Low interest rates have been a mainstay since the global financial crisis of 2008 When the pandemic hit, Governments pushed stimulus measures through the economy and central banks reduced interest rates even further. Coming out of COVID, housing market demand was strong and prices boomed but at the same time, supply chains remained restricted and the problems amplified by geo-political tensions increasing input costs. Supply could not keep up with demand to support the recovery, pushing inflation higher and broader than expected for a longer period of time. To control inflation, central banks have responded by tightening monetary policy and lifting interest rates. But the good news is that inflation is likely to ease. Inflation in the US has started to decrease from a high of over 9% in June 2022 to 7.7% in October, suggesting that interest rates may not rise as high and as aggressively as expected. Similarly in Australia, the Reserve Bank of Australia (RBA) Board raised the cash rate by 0.25% to 2.60% at its October 2022 meeting, a lower increase than many expected. The lower than expected rise suggests that inflation pressures, particularly wages growth, will be more subdued in Australia than overseas. Comparatively, Australian households are more sensitive to interest rates with more than 60% of mortgages variable rate loans. This is unlike the US where most borrowers are on 30-year fixed loans. The increase in interest rates is starting to take effect helping to restore price stability. However, in its statement, the RBA said that it will be a challenge to return inflation to 2-3% while at the same time “keeping the economy on an even keel”. It concluded the path to achieving this balance is “a narrow one and it is clouded in uncertainty”. In housing, the correction in house prices deepened and broadened across Australia, with capital city prices falling by 1.4% in September 2022, rounding out a 4.3% decline over the third quarter. Housing finance approvals also continued to mirror the broader correction to date, with further declines across investor and owner-occupier loans. So, where does all of this leave us? Inflation will stay higher for longer than originally anticipated. As a result, interest rates are expected to continue to increase, albeit at a slower rate, with the RBA resetting their view along the journey. Economists are predicting that the cash rate will increase to somewhere between 3.10% and 3.85% in the first half of 2023 and then remain stable until early 2024 before RBA policy pivots and interest rates lower in early 2024. Canstar analysis suggests that a 3.85% cash rate translates to an average variable rate of 6.73%. The difference between a 5.73% variable rate mortgage and 6.73% is $650 per month on a $1 million, 30-year mortgage. How to contact us We’re available to assist you with budgeting. Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000.

Tax & Christmas It’s that time of year again — what to do for the Christmas party for the team, customers, gifts of appreciation for your favourite accountant (just kidding)? Here are our top tips for a generous and tax-effective Christmas season. For GST-registered businesses (not tax-exempt) that are not using the 50-50 split method for meal entertainment. For your business What to do for customers? The most effective way of sharing the Christmas joy with customers is not necessarily the most tax effective. If, for example, you take your client out or entertain them in any way, it’s not tax deductible and you can’t claim back the GST. There are specific rules designed to prevent deductions and GST credits from being claimed when the expenses relate to entertainment, regardless of whether there is an expectation of generating goodwill and increased business sales. Restaurants, a show, golf, and corporate race days all fall into the ‘entertainment’ category. However, if you send your customer a gift, then the gift is tax deductible as long as there is an expectation that the business will benefit (assuming the gift does not amount to entertainment). Even better, why don’t you deliver the gift yourself for your best customers and personally wish them a Merry Christmas. It will have a much bigger impact even if they are not available and the receptionist tells them you delivered the gift. From a marketing perspective, if your budget is tight, it’s better to focus on the customers you believe deliver the most value to your business rather than spending a small amount on every customer regardless of value. If you are going to invest in Christmas gifts, then make it something people remember and appropriate to your business. You could also make a donation on behalf of your customers (where your business takes the tax deduction) or for your customers (where they receive the tax deduction). Donations to deductible gift recipients (DGRs) above $2 are often tax deductible and can make an active difference to a cause. What to do for your team? Christmas is expensive. Some businesses simply can’t afford to do much because cash flow is too tight. Expectations are high so if you are doing something then it’s best not to exacerbate cashflow problems and take advantage of any tax benefits or concessions you can. Christmas parties If you really want to avoid tax on your work Christmas party then host it in the office on a workday. This way, Fringe Benefits Tax (FBT) is unlikely to apply regardless of how much you spend per person. Also, taxi travel that starts or finishes at an employee’s place of work is exempt from FBT. So, if you have a few team members that need to be loaded into a taxi after overindulging in Christmas cheer, the ride home is exempt from FBT. If your work Christmas party is out of the office, keep the cost of your celebrations below $300 per person if you want to avoid paying FBT. The downside is that the business cannot claim deductions or GST credits for the expenses if there is no FBT payable in relation to the party. If the party is held somewhere other than your business premises, then the taxi travel is taken to be a separate benefit from the party itself and any Christmas gifts you have provided. In theory, this means that if the cost of each item per person is below $300 then the gift, party and taxi travel can potentially all be FBT-free. Just remember that the minor benefits exemption requires a number of factors to be considered, including the total value of associated benefits provided across the FBT year. If entertainment is provided to employees and an FBT exemption applies, you will not be able to claim tax deductions or GST credits for the expenses. If your business hosts slightly more extravagant parties and goes above the $300 per person minor benefit limit, you will pay FBT but you can also claim a tax deduction and GST credits for the cost of the event. Just bear in mind that deductions are only useful to offset against tax. If your business is paying no or limited amounts of tax, a tax deduction is not going to help offset the cost of the party. Christmas gifts for staff $300 is the minor benefit threshold for FBT so anything at or above this level will mean that your Christmas generosity will result in a gift to the Tax Office as well at a rate of 47%. To qualify as a minor benefit, gifts also have to be ad hoc - no monthly gym memberships or giving one person multiple gift vouchers amounting to $300 or more. Gifts of cash from the business are treated as salary and wages – PAYG withholding is triggered and the amount is subject to the superannuation guarantee. Aside from the tax issues, think about what will be of value to your team. The most appreciated gift is the one that means something to the individual. Giving a bottle of wine to someone who doesn’t drink, chocolates to a health fanatic, or time off to someone with excess leave, isn’t going to garner much in the way of goodwill. A sincere personal message will often have a greater impact than a standard gift. Collins Humes offices in Ballina and Byron Bay will close at 5PM on Thursday 22 December 2022 and reopen after the break at 8AM on Monday 9 January 2023.

Can you prevent a hack? In the wake of the Optus data leak, legislation before Parliament will lift the maximum fine for serious or repeated breaches of the Privacy Act from $2.2m to up to $50m. But there are no guarantees that even the strongest safety measures will prevent an attack. So, what does that mean for business and their customers? Legislation before Parliament will lift penalties for serious or repeated privacy breaches, provide new powers to the Australian Information Commissioner, require entities to provide detailed data to the Information Commissioner to assess public risk, and give the regulator greater information sharing powers. In a statement, Attorney General Mark Dreyfus said, “When Australians are asked to hand over their personal data they have a right to expect it will be protected.” But the question is, can any business claim that customer data will be protected from hackers? If a customer needs to disclose their personal information to your business to work with you, at the point the data is collected, your business is the custodian of that data. A duty of care exists from the moment the data is collected to the point the information is no longer required and is destroyed. The Privacy Act requires organisations to take “reasonable steps” to protect the data collected. ‘Reasonable’ steps “requires the existence of facts which are sufficient to [persuade] a reasonable person.” That is, in the event of a data breach, the business will need to prove the steps they have taken to protect client data. Lessons from RI Advice Australian Competition and Consumer Commission v RI Advice Group Pty Ltd was a landmark case. While specific to the obligations of an Australian Financial Services License (AFSL), it demonstrates that ASIC is willing to pursue companies that breach their duty of care and the directors and officers involved. RI advice is a financial services company that, through its AFSL, authorised representatives to provide financial services. As you would expect, as part of providing financial services, the authorised representatives received, stored and accessed confidential and sensitive personal information. Between June 2014 and May 2020, nine cybersecurity incidents occurred at practices of RI Advice’s Authorised Representatives. Enquiries following the incidents revealed: Computer systems which did not have up-to-date antivirus software installed and operating No filtering or quarantining of emails No backup systems or back-ups being performed; and Poor password practices including sharing of passwords between employees, use of default passwords, passwords and other security details being held in easily accessible places or being known by third parties. RI Advice took steps to manage their cybersecurity introducing a cyber resilience program, controls and risk management measures for its representatives including training, incident reporting, and contractual professional standard terms, but by its own admission, it took too long to implement. RI Advice was ordered to pay $750,000 towards ASIC's costs. Handing down the decision Justice Rofe said, “It is not possible to reduce cybersecurity risk to zero, but it is possible to materially reduce cybersecurity risk through adequate cybersecurity documentation and controls to an acceptable level.” Businesses must take all reasonable steps to comply with the obligations to prevent data breaches, and are not limited to cyber-attacks. How to contact us Contact Collins Hume Accountants & Business Advisers in Ballina or Byron Bay on 02 6686 3000.

Australian super funds gorge on cryptocurrency The value of cryptocurrency assets inside Australian self managed superannuation funds (SMSFs) increased by 589.9% ($1.17bn) between June 2019 and June 2022, according to the latest ATO statistics. While cryptocurrency is a relatively small asset class at only 0.16% of the $837bn held in SMSFs, it is a growing asset class, larger than collectables and personal use assets, and overseas property. Smaller funds, with an asset value below $200,000, are more likely to have a larger proportion of their value in cryptocurrency. ASIC warns of SMSF cryptocurrency scams Earlier this year, the Australian Securities and Investments Commission (ASIC) issued a warning on an increase in marketing encouraging Australians to switch from retail superannuation funds to SMSFs so they can invest in ‘high return’ portfolios. The regulator states that crypto-assets are a high risk and speculative investment and best practice is to seek advice from a licensed financial adviser before agreeing to transfer superannuation out of a regulated fund into an SMSF. An example of one of these schemes was A One Multi Services Pty Ltd that was shut down by ASIC late last year. The company promoted a scheme encouraging investors to roll their superannuation into an SMSF, then for the SMSF to loan money to A One Multi to generate “returns of between 10% and 20% on the investment and perhaps as high as 26%.” Over 60 SMSFs transferred $25 million into A One Multi’s accounts between January 2019 and June 2021. The money “invested” for the clients, between $7 million to $22 million of Bitcoin, was held in the name of one of the directors. An additional $5.7m was used by the directors to acquire property and luxury cars. Investing in crypto Trustees are free to invest in assets that meet the requirements of the fund and comply with the regulatory requirements: Trust Deed must allow for cryptocurrency assets. Most SMSF trust deeds are drafted broadly to enable trustees to invest in assets permitted by the superannuation laws and leave the investment strategy to manage the choice of assets and their appropriateness. However, it is important to check. Investment strategy — With cryptocurrency’s high volatility and risks, there must be clearly articulated information in the Investment Strategy. That is, it must articulate the trustees’ plan for making, holding and realising assets in a way that is consistent with the retirement goals of members being mindful of the member’s individual circumstances. Separation of assets – Cryptocurrency assets must be held in a wallet in the name of the SMSF and the IP address is provided to the SMSF auditors to verify the transactions (against the fund bank account). Problems often arise when a wallet (in the name of the SMSF) is connected to a personal credit card to acquire cryptocurrency. In these cases, the payment may be considered as either a contribution or a loan to the SMSF. Sole purpose test — Your SMSF needs to meet the sole purpose test to be eligible for the tax concessions normally available to super funds. This means your fund needs to be maintained for the sole purpose of providing retirement benefits to your members, or to their dependants if a member dies before retirement. Contact Collins Hume in Ballina or Byron Bay » ASIC has provided this reminder and general advice for SMSF trustees regarding their obligations and assets.

The deadline for existing directors of Australian companies to obtain a Director Identification Number is 30 November 2022. All directors of a company, registered Australian body, registered foreign company or Aboriginal and Torres Strait Islander corporation (ATSI) need a director ID. This includes directors of a corporate trustee of a self-managed super fund (SMSF). A director ID is a 15-digit identification number that, once issued, will remain with that director for life regardless of whether they stop being a director, change companies, change their name, or move overseas. For those who have been a director since 31 October 2021, the deadline for obtaining a director ID is 30 November 2022 unless you are a director of an Aboriginal and Torres Strait Islander corporation, then the deadline is 30 November 2023. For overseas directors, the process to obtain a director ID can be onerous as applications cannot be made online. In addition to the paper application form, you will need copies of one primary and one secondary identity document (or primary identity documents) certified by notaries public or at an Australian embassy. For those who have been invited to become a director but are not a director as yet, if you do not have a director ID, you will need to obtain one prior to being appointed. You do not need a director ID if you are running a business as a sole trader or partnership, or you are a director in your job title but have not been appointed as a director under the Corporations Act or Corporations (Aboriginal and Torres Strait Islander) Act (CATSI). Need an extension? If you need an extension, as soon as possible contact the Australian Business Registry service on 13 62 50 (+61 2 6216 3440 outside of Australia). Your identity will need to be established so have your documentation ready. You can also apply for an extension using the paper form (https://www.abrs.gov.au/sites/default/files/2021-10/Application_for_an_extension_of_time_to_apply_for_a_director_ID.pdf) What happens if I don’t obtain an ID? If you are required to obtain a director ID but don’t, a criminal penalty of up to $13,200 might apply or a civil penalty of up to $1,100,000. Where an individual has deliberately applied for multiple IDs or misrepresented the director ID, the criminal penalty escalates to $26,640 and up to one year in prison. 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.

“Hi Mum, I have broken my phone and I am using this number” The “Hi Mum” scam exploded with more than 1,150 Australians falling victim to the ploy in the first seven months of 2022, with total reported losses of $2.6 million. Once the scammer establishes contact, they start requesting money for an urgent bill or a replacement phone etc. For those with children or dependent family members, it is not that hard to believe. According to the Australian Consumer and Competition Commission (ACCC), two-thirds of family impersonation scams were reported by women over 55 years of age. Another common scam is the 'lost' or unable-to-deliver package texts and voicemails. With Christmas just around the corner, we can expect to see another escalation of this scam where tracking links purportedly from Australia Post, Toll or Amazon etc., are used to install malware. Once accessed, the malware will access your contacts and spread the malware and potentially access your personal information and bank details. In July, the Australian Taxation Office (ATO) reported a new wave of ‘Tax refund SMSF scams’. The texts purported to be from the ATO stating that the individual had a tax refund and to click on the link and complete the form. Another scam purporting to be from the ATO advised that the recipient was suspected of being involved in cryptocurrency tax evasion and requested that they connect their wallet. At which point the wallet was accessed and any assets stolen. The ACCC’s Targeting Scams report states that in 2021, nearly $1.8bn in losses were reported but the real figure is likely to be well over $2bn. The largest combined losses in 2021 were: $701 million lost to investment scams with 2021 figures significantly increased by cryptocurrency scams — more scammers are seeking payment with cryptocurrency and losses to this payment method increased 216% to $84 million $227 million lost to payment redirection scams $142 million lost to romance scams. Protecting yourself from scams Help educate older relatives — those aged over 55 are the most likely to fall victim to a scam Always use the primary website or app of your suppliers, not a link from a text or email Don’t click on links from emails or text messages unless you are (absolutely) certain of the source — for email, if the sending email domain is not clear or hidden, hover over the name of the sending account to check if the email is from the company domain For Government services, use your MyGov account — any messages to you from the ATO or other Government services need will be published to your MyGov account. Never click on links purporting to be from a bank, ATO or Government department. Protecting your business from scams Payment redirection scams, where the email of the business is compromised, caused the highest reported level of loss for business in 2021 at a combined $227 million. Payment redirection scams involve scammers impersonating a business or its employees via email and requesting an upcoming payment be redirected to a fraudulent account. In some cases, scammers hack into a legitimate email account and pose as the business, intercepting legitimate invoices and amending the bank details before releasing emails to the unsuspecting business. Other times, scammers impersonate people using a registered email address that is very similar to one from a legitimate business. Educate your team about threats and what to look out for, the importance of passwords and password security, and how to manage customer information. Phishing attacks, if successful, provide direct access to your systems Ensure staff only have access to the business systems and information they need. Assess what is required and close out access to anything not required. Also assess how customer personal information is accessed and communicated. Personal information should not be emailed. Email is not secure and it is too easy for staff to inadvertently send data to the wrong person No shared login details or passwords Complete a risk assessment of your systems and add cybersecurity to your risk management framework Develop and implement cyber security policies and protocols. Have policies and procedures in place for who is responsible for cybersecurity, the expectations of staff, and what to do in the event of a breach. Your policies should prevent shadow IT systems, where employees download unauthorised software Understand your organisation’s legal obligations. For example, beyond the Privacy Act some businesses considered critical infrastructure such as some freight and food supply operations are subject to the Security of Critical Infrastructure Act 2018. This might involve small businesses in the supply chain Use multifactor authentication on your systems and third-party systems Update software and devices regularly for patches Back-up data and have backup protocols in place. If hackers use ransomware to lock your systems, you can revert to your backup If customer data is being shared with related or third parties domiciled overseas, ensure your customer is aware of where their data is domiciled and your business has taken all reasonable steps to enforce the Australian Privacy Principles. Your business is responsible for how the overseas recipient utilises your customer’s data Only collect the customer data you need to provide the goods and services you offer Ensure protocols are in place for accounts payable Remember the hardware – laptops, computers, phones. How can Collins Hume help? If you need assistance with identifying if you are being approached by a scammer, please feel free to give us a call on 02 6686 3000 to discuss in more detail. Our team is here to support you and it’s important that we start the conversation as scamming is a continuous risk in our technologically advanced world.

Donate to HELP save Australian wildlife Byron Bay Wildlife Hospital (BBWH) needs help fundraising for professional vet care for injured, sick and orphaned wildlife. In two years, BBWH built and sustained a state-of-the-art wildlife veterinary hospital from their permanent base in Knockrow and, when required, they can attend natural disasters like bushfires, floods, or disease outbreaks to provide lifesaving triage, treatment and care for critical masses of impacted wildlife via “Matilda”, Australia’s largest mobile wildlife hospital. This financial year BBWH will need $1.5 million to continue its ground-breaking work. Their professional veterinary services save wild lives, yet they provide their expertise for free. BBWH donation drive this November It costs an average of $555 per wildlife patient for an initial consult, anaesthesia, X-rays, pain relief, fluid therapy and hospitalisation, not including the cost of medicines or surgery. BBWH is hoping to generate a groundswell of fundraising in November that will see their philanthropic activities through another financial year. We’re spreading the word to invite you to make a tax-deductible one-time or regular monthly donation that helps get BBWH over the line. All donations over $2 are fully tax-deductible. BBWH holds Deductible Gift Recipient (DGR) status with the Australian Taxation Office. No one owns Australia’s wildlife, so a collective effort is needed to protect our native species. BBWH has treated approximately 3,000 injured, sick and orphaned native animals since opening its doors and hopes to be able to continue their much-needed work. Collins Hume is a proud supporter of Byron Bay Wildlife Hospital. Read more about our Legacy here »

Need help applying for a Director ID? The Australian Business Registry Services have started contacting directors who are required to apply now for a director identification number (director ID). Key points Collins Hume cannot apply for a director ID on a client’s behalf — directors must apply for a director ID themselves Apply for a director ID online at abrs.gov.au/directorIDapply Directors must set up their myGovID with a standard or strong identity strength before they apply for a director ID. Our clients who are currently directors or who are planning to become a director will need to apply for a director ID. Directors appointed under the Corporations Act: before 1 November 2021, must apply by 30 November 2022 between 1 November 2021 and 4 April 2022, must apply within 28 days of being appointed from 5 April 2022, must apply before being appointed. You can find more information about who needs to apply for a director ID at abrs.gov.au/deadlines. Applying for a director ID online Applicants will need at least two of the following Australian identity documents to prove their identity: Driver’s licence or learner’s permit Passport Birth certificate Visa (using a foreign passport) Citizenship certificate ImmiCard Medicare card You can find a list of documents that you can use to prove your identity at www.mygovid.gov.au/verifying-your-identity. Directors will need additional information that the Australian Taxation Office (ATO) knows about you when applying for a director ID online: Tax file number (not essential, but recommended) residential address as held by the ATO, and information from two documents to prove your identity — applicants can use any two of these documents: Bank account details held by the ATO ATO notice of assessment Super account details Dividend statement Centrelink payment summary PAYG payment summary. You can find more information about which documents can be used to prove your identity at abrs.gov.au/verify. Directors who don’t apply online The Australian Securities and Investment Commission (ASIC) is responsible for enforcing director ID offences set out in the Corporations Act 2001. It is a criminal offence if directors do not apply on time, for more information about the penalties that may be applied, visit asic.gov.au/director-id. Source: abrs.gov.au

ATO contacts ‘at risk’ professional services firms New guidelines for professional services firms — lawyers, architects, medical practitioners, etc — came into effect on 1 July 2022. The guidance takes a strong stance on structures designed to divert income in a way that results in principal practitioners receiving relatively small amounts of income personally for their work and reducing their taxable income. The ATO is now contacting professionals who they believe might be at risk. Any structural changes that need to be made to reduce risk, should be completed by the end of the 2022-23 financial year. Where the ATO deems that income has been diverted inappropriately to create a tax benefit, they will remove that benefit and significant penalties may apply. 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 »

Stamp duty or an annual property tax for NSW first home buyers? First home buyers purchasing property in NSW of up to $1.5m will have a choice of paying stamp duty or an annual property tax from 16 January 2023. The annual property tax payments will be based on the land value of the purchased property. The property tax rates for 2022-23 are: $400 plus 0.3% of land value for properties whose owners live in them $1,500 plus 1.1% of land value for investment properties. Property tax assessments will be issued annually to home buyers who take the annual property tax option. As an example, a first buyer purchasing a $1.2m NSW property with a land tax value of $720,000, could pay stamp duty of $50,875 or opt to pay the annual property tax ($2,560 for 2022-23). The property tax rates will be indexed annually. Eligible first home buyers who sign a contract of purchase on or after 16 January 2023 will be eligible to opt into the property tax. If the property tax option is selected, first home buyers must move into the property within 12 months of purchase and live in it continuously for at least 6 months. The annual property tax is only applicable to the purchaser. If the property is sold, the property tax does not apply to subsequent purchasers. For eligibility details, see First Home Buyer Choice on the NSW Government website. Legislation enabling the property tax is expected before the NSW Parliament this month. If passed, eligible first home buyers who sign a contract of purchase between the passage of the legislation and 15 January 2023 will be eligible to opt into the property tax. These purchasers will pay land stamp duty but will be able to apply for and receive a refund of that duty if they opt into property tax. Queensland backs down on Australia-wide land tax assessment The Queensland Government has backed away from an amendment that would have seen the land tax rate for investment property in Queensland assessed on the value of the investor’s Australia-wide land holdings from 1 July 2023, not just the value of their Queensland property. The amendment passed the Queensland Parliament and became law on 30 June 2022. The amendment would see the value of all of the landholder’s Australian investment property assessed, the value of Queensland land tax calculated on taxable Australian-wide investments, then apportioned to the Queensland portion of the land. The amendment requires the landholder to declare their interstate landholdings and data from other sources to verify the landholdings. The end result is many investors being tipped into a higher land tax rate. The Bill states, “The land tax reform is intended to make Queensland’s land tax system fairer by addressing an inequity which can result in a landholder with all of their landholdings in Queensland paying more land tax than a landholder with a similar value of landholdings spread across jurisdictions.” Following the National Cabinet Meeting on 30 September, Premier Palaszczuk rescinded the reform as it relied on the “goodwill of other states, and if we can't get that additional information, I will put that aside.” 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.

We're proud to announce that Collins Hume is officially Climate Neutral Certified! Science says we have just nine years to make the changes needed to tackle climate change. Overwhelming? Yes. But it’s also an opportunity. Collins Hume is now officially one of hundreds of companies committed to leading the way, right now. We've spent the last three months working with Climate Neutral to measure our carbon footprint. We calculated all of the emissions that it takes to do what our business does. We then offset all our carbon footprint by investing in climate change solutions. Collins Hume Partner Peter Fowler said, “Our recent partnership with 1% for the Planet is another crucial piece of our sustainability jigsaw.” “It’s important that we take action on the positive difference we can make as a business. We want to make a living legacy that will be timeless — one that’s about contribution as opposed to consumption.” Climate change requires immediate action There isn't a minute to waste when it comes to removing climate-changing emissions from our global economy. If every business were to measure, offset and reduce their emissions right now, we could accelerate this journey in a serious way. Look for the Climate Neutral Certified label to support the businesses that are taking immediate action on climate change. Tell your favourite ones that you want them to #beclimateneutral too. Together, we can solve the climate challenge. Let's get to work. Collins Hume is thrilled to be in good company with other Climate Neutral Certified brands. We believe in Climate Neutral’s mission of taking action now to solve a problem that we understand to be an urgent threat. Follow us on our journey — and let’s work together to tackle climate change faster. Solutions to climate change exist, they just need funding. If we can drive investment into these projects, we can cut our emissions and get on the right path to a zero-carbon future and a balanced, healthy climate. “We are thrilled that by coming to work every day, we can add value to our clients’ businesses and lifestyle, whilst doing our bit to make the planet a healthier and happier place,” Peter added. Read more at https://www.climateneutral.org/.

The October 2022 Federal Budget and what it means for business Last month the Treasurer, Dr Jim Chalmers, handed down Labor’s first Federal Budget (an updated Budget for the 2022/23 financial year). The good news is there were virtually no tax or superannuation changes that affect small or medium size businesses. This is very much welcomed. The bad news is with interest rates and labour costs rising, as well as high inflation, businesses looking for assistance from the Government will be very disappointed by this interim Budget. Based on our analysis, the big winners appear to be: Families – Childcare subsidies extended, increased benefits with the Paid Parental Leave scheme Pensioners – Deeming rates are frozen at current rates until 30 June 2024, new measures to incentivise pensioners to downsize their homes, and income levels lifted significantly for eligibility for the Commonwealth Seniors Health Card Retirees – Downsizer superannuation contribution eligibility age is reduced from 60 to 55 years, starting from first quarter after this legislation is passed. This allows each eligible person to contribute up to $300,000 into their super at a much earlier age, benefiting from super’s low tax rates. Our concerns for future years This wasn’t the usual Federal Budget held in May where tax, super and other changes that affect business owners are announced. Instead, it was a Budget to wind back what the previous Government said they would do and to “fix” things and put in place new policies from the new Government. Based on the negative economic expectations discussed by the Government after releasing this Budget, it appears highly likely that significant tax increases will occur in the 2023 or future Budgets. Additionally, the ATO is clamping down further on business owners and ramping up audit activity in an attempt to raise tax revenue to support the new Government’s spending. We need to start planning for this now. 1. New ATO Ruling affects “Professionals” and profit allocations New ATO guidance changes the way that professional firm profits can be allocated (or split) among a family group from 1 July 2022 onwards. As a result, most professionals will end up paying larger amounts of tax from the 2023 financial year onwards. A professional firm is one that offers customised, knowledge-based services to clients which include medicine (doctors, dentists, medical specialists, etc), lawyers, architects, engineers, accountants, financial advisors and consultants. 2. Business cash flow may be “crunched” With inflation running the highest it has been in decades, interest rates rising, labour costs increasing and power costs exploding, you need to closely monitor your profit margins and ensure your prices are set at a level that keeps your business profitable. We believe it is ESSENTIAL for you to plan for the next 18 months by preparing a monthly Profit and Cash Flow Forecasts to prove to yourself that your business model (i.e. your way of running your business to succeed) is sustainable, or to alert you to the fact that you need to consider immediate changes to your pricing and operations to keep your cash flow positive. Collins Hume can help you with this essential work. 3. Big changes affecting Family Trusts (also known as Discretionary Trusts) We need to alert you to two key changes that will affect people using Family Trust in this 2023 financial year: This process will take time and will need to start taking place from the beginning of May 2023. Next steps For peace of mind, let’s meet for an initial review of how these key changes may affect you: 1. Professional Firm Profit Allocations 2. Cash Flow “Crunch” 3. Family Trusts – S100A and Distributions to Family Members 4. Family Trusts – “Owies” Case and Consideration of Beneficiaries When are you available to meet with us? Make a time with us here and let’s get started.