software providers. These are the rental statements that you receive on a regular basis from your real estate agent for your rental property.

The data-matching program is going back to the 2018–19 financial year and will continue through to the 2025–26 financial year.

The main focus of this data-matching program is to:

- identify and educate individuals and businesses who may not be lodging their income tax returns, not correctly reporting assessable income from a rental property, not correctly reporting associated rental deductions and not complying with capital gains tax obligations for properties used to derive rental income

- gain insights to help develop and implement strategies, which may include educational or compliance activities for individuals and businesses who lease or let real property, and

- promote voluntary compliance and increase community confidence in the integrity of the tax and superannuation systems.

Our focus is to ensure that you are getting the best possible tax outcome. However, if you review your past records and notice that you made an error, please let us know. In particular, look out for:

- any year that you forgot to include rental income if you held more than one property

- situations where the rental income declared in tax returns are not at the same proportion as the ownership documents, and

- you may have claimed an outright deduction for an asset that may have needed to be claimed over multiple years.

If you have any questions about this data-matching program or would like to review your arrangements, please contact our office.

Are you meeting your SMSF governance requirements?

Tue, 26 Nov 2024 05:31:59 GMT

Are you meeting your SMSF governance requirements?

A self-managed superannuation fund (SMSF) gives you control over your superannuation investments, but are you fully aware of your governance responsibilities? The members of the SMSF jointly control the fund but must follow strict rules in order to enjoy the considerable tax benefits of a complying fund.

Compliance and governance

You will need to understand and fulfill your responsibilities as trustees, for example by ensuring that the fund meets the sole purpose test and maintains up-to-date trust deeds and an investment strategy.

You must also comply with all ATO administrative and reporting requirements and arrange annual independent audits.

Investment strategy and performance

You must develop and regularly review a comprehensive investment strategy for the fund and ensure your investments align with the fund's objectives and risk profile. You will also need to diversify your investments appropriately and monitor and evaluate investment performance. You must comply with the in-house asset limits (generally 5% of total fund assets). In-house assets are investments, loans or leases to fund members or related parties.

Contributions and Benefits

It is important to understand and adhere to contribution caps (both concessional and non-concessional) and manage the timing and amount of contributions. You also need to ensure that all contributions are properly recorded and reported; that you understand the preservation rules and conditions of release, and that you manage benefit payments in compliance with the regulations.

Record Keeping and Reporting

It is important to maintain accurate and detailed records of all transactions and keep minutes of all investment decisions and trustee meetings. You will need to prepare and lodge annual tax returns and member contributions statements and value the funds assets regularly. All relevant documents must be kept for the required period (usually 5-10 years).

A key part of your responsibilities is to maintain clear separation between personal, business and SMSF assets. All transactions between the business and SMSF must be made at arm's length. Seek professional advice when considering using the SMSF to purchase business property. There are strict rules.

Talk to us about your SMSF concerns

If you are thinking of setting up an SMSF, or are already managing one, it is best to get regular professional advice. The tax benefits of a complying SMSF can be huge but the penalties for non-compliance can be equally huge. The rules are extensive and complex. Please seek advice.

Should your small business adopt AI tools?

Tue, 26 Nov 2024 05:29:30 GMT

Should your small business adopt AI tools?

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Accepting cash may become mandatory for Australian businesses

lionel@walshaccounting.com.au (Lionel Walsh) — Tue, 26 Nov 2024 05:25:53 GMT

Accepting cash may become mandatory for Australian businesses

Australia is fast heading towards becoming a cashless society. But there are still segments of society that rely on being able to pay in cash.

With this in mind, the Federal Government is proposing new legislation that would make it compulsory for Aussie businesses to accept cash for groceries, fuel and other essentials.

What’s the impact of this likely to be for your small business? Let’s take a look.

Giving consumers the option to pay with cash

Research from 2022 by the Reserve Bank of Australia shows that 76% of Australians pay with cards, while 13% pay using cash. However, there are demographic groups, generally the elderly and those in low income brackets, that still prefer to pay cash.

Reasons for this can range from security worries and a mistrust of online banking, to the relative ease of using cash as a payment method.

To protect the rights of consumers who prefer cash over cards and/or digital payments, the Federal Government hopes to introduce legislation over the next two years.

At present, under existing law, businesses do NOT have to accept cash payments. Proposed legislation would make it make it mandatory for businesses to accept cash as payment for groceries, fuel and other essentials. Cheques are to be phased out altogether as a payment option by September 2029. When was the last time that you wrote a cheque?

A consultation process will take place in 2024/25 and legislation will be introduced in 2026. There may be an exemption for small businesses, with details on this to be advised.

The retailers point of view

Some retailers are cash only. They do not have cash registers or cash floats and they do not have to count cash, record the total and take the cash less the float to the bank every day. In these respects they are more efficient than other businesses. Soon, they might be obliged to join the mainstream, and probably for a relatively short space of time, because a cashless society seems to be inevitable. In 1970, predictions of a cashless society were already being made.

Five questions to ask when you are buying a business

lionel@walshaccounting.com.au (Lionel Walsh) — Tue, 25 Jul 2023 22:51:42 GMT

Why is the business for sale? There are many reasons why an owner might want to sell a business. Make as many inquires as you need to ensure that you are not buying a lemon.
Is this a good industry? Think of the people who bought a camera shop just before digital cameras came on the market; or those who bought a shopfront music store just before digital music and the streaming platforms. Every industry has a lifecycle. Identify where the relevant industry sits in its lifecycle.
Have you done your due diligence on the business? The checklist is almost endless. Engage an accountant, a solicitor and an insurance broker to minimise the risk of overlooking vital checks.
Do you have a business plan? You will have your own methods of operating the business and it is unlikely that these will be the same as the current owner's methods. Your accountant will have a checklist which you can follow to develop the business plan. This checklist will ultimately be used to prepare the essential cashflow forecasts.
Do you have the necessary staff? Many businesses experience staff shortages in these days of low unemployment. Do not assume that the existing staff will stay with you. Meet with them. Have one-on-one conversations with key managers or employees

As always, we are here to help.

The Partnership

lionel@walshaccounting.com.au (Lionel Walsh) — Sun, 23 Jul 2023 06:12:22 GMT

The Partnership

Chapter 2

Fiona’s cake sales had increased to the extent that she could no longer meet demand in the kitchen of her rented flat. She scoured the town looking for commercial premises. Her sales were not yet high enough to support a shopfront or a waitress or kitchenhand. At this stage she was still restricted to making cakes for pickup or delivery. She was lucky to find vacant premises in an industrial area where the rent was cheaper. These premises already had a kitchen which, with modifications and additions, would meet her needs. The difficulty was that the renovations and additions were going to cost $50,000. Fiona was lucky to have $1,000. She decided to consult her accountant Michael to work out the best way forward. Michael had become a regular customer.

As usual, Fiona took her best friend Angelo along. Angelo told Michael that he had offered to lend Fiona the money. His father was happy to release $50,000 from Michael’s trust fund, but Fiona would not accept his offer because she did not want to take advantage of their friendship.

Michael had prepared a cash flow forecast before the meeting and told Fiona that it was unlikely that she would find a bank which would lend her $50,000. Fiona pondered this and said “I would accept the money from Angelo if he became a partner. Then he could have half the profit and I would not simply be taking advantage of his friendship”.

Michael heard a few warning bells and said “Fiona, you would be better off just accepting the offer of a loan with a rate of interest at least equal to the bank rate. Angelo would be rewarded with the interest. It is nice and clean and easy to untangle when you can stand on your own two feet”.

Fiona was stubborn. Their friendship was deep and long-lasting. She did not want even a skerrick of suspicion that she might be using it for her personal advancement.

Michael sighed and said to Angelo “Do you realise that if become a partner you could not only lose the $50,000 that you contributed but, if the worst happened, you could be responsible for any amount of money, even millions that insurance won’t cover? Debtors will attack the partner who has the money. If Fiona has nothing, they can take it all from you.”

Angelo said “Fiona is not going to fail. She has a special talent and she is careful. Besides, Dad has brilliant lawyers and they will make sure that everything is watertight. I do not even have access to my trust fund for another two years so at worst I can only lose $50,000 and even that is not going to happen.”

Michael though that, to a 23 year-old, two years is probably forever, so he tried a different approach. “Fiona, if you succeed (and I think you will) your business might be worth a million dollars one day. Michael has contributed $50,000 and would be entitled to a return of $500,000 without lifting a finger. How would you feel about that?” Fiona said, “I should like it above all things. Without his help I would never have succeeded”

Michael said “What if you find the right man and get married. How do you think your husband would feel about you giving away $500,000 to another man?” Fiona said, “I would explain to him at the beginning that I had this commitment”.

Michael said “Angelo, if you got married, how do you think your wife might feel about your business relationship with another woman? You know women can be funny about these things.”

Angelo said “Same as Fiona”.

Michael had seen too many cases where best friends had become worst enemies because one thought the he had put in so much money and was not getting any reward and the other thought that he was doing all the work and his partner was taking half the profits. It rankles. He thought about relating some of these stories to Fiona and Angelo, but he looked at the glow on their faces and decided that he would be wasting his time.

He sighed and said “I will apply for an ABN and tax file number for the partnership. Angelo, I presume your Dad’s lawyers will draw up the partnership agreement.”

In bed that night, Michael thought about the interview. Could he have handled it any better? He was not nearly as sanguine about the partnership as he had been about the sole trader.

On the bright side, as he slipped into slumber he thought “They are good cakes, though”.

How to be a good employer (3 of 3)

lionel@walshaccounting.com.au (Lionel Walsh) — Sat, 15 Jul 2023 05:49:15 GMT

The all-important sense of direction

Have you ever been woken at first light by your cat mewing triumphantly and presenting you with a mouse, dead or alive. Isn’t the cat crushed when you yell “Get that thing out of here”?

Imagine you are a mafia boss. Crime is your game, but you are very religious and would never commit or sanction a crime on Sunday, the day you go to church. One of your henchmen robs a bank on a Sunday and brings you the loot, anticipating the old-fashioned hug and the standard twenty percent commission.

Be fair. You can hardly give him the traditional concrete dunking if you have never told him that you do not approve of Sunday bank robberies.

These two real-life examples demonstrate why your employees crave a sense of direction. They want to do the right thing but the right thing for one employer might not be the same as the right thing for another. You have to tell them. You can (and should) do this by communicating your vision, your business plan and your policies. However, these alone are not sufficient, especially if they sit on a shelf unrefreshed for periods of time. You need to communicate your values and your preferred methods on a daily or weekly basis either face to face in the huddle or by training or work-shopping actual issues. The best way of all is by example. Never be a “do what I say, not what I do” employer.

Employees who use their initiatives generally have greater job satisfaction. You also stand to benefit by delegating but, in doing so, do not throw your employees to the wolves. It is common decency to make sure they feel safe by giving them all the training and information they need to make the decisions you would want them to make.

Communication is the key.

Remember, no blame. If they occasionally get it wrong (as you do) follow the correct procedure, as follows -

How do we fix it?

How do we reduce the risk of it happening again?

Admittedly, it is difficult to train a cat.

Small business energy incentive

lionel@walshaccounting.com.au (Lionel Walsh) — Fri, 14 Jul 2023 01:57:49 GMT

The federal government has announced a small business energy incentive in the 2023-24 Federal Budget. This allows a small business a 20% bonus deduction for expenditure that supports electrification and the more efficient use of energy. The additional deduction will be capped at $20,000 (20% of $100,000).

Eligible expenditure

To be eligible for the bonus deduction the expenditure must be eligible for a deduction under another provision of the tax law and must be first used or installed ready for use (or the improvement cost incurred) between 1 July 2023 and 30 June 2024.

Depreciating assets

The eligible expenditure includes a range of depreciating assets and upgrades to existing assets, including upgrades to more efficient electrical goods.

Depreciating assets which use electricity instead of fossil fuel; use electricity more efficiently or facilitate energy storage, efficiency or demand management may qualify for the bonus deduction.

Improvements

Asset improvements which allow an asset to use only electricity, be more energy efficient or allow for energy use to be monitored, reduced at specific times, or confined to specific times may qualify for a bonus deduction.

Exclusions

Certain exclusions will apply, such as:

• assets which can use a fossil fuel

• assets which have the sole or predominant purpose of generating electricity (such as solar panels)

• capital works

• motor vehicles (including hybrid and electric vehicles) and expenditure on motor vehicles

• assets and expenditure on an asset where expenditure on the asset is allocated to a software development pool; and

• financing costs, including interest, payments in the nature of interest and expenses of borrowing

Electric and hybrid vehicles may be eligible for other tax incentives such as the FBT exemption (conditions apply).

Claiming the bonus deduction

For depreciating assets first used or installed during the 2023–24 income year, businesses must claim the bonus deduction in the 2023–24 income year. For improvements made to existing assets, entities must claim the bonus deduction in the income year in which the improvement cost is incurred.

Early and late balancers may claim the bonus deduction across more than one income year, provided the eligible asset was first used or installed, or the improvement cost was incurred, during the bonus period.

Any expenditure incurred in excess of the $100,000 cap may still be eligible for other tax deductions under small business depreciation rules.

This measure is currently in the exposure draft stage. We will keep you posted.

Please feel free to contact our office if you need more information about this tax incentive.

How to be a good employer (2 of 3)

lionel@walshaccounting.com.au (Lionel Walsh) — Mon, 10 Jul 2023 07:53:40 GMT

The no-blame workplace

This is really a subset of feeling safe but it is so important that it deserves its stand-alone spot.

Attitude is such an important factor in any work environment and positivity is a big part of attitude. Blame, on the other end of the scale, is one hundred percent negative.

When I was in the first year of my first job, I had a boss who wanted to do something that I knew the Board would not like. I begged him for his own sake not to do it. He did it. I was not senior enough to attend board meetings but I had my spies. When the Board thumped the table, he went to water and told them that I did it. I have never forgotten how I felt when I found out. I had feelings of betrayal, of injustice and of downright fear. It was only by the greatest stroke of good luck that I had fluked this job and I did not want to lose it. I can still remember where I was standing and which way I was facing when I thought “Nobody deserves to feel like this. If I ever become a boss I will never blame anyone”. Decades later, I have, by and large, kept that promise.

A little later, the Deputy Chairman, Ted Seaby, lowered his voice and said “Don’t worry, we know it was him and not you”.

There is a good example in the NRL. When a player drops the ball, his teammates rush in to tousle his hair or pat him on the back. They are sending positive messages. “Bad luck, mate”. “You’re ok”. “Let’s go”. That is not a natural first reaction but all sixteen teams do it, so that tells me the psychologists have been at work.

Blame is destructive, on the football field or in any other workplace.

It took me a little longer to convince myself that my no-blame policy applied to me too. I used to beat myself up when I made a mistake. Now, I simply ask “How do I fix it” and “How do I minimize the risk of it happening again”. I never say “How do I stop it happening again” because there is no perfect person on earth, or if there is she is keeping herself well hidden. Obviously, it could not be a man.

What's the difference between statutory and management accounts

lionel@walshaccounting.com.au (Lionel Walsh) — Sun, 09 Jul 2023 08:52:03 GMT

As a small business owner you might be requested to provide statutory accounts or management accounts to your bank or a government agency. In these circumstances "statutory accounts" is a confusing term because the chances are that you can prepare your accounts any way you want. The Australian Taxation office does not care as long as you can produce evidence to justify the amounts that you have entered in your tax return. A simple spreadsheet might suffice.

1. What are statutory accounts?

For a small business company, the term statutory accounts is code for the following

Directors' report – giving an overview of business strategy and performance, key achievements and the company’s overall financial position. It will also cover shareholder information, dividends and broader information about the company.
Profit and loss statement – to outline the income coming into the business, and the expenditure going out over the course of the year. This is the key indicator of the profitability of the business during the preceding year.
Balance sheet – to give a snapshot in time of the assets, equity and liabilities in the business. This is an indication of the financial health of the company on the date that the accounts are produced and is a useful report for lenders to review.
Statement of Cash Flows – so you can see your cash inflows and outflows over the course of the period and reconcile them to your operating results.
Statement of Changes in Equity - to show how your equity has changed from the start to the end of the period.
Notes to the Financial Statements – which contain supplementary details on your accounting policies, significant estimates, disclosures, and other relevant information for a comprehensive understanding of the financial statements.

2. What are management accounts?

The term "management accounts" usually means a Profit and Loss Statement and a balance sheet drawn directly from the accounting software you use to enter your transactions, prepare your bank reconciliations and your business activity statements. In most cases you would provide the management accounts yourself but you would engage your accountant to prepare statutory accounts.

3. Both are useful

Management accounts provide you with useful information to assess day to day performance. You can see trends in revenue and expenses. You can see whether your bank balance is increasing or decreasing. You might even like to develop a dashboard to highlight the key performance indicators which are important to you. A dashboard can save you having to plough through figures every week or month.

Statutory accounts take time-related issues into account and can provide much more accurate and in-depth information about performance and business health. These accounts might make adjustments for debtors, changes in stock levels, prepayments, depreciation, creditors, GST and income tax liabilities, provisions (for doubtful debts etc.) contingencies and so on. Sometime the statutory accounts can be a significant reality check. They are also designed to ensure that you comply with taxation and other laws.

Need help? We are a click away.

End of Financial Year Checklist

lionel@walshaccounting.com.au (Lionel Walsh) — Sun, 02 Jul 2023 02:05:36 GMT

First of July is the best day to start your preparations for your financial statements and business tax return. Second of July is the second-best day and, following that logic, the thirty-first of January next year is the 215 ^th best day.

Everything is fresh in your mind on the first of July. Take the opportunity. You will be glad later that you did. Here is a suggested checklist to get you started.

Reconcile your bank accounts. This is usually much easier than it was years ago because outstanding deposits and payments are becoming rarer. Take a copy of your bank statement to give to your accountant. He or she needs it for quality control purposes.
Check your debtors. Are they real? Will they all pay? Are there some that can be written off as bad debts? You are supposed to write them off by 30 June if you want to claim the deduction in that year.
Stocktake. If you have trading stock and you are required to do stocktakes (some are not) the best time is now and it is, fortunately, a weekend this year. Write-down or write-off damaged or unsaleable stock.
Livestock. If you have livestock, the best time to complete your livestock schedule is definitely now. Months later you have to work backwards, taking into account recent sales, purchases, births and deaths. It is so much easier on 1 July. A man once told me that his accountant asked him how many cattle he had and he said “About 700”. His accountant said that he needed to know the exact number so, tongue-in-cheek of course, he said “Ok. You got me. I have 697.4 cattle”. His accountant wrote down 697.4.
Check for prepayments. Did you prepay anything or did someone prepay you? It is more common than you might think, especially at 30 June. Advise your accountant, because prepayments might have a different accounting and tax treatment from ordinary payments. In particular, there are circumstances where you do not have to pay tax on prepayments you have received.
Depreciation. Did you buy any depreciable plant, equipment or motor vehicles during the year? Provide the details to your accountant. Even better, when you buy, ask the salesman to send a copy of the invoice to your accountant. That only takes five seconds. I timed it. Otherwise you have to chase through paperwork months later to find the invoice. Then you have to post or scan and email and this usually takes a lot longer than five seconds. Besides, your accountant has the clock ticking while chasing you for the paperwork so you can save yourself some money by getting in first.
Financed assets. Did you finance any purchases? If so, same story as in the dot point above.
Sale of assets. Did you sell any assets? There might be capital gains tax issues or depreciation adjustments. Advise your accountant.
Creditors. Do you have any creditors (accounts payable)? Often these are tax-deductible even if you have not paid them by 30 June. In most cases creditors will not be recorded in your accounting system. You will have to wait until the invoices arrive. You can send copies to your accountant or send a list, remembering to include the GST status.
Business Activity Statements. Lodge your June BAS as soon as possible. This is necessary in order to reconcile your GST and PAYG Withholding balance. Any PAYG Instalment paid in the June BAS is taken into account when your business tax return is being prepared.
Sales. It is not a bad idea to scroll through your sales transactions. It is surprising how often a deposit is posted to sales even though it might be a medicare refund or a Lotto win or some other non-assessable deposit. Your accountant will scroll to identify these issues but nobody knows your business better than yourself. Do not pay tax unnecessarily.
Payroll. If you have employees, you are required to finalise their payroll information via Single Touch Payroll (STP Phase 2) by 14 July, but earlier is better. Check that your total gross payroll in STP agrees or reconciles with the wages total in your profit and loss account.
Super guarantee. Pay super guarantee payments as soon as possible but no later than 28 July. Remember that the super guarantee rate increases to 11% from 1 July 2023.

This checklist will not cover everything but it is a good start. I hope it helps. Give us a call if you have problems. The number of ways that something can go wrong in accounting is unlimited. You can have five firewalls in place and every now and then all five will fall over. We are here to help.

How to be a good employer (1 of 3)

lionel@walshaccounting.com.au (Lionel Walsh) — Sun, 02 Jul 2023 01:38:34 GMT

How to be a good employer (1 of 3)

In order to be a good employer, you first have to know what an employee wants. Your first task is to listen. As Richard Branson says -

“Listen deeply and always act with empathy”.

Different employees might tell you that they want higher wages or a company car or flexible working hours or weekend work or no weekend work, overtime or no overtime, fringe benefits or the option to work from home, a path to promotion, extended leave, fringe benefits and so on. As the economics textbooks say, human wants are endless.

The above wants are all legitimate and you would do well to try to deliver them to the extent the budget and workload allows. However, the most important want is something else. Here it is.

Employees want to feel safe.

I am not so much referring to physical workplace health and safety. That is virtually taken for granted these days. Even if employers are not empathetic, the big stick encourages them to comply with workplace health and safety rules. Nowadays, nobody pours concrete into the walls of a five-storey building without scaffolding or a harness.

I am focusing on other forms of safety. For example, employees want to feel safe from bullying. whether by bosses, fellow workers, customers or the public. There are insidious forms of bullying such as being sent to Coventry. Listen deeply.

Employees want to feel safe to use their initiative, safe from recriminations if they make a mistake, safe to tell the boss if he or she makes a mistake.

Safety is like money and sex in one respect. Those who say these things are not really important are mostly those who have plenty. I have sadly witnessed even people with strong personalities reduced to wrecks when they are continually made to feel unsafe.

The overwhelming reason why you should keep your employees safe is because it is common decency. However, there is icing on the cake. A safe employee is a more productive employee. When I first started work, one of my duties was to do the payroll for seventy employees. One of them would, without fail, come in on payday and argue that she should have been paid more. If I did make a mistake in the pays it would usually be with hers. It was not a coincidence. I now understand that I was so worried about her coming in that I was not wholly focused on the calculations (which were all manual in those days).

I will bet that you have said, or have heard others say “It would have to be him” or “It would have to be her”. You know why.

The type of employer who says “I am the boss. You do what is say.” is now a dinosaur or at best a very small operator. If your business is to grow, you must delegate, otherwise you become the bottleneck. Employees will not use their initiative if they do not feel safe to do so. You will have to make all the decisions yourself and as you are unlikely to be the only perfect person on earth your own resources will be limited. There will be a threshold where your business will start to grind down. Trust your employees and if they make a mistake, well…..

Next time. The no-blame workplace.