Peak Partnership Blog

Accessing your super after age 60

Wed, 08 Apr 2026 10:00:00 +1000

Turning 60 is a big milestone when it comes to your superannuation. In particular, the rules around accessing your super in your sixties became much simpler from 01 July 2024, with the preservation age now effectively being 60 for everyone.

That means once you turn 60, you’ve passed the age barrier that previously stopped many people from accessing their super.

That said, while age 60 opens the door, how you can access your super between ages 60 and 65 still depends on your work situation. Let’s break it down.

What does “preservation age” mean now?

If you were born after 30 June 1964, your preservation age is 60. There are no longer different preservation ages depending on your date of birth – everyone is now on the same page.

Once you reach preservation age, you may be able to access your super, but additional rules apply until you turn 65.

Accessing super if you’re still working

If you’re aged between 60 and 65 and haven’t retired, your access to super is limited.

In this situation, you can usually start a Transition to Retirement (TTR) income stream. A TTR income stream allows you to draw a regular income from your super while you continue working.

Some key points about a TTR income stream:

you must withdraw at least 4% and no more than 10% of your pension balance each year.
payments you receive are generally tax-free once you’re aged 60 or over.
your super account does not move into retirement phase, so investment earnings inside the fund are not tax-free.

If you want to withdraw a lump sum or access more than the TTR limits allow, you’ll need to meet another condition of release.

What if you’ve retired?

If you’re aged 60 or over and you stop working, you may meet the retirement condition of release.

To satisfy this condition:

an arrangement under which you were gainfully employed must have ended, and
if you were already 60 or older when that job ended, there are no further requirements – your future work plans don’t matter.

If you stopped working before age 60, the rules are stricter. Your super fund trustee must be reasonably satisfied that you don’t intend to work again, either full-time or part-time.

“Part-time” work generally means 10 hours or more per week, so you could still plan to do occasional or casual work of less than 10 hours a week and meet the retirement condition.

Once you meet the retirement condition:

you can access your super as lump sums.
you can start an account-based pension.
your super can move into retirement phase, where investment earnings are tax-free.

What happens at age 65?

Once you turn 65, things become much simpler again. At that point:

you automatically meet a condition of release.
you can access your super regardless of whether you’re working.
you can withdraw lump sums or start a pension without restrictions.

Plan before you withdraw your super

Accessing super is a major financial decision, and the timing and structure of withdrawals can make a big difference.

Before making any moves, it’s important to consider:

minimum pension withdrawal requirements each year.
how pensions affect your transfer balance cap.
potential impacts on your Age Pension entitlements.
your longer-term retirement income needs.

If you’re aged between 60 and 65 and thinking about accessing your super, getting the right advice early can help you avoid costly mistakes and make the most of your retirement savings.

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Financial planning services provided through Peak Partnership Wealth Design Solutions Pty Ltd as trustee for Carlmich Trust. ABN 26 711 439 304. Corporate Authorised Representative No 415154 of Professional Investment Services Pty Ltd AFSL 234954. ABN 11 074 608 558. www.centrepointalliance.com.au/PIS

How much money do you really need to retire?

Wed, 01 Apr 2026 10:00:00 +1000

It’s one of the most common questions we hear as financial advisers: “How much money do I need to retire comfortably?” The honest answer? It depends.

Your ideal retirement will be shaped by lots of moving parts – how much super you have, other savings and investments, your tax position, whether you’ll receive the Age Pension, and (most importantly) the lifestyle you want to enjoy once work becomes optional.

The good news is that with the right planning and a few smart strategies, retirement can be something to look forward to – not something to worry about.

Key points

Based on the latest ASFA Retirement Standard, a comfortable retirement typically requires around $630,000 for singles and $730,000 for couples, assuming you receive a part Age Pension.¹
Be careful of retirement calculators as they often exclude important factors such as age pension assistance, inevitable capital expenditure requirements (over and above your standard retirement income needs) and generous return assumptions.
A financial adviser can help you put practical strategies in place to grow your savings and reduce the risk of running out of money.

So… how much do you need?

A lot depends on what retirement looks like for you.

Some people picture overseas travel, hobbies and spoiling the grandchildren. Others are happy with a quieter pace, closer to home. That’s why headline figures like “you need $1 million to retire” can be misleading – they don’t reflect individual goals or circumstances.

In reality, many Australians retire with far less. According to the Australian Taxation Office's 2022-2023 figures, median super balances for people aged 60–64 are around:

$219,773 for men.
$163,218 for women.

What is clear is that after decades of hard work, no one wants to spend retirement worrying about money.

What does a “comfortable” retirement actually cost?

The Association of Superannuation Funds of Australia (ASFA) publishes a Retirement Standard that gives a helpful benchmark for typical retirement spending.¹

For Australians aged 65–84 who own their home, the estimated annual costs are:

Lifestyle	Couples (per year)	Singles (per year)
Comfortable	$77,375	$54,840
Modest	$51,299	$35,503

A modest lifestyle is slightly better than living on the Age Pension alone.

A comfortable lifestyle allows for private health insurance, better consumer goods, regular social activities and some travel.

These figures assume retirees draw down some capital over time – which is normal.

Turning benchmarks into your retirement plan

ASFA’s numbers are a useful starting point, but the real question is: How much do you need to support the lifestyle you want?

That’s where retirement calculators and personalised advice come in. At Peak Partnership Wealth Design Solutions, we incorporate Retirement Financial Roadmapping into the advice process to factor in:

Your super balance now and in the future: Including your income, employer contributions and any extra savings you add along the way.
Your non-super financial and property assets: Typical retirement calculators factor in superannuation only. In reality there are multiple ways to save and build up wealth for retirement – superannuation just happens to be one of the most tax effective ways.
Your investment strategy: Investment returns can make a big difference over time, especially if retirement is still a few years away. An accessible cash reserve is wise – fpr shorter-term capital expenditure requirements.
Your family situation: Including your partner’s income, contributions and super balance – as well as potential future inheritances. Also consider possible financial support for children and grandchildren.
Age Pension eligibility and part-time work : Many retirees receive a full or part Age Pension, or continue some paid work. These can significantly boost retirement income and the roadmapping process can provide clarity on how these benefits assist in capital preservation and income generation over time, for you.

Other important things to consider

There are a number of things to take into account when determining how much you need to retire.

Your age and life expectancy

When you retire – and how long you’re likely to live – matters.

If you retire around age 65, it’s reasonable to plan for 20–25 years in retirement. Based on Australian life expectancy data:²

Men aged 65 can expect to live to around 85 years of age.
Women aged 65 can expect to live to around 88.

Planning for longevity helps reduce the risk of running out of money later in life.

Your retirement goals

The clearer your picture of retirement, the easier it is to plan. You might like to think about:

How often (and where) you’d like to travel.
Whether a sea-change or tree-change is on the cards.
Downsizing, upsizing or staying put.
Hobbies, sport and social activities.
Helping children or grandchildren financially.
Future care needs – at home, in a retirement village or aged care.

Once your goals are clear, you can estimate costs, identify income sources and work out how much capital you’ll need.

Where your retirement income may come from

Most retirees draw on a mix of income sources, including:

Superannuation
Often the cornerstone of retirement income.
Age Pension
Depending on your income and assets, you may be eligible for a full or part pension – or none at all.
Other assets and savings
Such as selling or downsizing your home, investment properties, shares, savings accounts, term deposits or inheritances.

Ways to boost your retirement savings

If your projections show a shortfall, don’t panic – there are steps you can take.

Some common strategies include:

Consolidating superannuation accounts to reduce fees and simplify management.
Making extra super contributions, which may also be tax-effective if you stay within contribution caps.
Reviewing your investment options to ensure they align with your risk tolerance and time to retirement.
Diversifying investments to help manage risk over the long term.
Transition to Retirement Strategy to make effective use of your superannuation benefits between age 60 and 65, supplementing your employment income to either allow you to reduce your work hours OR enhance your tax-deductible super contributions.

How to avoid running out of money in retirement

Good planning doesn’t stop once you retire. Ongoing management is just as important.

Helpful strategies include:

Creating a realistic retirement budget: Covering housing, healthcare, utilities, transport, leisure and everyday expenses.
Diversifying your investments: A mix of asset classes can help balance growth and stability.
Setting a withdrawal strategy: Many retirees use the 4% rule as a guide, adjusting withdrawals for inflation over time.
Planning for healthcare costs: Including insurance and potential future medical expenses.
Getting professional advice: A financial adviser can help bring all the pieces together and adjust your strategy as circumstances change.

Frequently asked questions

Can I retire at age 60 with $500,000?
It may be possible, but it depends on your lifestyle, spending needs and whether you’ll receive the Age Pension. ASFA estimates a comfortable retirement at age 67 requires higher balances, assuming part pension support. Therefore, early retirement with $500,000 would likely be difficult.
How much does the average Australian retire with?
There’s no true “average.” Retirement outcomes vary widely based on lifestyle, assets, health and family circumstances.
How much do I need to withdraw from my pension each year?
Minimum withdrawals from an account-based pension start at 4% per year (under age 65) and increase as you get older, up to 14% per year at age 95 or older.

The bottom line

Association of Superannuation Funds of Australia benchmarks provide a helpful guide, but they’re only a starting point.

Getting personalised financial advice can give you a clearer picture of how your savings translate into income and help you plan for retirement with confidence. For a little inspiration, download our free Retirement Planning Guide here.

Our Financial Advisers can help you build a strategy designed around your goals, so retirement feels less uncertain and more exciting. If you'd like some straight-forward advice, clarity and direction to help you plan for your retirement, you can reach out to Pat Kelly or Amir Rodnia here to start the conversation.

Alternatively, head to our Retirement Planning page and fill out a few details – then we can get to work for you.

¹ ASFA Retirement Standard: December quarter 2023 www.superannuation.asn.au/resources/retirement-standard
² Australian Institute of Health and Welfare: www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Financial planning services provided through Peak Partnership Wealth Design Solutions Pty Ltd as trustee for Carlmich Trust. ABN 26 711 439 304. Corporate Authorised Representative No 415154 of Professional Investment Services Pty Ltd AFSL 234954. ABN 11 074 608 558. www.centrepointalliance.com.au/PIS

Retirement Planning: seven mistakes to avoid

Wed, 25 Mar 2026 08:45:00 +1000

You might be looking forward to putting a full stop to your working years, but a few miscues along the way could take the joy out of retirement. From underestimating how much money you’ll need – to not being proactive with your super – here are a few mistakes you’ll want to avoid as you prepare for your golden years.

1. Not having a vision

The first mistake is expecting your ideal retirement to magically fall into place without any planning. Like any major life transition, it requires forethought and a solid financial strategy.

Ask yourself what you want out of your retirement years. Many people take to travelling and pursuing the hobbies they had long dreamed of but never had time for, while others are content to lead quiet lives devoting attention to their homes and families.

What you decide will then inform how much money you’ll need. If it turns out there’s a gap between the amount you have and what you should have (or would like to have), look for ways to make up the shortfall.

That might involve topping up your super in the few years leading up to retirement so you’re in a better position once you officially hang up your hat. And if you plan to sell the family home and move into a smaller one, there's also the option to use some of the proceeds of sale to make a downsizer contribution into your super.

2. Underestimating inflation

Confident as you might be about your retirement plan, it won’t be worth its salt if it doesn’t factor in inflation.

Say you plan to live on $6,000 a month in retirement. That might be more than enough to meet your needs in the early years, but fast forward 10 or 15 years and that same amount may not stretch nearly as far.

3. Underestimating how long you'll live

One of the biggest (and most consequential) variables in retirement planning is how long we’ll actually live. While many people rely on average life expectancy statistics for guidance, we should remember these are neither static – they can increase over time as living standards improve – nor predictions.

To put it another way: don’t assume that you’ll only need to fund 20 years of retirement. If you’re planning for a retirement that lasts until age 85, your finances might be terribly unprepared if you wind up living into your 90s or even hitting 100.

4. Getting the timing wrong

The timing of retirement isn’t always up to us. Some people continue working out of necessity – whether to boost their super, clear debts, or ride out a down market – while others are pushed into an early retirement because of illness or redundancy.

But then there are those who put off retirement out of uncertainty. They might not have a good idea of how much super they need and insist on working longer than they have to ‘just in case.’ Or there might be some mistaken beliefs at play.

One misconception that’s unfortunately common is that you can only retire once you become eligible for the Age Pension (which is typically age 67). But the truth is your super can be accessed much earlier than that.

Don’t let misunderstandings like these cost you valuable years you could be enjoying not working.

5. Leaving your super in the accumulation phase

When you reach retirement age, there are two main ways you can receive your super:

commencing an account-based pension, or
withdrawing it as a lump sum.

Yet some people leave their super in the ‘accumulation’ phase despite ticking all the boxes necessary to access it.

What they may not realise is that doing this has big tax implications. Any investment earnings in the accumulation phase will continue to be taxed at a maximum rate of 15%, unlike an account-based pension where investment earnings are generally tax-free. In other words, you could be giving up a key tax advantage without realising it.

6. Not taking advantage of your entitlements

For those who qualify, the Age Pension can be a valuable supplement to your super income, but it’s not something you can just set and forget. Your eligibility and the amount you receive depends on your income and assets, and these can change over time.

One thing to keep in mind is that Centrelink doesn’t automatically depreciate lifestyle assets like cars, boats or caravans, so their reported value can become inflated as the years go on. If you don’t update their current worth, you might wind up receiving less Age Pension than you’re entitled to.

7. Being too frugal

A surprising number of retirees pass away with most of their super untouched. This might come down to a desire to leave a large inheritance or an inability to shake the sense of scarcity that’s followed them throughout life. Whatever the reason, it should be weighed against the very real risk of squandering your golden years.

After all, spending within your means is admirable, but you don’t want to overdo it and deprive yourself of all the things that make retirement worthwhile.

Think about working with a financial adviser to create a plan that occupies a sensible middle ground between overspending and under-spending.

In summary

Amir Rodnia, my Financial Adviser colleague, and I are very conversant with the opportunities and strategies around planning for retirement.

If you're aged of 50 or older and still haven't given any though towards your retirement and finances, now is a good time to start – even with some basic planning and understanding of the financial options around retirement.

To help get you started, download our free Retirement Planning Guide right here.

If you're ready to take your retirement planning to the next step, reach out to our financial advisers at The Peak Partnership for a free preliminary discussion or head to our Retirement Planning page and fill out a few details so we can get to work for you.

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Financial planning services provided through Peak Partnership Wealth Design Solutions Pty Ltd as trustee for Carlmich Trust. ABN 26 711 439 304. Corporate Authorised Representative No 415154 of Professional Investment Services Pty Ltd AFSL 234954. ABN 11 074 608 558. www.centrepointalliance.com.au/PIS

You're 55 with no retirement plan

Wed, 18 Mar 2026 10:00:00 +1000

If you’re thinking, "I'm in my 50s and I have no retirement plan...have I left it too late?" – take a deep breath. You’re not alone, and it’s definitely not too late to start planning for your retirement.

While it’s true you don’t have decades up your sleeve anymore, you still have some very practical options to improve your retirement outlook. The key is taking action now rather than putting it off any longer.

Retirement planning is one of those things that’s easy to ignore when life is busy. When you’re younger, retirement feels a lifetime away. But somehow the years fly by, and suddenly retirement isn’t a distant concept – it’s on the horizon.

The good news? There’s still plenty you can do. Let’s walk through some practical steps.

1. Assess your current financial situation

Before you can make any decisions about retirement, you need a clear picture of where you’re starting from.

That means pulling together your bank accounts, super balances, investments (if you have them), and any debts. It’s also worth mapping out your income and expenses so you understand what it actually costs you to live.

Yes, this step can feel overwhelming at first – but it’s also empowering. Once you know the numbers, you can start making informed choices instead of guessing.

2. Set clear retirement goals

Next, think about what you actually want your retirement to look like.

Is it travel? More time with family? Downsizing and enjoying a slower pace of life? There’s no right or wrong answer — but having a clear idea of your goals gives your plan direction.

If you’re starting at age 55, it’s also important to be realistic. Your goals may need to align with the time and resources you have available, but even modest plans can still lead to a comfortable and fulfilling retirement.

Pat Kelly, Director & Financial Adviser

3. Start saving ASAP!

If there’s one thing that makes the biggest difference at this stage, it’s starting – or increasing – your savings now.

Making extra contributions to super can be particularly effective thanks to the tax advantages. Consider making catch-up contributions (also known as carry forward contributions) if you're 50 or older and your super balance is below where it should be for someone of your age and income level.

Even small, regular top-ups can add up over the next 10–15 years and significantly improve your retirement balance.

4. Get to work on debt reduction

Debt can be a major roadblock to retirement savings – especially high-interest debt like credit cards or personal loans.

Paying these down as quickly as possible frees up cash flow and reduces financial stress. The less money you’re sending to lenders, the more you can redirect towards your future.

5. Consider part-time work

Retirement doesn’t have to be a full stop. For many people, working part-time in retirement is a smart and flexible option.

It can help supplement your income, reduce pressure on your savings, and keep you socially and mentally engaged. In some cases, part-time work may not significantly reduce your Age Pension once you become eligible at age 67, thanks to income test thresholds.

6. Invest wisely

At age 55, investing is still important – but it’s also about balancing growth with protecting what you’ve built.

Your risk tolerance may be lower than it was in your 30s, so a more balanced or conservative approach might be appropriate. Diversification is key, and your investment strategy should align with how soon you’ll need access to your money.

This is an area where professional advice from a certified Financial Adviser can make a big difference.

7. Claiming the Age Pension

From age 67, you may be eligible for the Age Pension, depending on your income and assets.

The good news is that not all employment income is assessed under the means test. This means you may be able to keep working part-time while still receiving some Age Pension – helping to boost your overall income.

Understanding how the rules work can help you make better decisions about when and how to transition into retirement.

8. Downsize and cut expenses

If your savings aren’t quite where you’d like them to be, reducing expenses can be just as powerful as increasing income.

If you're age 55 or older, downsizing your home can help you boost your superannuation balance. When you sell your home, you can direct up to $300,000 ($600,000 for couple) into your super – we have more on downsizing super contributions here.

Cutting unnecessary costs or simplifying your lifestyle can also free up capital and reduce ongoing expenses – without sacrificing your quality of life.

9. Seek professional advice

You don’t have to figure all of this out on your own.

A Financial Adviser can help you create a tailored retirement plan, show you how to make the most of your super, manage tax effectively, and bring everything together into a clear strategy.

Sometimes, just having a plan in place can replace uncertainty with confidence.

Summary

If you’re 55 and don’t yet have a retirement plan, it’s not the end of the road – far from it.

By understanding your current position, setting realistic goals, boosting savings, reducing debt and exploring flexible work options, you can still significantly improve your retirement outcome.

The most important step is starting now. With the right plan and a bit of discipline, your retirement years can still be comfortable, secure and enjoyable.

Because it’s never too late to take control of your financial future – and make the most of what’s ahead.

If this article has got you thinking and you'd like some advice, clarity and direction about your retirement plans, feel free to reach out to Pat Kelly or Amir Rodnia – our expert Financial Advisers – to guide you through all your options. And you can download our free Retirement Planning Guide for some added inspiration.

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Financial planning services provided through Peak Partnership Wealth Design Solutions Pty Ltd as trustee for Carlmich Trust. ABN 26 711 439 304. Corporate Authorised Representative No 415154 of Professional Investment Services Pty Ltd AFSL 234954. ABN 11 074 608 558. www.centrepointalliance.com.au/PIS

FBT 2026: What's the latest?

Tue, 17 Mar 2026 09:08:28 +1000

With the current Fringe Benefits Tax year approaching on 31 March, now is a great time to know what’s happening in the area of FBT. The topic of focus this FBT year-end is the provision of commercial-type vehicles in your business for both owners and employees.

LARGE UTES AND TRUCKS: NOT ALWAYS EXEMPT UNDER THE ATO's SAFE HARBOUR RULES (PCG 2018/3)

Many employers assume that all utes, trucks, and workhorse‑style vehicles are automatically exempt from Fringe Benefits Tax (FBT).

However, under the ATO’s safe harbour guidelines in PCG 2018/3, an FBT exemption only applies when all specific conditions are met. This means not every commercial‑type vehicle – and not every pattern of use – qualifies for the exemption.

THE ATO's FOCUS ON UTES IN 2026

The ATO has made it clear that utes are a compliance focus this year, and we have already seen active reviews underway. The ATO is also reviewing social media posts, including cases where work utes have been spotted at Fraser Island (K’gari) and other popular holiday locations.

The ATO is even checking social media activity to see how and where business vehicles are being used.

Janolla Weatherhead | Senior Accountant

With FBT taxed at 47%, errors can lead to significant tax liabilities.

SAFE HARBOUR CONDITIONS UNDER PCG 2018/3

Eligible vehicle – the employer provides an eligible vehicle to a current employee.
Business‑related use – the vehicle is provided for work duties.
Value under LCT threshold – the vehicle’s GST‑inclusive value at purchase is below the Luxury Car Tax (LCT) threshold.
Not salary packaged – the vehicle is not part of a salary packaging arrangement.
Private use strictly limited – employer has a written policy limiting private use and receives employee confirmation.
Home‑to‑work travel limits – travel between home and work must not add more than 2 km to the usual route.
Strict private travel limits – private trips must not exceed 1,000 km annually or any single return trip over 200 km.

EXCEEDING THE LUXURY CAR TAX THRESHOLD

A vehicle with a GST‑inclusive value above the Luxury Car Tax (LCT) threshold at acquisition is automatically excluded from PCG 2018/3.

2026 Luxury Car Tax thresholds:

Fuel‑efficient vehicles: $91,387
Other vehicles: $80,567

Common vehicles under ATO scrutiny:

Dual‑cab utility vehicles
RAM, Chevrolet and other extra‑large trucks
High‑performance or high‑value utility vehicles

IS THE FBT EXEMPTION STILL POSSIBLE FOR LARGE VEHICLES WITH GREATER THAN 1 TONNE CAPACITY?

Yes — in some cases. Even if a vehicle cannot use the safe harbour guidelines because it exceeds the LCT threshold, this does not automatically mean the FBT exemption is unavailable.

If you believe this situation applies to you, contact your Business Adviser at The Peak Partnership.

RECOMMENDED ACTIONS FOR EMPLOYERS

Maintain a written vehicle‑use policy restricting private use and outlining business‑related use.
Request employees complete an annual statutory declaration confirming compliance and actual business use.
Require employees to keep a detailed logbook showing business use to support exemption or reduce FBT exposure.
Review all your vehicles in your business fleet in March every year, update and maintain a list of current drivers for all of them (take special note for cars that may have been reallocated between employees, or previously driven by ex-employees).

Plug-in hybrid vehicles no longer FBT-exempt

From 01 April 2025, plug-in hybrid electric vehicles no longer qualified for the FBT exemption unless:

the use of the vehicle was exempt before 01 April 2025, and
there is a financially binding commitment to continue providing private use of the vehicle on and after 01 April 2025.

If there has been a break or change to that commitment on or after 01 April 2025 then the exemption normally won’t be available any more.

SUMMARY (need some FBT help?)

Utes and trucks are a significant ATO focus in 2026, and many commonly used vehicles do not fit neatly within the safe harbour rules.

With the ATO actively monitoring social media and targeting high‑value vehicles, employers must ensure strong policies, statutory declarations, and logbooks are in place to manage the high compliance risk associated with the 47% FBT tax rate.

At the Peak Partnership, we're here to help you understand what is a very complex area of Australian Taxation Law, so feel free to reach out to your Business Adviser on (07) 3360 9888 or contact us here.

NOTE: Practical Compliance Guidelines (PCG) provide broad law administration guidance, address the practical implications of tax laws, and outline the Australian Tax Office's administrative approach.

Payday Super: What your business needs to know

Wed, 25 Feb 2026 13:49:53 +1000

Running a business already means juggling payroll, cash flow and compliance – and from 01 July 2026, there’s a significant and mandatory change that will reshape how you manage superannuation for your employees.

Payday Super will apply to all businesses that pay salaries or wages.

The aim is simple: make sure employees receive their super at the same time they’re paid, helping close Australia’s unpaid super gap and improving retirement outcomes – particularly for casual and part-time workers.

Payday Super changes

From 01 July 2026, superannuation guarantee (SG) contributions will need to be paid at the same time as wages, rather than quarterly. Employers will have seven business days from payday to ensure super contributions are received by employees’ super funds.

If super isn’t paid on time, the Superannuation Guarantee Charge (SGC) will apply. This means paying the outstanding super plus interest and an administration charge. Once the SGC is assessed, further interest and penalties may apply if the amount isn’t paid in full.

Unlike the current system, SGC amounts will generally be tax-deductible, although penalties associated with late payment won’t be.

Another important change is the retirement of the Small Business Superannuation Clearing House (SBSCH) from close of business on 30 June 2026. Businesses that currently rely on this platform to pay employee superannuation contributions will need to move to an alternative solution.

Beyond compliance, the impact is meaningful. Earlier super payments are expected to significantly improve retirement balances, with the average worker estimated to be thousands of dollars better off over time.

Why Payday Super is good for business

While Payday Super may sound like extra administration at first, it can actually streamline payroll and strengthen your position as an employer.

Less admin – Paying super alongside wages removes the pressure of quarterly payment deadlines.
Lower compliance risk – Faster ATO data-matching means issues are identified earlier, reducing the chance of penalties building up.
Stronger employee trust – Employees can see their super being paid regularly, which supports engagement and retention.
Smoother cash flow – Smaller, more frequent payments are often easier to manage than large quarterly amounts.

The ATO has indicated it will take a risk-based approach in the first year, focusing on education and support. Businesses that pay on time are likely to be considered low risk, with fewer compliance checks.

Preparing for Payday Super

There’s still time before the changes begin, but early preparation will make the transition much easier.

Review your payroll software
Most modern systems such as MYOB, Xero and QuickBooks already support payday-aligned superannuation processing. Check your setup and confirm whether any updates or integrations are required.
Understand your pay cycles
Identify how often you pay your employees (weekly, fortnightly or monthly) and factor in the seven-business-day payment window.
Brief your team
Make sure anyone involved in payroll understands the new rules. The ATO provides free resources and webinars to support the transition – take a look at ato.gov.au/payday super.
Plan your cash flow
Moving to more frequent super payments well in advance of the 01 July launch date can help reduce cash flow pressure later and avoid surprises.
Monitor and review
Put a regular check in place to confirm super payments are clearing correctly, and stay across ATO guidance as it’s finalised.

If you outsource payroll, it’s a good idea to speak with your provider early – many payroll vendors are already updating their systems to support Payday Super.

The bottom line

Payday Super is more than a compliance change. Done well, it can make payroll more efficient, improve employee confidence, and reduce long-term compliance risk.

Payday Super is as significant a change to business payroll processes as SuperStream and Single Touch Payroll. To help you understand the changes to your business's payroll and superannuation processing, download our Payday Super Fact Sheet here.

If you’d like help reviewing your payroll setup or planning for the transition, get in touch with our Accounting team. We can help ensure your business is ready well before Payday Super begins on 01 July 2026.

Tax and financial advice from 'finfluencers'

Tue, 03 Feb 2026 10:41:51 +1000

Scrolling through social media these days, it’s hard to miss the endless money tips, tax “hacks” and investment advice popping up in your feed. These posts often come from so-called financial influencers – or “finfluencers” – who make managing your money sound quick, easy and foolproof.

But when it comes to tax advice, following the wrong voice online can be risky.

Be careful who you take tax advice from online

The Tax Practitioners Board (TPB) has recently sounded the alarm about the growing number of so-called “finfluencers” on social media. These are influencers on platforms like Facebook, Instagram and TikTok who share financial and tax tips with their followers.

While some of this content may sound convincing (and rack up plenty of likes), the problem is that many finfluencers don’t actually have the qualifications needed to give proper tax advice. They also don’t always share the full picture – which can lead to people making decisions that end up costing them thousands of dollars.

Another thing to keep in mind is how finfluencers make their money. Often, they’re paid by companies to promote financial products. Those products may not be right for you, and the finfluencer may not fully understand – or explain – the risks involved.

When it comes to tax advice, following the wrong voice online can be risky.

Damian Knoblanche, Director

How to protect yourself

If you’re getting help with your tax affairs or relying on tax advice, it’s important to make sure the person you’re dealing with is registered with the Tax Practitioners Board. You can easily check this by searching the TPB Register at tpb.gov.au.

The TPB is very clear that, not only must tax practitioners registered with the TPB be fully-qualified to give tax advice and prepare tax returns, but they must also possess professional indemnity insurance — a consumer protection device to cover their clients if they suffer a loss due to an error or omission as a result of tax agent services. That's a level of protection you’re very unlikely to get from a 'finfluencer'.

The Tax Practitioners Board's key tips for dealing with finfluencers

The TPB offers some practical advice to help taxpayers stay safe:

Double-check tax advice on the Australian Tax Office website at ato.gov.au, which is the most reliable source of up-to-date tax information.
If it sounds too good to be true, it probably is. Be cautious about “tax hacks” or shortcuts that promise big savings.
Be wary of “free expert advice”. When it comes to tax, it’s always safer to speak with a registered tax professional.
Protect your personal information. Avoid websites or individuals asking for sensitive details like your TFN, identity documents or myGov login.
Report concerns. If someone is offering tax advice and you’re worried about their conduct, you can lodge a complaint with the TPB.

The bottom line

Social media can be a great place for ideas and general information – but when it comes to tax or investing advice, getting it wrong can be costly. Before acting on anything you see online, make sure it’s accurate, verified and coming from a properly registered professional.

If you’d like peace of mind or tailored advice for your situation, we’re always here to help.

Estate Planning: 14 essentials other than your Will

Tue, 27 Jan 2026 16:44:17 +1000

One of the most important things you can do for your loved ones — and your own peace of mind — is make sure your affairs are in order before you pass away. But there’s a lot more to the estate planning process than getting your Will sorted.

Here are a few additional items (14 of them in fact) that, depending on your situation, you might need to check off the list.

1. Make an inventory of your assets

One of the first steps when planning your estate should be to itemise all your belongings.

This means compiling a list of not just your physical assets (such as your property, car and jewellery) but non-physical assets (such as bank accounts, investments and superannuation) too.

2. Talk to your executor

An executor is the person you appoint to manage your estate in accordance with your wishes once you pass away. Think carefully about who you choose, as an executor’s job can be quite taxing. If you don’t believe anyone you know is up to the task, you can opt to go with a professional (such as a solicitor, accountant or specialist trustee company).

3. Make a list of your debts

End-of-life planning is about more than distributing your assets — any debts you have will need to be settled too.

When you pass away, it falls to your executor to pay down your debts using the funds from your estate. If the available funds fall short, they might resort to selling assets that were intended for your beneficiaries.

4. Make sure you have a death benefit nomination for your superannuation

To have a say in how your super death benefit is distributed, you’ll need to nominate a beneficiary via your fund.

Keep in mind that your super can generally only be paid out to a dependent, which means a spouse, child, financial dependent, or someone with whom you have an interdependency relationship.

If you’d prefer your death benefit goes to someone else, there’s also the option to nominate your legal personal representative. This way your super benefit can be paid into your estate and distributed to your preferred recipients as specified in your Will.

5. Check your life insurance

Like super, life insurance policies aren’t typically covered by your Will. That means your insurer will pay the proceeds of the policy to your nominated beneficiary when you pass away. Make sure to review your nomination, especially after any major life events (such as getting married, having kids, getting divorced, or the passing of your nominated beneficiary).

6. Review any co-owned assets

If you co-own property with another person, it might be a good idea to review the ownership arrangement that’s in place. If you are joint tenants, then right of survivorship means that your share of the asset will automatically pass to the remaining tenant when you die. If you are tenants in common, however, your share will form part of your estate and can be bequeathed to whoever you wish.

7. Make a list of contacts and memberships

Your death won’t just be felt by your friends and loved ones — chances are people outside your circle will be impacted too. To help those who are managing your affairs after you’re gone, consider compiling a list of all the people and organisations who should be notified in the event of your passing.

8. Set up an Advance Care Directive

If you fall seriously ill or are injured, an Advance Care Directive will let doctors and your family know what type of care or treatment you’d prefer if you’re no longer able to communicate or make the decision yourself.

So long as an Advance Care Directive is valid (meaning you had capacity when you wrote it, it clearly specifies which treatments you would accept or refuse, and it’s relevant to the situation at hand), it must be followed by health professionals.

Make sure to review it each year in case your preferences change.

9. Set up Enduring Power of Attorney

An Enduring Power of Attorney authorises someone to manage your financial and legal affairs on your behalf, and continues to operate in the event you lose the capacity to do so yourself. This might involve handling your finances, signing legal documents, and even selling your home so you can move into an aged care facility.

10. Set up Enduring Guardianship

Similar to Enduring Power of Attorney, Enduring Guardianship authorises someone to make lifestyle, health and medical decisions on your behalf (which can include where you live and which medical treatment you receive), and it continues should your decision-making ability become impaired due to illness, injury or advanced age.

11. Think about setting up a trust

If your heirs are minors, intellectually impaired, or you suspect they might misuse the money you intend to give them, think about whether a testamentary trust would be beneficial. This comes into effect when you die and gives your assets to a nominated trustee to hold on behalf of your beneficiaries. They will then be distributed according to the rules laid out in the trust deed.

12. Consider your digital legacy

Have you given much thought to what will happen to your social media accounts once you die? Many social media platforms let you memorialise your profile, which locks access but preserves your memory by allowing loved ones to continue to view your posts and photos. You might also be able to nominate a ‘legacy contact,’ who can elect to delete your account when you pass away.

13. Keep your family in the loop

Broaching the topic might be uncomfortable, but it can be a good idea to involve your family in the estate planning process so they understand what you’re leaving behind and what’s expected of them. This is especially important if you’ve appointed a family member as executor. Think about keeping a master document with a list of all your assets, accounts and the whereabouts of important documents to help make things easier for them.

14. Review your plan annually

Finally, make a point to review your estate plan at least once a year, or every time you undergo a major life change. This can be a good idea even if your personal circumstances haven't changed, since there's always a chance that tax laws and other regulations might.

Estate planning can be complicated and there are consequences to not setting things up correctly. For advice on writing a Will and everything else that goes into settling your affairs before you pass away, consider speaking to an estate planning lawyer.

In summary

While we don't directly provide legal advice about Estate Planning at The Peak Partnership, our comprehensive understanding of our clients' financial arrangements means we are well-placed to help facilitate your Estate Planning objectives – working with your nominated legal professional, or we can recommend a lawyer from our panel of affiliates.

Reach out to us at The Peak Partnership on 07 3360 9888 if you want help to get your Estate Planning framework underway.

Manage your FBT this Christmas

Fri, 07 Nov 2025 15:17:30 +1000

The festive season is a great time for your business to celebrate your team’s efforts and show appreciation to your customers, clients and associates. But before you book the venue and start buying gifts, it’s important to understand how Fringe Benefits Tax might apply – and how you can legitimately minimise or even avoid it.

Fringe Benefits Tax is the tax employers pay on benefits they provide to employees, their family or other associates in addition to, or as part of, their salary or wages.

In addition to work cars for employees’ private purposes, or paying for an employee’s private health insurance, Christmas parties (as well as staff bonuses and gifts in some cases) can be subject to FBT as they constitute 'entertainment benefits'.

The good news: there are exemptions under FBT that could save your business some money.

The catch: it’s not exactly simple to determine what’s FBT-exempt and what’s not. The Australian Tax Office (ATO) website has a comprehensive Entertainment-related fringe benefits section to help clear any confusion.

Here’s a practical overview for small and medium-sized businesses on how to keep the Christmas celebrations tax-smart.

1. Understanding FBT and Entertainment Rules

Fringe Benefits Tax (FBT) applies when you provide benefits to employees or their associates (such as family members) in place of, or in addition to, salary or wages. During Christmas, this commonly includes:

Staff Christmas parties.
Meals and drinks provided to employees or associates.
Gifts to employees.
Tickets or vouchers given as rewards or bonuses.

FBT can be a grey area because it depends on who receives the benefit, where it’s provided, and how much it costs.

2. Venue matters

Whether your Christmas party is considered ‘entertainment’ or ‘non-entertainment’ is just as important from the ATO’s perspective as it is for your employees.

From the ATO’s standpoint, you’ll be more likely to be FBT-exempt if the event venue is classified as ‘non-entertainment’. If the Christmas party is at your office on a working day, it’s more likely to be classified as ‘non-entertainment’. Conversely, if you host a party off-site (e.g. a restaurant of function venue), the $300 per-head rule from point 3 below applies.

The ATO defines ‘entertainment’ with a few dot points on its website:

Providing entertainment by way of food, drink or recreation;
Providing accommodation or travel in connection with such entertainment; and
Paying or reimbursing expenses incurred in obtaining something covered by either of the above.

3. $300 IS the magic number

When it comes to FBT, $300 is an important number to remember. It’s basically the threshold for what classifies as a ‘minor benefit’ and what doesn’t.

That’s important because minor benefits are often exempt from FBT, but there are some conditions.

A minor benefit has to be infrequent and irregular, meaning you can’t throw a Christmas party-scale event every other week and still say its infrequent.

A business that holds an end-of-financial-year party in June/July and a Christmas party in November/December is considered acceptable on this front.

The total amount spent per head also has to be $300 or less (GST inclusive), and this is for all similar expenses you’re claiming throughout the FBT reporting year for that employee. This can also extend to benefits provided to the employee's associate (e.g. spouse).

4. ‘non-entertainment’ gifts provide a better tax outcome

He knows when you’re sleeping, he knows when you’re awake, he knows when you’ve been bad or good, he knows the FBT classification of your workplace Christmas gift ('he' being the ATO, that is).

Tickets to concerts, shows and sporting events etc., movie passes and holidays are classified as entertainment gifts by the ATO and are usually subject to FBT. If these types of gifts are under $300, they are FBT-exempt but not tax-deductible.

However, hampers, vouchers, bottles of wine and other similar gifts are classified as ‘non-entertainment’ and are generally exempt from FBT.

In general, gifts that are considered ‘things’ are less likely to be considered ‘entertainment’.

5. Clients and Suppliers

When it comes to entertainment, costs related to clients or customers are not subject to FBT (because they’re not employees), but these costs are not tax-deductible as entertainment expenses.

Gifts to clients and suppliers are not subject to FBT and are tax-deductible, provided they are given for business reasons (e.g. goodwill or maintaining relationships).

In summary

To summarise, there are a few important questions to ask yourself before you throw your Christmas party.

How much will it cost? Remember $300 (GST inclusive) is the magic number.
Where is it, and when will it be held? At the office during work or away from work?
Who’s invited? Is it employees only? Are partners, clients and suppliers also invited?
Giving gifts? How much are they worth, what type are they and who is receiving?

If your concerned about FTB issues around your business' Christmas activities, get in contact with your adviser at The Peak Partnership. We're here to help with advice, clarity and direction when it comes to end of year Christmas celebrations.

It's better to be safe than sorry this silly season…and have a happy and safe holiday season.

Division 296 Super Tax revamped

Thu, 30 Oct 2025 16:29:58 +1000

On 13 October 2025, the Federal Treasurer announced substantial changes to the proposed Division 296 Tax measure on superannuation balances over $3 million – including a delayed start date.

It seems the Government has listened to criticism of the two most controversial features of their original Division 296 Tax proposal:

the taxation of unrealised gains through a Total Superannuation Balance (TSB) change methodology; and
the lack of indexation of the threshold that would potentially subject more superannuation account holders to the additional tax over time.

Both aspects of the proposed legislation have been amended in the revamp.

Let's unpack the details and changes in Division 296 Tax 2.0…

Delayed start date

Originally planned for a retrospective introduction on 01 July 2025, the commencement date has been deferred to 01 July 2026.

What we didn't like

In the first proposal, the additional tax was based on changes to your Total Super Balance, which could include unrealised gains (increase in asset values that haven't been sold or received as income) – equating to tax on 'paper profits'.

Also, the $3 million threshold for the additional tax was not intended to be indexed, meaning more people would be impacted over time as super balances grow.

The new rules

A two- tiered threshold for higher super balances:

an additional 15% tax on the proportion of earnings relating to balances over $3 million and up to $10 million (effectively 30% on earnings for this component); and
an additional 25% tax on the proportion of earnings relating to balances over $10 million (effectively 40% on earnings for this component).

Indexation will apply: both thresholds will be indexed to maintain alignment with the Transfer Balance Cap (TBC) and inflation (CPI).

Tax will only apply to realised earnings: that is, actual income your super fund has received, such as dividends, interest, rent and realised capital gains from the sale of assets.

Why Division 296 2.0 is better

This approach is considered fairer, as impacted super fund members will only be taxed on income their fund has actually earned – not on paper profits that may never be realised.

It also addresses the problem – through indexation – of more people becoming subject to the tax over time due to ‘bracket creep’.

What's next

Division 296 legislation still has to pass through Parliament before it take effect, so for now it's a case of 'wait and see' – at the earliest, the first 'trigger' date for the impact of Division 296 Tax is 30 June 2027 (focusing on an individual's Total Super Balance that exceeds $3 million or $10 million).

In summary

These latest reforms to Division 296 are very much welcomed, largely due to the efforts of the SMSF Association and the wider superannuation industry.

However, right now ‘the devil is in the detail’ and that detail will be in a revised Bill presented to Parliament. That revised Bill is not expected to be released until 2026, after further consultation with stakeholders.

Keep an eye on more communications from The Peak Partnership on this topic as developments unfold and the revised proposal moves towards legislation.

In the meantime, if you have any questions or concerns about the proposed Division 296 Tax on your superannuation savings, feel free to contact us at The Peak Partnership.

False news about superannuation changes

Fri, 13 Jun 2025 15:31:53 +1000

The Australian Tax Office has issued a warning regarding dodgy websites sharing false information about changes to the superannuation preservation rules and withdrawal rules, supposedly starting from 01 June 2025. Some of the misleading claims currently spreading online include:

that the preservation age will increase from 60 years to 70 years by 2030;
that lump-sum withdrawals will be capped at 50% of a person’s balance;
that there will be new “phased withdrawal limits” for people in pension phase;
that a “deferred access bonus” of 3% per year up to age 75 will be introduced; and
that early access to super will face tighter eligibility criteria and capped withdrawals.

None of these claims are true.

No such changes have been proposed by the Australian Government or Treasury, and none are in legislation.

Emma Rosenzweig, Deputy Commissioner for Superannuation at the ATO, has said…

I’m aware that there is false information circulating that there are changes to the superannuation preservation rules and withdrawal rules starting on 01 June. This is false.

Your super access rights

It’s important to understand when you can legally access your super, which is:

when you reach preservation age and retire;
when you turn 65, regardless of whether you’re still working; and
if you’re between 60 and 65 and haven’t retired, you can start a transition to retirement income stream (TRIS), which allows you to receive a regular income from your superannuation.

For anyone born on or after 01 July 1964 their preservation age is 60. People born before this date will have a lower preservation age.

To satisfy the “retired” condition, you must have reached preservation age and ended a position of gainful employment. If your employment ended after you reached your preservation age, there are no further requirements.

However, if your employment ended before reaching your preservation age, the trustee of your fund must be reasonably satisfied that you don’t intend to work for 10 or more hours each week.

Protecting yourself from misinformation

The ATO has observed websites attempting to harvest personal information such as Tax File Numbers, identity details and myGov login credentials under the guise of providing “super advice”.

To protect yourself:

always verify information through trusted sources like the ATO, ASIC’s MoneySmart or your super fund.
consult a registered tax professional or licensed financial adviser for personalised guidance.

If you have any concerns at all about your superannuation and when you can access your retirement funds, feel free to reach out to our Financial Advisers at The Peak Partnership. You can contact us here.

Trump's Tariffs and the Financial Markets

Wed, 09 Apr 2025 13:53:49 +1000

There’s a well-known maxim in the markets – "Sell the rumour, buy the fact" – a belief that market expectations can often be worse than reality. However, in the case of last week's US tariff announcement, the outcome was much more significant than anticipated, leading to increased volatility across global markets.

Yes, Equities have taken a steep hit but to soften the blow, government bond yields and the Australian dollar have trended lower, which has been a positive for defensive bond assets and has insulated global holdings to a degree. This is a strong reminder of the importance of diversification and maintaining a margin of safety in your investment strategy.

While the proposed tariffs will undeniably have significant implications for global trade, economic growth, and inflation, it’s important to note that this is likely an initial “deal making” step only in the Trump Administration’s aim to rebalance what they view as an unfair global trade system.

Going by Trump’s track record, there is a strong possibility that he is front-loading very high tariff rates as part of a dangerous negotiating tactic!

There will now be a round of reciprocal tariff negotiations, and this will likely play out with a lot of posturing amongst global political leaders. Yes, the media will have an absolute field day!

We understand that this can be unsettling however we suggest that you stay focused on your strategic plan in volatile times.

Pat Kelly, Financial Adviser

Volatility, as always, can create attractive entry points for quality assets, especially for investors with a medium- to long-term time horizon.

What we know about the Tariffs.

The US announced a set of "reciprocal tariffs" on a range of countries, based on what it believes to be the effective tariff rates that these nations impose on US goods, including factors like local sales taxes and alleged "currency manipulation."

The rates highlighted are highly questionable and in Australia, with which the US maintains a trade surplus, we will face a 10% tariff (the minimum rate). Goods manufactured in the US are exempt from these tariffs.

There are also some temporary exemptions, including steel and aluminium; automobiles and auto parts already affected by Section 232 tariffs; copper, pharmaceuticals, semiconductors, and lumber; and bullion, energy, and minerals not readily available in the US.

What we don’t know.

While President Trump did not provide a definitive timeline for the duration of these tariffs, he is posturing that they could remain in place indefinitely.

This remains to be seen and will no doubt be impacted by potential legal challenges and the outcome of how the affected countries will respond.

Potential scenarios include retaliating by raising tariffs on US goods, prompting further US tariff increases. Another could see countries seeking to lower tariffs on US exports in exchange for concessions on their goods.

At this point, the situation remains fluid and subject to change.

Initial market reactions and potential ramifications.

US and global stocks have experienced a sharp decline with the broad-based US S&P500 Index retreating 10.50% over last Thursday and Friday.

Unsurprisingly, US companies reliant on imported goods were among the hardest hit, including well known multinationals like Apple (-15%), Nike (-12.3%) and Amazon (-12.75%).

The US market closed flat overnight, after a volatile trading session to start the week. The Australian share market has also experience steep falls over the past week.

As a result of these changes, consumers in the US may face higher prices, at least in the short- to medium-term.

Further, global GDP growth could be stifled as businesses defer making any significant investment decisions and consumers pull back on spending. Company profit margins may come under pressure from increased costs, not passed onto the end consumer.

That said, economics is rarely so straightforward. There are several factors that could offset these challenges, along with the potential for tariff rates to be decreased via trade negotiations. For example, the US might respond with fiscal stimulus measures, such as additional tax cuts, to support the economy.

Furthermore, the tariffs could accelerate the "reshoring and friend shoring" of US manufacturing. The impact on markets and sentiment may also have an impact on future US Federal Reserve policy.

The tariff news could potentially shift the Fed’s focus from inflation concerns to economic weakness. If this occurs, the Fed and the Reserve Bank of Australia may decide to resume interest rate cuts sooner than previously anticipated. This is a counter measure that can stimulate activity in challenging times.

The oil price has retreated significantly over the past few days (which can reduce input costs) and China may decide to offload surplus goods to other markets like Australia (cheaper goods for us)!

What should you do?

It rarely pays to make knee jerk investing decisions post steep, policy induced share market declines. Investing in equities is an investment in Real Assets! Real businesses with the ability to be agile and adapt to changing market conditions.

Market volatility, particularly in reaction to policy shifts like tariff announcements, is a timely reminder of the crucial role portfolio diversification plays in mitigating risk. While short-term fluctuations are inevitable, a diversified portfolio can help smooth out the bumps and provide stability during periods of uncertainty.

Like any other case of market volatility, we encourage a long-term view, understanding that market turbulence is a feature, not a bug, of investing.

It’s also important to take a breath, and remember that this situation will continue to evolve, and we’ll ensure to keep you informed of any future changes.

Questions? Concerns?

If you have any questions or concerns about the impact of the US tariffs on your investments, feel free to reach out to our Financial Advisers through our website or email us at wealth@peakpartnership.com.au

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Financial planning services provided through Peak Partnership Wealth Design Solutions Pty Ltd as trustee for Carlmich Trust. ABN 26 711 439 304. Corporate Authorised Representative No 415154 of Professional Investment Services Pty Ltd AFSL 234954. ABN 11 074 608 558. www.centrepointalliance.com.au/PIS

FBT 2025: What you need to know

Wed, 12 Mar 2025 12:12:13 +1000

With the Fringe Benefits Tax (FBT) year ending on 31 March, it's important for business owners to be aware of the Australian Tax Office's hot spots for employers and employees.

FBT exemption for electric cars

Employers that provide employees with the use of eligible electric vehicles (EVs) can potentially qualify for an FBT exemption. This should normally be the case where:

the car is a zero or low emission vehicle (battery electric, hydrogen fuel cell or plug-in hybrid electric);
the car is both first held and used on or after 01 July 2022; and
the value of the car is below the luxury car tax threshold for fuel efficient vehicles (which is $89,332 for 2024-25 financial year).

Plug-in hybrid vehicles no longer FBT-exempt

From 01 April 2025, plug-in hybrid electric vehicles will no longer qualify for the FBT exemption unless:

the use of the vehicle was exempt before 01 April 2025, and
there is a financially binding commitment to continue providing private use of the vehicle on and after 01 April 2025.

If there is a break or change to that commitment on or after 01 April 2025 then the exemption normally won’t be available any more.

Working with the exemption

Even if the FBT exemption applies, your business will still need to work out the taxable value of the benefit as if the FBT exemption didn’t apply. This is because the value of the exempt benefit is still taken into account when calculating the reportable fringe benefits amount of the employee. While income tax is not paid on this amount, it can impact the employee in a range of areas (such as the Medicare levy surcharge, private health insurance rebate, employee share scheme reduction, and social security payments).

This means the employee’s own home electricity costs incurred on charging the electric vehicle will often need to be worked out. This figure can generally be treated as an employee contribution to reduce the value of the benefit.

While this can be practically difficult to determine, the ATO has issued some guidelines that provide a 4.20 cent per km shortcut rate that can potentially help with the calculation. These guidelines do not apply to plug-in hybrid vehicles.

Many electric vehicles are also packaged together with electric charging stations. Just be aware that the FBT exemption for electric cars does not extend to charging stations provided at the employee’s home.

Providing equipment to work from home

Many businesses continue to offer flexible work from home arrangements. employees are often provided with work-related items to assist them to work from home. In general, where work related items are provided to employees and used primarily for work, FBT shouldn’t apply.

For example, portable electric devices such as laptops and mobile phones provided to employees shouldn’t trigger an FBT liability as long they are primarily used by your employees for work. Multiple similar items can also be provided during the FBT year where required – for example multiple laptops have been provided to the employee – but only if the business has an aggregated turnover of less than $50 million (previously, this threshold was less than $10 million).

If the employee is using equipment provided by the business for their own private use, normally FBT would apply to the private use. However, the FBT liability can be reduced based on the business use percentage.

Does FBT apply to your contractors?

The FBT rules tend to apply when benefits are provided to employees and certain office holders, such as directors. FBT should not apply when benefits are provided to genuine independent contractors but, you need to be sure that your contractors are in fact contractors.

Are your contractors really contractors?

Following two landmark decisions handed down by the High Court, the ATO has now finalised a ruling TR 2023/4 that helps determine whether a worker is an employee or an independent contractor.

If the parties have entered into a written contract, then you need to focus on the terms of that contract to establish the nature of the relationship (rather than looking at the conduct of the parties). However, merely labelling a worker as an independent contractor doesn’t necessarily mean that they won’t be treated as an employee if the terms of the contract suggest that the parties have entered into an employment relationship.

The ATO has also issued PCG 2023/2 that sets out four risk categories. Arrangements will tend to be viewed in a more favourable light where:

there is evidence to show that you and the worker have agreed on the classification;
there is a comprehensive written agreement that governs the relationship;
there is evidence that you and the worker understand the consequences of the classification;
the performance of the arrangement hasn’t deviated significantly from the terms of the contract;
specific advice has been sought confirming that the classification is correct; and
tax, superannuation, and reporting obligations have been met when the worker is classified as an employee or independent contractor (whichever relevant).

If your business employs contractors, you should have a process in place to ensure the correct classification of the arrangements and to determine the ATO’s risk rating. These arrangements should also be reviewed over time.

Even when a worker is a genuine independent contractor, just remember that this doesn’t necessarily mean that the business won’t have at least some employment-like obligations to meet. For example, some contractors are deemed to be employees for superannuation guarantee and payroll tax purposes.

Reducing the FBT record keeping burden

Record keeping for FBT purposes can be onerous.

From 01 July 2024 however, your business will have a choice to keep using the existing FBT record keeping methods, use existing business records where those records meet the requirements set out by the legislative instrument, or a combination of both methods:

Travel diaries – see LI 2024/11
Living-away-from-home-allowance – FIFO/DIDO declarations – see LI 2024/4
Living-away-from-home – maintaining an Australian home declaration – See LI 2024/5
Otherwise deductible rule – expense payment, property or residual benefit declaration – See LI 2024/6
Otherwise deductible rule – private use of a vehicle other than a car declaration – See LI 2024/7
Car travel to an employment interview or selection test declaration – See LI 2024/14
Remote area holiday transport declaration – See LI 2024/10
Overseas employment holiday transport declaration – See LI 2024/13
Car travel to certain work-related activities declaration – See LI 2024/9
Relocation transport declaration – See LI 2024/12
Temporary accommodation relating to relocation declaration – See LI 2024/8

FBT housekeeping

It can be difficult to ensure the required records are maintained in relation to fringe benefits – especially as this may depend on employees producing records at a certain time. If your business has cars and you need to record odometer readings at the first and last days of the FBT year (31 March and 01 April), remember to have your team take a photo on their phone and email it through to a central contact person – it will save running around to every car, or missing records where employees forget.

The top FBT risk areas

Mismatched claims for entertainment – claimed as a deduction but no FBT

One of the easiest ways for the ATO to pick up on problem areas is where there are mismatches.

When it comes to entertainment, employers are often keen to claim a deduction, but this can be a problem if it is not recognised as a fringe benefit provided to employees. Expenses related to entertainment such as a meal in a restaurant are generally not deductible and no GST credits can be claimed unless the expenses are subject to FBT.

Let’s say you taken a client out to lunch and the amount per head is less than $300. If your business uses the ‘actual’ method for FBT purposes, then there should not be any FBT implications. This is because benefits provided to client are not subject to FBT and minor benefits (i.e., value of less than $300) provided to employees on an infrequent and irregular basis are generally exempt from FBT. However, no deductions should be claimed for the entertainment and no GST credits would normally be available either.

If the business uses the 50/50 method, then 50% of the meal entertainment expenses would be subject to FBT (the minor benefits exemption would not apply). As a result, 50% of the expenses would be deductible and the business would be able to claim 50% of the GST credits.

Employee contributions by journal entry in the accounts

Many businesses use after-tax employee contributions to reduce the value of fringe benefits. It is also reasonably common for these contributions to be made by journal entry through the accounting system only (rather than being paid in cash).

While this can be acceptable if managed correctly, the ATO has flagged numerous concerns including whether journal entries made after the end of the FBT year are valid employee contributions.

For an employee contribution made by way of journal entry to be effective in reducing the taxable value of a benefit, all of the following conditions must be met:

the employee must have an obligation to make a contribution to the employer towards a fringe benefit (i.e., under the employee’s remuneration agreement);
the employer has an obligation to make a payment to the employee. For example, the parties may agree that the employer will lend an amount to the employee or the employee might be entitled to a bonus that hasn’t been paid yet. If a loan is made by the employer then this could trigger further tax issues that need to be managed;
the employee and employer agree to set-off the employee’s obligation to the employer against the employer’s obligation to the employee; and
the journal entries are made no later than the time the financial accounts are prepared for the current year (i.e., for income tax purposes).

Failing to ensure that arrangements involving fringe benefits and employee contributions are clearly documented can lead to problems. For example, the ATO may ask to see evidence of the fact that the employer is actually under an obligation to make contributions towards a fringe benefit. If there is no evidence, then significant FBT liabilities could arise.

Not lodging FBT returns

The ATO is concerned that some employers are not lodging FBT returns when required to.

If your business employs staff (even closely held staff such as family members), and is not registered for FBT, it’s essential to review that position to check whether the business could potentially have an FBT liability.

If the business provides cars, car parking spaces, reimburses private (not business) expenses, provides entertainment (food and drink), employee discounts etc., then you are likely to be providing at least some fringe benefits.

There is a list of benefits that are considered exempt from FBT, such as portable electronic devices like laptops, protective clothing, tools of trade etc. If your business only provides these exempt items, or items that are infrequent and valued under $300, then you are unlikely to have to worry about FBT.

Need FBT help?

Our Accounting Advisers are happy to help you with advice, clarity, direction when it comes you your FBT concerns. You can contact us here, or just give our team a call on 07 3360 9898.

Fringe Benefits Tax: A quick guide

Wed, 12 Mar 2025 12:05:21 +1000

While income tax and company tax seem to be front of mind for most businesses, Fringe Benefits Tax (FBT) is also applicable when employers provide certain benefits to their employees or associates of employees (usually family members connected to their employment).

Let’s look at the basics of Fringe Benefits Tax.

What is a fringe benefit?

The term ‘benefit’ in fringe benefit can be broadly defined to include any rights, privileges or services. A few examples of an employer providing fringe benefits include:

giving an employee the use of a work car for private purposes.
providing entertainment with food, drink or recreation.
giving an employee a discounted loan.
reimbursing a non-business expense incurred by the employee (for example, private health insurance or school fees).

Determining whether you are providing fringe benefits

The first step is to determine whether you are providing fringe benefits to your employees and their associates (usually family members). By definition, employees can be current, former and future employees, or directors who conduct their business through a company or trust.

In addition, a fringe benefit can be provided by a third party or associate by agreement with the employer. For instance, a business might work with a supplier who, in turn, provides free products or services to employees.

By definition, associates include people or entities that are associated with employers and employees. This can include relatives or companies or trusts that are closely connected.

How to calculate FBT

The Australian Tax Office will not usually notify employers of how much FBT they need to pay. Businesses need to self-assess (or use the services of a professional adviser) and report fringe benefits tax liability for the given FBT year. The FBT year is from 01 April to 31 March, so it's different to the normal financial year period.

Here are some useful steps for calculating how much FBT you will need to pay:

Step 1:
Determine if you have provided fringe benefits and identify the type of benefit/s.

Step 2:
Calculate the taxable value of each fringe benefit provided to each employee. There are various rules for calculating the taxable value of a fringe benefit, depending on the type of benefit.

Step 3:
Calculate the total taxable value of all the fringe benefits that your business provides that you can claim a GST credit for.

Step 4:
Determine the total taxable value of all the fringe benefits that you cannot claim a GST credit on, such as supplying goods or services that are GST-free.

Step 5:
Calculate the grossed-up taxable value of the fringe benefits by multiplying the total taxable value of all the benefits you can claim a GST credit for (the amount from Step 3) by the type 1(higher) gross-up rate. This can be found on the ATO website.

The term ‘grossing-up’ for FBT purposes refers to an increase to the taxable value of fringe benefits provided to reflect the gross salary an employee would need to earn at the highest marginal tax rate (including the Medicare Levy) to purchase the benefits after paying tax.

Step 6:
Multiply the total taxable value of all fringe benefits not claimable for a GST credit (from Step 4) by the type 2 (lower) gross-up rate.

Registering for, reporting and paying FBT

Once you have determined you need to pay fringe benefits tax, you will need to register for FBT with the ATO, then report and pay what you owe. The reporting period for FBT runs from 01 April to 31 March annually.

Types of fringe benefits subject to FBT

There is a range of fringe benefits that require fringe benefits tax to be paid. These include:

car fringe benefits.
car parking fringe benefits.
entertainment and fringe benefits.
expense payment fringe benefits.
loan fringe benefits.
debt waiver fringe benefits.
housing fringe benefits.
board fringe benefits.
living away from home allowance fringe benefits.
residual fringe benefits.

Each type of fringe benefit has specific criteria. For example, for fringe benefits tax purposes a car is defined as:

a station wagon, sedan, four-wheel drive, utility or panel van (except for panel vans and utilities that can carry one tonne or more).
any vehicle for carrying goods with a carrying capacity of under one tonne.
any other passenger vehicle that is designed to carry fewer than nine passengers.

For a complete explanation for criteria under which FBT applies to the categories listed above and valuation rules, visit the Types of Fringe Benefits page on the ATO website.

The definitions and valuations of FBT categories can be complex so it’s best to get advice from a registered tax agent – like The Peak Partnership – we're across all the intricate details of FBT and can help you with your FBT assessment.

You can also head across to our Financial Fact Sheets section for more helpful information about FBT around entertainment expenses, meals and Christmas spending on staff. Just look under the BUSINESS tab.

Small business with outstanding ATO debts

Wed, 12 Feb 2025 08:33:03 +1000

The Australian Taxation Office (ATO) has earmarked 2025 as the year for businesses to get their tax and superannuation debts back on track.

From 01 July 2025, the cost of tax debt for businesses will increase significantly, when the general interest charge (GIC) and the shortfall interest charge (SIC) become non-deductible. In addition, the ATO is changing their approach to collecting unpaid tax and super - all of which is aimed at incentivising businesses to pay outstanding debt to the ATO first.

Current policy

Tax debt owed to the Australian Taxation Office (ATO) is subject to SIC and GIC, which are currently tax-deductible.

GIC is incurred when a taxpayer fails to lodge and pay their taxes by the due date. The current annual GIC rate is 11.42%.

SIC is incurred in instances of taxpayer errors which result in underpayment of tax. The current annual SIC rate is 7.42%.

Proposed policy

The new policy would see GIC and SIC charges incurred from 01 July, 2025 onwards become non-deductible, essentially increasing the cost of tax debt.

This change comes amid an ATO crackdown on outstanding debt, with record numbers of director penalty and garnishee notices being issued. These measures are designed to accelerate collection of over $50 billion of tax debt owed to the ATO, exacerbated by COVID-era leniency.

Supporting small business to repay debt

The Australian Banking Association (ABA) has collaborated with Chartered Accountants Australia and New Zealand (CAANZ), CPA Australia (CPA), and the Australian Taxation Office (ATO) to help inform [create a support-based factsheet for] small business customers who might be struggling to pay their debts on time.

Australian Banking Association CEO Anna Bligh urged small business owners to reach out to their bank if they were worried about their finances.

“If you're feeling stressed about your finances or existing debts, seek help from your bank, accountant, or a financial counsellor right away. For any debts you have with the ATO, get in touch with them early on so they can work with you on managing the debt.”

ATO Assistant Commissioner Anita Challen said the ATO is encouraging businesses to engage early to get on top of their debts.

“We want to work with businesses to help them get back on track with paying their tax debts. For small businesses who need support, there are a range of support options available. We encourage small business owners to reach out to the ATO or a trusted advisor early to identify options that may help their business remain viable.”

Anita Challen, Australian Tax Office Assistant Commissioner

Ms Bligh said that the financial services industry knows that customers are feeling the pinch of the cost of living, and this is especially true for our small business owners.

"Our small businesses are incredibly resilient, but banks want customers to know they are not alone if they feel like they are struggling to make repayments.”

"Don't be afraid to contact your bank as soon as possible. They have specialised teams ready to help, and the sooner you get in touch the sooner your bank can review your circumstances.”

CEO of Chartered Accountants Australia and New Zealand (CA ANZ), Ainslie van Onselen has encouraged small businesses to work with their chartered accountant at the first sign their business may be under financial stress.

“Chartered accountants have the expertise to help your small business find the best path forward from looking at your business structure, to identifying cash-flow improvements and helping manage outstanding debt.

“In a cost-of-living crisis, having a chartered accountant in your corner supporting your business is a great way to manage through economic and financial pressures.”

CPA Australia’s Chief Executive Officer, Chris Freeland highlighted the critical nature of Australia’s small businesses and encouraged those struggling to seek support.

“Small businesses are an essential part of our economy and millions of enterprising Australians live and breathe their business. This is great when things are going well, but circumstances can change quickly and leave small business owners feeling overwhelmed and under pressure, particularly when dealing with their finances.

“Business success requires informed decision-making, healthy financials and great advice. Understanding the overall position of your business, including managing your debts and tax obligations is critical to survival and growth. When you need help with debt, seeking support becomes your next good business decision.

Seeking advice from your accountant or bank will give you a better understanding of your options and allow you to make more informed decisions. It could prove to be the best thing you did. CPA Australia is committed to supporting small businesses navigate the ever-evolving regulatory and economic environment.”

Falling behind with your business tax repayments?

If your business is concerned about tax debt or financial stability, our Business Advisers and Chartered Accountants at The Peak Partnership can help.

Download our Supporting Small Business fact sheet for more information and feel free to contact us today to discover long-term solutions for your business, including cash flow management, restructuring and refinancing options.

Changes to capital gains withholding

Tue, 14 Jan 2025 12:36:55 +1000

The Australian Tax Office (ATO) introduced changes to the Foreign Resident Capital Gains Withholding (FRCGW) rules on 01 January 2025 that will affect all Australian residents selling property.

Prior to 01 January, Australian residents selling property were required to provide a clearance certificate to the purchaser at or before settlement to avoid having 12.5% withheld from a property sale where the value of the property was $750,000 or more.

Under the changes to the FRCGW legislation, all Australian residents now require a clearance certificate from the ATO for all property contracts signed on and after 01 January 2025, regardless of the sale price. In short, the changes are:

the withholding rate will increase from 12.5% to 15%.
the $750,000 property value threshold will be removed, and the withholding rules will apply to all property sales.

Without a clearance certificate, the tax – calculated at 15% of the sale price – must be withheld from the sale proceeds by the purchaser and paid to the ATO. If tax is withheld from the sale price, the vendor will only receive any refund due after their next income tax return is processed at tax time.

Australian residents selling property can apply for a certificate (free of charge) from the ATO – and as certificates are valid for 12 months, it's not necessary to wait until a signed contract of sale is in place.

The seller must provide the certificate to the purchaser before the settlement date. According to the ATO website, clearance certificates usually issue within a few days, but can take up to 28 days in some circumstances - that's why it's important to apply for a certificate as early as possible when planning to sell a property.

If you're considering selling a property in 2025 and want to know more about the ATO rules around Foreign Resident Capital Gains Withholding, feel free to reach out to one of our Accounting Advisers at The Peak Partnership.

What lies ahead in 2025?

Tue, 17 Dec 2024 09:55:35 +1000

The past few years have been a rollercoaster ride of instability; with the COVID-19 pandemic, interest rate rises, limited housing affordability and availability, cost-of-living pressures and more. There's no guarantee, but we're all hoping for greater stability and certainty in 2025.

Let's explore some of the key changes and challenges.

A federal election

Expect more political advertising slipping into your letterbox, social media, voicemail, and television viewing - most likely with messages from the opposition asking if you are better off, and from the incumbents telling you all the reasons why you are.

The 2025-2026 Federal Budget has been brought forward to 25 March 2025, suggesting an election will be held some time after that but no later than 17 May 2025.

Legislation in limbo

The Senate pushed through 32 Bills on the final sitting day of Parliament for 2024, including seven of direct relevance to business and to the financial interests of some Australians. However, two key announcements remain in limbo:

$3 million tax on earnings in a superannuation fund

The proposed Division 296 tax, which imposes a 30% tax rate on future earnings for superannuation balances above $3 million, is proposed to commence from 01 July 2025. The Bill enabling the new tax is stalled in the Senate.

It’s unlikely that this tax will pass parliament prior to the election; at which point the Bill lapses. It then becomes a question of whether the elected Government chooses to rectify the concept or let it fade into oblivion as a bad idea.

$20,000 instant asset write-off for small business

In the 2024-2025 Federal Budget, the government announced the extension of the $20,000 instant asset write-off threshold for small business for a further year to 2024-2025. The concession enables businesses with an aggregated turnover of less than $10 million to immediately deduct the full cost of eligible depreciating assets costing less than $20,000.

Without this measure, the threshold returns to $1,000.

This concession was removed by amendment from the enabling legislation at the last minute in the final sitting of Parliament of 2024. The removal of this measure is unfortunate as, once again, SMEs now have no confidence about the tax treatment of investments in assets that they might be looking to make, or have made, in the current financial year.

Tax & super changes

Foreign resident capital gains withholding changes on sale of property

One of the Bills pushed through Parliament at the end of 2024 changes how capital gains withholding applies to foreign residents from 01 January 2025.

Currently, residents selling taxable Australian property must provide a clearance certificate to the purchaser at or before settlement to avoid having 12.5% withheld from a property sale where the value of the property is $750,000 or more. If applicable, the withholding is then made available as a credit against any tax liability. The vendor only receives any refund due after their next income tax return is processed at tax time.

From 01 January 2025 however, the threshold will be removed and the withholding rate increased so that:

the withholding is increased from 12.5% to 15%; and
the withholding applies to the sale of all Australian land and buildings by foreign residents, regardless of the value of the assets.

The reforms apply to acquisitions made on or after 01 January 2025.

Superannuation Guarantee rate increases to 12%

The Superannuation Guarantee (SG) rate will rise from 11.5% to 12% on 01 July 2025 – the final legislated increase.

Superannuation on Paid Parental Leave

From 01 July 2025, superannuation will be paid on Paid Parental Leave payments. Eligible parents will receive an additional payment based on the superannuation guarantee (i.e. 12% of their PPL payments), as a contribution to their superannuation fund.

Interest rates

At the last Reserve Bank Board (RBA) meeting, RBA governor Michele Bullock recognised the easing of headline inflation from 5.4% to 2.8% over the year to September 2024 but suggested that the economy still has some way to go before inflation is sustainably within the 2% to 3% target range. The RBA appears wary of volatility and wants to see inflation sustainably trending down before making any move.

CommBank is predicting a February 2025 rate cut, ANZ and Westpac May 2025, and NAB June 2025.

Cost of living pressures

The National Accounts released in early December took economists by surprise with living standards growing by a mere 0.2% in the September quarter – the expectation was much higher. Discretionary spending only increased by 0.1%.

The personal income tax cuts that came into effect from 01 July 2024 helped households, as did federal and state energy subsidies, but the impact is still working its way through the system. At the same time, mortgage costs continue to rise as past increases continue to impact.

Through the year, Australia’s economy grew 0.8%, the lowest rate since the COVID-19 affected December quarter 2020. Economic activity in the Australian economy right now is heavily dependent on Government spending.

Slow and steady is the expectation for 2025.

The ‘Trump effect’

President-elect Donald Trump will recite his oath of office on 20 January 2025. The Trump administration will hold the presidency, Senate and the House.

For Australia, the question is the likely impact of some of President-elect Trump’s stated policy objectives including the imposition of tariffs. On social media, Trump has said:

“…as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders.”
“…we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America.” This in response to claims that China is responsible for massive amounts of drugs, in particular Fentanyl being sent into the US.

The issue for Australia is the secondary impact of a trade war. China is Australia's largest two-way trading partner, accounting for 26% of our goods and services trade with the world in 2023. A slowdown in the Chinese economy impacts Australia and the region generally.

An immediate impact of the idea of a trade war has been the decline of the AUD/USD, currently sitting at around 64c.

Fuel efficient cars

New standards for vehicle manufacturers come into effect from 01 January 2025.

Vehicle manufacturers will have a set average CO₂ target for all new cars they produce, which they must meet or beat. The target will be reduced over time and car companies must provide more choices of fuel-efficient, low or zero emissions vehicles.

Suppliers can still sell any type of vehicle they choose but with more fuel-efficient models offsetting any less efficient models. If suppliers meet or beat their target, they'll receive credits. If they don’t, they will have two years to either trade credits with a different supplier, or generate credits themselves, before a penalty becomes payable.

Wage theft criminalised

As of 01 January 2025, the intentional underpayment of workers will be criminalised. Employers will commit an offence if:

they’re required to pay an amount to an employee (such as wages), or on behalf of or for the benefit of an employee (such as superannuation) under the Fair Work Act, or an industrial instrument; and
they intentionally engage in conduct that results in their failure to pay those amounts to or for the employee on or before the day they’re due to be paid.

Employers convicted of wage theft face fines of up to three times the amount of the underpayment and $7.825 million.

Phasing out cheques

The Government has announced a transition plan to phase out the use of cheques. Under the plan, cheques will stop being issued by 30 June 2028 and stop being accepted on 30 September 2029.

The use of cheques has declined dramatically over the past 10 years, declining by around 90%. In response, banks have stopped issuing chequebooks to new customers. However, financial institutions have a legislated requirement to accept cheques until the Government no longer requires them to do so.

Danish banks stopped accepting cheques in 2017 and New Zealand's banks in 2021.

Cheques out but cash remains king

While Australians have moved to digital payment methods, the Government has been careful to maintain cash as a payment method.

Around 1.5 million Australians use cash to make more than 80% of their in‑person payments. Cash also provides an easily accessible back‑up to digital payments in times of natural disaster or digital outage.

According to the most recent data, up to 94% of businesses continue to accept cash.

The Government has stated that they will mandate that businesses must accept cash when selling essential items, with appropriate exemptions for small businesses.

Currently, businesses don’t have to accept cash – business can specify the terms and conditions that they will supply goods and services.

The issue of card surcharges often comes up when a business adds a surcharge rather than recognising this cost of doing business in their pricing. A business can charge a surcharge for paying by card, but the surcharge must not be more than what it costs the business to use that payment type.

Hiring staff for the festive season

Wed, 13 Nov 2024 14:38:49 +1000

As the festive season approaches and holiday trading ramps up, small business employers may be considering hiring new staff to help with the likely increase in sales activity.

When taking on new staff, business owners should keep in mind the following 'key things' when it comes to their employer tax and super obligations.

Employers will need to make sure they are withholding the right amount of tax from payments they make to their employees and other payees. This is an important part of their role, as it will help their employees meet their end-of-year tax liabilities.
Employers' accounting or payroll software, the ATO's tax tables or its online tax withheld calculator will help employers do this.
Employers must pay Superannuation Guarantee ('SG') at the current rate of 11.5% to all eligible employees' super funds in full and on time to avoid paying the super guarantee charge. The ATO's super guarantee contributions calculator can help employers work out how much super to pay for each employee.
If employers are still not reporting through single touch payroll ('STP') and they do not have an approved exemption, deferral or concession in place, they should start reporting now. If they have just started a business or recently employed staff, they will need to report through STP from their first payday.
Employers should remember that if they report through STP, they do not need to send the ATO their employee's completed TFN declaration, as the ATO has already received this information through their STP reporting. Employers should however keep their employee's completed TFN declaration for their own records.

Employers can refer to Obligations when people work for you for further information about employee tax and super obligations.

The bottom line

The Christmas and New Year holiday season is a great opportunity for businesses to 'cash in' on consumers' positive outlook and freer spending behaviours, albeit with an investment in [cost of] additional staff.

What your business doesn't want is to get to 30 June 2025 and discover you haven't accounted or budgeted for these extra holiday season staff expenses. If you're planning to add short-term staff to you workforce this summer, let's talk first – it could be a worthwhile and stress-relieving chat.

General Interest Charge: ATO gets tough on penalties

Tue, 12 Nov 2024 14:01:18 +1000

Quite often as tax agents, our role is to liaise with the Australian Tax Office on behalf of our clients to apply for General Interest Charge (GIC) penalties to be reduced or waived, and to arrange payment plans for tax liabilities or other tax-related debts.

For quite some time, the ATO has been understanding and accommodating of the plight of (mostly business) taxpayers, but we've recently seen the tide changing in the ATO's level of tolerance for such requests.

In short, tax agents like The Peak Partnership are being told to adjust their (and their clients') expectations around payment plans and penalty remissions as the ATO toughens its approach to tax debts. The ATO has said that too many tax professionals are looking to secure payment plans and penalty remissions for clients when their clients are not in “genuine need”.

Speaking through a webinar earlier this year, ATO Assistant Commissioner Lodge and Pay, Sylvia Gallagher stressed that payment plans were not a loan to businesses and were only intended for those that needed genuine support.

“We expect those who can and do pay on time to do so. I listen to a lot of phone calls and watch a lot of processing and there’s an expectation that payment plans will be granted and that they will be three-year payment plans and the minimum amount of payment for pretty much each of the clients that tax agents call up for,” said Ms Gallagher.

“That may have been okay during COVID but that’s not okay anymore. A payment plan isn’t there as a loan. It’s not there for businesses who actually can pay and lodge on time to help them keep that money in their account.”

Ms Gallagher said payment plans will only be granted where the taxpayer can’t pay on time.

“Paying tax isn't voluntary. It is something that is an obligation for all Australians who earn an income,” she said.

She also stressed that the ATO expects those who can lodge on time to do so and before the due date and those who can pay on time to do so.

“So, we will be more stringent in asking questions about capacity to pay and we will be more stringent in looking at General Interest Charge (GIC) remissions,” she warned.

“We’re getting a lot of tax agents call up and say their client has paid off payment plans and are then asking for a GIC remission. Well, why? [The fact] that the payment plan was paid off is not an excuse to get a GIC remission.”

Ms Gallagher said by allowing GIC remissions for those who chose not to pay on time, the ATO would be creating an uneven playing field.

She noted that PS LA 2011/12 sets out in what circumstances it is reasonable for the Tax Office to grant a GIC remission.

“We absolutely will in those cases. [We look at factors such as] did the client have control over the late payment? If they didn't, then obviously we can remit. But also did they make steps to reduce the payment? Is it fair and reasonable to be able to grant that remission as well?” she asked.

The ATO’s collectable debt has now reached more than $50 billion.

“Small businesses make up the majority of that debt, around 90 per cent. So we do want to make sure that we can help businesses get back on track,” she said.

“It is really important that lodgements and payments are up-to-date so that we can understand where a business might be struggling and we can go out and help them.”

From a tax agent perspective, we'll continue to support our clients by applying to the ATO for payment plans and penalty remissions. An important part of that process for us is communication – understanding where your business is at regarding capacity to pay tax-related liabilities, and being able to pro-actively engage with the ATO on your behalf.

If you think you or you business may have difficulty paying the ATO on time, please let your Accounting Adviser at The Peak Partnership know about it as soon as possible. Remember, we're here to help.

More women using ‘downsizer’ contributions to boost their superannuation

Fri, 11 Oct 2024 16:13:05 +1000

If you are aged 55 years or older, the "downsizer contribution" rules enable you to place up to $300,000 from the proceeds of the sale of your home into your superannuation fund (eligibility criteria applies), and recent statistics show that women are leading the way.

In 2023-24, over 57% of people making a ‘downsizer’ contribution to super were women, and the average value of the contribution was marginally higher at $262,000 (compared to $259,000 contributed by men).

The most likely age someone makes a downsizer contribution is between 65 and 69. From age 65, a downsizer contribution can be withdrawn from super if your circumstances change, even if you are still working. Those aged 55 to 64 generally won’t have access to these funds until they are at least 60 and retired.

Downsizer contributions are excluded from the existing upper age test, work test, and the total super balance rules (but the amount that can be moved to a retirement pension is limited by your transfer balance cap).

An advantage of downsizer contributions is that they don't against your other non-concessional contributions – so if you've already reached your contributions cap for the year, you can still contribute up to $300,000 per person.

Pat Kelly, Financial Adviser

For couples, both partners can take advantage of the concession for the same home. That is, if you or your spouse meet the other criteria, both of you can contribute up to $300,000 ($600,000 per couple). This is the case even if one of you did not have an ownership interest in the property that was sold (assuming they meet the other criteria).

To be eligible to make a downsizer contribution you do not have to buy another home once you have sold your existing home, and you are not required to buy a smaller home – you could buy a larger and more expensive one and make a downsizer contribution if you have access to other funds.

Check out our related article here to find our more about downsizer contributions rules and eligibility.

If you're thinking of selling your home and investing some of the proceeds into your superannuation, you need to chat with one of our Financial Advisers first. We can help you determine if a downsizer contribution approach is right for your personal circumstances.

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Financial planning services are provided through Peak Partnership Wealth Design Solutions Pty Ltd as trustee for Carlmich Trust. ABN 26 711 439 304.
Corporate Authorised Representative No 415154 of Professional Investment Services Pty Ltd AFSL 234954. ABN 11 074 608 558.
www.centrepointalliance.com.au/PIS

It wasn’t me: the tax fraud scam

Tue, 10 Sep 2024 10:11:50 +1000

You login to your myGov account to find that your activity statements for the last 12 months have been amended and GST credits of $100,000 issued. But it wasn’t you. And you certainly didn’t get a $100,000 refund in your bank account. What happens now?

In what is rapidly becoming the most common tax scam, myGov accounts are being accessed for their rich source of personal data, bank accounts changed, and personal data used to generate up to hundreds of thousands in fraudulent refunds. For all intents and purposes, it is you, or at least that’s what it seems. And, the worst part is, you probably gave the scammers access to your account.

But it’s not just activity statements. Any myGov linked service that has the capacity to issue refunds or payments is being targeted.

Scammers are using the amendment periods available in the tax law to adjust existing data and trigger refunds on personal income tax, goods and services tax (GST), and through variations to pay as you go (PAYG) instalments. In some cases, the level of sophistication and knowledge of how Australia’s tax and social security system operates is next level.

myGov accounts are being accessed for their rich source of personal data, bank accounts changed, and personal data used to generate up to hundreds of thousands in fraudulent refunds

Damian Knoblanche | Director

Once the scammers have access to your myGov account, there is a lot of damage they can do.

So, how does this happen and why is it so pervasive? Humans are often the weakest link.

Common scams utilise emails (78.9% of reported tax related scams in the last 12 months) or SMS (18.4% of reported scams) that mimic communication you might normally expect to see. The lines of attack used by tax related scammers are commonly:

fake warnings about attempted attacks on your account (and requiring you to click on the link and confirm your details);
opportunistic baiting where some form of reward is flagged (like a tax refund) that you need to click on the link to confirm and access; and
mimicking common administrative notifications from the Australian Tax Office (ATO) like a new message accessible from a link.

How to spot a fake

Often the first sign that something is amiss is alerts about activity on your myGov account or a change in details – which might seem a little ironic if the way in which scammers got into your account in the first place is via these very same messages.

But, there are ways to spot a fake:

The ATO, Centrelink and MyGov don’t use hyperlinks in messages. If you receive a message with a link, it’s a fake.
The ATO will not use QR codes as a method for you to access your account.
The ATO will never ask for your tax file number (TFN), bank account details or your myGov login details over social media. Some scammers have used fake social media accounts mimicking the ATO and other Government agencies. When a query comes in, they respond by asking for information to verify it’s you. The ATO will never slide into your DMs. ATO Assistant Commissioner Tim Loh said, “it’s like giving your house keys to a stranger and watching them change your locks.”
The ATO do not use pre-recorded messages to alert you to outstanding tax debt.
The ATO will not cancel your TFN. Some scammers suggest that your TFN has been cancelled or suspended due to criminal activity or money laundering and then tell you to either pay a fee to correct it, or transfer your money to a ‘safe’ bank account to protect you against your corrupted TFN.
The ATO will not initiate a conference call between you and your tax agent and someone from a law enforcement agency. In one case, the taxpayer was told that the caller was from the ATO and a person from her accounting firm was on the call as well to represent her and work through a problem. The ATO caller and the tax agent were fake. Just hang up and call our office if you are ever concerned. The ATO will never initiate a conference call of this type.
The ATO will also not ask you to reconfirm your details because of security updates to myGov. The link, when activated, takes you to a fake myGov web page that can look very convincing.

In general, you should always log into your myGov account directly to check on any details alerted in messages rather than clicking on links. This way, you know that you are not being redirected to somewhere you should not be.

And, don’t log into your myGov account on free wi-fi networks. Ever.

Who is getting scammed?

There is a pervasive view that older, technology challenged individuals are the most at risk. And while this might be the case generally, scamming is impacting all age groups.

The ATO says that the demographic who most reported providing personal information to scammers was 25 to 34 year olds. And, the younger generation are more likely to fall for investment scams.

According to the AFP-led Joint Policing Cybercrime Coordination Centre (JPC3), people under the age of 50 are overtaking older Australians as the most reported victims of investment scams. Australians reported losing $382 million to investment scams in the 2023-2024 financial year. Nearly half (47%) of the investment scam losses involved cryptocurrency.

Other scams

Scammers are in the business of scamming and they will use every trick and opportunity to part you from your money.

Investment scams

Pig butchering: Pig butchering is a tactic where scammers devote weeks or months to building a close relationship with their victims on social media or messaging apps, before encouraging them to invest in the share market, cryptocurrency, or foreign currency exchanges. Victims think they are trading on legitimate platforms, but the money is siphoned into an account owned by the scammers, who created fake platforms that look identical to well-known trading and cryptocurrency sites. Scammers will show fake returns on these platforms to convince victims to invest more money. Once they have extracted as much money as possible, the scammers disappear with all the invested funds.

Deepfakes: Deepfakes are lifelike impersonations of real people created by artificial intelligence technologies. Scammers create video ads, images and news articles of celebrities and other trusted public figures to promote fake investment schemes, which can appear on social media feeds or be sent by scammers through messaging apps. Unusual pauses, odd pitches, or facial movement not matching their speaking tone are often giveaways but increasingly, the fakes are difficult to spot.

Invoice scams

The names and details of legitimate businesses are used to issue fake invoices with the money transferred to the scammer’s account. These scams are often tied to cyber breachers where hackers have accessed your systems and have identified your suppliers.

Bank scams

There has been a lot in the media of late about people receiving phone calls purporting to be from their bank, advising them there is a problem with their account, and then walking them through a resolution that involves transferring all their money into a ‘safe’ scammers account. Victims commonly state that they believed the scammer because of the level of personal information they relayed.

Your bank will never send an email or text message asking for any account or financial details, this includes updating your address or log in details for phone, mobile or internet banking.

A CHOICE survey found that four out of five of the victims of banking scams in their report said their banks did nothing to flag a scam before they transferred their money to the perpetrator.

The Australian Banking Association have stated that, if not already, banks will introduce warnings and payment delays by the end of 2024. And, in addition to other measures, they will limit payments to high-risk channels such as crypto platforms.

What to do if you have been scammed

myGov

If you have downloaded a fake myGov app, have given your details to a scammer, or clicked on a link from an email, text message or scanned a QR Code, contact Services Australia Scams and Identify Theft Helpdesk on 1800 941 126, or get help with a scam here.

Tax scams

Before acting on any instructions, please contact us and we will verify the information for you. If you have already acted, contact the ATO to verify or report a scam on 1800 008 540.

The Government use external agency recoveriescorp for debt collection, but we will advise you if you have a tax debt outstanding.

What do people typically do with their super when they retire?

Tue, 27 Aug 2024 16:25:45 +1000

If everything has gone to plan, you’ll have accumulated enough super throughout your working years to achieve a comfortable lifestyle in retirement. But there’s more than one way that super can be paid out, and what you choose to do with your nest egg can make a big difference.

Some people will withdraw their super as a lump sum, while others prefer the regular income delivered through an account-based pension. Depending on your circumstances, you might even be able to choose a combination of both.

Here are some of the more common options to access your super and what they might mean for you.

Let's start with when you can access your super

You’ll be allowed to withdraw your super if you meet a condition of release. The main ones are:

turning 65 (even if you haven’t retired yet).
reaching preservation age (between 55 to 60, depending on when you were born) and permanently retiring or starting a transition to retirement (TTR) income stream while still working.
ceasing a gainful employment relationship after reaching age 60.
satisfying an early access requirement, such as requiring the funds to pay for medical treatment.¹

Withdraw it as a lump sum

Depending on your super fund’s rules, you might be able to withdraw your super in one or more lump sum payments. This might be preferable if you have debts you want to pay down or large purchases or investments you’d like to make.

Once withdrawn, you’ll have unfettered access to your money. Importantly, it won’t be considered super anymore, so if you decide to invest it, the earnings won’t be taxed according to super rules and will likely need to be declared in your tax return.

As the lump sum will need to last you throughout retirement, this option may require some forward thinking. Consider creating a retirement budget, or speak to your financial adviser about ways you can avoid outliving your savings.

Pat Kelly | Director and Financial Adviser

Just take care if you are under age 60 or if your super has an untaxed element, as tax might apply to the withdrawal. What’s more, you might not be able to re-contribute the funds back into super if you change your mind.

Start an account-based pension

If you’d prefer to convert your super into an income stream at retirement, there’s the option to commence a retirement phase account-based pension. This way, your super fund can continue to invest the bulk of your money while you draw on it as needed to fund your retirement.

You’ll have some say in the size and frequency of payments, how your balance is invested, as well as how much of your super gets converted into a pension in the first place.

That said, the government requires Australians draw down a minimum payment from their pension each year to encourage them to spend their retirement savings. Currently, the minimum drawdown requirements start at 4% for under 65s and increase to 14% for anyone aged 95 and above.

So long as you adhere to these requirements and your retirement pension doesn’t exceed your transfer balance cap, any earnings within your pension account will typically be tax-free. If you are over 60, you also won’t have to pay tax on any payments you receive as part of the pension.

Just keep in mind that market fluctuations can cause your account balance to rise and fall. So when you’re deciding whether an account-based pension is right for you, remember that the sustainability of your pension income can depend a great deal on market performance.

Leave the money in your super account

Many people choose to leave their superannuation in the accumulation phase upon retiring, even if they’ve ticked all the boxes necessary for its release.

If you do this, your super fund will continue to invest your money and any earnings will be taxed within the fund at a maximum rate of 15%. That said, you might be eligible for franking credit tax offsets and capital gains discounts, which can bring the effective tax rate in the accumulation phase to around 7%.²

But even with those discounts, leaving your savings in the accumulation phase may not be the most tax-effective option. Remember that while your super is in the retirement phase, your super fund generally doesn’t have to pay tax on earnings.

Using your super to help transition to retirement

It’s also worth mentioning the options available for people on the cusp of retirement but not quite ready to stop working.

If you’ve reached preservation age but haven’t yet met a retirement condition of release, you might be able to start a transition to retirement (TTR) pension. This can allow you to ease into retirement gradually by using some of your super to supplement your reduced work earnings.

Starting a TTR pension involves instructing your super fund to transfer part of your super into a transition phase account-based pension. The rest of your money will remain in your super account, which will continue to receive contributions from your employer (and any voluntary contributions you make).

Investment earnings are generally taxed at 15%. Meanwhile, your TTR pension payments are taxed at your marginal tax rate if you’re between 55 and 60 years old, though a 15% tax offset will apply. Once you reach 60, the payments become tax-free.

In summary

These are just some of the ways you can access your super during (or prior to in emergency cases) retirement. Take time to think through your options carefully, and seek financial advice if you’re unsure which option is appropriate for you.

And remember, we now have three experienced financial advisers at The Peak Partnership to help you navigate your transition from working life to retirement – so feel free to contact us for advice, clarity, direction.

¹ Australian Taxation Office | ² Treasury

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

Peak Partnership Wealth Design Solutions Pty Ltd as trustee for Carlmich Trust.
ABN 26 711 439 304. Corporate Authorised Representative No 415154 of
Professional Investment Services Pty Ltd AFSL 234954. ABN 11 074 608 558.
www.centrepointalliance.com.au/PIS

The rise in business bankruptcy

Thu, 22 Aug 2024 11:59:44 +1000

ASIC’s annual insolvency data shows corporate business failure (those companies entering external administration) is up 39% in 2023-2024, compared to the previous financial year. The industries with the highest representation were construction (27% of all business failures), accommodation (15%) and food services (9%) 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 01 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*.

*https://asic.gov.au/about-asic/news-centre/news-items/annual-asic-insolvency-data-reveals-increase-in-companies-failing/

Annual insolvency statistics: 2023-2024

In the latest statement from the Reserve Bank of Australia, Governor 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.

Strategically, business managers need to be on top of their numbers to identify and manage problems before they get out of hand. If you don't 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 companies fail are:

poor strategic management;
inadequate cashflow or high cash use; and
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 cash flow – 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.

Our Accounting Directors – Robyn Henshaw, Brad Roberts and myself – each have in-depth knowledge and experience in working with small and medium size businesses to navigate the inevitable cash flow concerns many companies face.

Like most things in life, the first step is to acknowledge when there is a financial issue in your business and then taking remedial action sooner rather than later. If you don't feel like you have the time, resources or financial expertise to work through your business's issues and understand the possible solutions, reaching out to an experienced business adviser is the best second step.

We're here when you need us to support your business, so fee free to contact us.

Becoming the 'Bank of Mum & Dad'

Fri, 14 Jun 2024 15:56:00 +1000

FACT: When we roll into 01 January 2025, every Baby Boomer will be aged 60 or older – many well cashed up and with a healthy asset base. With surplus time and money on their hands, the great wealth transfer from the baby boomer generation has begun and home ownership is a major catalyst, but does that mean the ‘Bank of Mum and Dad’ is a good idea?

The median dwelling price for Australia is currently $785,556. Across the capital cities, Sydney is the highest with a median dwelling value of $1,156,020 and Brisbane has overtaken Canberra as the second most expensive city at $843,241¹.

With the official cash rate expected to remain steady at a 12 year high of 4.35% over 2024, the pressure is on parents and family to help the younger generation become homeowners.

Over the past 15 years, home ownership has fallen from 70% to 67% of the population. Declining home ownership will increase the wealth gap in Australia as, for many, home ownership is a significant factor in wealth accumulation. According to the Actuaries Institute, wealth inequality is significantly higher now than in the 1980s, with the wealthiest 20% of households having six times the disposable income of the lowest 20%².

The Domain’s First Home Buyer Report 2024 estimates the time for a couple aged between 25 and 34 to save a 20% deposit for an entry level home to be 6 years and 8 months in Sydney, and 5 years and 5 months in Melbourne (the Australian average is 4 years and 9 months). In that time, they are begrudgingly paying rent (or staying with Mum and Dad).

So, should you help your children buy a home? If they can, many parents would prefer to assist their children when they need it most, rather than benefiting from an inheritance later in life. However, it’s essential that any support does not risk your own financial security, and that means looking at what support you can afford to provide.

The downside of cash gifts

A cash gift towards a deposit or mortgage is a simple and effective method of helping a family member. However, there are a few downsides:

Where the gift forms all or a large portion of the deposit, lenders will likely want to ensure that the loan is serviceable – this may require verification of the source of the funds to confirm the amount is not a loan and does not require repayment (i.e. a gift letter).
In the event of a divorce or separation, the gift may not overtly benefit your child (instead forming part of the property pool to be divided between your child and their partner).

For income tax purposes, gifts from a family member out of natural love and affection are not normally taxed.

The ‘Bank of Mum & Dad’

If you provide a loan to your child to purchase a home, it’s essential that the terms of the loan are documented, preferably by a lawyer.

There are many ways to structure the loan depending on what you’re trying to achieve. For example, the loan might mimic a bank loan with interest and regular payments, require repayment when the property is sold or ownership changes, and/or managed by your estate in the event of your death (treated as an asset of the estate, offset against the child’s share of the estate, or forgiven).

There is a lot to think about before lending large amounts of money, such as:

What should happen in a divorce?
What if your child remortgages the property?
What if you die?
What if your child dies?
What if the relationship becomes acrimonious, etc?

As always, hope for the best but plan for the worst.

Providing security to lenders

A personal guarantee can be used to support a loan in part or in full. For example, with some lenders you can use your security to contribute towards your child’s deposit to avoid lender’s mortgage insurance (which ranges between 1% to 5% of the loan).

When you act as a guarantor for a loan, you provide equity (cash or often your family home) as security. In the event your child defaults, you are responsible for the amount guaranteed. If you have secured your child’s loan against your home and you do not have the cashflow or capacity to repay the loan, your home will be sold.

If you are contemplating acting as guarantor for your child, you need to look at the impact on your finances and planning first. Your retirement should not be sacrificed to your child’s aspirations. And, where you have more than one child, look at equalising the impact of the assistance you provide in your estate.

Property co-ownership

There are two potential structures for buying property with your children:

Joint tenants - the property is split evenly and in the event of your death, the property passes to the other owner(s) regardless of your Will.
Tenant-in-common – the more popular option as it allows for proportions other than a 50:50 split (i.e. 70:30). If you die, your share is distributed according to your Will.

Regardless of ownership structure, if the property is mortgaged and the other party defaults on the loan, the loan might become your responsibility. It is vital to consider this before loan arrangements are entered into.

It’s also essential to have a written agreement in place that defines how the co-ownership will work. For example, what happens if your circumstances change and you need to cash out? What if your children want to sell and you don’t? Will the property be valued at market value by an independent valuer if one party wants to buy the other one out?

It’s not uncommon for children to assume that they will only need to pay the original purchase price to buy your share with no recognition of tax, stamp duty or interest. And, what happens in the event of death or dispute?

If you are not living in the home as your primary residence, then it is likely that Capital Gains Tax will apply to any increase in the market value of the property on disposal of your share (not the price you choose to sell it for). Further to this, you will not benefit from the main residence exemption. In these situations, it is essential to keep records of all costs incurred in relation to the property to maximise the CGT cost base of the property and reduce any capital gain on disposal.

Utilising a family trust

A more complex option is to purchase a property in a family trust where you or a related company acts as trustee. This strategy is often used for asset protection purposes.

Typically, at some point in the future, you would pass control of the trust to your child and it might be possible to do this without triggering material CGT or stamp duty liabilities, although this would need to be checked. On the eventual sale of the property, CGT will apply to any increase in value of the property and the main residence exemption cannot be used to reduce the tax liability, even if the child was living in the home.

Be wary of state tax issues too. For example, in some states, owning property through a trust will mean that the tax-free land threshold will not apply, increasing any land tax liability. Also, if the trust has any foreign beneficiaries, this could result in higher rates of stamp duty.

Reduced or rent-free property

Buying a house and allowing your child to live in the house rent-free or at a reduced rent enables you to put a roof over their heads but adds no value to your child’s ability to secure a loan or utilise the equity of the property to build their own wealth.

If you intend to treat the property your child is living in as an investment property and claim a full deduction for expenses relating to the property, then rent needs to be paid at market rates. If rent is below market rates, the ATO may deny or reduce deductions for losses and outgoings depending on the discount provided.

Any rental income received is assessable to you. In addition, Capital Gains Tax will be payable on any gain when the property is sold, or ownership is transferred. If the intention is to provide this property to your child in your estate, ensure your Will is properly documented to support this intent.

One last thought

With a cost-of-living crisis, rising interest rates and skyrocketing home prices, it’s little wonder our younger generations can feel disillusioned with their home ownership prospects. Many baby boomers are in an ideal position to financially assist the next generations, or secure their own financial prosperity through to retirement, or do both.

We all see, read and hear about each generational group being critical of the other generations (sometimes ignorantly), but it’s ultimately an individual choice to support your adult child/ren into property ownership – depending on your own financial circumstances and retirement aspirations.

Lastly, if you're thinking of becoming your kids' financial lender of first choice, feel free to bounce your ideas off one of our Accounting Advisers first - just contact us here.

¹Source: CoreLogic 01/06/2024

²Source: www.actuaries.asn.au

The Essential EOFY '24 Guide

Wed, 12 Jun 2024 14:19:14 +1000

With the end of the 2023-2024 financial year fast approaching, we outline the areas at risk of increased Australian Tax Office scrutiny and the opportunities to maximise your tax deductions by 30 June.

For 2024, the ATO’s vigilance is particularly focused on incorrect claims of work-related expenses, inflated rental property claims, and the omission of income from tax returns.

In 2022-23, over eight million individuals claimed work-related deductions, with a significant number related to home office expenses.

Opportunities for individual taxpayers

Take advantage of the 01 July 2024 tax cuts by bringing forward your deductible expenses into 2023-24. Prepay your deductible expenses where possible, make any deductible superannuation contributions, and plan any philanthropic gifts to utilise the higher tax rate.

Bolstering superannuation

If growing your superannuation is a strategy you are pursuing, and your total superannuation balance allows it, you could make a one-off deductible contribution to your superannuation if you have not used your $27,500 cap. This cap includes superannuation guarantee paid by your employer, amounts you have salary sacrificed into super, and any amounts you have contributed personally that will be claimed as a tax deduction.

And, if your superannuation balance on 30 June 2023 was below $500,000 you might be able to access any unused concessional cap amounts from the last five years in 2023-24 as a personal contribution. For example, if you were $8,000 under the cap in each of the past 5 years, you could contribute an additional $40,000 and take the tax deduction in this financial year at the higher personal tax rate.

To make a deductible contribution to your superannuation, you need to be aged under 75, lodge a notice of intent to claim a deduction in the approved form (check with your superannuation fund), and get an acknowledgement from your fund before you lodge your tax return. For those aged between 67 and 75, you can only make a personal contribution to super if you meet the work test (i.e. work at least 40 hours during a consecutive 30-day period in the income year, although some special exemptions might apply).

And, if your spouse’s assessable income is less than $37,000 and you both meet the eligibility criteria, you could contribute to their superannuation and claim a $540 tax offset.

If you are likely to face a tax bill this year, for example, you made a capital gain on shares or property you sold, then making a larger personal superannuation contribution might help to offset the tax you owe.

Charitable donations

When you donate money (or sometimes property) to a registered deductible gift recipient (DGR), you can claim amounts over $2 as a tax deduction. The more tax you pay, the more valuable the tax deductible donation is to you. For example, a $10,000 donation to a DGR can create a $3,250 deduction for someone earning up to $120,000 but $4,500 to someone earning $180,000 or more (excluding Medicare levy).

To be deductible, the donation must be a gift and not in exchange for something. Special rules apply for amounts relating to charity auctions and fundraising events run by a DGR.

Philanthropic giving can be undertaken in a number of different ways. Rather than providing gifts to a specific charity, it might be worth exploring the option of giving to a public ancillary fund or setting up a private ancillary fund. Donations made to these funds can often qualify for an immediate deduction, with the fund then investing and managing the money over time. The fund generally needs to distribute a certain portion of its net assets to DGRs each year.

Investment property owners

If you do not have one already, a depreciation schedule is a report that helps you calculate deductions for the natural wear and tear over time on your investment property. Depending on your property, it might help to maximise your deductions.

Tax Risks for individuals

Work from home expenses

Working from home is a normal part of life for many workers, and while you can’t claim the cost of your morning coffee, biscuits or toilet paper (seriously, people have tried), you can claim certain additional expenses you incur. But, work from home expenses are an area of ATO scrutiny.

There are two methods of claiming your work from home expenses; the short-cut method, and the actual method.

The short-cut method allows you to claim a fixed 67c rate for every hour you work from home. This covers your energy expenses (electricity and gas), internet expenses, mobile and home phone expenses, and stationery and computer consumables such as ink and paper. To use this method, it’s essential that you keep a record of the actual days and times you work from home because the ATO has stated that they will not accept estimates.

The alternative is to claim the actual expenses you have incurred on top of your normal running costs for working from home. You will need copies of your expenses, and your diary for at least 4 continuous weeks that represents your typical work pattern.

Landlords beware

If you own an investment property, a key concept to understand is that you can only claim a deduction for expenses you incurred in the course of earning income. That is, the property needs to be rented or genuinely available for rent to claim the expenses.

Sounds obvious but taxpayers claiming investment property expenses when the property was being used by family or friends, taken off the market for some reason or listed for an unreasonable rental rate, is a major focus for the ATO, particularly if your property is in a holiday hotspot.

There are a series of issues the ATO is actively pursuing this tax season. These include:

Refinancing and redrawing loans – you can normally claim interest on the amount borrowed for the rental property as a deduction. However, where any part of the loan relates to personal expenses, or where part of the loan has been refinanced to free up cash for your personal needs (school fees, holidays etc.), then the loan expenses need to be apportioned and only that portion that relates to the rental property can be claimed. The ATO matches data from financial institutions to identify taxpayers who are claiming more than they should for interest expenses.
The difference between repairs and maintenance and capital improvements. While repairs and maintenance can often be claimed immediately, a deduction for capital works is generally spread over a number of years. Repairs and maintenance expenses must relate directly to the wear and tear resulting from the property being rented out and generally involve restoring the property back to its previous state, for example, replacing damaged palings of a fence. You cannot claim repairs required when you first purchased the property. Capital works however, such as structural improvements to the property, are normally deducted at 2.5% of the construction cost for 40 years from the date construction was completed. Where you replace an entire asset, like a hot water system, this is a depreciating asset and the deduction is claimed over time (different rates and time periods apply to different assets).
Co-owned property – rental income and expenses must normally be claimed according to your legal interest in the property. Joint tenant owners must claim 50% of the expenses and income, and tenants in common according to their legal ownership percentage. It does not matter who actually paid for the expenses.

Gig economy income

It’s essential that any income (including money, appearance fees, and ‘gifts’) earned from platforms such as Airbnb, Stayz, Uber, YouTube etc. is declared in your tax return.

The tax rules consider that you have earned the income “as soon as it is applied or dealt with in any way on your behalf or as you direct”. If you are a content creator for example, this is when your account is credited, not when you direct the money to be paid to your personal or business account. Squirrelling it away from the ATO in your platform account won’t protect you from paying tax on it.

Since 01 July 2023, the platforms delivering ride-sourcing, taxi travel, and short-term accommodation (under 90 days), have been required to report transactions made through their platform to the ATO under the sharing economy reporting regime. This is the first year that the ATO will have the income tax returns of taxpayers to match to this data.

All other sharing economy platforms will be required to start reporting from 01 July 2024. If you have income you have not declared, do it now before the ATO discover it and apply penalties and interest.

Opportunities for business

Bonus deductions

There are a series of bonus deductions available to small business in 2023-24. These include the instant asset write-off, energy incentive, and the skills and training boost.

Announced in the 2023-24 Federal Budget, the increase to the instant asset write-off threshold enables small businesses with an aggregated turnover of less than $10 million to immediately deduct the full cost of eligible depreciating assets costing less than $20,000. In the 2024-25 Federal Budget, the Government extended this measure to 30 June 2025.

Without these measures, the instant asset write-off threshold would be $1,000.

IMPORTANT NOTE: Legislation to enact the 2023-24 and 2024-25 measures has not passed Parliament following a disagreement between the House of Representatives and the Senate about the amount of the threshold, and whether the measures should apply to medium businesses as well (up to $50 million).

Similarly, the $20,000 energy incentive that provides an additional 20% deduction on the cost of eligible depreciating assets or improvements to existing depreciating assets that support electrification and more efficient use of energy in 2023-24, is not yet law.

Assuming both measures pass Parliament by 30 June 2024, any assets need to be first used or installed ready for use, or the improvement costs incurred, between 01 July 2023 and 30 June 2024 to be written off in 2023-24.

What is certain is the bonus 20% deduction for eligible expenditure for external training provided to your employees. The ‘skills and training boost’ is available to businesses with an aggregated annual turnover of less than $50 million. To claim the boost, the training needs to have been provided by a registered training provider and registered and paid for between 29 March 2022 and 30 June 2024. Typically, this is vocational training to learn a trade or courses that count towards a qualification rather than professional development.

Write-off bad debts

Your customer definitely not going to pay you? If all attempts have failed, the debt can be written off by 30 June. Ensure you document the bad debt on your debtor’s ledger or with a minute.

Obsolete plant & equipment

If your business has obsolete plant and equipment sitting on your depreciation schedule, instead of depreciating a small amount each year, scrap it and write it off before 30 June.

For companies

If it makes sense to do so, bring forward tax deductions by committing to directors’ fees and employee bonuses (by resolution), and paying June quarter super contributions in June.

Tax Risks for business

Tax debt and not meeting reporting obligations

Failing to lodge returns is a huge ‘red flag’ for the ATO that something is wrong in the business. Not lodging a tax return will not stop the debt escalating because the ATO has the power to simply issue an assessment of what they think your business owes. If your business is having trouble meeting its tax or reporting obligations, we can assist by working with the ATO on your behalf.

Professional firm profits

For professional services firms – architects, lawyers, accountants, etc. – the ATO is actively reviewing how profits flow through to the professionals involved, looking to see whether structures are in place to divert income to reduce the tax they would be expected to pay. Where professionals are not appropriately rewarded for the services they provide to the business, or they receive a reward which is substantially less than the value of those services, the ATO is likely to take action.

Act sooner rather than later

If you need some last minute advice around EOFY tax planning, jump over to our Year End Planning page and fill out a few details. We'll get back to you in a flash to help you back on track by 30 June.

Peak Partnership Blog

Accessing your super after age 60

What does “preservation age” mean now?

Accessing super if you’re still working

What if you’ve retired?

What happens at age 65?

Plan before you withdraw your super

How much money do you really need to retire?

Key points

So… how much do you need?

What does a “comfortable” retirement actually cost?

Turning benchmarks into your retirement plan

Other important things to consider

Ways to boost your retirement savings

How to avoid running out of money in retirement

Frequently asked questions

The bottom line

1 ASFA Retirement Standard: December quarter 2023 www.superannuation.asn.au/resources/retirement-standard2 Australian Institute of Health and Welfare: www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy

Retirement Planning: seven mistakes to avoid

1. Not having a vision

2. Underestimating inflation

3. Underestimating how long you'll live

4. Getting the timing wrong

5. Leaving your super in the accumulation phase

6. Not taking advantage of your entitlements

7. Being too frugal

In summary

You're 55 with no retirement plan

1. Assess your current financial situation

2. Set clear retirement goals

Pat Kelly, Director & Financial Adviser

3. Start saving ASAP!

4. Get to work on debt reduction

5. Consider part-time work

6. Invest wisely

7. Claiming the Age Pension

8. Downsize and cut expenses

9. Seek professional advice

Summary

FBT 2026: What's the latest?

LARGE UTES AND TRUCKS: NOT ALWAYS EXEMPT UNDER THE ATO's SAFE HARBOUR RULES (PCG 2018/3)

THE ATO's FOCUS ON UTES IN 2026

Janolla Weatherhead | Senior Accountant

SAFE HARBOUR CONDITIONS UNDER PCG 2018/3

EXCEEDING THE LUXURY CAR TAX THRESHOLD

IS THE FBT EXEMPTION STILL POSSIBLE FOR LARGE VEHICLES WITH GREATER THAN 1 TONNE CAPACITY?

RECOMMENDED ACTIONS FOR EMPLOYERS

Plug-in hybrid vehicles no longer FBT-exempt

SUMMARY (need some FBT help?)

NOTE: Practical Compliance Guidelines (PCG) provide broad law administration guidance, address the practical implications of tax laws, and outline the Australian Tax Office's administrative approach.

Payday Super: What your business needs to know

Payday Super changes

Why Payday Super is good for business

Preparing for Payday Super

The bottom line

Tax and financial advice from 'finfluencers'

Be careful who you take tax advice from online

Damian Knoblanche, Director

How to protect yourself

The Tax Practitioners Board's key tips for dealing with finfluencers

The bottom line

Estate Planning: 14 essentials other than your Will

1. Make an inventory of your assets

2. Talk to your executor

3. Make a list of your debts

4. Make sure you have a death benefit nomination for your superannuation

5. Check your life insurance

6. Review any co-owned assets

7. Make a list of contacts and memberships

8. Set up an Advance Care Directive

9. Set up Enduring Power of Attorney

10. Set up Enduring Guardianship

11. Think about setting up a trust

12. Consider your digital legacy

13. Keep your family in the loop

14. Review your plan annually

In summary

Manage your FBT this Christmas

1. Understanding FBT and Entertainment Rules

2. Venue matters

¹ ASFA Retirement Standard: December quarter 2023 www.superannuation.asn.au/resources/retirement-standard
² Australian Institute of Health and Welfare: www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy