Author: Glance Consultants

We may need to talk about your family trust

You may have read about a recent court decision affecting some family trusts. In a case called Bendel, published on 19 February 2025, the Full Federal Court unanimously held that the private company beneficiary of a discretionary trust has not made a “loan” or “financial accommodation” to the trust merely by not calling for the payment of its trust distribution.

This item only applies to clients with business structures involving trusts that have private corporate beneficiaries where the private company has not called for payment of a trust distribution, thereby creating an unpaid present entitlement (UPE).

It’s a fine distinction, but Full Court said that in order for there to be a loan there has to be an obligation to repay an amount, which does not apply to a UPE as there is no legal obligation to repay anything.

Since 2010 the ATO has been operating on the basis that a UPE owing by a trust to a corporate beneficiary is a loan for the purposes of the Division 7A rules. These rules catch disguised distributions made by private companies to their shareholders or associates.

If the “loan” remains unpaid at the time of lodgement of the company’s tax return, the UPE amount is treated as an unfranked dividend in the hands of the trust unless the company and the trust enter into a complying loan agreement involving both capital and interest payments. This avoids the deemed dividend outcome but usually involves some tax costs and can also create funding and compliance issues for the trust.

The ATO has responded to the Full Court’s decision by seeking special leave to appeal to the High Court. The outcome of the special leave application may not be known for some months, and if special leave is granted there is unlikely to be a decision much earlier than Christmas.

In the meantime, the ATO has revised its earlier Decision Impact Statement (DIS) by announcing that it will continue to apply its existing practice of treating UPEs as loans, in defiance of the Full Court’s decision. This is not the first time the ATO has felt entitled to ignore the law of the land, and it is not something taxpayers could hope to get away with.

Even if its High Court challenge is unsuccessful, the ATO could approach the government for a law change. The previous Coalition government announced in the 2018-19 Budget that it would legislate to make it clear that corporate UPEs are caught under Division 7A. To date, nothing has been done by either side of politics to follow through on that announcement but, depending on what happens in the High Court, a legislative response cannot be ruled out.

If the Full Court’s decision stands (a big if) there will be major implications for discretionary trusts with corporate beneficiaries.

In the longer term, it would make the funding of discretionary trusts a lot easier, while also reducing compliance costs.

In view of all this uncertainty, there is the question of what to do about 2023-24 UPEs. While taxpayers would be within their rights to rely on the Full Court’s decision by not converting those UPEs into complying loan agreements, there are risks associated with that course of action which we need to discuss with you. A safer approach might be to follow the Commissioner’s approach for now and lodge objections to protect your rights.

A decision needs to be made one way or the other by the time the relevant company returns are due for lodgement, which isn’t far off.

 

Selling property? Buyers must withhold and pay the ATO!

If you’re selling property in Australia and you’re a foreign resident, there are important tax rules you need to know.

Recent changes mean that buyers must withhold 15% of the property’s market value and pay it to the ATO, unless the seller provides a residency clearance certificate.

What’s changed?

From 1 January 2025, all property sellers must prove their residency status by obtaining a clearance certificate from the ATO. If they don’t, the buyer is legally required to withhold 15% of the sale price and remit it to the ATO. This rule is designed to ensure foreign residents don’t avoid capital gains tax (CGT) withholding obligations. The government now assumes all property sellers are foreign residents unless they provide an ATO-issued clearance certificate proving otherwise.

How does the withholding rule work?

If you’re buying property from a foreign resident, you must:

■ Withhold 15% of the purchase price (for contracts from 1 January 2025).
■ Register as a withholder with the ATO before settlement.
■ Pay the withheld amount to the ATO before the sale is finalised.

For contracts entered before 1 January 2025, the withholding rate is 12.5%, but only applies to properties worth over $750,000.

If you’re a foreign resident selling property in Australia, you’ll receive a tax credit for the withheld amount when you lodge your Australian tax return.

What if the property is your former home?

Even if the property was your main residence, foreign residents can’t claim the main residence CGT exemption when selling Australian real estate. This means that any capital gain from the sale is fully taxable in Australia.

In fact, foreign residents are always subject to CGT on property they own in Australia – whether or not they live here.

How do you know if the seller is a foreign resident?

As a buyer, you don’t have to investigate the seller’s residency status yourself. Under standard property contracts, the seller must declare whether they are a foreign resident and provide an ATO clearance certificate if required.

If the seller doesn’t obtain a clearance certificate, the buyer must withhold 15% of the purchase price and pay it to the ATO.

Your solicitor or conveyancer will typically handle this process.

Are there any exceptions?

Yes. In some cases, the ATO may allow a reduced withholding amount – or even none at all. This happens when:

■ The foreign resident seller obtains a variation certificate from the ATO.
■ The seller is exempt from Australian tax (eg, a foreign charity).
■ A CGT rollover applies, such as in a property transfer due to a marriage breakdown.
■ The property is jointly owned by an Australian and a foreign resident – a situation becoming more common in today’s global world.

Other assets affected by these rules

It’s not just real estate – the foreign resident CGT withholding rules also apply to other assets that are closely connected to Australia such as “significant interests” in private unit trusts and companies. Whether you’re a buyer or seller, understanding these rules is crucial to avoid unexpected tax obligations. If you’re unsure how these changes affect you, get in touch with us for expert advice.

 

Three great reasons to start a Transition to Retirement Pension

Thinking about easing into retirement but still need a steady income? Want to trim your tax bill while growing your super? Or maybe you’d love to knock down some debt before you stop working? If you are 60 or over, you can do just that.

 

Who can start a super pension?

Using your super to start a pension can help give you the cashflow needed to reach your financial goals. Not everyone is allowed to start a pension but if you are 60 or over, you can. Once you retire or turn age 65 you can unlock the flexibility an account-based pension has to offer. This includes no maximum limit on how much you can take out— so long as you draw a minimum pension.

If you’re between 60 and 65 and still working, you may not qualify for a fully flexible account-based pension. However, you can start a Transition to Retirement (TTR) pension instead. While a TTR pension has some limits—like a maximum annual withdrawal of 10% of your starting balance—it can still be a powerful tool to help you achieve your financial goals. If you’re looking to supplement your income, reduce tax, or boost your super, a TTR pension could be the solution you need!

Let’s look at three typical goals.

1. Replace income while cutting back on work

Want to work less but keep the same income? A TTR pension can help!

As retirement approaches, many people start reducing their work hours—but that can mean a drop in income. By using a TTR pension, you can replace lost wages with tax-free withdrawals from your super.

Meet Theodore

Theodore (age 63) is a town planner. As Theodore nears retirement, he decides to cut back his work hours by one day a week.

That means earning less—but thanks to a TTR pension, not taking home less. His taxable income drops by $25,000, but since his pension withdrawals are tax-free, he only needs to draw $17,000 to maintain the same after-tax cashflow. Less work, lower tax, and the same income—sounds like a win, right?

2. Reduce tax and boost your super

Theodore works less and pays less tax. He is a winner but his super balance isn’t. Perhaps you would prefer more super and less tax.

A TTR pension can free up extra cash so you can salary sacrifice more into super. This means swapping taxable salary (which could be taxed at up to 47%) for concessional super contributions, which are taxed at just 15%.

Meet Matilda

Matilda (age 62) is a marine biologist and earns $160,000 per year. She starts a TTR pension with $100,000 in super and withdraws $7,075 tax-free from her pension. To receive the same amount after tax Matilda would need to earn $11,600. The extra tax-free cash from her TTR allows her to salary sacrifice $11,600 into super. The result? She saves $4,525 in personal tax and her super grows by an extra $2,785 (after super tax). That’s a win-win!

3. Pay your debt off sooner

Have some unwanted debt? A TTR pension can help you clear that debt sooner—so you can enter retirement stress-free.

Meet Simon

Simon (age 60) is a self-employed shopfitter and has $300,000 in super and a $300,000 mortgage on a holiday home (6% interest). He makes monthly repayments of $3,330 and the loan will be extinguished in 10 years (age 70).

He wants to be debt-free at retirement (age 65) so commences a TTR pension and draws down $2,470 per month ($29,640 annually). He uses the extra cashflow to make additional monthly repayments of $5,800 ($69,600 annually).

The result? Simon pays off his loan in 5 years age 65 – saving him interest and giving him peace of mind in retirement.

Is a TTR Pension right for you?

Commencing a TTR pension to reach your financial goals can be a great strategy, but it’s not for everyone. It’s important to weigh the benefits against the long-term impact on your super savings.

To make sure you’re making the right move, speak to your financial adviser. Your adviser can help you with your financial goals, be it to lower your tax, build your super, pay down debt or retire sooner!

Commencing a TTR pension to reach your financial goals can be a great strategy, but it’s not for everyone. It’s important to weigh the benefits against the long-term impact on your super savings.

 

FEDERAL BUDGET: STOP PRESS

In a shrewd tactical move by the government ahead of its election announcement, the modest personal tax cuts announced in the 25 March 2025 Budget have been hurriedly passed into law, as has the Bill extending the small business $20,000 Instant Asset Write-off threshold to 30 June 2025 (but not beyond that date).

The tax cuts reduce the marginal tax rate on the $18,200 to $45,000 tax bracket from 16% to 14% in two stages from 1 July 2026 and 1 July 2027, giving taxpayers up to an extra $268 a year in their pocket to start with, rising to $536 after the second stage kicks in..

 

Employees vs. Contractors: What sets them apart

The Australian Taxation Office (ATO) has recently revised its guidance on differentiating between employees and independent contractors. This change follows several court rulings that clarified the criteria for determining whether a worker is genuinely an employee or an independent contractor.

Whether you’re a worker or a business owner, understanding these differences is crucial, as they have an impact on tax, superannuation, and workplace entitlements.

Why does the difference matter?

How a worker is classified – either as an employee or a contractor – impacts who is responsible for paying taxes, providing benefits like superannuation and leave, and who carries legal responsibilities.

Misclassifying a worker can lead to serious financial consequences, including unpaid entitlements and penalties from the ATO.

Key differences between employees and contractors

The primary difference lies in how the worker interacts with the business:

■ Employees work in the business and are part of its operations.
■ Contractors work for the business but maintain their own separate operation.

The contract between the business and the worker is crucial in determining a worker’s classification. While day-to-day work practices play a role, the legal rights and responsibilities outlined in the contract hold the greatest significance.

The ATO’s most important considerations are laid out in Table 1 on the following page. Superannuation and contractors

Even if someone is considered a contractor, they might still be entitled to superannuation if:
■ They’re paid mainly for their labour.
■ They work as a sportsperson, artist, entertainer, or in a similar field.
■ They provide services for performances or media production.
■ They do domestic work for over 30 hours per week.

Workers who are always employees

Some workers are always considered employees, no matter what. This includes apprentices, trainees, labourers, and trades assistants.

Apprentices and trainees work while completing recognised training to earn a qualification, certificate, or diploma. They might be full-time, part-time, or even school-based and usually have a formal training agreement.

Most of these workers are paid under an award, meaning they have set pay rates and conditions.

Businesses hiring them must follow the same tax and superannuation rules as they do for other employees.

Companies, trusts, and partnerships are always contractors

If a business hires a company, trust, or partnership (rather than a person) it’s always considered a contracting arrangement. However, people working for that entity could still be employees of that entity, rather than the business hiring the services.

Why this matters to you?

For workers, knowing your status helps ensure you receive the correct pay and benefits. For businesses, classifying workers correctly helps avoid fines and ensures compliance with tax and employment laws.

If you need more details or want to check your situation, reach out to us for more information. Proper classification today can prevent costly mistakes in the future.

 

Concessional contributions: Can there be too much of a good thing?

A fantastic way to grow your retirement savings and shrink your tax bill is through concessional contributions (CCs) to super. But more is not always better and like Goldilocks and her porridge, it pays to get things just right.

 

The basics of concessional contributions

Extra CCs can be made through salary sacrifice or as personal deductible contributions (PDCs). These contributions reduce your taxable income and are taxed at 15% inside super rather than your personal tax rate. That’s a win—especially if you’re on a higher income!

When do concessional contributions lose their tax advantage?

CCs typically save you tax but there’s a point where they stop working in your favour. This happens when your taxable income drops to the effective tax-free threshold—the level where you don’t pay any tax anyway.

For the 2024/25 financial year, the effective tax-free threshold for a single person (without the Senior Australian Pensioner Tax Offset or SAPTO) is $22,575. This includes the standard tax-free threshold of $18,200 plus the Low-Income Tax Offset (LITO).

If your taxable income falls below this, making CCs won’t save you any tax—because you weren’t paying any in the first place!

What is YOUR effective tax-free threshold?

Knowing your effective tax-free threshold will help you decide how large or small your CC should be. This of course assumes you have your cashflow sorted!

The table following illustrates the effective tax-free thresholds that may apply to you depending upon your circumstance.

If your taxable income is already below your threshold, making CCs won’t reduce your tax further—but they will be taxed at 15% inside super. This means you’re losing 15% for nothing and you might be better off considering making after-tax “non concessional contributions” which aren’t subject to this “contributions tax.”

Don’t forget your catch-up concessional cap!

Haven’t been maxing out your concessional cap in previous years? No worries! If your total super balance is under $500,000, you can make extra catch-up contributions using your unused cap amounts from the past five years. You might even be eligible for up to $162,500 in catch-up CCs! That can really get your taxable income down—but remember don’t go overboard!

Watch your concessional cap and other tips

Don’t forget your employer will make CCs via super guarantee and these will also count towards your concessional cap.

Exceeding your concessional cap can mean extra tax and be an administrative headache. Also if you are on a higher income your CCs may be subject to an additional 15% tax in the form of “Division 293” tax. Play it smart and get advice!

 

Click to view Glance Consultants April 2025 Newsletter via PDF

 

 

Just as new financial strategies emerge from the government, the 2025–26 Federal Budget, unveiled by Federal Treasurer Dr. Jim Chalmers, presents significant updates that could impact you and your financial decisions. Delivered on 25 March 2025, the Budget is articulated around five core priorities, focusing on crucial aspects such as cost-of-living relief, housing development, and education investments. As you review these changes, pay special attention to the new personal tax cuts, increased Medicare levy thresholds, restrictions on foreign ownership of housing, and proposed reductions in student debts.

One of the standout features of the Budget is the introduction of two new personal tax cuts, which aim to enhance your financial comfort. Starting from 1 July 2026, the marginal tax rate for single taxpayers earning between $18,201 and $45,000 will decrease from 16% to 15%. Furthermore, this rate will further decrease to 14% from 1 July 2027. This progressive easing on your tax obligations could offer you substantial savings over the coming years.

The Budget also addresses healthcare affordability. It proposes an increase in the Medicare levy low-income thresholds for singles, families, and seniors, effective from 1 July 2024. This adjustment aims to ensure that more Australians can access vital healthcare services without financial strain. By raising the threshold, you may find it easier to navigate your healthcare costs.

If you’re carrying a student loan, you can look forward to a significant change as well. Starting on 1 July 2025, student loan debts will be reduced by 20%, coupled with reforms to the repayment system. This is designed to alleviate some of the financial burdens that student debt can impose on fresh graduates and those still in education.

Special attention is given to housing in this Federal Budget, with a ban on foreign individuals purchasing existing homes. This measure could impact the housing market by potentially making more properties available to Australian residents, offering you increased opportunities for home ownership. Additionally, the government plans to delay the enactment of certain tax measures until proper legislation is in place, ensuring that changes are implemented thoughtfully.

Further modifications relate to tax administration and compliance. The Australian Taxation Office (ATO) has been allocated $999 million over four years to extend its tax compliance activities, which may affect the way you engage with tax filings. Additionally, rules surrounding managed investment trusts are set to be amended, ensuring legitimate investors like you maintain access to concessional withholding tax rates starting from 13 March 2025.

Not-for-profits will also see an update, with an updated list of deductible gift recipients, providing you with more options if you choose to support charitable organizations. On the indirect taxes front, you should note that there will be a pause on indexation for draught beer excise, lasting two years from August 2025, as well as increases in excise remission caps for alcohol manufacturers, again effective from 1 July 2026.

To wrap up, the 2025–26 Federal Budget offers a comprehensive snapshot of how government policies could influence your personal finances and everyday life. By being informed and aware of these changes, you can better navigate your financial future in the year ahead.

 

Please check the following link for our PDF report on the 2025-2026 Budget:

Federal Budget PDF 2025-2026

 

 

It’s important to stay on top of your reporting obligations, as the Australian Taxation Office (ATO) is set to begin issuing penalties for overdue taxable payments annual reports (TPARs) starting from 22 March. If you haven’t lodged your TPAR for the 2024 financial year or previous years and have received three reminder letters from the ATO, you may be at risk of incurring penalties.

If your business pays contractors for services that fall under the taxable payments reporting system (TPRS), you are required to lodge a TPAR by 28 August each year. This requirement applies to businesses engaged in sectors such as building and construction, courier services, cleaning, information technology, road freight, as well as security, investigation, or surveillance services.

In the previous year, the ATO issued approximately $18 million in penalties to over 11,000 businesses for late or non-compliance in TPAR submissions. This demonstrates the seriousness with which the ATO views compliance with these reporting requirements.

One of the key purposes of the TPAR is to ensure that contractors report their income accurately. The ATO uses the data collected through these reports to pinpoint contractors who might be under-reporting their income. This data matching enables a fairer landscape for all businesses, ensuring that those who adhere to the regulations are not at a disadvantage against those who do not.

If you find that your business no longer needs to lodge a TPAR—perhaps because you simply do not pay contractors anymore—you can submit a non-lodgment advice (NLA) form. This form allows you to officially indicate that you are exempt from future TPAR requirements. Make sure to act promptly, as proactively addressing this matter can prevent any unwanted penalties.

In addition to monitoring TPAR compliance from businesses, the ATO also uses this data to scrutinize the tax returns filed by contractors. If they identify discrepancies, such as omitted or misreported income, the ATO may reach out to you directly or contact your tax professional. They may ask you to amend your tax return to ensure accuracy and compliance.

Through these measures, the ATO aims to level the playing field, encouraging honesty and transparency within the contracting workforce. While fulfilling your reporting obligations may seem daunting at times, it’s important to stay organized and timely in your submissions to avoid the penalty repercussions.

To summarize, ensure that your TPARs are lodged correctly and by the due date, especially if your business pays contractors for applicable services. If you need guidance on how to lodge your TPAR or how to submit an NLA form, consider consulting with your tax professional. Staying compliant not only protects your business from penalties but also contributes to a fairer taxation system for everyone involved.

Contact Glance Consultants today if you have any queries or need help with your business 

Salary Sacrifice vs Personal Deductible Contributions: And the winner is…

Super is a great way to save for retirement. It offers an opportunity to invest in long-term growth assets and enjoy generous tax concessions along the way. For those wanting to make extra contributions and reduce their personal tax bill, there are two options:

■ Salary sacrifice, and
■ Personal deductible contributions (PDCs).

Both have their benefits, and choosing the right method depends on your cash flow, flexibility needs and personal preference.

Let’s break them down.

What are salary sacrifice and personal deductible contributions?

1. Salary sacrifice

Your employer deducts a portion of your pre-tax salary and contributes it to your super fund.

2. Personal deductible contributions (PDCs)

You make voluntary contributions from after-tax money and later claim a tax deduction when you lodge your tax return.

Salary sacrifice

Benefits of salary sacrifice

■ Timing – Salary sacrifice contributions reduce your taxable income immediately, meaning your employer will withhold less tax and you will immediately enjoy the tax saving. PDCs provide a tax deduction when you lodge your tax return meaning you do not get the tax benefit until later.

■ Discipline – Salary sacrifice is automatic and helps maintain savings discipline.

■ Simplicity – Salary sacrifice can be much simpler and less administrative. PDCs require you to submit paperwork to the super fund known as a “notice of intent” form. This paperwork must be submitted within strict timeframes. With salary sacrifice you do not need to worry about such paperwork.

When salary sacrifice is a winner

Salary sacrifice is a winner for employees who:

■ Prefer a “set-and-forget” approach to growing their super.

■ Have regular income and want a simple way to contribute.

■ Want to ensure their contributions are made gradually over the year to benefit from “dollar cost averaging”. This reduces the risk of “going all in” at the peak of the market.

Personal deductible super contributions

Benefits of personal deductible super contributions

■ Availability – Salary sacrifice is only available to employees. If you are not employed, you can’t salary sacrifice. Instead, you might able to make a PDC to super.

■ Flexibility – PDCs offer greater flexibility, allowing you to contribute lump sums at any time during the financial year.

■ Reversibility – After making the contribution and submitting paperwork to claim the deduction you might change your mind.

Perhaps you have insufficient income to justify claiming a deduction and would prefer that contribution not be subject to the 15% “contributions tax”. It may be possible to “reverse” the contributions tax and not claim the deduction, but unless you have retired or met a condition of release the contribution will remain “stuck” in super.

When personal deductible contributions are a winner

PDCs are a winner for people who:

■ Want greater control over when and how much they contribute.

■ Have variable income or expect a large one-off payment (eg, bonus, inheritance, asset sale).

■ Are self-employed or receive income from multiple sources.

■ Want to contribute additional amounts closer to the end of the financial year to maximise their tax deduction.

Enjoy the best of both worlds:

Combining salary sacrifice and PDCs

Many people use both strategies to maximise their super contributions efficiently. For example:

■ Setting up salary sacrifice to contribute steadily throughout the year.

■ Making a PDC at the end of the financial year if additional concessional contribution (CC) cap space is available.

■ Adjusting contributions based on unexpected income or bonuses.

Conclusion

Salary sacrifice and PDCs each have their advantages, and the right choice depends on your employment, cash flow and personal preference.

By speaking to your adviser as to how each method works, you can make informed decisions to optimise your retirement savings while also reducing your tax bill.

 

Beware of Bitcoin gains!

If you own Bitcoin, or any other crypto currency, you may have been the beneficiary of Donald Trump’s election as President last November – which saw Bitcoin prices jump by almost 50% almost immediately after the election (and certainly in the following weeks).

And if you decided to take advantage of this and realise your gain by selling your Bitcoin you may have a capital gains tax (CGT) problem, and a nasty one at that (albeit, it is only a tax problem – it is not a “no-profit” problem!) .

So, if you have made a capital gain, you should consider a few things.

Firstly, the Tax Office’s data matching capabilities regarding the buying and selling of Bitcoin are very extensive (and very good) – so, any idea of just not declaring your gain would bring with it big risks.

Secondly, like anything to do with tax, keep good records of your dealings with Bitcoin: it is both a legal requirement and will help you manage your tax affairs.

Thirdly, if you also have capital losses from your dealings in Bitcoin (or any other CGT assets) in either this income year or previous ones, you can use those losses to reduce any assessable capital gains from Bitcoin – and this will result in less tax being payable.

And the same rules applies to using any current or prior-year “revenue” or trading losses you have from any other activities.

They too can be used to reduce your capital gains from Bitcoin.

Fourthly, and importantly, like most capital gains from other assets, you are entitled to use the 50% discount to reduce the amount of assessable capital gain – provided you have owned the Bitcoin for more than 12 months.

Finally, don’t forget that if you become a foreign resident for tax purposes you will be deemed to have sold your Bitcoin for its market value at the time you left the country – or the CGT rules will subject you to Australian CGT if you sell it while you are overseas. (And don’t forget about the ATO’s extensive data matching capability in this regard!)

However, all this assumes you aren’t in the business of trading in Bitcoin. If this were the case you would generally be taxed on your profits as ordinary business or other income – without the benefit of the accompanying concessions.

The other thing to be wary of is that the ATO has specific guidelines about how it treats Bitcoin and these can be difficult to apply to a particular situation.

So, if you have a “Bitcoin problem”, come and speak to us about it – and we will help you get things right (and maybe even find a legitimate way to reduce the ultimate tax payable on it).

 

Is an asset you own used in another person’s business?

Did you know that if you own an asset (eg, land or a factory or even a trademark) that someone else uses in carrying on a small business then you might be entitled to the CGT small business concessions when you sell the asset?

And these concessions can either entirely or partially eliminate any capital gain you make on selling it (or at least defer it).

This can occur for example when your asset is used by, say, your spouse or a child under 18 in their own business (or one that you may be involved in also) – such as where that small commercial property you own (or own jointly with your spouse) is used by your spouse in, say, that art frame, photography or accounting business etc that he or she carries on.

Typically, this concession can also apply where an asset you own is used in say the business carried on by a family company or family trust in which you have a relevant interest – although the rules can get a bit complicated where you are only a beneficiary in that family trust.

These rules can also apply in “reverse” – so that an asset owned by family company or family trust that is used in the business carried on by a relevant shareholder or a relevant beneficiary can also qualify for the CGT small business concessions (eg, farmland).

Importantly, these rules apply whether or not you lease the asset to that other person (or entity) that carries on the business.

Interestingly, the rules can also apply in appropriate circumstances where a testamentary trust continues to carry on the business that was carried on by the deceased – although in that case it may be easier to access the concessions by having the executor or beneficiary (or surviving spouse) sell the relevant business asset within two years of the deceased’s death.

These rules that allow an asset owned by one person to qualify for the CGT small business concessions where they are used by another person (or entity) in their business are only permissible where the parties are either “affiliates” or “connected entities” of each other (as defined under the tax law).

Suffice to say, whether or not persons or entities are “affiliates” or “connected entities” of each other for the purposes of the CGT small business concessions can be difficult to determine – and will depend on the exact circumstances of the relevant parties.

So, if you think you are in this situation – or propose to start a small business and intend to use assets owned by someone else in that business – speak to us first so that we can help you get the optimal CGT outcome.

 

FBT Checklist 2024-25

With the due date for FBT returns coming up, the following non-exhaustive checklist may prove useful in determining whether an employer has an FBT liability in the first place.

Although it will generally fall to your accountant to prepare the FBT return from your software file or other records, all of the instances where you have provided employees and/or their associates (eg, spouse) with a potential fringe benefit may not always be apparent to them. To assist you in bringing these potential benefits to the attention of your accountant, following is a general checklist to refer to.

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Click to view the Glance Consultants March 2025 Newsletter via PDF

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt, when managed responsibly, can be an effective tool for the following purposes:

• Financing Expansion
• Buying Equipment
• Smoothing out Cash Flow

However, poorly managed debt has the potential to create devastating financial distress. As such, we’ve put together some of the most important debt management tips:

Know Your Debt Situation

You need to first know your current debt situation. This involves listing all your debts, including:

• Loans
• Lines of Credit
• Credit Cards
• Any Unpaid Bills to Suppliers (Trade Credit)

Calculate key ratios such as the debt-to-asset ratio, which is the total debt over total assets, and the debt-to-equity ratio, which is the total debt over owner’s equity. This will give you the leverage status within your organisation.

Create a Realistic Budget and Cash Flow Projection

Having a realistic budget and cash flow projection is also crucial to managing your debt. This involves the following: 

• Projection of Income and Expenses
• Estimating your Expected Income and Expense over a Specific Period (month-to-month or quarter-over-quarter)

Most importantly, ensure your budget has decent provision for taking care of debt servicing on 

Time by budgeting for the activity.

Payback Debts

Prioritise by interest rate and pay off high-interest debt first to save long-term interest costs. Consider the collateral supporting the loans. Secured loans, such as loans against company assets, may involve a greater risk of losing assets in case of default.

Notify the Lenders

If you see difficulties in making your repayments, contact your lenders as soon as possible. They might consider renegotiating changed conditions, such as longer loan terms, or reduced repayments in The short term..

Some lenders also have specific programs which will assist businesses in financial stress, so enquire about hardship assistance.

Monitor and Review Regularly

Managing debt is an ongoing activity. You need to monitor your level of debt, cash flow, and financial performance on a regular basis.

Always change your budget and debt management concepts as necessary .

Seek Professional Advice

Don’t be afraid to seek help. Accountants may help you analyse your finances and prepare a budget. They will also make certain relevant suggestions regarding debt management. Financial advisors will help you about debt consolidation, refinancing, etc.

Getting on top of your business’ debt doesn’t have to be scary. Glace Consultants can help you devise a plan to address your debt. Don’t delay- contact our staff now for a discussion.

Seven changes impacting your super in 2025

Superannuation rules are always changing, and 2025 is set to bring some updates that could affect your retirement savings.

Whether you’re just starting to build your super or already planning for retirement, keeping up with these changes can help you make informed decisions. Here’s what’s on the horizon.

1. Possible tax changes for large superannuation balances

The government is looking at increasing taxes on large super balances. The proposal would add an extra 15% tax on the earnings of super balances over $3 million, starting from 1 July 2025. This has been a hot topic, with debates about whether the tax system for super is fair. The proposal made it through the House of Representatives in 2023 but ran into problems in the Senate in late 2024. To pass, the government needs support from minor parties and independent senators, but many are pushing back against key parts of the plan, such as taxing unrealised gains (profits on investments that haven’t been sold) and not adjusting the $3 million threshold over time.

With a federal election coming up, it’s unclear if this tax change will go ahead. If it doesn’t pass soon, it may be delayed or scrapped altogether. The Senate will revisit the issue in February 2025, so we’ll have to wait and see what happens next.

2. Increase in employer superannuation guarantee contributions

A key change in 2025 is the rise in the super guarantee (SG), which is the portion of your wage that your employer must contribute to your super fund. From 1 July 2025, the SG rate will increase from 11.5% to 12%. While this might seem like a small increase, it can make a significant difference over time, helping your retirement savings grow. If you’re an employee, this means more money going into your super, but it’s also worth checking if it affects your overall salary package.

3. Potential increase to transfer balance cap

Although contribution caps increased in July 2024 due to inflation adjustments, they are not expected to rise again in July 2025. However, the transfer balance cap (TBC) – which limits how much super can be moved into a retirement pension – will increase from $1.9 million to $2 million on 1 July 2025. This change mainly affects people who haven’t yet started drawing a retirement income from their super. If you already receive a pension from your super, you might still benefit from a partial increase, depending on your individual circumstances.

4. Impact on total superannuation balance

As the TBC rises on 1 July 2025, the total super balance (TSB) limit will increase as well. This limit affects how much you can contribute to your super using after-tax dollars, known as non-concessional contributions (NCCs). The expected increase in TSB thresholds will determine how much extra you can contribute, including whether you can use the bring-forward rule, which allows you to make larger contributions over a shorter period. The table below shows a breakdown of the expected limits for 2025.

As can be seen, if your TSB is below $1.76 million, you can contribute up to $360,000 over three years. However, as your TSB increases beyond this amount, the limit on how much you can contribute gradually reduces. Once your TSB reaches $2 million or more, you will no longer be able to make additional NCCs.

These changes may create opportunities for some individuals to grow their super, but it’s important to understand how the new limits apply to your personal situation.

5. New rules for older legacy pensions

In December 2024, the government introduced new rules to give people more flexibility in managing older “legacy pensions.”

For years, some retirees with lifetime, life expectancy, and market-linked pensions in self-managed super funds (SMSFs) have faced strict rules that made it difficult to change or adjust these pensions. These products can no longer be started in SMSFs, and many people have been stuck in outdated pensions that no longer suit their needs.

Previously, the only way to change these pensions was to convert them into similar products, which came with limits on how reserves could be allocated that did not count towards the member’s contribution caps. But with the new rules now in place, people with legacy pensions have five years to review their options and make changes if needed. Since these decisions can be complex, it’s a good idea to speak with a financial adviser, especially one who specialises in SMSFs, before making any changes.

6. Improved super fund performance and transparency

Large APRA-regulated super funds are under pressure to deliver better performance and be more transparent with their members. In 2025, expect to see:

■ Continued focus on underperforming funds: funds that don’t deliver strong returns may face more scrutiny or even be forced to merge.
■ Better reporting on fees and investment performance: members should receive clearer information about where their money is invested and what fees they’re paying.

Comparing super funds has become easier, helping you make more informed decisions about where to keep your retirement savings.

7. Technology and digital innovation and super

Technology is playing a bigger role in superannuation, and 2025 will likely see more innovation. Super funds are investing in better online tools, mobile apps, and artificial intelligence to help members track their savings and make smarter investment choices. If you haven’t already, it’s worth exploring your super fund’s digital tools to take control of your retirement planning.

Final thoughts

Superannuation is a long-term investment, and small changes can have a big impact over time.

With the start of a new year, take the time to review your super, stay informed about potential changes, and consider speaking to a financial adviser if needed. With the right strategies, you can make sure your super is working hard for your future retirement.

 

Yet more rental data matching by the ATO

Feeding its seemingly insatiable appetite for rental data, the ATO has recently announced it will soon be collecting rental bond details for some 2.2 million individuals.

The data, which will be collected twice a year from State and Territory bond regulators, is very comprehensive, and will include personal details such as names, addresses, dates of birth, telephone numbers, email addresses and bank account details for rental providers and tenants. The data obtained will also include business-related information for managing agents. Also included will be the address of the leased property, the term of the lease, lease commencement and end dates, bond amounts, rent payable and payment intervals.

The ATO will also be seeking information about the characteristics of the leased property, including the type of dwelling, the number of bedrooms and a unique identifier for the rented property.

This latest quest for rental data comes after the ATO also acquired property management data records for 2.3 million rental providers from software companies last year.

The project is aimed at identifying those who may not have properly disclosed their rental income, or accounted for capital gains tax (CGT) due on the disposal of their rental property. Clearly, the ATO believes there is still significant under-reporting in this area and that the level of compliance needs to be improved. How much under-reporting of rental income there is remains to be seen.

Where people are letting their properties outside of the rental bond framework by using short stay platforms such as Airbnb, the ATO already knows about those arrangements, having obtained the information from the platform providers.

Rental income from short-term stays or even renting out a bedroom in your home has to be disclosed as assessable income in the same way as rental income from the long-term lease of a house or an apartment, although there can be some tricky issues around the apportionment of expenses when claiming deductions. Many taxpayers with investment properties can expect to be subject to some sort of ATO attention in the coming years and it may be worth double checking that the way these transactions have been disclosed in your tax returns is 100% correct. If not, the best way to set things right would be by making a voluntary disclosure to the ATO before they start asking questions.

Issues that could be raised on audit include:

■ The repairs vs improvement issue

There can be a fine line between work carried out that is a genuine repair (and tax deductible up front) and an improvement (generally deductible over time). Even where something is a genuine repair, it may not be deductible if the work is carried out immediately after acquiring the property and before any tenants are put in.

■ Bond retentions

Where part of the bond is retained at the end of a tenancy because of damage caused by the tenants, the amount retained needs to be disclosed as assessable income. The cost of any associated repairs would generally be deductible.

■ Interest deductibility

Where you have a mortgage over an investment property and the loan was used to acquire the property (or any other income producing asset), interest will be deductible, provided the property is being let or is available to let. But where you already own an investment property free and clear and borrow against it to pay off the mortgage on your main residence or use the money to buy a car or fund a holiday, the interest is non-deductible. It’s the use of the borrowed funds that determines interest deductibility.

■ Is that holiday house genuinely available for rent?

Unless your beach house is exclusively used for rental purposes, and is never used by family members or friends free of charge or below market value, there are always issues around the apportionment of expenses. Advertising the property at an unrealistic price is not regarded as making it genuinely available for rent, which will affect apportionment.

■ Inherited property

There is a myriad of CGT issues around the sale of an inherited property, including where it has been used for rental purposes.

We’re happy to help

 

Coalition election announcements

The unofficial federal election campaign is now well under way, with Opposition Leader Peter Dutton announcing a couple of tax policies while out on the hustings in Queensland on 19 January.

We’re drawing these developments to your attention in order to keep you informed about what the tax landscape might look like post-election after announcements from the major parties. We appreciate that people make their voting decisions for all sorts of reasons, and small business tax policy is unlikely to affect the election result in one way or another. And we would never suggest how you should direct your votes – that’s none of our business.

Entertainment expenses –return of the boozy lunch?

In an effort to boost the hospitality sector, the Coalition promises full deductibility and no FBT for up to $20,000 a year spent on the cost of food and entertainment at clubs, pubs and restaurants, but not for the cost of alcohol. Intriguingly, the announcement states that the new policy will run for an initial two-year period, perhaps suggesting that the Coalition may be open to extending it beyond two years.

The proposal will apply to businesses with an annual turnover of up to $10 million. The policy has not been costed, at least not publicly – that will presumably come later in the campaign.

So, what’s being proposed is not a switching off of the non-deductible entertainment rules across the board. Football, tennis and theatre tickets and the like will remain non-deductible and/or subject to FBT where employees are involved. This is a carve-out for meals and associated entertainment only.

The alcohol exclusion is a win for sobriety, but in any case, workplace practices have changed since the 1980s and 1990s, with many workplaces having testing protocols with a zero tolerance for drugs and alcohol. Some older readers may look back nostalgically to the lunchtime exploits of yesteryear, but for the most part societal attitudes have moved on.

Whether this policy would be the shot in the arm the Coalition is hoping for remains to be seen. When the entertainment regime was first announced in 1985, many were predicting the swift demise of the hospitality industry, only to be proven wrong as business adjusted pretty quickly to the new rules.

And there were still plenty of long lunches in the late 80s and 90s. The reverse is entirely possible – that the slight loosening up of the rules will not do very much to change business behaviour.

But every little bit helps, and it is likely this two-year boost in deductibility for meals and entertainment will be welcomed by small businesses.

Instant asset write-off (IAWO) threshold

Another point of differentiation is the IAWO threshold, which is the amount below which small businesses (annual turnover up to $10 million) can take an immediate tax write-off for the cost of acquiring a depreciating asset. The Coalition is proposing to set the threshold at $30,000 and importantly, to make it a permanent feature of the tax law. As things currently stand, the existing $20,000 has to be legislated on a year by year basis, otherwise the threshold reverts to $1,000.

The legislation establishing the $20,000 threshold for the 2023-24 income year was only passed days before 30 June 2024, which may have dampened its incentive effect.

The announcement does not include a start date for the $30,000 regime. If the Coalition were to be elected this year and legislation was introduced speedily, it could apply to assets acquired in the 2024-25 income year, although commencement seems more likely to slip one year to the 2025-26 year.

On any objective basis, $30,000 is better than $20,000. Let’s hope this announcement sets off a small business tax bidding war.

 

Super and hardship: A safety net in financial difficulty

Superannuation is often seen as untouchable savings for retirement, but did you know it can also be a lifeline during financial difficulty? While super is designed for retirement, there are rules to allow it to provide financial support in several situations. Let’s explore these rules and how super might offer relief in times of crisis.

Accessing super on compassionate grounds

If you’re dealing with specific expenses that you simply can’t afford, you may be able to access your super on “compassionate grounds”. This option allows you to withdraw a lump sum to cover certain expenses, which may include:

■ Eligible medical treatment or associated transport costs
■ Modifications to your home or vehicle to accommodate a disability
■ Palliative care for yourself or a dependent with a terminal illness
■ Funeral expenses for a dependent
■ Preventing the foreclosure or forced sale of your home

There is no set limit on how much super you can access under compassionate grounds, except when it comes to mortgage relief which is restricted to the sum of three months repayments and 12 months of interest on the outstanding balance of the loan. Mortgage relief only applies to principal homes and not investment properties.

To apply, you’ll need to submit your application to the Australian Taxation Office (ATO). This can be done online through myGov or by requesting a paper form from the ATO. This process also applies to individuals with a self-managed super fund (SMSF). SMSF trustees also require the ATO’s approval before accessing their super early under compassionate grounds. Once approved, you’ll need to provide the approval letter to your super fund to facilitate the release of funds. Keep in mind that tax may apply to your withdrawal.

Severe financial hardship

If you do not qualify for an eligible expense under “‘compassionate grounds” but are struggling financially and receiving a Centrelink income support payment, you may qualify to access your super under severe financial hardship. The rules for this depend on your age:

If you’re under 60 and 39 weeks: You can make one withdrawal of up to $10,000 in a 12-month period if:

■ You’ve been receiving an income support payment (like JobSeeker Payment) for at least 26 continuous weeks, and
■ You can’t meet immediate and reasonable family living expenses, such as mortgage repayments.

If you’re older than 60 and 39 weeks: There are no limits on the amount you can withdraw if:

■ You’ve received an income support payment for at least 39 weeks since reaching 60 years of age, and
■ You’re not currently employed.

For those in this category, you may be able to access your full super balance.

To apply for early super release due to severe financial hardship, you’ll need to contact your super fund directly, as they are responsible for assessing your claim. The same rules apply to individuals with an SMSF, where trustees are legally required to evaluate member applications using the same severe financial hardship eligibility criteria.

Final thoughts

It can be reassuring to know that your super isn’t entirely locked away if you find yourself in financial difficulty. Whether it’s to cover urgent medical expenses, prevent losing your home, or simply make ends meet, these provisions can provide much- needed relief. Of course, accessing your super early means you’ll have less saved for retirement, so it’s important to weigh up your options carefully. Also keep in mind, tax may apply on your withdrawal.

If you are thinking of accessing your super due to financial difficulty, consider reaching out to your adviser who can help you navigate the process.

If you do not qualify for an eligible expense under “‘compassionate grounds” but are struggling financially and receiving a Centrelink income support payment, you may qualify to access your super under severe financial hardship.

 

ATO confirms tax deductibility of financial advice fees

The Australian Tax Office (ATO) has released new guidance (TD 2024/7) on when financial advice fees can be claimed as a tax deduction. Overall, the ATO has not changed its view but it has given more clarity around the deductibility of upfront and ongoing fees.

Key points to know

Some of the key takeaways from this determination include:

■ If you receive financial advice that includes tax-related advice, you may be able to claim a deduction, but only if the advice comes from a qualified tax professional.
■ Upfront fees for initial advice (eg, setting up a financial plan) related to structuring investments are generally non-deductible, as they are considered capital expenses. However, if the advice relates to managing investments for income production or relates to managing tax obligations, it may be deductible.
■ Ongoing advice fees can be deductible if they’re related to income-generating activities.
■ To be deductible under tax law, the fees must relate to you gaining or producing assessable income. If only part of the advice is income-related, you can only claim a partial deduction.

In essence, advice fees must be linked directly to producing assessable income to qualify for deductions. For example, fees paid for advice that helps manage existing investments producing income can be deductible, but fees for advice on structuring investments or creating a financial plan won’t be. Understanding the distinction between capital and income-related advice fees is key for ensuring that tax deductions are properly applied.

Who isn’t covered

The rules in this determination do not apply to individuals running an investment business or address scenarios where financial advice fees are paid from a superannuation fund.

Why this matters

This update helps clarify what types of financial advice fees you can and can’t claim, making it easier to understand which expenses are deductible and which are not.

To make sure you are meeting all the ATO’s criteria for claiming these deductions, it’s important to work with your accountant or financial adviser to properly categorise your financial advice costs. This will help you make the most of the available deductions while staying compliant with the tax law.

 

 

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Scammers will try to exploit businesses in Australia regardless of their sizes. Here are some tips to help you recognise scams and offer protection to your business.

1. Identify Common Scam Types

The first step in protection is to understand the common types of scams. This includes;

Phishing Scams: Fraudulent emails or messages which claim to be from genuine institutions to steal personal information.

Invoice Scams: These fake invoices are sent to businesses, mostly from people pretending to be legitimate suppliers.

Business Email Compromise: Scammers pretending to be high-level executives or suppliers to trick employees to transfer money or disclose sensitive information.

2. Verify Communications

Verify any unsolicited communication, especially which involves money or sensitive data. For instance:

Phone Verification: On receiving any suspicious email or invoice, call the company directly using a number from their official website, not from the contact information provided in the suspicious communication.

Two-Factor Authentication: Implement 2FA for sensitive systems and all significant financial procedures to introduce further security.

3. Train and Educate Your Team

The employees are usually your first line of defense against scams. Regular training sessions can:

Increase Awareness: Teach your employees about the newer ways and means by which scams are being committed and how to identify them.

Promote Vigilance: Create an atmosphere of caution whereby employees can report suspicious activities without the fear of being reproached.

4. Establish Robust Security

Invest in high-quality cybersecurity infrastructure.

Networks: With firewalls, antivirus, and regular updates, become protected.

Regular Backups: Ensure all critical data is regularly backed up so that in case of a ransomware attack, damage will be minimal.

Access Controls: Permit access to sensitive data only when required for their job.

5. Stay Up-to-Date and Be Informed

The tactics used for scams change incredibly fast; therefore, being updated is very important.

Subscribe to Alerts: Sign up for Scam Alerts through bodies like the ACCC via Scamwatch.

Industry Networks: Share information and get information related to the latest emerging threats and best methods to avoid them using industry groups and forums.

6. Report Scams

If your business has fallen victim to a scam, then it is vital to take fast action and report such matters to the relevant authorities. If scam incidents happen, one reports them in Australia to:

Scamwatch: ACCC’s Scamwatch publishes opportunities to report scams and provides notice.

Australian Cyber Security Centre (ACSC):  ACSC has dedicated resources and reporting tools for cyber-related scams.

7. Conduct Regular Audits

Regular audits of your financial dealings and security systems present you with opportunities for the timely detection of susceptibilities and questionable acts you were unaware of.

In-house Audits: Schedule periodic reviews of your financial documents that can point toward abnormalities.

Third-Party Analysis: Have cybersecurity experts perform audits from the outside and propose ways based on their results.

Want to learn more about our tailored cybersecurity solutions and bookkeeping services we provide here at Glance Consultants? Make sure you get in touch with our team today for a chat.

Christmas & Tax 

With the festive season just around the corner (or already under way), many business owners will be gearing up for year-end celebrations with both employees and clients. Knowing the rules around FBT, GST credits and what is or isn’t tax deductible can help avoid unwelcome surprises on the tax front. Holiday celebrations generally take the form of Christmas parties and/or gift giving.

 

Parties

Where a party is held on business premises during a working day, is attended by current employees only and comes in at less than $300 a head (GST-inclusive), FBT does not apply, the cost of the function is not tax deductible and GST credits cannot be claimed.

Where the function is held off business premises, say at a restaurant, or is also attended by the employees’ partners, FBT applies where the GST-inclusive cost per head is $300 or more, but not where the cost is below the $300 threshold, as it would be regarded as a minor or infrequent benefit. Where FBT applies, it applies to the entire cost of the event, not just to the excess over $300, while the cost of holding the function is tax deductible and GST credits can be claimed.

Where clients also attend, FBT will not apply to the cost applicable to them (not being employees), but those costs will not be tax deductible and GST credits will not be available.

Gifts

First, you need to work out whether the gift itself is in the nature of entertainment – for example, movie or theatre tickets, admission to sporting events, holiday travel or accommodation vouchers.

Where the recipient of an entertainment gift is an employee, and the GST-inclusive cost is below $300, the minor or infrequent exemption may apply so that FBT is not payable, in which case the cost will not be tax deductible and GST credits are not claimable. For larger entertainment gifts to employees, however, FBT applies, the cost is deductible and GST credits can be claimed.

Where the gift is not in the nature of entertainment and it falls below $300, the FBT minor or infrequent exemption may apply – for example, Christmas hampers, bottles of alcohol, pen sets, gift vouchers.

But because the entertainment rules do not apply, the cost of the gift is tax deductible and GST credits are claimable.

Where a gift is made to a client, the $300 FBT minor benefit exemption falls by the wayside, as long as it is not an entertainment gift and the gift was made in the reasonable expectation of creating goodwill and boosting future sales. Such gifts are uncapped (within reason) and are tax deductible to the business. GST credits are also claimable.

Best approach for employees

Provided it’s not a regular thing, taking employees out for Christmas lunch or dinner escapes FBT, as long as the cost per head stays below the $300 threshold. While the cost of the function will still be non-deductible, that has much less of a cash-flow impact on the business than the grossed-up FBT amounts.

Combined with a non-extravagant off-site

Christmas party, making a non-entertainment gift costing up to $299 is a very tax-effective way of showing your appreciation. Gift cards are always well-received and even where they can be used to make a wide variety of purchases (including theatre tickets and the like), they will not be regarded as an entertainment gift, which means the cost is tax deductible and GST credits can be claimed.

Best approach for clients

While FBT is off the table for business clients, making a non-entertainment gift (tax deductible; no dollar limit) is actually much more tax-effective than wining and dining a key client (non-deductible entertainment). If you put some thought into what gift to buy a client and in some cases deliver it yourself, you may make much more of an impact than joining them in one of many restaurant meals in their already crowded Christmas calendar.

If you need help on the tax treatment of holiday celebrations and gifting, please give us a call.

 

Deduction for self-education courses

So, you are undertaking a course or further education that relates to your work or business in some way – and you have to pay for the costs of the training or course. Well, the question of whether you can claim a deduction for this cost as “self-education” expenses is not always a clear cut matter.

As a broad proposition, self-education expenses are tax deductible if there is a sufficient connection with your income-producing activities.

In particular, if the expenses are incurred in improving your ability to carry out your current duties, they should be deductible – especially if they are likely to result in a pay rise. By way of a colourful example, the costs of flying lessons for an air traffic controller have been allowed on this basis.

Likewise, a deduction for overseas travel expenses or formal study tour costs incurred by a person may be allowed where the clear purpose of the travel or tour is to increase the specific skills that relate to your job – especially if they may lead to a promotion or pay increase. (But there would always need to be an apportionment for any “private” element of the travel or study tour.)

However, self-education expenses would not be deductible if they were incurred to help you obtain skills for a new occupation.

Nor are they likely to be deductible if they are incurred in a preliminary manner before commencing your new job or a new occupation.

In short, self-education costs will not be deductible if they are undertaken to obtain a new career or obtain new employment.

On the other hand, if you are employed or are self-employed, then the cost of courses or training incurred would be deductible if there is a relevant connection with earning income by way of enabling you to carry out your existing duties better and/ or more skilfully. This could include, for example, undertaking a higher degree that is connected with your current job – and, again, especially if it is likely to lead to increased pay.

Likewise, the expenditure incurred in attending professional development courses and seminars (eg, CPD events) would be deductible (unless these are paid for by your employer).

Similarly, technical books and digital subscription services that improve your knowledge and/or skills in the areas related to your occupation would be deductible – but subject to an apportionment for any “private” usage of the material. For example, an English high school teacher may buy many books which are relevant to his or her job – but there may also be a personal use element.

Which all goes to show that nothing about deductions for self-education expenses is entirely clear cut – so come and see us if you have this issue.

 

Unwrap your future: 12 super tips for a merry and bright retirement

Christmas is a time for giving, but it’s also a great time to give your future self the gift of financial security. Here are 12 simple superannuation tips to help you make the most of your super fund – wrapped up with a touch of festive cheer!

 

1. Consolidate your superannuation

If you’ve worked multiple jobs, you might have multiple super accounts. Consolidating them into one fund can save you money on fees, similar to decorating one Christmas tree instead of several. The good news is that consolidating is easy through ATO online services or your myGov account where you can also search for lost or unclaimed super.

Before consolidating, consider potential impacts like the loss of insurance coverage, fees, investment options, and tax implications to ensure the transfer aligns with your needs and adds value.

2. Review your investment strategy

Your super is an investment for your future, so make sure it aligns with your goals and risk tolerance.

Think of it like choosing the perfect star for your Christmas tree – get it right, and it will shine brightly for years. For self managed super funds (SMSFs), it’s a legal requirement to have a documented investment strategy aligned with your objectives, which must be reviewed regularly. Now is a great time to ensure your strategy supports your retirement goals.

3. Check your insurance coverage

Many super funds offer default insurance, including life, total and permanent disablement (TPD), and income protection coverage. It’s essential to review your cover to ensure it provides adequate protection for you and your family. If you manage an SMSF, you’re also required to consider and document the insurance needs of each member as part of the investment strategy.

Seek professional advice to ensure your current cover is sufficient for death, disability or illness.

4. Check your fund’s performance

Not all super funds are created equal, and performance can vary significantly. Regularly check your fund’s performance compared to others to ensure it’s performing. If your fund’s performance is underwhelming, consider revisiting your investment strategy or switching to another fund that better aligns with your retirement goals.

5. Nominate your beneficiaries

Super isn’t automatically part of your estate, so it’s important to nominate valid beneficiaries to ensure your funds go to the right people. Without a valid nomination, your super fund may decide who receives the benefits, regardless of your Will.

Regularly review your beneficiary nominations, especially when circumstances change, to ensure they are up to date and reflect your preference.

6. Make extra contributions

Even small additional contributions can make a big difference to your super balance at retirement thanks to compounding returns. It’s like adding an extra treat to a Christmas stocking – small now, but a delightful surprise in the future. In addition to the 11.5% employer super guarantee contributions for 2024/25, adding extra contributions through salary sacrificing or personal after-tax payments can boost your retirement savings. Just be mindful of contribution caps to avoid extra tax. Small sacrifices now can lead to substantial benefits later.

7. Salary sacrifice

Salary sacrificing is an efficient way to boost your retirement savings and reduce your tax. By redirecting part of your pre-tax salary into your super fund, you can benefit from lower tax rates, allowing more money to work for you in the long term. It’s an easy way to start saving for the future without feeling the pinch today, and over time, compounding returns will help your super grow.

8. Claim your government co-contribution

If you earn below a $60,400 a year and make a voluntary contribution to your super, the government may top up your super with a part co-contribution.

The maximum co-contribution is $500. To receive this maximum amount your income must be below $45,400 and you must contribute at least $1,000 as a personal after-tax contribution into super.

This is a great way to boost your super savings and is a government bonus, much like finding an unexpected gift under the tree.

To be eligible there are several other rules, so check if you qualify and take advantage of this opportunity to grow your retirement savings.

9. Explore spouse contributions

If your spouse earns less than $40,000 pa, you can contribute to their super fund and potentially claim a tax offset of up to $540. This is a great way to help boost their retirement savings and potentially reduce your taxable income in the process.

10. Plan for transition to retirement

If you’re nearing retirement, a transition-to-retirement (TTR) strategy could help you make the most of your savings and ease into retirement more comfortably. This strategy allows you to draw down some of your super while still working part-time, supplementing your income without fully retiring. It’s a way to boost your savings and ensure a smooth transition to retirement, making your golden years as stress-free as possible.

11. Review fees

Super funds charge various fees for managing your money, and these can add up over time, reducing your returns. It’s important to review the fees associated with your super to ensure you’re not overpaying. Much like trimming unnecessary expenses from your Christmas shopping list, minimising fees helps your super balance grow. Check if you’re getting good value for the services provided and whether switching to a more cost-effective option could be beneficial.

12. Seek professional advice

If you’re unsure about any aspect of your super, seeking advice from a financial adviser can be a great step. A financial adviser can provide tailored advice, helping you navigate decisions about your super, investments, and retirement planning. Think of them as your financial Santa’s helpers, ensuring your super journey stays on track and guiding you toward the best financial decisions for your future.

It’s always worth consulting an expert to maximise the benefits of your super and financial planning.

The last word …

By ticking off these 12 tips, you’ll be giving yourself the ultimate Christmas present: a brighter and more secure future. Merry Christmas and happy super planning!

 

That small farm dream… and tax deductions

Many professionals (and others) who retire – or who are on the verge of retiring – turn their minds to buying farmland and carrying out some sort of small-scale farming activities. And some are already right into it.

But there are some important tax considerations that should be borne in mind in any of those cases – the key one of which is the “non-commercial loss” rules that apply to limit or deny a deduction for losses from that activity.

Importantly, these rules only apply if you are carrying on a business of farming (or any business for that matter) – as opposed to merely “hobby” farming (or any hobby activity). If it is merely a hobby, then generally there are no tax consequences associated with the activity.

However, note that it is not always easy to determine the difference between hobby farming and farming as a business.

But if you are carrying on a farming business (or any business for that matter) the “non-commercial loss” rules will come into play.

And these rules provide that losses from a non-commercial business activity will be restricted from being offset against other income (such as other investment income, rent or salary and wages) unless that business activity satisfies one of the four “commerciality tests”.

Furthermore, if the rules apply, then the non-commercial loss is deferred and, in most cases, can only be offset against profits generated from the same activity in a later year. However, the non-commercial loss rules also do not apply for a farming business if income from other sources is less than $40,000.

So, what are these four “commerciality tests”?

Firstly, if the “income” generated from the business activity is $20,000 or more then the rules will not apply. This includes if it would be estimated that the income would be $20,000 where the activity is only carried on for part of the year. However, there are a lot of rules for how “income” is determined in this case.

Secondly, if the total value of real property used in carrying on the activity is at least $500,000 then again the rules will not apply. But, again, there are a lot of rules for calculating what the value of real property is for these purposes.

Thirdly, if the farming activity resulted in a “profit” in at least three of the past five income years then the rules will not apply.

But, again, there are many rules for how “profit” is determined in this case.

Finally, if the total value of other defined assets used in carrying on the activity is at least $100,000 the rules will not apply.

And just to complicate things, the ATO has a discretion not to apply the non-commercial loss rules if it would be “unreasonable” to do so because the business has been affected by events outside the taxpayer’s control (eg, by drought, flood, bushfire or some other natural disaster).

This discretion can also be exercised where the business is not expected to make a tax profit in the year, but there is an “objective expectation” that it will make a tax profit within some commercially viable period. However, the exact circumstances in which the ATO will exercise the discretion are also governed by various ATO rulings and policy guidelines.

In summary, most of the non-commercial loss rules are fairly straight forward in principle. However, as with any such matters, the devil is always in the detail – and there is a lot of detail attached to these rules.

So, we are here to help you navigate these rules if you are intending to take on a small farming business (or any other business) on your retirement – or if you intend to undertake any business at any time in your working life as the rules apply to any business activity at any stage it is undertaken.

 

How does your super compare with others your age?

Have you ever wondered how your super balance compares to others in your age group? Or maybe you’re curious about how much you should have saved by now to ensure a comfortable retirement? It’s not always easy to figure out if your super is on track, but understanding how it stacks up can help you make smarter decisions now that will benefit you later. This article looks into the average super balances for people of different ages and explores how much you may need in retirement.

 

Average balances of Australians

The Australian Taxation Office (ATO) has released data showing average super balances for different age groups. The data gives a helpful overview of where Australians are at in terms of their retirement savings. Here’s how the averages break down:

You might be looking at your super balance right now, feeling either satisfied or a little worried about how it measures up to these averages. Remember, averages don’t tell the whole story. Your balance can be impacted by various factors like career breaks, part-time work, salary levels, or investment decisions.

If you’ve made additional contributions or opted for higher-growth investment options, your balance may be above average. If it’s not quite where you’d like it to be, don’t worry – there’s still plenty of opportunity to take steps and get back on track.

How much super do you need in retirement?

Understanding what you’ll need in retirement can help you gauge whether your super balance is on track.

The Association of Superannuation Funds of Australia (ASFA) provides clear benchmarks to define what a “comfortable” or “modest” retirement might look like.

A modest retirement covers basic living expenses, with most of the income coming from the age pension. On the other hand, a comfortable retirement allows for a higher standard of living, including private health insurance, a reliable car, household upgrades, and leisure activities like holidays.

Here’s what ASFA estimates you’ll need if you retire at 65, own your home outright, and are in good health:

Knowing these benchmarks can help you assess your progress and plan for the future you want.

Are you on track?

Now that you know what the average super balance look like, and you have a better idea of how much you may need, it’s time to check where your super stands. If your balance is lower than the targets set by ASFA, don’t panic – it’s never too late to take action.

You can still take steps to boost your super and make it work harder for your retirement.

Consider making extra contributions, whether through salary sacrificing or personal after-tax payments.

Reviewing your investment strategy to ensure it aligns with your goals and risk tolerance is also important. If you’re unsure about what changes to make, it could be helpful to speak to a financial adviser who can offer tailored advice for your situation.

Super is an essential part of your retirement planning, and understanding where you stand can help you make smarter choices today. Whether you’re feeling confident about your balance or realising there’s more work to be done, it’s always worth taking the time to review and plan ahead. The sooner you act, the more time your super will have to grow – putting you in a better position to enjoy your golden years.

 

Click to view our Glance Consultants December 2024 Newsletter via PDF

 

 

 

The Australian taxing environment can be daunting for entrepreneurs. With its many requirements and processes, it’s not difficult to become confused.

But a clear understanding of the tax code is necessary for compliance and financial success. In this article, we break down a few useful tips to make it less daunting.

Know Your Business Structure

The taxing requirements for your business vary a lot with its form of structure. Are you a sole proprietor, partnership, company, or trust? Each form of structure entails different taxing implications, including:

• Taxing Rates for your Earnings
• Reporting
• Allowable Deductions

Knowing your structure is the key to knowing your taxes.

Get Familiar with the ATO Website 

The Australian Taxation Office (ATO) website is a goldmine of information. It’s a website full of guides, tools, and information about a variety of taxes. You can learn everything from registering for a GST to claiming allowances

It’s full of specific information for different industries, and a must for any owner of a business.

Learn Key Tax Concepts

A variety of key concepts form the backbone for the Australian taxing system. These include:

• Assessable Earnings: This is your earnings for your business that are subject to tax
• Deductions: These are expenses for your driving and car maintenance, etc., that you can claim off your assessable earnings to reduce your tax liability
• Goods and Services Tax (GST): This is a 10% tax of most goods, services, and other items sold or consumed in Australia
• Business Activity Statements (BAS): These statements are used by companies to report and pay for their GST, PAYG withholding, and other taxes.

Have Accurate Records

Record accuracy is important when dealing with taxes. You will have to have a record of your expenses and incomes, such as bank statements, invoices, and receipts.

Accurate books will not only allow you to comply with your taxes but will ease your claim for a deduction and bookkeeping.

Obtain Expert Advice

 If you’re struggling with tax codes, don’t suffer in silence. Get expert advice for any section of your business taxation with a registered tax agent. They can advise you about your requirements, apprise you about potential claims, and make certain you’re complying with all relevant laws.

Get Informed

The legislation varies and can change, and staying updated is a must. Subscribe to updates through ATO, attend a seminar, or follow a reliable publication to remain in the loop.

Glance Consultants can help. With Glance Consultants, our experienced professionals can sift through all your business taxation complexities and make certain that you’re complying and getting your full claims. Get in contact with Glance Consultants today and see for yourself, receive a consultation free of charge.

 

Fraud in today’s modern world, at many levels, has become more sophisticated and frequent. Within Australia, however, fraud sustains its levels due to these fraudsters operating both in the digital and conventional modes of getting their victims to cough their valuables. 

Let’s get started with some insight into the different classes of fraud taking root in Australia at the moment.

Most common among them are:

• Fraudulent Investments
• Phishing
• Identity Theft
• Romance
• Money Recovery Scams

1. Learn About Common Scams

You first need to know how to identify any type of this scam. Some common fraud involves phishing emails, investment frauds, identity theft, and romance scams. More information on currently ongoing fraudulent situations is available, continuously updated at ACCC’s Scamwatch website.

2. Safeguard Personal Information

Be very careful about sharing your personal information, particularly on social media and internet sites. Use strong, distinctive passwords for all your accounts and switch on two-factor authentication where available. 

Never share sensitive information, like bank account numbers or a tax file number, unless absolutely necessary and only to entities that can be trusted.

3. Research Fishy Investment Opportunities

Investment scams are common in Australia, so do some research on the company or opportunity before investing. Check if they have an AFS license number, and check the same from ASIC. Be wary of offers boasting extremely high returns and making no risks – such offers are generally just too good to be true.

4. Monitor Your Financial Statements

Regularly review your bank and credit card statements to detect any unauthorised transactions. Promptly report any discrepancies to your financial institution. Consider setting up account alerts to receive notifications of unusual activity.

5. Use Secure Payment Methods

When making online purchases or transactions, use secure payment methods such as credit cards or trusted payment services like PayPal. These methods offer better protection against fraud compared to direct bank transfers or money wiring services. Ensure the website is secure by looking for “https” in the URL and a padlock symbol.

6. Educate Yourself and Others

Education is a powerful tool in combating fraud. You could:

• Go to Workshops
• Attend Webinars on Financial Fraud Prevention
• Share your Knowledge with Family and Friends

The more people are aware of the risks, the harder it becomes for scammers to succeed.

7. Report Suspicious Activity

Report if you think it is a scam. You can report by contacting Scamwatch or your local police in Australia. By reporting sooner, you give the authorities a chance to look into the scam and probably find and shut down the operators before they scam others.

Protect your finances with expert advice! Want to learn more about the accounting and bookkeeping services we provide here at Glance Consultants? Don’t hesitate to get in touch with our team today for a chat.