Nerida Byron, with her local business background and a strong drive to learn, adds firepower to the small business bookkeeping team at Collins Hume, bringing a fresh perspective and a wealth of experience. Originally hailing from Brisbane, Nerida moved to the Northern Rivers region in 2007. Her initial foray into bookkeeping began during the pandemic when she decided to take advantage of some free education courses. Her curiosity led her to explore bookkeeping, which she enjoyed, and she subsequently embarked on her Cert IV Accounting & Bookkeeping certification. Wanting an extra challenge and to advance her career and qualifications, Nerida approached Collins Hume for a bookkeeping and assistant accountant role, and we are glad she did! Nerida's days are filled with various bookkeeping responsibilities. Undertaking tasks for all Partners, her core duties include BAS preparation, payroll, accounts payable and some reporting — all using Xero’s cloud accounting platform on which she has become a dab hand. One aspect that sets Nerida apart is her ability to focus on tasks at hand. She identifies herself as a "doer," emphasising her task-oriented nature, which is crucial in the world of bookkeeping where precision across a multitude of minute actions is paramount for financial accuracy. Culture of Support and Growth When asked about her experience in her new workplace, Nerida is appreciative for the supportive Collins Hume culture. Her onboarding, guided by Clare, was smooth and swift, ensuring that Nerida could hit the ground running. The collaborative atmosphere and the willingness of her colleagues to share their knowledge have accelerated her learning. "It’s amazing — every time I need help I always get an answer. Everyone is very generous with their time and really cool about helping me out and teaching me the ropes, so I'm getting a lot out of it," says Nerida. Outside the office, Nerida enjoys baking and running around after her daughters, going to the beach and spending time with her family with their beloved labradoodle, Nara. Her commitment to continuous learning and relishing her new role stand her in good stead for the future that lies ahead at Collins Hume. "If you stop learning, you just stop, so learning is magic," Nerida added. Nerida’s journey to becoming a bookkeeper is one marked by that same passion for learning. With a Cert IV in Accounting & Bookkeeping nearly completed plus a Bachelor of Arts in Film & Media Studies and Advertising, Nerida's qualifications might seem diverse, but she is poised to become a valuable asset not only to Collins Hume but also to the business owners she assists. She is also Xero Payroll Certified. For Xero conversions and any complex bookkeeping needs, Nerida stands ready to lend her expertise and make the financial world a bit clearer for all.

The shape of Australia’s future What will the Australian community look like in 40 years? We look at the key takeaways from the Intergenerational Report. The 2023 Intergenerational Report (IGR) is a crystal ball insight into what we can expect Australian society to look like in 40 years and the needs of the community as we grow and evolve. It doesn’t map out our path to flying cars and Jetsons-style robotic domestic help (unfortunately) but it does forecast structural trends that will give many of us a level of anxiety about what we need to be doing now to successfully navigate the future. The report links the continued growth and prosperity of Australia to five significant areas of influence: 1. We’re ageing Thanks for the reminder. The number of people aged 65 and over will more than double and the number aged 85 and over will more than triple. We’re expected to live longer with the life expectancy of men increasing from 81.3 to 87 years and from 85.2 to 89.5 for women by 2062-63. And that’s a problem for the younger generation. Who bears the burden of an ageing population? Australia’s low birth rate, limited migration and increased longevity all have an impact. The old age percentage — the number of people aged 65 and over for every 100 people of traditional working age (15 to 64) in the population — will increase from 26.6% to 38.2%. From a tax perspective, Australia’s reliance on personal tax means workers will bear an increasing proportion of the tax burden under current fiscal policy. In a recent interview, former Treasury boss Ken Henry labelled it an “intergenerational tragedy” with personal tax growing from 11.7% of GDP to 13.5% based on current policy. The report says that “only 12% of Australians aged 70 and over pay income tax and this age group now makes up 12.2% of the total population. This age group is expected to increase to 18.1% of the total population in 2062-63.” Wholesale tax reform will be required to prevent the growing tax burden on individuals dragging on the economy. With economic growth expected to slow to 2.2% from 3.1% over the next 40 years, the solution will not magically arise from corporate Australia. If it was not for our high rate of inflation you would think an increase to the GST was imminent. 2. Services and who pays Demographic ageing alone is estimated to account for around 40% of the increase in Government spending over the next 40 years. The outcome of an ageing population, as you would expect, is increased demand for care and support services that will push the Federal Budget back to a point where deficits are the norm if the current policies remain in place. From a consumer perspective, it also means that the trend towards user-pays will only increase. As individuals, we need to ensure that we have the means to fund our old age because Government resources will be limited by increasing demand and this demand is funded by a deteriorating percentage of workers contributing to tax revenue. It's also likely that we will need to look at how we generate income. For some that might mean working longer, for others it is value adding — creating, buying and selling assets in some form, whether that is business, innovation, or through more traditional assets such as property or financial products. Superannuation the size of a nation Australia currently has the fourth largest pool of retirement assets in the world, with total superannuation balances projected to grow from 116% of GDP in 2022-23 to around 218% by 2062-63. Our superannuation system will be what underwrites retirement for most Australians. At present, around 70% of people over aged pension age receive some form of Government income support. Over time, and as our superannuation system matures, this percentage is expected to decline sharply as a percentage of GDP with Government support supplementing rather than providing for retirement (the first generation of workers with superannuation guarantee throughout their working life hit retirement age around 2058). However, the IGR points out that, “the cost of superannuation concessions will increase, driven by earnings on the larger superannuation balances held by Australians.” The proposed tax on future earnings on super balances above $3m may not be the last. We can expect the management of superannuation to be a priority for the Government to ensure that retirement savings are maximised to reduce the reliance on Government support, and to ensure that this enormous pool is leveraged for the gain of not only members but the nation. Growth of services Like most advanced economies, global competition has shifted Australia’s industrial base from the production of goods to services. Ninety per cent of jobs are now in services. With an ageing population, demand for health and care services is expected to soar. People aged 65 or older currently account for around 40% of total Australian health expenditure, despite being about 16% of the population. The IGR estimates that the workforce required to support this sector will need to be twice the size of what it is now to meet demand by 2049-50. The Government’s biggest spending pressures will be health, aged care, the NDIS, defence and interest payments on government debt. Of these, the NDIS is the fastest growing at 7% per year. 3. The role of technology The speed of technological change is difficult to predict, and the IGR doesn’t attempt to make predictions. But what we do know is that technology has had a transformational impact on labour productivity (the value of output of goods and services produced per hour of work). Over the last 30 years, labour productivity has accounted for around 70% of the growth in Australia’s real gross national income. But, tempering this is a slowing of labour productivity growth since the mid-2000s. We know technological disruption is coming and the debate about the role of artificial intelligence is only just beginning. We also know that unless technology is accessible, our future will be one polarised by those who have and have not benefited from technological change. 4. Climate change transformation There are two key aspects to climate change; the cost of rising temperatures, and the opportunity created by the shift to renewable energy. Temperatures are anticipated to increase by 1.5 degrees before 2100, potentially before 2040. From 1960 to 2018, climate disasters reduced annual labour productivity in the year they occurred by about 0.5% in advanced economies. However, for severe climate disasters labour productivity is estimated to be around 7% lower after three years. With rising temperatures, floods, bushfires and other extreme weather events are expected to increase in frequency and severity. The impact of climate change spelt out in the report is sobering with disruptions and changing patterns impacting agriculture, tourism, recreation and industries that rely on labour-intensive outdoor work. On the positive side, Australia could benefit from new “green” industries, such as hydrogen and other clean energy exports, critical minerals and green metals. It is also likely to drive new, innovative ideas as businesses invest in and develop low emissions technologies, providing a source of future productivity growth in a more sustainable economy. Australia’s potential to generate renewable energy more cheaply than many countries could also reduce costs for both new and traditional sectors, relative to the costs faced by other countries. 5. Geopolitical risks Australia relies on open international markets. Trade disputes and military conflicts pose an external threat to Australia’s economy and well-being. While the IGR cannot predict the nature of geopolitical events, it notes the importance of investing in national security, presumably this includes cybersecurity, ensuring access to international markets, and deepening regional partnerships to reduce supply chain vulnerabilities. The 2023 Intergenerational Report projects the outlook of the economy and the Australian Government's budget to 2062-63. This is the sixth report. Its analysis and projections of the key drivers of economic growth will help inform and improve public policy settings to better position Australia for the next 40 years. Read or download a copy here »

The tax refund many Australians expect has dramatically reduced. We show you why. There is a psychology to tax refunds that successive Governments have been reticent to tamper with. As a nation, Australia relies heavily on personal and corporate income tax, with personal income tax including taxes on capital gains representing 40% of revenue compared to the OECD average of 24%. And, for the amount we pay, we expect a reward. The reward is in the form of tax deductions that reduce the amount of net income that is assessed for tax purposes and tax offsets that reduce the tax payable, generating a refund for some. And, refunds have a positive impact on tax compliance. As part of the previous Government’s efforts to flatten out the progressive individual income tax system, a time-limited low and middle-income tax offset was introduced. The lifespan of the offset was extended twice, partly as a stimulus measure in response to COVID-19. The offset delivered up to $1,080 from 2018-19 to 2020-21, and up to $1,500 in 2021-22 for those earning up to $126,000. This was a significant boost for many people each tax time and bolstered the tax returns of millions of Australians. For many, the end of this offset has meant that their tax refund has reduced dramatically compared to previous years. Do we pay more tax than other nations? It depends on how you look at the statistics. Australia relies heavily on income tax, collecting 40% of tax revenue from personal income. That makes Australia the fourth highest taxing nation for personal tax in the OECD – but we were second highest in 2019 if that makes you feel better. But, if you are looking at take-home pay there is a separate measure for that. The Employee tax on labour income looks at our take-home pay once tax is taken out and benefits have been added back in. This shows that the take-home pay of an average single worker is 77% of their gross wage compared to the OCED average of 75.4%. For the average worker with a family (one married earner with 2 children), once tax and family benefits are taken into account, the Australian take-home pay average is 84.1% compared to the OECD average of 85.9%. All of this means that Australia is a high-taxing nation but returns much of that in the form of means-tested benefits. Australia also does not have social security contributions like other nations. These contributions represent an average of 27% of the total tax take for OECD nations. And, because Australia has a progressive tax system, the pain of taxation is felt more by higher-income earners. The top 11.6% of Australian income earners contribute 55.3% of the tax revenue from personal income tax. With the final round of legislated income tax cuts due to commence on 1 July 2024, this should reduce the overall dependence on personal income tax relative to corporate and other taxes. So, do we personally pay more tax than other nations? If you are a high-income earner the answer is likely to be yes. If not, the answer is no. As Benjamin Disraeli reportedly said, “…lies, damn lies, and statistics”. It’s all how you read it. Is a second job worth it? In an Uber the other day, the driver revealed that he had become a driver to pay for his second mortgage. He invested in property but with interest rates spiking, the only way he could hold onto the property was to earn additional income. His “day job” starts early and ends at 3pm at which time he heads off to start driving. He is not alone. The latest stats from the Australian Bureau of Statistics reveal that the number of workers holding multiple jobs has increased by 2.1% since December 2022 – in total, Australia has 947,300 people holding multiple jobs or 6.6% of the working population. The reason why people take on second jobs is varied. For some, it is to manage increasing costs, for others it is to start up a new venture but with the security of a regular income stream from their primary occupation. Is it worth it? From a tax perspective, Australia has a progressive income tax system – the more you earn the more tax you pay, and access to social benefits tapers off. It’s important when looking at a second job to understand your overall position – how much you are likely to earn, your costs of generating income, and what this income level will mean. The trap for many picking up a ‘gig economy’ second job is that they are often independent contractors. That is, you are responsible for managing your tax affairs. All Uber drivers for example, are required to hold an ABN and be registered for GST. There is a compliance cost to this and from a cashflow perspective, 1/11th of the fee collected needs to be remitted to the Tax Office once a quarter. It’s important to quarantine both the GST owing and income tax to ensure you have the cash flow to pay the tax when it is due. The upside is you can claim the expenses related to your second job. If you are taking on a second job, ensure that your tax-free threshold applies to your highest-paying job from a PAYG withholding perspective. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

The tax implications and pitfalls of small-scale subdivisions You’ve got a block of land that’s perfect for a subdivision. The details have all been worked out with Council, the builders, and the bank. But, one important aspect has been left out; the tax implications. Many small-scale developers often assume that their tax exposure is minimal – but this is not always the case and the tax treatment of a subdivision project can significantly impact on cashflow and the financial viability of the project. New guidance from the Australian Taxation Office (ATO) walks through the tax impact of small-scale subdivision projects. We look at some of the leading issues: Tax treatment of the subdivision Subdividing land The tax treatment of even a small subdivision can become complex very quickly and tax applies according to the circumstances. You cannot simply assume that just because it’s a small development, any profit from the eventual sale will be taxed as a capital gain and qualify for CGT concessions. In general, if you own a property personally, it has been held and used for private purposes over an extended period, you subdivide it and sell the newly created block, then capital gains tax is likely to apply to any gain you make. The gain is recognised from the point you first acquired the land, although you will ned to apportion the amount paid for the property between the subdivided lots. If you are subdividing a property that contains your home – the main residence exemption will not generally be available if you sell a subdivided block separately from the block containing your home, even if the land has only ever been used for private purposes in connection with your home. If a property is initially owned jointly but the property is subdivided and the lots split between the owners, then this will normally trigger upfront tax implications even though the land hasn’t been sold to an unrelated party yet. Arrangements like this (referred to as partitioning) can be complex to deal with from a tax perspective. Developing a property But what happens if you develop the land? It’s not uncommon for people to decide to subdivide and develop their block by building a house or duplex and then selling the new dwelling. When someone develops a property with the intention of selling the finished product at a profit in the short term, there is a risk that this will be taxed as income rather than under the capital gains tax rules. This limits the availability of CGT concessions (such as the 50% CGT discount) and will often expose the owners to GST liabilities as well. This can be the case even for one-off property developments. Let’s look at an example. Claude purchased his home on 1 July 2001 for $300,000. In July 2020, Claude began investigating the idea of subdividing his block and building a new house, then selling it. A registered valuers report on the subdivision says that the original house and land is now worth $360,000, and the subdivided lot is worth $240,000 (the valuation is an important step before commencement to prevent any debates with the ATO). Claude decides to go ahead and build a dwelling on the newly subdivided block and takes out a loan of $400,000 for the development. He intends to pay off the loan as soon as the house sells. In July 2021, Claude sells the subdivided block and new home for $1,210,000 (GST-inclusive). Here is how the tax works for Claude’s scenario: Claude made an overall economic gain of $580,000. The overall gain ($580,000) is based on the GST exclusive sale proceeds ($1,100,000, although we are assuming that the GST margin scheme isn’t applied) minus the GST exclusive development expenses ($400,000) and the original cost attributable to the newly subdivided lot of $120,000 ($300,000 × 40%). The increase in the value of the newly created subdivided lot from when it was originally acquired (1 July 2001) up to when the profit-making activities began (1 July 2020) should be treated as a capital gain. The value of the newly created subdivided lot at the time Claude began to undertake profit-making activities on 1 July 2020 was $240,000. The original cost, attributable to the newly created subdivided lot was $120,000 (40% × $300,000) on 1 July 2001. This means that there is a capital gain of $120,000. As Claude has held the subdivided block for greater than 12 months he is entitled to a 50% CGT discount, hence there is a discounted capital gain of $60,000. The increase in the value of the newly created subdivided lot from when the profit-making activities began up to the time of sale should be treated as ordinary income. The net profit ($460,000) will be based on the GST-exclusive sale proceeds ($1,100,000) minus the GST-exclusive development expenses ($400,000) and the value of the subdivided lot ($240,000). If Claude is not carrying on a business, he cannot claim a deduction for the development expenses as they are incurred. They will be taken into account in determining the net profit on sale. If Claude finished the development but decided not to sell the property, then this would complicate the income tax and GST treatment. We would need to explore what Claude plans to do with the property. Do I need to register for GST? If you are an individual who is subdividing land that has been held and used for private purposes then you might not need to GST, although this will depend on the situation. However, if you are engaged in a property development business or a one-off project that is undertaken in a business-like manner, then it is more likely that you would need to register for GST. In Claude’s scenario, because the projected sale price of the developed land was above the GST threshold of $75,000, he will probably need to register for GST. This will mean that he: Has a ‘default’ GST liability of $110,000 on the sale price of the developed block, although it might be possible to reduce the GST liability by applying the GST margin scheme Needs to provide a notification to the purchaser of the amount at settlement to be withheld and paid to the ATO Is able to claim $40,000 credits for the GST included in the development expenses (subject to the normal GST rules), and Must report these transactions by completing business activity statements. The tax consequences of subdivision and other property projects can be complex. If you are contemplating undertaking a subdivision and any property development activities, please contact Collins Hume on 02 6686 3000 and we can help walk you through the scenarios and tax impact of the project.

Help Make Marisa’s Every Step Count Against Melanoma and Skin Cancer You’re invited to be part of a life-changing journey — Jay's Mission Melanoma Walk '23. This event is not just a walk; it's a powerful statement of endurance, awareness and hope. Collins Hume Senior Accountant Marisa Worling will join “The Melanoma Man” Jay Allen and his dedicated team this November as they take on the inspiring challenge of walking from Merimbula to Port Melbourne over two weeks, covering a remarkable distance of 621km from Saturday 18 November to Friday 1 December. “I want to raise awareness and funds for not only melanoma but also skin cancer in general and have joined up with Jay to complete the walk. We have been set a target of $10,000 to be raised by the time the walk is completed on the first day of summer,” says Marisa. How you can help We invite you to be a part of this inspiring movement by donating generously — help Marisa to smash her $10,000 target to fuel melanoma research, support and awareness. Every contribution makes a difference. Why walk for melanoma? The statistics are stark: in Australia alone, an estimated 16,000 people will be diagnosed with melanoma this year. Shockingly, that means someone will hear the words "you have melanoma" every 30 minutes. And it's not just melanoma — over 1 million individuals will also face diagnoses of non-melanoma skin cancers, including Basal Cell Carcinoma and Squamous Cell Carcinoma. Mission Melanoma: Support, Educate, Fund Research, Advocate Jay's Mission Melanoma Walk '23 is more than a fundraiser; it's a call to action dedicated to providing critical support, education, funding for research and a driving force for advocacy against melanoma and non-melanoma skin cancers. Every step we take with Marisa as part of Jay’s team contributes to this vital mission. Marisa's Inspiring Journey from Diagnosis to Triumph Marisa Worling is a true testament to resilience and triumph over adversity. In 2017, Marisa faced a Stage 4 melanoma diagnosis that turned her life upside down which she talks about candidly. Despite the challenges, she emerged stronger, undergoing surgeries, revolutionary treatments and therapy. After a tough battle, Marisa reclaimed her passion for running, completing the 50km Ultra Trail Australia. “Being able to run and walk is very important to me as, at the time of my diagnosis, I really didn’t know what my future was going to be, so I didn’t want to take it for granted. And this is especially why being involved in the walk is pretty special,” says Marisa. “I'm also hoping that sharing my story and being involved in the walk will bring hope to others who have been given a similar diagnosis as mine,” she added. Marisa's journey is a beacon of hope for others facing similar battles. She understands the significance of every step and cherishes her mobility. By joining Jay's Mission Melanoma Walk '23, Marisa aims to share her story, raise awareness and fundraise to support others fighting melanoma and skin cancer. Remember, every step taken brings everyone closer to a world without melanoma. Please support Marisa in her incredible journey, for everyone who has been touched by melanoma. Together, they walk towards a brighter, healthier future. For more information, visit https://www.australianskincancerfoundation.org/mission-melanoma-event. To donate, visit https://jaysmissionmelanomawalk23.raisely.com/marisa-worling. #JayMissionMelanomaWalk23 #WalkForACause #JoinTheJourney 👟🏃

What does it take to hand your business to the next generation? What is the end game for your business? Succession is not just a topic for a TV series or billionaire families, it’s about successfully transitioning your business and maximising its capital value for you, the owners. When it comes to generational succession of a family business, there are a few important aspects: Succession of the business; Succession of the ownership of the business; Succession planning/pathway; and Moving from a business family to an investment family. For generational succession to succeed, even if that succession is the sale of the business and the management of the sale proceeds for the benefit of the family, communication is essential. Where generational succession fails, it is often because succession has not been formalised until a catalyst event or retirement planning requires it. A concept of ‘legacy’ is not enough. Successful succession occurs when the guiding principles of governance, family rules, aligning values, dispute resolution, succession and estate planning are managed well before discontent tears it apart. Generational succession usually involves the transfer of an interest in a business to another generation of a family (usually younger). It is often a family in business rather than simply a family business. “One-third of Australian family businesses expect that the next generation will become the majority shareholders within 5 years time. Yet only 25% of Australian family businesses have a robust, documented and communicated succession plan in place.” — Family Business Survey The options for how a movement of an interest may occur are many and varied but usually focus on the transfer of some or all of the equity held in the business over a period or at a defined point in time and the payment of some form of consideration for the equity transferred. Alternatively, a part of the equity transfer may ultimately be dealt with through the estate. Generational succession comes with its own set of issues that need to be dealt with: Capability and willingness of the next generation A realistic assessment of whether the business can continue successfully after the transition. In some cases, the older generation will pursue generational succession either as a means of keeping the business in the family, perpetuating their legacy, or to provide a stable business future for the next generation. While reasonable objectives, they only work where there is capability and willingness. Communication of expectations is essential. Capital transfer Consider the capital requirements of the exiting generation. To what extent do you need to extract capital from the business at the time of the transition? The higher the level of capital needed, the greater the pressure on the business and the equity stakeholders. In many cases, the incoming generation will not have sufficient capital to buy-out the exiting generation. This will require the vendors to maintain a continuing investment in the business or for the business to take on an increased level of debt. Either scenario needs to be assessed for its sustainability at a business and shareholder level. In some scenarios the exiting owners will transition their ownership on an agreed timeframe. Managing remuneration In many small and medium businesses, the owners arrange their remuneration from the business to meet their needs rather than being reasonable compensation for the roles undertaken. This can result in the business either paying too much or too little. Under generational succession, there should be an increased level of formality around compensation. Compensation should be matched to roles, and where performance incentives exist, these should be clearly structured. Who has operational management and control? Transition of control is often a sensitive area. It is essential to establish and agree in advance how operating and management control will be maintained and transitioned. This is important not only for the generational stakeholders but also for the business. Often the exiting business owners have a firm view on how the business should be run. Uncertainty in the management and decision-making of the business can lead to confusion or a vacuum - either will have an adverse impact. Tensions often arise because: The incoming generation want freedom of decision-making and the ability to put their imprint on the business. Without operating control, they feel that they have management in name only. The exiting generation believe that their experience is necessary to the business and entitles them to a continued say. A perception that capital investment should equate to ultimate operating control. An uncertainty by either or both generations about the extent of their ongoing roles. Agreeing transition of control in advance, on an agreed timeframe, can significantly reduce tensions. Transition timeframes and expectations Generational succession is often a process rather than an event. The extended timeframe for the transition requires active management to ensure that there are mutual expectations and to avoid the process being derailed by frustration. The established generation may have identified that they want to scale down their business involvement and bring on other family members to succeed them. This does not necessarily mean that they want to withdraw completely. An extended transition period is not uncommon and can often assist the business in managing the change. This can also work well in managing income and capital withdrawal requirements. The need for greater formality and management structure A danger for many SMEs is the blurring of the boundaries between the role of the Board, shareholders, and management. With generational succession, this can become even more pronounced. Formality in these structures is important, with clear definitions of the roles and clarification of the expectations. For example, who should be a director and what is their role? For some, the role of the family is managed by a family constitution – an agreed set of rules. For others there will be an external advisory group that advises the family to ensure that the required independent expertise is brought to bear. Successfully managing generational change is a process we can help you navigate. Talk with Collins Hume about how we can help to structure an effective transition path.

Do you remember dial-up internet access? How about audio cassettes? Don’t worry if you don’t; they are, of course, a thing of the past. A 30-year mortgage with one lender is a bit the same – a thing of the past and something that is largely obsolete nowadays, especially given the current climate. Common reasons to refinance Secure a more competitive interest rate Make the most of possible interest-saving features like offset accounts or redraw facilities Access equity for renovations, additional properties or other financial goals Consolidate debt. With the cost of living going through the roof and home loan interest rates shooting up from a record low of 0.1 since last May, more and more people are refinancing their mortgages – 2,370 every working day in Australia, to be precise. Homeowners have experienced the fastest tightening cycle in a generation, and many are ditching their current lender for a more competitive mortgage elsewhere. Analysis from the Australian Banking Association (ABA) found 70 per cent of bank customers who refinanced their mortgage in the past six months did so with another lender. If, like them, you feel it’s time to shop around, here’s why you should use a mortgage broker to refinance. Expertise you can trust At the moment there is intense competition in the home loan industry. Banks are hungry for your business and are offering all sorts of sweeteners to get you on board. Cashback offers. Rate discounts. Package deals. The whole shebang. So, how do you know which home loan is most suited for you? That’s where you need a professional on your team. A mortgage broker is a trained finance specialist. They know the system and which products best suit your needs. They are also across all the latest industry developments, so you gain access to a wealth of knowledge by working with them. Tailored finance solutions There’s no one-size-fits-all mortgage. Everyone’s financial situation and goals are different, which is why you need tailored finance solutions. A mortgage broker will find a loan that’s appropriate for your specific needs. If they think you could benefit from loan features like an offset account or redraw facility, they'll explain why. But they must work in your best interests and won’t push any extras on you that you don’t actually need. Options, options and more options If you go directly to your current lender asking for a more competitive rate, you only get what they are able to offer i.e. their loan products and the rates they are prepared to put on the table. A mortgage broker, on the other hand, has access to the full smorgasbord – a panel of lenders with different types of products, features and benefits. What about commissions? The commissions they receive are pretty similar across lenders. This ensures there’s no incentive for a broker to recommend one over another. Their role and obligation is to act in your best interests. Make your life easier Trying to understand all the different home loan products out there can be stressful and overwhelming. With a mortgage broker, they can take the burden out of refinancing. They can also liaise with your chosen lender and facilitate the whole process. Prepare for the fixed-rate cliff One-fifth of Australian home loans will revert from fixed to variable in 2023. Do you fall into this category? If you do, it’s worth speaking to a mortgage broker about your refinancing options. Your current lender’s variable rate may not be the most competitive or appropriate for your circumstances, so it’s important to get a second opinion. Clients of Collins Hume are eligible for an obligation-free finance appraisal. Contact our team on 02 6686 3000 to find out more. General Advice Warning The information provided is general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. This article does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

There could be a few reasons your return refund doesn't look as robust as in past years, according to the ATO: Your refund could have been offset against other debt you have There could be a difference between the details in your tax return and the pre-fill information data Your income and deductions are different from last year. But the most likely culprit for a low refund — or even a tax bill — is the discontinuation of the low and middle income tax offset (LMITO). Introduced in 2018/19 Budget, the LMITO gave those earning between $37,000 and $126,000 a tax benefit of up to $1,500 depending on how much they earned. Those earning between $40,001 and $90,000 got the full $1500 offset. The ATO reported that more than 10 million people claimed the LMITO in the 20/21 financial year. Well, the good times are over as the LMITO ran out on 30 June 2022. So, if you have a discrepancy of about $1,500 in your 22/23 return refund, the missing LMITO could be the cause. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here » Source: https://www.abc.net.au/news/2023-07-10/why-is-my-tax-return-so-low-this-year-tax-return-ato/102558758

The 120% skills and training and technology costs deduction for SMBs has passed Parliament Here's how to maximise your deductions Almost a year after the 2022-23 Federal Budget announcement, the 120% tax deduction for expenditure by small and medium businesses (SMB) on technology, or skills and training for their staff, is finally law. But there are a few complexities in the timing — to utilise the technology investment boost, you had to of purchased the technology and when it comes to acquiring eligible assets, installed it ready for use by 30 June 2023; that’s just seven days from the date the legislation passed Parliament. Who can access the boosts? The 120% skills and training, and technology boosts are available to small business entities (individual sole traders, partnership, company or trading trust) with an aggregated annual turnover of less than $50 million. Aggregated turnover is the turnover of your business and that of your affiliates and connected entities. $20k technology investment boost The Technology Investment Boost provides SMBs with a bonus deduction for expenses and depreciating assets for digital operations or digitising from 7:30pm (AEST) on 29 March 2022 until 30 June 2023. You ‘incur’ an expense when you are in debt for it; this might be a tax invoice or it might be a contract where you are legally liable for the cost. For depreciating assets, like computer hardware, there is an extra step. The technology needs to have been purchased and installed ready for use. For example, if you ordered 10 computers, you need to have received the computers and had them set up ready to use by at least 30 June 2023. Ordering them on 29 June won’t be enough to claim the boost if you did not receive them. The types of expenses that might be eligible for the technology boost include: Digital enabling items - computer and telecommunications hardware and equipment, software, internet costs, systems and services that form and facilitate the use of computer networks; Digital media and marketing - audio and visual content that can be created, accessed, stored or viewed on digital devices, including web page design; E-commerce - goods or services supporting digitally ordered or platform-enabled online transactions, portable payment devices, digital inventory management, subscriptions to cloud-based services, and advice on digital operations or digitising operations, such as advice about digital tools to support business continuity and growth; or Cyber security - cyber security systems, backup management and monitoring services. The technology also must be “wholly or substantially for the purposes of an entity’s digital operations or digitising the entity’s operations”. That is, there must be a direct link to your business’s digital operations. For example, claiming the drone you bought at say Christmas 2022 won’t be deductible unless your business is, for example, a real estate agency that needed a drone to take aerial images of client homes to market on their website. The expense needs to relate to how the business earns its income, in particular its digital operations. Repair and maintenance costs can be claimed as long as the expenses meet the eligibility criteria. Where the expenditure has mixed use (i.e., partly private), the bonus deduction applies to the proportion of the expenditure that is for business use. There are a few costs that the technology boost won’t cover such as costs relating to employing staff, raising capital, construction of business premises, and the cost of goods and services the business sells. The boost will not apply to: Assets that you purchased but then sold within the relevant period (e.g., on or prior to 30 June 2023). Capital works costs (for example, improvements to a building used as business premises). Financing costs such as interest expenses. Salary or wage costs. Training or education costs, that is, training staff on software or technology won’t qualify (see Skills and Training Boost). Trading stock or the cost of trading stock. Example Let’s look at the example of A Co Pty Ltd (A Co) that purchased multiple laptops on 15 July 2022 to help its employees to work from home. The total cost was $100,000. The laptops were delivered on 19 July 2022 and immediately issued to staff entirely for business use. As the holder of the assets, A Co is entitled to claim a deduction for the depreciation of a capital expense. A Co can claim the cost of the laptops ($100,000) as a deduction under the temporary full expensing in its 2022-23 income tax return. It can also claim the maximum $20,000 bonus deduction in its 2022-23 income tax return. The $20,000 bonus deduction is not paid to the business in cash but is used to offset against A Co’s assessable income. If the company is in a loss position, then the bonus deduction would increase the tax loss. The cash value to the business of the bonus deduction will depend on whether it generates a taxable profit or loss during the relevant year and the rate of tax that applies. The good news for many eligible businesses is that your technology subscriptions and other products you use in your business might qualify for the boost. The boost is claimed in your tax return with the extra 20% sitting on top your normal claim. That is, however the way the expense or asset is claimed (immediately or over time), the bonus 20% applies in the same way. The Skills and Training Boost The Skills and Training Boost gives you a 120% tax deduction for external training courses provided to employees. The aim of this boost is to help SMBs grow their workforce, including taking on less-skilled employees and upskilling them using external training to develop their skills and enhance their productivity. Sole traders, partners in a partnership, independent contractors and other non-employees do not qualify for the boost as they are not employees. Similarly, associates such as spouses or partners, or trustees of a trust, don’t qualify. As always, there are a few rules: Registration for the training course had to be from 7:30pm (AEST) on 29 March 2022 until 30 June 2024. If an employee is part the way through an eligible training course, enrolments in courses or classes after 29 March 2022 are eligible, not before. The training needs to be deductible to your business under ordinary rules. That is, the training is related to how the business earns its income. A registered training provider needs to charge your business (either directly or indirectly) for the training (see What organisations can provide training for the boost). The training must be for employees of your business and delivered in-person in Australia or online. The training provider cannot be your business or an associate of your business. Training expenditure can include costs incidental to the training, for example, the cost of books or equipment necessary for the training course but only if the training provider charges the business for these costs. Let’s look at an example. Animals 4U Pty Ltd is a small entity that operates a veterinary centre. The business recently took on a new employee to assist with jobs across the centre. The employee has some prior experience in animal studies and is keen to upskill to become a veterinary nurse. The business pays $3,500 for the employee to undertake external training in veterinary nursing. The training meets the requirements of a GST-free supply of education. The training is delivered by a registered training provider, registered to deliver veterinary nursing education. The bonus deduction is calculated as 20% of the amount of expenditure the business could typically deduct. In this case, the full $3,500 is deductible as a business operating expense. Assuming the other eligibility criteria for the boost are satisfied, the bonus deduction is calculated as 20% of $3,500. That is, $700. In this example, the bonus deduction available is $700. That does not mean the business receives $700 back from the ATO in cash, it means that the business is able to reduce its taxable income by $700. If the company has a positive amount of taxable income for the year and is subject to a 25% tax rate, then the net impact is a reduction in the company’s tax liability of $175. This also means that the company will generate fewer franking credits, which could mean more top-up tax needs to be paid when the company pays out its profits as dividends to the shareholders. What organisations can provide training for the boost? Not all courses provided by training companies will qualify for the boost; only those charged by registered training providers within their registration. Typically, this is vocational training to learn a trade or courses that count towards a qualification rather than professional development. Qualifying training providers will be registered by: Tertiary Education Quality and Standards Agency (search the register – includes States and Territories) Australian Skills Quality Authority (ASQA) Victorian Registration and Qualifications Authority (search the register) Training Accreditation Council of Western Australia While some training you might want to have engaged might not be delivered by registered training organisations, there is still a lot out there, particularly the short-courses offered by universities, or the flexible courses designed for upskilling rather than as a degree qualification. If you have recently completed performance reviews for staff and training is part of their development pathway, it might be worth exploring. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

What changed on 1 July 2023? Employers and business Superannuation guarantee increases to 11% from 10.5% National and Award minimum wage increases take effect. The minimum salary that must be paid to a sponsored employee - the Temporary Skilled Migration Income Threshold - increased to $70,000 from $53,900. Work restrictions for student visa holders reintroduced to 48 hours per fortnight. The cap on claims via the small claims court procedures for workers to recover unpaid work entitlements increases from $20,000 to $100,000. Energy Bill Relief Fund for small business kicks in – it will apply to your energy bills if you meet the criteria. Sharing economy reporting to the ATO commences for electronic distribution platforms. Superannuation Superannuation guarantee increases to 11% Indexation increases the general transfer balance cap to $1.9 million. Minimum pension amounts for super income streams return to default rates. SMSF transfer balance event reporting moves from annual to quarterly for all funds. For you and your family The new 67 cent fixed rate method for working from home deductions – make sure you have a record of when you work from home. The ATO won’t accept a simple “I work from home every Wednesday” x 8 hours calculation. Access to the first home loan guarantee expands to “friends, siblings, and other family members.” The Medicare low income threshold has increased for 2022-23. The child care subsidy will increase from 10 July 2023 for families with household income under $530,000. See the Services Australia website for details. New parents able to claim up to 20 weeks paid parental leave. Access the age pension increased to 67 years of age. Important: 1 July 2023 wage increases For employers, incorrectly calculating wages is not portrayed as a mistake, it’s “wage theft.” Beyond the reputational issues of getting it wrong, the Fair Work Commission backs it up with fines of $9,390 per breach for a corporation. In 2021-22 alone, the Fair Work Ombudsman recovered $532 million in unpaid wages recovered for over 384,000 workers. On 1 July 2023, award rates of pay and the National Minimum Wage increased by 5.75%. It is critically important that all employers review their payroll systems and ensure they are applying the correct rates and Awards. The National Minimum Wage applies to workers not covered by an Award or registered agreement. From 1 July 2023, the National Minimum wage has increased to $23.23 per hour ($882.80 per week for a full time employee working a standard 38 hours week). For casuals, the minimum wage including the 25% casual loading is a minimum of $29.04 per hour. For workers under an Award, adult minimum award wages increase by 5.75% applied from the first full pay period on or after 1 July 2023. Proportionate increases apply to junior workers, apprentice and supported wages. In addition, the superannuation guarantee increased from 10.5% to 11% on 1 July 2023. If the employment agreement with your workers states the employee is paid on a ‘total remuneration’ basis (base plus SG and any other allowances), then their take home pay might be reduced by 0.5%. That is, a greater percentage of their total remuneration will be directed to their superannuation fund. For employees paid a rate plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their SG payments. Cents per kilometre increase The cents per kilometre rate for motor vehicle expenses for 2023-24 has increased to 85 cents. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

FBT on cars, other vehicles, parking and tolls How FBT applies to cars, other motor vehicles, electric cars, car leasing, car parking and road tolls. It’s a common myth that fringe benefits tax (FBT) doesn’t apply to dual cabs. However, this isn’t correct. Here’s what you need to know about FBT Cars and FBT Read how FBT applies to cars, private versus business use, car leasing, and calculating the value of a car fringe benefit. Exempt use of eligible vehicles Your employee’s limited private use of a ute, van or other eligible vehicle may be exempt from FBT. Read more » Electric cars exemption From 1 July 2022 employers do not pay FBT on eligible electric cars and associated car expenses. Read more » Car parking and FBT Read how FBT applies to car parking, exemptions for small businesses and disabilities and how to calculate taxable value. Road and bridge tolls and FBT Find out when FBT applies to road and bridge tolls, and work out the taxable value of tolls. While there’s an exemption for eligible commercial vehicles, this applies only if private use is limited. If you are taking the work ute to the footy every weekend, you may need to re-evaluate your FBT obligations. How to contact us We’re available to assist you with tax planning including tax deductions: Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »

Super savings and strategies Tax deductions for topping up super You can make up to $27,500 in concessional contributions each year assuming your super balance has not reached its limit. If the contributions made by your employer or under a salary sacrifice agreement have not reached this $27,500 limit, you can make a personal contribution and claim a tax deduction for the contribution. It’s a great way to top up your super and reduce your tax. For those aged between 67 and 74, you will need to meet the ‘work test’ to contribute personal concessional contributions and claim a deduction - you must have worked at least 40 hours within 30 consecutive days in a financial year before your super fund can accept voluntary contributions from you. To be able to claim the tax deduction for these contributions, the contribution needs to be with the super fund before 30 June (watch out for processing times). You will also need to lodge a Notice of intent to claim or vary a deduction for personal super contributions with your super fund before you lodge your tax return to advise them of the amount you intend to claim as a deduction. Bringing forward unused contribution caps If your total super balance is below $500,000, and you have not reached your cap in the previous four years, you might be able to carry forward any unused contributions and make a larger tax deductible contribution this year. For example, if your total concessional contributions in the 2021-22 financial year were $10,000, you can ‘carry forward’ the unused $17,500 into this financial year, make a higher personal contribution and take the tax deduction. This is a helpful way to reduce your tax liability particularly if you have made a capital gain. If you have never used your contribution cap, for example you have recently become a resident or have returned from overseas, you can also bolster your superannuation by contributing the five years’ worth of concessional contributions in one year (assuming you have not reached your balance cap). Doubling the benefit for SMSFs For self managed superannuation funds, a quirk in the way concessional contributions are reported means that a concessional contribution can be made in June, but not allocated to the member until 28 days later in July. The practical effect is that a member can make a contribution of up to $55,000 this financial year (2 x the $27,500 cap - assuming you have not used your cap) and take the full tax deduction, but the fund recognises the contribution in two amounts; one amount in June and the second allocated to the member from the SMSF’s reserve in July. This strategy is particularly helpful for the self-employed who need to boost their superannuation and reduce their tax liability in a particular year. Top up your partner’s super With a cap on how much you can transfer into a tax-free retirement account, it makes sense to even out how much super each person holds to maximise the tax savings for a couple. If your spouse’s assessable income is less than $37,000, make a contribution of $3,000 or more on their behalf and you can take a tax offset of up to $540. Another way of topping up your spouse super is super splitting. If your spouse has not retired and below their preservation age, you can roll over up to 85% of a financial year’s taxed splitable contributions to their account. Thinking of retiring? Wait until 1 July From 1 July 2023, indexation will increase the general transfer balance cap, the amount you can transfer into a tax-free retirement account, by $200,000 to $1.9m. For those contemplating retiring very soon, by waiting until after 1 July 2023 before starting a retirement income stream, you will have access to this additional $200,000 cap of tax-free superannuation savings. How to contact us It's important to speak to a financial professional before taking any action on superannuation strategies. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000 Read more tax planning topics here » Access our free tax factsheets here »