Defining and achieving your ‘budget goals’ As businesses are currently setting their budgets (or should be soon) this is an excellent time to put some basic business budgeting theory into practice. Whether you’re planning your budget for the next six months or full financial year, the specific framework remains the same. Instead of focusing on revenue targets, start with a straightforward approach that aligns your budgeting process with your ultimate goals. This simple yet effective framework will set you on the path to achieving your financial objectives. As we kick off another financial year, there are two main principles for your budgeting that will help you meet your profit goals. Principle 1: Focus on the bottom line The first principle is to determine what you want your bottom line to be at the end of the year. Don’t get bogged down with sales targets, staffing, or marketing details just yet. Ask yourself, "What is the profit I must achieve over the next 12 months?" Set a specific profit target:  Whether it’s $100,000, $500,000 or $2 million, having a clear, specific target is essential Work backwards from the target:  Once you’ve set your profit goal, plan everything else around achieving this number. For example, if you aim for a $500,000 profit, identify all your overhead expenses for the year. Let’s say your overheads amount to $1.5 million. This means you need a gross profit of $2 million to cover your overheads and achieve your profit target. Principle 2: Set a gross profit target Gross profit, defined as revenue minus direct costs, is the second critical element. Determine how you can generate the required gross profit given your current resources and market conditions. Assess overhead expenses:  Calculate all overheads you’ll need to invest in for the year. In our example, this is $1.5 million Target gross profit:  To achieve a $500,000 profit with $1.5 million in overheads, you need a gross profit of $2 million. Optimise Resource Utilisation With a clear gross profit target, evaluate how you can generate the necessary revenue using your existing resources. Consider: Product offerings:  What products or services can you offer to maximise gross profit? Selective clientele:  Determine who your ideal customers are and be willing to say 'no' to any who don’t fit this profile. High demand can lead to unrealistic expectations, making it essential to maintain a strong business positioning. For example, not everyone can afford a Louis Vuitton product, which is positioned at a premium price point. Similarly, your business needs to be selective about who you serve to maintain high gross profit levels. Balance Capacity and Demand Be strategic about your capacity and the demand you’re meeting. Saying ‘yes’ to every customer may keep your team busy, but it can compromise your profitability and distract you from your financial goals. Maintain high GP levels:  Ensure your offerings provide the highest possible gross profit Capacity management:  Balance your team's capacity with demand to maximise gross profit without overextending your resources. Being selective and focusing on high-value customers ensures you can achieve the necessary gross profit to cover overheads and reach your profit goals. By setting a clear bottom line and focusing on gross profit targets, you can strategically plan for the 2025 financial year. Remember to: Set a specific profit target and plan backwards from it Determine the required gross profit and optimise your resources to achieve it Be selective about customers and maintain high gross profit levels Balance capacity and demand to maximise profitability. Implement these principles to ensure a successful and profitable financial year. Elevate your business to new heights. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you achieve a better performing business and lifestyle.

The ATO has warned that it is looking closely at how trusts distribute income and to whom. The way in which trusts distribute income has come under intense scrutiny in recent years. Trust distribution arrangements need to be carefully considered by trustees before taking steps to appoint or distribute income to beneficiaries. What does your trust deed say? An area of concern is that trustees are not considering the trust deed before income is appointed. The answer to what the trust can do, and who it can allocate income to and how, is normally in the trust deed. This should be your first point of call. Review your deed Conduct a review of the trust deed and any amendments to ensure trustees are making decisions consistent with the terms of the deed Check the trust vesting date. The trust deed will specify what happens when the trust vests. If the trust vests, the trustees might be directed to distribute the income and property of the trust to particular beneficiaries. The trustee may no longer have the discretion to decide who to appoint income or capital to Check who the intended beneficiaries are, and also keep in mind that some beneficiaries might have different entitlements to income and capital under the trust deed Timing and requirements for resolutions - Check the deed for any conditions and requirements for trustee resolutions, including the need to have the resolution in writing and the timing of when it’s required to be made. For example, the deed might require trustees to take certain actions before 30 June If you are looking to stream capital gains or franked distributions to certain beneficiaries, check the trust deed doesn’t prevent this and the streaming requirements have been met. Family trust and interposed entity elections A family trust election helps wrap the workings of the trust around a specific individual’s family group. These elections can help protect trust losses, company losses, and franking credits but can also cause significant tax problems if they are used incorrectly. An interposed entity election makes an entity a member of the family group of an individual. Where these elections are in place, it is essential that trustees understand the implications before making any decisions on distributions. Distributions of trust income outside the specified individual’s family group will trigger family trust distribution tax at penalty rates. Who receives the benefit? The ATO is also on the lookout for arrangements where amounts are allocated or appointed to beneficiaries, but they don’t receive the real financial benefit of the distribution. If the arrangement has the effect of reducing the overall tax paid on the income of the trust, then this will normally increase the level of risk involved and attract the ATO’s attention. Increased reporting on tax returns Changes have been made to capture more information on the tax return about how trusts distribute income. These include: Trust tax return – four new capital gains tax labels have been added. This information should be provided to beneficiaries to match what is reported in their returns. Beneficiaries – all beneficiaries of trust income will be required to lodge a new trust income schedule. This schedule should align to your distributions as set out in the trust’s statement of distribution. Trusts can be an excellent vehicle for many reasons including the flexibility to determine how income is distributed. The cost of that flexibility is strong controls and compliance. The ATO is increasingly strident about how trusts are distributing income, and the tax impact of those distributions. It’s important for trustees to get it right because if trust distributions are found to be invalid, the tax ramifications can be significant. How to contact us We’re available to assist you with trust distributions. Contact  Collins Hume Accountants & Business Advisers in Ballina on 02 6686 3000 (Byron Bay by appointment). Collins Hume clients can book here »

As a business owner, you know that understanding the nuances of cash flow is essential to the health and longevity of your company.   Did you know, businesses that only focus on profit neglect their cash flow? Ignoring the significance of cash flow has led to the downfall of many good businesses, and unfortunately, many business owners realise their mistake too late.  The reality is that when you are managing a business “cash is king”. As long as you have positive cash flow, you’ll survive. Or at least, you should.  To ensure your cash flow doesn’t become your business’s Achilles’ heel, follow these guidelines:  Step 1: Assess Your Current Cash Flow Situation  Begin with a thorough evaluation of your current cash flow. Scrutinise your financial statements, cash flow projections, and historical data to understand your cash inflows and outflows. Look for patterns, such as seasonal fluctuations or delayed customer payments, that may impact your cash flow.  Step 2: Identify Bottlenecks or Inefficiencies in your Cash Flow Process  This might include unfavourable payment terms with suppliers, slow invoice processing or high overhead costs. Addressing these issues can significantly improve your cash position.  Step 3: Bridge the Gaps  Consider utilising working capital finance to bridge gaps in your cash flow. Solutions like invoice financing or lines of credit can provide the funds needed to cover short-term expenses and keep operations running smoothly.  Step 4: Negotiate Better Payment Terms  Improving cash flow can also involve negotiating better payment terms with suppliers. Seek to extend payment terms or secure early payment discounts to better manage your cash flow and reduce financial strain.  Step 5: Streamline Operations  Streamlining operations can reduce costs and improve efficiency, leading to better cash flow. Automate manual processes, reduce waste and optimise your supply chain to enhance overall operational efficiency.  Step 6: Build Stronger Supplier Relationships  Strong supplier relationships are crucial for smoother cash flow management. Maintain open communication, pay invoices on time and grasp opportunities to collaborate and negotiate mutually beneficial terms.  Step 7: Continuously Monitor Cash Flow and Adjust as Necessary  Regularly review your financial statements, cash flow projections and key performance indicators to ensure your cash flow remains healthy and resilient.  Cash flow is the lifeblood of your business – prioritise it, nurture it, and watch your business flourish.  By following these steps and adopting a proactive approach to cash flow management, you can bolster your business resilience, maximise profits and thrive in today’s fluctuating market.   Collins Hume can help you take the first step toward a stronger, more resilient business with Strategy360. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how we can help you achieve a better performing business and lifestyle.

Do you know how much your business is worth? Or how to boost that value?  Unlock Your Business's Potential with Collins Hume's Strategy360 Services  Understanding your business valuation is more than just a number—it's a critical insight into the health, performance and financial future of your business.  Why Business Valuation Matters Informed Decisions:  Knowing your business’s value helps you strategise effectively  Growth Identification:  Spot areas for improvement and work on enhancing them  Investor Attraction:  A higher valuation makes your business more appealing to investors  Exit Strategy:  Essential for fair negotiations if you plan to sell or pass on your business  Financing:  Lenders assess your business value, affecting your funding opportunities  Benchmarking:  Track progress and compare with industry standards  Risk Management:  Identify improvement areas to mitigate risks  Financial Health:  Reflects your business’s stability and performance.  Calculating Business Valuation is simple: maintainable profits times a multiple  For example, $1M in earnings with a multiple of five values your business at $5M. Improving profitability and the multiple can significantly enhance this value.  7 Factors Driving Business Valuation   1. Performance Quality: High gross and net profit margins boost valuation  ACTION: Regularly review financials and optimise profit margins.  2. Level of Growth: Continuous growth and potential for expansion attract higher valuations  ACTION: Develop a growth plan with specific steps and milestones.  3. Cash Conversion:  High-margin, low-asset businesses are more valuable  ACTION: Improve profit efficiency and minimise asset requirements.  4. Owner Dependency: Less dependency on the owner increases value  ACTION: Document operations procedures for smooth functioning in your absence.  5. Industry Perception: Thriving industries are more attractive  ACTION: Encourage positive reviews to enhance your industry’s reputation.  6. Economic Conditions: A strong economy boosts valuation multiples  ACTION : Engage financial experts to time your sale strategically.  7. A Bit of Luck: Timing and positioning can command a premium.  ACTION : Develop a detailed exit strategy for optimal business sale conditions.  Harness the power of Collins Hume's Strategy360 services to unlock your business’s full value. Contact Collins Hume and take the first step toward a stronger business valuation. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how we can help you achieve a better performing business and lifestyle.

Generational succession - handing your business across to your kids or family - sounds simple enough. However, many families end up in a dispute right at the point when the parents, business, and children are most vulnerable. It’s important that generational succession is managed as closely and diligently as if you were selling your business to a stranger to avoid misunderstandings and disputes.  If you are looking to hand your business to your children or relatives, there are a few key issues to think about:  Capability and willingness of the next generation – do your kids really want the business?   There needs to be a realistic assessment of whether or not the business can continue successfully after the transition. In some cases, the exiting 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. All of these are reasonable objectives, however, they only work where there is capability and willingness.   The alternative scenario can also exist where generational succession is pursued by the younger generation. In some cases, it’s seen as their birth right. In these cases, the willingness will exist but this does not automatically translate to capability.  Capital transfer – how much money needs to be taken out of the business during the transition?  What level of capital do the current business owners, generally the parents exiting the business, need to extract from business at the time of the transition? The higher the level of capital needed, the greater the pressure that will be placed on the business and the equity stakeholders.  In most 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.  In many cases, the exiting generation will want to maintain a level of equity investment. This might be a means of retaining an interest in the business or alternatively staging their transition. In either case, it is important to map the capital transition both from a business and shareholder perspective. This needs to be documented and signed off firstly from the business’s perspective and then by both generational groups. No generational transition should be undertaken without a clear and agreed capital program.  Income needs – ensuring remuneration is on commercial terms  In many SMEs, 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 a generational succession, there should be an increased level of formality around compensation to directors and shareholders. Compensation should be matched to roles and where performance incentives exist these should be clearly structured.  Operating and management control  Once the capability and capital assessments have been completed, it is important to look at the transition of control. This can be a very sensitive area. It’s essential to establish and agree in advance how operating and management control will be maintained and transitioned.  The plan for operating and management control should be documented and signed off by all parties with either timelines for time driven succession or milestones for event-focussed transitions.   Transition timeframes and expectations  Generational succession is often a process rather than an event and achieved over an extended period of time. The critical issue is to identify and ensure that all parties have a common understanding and acceptance of the time period over which the transition will take place. This should be included in the documented succession plan.  The need for greater formality and management structure  Generational succession often requires a greater level of formality in the management and decision making process. This formality should achieve a separation of function between management, the Board, and shareholders.  Often in an SME business, these roles merge and there are no clear dividing lines or boundaries. Roles, responsibilities, and clear key performance indicators (KPIs) for management should be agreed and documented.  Need assistance? We can work with you to successfully transition your business. Elevate your business to new heights. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you achieve a better performing business and lifestyle.

ASIC’s annual insolvency data shows corporate business failure is up 39% compared to last financial year. The industries with the highest representation were construction, accommodation and food services at the top of the list.  Restructuring appointments grew by over 200% in 2023-24. Small business restructuring allows eligible companies – those whose liabilities do not exceed $1 million plus other criteria – to retain control of its business while it develops a plan to restructure its affairs. This is done with the assistance of a restructuring practitioner with a view to entering into a restructuring plan with creditors.  Of the 573 companies that entered restructuring after 1 January 2021 and had completed their restructuring plan by 30 June 2024, 89.4% remain registered, 5.4% have gone into liquidation, and 5.2% were deregistered as at 30 June 2024.  In the latest statement from the Reserve Bank of Australia, Michelle Bullock stated that, “...there’s also some signs that the business sector is under a bit of pressure, that the business outlook isn’t as rosy as it was.” Productivity is also lagging. Strategically, managers need to be on top of their numbers to identify and manage problems before they get out of hand. If you do not know what the key drivers of your business are - the things that make the difference between doing well and going under - then it’s time to find out.      A business becomes insolvent when it can’t pay its debts when they fall due.  The top three reasons why companies fail are:  Poor strategic management  Inadequate cashflow or high cash use  Trading losses. It’s easy to miss the warning signs and rely on optimism that things will get better if you can just get past a slump. The common problem areas are:   Significant below budget performance.  Substantial increases in fixed costs without an increase in revenues - Fixed costs are costs that you incur irrespective of your business activity level. When fixed costs go up, they have a direct impact on your profitability. If your fixed costs are increasing, such as leasing more space, hiring more people, buying more plant and equipment, but there is no measurable increase in your turnover and gross profit, it might tip you over.    Falling gross profit margins - Your gross profit margin is the margin between your sales, minus cost of goods sold. Every dollar you lose in gross profit is a dollar off your bottom line.   Funding your business primarily from debt rather than equity finance.  Falling sales - If sales are falling, it is going to have a ripple through effect on your business, reducing profit contribution and inhibiting growth.   Delaying payment to creditors - Your sales are good but you don’t seem to have enough cash in the business to pay your creditors on time.  Spending in excess of cashflow - Trying to pay today’s expenses with tomorrow’s income.    Poor financial reporting systems - Driving your business with a blindfold over your eyes!  Growing too quickly - You’re making more sales than your business can sustain.   Substantial bad debts or ‘dead’ stock - Customers who won’t pay their accounts and stock that you can’t sell. For a business structure review appointment with expert advice, call Collins Hume in Ballina (Byron Bay by appointment) on 02 6686 3000.

The cost of living has eased over the past year but consumers are still under pressure. For business, planning is the key to managing Christmas volatility.  The countdown to Christmas is on and we’re in the midst of a headlong rush to maximise any remaining opportunities before the Christmas lull. Busy period or not, Christmas causes a period of dislocation and volatility for most businesses. The result is that it is not ‘business as usual’ and for many, volatility can create problems.   Added to this dislocation are cost of living pressures impacting consumers. Employee households are the hardest hit experiencing mortgage cost fuelled increases – spiked by the rollover of fixed rate loans to higher variable rate loans. While there has been some relief from energy subsidies and a reduction in fuel prices, underlying inflation remains persistently above the RBA’s target rate. Services inflation - the cost of your rent, insurance, your hairdresser, etc – is sitting at around 5%. With the Reserve Bank of Australia (RBA) Board keeping rates on hold for now and hinting that it will be some time yet before they are comfortable reducing rates, consumers want a reason to spend based on value for money. The irony is that if we all spend up big, which a recent Roy Morgan poll  suggests we are, there is a risk this elevated spending will further delay rate cuts. But, while we might spend more, some of this increase is simply to compensate for inflation - we need to spend more to buy at the same level as previous years.  The discounting trend  Consumers expect a bargain and can generally find one. If you choose to discount stock (or the market forces you to), it’s essential to know your profit margins to determine what you can afford to give away. A business with a 20% gross profit margin that offers a 15% discount, needs a 300% increase in sales volume simply to maintain the same position. Worst case scenario is that a business trades below its breakeven point and generates losses.   Increased sales from discounting can be great if you know your numbers, have excess or older stock that needs to be moved, generates demand, or drives new customers to you.  Also think about how you create value; it does not always have to be a direct discount on a product. Packaging might be a better option than a straight discount where you can increase sales of multiple items, even better if you can combine higher demand with lower demand stock. Quantity discounts, value added are also options.  The Christmas cost hangover  Costs tend to go up over Christmas. More staff, lower efficiency, downtime from non-trading days, increased promotional costs, all mean that the cost of doing business increases. It’s great to get into the Christmas spirit as long as you don’t end up with a New Year hangover. Cost control is important.  Many businesses also bring in casual staff. It’s essential that you pay staff at the correct rates and meet your Superannuation Guarantee obligations. Check the  pay calculator  to make sure you have it right.  New Year cash flow crunch  The New Year often leads into a quieter trading and tighter cash flow period. The March quarter is often the toughest cashflow quarter of the year. You will need a cash buffer. Don’t over commit yourself in the run up to the end of the year and start the new Year with a problem.  Take a lesson from Scrooge  If you work with account customers, start your debtor follow up early. If your customers are under cash flow pressure, the Christmas period will only exacerbate it. The creditors that chase debt hard and early will get paid first. Don’t be the last supplier on the list; the bucket might be empty by then.  Trading stock headaches  If business activity spikes over the Christmas period and you sell goods, then there is a temptation to increase stock levels. That makes sense as long as you don’t go too far. Too much stock post the Christmas period and you will either be carrying product that is out of season, or you will have too much cash tied up in trading stock. Try to work with suppliers that can supply on short notice.   Managing your trading stock is not just about managing cost. If your customers are in your store but can’t find what they need, have an online option available in store to take the sale. Christmas is a great time of year. Just don’t get caught up in the rush and remember your business basics. Call Collins Hume in Ballina on 02 6686 3000 for any help you might need in your business before Christmas to see you through the festive season.

Register now — tipping starts 1 March Collins Hume's NRL Footy Tipping Competition kicks off for 2026! Footy season starts on 1 March and Collins Hume would like to invite you to take part in our annual NRL Tipping Comp. Prize Information First prize $300 Second prize $100 Third prize $50 Knockout Comp Winner $100 5 quick steps to join: Go to  https://www.iTipFooty.com.au Click the REGISTER button if you don't already have an account with iTipFooty.com.au Once you have successfully registered login and, click the JOIN COMP button Enter Comp # 103098 and Comp Password CH1234 Click join comp.....DONE! Check-in for results each week. Prizewinners will be announced at the end of the season. Good luck!

Get your business 2026-ready with a complimentary RAVDA Each new year is the ideal time to reset your business strategy, refocus your goals and make confident decisions for the months ahead. Whether you’re running a small or medium business (SMB), not-for-profit organisation or commercial enterprise, a clear plan for 2026 improves profitability, reduces risk and builds long-term value. Here’s a practical guide to setting your business up for success in 2026. 1. Strong personal finances create better business decisions. Before diving into business goals, get clear on your personal finances . Review debt, savings, investments and retirement planning. Start by assessing where you are today, then set realistic goals for 2026. Build a simple budget or cash flow plan and review it regularly so you can adapt as circumstances change. 2. Review your estate plan Life changes quickly, so review your will, enduring power of attorney, and superannuation and death benefit nominations. Your business planning should include your personal world. Nor is it just worst-case planning. Ensure your assets pass as intended and protect what you’ve worked hard to build. Related: https://www.collinshume.com/post/estate-planning-and-protecting-your-family 3. Reset your business strategy Now zoom out and look at the business. Ask yourself what worked in 2025, what didn’t, what’s changed in your market, team or priorities and what success looks like by the end of 2026. A structured planning session with your leadership team or an external adviser can help cut through noise and clarify direction. Use this time to define clear goals, decide what to stop doing, set 90-day priorities and align your leaders around what matters most. Related: https://www.collinshume.com/post/why-strategy-matters-for-not-for-profits-right-now 4. Complete a legal health check and risk review With strategy clear, protect what you’re building. Review your business structure, shareholder or partnership agreements, key contracts, intellectual property, and privacy, data and regulatory obligations. A legal health check highlights weaknesses, closes compliance gaps and helps avoid costly problems later. Related: https://www.collinshume.com/nfp 5. Track performance and remove inhibitors Clear reporting helps you make better decisions but only if you act on what the numbers are telling you. Choose your top 3-5 priorities, block out time to work on them and make sure you have visibility across what’s really driving performance. At the same time, take a hard look at what’s holding the business back. Every business accumulates baggage over time: unprofitable products, inefficient processes, outdated systems or cultural issues. Often the fastest way to improve profitability is to stop doing things that no longer serve the business. A regular business detox sharpens focus, lifts margins and creates space for growth. Related: https://www.collinshume.com/post/the-traits-driving-high-performing-businesses 6. Implement technology that sticks If 2026 is the year for cloud upgrades or system improvements, take a structured approach. Join demos, use trials, check integrations, gather team feedback and make sure everyone is aligned before committing. Technology only delivers value when your people adopt it. Related: https://www.collinshume.com/post/is-your-business-lagging-on-tech-adoption 7. Focus on building business value Even if you’re not planning to sell, increasing business value gives you options: easier access to finance, stronger succession pathways and greater flexibility. Key value drivers include up-to-date financials, systemised processes, reduced owner dependency, a clear growth strategy and early adviser involvement. Understanding how valuations help you build a smarter plan for the year ahead. Related: https://www.collinshume.com/post/do-you-know-how-much-your-business-is-worth 8. Thinking about selling your business? Start now If succession or exit is on your radar over the next 3-5 years, the decisions you make today matter. Ask yourself whether you still see yourself in this business long term, whether your energy for growth is still there, and whether you’re building something others would want to buy. Preparing early improves sale outcomes and often boosts performance even if you don’t sell in 2026. Related: https://www.collinshume.com/post/boost-business-value-before-you-exit Ready to get your business 2026-ready? Book a complimentary Risk and Value Driver Assessment (RAVDA) with our Strategy360 team. We’ll help you identify key risks, uncover growth opportunities and clarify what’s really driving value in your business — so you can move into 2026 with confidence. Spots are limited, so get in touch today to secure your assessment. By partnering with Strategy360, gain clarity and control over your operations, improve profitability, increase business value and secure a sustainable future for your business.

What EV Discounts Mean for Your Business (and What You Should Do Now) Electric vehicles (EVs) are no longer a niche choice. By late 2025, they account for more than 8% of new car sales in Australia, driven in no small part by generous tax incentives. One of the most significant is the Federal Government’s Electric Car Discount, introduced in mid-2022. For many businesses and employees, it has materially reduced the cost of owning or leasing an EV. That said, the rules are now under review. While no immediate changes are proposed, this is an important moment to understand the benefits, assess whether they suit your circumstances, and consider timing. How the Electric Car Discount Works (in Plain English) The discount is not a cash rebate. Instead, it operates through tax concessions that can significantly reduce the real cost of an EV: 1. Fringe Benefits Tax (FBT) exemption Where an eligible EV is provided to an employee as a fringe benefit, private use is exempt from FBT. This is often the biggest saving. Without the exemption, FBT is effectively charged at up to 47%. For many employees, the exemption can reduce the annual after-tax cost of a vehicle by thousands of dollars. Important points: The exemption applies to battery electric vehicles and hydrogen fuel cell vehicles. Plug-in hybrid vehicles lost eligibility for new arrangements from 1 April 2025. The car must be first held and used after 1 July 2022 and be below the luxury car tax threshold at first purchase. 2. Higher luxury car tax (LCT) threshold Fuel-efficient vehicles, including EVs, benefit from a higher LCT threshold ($91,387 for 2025–26, compared to $76,950 for other cars). This can prevent the 33% luxury car tax applying to part of the purchase price. 3. Reduced import costs Certain EVs are also exempt from the 5% customs duty, reducing upfront acquisition costs. Commercially, these settings have made EVs very competitive. Lower running costs (electricity versus fuel, fewer servicing requirements) and solid resale values have strengthened the business case, particularly for salary packaging and small fleets. Why the Government is Reviewing the Rules A statutory review of the Electric Car Discount has now commenced. The key reason is cost. Uptake has exceeded expectations, and the projected cost to the budget has increased significantly over the forward estimates. The review will examine: Whether the concession is still required to encourage EV adoption Whether eligibility settings should be tightened (for example, limiting benefits to certain vehicle types or price points) How the discount interacts with other policies, such as the National Vehicle Emissions Standard commencing in 2025. Public consultation is underway, with a final report not due until mid-2027. Importantly, there is no suggestion of immediate changes, and any reforms are more likely to be prospective. Practical Takeaways for Business Owners and Employees While uncertainty always creates hesitation, the current rules are clear and legislated. From a practical perspective: Now is a good time to review fleet or salary packaging arrangements, particularly if you are considering replacing a vehicle in the next 12–24 months. Existing arrangements are expected to be grandfathered, reducing the risk of retrospective changes (although we can’t guarantee this). Ensure vehicles are clearly under the LCT threshold at first purchase and meet all eligibility criteria if you want to access the FBT exemption. Check the tax treatment of charging infrastructure provided in connection with an eligible EV, this won’t necessarily qualify for an FBT exemption. Final Thought The Electric Car Discount remains one of the most valuable concessions available for employee vehicles. While a review introduces longer-term uncertainty, the commercial reality today is that EVs can deliver genuine tax and cash-flow savings when structured correctly. If you are considering an EV—either personally or through your business—now is the right time to run the numbers. Please contact the Collins Hume team in Ballina if you would like tailored advice on whether an electric vehicle strategy makes sense for you under the current rules.

What the New Tax Guidance Means for You For many Australians, a holiday home does double duty. It’s a place to escape with family and friends, and during the rest of the year it’s listed on Airbnb or Stayz to help cover the costs. Until recently, many owners assumed they could claim most of the usual deductions for the property without much trouble, as long as appropriate apportionments were made. However, that position is now under more scrutiny than ever following the release of some new draft guidance documents by the Australian Taxation Office (ATO) - TR 2025/D1, PCG 2025/D6 and PCG 2025/D7. The ATO is looking to significantly tighten the rules around holiday homes that are used to derive some rental income. While the documents are still in draft form, they clearly signal the ATO’s compliance focus going forward. What is the ATO Concerned About? In simple terms, the ATO wants to distinguish between properties that are genuinely held to maximise rental income and those that are primarily lifestyle assets with some incidental rental use. The ATO confirms that all rental income must be declared, even if it is occasional or earned through informal arrangements. However, if the property is really a holiday home and isn’t used mainly to produce rental income during the year then the owner can’t claim any deductions for expenses such as interest, rates, land tax, repairs and maintenance. That is, the ATO might not allow any of these expenses to be claimed as a deduction, even if the property is used to generate taxable rental income for some of the year at market rates. If the property is classified as a holiday home by the ATO then owners can only claim deductions for limited direct expenses such as cleaning or advertising. The ATO is particularly focused on properties that: Are blocked out for private use during peak periods (for example, school holidays or ski season) Are advertised inconsistently or at above-market rates Generate ongoing tax losses year after year. How Expenses Must be Claimed Even if the property isn’t classified as a holiday home, it will often still be necessary to apportion expenses if the property is only used partly for income producing purposes. PCG 2025/D6 outlines how expenses should be apportioned. The key principle is that claims must be “fair and reasonable”. Common methods include: Time-based apportionment (for example, based on days rented or genuinely available for rent), and Area-based apportionment (where only part of a property is rented). Getting this wrong, or failing to keep evidence, increases audit risk. The ATO has access to booking platform data and can easily compare listings, calendars and reported income. The Financial Impact can be Significant Consider a holiday unit that earns $30,000 a year in off-peak rent but is kept for private use during peak holiday periods. Under the new approach, the ATO may conclude the property is really a holiday home and could reduce deductible expenses from tens of thousands of dollars to only a small fraction, resulting in a materially higher tax bill. Co-ownership also needs care. Income and deductions are generally split according to ownership interests, regardless of who uses the property more. Renting to relatives at discounted rates can further limit deductions. Practical Steps you Should Take Now Although the guidance is proposed to apply from 1 July 2026 (with transitional relief for arrangements in place before 12 November 2025), now is the time to review your position: Are you holding and using the property to genuinely maximise rental income? Is the property advertised broadly and consistently, including during peak periods? Use market pricing: Set rent in line with comparable properties in the same area. Keep strong records: Retain booking calendars, advertisements, enquiries, and a diary showing private versus rental use. Review ownership and strategy: In some cases, changing how a property is operated can improve its commercial profile and tax outcome, but beware of CGT liabilities, duty and legal fees. Document existing arrangements: If you may qualify for transitional relief, evidence is critical. The Bottom Line The ATO is not banning deductions for holiday homes, but it is drawing a firmer line between genuine investment properties and lifestyle assets. With the right structure, pricing and record-keeping, many owners can still claim appropriate deductions and improve cash flow. If you own a holiday property, a proactive review could save you from an unpleasant surprise later. Please contact Collins Hume in Ballina if you would like us to assess your current arrangements and help you plan ahead.

Closing date extended: Applications now close Friday, 6 February 2026 (first‑in, first‑served).  The NSW Government’s  Regional Business Improvement Program (RBIP)  is currently open and provides a fully funded, expert‑led business improvement audit for eligible regional SME manufacturers — there is no cost to participate. The program focuses on practical lean and continuous‑improvement opportunities to lift efficiency, reduce waste and build workforce capability.    Who can apply SME manufacturers (approx. 10–200 FTE) Must have an ABN and a manufacturing ANZSIC/BIC code Located in eligible regional NSW (Sydney metro is excluded) Public liability insurance ≥ $10 million (or equivalent self‑insurance) No cost to participate — participants are fully funded by the NSW Government.   Why this is valuable to businesses Practical, business‑ready recommendations to streamline operations and improve productivity Quick turnaround — audits delivered through the first half of 2026, meaning benefits land fast.   How to apply (about 15 minutes) Review the program details and eligibility at  https://www.nsw.gov.au/grants-and-funding/regional-business-improvement-program Apply via SmartyGrants at  https://rd.smartygrants.com.au/RBIP   Support for businesses If you are unsure about eligibility or what the audit covers, the program team can assist at  economic.programs@dpird.nsw.gov.au  or please reach out to be connected with a local Economic Development Manager.