Category: Accountants

 

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.

 

 

Click here to view our February newsletter via PDF

 

 

 

 

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.

 

Expense tracking can be a tedious process – especially when you’re doing so manually without any assistance or software. However, it’s an essential business practice if you’re trying to make more informed business decisions. So, we’ve put together a list of some of the key benefits effective expense tracking can have on your business.

Enhances Financial Control

You gain a clearer view of where your money goes when you consistently track expenses. This is largely because you can understand your company’s spending patterns better, which then lets you identify areas where costs can be reduced. 

Once you’ve got a more complete financial picture, you can stop overspending and can allocate resources more efficiently. This not only keeps you within your budget but also maximises profits.

Improves Cash Flow Management

Cash flow can make or break a small business without cash or asset reserves to fall back on during hard times. Managing it effectively means having an understanding of both income and outflows – accurate expense tracking lets your business do the following:

• Predict future expenses
• Anticipate shortfalls
• Plan for peak and slow seasons 
• Be less susceptible to sudden cash shortages

Eases Tax Preparation and Compliance

Come tax season, having organised expense records makes the process far smoother. This is because you’re able to maximise deductions legally, which ends up resulting in significant tax savings if done correctly.

Furthermore, clear records stop your business from incurring penalties due to incomplete or incorrect filings. For small business owners, this practice not only saves money but also reduces a lot of stress during tax season.

Supports Informed Decision-Making

Expense tracking gives you the necessary insights to make better decisions as a company. When expenses are closely monitored, it becomes far easier to identify which products or services are profitable and which are costing more than they contribute. With that solid financial evidence in mind, you’re now able to do the following:

• Refine your offerings
• Adjust pricing
• Explore new growth strategies

Facilitates Long-Term Planning and Growth

Any small business that has well-organised expense records is one that’s well-equipped to make long-term plans. Tracking expenses means that you’re able to:

• Set realistic financial goals for your business
• Plan for new investments
• Secure financing from banks

Now that you’ve got a stronger understanding of your business’s cost structures, you should be able to approach banks and investors with far more confidence. This is essential for anyone aiming to expand their business.

Managing accounting responsibilities and remaining tax compliant is a lot to handle for a small business – especially when your primary concern should be growing your company. Because of this, many small businesses partner with external accountants to handle this on their behalf. 

Interested in hearing what accounting and bookkeeping services we offer here at Glance Consultants? Get in touch with our team today for a chat.

Making contributions later in life

Superannuation laws have been simplified over recent years to allow older Australians more flexibility to top up their superannuation. Below is a summary of what you need to know when it comes to making superannuation contributions.

 

Adding to super

The two main types of contributions that can be made to superannuation are called concessional contributions and non-concessional contributions.

Concessional contributions are before-tax contributions and are generally taxed at 15% within your fund. This is the most common type of contribution individuals receive as it includes superannuation guarantee payments your employer makes into your fund on your behalf. Other types of concessional contributions include salary sacrifice contributions and tax-deductible personal contributions. The government sets limits on how much money you can add to your superannuation each year.

Currently, the annual concessional contribution cap is $30,000 in 2024/25.

Non-concessional contributions are voluntary contributions you can make from your after-tax dollars. For example, you may wish to make extra contributions using funds from your bank account or other savings. As such, non-concessional contributions are an after-tax contribution because you have already paid tax on these funds. Currently, the annual non-concessional contribution cap is $120,000 in 2024/25.

 

Super contribution options for people under 75

If you’re under 75, you can make and receive various types of contributions to your superannuation, such as:

■ Compulsory superannuation guarantee contributions
■ Salary sacrifice contributions
■ Personal non-concessional (after-tax) contributions
■ Contributions from your spouse
■ Downsizer contributions from selling your home
■ Personal tax-deductible contributions

 

Work test rule relaxed

After age 67, you’ll need to meet the “work test” or qualify for a “work-test exemption” to make personal tax-deductible contributions. To satisfy the work test, you must work at least 40 hours during a consecutive 30-day period each financial year.

Prior to 1 July 2022, the work test applied to most contributions made by individuals aged between 67 to 75, but now it only needs to be met for personal tax-deductible contributions. The good news is that you don’t need to meet the work test for other types of contributions, so being retired won’t stop you from contributing to superannuation.

So whether you are still working or retired, you can continue to make superannuation contributions to benefit you in retirement and beyond.

If you don’t meet the work test condition, you can use the “work test exemption” on a one-off basis if your total superannuation balance on the previous 30 June was less than $300,000 and you satisfied the work test requirements last financial year.

Meeting this requirement will allow you to also make personal tax-deductible contributions to superannuation.

 

Super contribution options for people over 75

Once you turn 75, most superannuation contributions are no longer allowed. The only exceptions are compulsory superannuation guarantee contributions from your employer (if you’re still working) and downsizer contributions from selling your home.

If you’re about to turn 75 or have just passed that milestone, you still have one final chance to make or receive other contributions. Superannuation funds can accept contributions for up to 28 days after the month you turn 75. For example, if you turn age 75 in October, the contribution must be received by your superannuation fund by 28 November.

 

Final word

Changes to the contribution rules now allow more flexibility for people in their 60s and 70s to add to their superannuation. So whether you are still working or retired, you can continue to make superannuation contributions to benefit you in retirement and beyond.

 

What is the right business structure?

If you carry on a business – small or large – the question of which business structure to use always arises – and not just from when you start that business, but also during its operation when it may be beneficial to change from one structure to another.

Essentially, there are four major ways in which you can carry on a business: as a sole trader, in partnership, or through a company or trust – or even a combination of these (eg, in a partnership of companies and/or trusts).

Moreover, each has their own particular advantages and disadvantages – particularly when it comes to taxation consequences (and the benefits thereof).

By way of a simple example, if you operate a business in partnership you have the legal problem of being “jointly and severally” liable for any debts of the partnership (ie, you can be personally liable for all the debts of the partnership even if they were “incurred” by the other partner).

On the other hand, there are not a lot of legal formalities to comply with (unlike a company) and, moreover, from a tax point of view you can generally split the income from the business with the other partner/s in the most tax advantaged manner.

Furthermore, and something that is often forgotten, any tax losses made by the partnership can be attributed to the partners – and can be used to reduce tax on their other income. This may be particularly useful in the early stage of a business when losses are more likely to be made.

This is unlike companies and trusts where the losses remain “locked” in the company or trust until such time that there is income against which they can be offset. And even then there are complex rules that prevent such losses being used in this way if, for example, there has not been underlying “continuity in ownership” of the company or trust.

On the other hand, family trusts at least do in effect allow flexible “splitting” of the income or profits made by the trust in a tax effective way. And companies and unit trusts also allow the same – but in a somewhat more rigid manner.

However, the key point we seek to make is that you can change the structure of your business at any time in its operation – and in regards tax, you can do so usually without any adverse tax consequences because of the various concessions and roll-overs that allow you to do so.

For example, if you have been running your business as a sole practitioner or in partnership you can roll-over your business (ie, the assets that comprise it) into a company or trust without there being any adverse tax consequences.

Of course, this is subject to meeting certain eligibility requirements – the main one of which is that you remain the beneficial owner of the business in that you remain the controller of the business in the same way you were before the “roll-over”.

And this is just at the simple end of this type of roll-over. In fact, the roll-over provisions now allow you to even roll-over a small business from whatever structure into a discretionary trust structure (with all its tax benefits). But again this is in effect subject to the same “continuity of beneficial ownership” existing both before and after the roll-over.

Finally, and crucially, even in the event you trigger a capital gain on restructuring a small business, the CGT small business concessions should apply to allow you to eliminate or greatly reduce the assessable gain – and to roll-over the gain into buying assets for a new business.

If you are running a small business, and think it is time to do things a bit differently (at least from a tax perspective!) come and see us to discuss all the options and all the advantages and disadvantages of a particular structure.

Likewise, if you are thinking of starting a business for the first time, come and speak to us to work out what type of structure would best suit you at the start of your entrepreneurial adventure.

 

Selling a property with mixed rental and residential use

Selling a property that may have been used for mixed rental and residence purposes has a lot of capital gain tax (CGT) issues – and some of these also involve exercising good judgment as to how to best use the relevant CGT concessions.

By way of example, if you retain your original home and rent it after you have purchased your new home, you will have to make a decision about whether you want to retain a full CGT exemption on the original home (or maximise it, at least) or whether you want the full exemption to apply to the new home. (But there are also ways that you can, in effect, have your cake and eat it too!)

On the other hand, where you rent a property first and then afterwards live in it, then various concessions that may help reduce your CGT liability may not be available.

Further, there are important CGT rules and concessions that apply to a home that has been used for such mixed use where the owner dies and then it is later sold by beneficiaries. These can be complex, but if applied with good planning can have (very) good outcomes.

And then, of course, there is the issue of how you actually calculate any partial capital gain (or loss) in respect of a property that has been used for both rental and as a residence in circumstances where it is not possible to get a full exemption on it.

And these calculation issues can involve determining whether you can use a market value cost at any time in the process and how you can account for any non-deductible mortgage interest (and other non-deductible costs).

There is also the issue of whether you need to write-off any amounts for which you have claimed a deduction (such as building write-off deductions). In this regard, there is also the issue of whether you have actually claimed write-off amounts and therefore whether you need to write the amounts back in in any way (and the result may surprise you).

And crucially, there is also the issue of whether any partial capital gain can qualify for the very generous 50% CGT discount. (And in this regard, interestingly the tax concession that costs the government the most in foregone revenue in most financial years is the CGT discount applying to a partial exemption on a home!)

Interestingly the tax concession that costs the government the most in foregone revenue in most financial years is the CGT discount applying to a partial exemption on a home!

Of course, there are a lot of planning issues surrounding a property that you purchase with mixed intentions of both wanting to live in it and rent it.

For example, if you live in it first on a genuine (bona-fide) basis then you can access a concession that allows you to retain its full CGT exemption for up to six years.

Furthermore, if you rent it for more than six years and have to calculate a partial CGT exemption you can usually get the benefit of a market value cost at the time you first rent it to calculate this partial gain.

As can be seen, there are an array of CGT issues surrounding the selling of a property used for mixed rental and residence use – including the need to determine how to best use (and choose) various concessions to minimise any potential CGT liability.

So, if you are in this position – or even thinking of buying a property that may be used for this mixed purpose – come and have a chat to us.

 

Comparing SMSFs with other super funds

While all superannuation funds have a shared goal to provide retirement benefits to their members, there are many differences between SMSFs and other superannuation funds. So if you’re thinking about setting up an SMSF, it’s worthwhile comparing SMSFs with other funds before making your decision. Here, we highlight the main differences between SMSFs and other funds.

 

The dangers of failing to declare income or lodge returns

There are many adverse consequences associated with failing to lodge income tax returns or omitting income from those returns if the ATO finds out.

The ATO has increasingly sophisticated technology to track such matters and catch people out – including “data matching” programs where it compulsorily obtains masses of information from certain authorities (eg, banks, insurance companies, real estate bond boards etc).

And on top of this, the ATO does not even have to actually look at the information too closely – as a computer program does this for the Commissioner.

So, it now seems that there is a bigger risk of being caught for failing to lodge returns or declare income (and for wrongly claimed deductions).

Moreover, if the ATO does catch you out for this and raises amended assessments or default assessments and you decide to challenge the assessments, then you may well face an uphill battle in doing so.

This is because in any matter before the tribunals or courts, the onus will be on you to not only prove that the assessments are wrong (ie, “excessive”), but also what the correct amount of taxable income should be.

And in many cases, this will be an almost insurmountable task – if only because you may no longer have the relevant records to prove your claim. (And for the record, there have been very few cases in recent, or less recent history, where a taxpayer has succeeded in this task.)

For example, in a recent case where the tribunal found that the ATO had been “careless” in the way it arrived at the amount of the alleged omitted income (even to the extent that it considered sending the assessments back to the ATO to redo), the tribunal still said it was “duty bound” to find that the taxpayer had failed in its onus of proving the assessment was excessive.

Furthermore, the Commissioner has the power to impose harsh penalties for failing to lodge returns or declare income – and again, the onus would be on you, the taxpayer, to show that the penalties are excessive and should be reduced or remitted.

Likewise, the ATO has the power to issue amended or default assessments many years after the income year in which they were due or income was omitted if it believes there has been “fraud or evasion” on your part – and, once again, the onus would be on you to prove otherwise!

So, the moral of this story is make an appointment with us to make sure you do not omit assessable income or fail to lodge a return – and, moreover, seek our advice to help tidy up any instances where you may have done so (unwittingly or otherwise).

 

 

Click to view the Glance Consultants October 2024 newsletter via PDF

 

 

 

 

 

 

 

Among handling all your other responsibilities, managing your small business’s finances can seem overwhelming. Unfortunately, being organised in this field is something you’ll need to master in order to achieve long-term success. The good news is that it’s easily achievable if you follow a few basic accounting practices:

Separate Personal and Business Finances

One of the simplest ways to streamline accounting is to create separate accounts for your personal and business expenses. You might need to open a dedicated business bank account and apply for a business credit card if necessary. Separating these two accounts benefits your business in a litany of ways:

• It makes tracking business income and expenses easier
• It minimises error
• It simplifies tax reporting 
• It establishes a clearer picture of your business’s actual performance 

Use Accounting Software

From Xero and MYOB to QuickBooks, investing in reliable accounting software is invaluable for business owners. Modern software solutions help:

• Automate tasks
• Generate invoices
• Track expenses
• Produce financial statements with ease
• Access real-time financial insights

If you’re used to doing these activities by hand, making the shift will also help reduce manual errors – this can be crucial regarding tax compliance.

Track Expenses and Income Regularly 

Try to set aside time either weekly or monthly to input all expenses and income into your accounting system. It helps if you categorise each transaction correctly to give you a clearer idea of where your money is going. 

Keep these records updated consistently so that you have more accurate insights and won’t be backlogged when tax season arrives.

Maintain Accurate Records for Deductions

Keep detailed records of any tax-deductible expenses. These could be:

• Office supplies
• Travel
• Professional services

You’ll need to document these expenses properly in case of potential audits and to save yourself time during tax season. This means keeping receipts or invoices – make good use of cloud storage or digital folders for this so you’re better organised.

Set Reminders for Important Deadlines

Missing tax filing deadlines leads to unnecessary penalties, so ensure you’ve set reminders for crucial dates. For instance, this could include quarterly tax payments or annual submissions. Most accounting software programs can help you track these dates and even send reminders, so this shouldn’t be too difficult of a process.

Review Financial Reports Regularly

Monthly or quarterly reviews of your business’s financial statements give you a better gauge of your overall financial health. This could include:

• Profit-loss statements
• Balance sheets
• Cash flow reports

Work with Glance Consultants

Your accounting needs will likely become increasingly complex as your business grows, so you’re best off partnering with Glance Consultants to keep your finances in check. Our team of chartered accountants and expert bookkeepers can help with the following:

• Offer insights
• Assist with tax planning
• Ensure tax compliance

So, if you’d like to know more about the accounting and bookkeeping services our team at Glance Consultants can provide your business, make sure you get in touch today for a chat.

 

Whether you’re a sole trader or you’re running a growing enterprise, handling your accounting responsibilities in an efficient way is going to:

• Save your business valuable time
• Reduce the amount of errors you notice
• Generally improve financial health

Take a look at some of the easiest ways that you’re able to enhance your accounting processes here in Australia:

 

Automate with Accounting Software

Whether it’s Xero, MYOB, or QuickBooks, investing in accounting software is generally one of the quickest ways you can make your business more organised. If you’re unfamiliar with how these work, put simply, they simplify all your invoicing, payroll, and tax reporting while keeping all your financial data in one place.

Now that you’re actually automating these tasks, you’re able to reduce manual data entry, and all of the possibilities of human error that come with that – helping you stay compliant with the ATO.

 

Regular Financial Reviews

Naturally, it always helps to conduct regular financial reviews so that you’re able to guarantee you stay on top of your financial performance (most people tend to do this on a monthly or even quarterly basis). 

Aside from this, staying aware of your current financial situation at any given time will definitely pay dividends during tax season or if you happen to be seeking a business loan.

 

Separate Business and Personal Finances

If you haven’t already separated your business and personal finances, definitely make this a priority if you’re looking to avoid confusion during tax season. Fortunately, it’s pretty easy to open a dedicated business bank account and credit card – giving you the opportunity to keep your financial records accurate as well as track expenses and calculate profits.

 

Stay ATO-Compliant

As you might expect, the Australian Taxation Office has some pretty strict requirements when it comes to record-keeping. So, in order to stay fully compliant with them, try to ensure that your business is adhering to these guidelines by maintaining accurate records of things like:

• Income
• Deductions
• GST obligations

Not only does this make it easier to manage your finances, but you’re, most crucially, avoiding the risk of penalties.

 

Partner with Glance Consultants

Still, without a solid financial background and a thorough understanding of all the ATO’s regulations and guidelines, it can be particularly difficult to stay compliant when it comes to tax filing. Fortunately, our team at Glance Consultants can help you out – we specialise in Australian tax regulations and can assist in:

• Managing tax obligations
• Implementing effective accounting systems
• Offering tailored advice on your business’s unique needs

Then, all that’s left for you is to focus on growing your business while we help ensure you’re staying financially sound.

Interested in hearing more about the range of accounting and bookkeeping services that we provide here at Glance Consultants? Don’t hesitate to get in touch with our team today for a chat.