When you’re busy with life, refinancing can seem like a hassle. However, with a mortgage broker to guide you through the process, it doesn’t have to be!  Refinancing may allow you to switch to a more competitive home loan, thereby potentially saving you money in interest.   It can also help you achieve other goals, like using different finance options to renovate your property or consolidating your debt and paying it off more efficiently. You may even consider refinancing to access equity to buy an investment property or another big-ticket item like a pool.  Here are the steps involved in the refinancing process: Step 1: Work out your financial goals Do you want to find a loan with a lower interest rate? Perhaps you’d like to explore some of the interest-saving loan features that are available nowadays like offset accounts and redraw facilities?  It’s important to understand what your financial goals are so that we can help you to access the finance you need to achieve them.  Step 2: Compare home loan options  Next, it’s time to do some research. Trying to understand all the different home loan options available and consulting with different lenders can be time-consuming and overwhelming. Instead, get us to do the hard yards for you. We can explain which home loans may be suitable and help you narrow down your options.  Step 3: Submit your loan application Once you’ve decided which home loan is right for you, we’ll take care of your mortgage application.  Just like when you applied for your original loan, you’ll need to supply certain documents. These usually include identification, proof of income, home loan statements, and records of living expenses, liabilities and assets.  The new lender may also require a property valuation. This helps them to determine how much they are willing to lend you.  Step 4: Discharge your existing loan and settle your new one  When your chosen lender approves your new loan, we will let your current lender know you plan to discharge, or pay out, your existing loan. We’ll keep you informed throughout the settlement process and let you know when your new lender has paid out your old loan.   Step 5: Start making repayments  After settlement, you’ll receive documentation explaining the ins and outs of your new loan. Then, it’s time to start making repayments.   All up, in most cases the process of refinancing usually takes anywhere from four to eight weeks. The timeline depends on the lender, how quickly you submit the required paperwork and the strength of your application. Some lenders may offer a fast-tracked service.  Ready to get started? As you can see, refinancing may not be as hard as you think. If you’re interested in comparing what loan options are available for you, get in touch today. Email  David at Regional Finance Solutions or phone him on 0418785747. Article used with permission from David Seymour at Regional Finance Solutions Pty Ltd, Australian Credit Licence Number: 484980 | ABN: 71 163 893 945.

Unlock up to $300,000 in super contributions from your home sale. How downsizer contributions work and why more women are taking advantage of this opportunity. If you are aged 55 years or older, the downsizer contribution rules enable you to contribute up to $300,000 from the proceeds of the sale of your home to your superannuation fund (eligibility criteria applies).  In 2023-24, over 57% of people making a ‘downsizer’ contribution to super were women. And, the average value of the contribution was marginally higher at $262,000 versus $259,000 contributed by men.   The most likely age someone makes a downsizer contribution is between 65 and 69. From age 65, a downsizer contribution can be withdrawn from super if your circumstances change, even if you are still working. Those aged 55 to 64 generally won’t have access to these funds until they are at least 60 and retired.  Downsizer contributions are excluded from the existing upper age test, work test, and the total super balance rules (but the amount that can be moved to a retirement pension is limited by your transfer balance cap).  For couples, both members of a couple can take advantage of the concession for the same home. That is, if you or your spouse meet the other criteria, both of you can contribute up to $300,000 ($600,000 per couple). This is the case even if one of you did not have an ownership interest in the property that was sold (assuming they meet the other criteria).    To be eligible to make a downsizer contribution you do not have to buy another home once you have sold your existing home, and you are not required to buy a smaller home - you could buy a larger and more expensive one and make a downsizer contribution if you have access to other funds.  Please contact Collins Hume in Ballina on 02 6686 3000 if you would like the facts about downsizer contributions.

Employers Face New Reforms with Payday Super The Government’s upcoming Payday Super reform, set to take effect on 1 July 2026, will mark a significant shift for employers by requiring them to pay superannuation contributions on payday, rather than quarterly. Please note: Employers face daily interest on unpaid super Employers must switch to modern payroll solutions to meet new payday super requirements The ATO’s Small Business Superannuation Clearing House (SBSCH) will be retired on 1 July 2026. Under the new system, employers will be required to make Superannuation Guarantee (SG) contributions within seven calendar days of paying their employees’ wages. Failure to do so will result in immediate penalties, including a new SG charge that carries daily interest on unpaid super. The general interest charge for unpaid super, currently at 11.36% (July – September 2024 quarter), will apply on a compounding basis from the day after the due date, further incentivising timely payments. Employers who fail to meet these obligations will face larger penalties, especially if they are repeat offenders. The Australian Taxation Office (ATO) will have enhanced tools and visibility, allowing it to proactively identify missed or late payments through Single Touch Payroll (STP) data, ensuring non-compliance is addressed swiftly. This reform will empower employees to monitor their super entitlements more closely and take action against any instances of unpaid super by reporting to the Fair Work Ombudsman or the ATO. In a move that reflects the evolution of payroll solutions and the increasing need for efficiency, the ATO’s Small Business Superannuation Clearing House (SBSCH) will be retired on 1 July 2026. Employers, particularly small businesses, will be required to transition to more modern, fit-for-purpose payroll solutions that facilitate the new payday super requirements. The ATO will work closely with small businesses during the transition to ensure they are supported in adopting suitable alternatives. This reform is expected to enhance both retirement savings and superannuation system efficiency while creating a more accountable and transparent environment for employers and employees alike. This change is part of the broader Securing Australians’ Superannuation Package, aimed at tackling unpaid super and ensuring more dignified retirements for workers. At Collins Hume, we know that running a business is challenging enough without the added stress of payroll compliance. We help business owners manage their employer obligations with ease. Our goal is to allow you to focus on what matters most – growing your business. For payroll help and compliance, please contact Collins Hume's Bookkeeping team on 02 6686 3000. Source: treasury.gov.au

Breaking up is hard to do. Beyond the emotional and financial turmoil divorce creates, there are a number of issues that need to be resolved. What happens when there is a family company?  For couples that have assets tied up in a company, the tax consequences of any settlements paid from the company will need to be assessed. Settlements paid out by a corporate entity can sometimes be treated as taxable dividends and taxed at the relevant spouse’s marginal tax rate.  If you are receiving assets from a corporate entity as part of a property settlement, it’s essential that you understand the tax implications prior to settlement or a sizeable portion of the settlement could go to the ATO.  For business owners, outside of the tax and financial issues, it’s important to not lose focus on what’s important to keep the business running efficiently.  What happens to your superannuation in a divorce?  A spouse’s interest in superannuation is a marital asset and can be split as part of the breakdown agreement. It’s important to be aware however that superannuation cannot be paid directly to a spouse unless the spouse is eligible to receive superannuation (they have met a condition of release) but it can be rolled over into the spouse’s fund until they are eligible to receive it. Laws exist to prevent taxes such as CGT being triggered when superannuation assets are transferred. This is particularly important where your superannuation fund holds property.  A Court order or Superannuation Agreement is required to give effect to the agreed split in the SMSF assets or to execute a rollover eligible for the CGT rollover concession.  If you have an SMSF and both spouses are members, it’s important to get advice to make sure that all of the appropriate administrative issues are taken care of. Where a divorce is not amicable, it’s important to keep in mind that the SMSF trustee is required under law to act in the best interests of the fund and its beneficiaries. Anything less and the fund members may seek compensation for loss or damage.  Can you protect both parties from divorce?  In a divorce, assets are split based on a multitude of factors such as earning capacity, maintenance of children, and the assets held pre-marriage. Many couples don’t go through their marriage with an equal view of how assets and income should be attributed until something goes wrong. If there is a disparity between the income levels of each spouse, there are a lot of benefits to the household in general of evening out how income flows through to the family.  If your partner earns less than you, there is a very real financial benefit to topping up their super as superannuation has preferential tax rates.  The same goes for taxable income. If you can even out income coming into the household, it spreads the tax burden. Good planning can make a difference.  To book a detailed analysis of your tax and superannuation position, call our team in Ballina (or Byron Bay by appointment) on 02 6686 3000.

Collins Hume talks with Rachael Warburton at Byron's iconic Dr Moose T-shirts. Australia's oldest t-shirt shop, Dr. Moose, was established in 1995 and has grown into a well-loved worldwide brand. Giving customers a free hand in designing custom made shirts and accessories that represent their own unique individuality has been Dr Moose's ethos for years and made it a longstanding iconic shop, synonymous with the world-famous Byron Bay experience. Rachael Warburton, Dr Moose's new co-owner, hails from an idyllic Blytonesque corner of England called Clitheroe but grew up as a kid in Australia. In her beautiful accent, she explains how she backpacked her way to Byron, found herself working at Dr Moose, and fell in love with a bloke and a business. "I realised how much I loved the creativity of my job," says Rachael. "The owner wanted a change and agreed to sell when his other business took off." That was in 2016 and Rachael knew how good Dr Moose as a business was — she had been managing it for five years and had already done her due diligence working in the shop. But she knew she needed professional advice to make sure her calculations stacked up. " Kelly Crethar was fantastic. She helped us assess the business sale price by evaluating the offer and confirmed correct price for us." "We're not formally trained in business. We knew there was a business opportunity but we needed Kelly to help us navigate the process." "Everything in the business is brilliant. Kelly helped us set up a trust and she recommended getting wills to help us with asset protection. She guided us through the whole process and it wasn't stressful. It's good to have peace of mind." Expansion streams coming Rachael has not stood still in her new role as business owner. Since taking ownership in 2016, she has personally grown 500 Facebook Page Likes into a staggering 14,000! But doing the groundwork with Kelly has given Rachael itchy feet. "I want to grow the business so our next step is planning with Kelly for our future financial needs," says Rachael. "That means looking at how we can get new machines, revamp the website, engage an agency for social media and move forward to be more successful online as well as keeping our brick and mortar store for visits." "We've got a huge cult following and a real 90s feel. It's important that we keep that vibe." Working with Collins Hume to help structure what they want to do with their future forms a huge part. "From helping us when we bought our first property to navigating tax on cryptocurrency, Kelly has been our go-to for years." "She is accessible, knowledgeable and just a great guide for those of us who need to be directed on how to do things smartly," Rachael added. Dr Moose is a tight-knit, innovative and creative team of committed Moose Techs, flying the flag for creativity everywhere, all from Byron Bay. Check out their uniquely designed clothing and accessories at https://drmoose.com.au/ . Copyright 2021. Collins Hume Accountants & Business Advisers Ballina & Byron Bay NSW

Client Case Study Overview Katapult Design is a leading global product design and development consultancy with studios in Byron Bay, Sydney and Melbourne. Their award-winning team of industrial designers, product engineers and creative thinkers boasts over 30 years of experience developing a wide range of products, from medical and high-tech electronics to hardware and much more. The Challenge As a rapidly growing business with a diverse portfolio, Katapult Design faced significant challenges in managing their financial operations. From cash flow management to tax compliance and strategic financial management, the complexity of their financial landscape increased with their expansion. Katapult Design needed a partner who could provide comprehensive financial advisory services tailored to their unique needs. The Solution Collins Hume stepped in to provide a suite of services that went beyond traditional accounting. Recognising the specific challenges faced by Katapult Design, Collins Hume offered: Tax and Quarterly Accounts Management: Initially providing local tax and quarterly accounts assistance Business Restructuring: Assisting in restructuring the business to optimise operations and financial efficiency Financial Management: Offering detailed financial management services to improve the way Katapult Design handles their business accounts CFO Services: Jamie Doyle acted as a de facto CFO, meeting regularly with the Katapult Design team to provide in-depth feedback on their financial performance and strategic advice. Implementation and Collaboration The collaboration between Katapult Design and Collins Hume has been marked by regular consultations and a deep understanding of their business dynamics. Jamie Doyle, in particular, has been instrumental in offering not just financial advice but also insights into people management, time management and the overall trajectory of the business. His role as a sounding board has been invaluable for Katapult Design, enabling them to make informed decisions quickly and effectively. Results and Impact The impact of this partnership has been substantial: Enhanced Financial Stability: Improved cash flow management and financial operations have led to greater financial stability Optimised Tax Position: Expert tax advice has resulted in significant tax savings, contributing directly to the company's profitability Strategic Growth: With Collins Hume's strategic financial planning, Katapult Design has been able to focus on their core business operations and pursue new opportunities with confidence. 360-Degree Business Approach “We’ve been with Collins Hume for quite a few years now, and what started out as seeking out a local accountancy firm to help us with our tax and quarterly accounts has blossomed into something where Collins Hume has been helping us with restructuring our business in recent times, financial management and, more recently, working closely with Jamie Doyle as a CFO effectively.” “We've got huge benefit out of working on a regular basis to provide detailed feedback on how we're tracking and what we should be thinking about from a financial perspective. It's just really nice to have that sort of advice.” ~ Nathan Pollock, Founder of Katapult Design Our collaboration with Katapult Design highlights the transformative power of a strategic financial partnership. By providing tailored solutions and unwavering support, Collins Hume has empowered Katapult Design to thrive in a competitive market, ensuring their innovative spirit continues to flourish. Elevate your business to new heights. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you achieve a better performing business and lifestyle.

Quadracon Building, a commercial refurbishment company based on the northern NSW coast, has shown remarkable growth since its inception in 2014.   Initially starting with just two people, the company has expanded to a team of 30 with three offices along the eastern seaboard. Quadracon specialises in aged care building refurbishments, local council and state government building work.  Key to Entrepreneurial Success  David Freedman, cofounder of Quadracon, emphasises three essential skills for entrepreneurial success: a keen eye for detail, a strong work ethic and a good moral compass.   "The ability to push the envelope and never accept mediocrity is probably the main successful attribute that we have as a business," he states.  Building momentum has been a significant challenge for David.   "Instead of pushing the snowball, we're now running in front of it," he explains. The team’s alignment with core values and the constant drive to exceed client expectations are key motivators for David. He adds, "We have a very like-minded workforce. The team is strong — we all have aligned core values, and I find that they push me as we strive to do more for our clients."  As for many small businesses, COVID-19 was a testing time for Quadracon. Although the construction sector remained relatively buoyant, Quadracon's aged care projects faced significant disruptions.   "Our biggest lesson learned was to not put people on leave and run down entitlements. Keeping them employed, motivated and trained so that when we came out of the other end of the pandemic, we had an engaged workforce which actually picked up some skills along the way," David reflects.  ISO certification has been a cornerstone of Quadracon’s success, particularly during the pandemic.   "ISO certification involves a lot of looking forward and looking backwards and seeing where we can do business improvement," David notes. Additionally, Quadracon's focus on web-based mobile solutions has positioned them as an IT-driven business.  Quadracon has had a longstanding relationship with Peter Fowler from Collins Hume.   Peter has been instrumental in forward planning, budgeting, business improvement, business benchmarking, and RAVDA analysis.   "Peter has been with us since the beginning, so he has seen our business grow and knows so much about it," David shares. This partnership dovetailed into their ISO certification, helping Quadracon navigate complex business landscapes.  David highlights the rapid growth Quadracon has experienced, surpassing their five-year plan within three years.   "If you had told me at the beginning that we would grow this big, I would have said no; I was quite content being a boutique operation in the region. It was Peter who continually pushed us towards greater reliability and growth," he admits.  Jennie Freedman, who is an integral part of Quadracon, has now selectively stepped back to focus on key roles three days a week. Her efforts in the initial years were crucial in establishing the company’s administrative processes.   "We've gone from that to having a dedicated person in Melbourne who just does nothing but process electronically," David explains. This delegation has allowed Jennie to balance work with personal commitments, especially with their large family.  Quadracon's journey from a small team to a thriving company invoicing million-dollar months, even during COVID-19, is a testament to their strong work ethic, aligned core values and strategic partnerships.   David concludes with advice for aspiring entrepreneurs: "You need to have a nose for numbers, be able to weigh up, measure, and calculate a risk, and not be afraid to take that risk and back your ability." Read more at https://www.quadracon.com.au/ Elevate your business to new heights. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you achieve a better performing business and lifestyle.

Becoming a memorable leader  As a business owner, you undoubtedly aim to be a leader who leaves a lasting positive impression But in the world of leadership, being remembered isn't always for the right reasons. We've all heard the stories about bad bosses—those who left their mark through mistakes and missteps. However, the key to truly effective leadership is being memorable for your positive impact.  The Power of Standing Out—For the Right Reasons  When you think back on the leaders who left an impression on you, chances are, the ones who stand out did so because they made mistakes, or they lacked certain essential qualities. These examples can be incredibly valuable as you develop your leadership style. Remember the boss who never made eye contact before their second coffee? Aim to be the leader who starts each day with a warm greeting.  At Collins Hume, CEO Christopher Atkinson makes it his mission every day to always greet our team at the start of each workday. This gesture has a lasting impact, and it serves as a reminder that leadership isn't just about leading your team, but connecting with everyone in the workplace. (By the way, Chris was recently recognised as an Outstanding Business Leader  which only reinforces how important being a good leader is.)  Lessons from the Past: Learning from the Mistakes of Others  The not-so-good leaders we’ve all encountered provide us with invaluable lessons. By observing and reflecting on their behaviour, you can steer clear of their pitfalls and craft a leadership style that resonates positively with your team. As Franklin Roosevelt wisely said, "People don’t care how much you know, until they know how much you care." Caring is the cornerstone of memorable leadership.  Authentically showing how you care  We're not talking about becoming besties with your employees or indulging in overly personal gestures. Instead, great leaders show they care through professional and meaningful actions. Here are some ways to ensure you’re remembered for all the right reasons:  Meaningful Conversations: Take the time to have genuine career and skill development discussions with your team members to show you're invested in their growth  Regular Feedback: Hold consistent check-ins and feedback sessions. It’s not just about what they can do better, but also about recognizing what they’re doing well  Personalised Praise: When giving praise, tailor it to the individual in a way that holds meaning for them. A simple “good job” might not be as effective as recognizing their specific contributions  Follow Through: If you make a commitment, honour it. Being accountable to your promises builds trust and reliability  Professional Standards: Maintain accountability and hold yourself and your team to high professional standards. Leading by example is one of the most powerful ways to inspire respect  Be a Role Model: Your team will follow your lead, so demonstrate the behaviour, work ethic and values you want to see in them.  The Journey Ahead  Your leadership journey is a marathon, not a sprint. To become a great leader, take inspiration from those around you—both the good and the not-so-good—and let their lessons shape your path. Aspire to be the leader who is talked about years from now for all the right reasons.  Be memorable, but more importantly, be remembered for making a positive difference.  Elevate your business to new heights. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you tailor a business advisory program to suit your specific requirements.

Ballina Chamber Business After Hours October 2024 Collins Hume is thrilled to be part of Ballina Chamber of Commerce's Financial Wealth Insights Networking Event next week. Set to take place at the Ramada Hotel in Ballina, the event promises attendees the chance to gain invaluable insights from some of the most influential financial professionals in the Ballina Shire. The event will be hosted by Chamber Board member Matt Prentice, who will moderate a dynamic panel featuring experts across various sectors. Together they will delve into pressing questions on asset and debt management, local market trends and future financial opportunities. "I’m excited to be a panellist at this year’s event,” said Partner Kelly Crethar. “This panel is composed of some of the brightest minds in Ballina’s financial community, offering attendees a unique opportunity to understand future trends and strategies that can help them thrive." Kelly brings over 20 years of hands-on experience in guiding business owners toward success. Known for her sharp strategic insights and deep understanding of industries including professional services, construction and property development, she has a unique talent for helping clients navigate complex business challenges. At Collins Hume, Kelly excels in advising on growth strategies, boosting profitability and ensuring compliance, making her a natural choice for the Financial Wealth Insights panel. Her passion for empowering businesses and practical approach to problem-solving will offer valuable perspectives to the discussion. Topics will range from the comparative value of property versus shares, debt management strategies, and considerations for choosing between banks and mortgage brokers, to localised client profiles and market projections for the next year and beyond. The Ballina Chamber’s Financial Wealth Insights Networking Event begins at 5:30 pm on 23 October at the Ramada Hotel, 2 Martin Street, Ballina. This is a must-attend event for those looking to make informed financial decisions in the coming years. For more information or to register for this free event, please visit the Ballina Chamber of Commerce website . — About Kelly Crethar Kelly is a highly qualified and experienced business services specialist with a passion for helping business owners achieve their goals. With over 20 years of experience in the field, Kelly has a wealth of knowledge in business planning, structuring, management, acquisitions, valuations and regulatory compliance, with a special focus on professional services, hospitality and retail, building and construction, property development, health, and larger intricate structures industries. Kelly holds a Bachelor of Business (Accounting & Business Law) from Southern Cross University and is a Certified Practising Accountant (CPA), Xero Certified Advisor and Registered Tax Agent. Kelly joined Collins Hume in 2017 where she helps clients navigate the complex world of business. Her areas of expertise include business advisory around growth strategies, profitability and systems implementation, as well as business regulatory compliance. Read more »

The Stars of Ballina Dance for Cancer event is just around the corner, and it's a sell-out hit! This year, Chris and his pro dance coach, Maree, are stepping up to the challenge and dancing their hearts out for a cause that impacts millions. Although tickets are now sold out, you can still join in the fight against cancer by supporting Chris and Maree online. How to Support Chris and Maree If you've already donated, thank you! Your generosity goes a long way in helping to fund cancer research and support services. If you haven’t yet, there’s still time to show your support: Head over to the official donation page and contribute to their fundraising goal. Every donation, big or small, helps fuel the fight against cancer https://stars.cancercouncil.com.au/fundraisers/chrisatkinson/stars-of-ballina Spreading the word can be just as impactful as donating. Share this blog or the fundraising page with friends, family and colleagues. Follow Chris and Maree’s journey by liking and sharing their posts and show your support for their hard work: https://www.instagram.com/maree_white_dance/ https://www.instagram.com/collinshume/ https://www.facebook.com/CollinsHumeAccountantsBusinessAdvisers   Why Stars of Ballina is a Must-Support Event The Stars of Ballina Dance for Cancer brings the community together for a night of entertainment, laughter and unity. Watching our local heroes take the stage to perform is always a blast, but the true purpose behind the event is what makes it extra special. With every step they take on the dance floor, Chris and Maree are helping to fund essential services and groundbreaking research. Why Supporting Cancer Research Matters Every year, thousands of Australians are diagnosed with cancer, impacting not only the patients but also their families, friends and communities. By donating, you’re contributing to life-saving research, support programs and services for those battling cancer. The Cancer Council relies on community support to fund these initiatives, which means all our donations can make a real difference. Help make a difference today!

That's a Wrap Folks! And what a grand final it was! Congrats to all the Panthers fans out there 😎 and commiserations to all the Storm faithful 😪 Thank you to everyone for taking part this year — we can now declare correct weight on the comp after we have all viewed the try/no try/held up footage 900 times ! Well done to vidsa coming away with the overall win ($300), second places goes to tingtao ($100), with Murdoch1956 taking out third place ($50). This year's Knockout Comp Winner with $100 is LucyA. You'll each have an email in your inbox from us to arrange transfer of prize money. Thanks again and hope to see you again for the 2025 season!

The Tax Commissioner has successfully argued that more than $1.6m deposited in a couple’s bank account was assessable income, not a gift or a loan from friends.  The case of Rusanova and Commissioner of Taxation  is enough for a telemovie. The plot features an Australian resident Russian couple ‘gifted’ over $1.6m in unexplained bank deposits, over $67,000 in interest, the Russian father-in-law seafood exporter, a series of Australian companies, and the generous friend loaning money in $20,000 tranches.   The crux of the case before the Federal Court is whether you can prove to the Australian Tax Office (ATO) that unexplained deposits should be treated as gifts or loans and what happens when the Tax Commissioner thinks otherwise? If the Commissioner suspects the deposits are income, he can issue a default tax assessment and decide what tax should be paid. The burden of proof is then on the taxpayer to prove the Tax Commissioner wrong.   The unexplained deposits  Between 2012 and 2016, an Australian resident husband and wife had an estimated $1,636,000 deposited into their bank accounts. The ATO became curious when neither spouse had lodged tax returns in the mistaken belief that they had not earned any income.   The money deposited, they said, was a gift from the wife’s father and therefore not assessable income. Curiously, there were no records produced to support the deposits and not a single text or email notifying that money had been remitted, or acknowledging its receipt.   In addition, a friend of the couple deposited money into the husband’s account including a series of $20,000 transactions over about a week. These, the friend said, were interest-free loans with no agreed terms but an expectation that they would be repaid. The friend could not remember how he was requested to make the loans and there were no loan documents, emails, or texts disclosed to support the loans. Around the same time as the loans were being advanced, there was evidence of the husband ‘repaying’ amounts in excess of what had been lent. In addition, documents show the husband transferred a Porsche Cayenne to his friend in Russia, said to be repayment of the loan.  Compounding the issue were the four directorships of Australian companies held by the husband, none of which had lodged tax returns. One of the companies was a seafood wholesaler, distributing the product of his father-in-law’s American registered Russian export company. The dedicated son-in-law stated that he was merely trying to develop his father-in-law’s business during 2010 and 2016, without remuneration.  Contesting the Tax Commissioner  In 2017, a covert tax audit utilised entries in the couple’s bank accounts to assess their income tax liability and the ATO issued a default assessment based on the unexplained deposits and expenses. The couple objected to the assessment and this objection was partly allowed. A second assessment was then issued to which the couple again objected before the Administrative Appeals Tribunal (AAT) on the grounds that the assessment was excessive.   Can the Tax Commissioner really decide how much tax you should pay?  The Tax Commissioner has the power to issue a ‘default assessment’ for the amount he believes is owing from overdue tax returns or activity statements. The assessment is the amount the ATO believes is owing, not what has been declared.  The problem with a default assessment is not just the Tax Commissioner deciding how much tax you should pay, it is the potential addition of an administrative penalty of 75% of the tax-related liability for each default assessment issued. This penalty may be increased to 95% of the tax-related liability in certain circumstances for taxpayers who have a pattern of non-compliance.  But, here is the problem for the couple. While genuine gifts of money are not taxable, the burden is on the taxpayer to prove that the gift is truly a gift, if the ATO asks. The AAT held that, “absent any reliable evidence..., there is no proper basis to make any findings as to whether the deposits constitute part of the applicants’ taxable income or not.”   The Tax Commissioner can rely on a “deficiency of proof”.    The couple’s stance that the deposits were either gifts from the father or loans from a friend were rejected by the AAT. This is despite an affidavit and evidence from the wife’s father stating that the amounts transferred to them were gifts. The couple did not demonstrate what their income actually was to prove the Tax Commissioner’s assessment was unreasonable, and they could not substantiate that the gifts were indeed gifts from a very generous father.  The Federal Court dismissed the couple’s appeal with costs, leaving the Tax Commissioner’s default tax assessment and penalties in place.   Avoiding the gift tax trap  A gift of money or assets from an individual is generally not taxed if the gift is given voluntarily, nothing is expected in return, and the gift giver does not materially benefit.   However, there are some circumstances where tax might apply.  Gifts from a foreign trust  If you are a tax resident of Australia and the beneficiary of a foreign trust, it’s possible that at least some of the amounts paid to you (or applied for your benefit) will need to be declared in your tax return. This applies even if you were not the direct beneficiary of the foreign trust, for example, a family member received money from a foreign trust and then gifted it to you. This applies to cash, loans, land, shares, etc.  Inheritances  Money or property you inherit from a deceased estate is often not taxed. However, there are circumstances where capital gain tax (CGT) might apply when you dispose of an asset you inherited. For example, if you inherit your parents’ house, CGT generally does not apply if:  The property was their main residence; and  Your parents are Australian residents for tax purposes; and  You sell the property within 2 years.  However, CGT is likely to apply if for example:  You sell your parents former main residence more than 2 years after you inherit it; or  The property you inherit was not your parents’ main residence; or   Your parents were not Australian tax residents at the time of their death.  Gifting an asset does not avoid tax  Donating or gifting an asset does not avoid CGT. If you receive nothing or less than the market value of the asset, the market value substitution rule might come into play. The market value substitution rule can treat you as having received the market value of the asset you donated or gifted when calculating any CGT liability.  For example, if Mum and Dad buy a block of land then eventually gift the block of land to their daughter, the ATO will look at the value of the land at the point they gifted it. If the market value of the land is higher than the amount that Mum & Dad paid for it, then this would normally trigger a CGT liability. It does not matter that Mum & Dad did not receive any money for the land. Mum & Dad might have a CGT bill for land they gifted with nothing in return.  Donations of cryptocurrency might also trigger CGT. If you donate cryptocurrency to a charity, you are likely to be assessed on the market value of the crypto at the point you donated it. You can only claim a tax deduction for the donation if the charity is a deductible gift recipient and the charity is set up to accept cryptocurrency. Managing the tax consequences of an inheritance can become complex quickly. Please contact us for assistance when planning your estate to maximise the outcome for your beneficiaries, or managing the tax implications of an inheritance. These issues are often not taken into account if you are drafting or updating a will.