December 2017

Office News        
Business and Tax
Financial Planning - Risk Insurance
Financial Planning - Investment

Office News

Christmas Trading Hours

The Warragul and Berwick offices will be closed from 12 o'clock Thursday the 21st of December and will re-open again on Monday the 8th of January.

Staff News

Returning Staff Member – Stephanie Green

We are pleased to advise clients that Stephanie Green will be re-joining the team in January.

Returning from maternity leave, Steph will be working on a part time basis and will be resuming her role with the superannuation compliance division of the business.

New Staff -  Jessica Lye

We also welcomed Jessica Lye to our team in August.  Jessica joins the business and tax team in an accounting role.

Jessica is a CPA qualified accountant, and joins us after spending the majority of her career in the personal and corporate insolvency sector.

New Staff – Lyn Shand

Last, but not least we welcome Lyn Shand to the business.

Joining the business & tax team, Lyn brings a wealth of experience to the firm where she has worked in public practice since 1999, beginning her career at Pricewaterhouse Coopers.

Lyn has also ran her own accounting firm in Cranbourne, and more recently a successful home based accounting and bookkeeping service to her client base.

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Business & Tax

ATO to focus on cash-only businesses

The Australian Taxation Office is visiting businesses across Australia as part of their ongoing focus on the cash and hidden economy, and part of the reason for this is to:

Protect honest businesses

The ATO know most business owners are honest and that running a business can be difficult. So by finding industry-wide patterns, they can see who may need assistance.

Unfortunately, there are businesses that operate in the cash and hidden economy, gaining an unfair advantage over those who declare their income and do the right thing. The ATO aim to protect honest business from this unfair competition.

The ATO work closely with industry associations, tax practitioners and businesses to understand any issues they may have. The ATO use up-to-date third-party data and sophisticated risk-analysis to identify who may not be doing the right thing or may need a bit more help.

The ATO have found that the community has less tolerance for unfair practices than it once did.

Visiting businesses

In the coming months the ATO will focusing on visiting businesses that:

  • Operate and advertise as 'cash-only'
  • Their data matching suggests they don't take electronic payments
  • Are part of an industry where cash payments are common
  • Indicate unrealistic income relative to the assets and lifestyle of the business and its owner
  • Fail to register for GST or lodge activity statements or tax returns
  • Under-report transactions and income according to third-party data
  • Fail to meet super or employer obligations
  • Operate outside the normal small business benchmarks for their industry
  • Are reported to the ATO by the community for potential tax evasion

Why the ATO are visiting 'cash-only' businesses

The ATO are visiting businesses across Australia as part of our ongoing focus on the cash and hidden economy. In particular, the ATO are focusing on businesses advertising 'cash-only' or dealing mainly in cash.

The ATO will be talking to them about:

  • why we are focusing on cash
  • the benefits of electronic payment and record keeping facilities (XERO)
  • community expectations of paying by card
  • our tools and demonstrating how to use them, including online lodgement
  • making sure they're registered correctly
  • ensuring all businesses pay the correct amount of tax and super by declaring all their income and knowing what expenses they can claim
  • lodging their tax returns and activity statements
  • meeting their obligations if they are struggling, taking into account specific circumstances, and helping them get back on track
  • any other help they may need.

If the ATO see a business deliberately doing the wrong thing, they have an obligation to do something about it. Sometimes this could result in an audit or even prosecution.

No matter what kind of business you have, if you're doing the right thing, you don't need to be concerned.

However, if you are concerned for any reason, or just want to discuss how we can help you improve how you run your business, please don't hesitate to give us a call.

We'd also like to thank our partners at Allbiz Finance Brokers who helped put this alert together – please check them out at for all your financing needs. To read more, please go to:

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Financial Planning - Risk Insurance 

Business insurance as part of a business succession plan

Whether your business is structured through a partnership, company or trust, few have effective mechanisms in place for the transfer of equity and/or control if one of the owners is lost to the business due to death, disablement or a critical illness.

In many cases the loss of a business owner from one of these events results in the demise of an otherwise healthy business simply because there was no succession plan and funding agreement in place.

A business succession plan that incorporates insurance funding protects your investment and can help to ensure the survival of your business should one of the business owners or a key person die, become disabled or suffer a critical illness.

Who is a key person?

Most businesses have one or more key persons whose skill, knowledge, experience and leadership ensures the success of the business. A key person in any business may generally be defined as one whose death, disablement or early retirement may have an adverse economic effect on the business. It is important to identify these key people and to quantify the adverse outcomes that are likely to be suffered by the business in the event of death, disablement or illness.

There are three basic protection needs that a business may have:

• Asset Protection • Revenue Protection, and • Ownership Protection.

Asset Protection

The loss of a business key person may lead to the loss of the owners' personal and business assets. In the event of a key person's death or disablement, a business may be forced to sell assets to maintain cash flow – particularly if creditors press for payment or debtors hold back payment. Similarly, customers and suppliers may not feel confident in the trading capacity of the business and its credit rating could fall if lenders are not prepared to extend credit. Outstanding loans owed by the business to the owners (or their beneficiaries) may also be called up for immediate repayment. What is Asset Protection?

Asset Protection can provide your business with enough cash to preserve its asset base, so it can repay debts, free up cash flow and maintain its credit standing if a business owner dies or becomes disabled. It can also release personal guarantees secured by the business owner's assets (such as the family home).

Revenue Protection

A drop in revenue is often inevitable when a key person is no longer there. Losses may also result from demand that can't be met while finding and training a suitable replacement, errors of judgement by a less experienced replacement or through the reduced morale of employees. If there isn't a suitable replacement within the business, it may take substantial time and financial inducement to find and train a successor.

What is Revenue Protection?

Revenue Protection can provide your business with cash to compensate for the loss of revenue and costs of replacing a key employee or business owner should they die or become disabled.

Ownership Protection

The death of a business owner can result in the demise of an otherwise successful business simply because of a lack of business succession planning. While business owners are alive they may negotiate a buy-out amongst themselves, for example on an owner's retirement. But what if one of them dies? The remaining owners must now negotiate with the deceased owner's legal representative, who may be more concerned about the needs of the estate than the needs of the business. Many business owners mistakenly believe this contingency has been catered for in the business' constitutional documentation but often there is no buy-out provision or, if there is, it's often ineffectually drawn up and inadequately funded. Similar issues arise when an owner is disabled and cannot (or no longer wishes to) be involved in the business.

What is Ownership Protection?

Ownership Protection can provide the continuing owners or their nominees with sufficient cash for the transfer of the outgoing owner's equity to the continuing owners should a business owner die, become disabled, or suffer a critical illness.

If you would like to discuss your Business Insurance needs, please call our office on 03 56 233778 and book an appointment with our specialist adviser Jamie Klason.

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Financial Planning - Investment

The last five years have seen strong returns for diversified investors thanks to double digit gains in shares (after a rebound from a mini bear market around the Eurozone crisis) and solid returns from unlisted commercial property and infrastructure. For example, balanced superannuation funds saw median returns of 9.3% per annum over the five years to September (after taxes and fees). Despite this our assessment remains that medium term (ie. 5-10 year) returns will be constrained because of low investment yields across most asset classes.

Investors now need to have a reasonable return expectation. Low investment yields and constrained nominal GDP growth indicate it is not reasonable to expect sustained double digit returns. In fact, the decline in the rolling 10-year average of superannuation fund returns indicates we have been in a lower return world for many years already – it's just that it only becomes clear every so often with strong returns in between. This partly reflects very low inflation, real returns haven't fallen as much. The use of a dynamic approach to asset allocation makes sense now as a way to enhance returns when the return potential from investment markets is constrained. A focus is needed on assets providing decent and sustainable income flow as they provide confidence regarding future returns, eg, commercial property and infrastructure or high dividend paying shares.

As it becomes harder to find a decent return on your investment it becomes even more essential to seek advice from professionals. If you wish to speak to one of our Financial Planners please contact us.

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ATO's most frequently asked questions about super and relative changes.

As many of you will know the super world can often leave one confused over the many rules and year on year rule changes.

Thus, we have put together a list of the most frequently asked questions put to the ATO to hopefully give you a better understanding of the super environment and answer any unasked questions you may be harbouring.

What is my preservation age for accessing super benefits?

Your preservation age is the minimum age at which point you may access your preserved super benefits, unless another condition of release has already been met. It is based on when you're born.

Your preservation age is calculated as follows:

  •    55 – if you were born before 1 July 1960.
  •    56 – if you were born between 1 July 1960 and 30 June 1961.
  •    57 – if you were born between 1 July 1961 and 30 June 1962.
  •    58 – if you were born between 1 July 1962 and 30 June 1963.
  •    59 – if you were born between 1 July 1963 and 30 June 1964.
  •    60 – if you were born after 30 June 1964.

To access your preserved super benefits in the 2016/17 income year, you must have turned 56 before 1 July 2016. your preservation age is relevant in the following conditions of release:

  •    Reaching your preservation age and retiring with no intention of returning to work in the future.
  •    Reaching preservation age and starting a transition-to-retirement income stream.

How are unrestricted non-preserved benefits related to a condition of release?

The most common conditions of release for a member looking to access their super benefits are when a member has:

  •   Reached preservation age and retires permanently.
  •   Reached preservation age and begins a transition-to-retirement income stream.
  •   Turned 65 (even if they haven't yet retired)
  •   Died.

When a condition of release with a zero cashing restriction is met, your preserved super benefits become unrestricted non-preserved benefits (UNPB)

A member who has UNPB may cash them at any time.

What if a trustee fails to meet minimum pension payment requirements under the Superannuation Industry Supervision (SIS) Regulations?

If a fund fails to meet the minimum pension payment requirements in an income year the super income stream will be treated as if it ceased at the start of that income year for tax purposes.

Thus, all payments made during that year will be super lump sums for both tax and SIS Regulation purposes, this is still the case even if the member is still entitled to receive a payment from the fund under the governing rules. The major impact on the fund is released when completing the annual return, as the income and capital gains are not entitled to be treated as exempt current pension income (ECPI) and will therefore be taxed at the 15% SMSF tax rate.

Does the age pension or a foreign pension count towards the calculation of the transfer balance cap?

No. For an income stream to count towards your transfer balance cap of $1.6 million it must be a superannuation income stream; therefore, the age pension and any foreign pension accounts aren't included in your balance.

Can the transfer balance cap be shared between a couple?

No. The transfer balance cap applies on a per member basis, and cannot be shared between a couple.

For example, one person in the fund cannot have $3 million and the other have $200,000 in a superannuation income stream.

For more frequently asked questions please visit the ATO's website, or the corresponding link below.

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"seen as a very important part of our organisations future. The level of service is well above what would be considered the norm"

Dale Sumner - General Manager of Lakes Entrance Fishermens Co-op & Leftrade Limited

"They provide us with well-researched financial and business advice, take care of all our tax responsibilities and financial needs, and even check in from time to time to see how we’re going"

Jessie Ballantyne- Director of The Grants Hub

"They have taken the time to get to know us as a business, and go above and beyond in helping us grow."

Jessie Ballantyne - The Grants Hub