Upcoming Tax Deductibility Change

FROM 1 JULY INTEREST ON ATO DEBT WILL NO LONGER BE TAX DEDUCTIBLE

This change could significantly impact business cash flow and overall tax strategy.

As a result, it’s more important than ever to consider alternative financing options that could reduce your interest costs and in some cases, restore the tax deductibility of the debt.

If you own property with available equity, there may be an opportunity to refinance your ATO debt into a home loan. The benefits include:

Lower interest rates – potentially reducing from ~11% (ATO) to ~7%

Potential tax deductibility – depending on structure (confirm with your accountant as debt related to personal tax debt is not tax deductible)

Improved cash flow – longer loan terms up to 30 years.

Lenders also offer flexible loan options in regards to documentation required. This can range from Full Doc Loans (full tax returns and financials) to Alt Doc Loans (BAS, bank statements, accountant/client declarations).

Small Business Skills and Training Boost

The Skills and Training Boost allows small businesses with an aggregated annual turnover of less than $50 million to deduct an additional 20% of expenditure incurred for the provision of eligible external training courses to their employees by registered providers in Australia.

To be eligible for this bonus deduction, businesses must meet the following criteria:

The expenditure must have been incurred between 7:30 pm AEDT 29 March 2022 and 30 June 2024.

These new tax incentives present a significant opportunity for small businesses to accelerate their digital transformation journey and invest in their workforce. By strategically investing in digital technologies and employee training, businesses can enhance their operational efficiency, customer experience, and overall competitiveness. As always, it’s advisable to consult with a Chartered Accountant to understand how these incentives can be best utilised for your specific business needs.

Seizing the Opportunity

The Small Business Technology Investment Boost and the Small Business Skills and Training Boost represent a significant opportunity for small businesses to invest in their future.

By taking advantage of these incentives, businesses can not only enhance their digital capabilities and workforce skills but also improve their bottom line by reducing their tax liability.

The Technology Investment Boost can help businesses upgrade their digital infrastructure, enhance their cybersecurity, and adopt new technologies that can improve efficiency and customer service. Meanwhile, the Skills and Training Boost can help businesses invest in their most valuable asset – their employees.

By providing employees with the training they need to excel in their roles, businesses can improve productivity, enhance service quality, and retain top talent.

Planning for Success

While these incentives are generous, it’s important for businesses to plan their investments carefully. This includes ensuring that any expenditure meets the eligibility criteria and is incurred within the specified timeframes. Businesses should also consider their cash flow, as the cost of the investment must be paid upfront, with the deduction applied later in the tax return.

Furthermore, businesses should ensure that their investments align with their overall business strategy. For example, when investing in digital technologies, businesses should consider how these technologies can support their business goals and provide a return on investment. Similarly, when investing in training, businesses should consider how the training will enhance their employees’ skills and contribute to the business’s success.

Instant Asset Write Off

The $20,000 instant asset write-off has officially passed into legislation and is now available for eligible assets purchased and installed before 30 June 2025.

This provides some certainty for planning this financial year, however we’re still unsure what will happen beyond 30 June 2025, with no further extensions announced at this stage.

What this means for small business:

Available to small businesses with an aggregated turnover under $10 million
Applies to eligible depreciating assets costing less than $20,000 (excluding GST)
The asset must be first used or installed ready for use by 30 June 2025
The $20,000 threshold applies per asset, so multiple assets can be claimed

If you’re thinking of upgrading or purchasing business equipment, vehicles or tools, now is a good time to take advantage of this incentive. Please contact us if you’d like help assessing whether your planned purchases qualify.

It’s good to be aware of what plan you are on and to regularly check with your current retailer, or other retailer, to make sure you are on the best plan for your small business.

You should also check what the pricing structure of your plan is. For some plans, the time of day you use electricity will impact how much you pay.

You can also use the Government comparison sites Energy Made Easy and Victorian Energy Compare to find a better offer for your small business. These websites are free to use, compare every company’s plans and do not take commissions from energy companies because they are government operated.

Concessions and rebates can significantly reduce your energy bills. You can make sure your small business is getting what it is entitled to by speaking to your energy retailer or checking Energy Rebates for more information.

The ACCC recently released the June 2024 Report as part of our inquiry into the National electricity market. Key findings of the report include:

electricity prices have increased, however government rebates and lower usage has limited the impact of higher prices
more customers are experiencing financial difficulties, with those customers facing increased bills
most small businesses can save by switching plans, regardless of what plan they are on
while customers in embedded networks (such as shopping centres) pay less than regular customers at the median, this is not the case for all embedded network customers
embedded network customers have fewer or no options to choose a better deal.

For more information you can also read the ACCC’s media release.

If you have struggled with using accounting software, then chances are you can relate to this!

Back in 2015 I gave birth to my first born, when I started up my bookkeeping business to work from home while raising my family. I had NO Idea how to use Xero, and MYOB was converting online then too. I signed up to both software’s to use for my new clients, and I had NO IDEA how to use the cloud accounting software’s, at all!! I was old-school and knew MYOB Premier V

V17 which was desktop based, or Sage Micropay for Payroll. Very clunky old-school programs!

I was spending so much time on you-tube, on the phone and even trying to navigate the software’s “Free” Webinars which helped to a degree, but I wasted SO Much time and effort trying to self-teach myself in using these software’s, and even worse I didn’t know if I was missing important things I needed within these software’s.

After spending months training myself in using the software’s, it then took years of expertise to know Xero and MYOB inside out. It wasn’t until 2021 when I worked part time in an accounting firm, I was noticed for how much knowledge I actually had in Xero and MYOB, that the owner of the firm asked me specifically to be the one person to train their clients in how to use the software’s. I was in boardrooms, on site, and on-line via zoom showing hundreds of people how to use Xero and MYOB for small to medium sized businesses on how to set up bank feeds, to bank reconciling, automation to save time using bank rules, ATO Compliance, Payroll, Invoicing…. the works! It wasn’t until then that I started to advertise this training in my own bookkeeping business and found a love for helping people navigate their own business!

If you're a New Business Owner starting fresh and struggling with understanding how to use your Xero or MYOB file or setting up, our Zoom training is the best way to get your Accounting Software accurate, up to date, and compliant.

It wasn’t until November 2022 and I’ll never forget the day when I put one or two Facebook ads out in some small business pages I was in, and was shocked… I got three people purchase within the week. I was expecting crickets!

I then offered recorded training sessions, free follow ups, additional resources, I found so much joy in providing value to business owners new in the space of learning their cloud accounting software, ensuring they were set up correctly and had all the tools needed to move forward stress free in their business!

I’ve now trained hundreds of business owners and even bookkeepers within my business on how to set up and use Xero and MYOB, saving people just like you hours of grief and struggle like I went through back in 2015, in one short hour of training.

BUSINESS CONTINUITY GUIDES/PLAN

Let's talk about something super important yet often overlooked: Business Continuity Plans (BCPs). Imagine this—your business running smoothly, even when life throws unexpected curveballs. Sounds great, right? That's exactly what a BCP can do for you.

What’s a BCP Anyway?

A Business Continuity Plan is your business's best friend during times of need. Whether it's a natural disaster, cyber security attack, network issue, or even a global health pandemic, a solid BCP ensures your business keeps ticking and bounces back stronger than ever.

Peek at What Others Are Doing

Before diving into creating your BCP, why not get inspired by checking out some plans other businesses and agencies have put together? It’s a great way to gather ideas and see what works best.

How It Works

Your BCP is a detailed outline of procedures to help you prepare for disruptions. Here’s a quick rundown:

Assemble a Dream Team: Gather a team of awesome employees to take charge of creating the BCP. Assign key roles and responsibilities to each member.
Set Clear Goals: Identify the main objectives and goals for your plan. What do you want to achieve?

Key Components to Cover

Make sure your BCP includes these crucial elements:

Objective: Define the purpose of the plan.
Scope: Outline who and what the BCP covers, including employees, locations, and business activities.
Responsibilities: List key contacts and their roles during and after an event.
Resources: Identify the tools and resources needed to keep things running smoothly. Can you operate with a minimal team?
Stakeholders: Who outside your business is essential for smooth operations? Think online providers, suppliers, clients, etc.
Timeline: Create a timeline for the stages of an event when your BCP is activated.

With these steps, your business will be ready to face any challenge head-on and come out on top!

Ready to get started? Let's keep your business rolling no matter what comes your way! Below are some FREE examples and guides other businesses have set up! Take a look at the ones listed below:

Continuity and contingency planning (business.govt.nz)
10 tools to support your accounting practice’s business continuity planning (Xero Blog)
How to Create & Implement Your Company’s Business Continuity Plan (Nextiva Blog)
Adapt and respond to risks with a business continuity plan (BCP) (IBM Website)

Guessing your way through

Entrepreneurs tend to guess their way through bookkeeping when they aren’t fully sure what they’re doing. Problem is, guesswork compounds over time, potentially leaving a year’s worth of books that you need to fix at tax time.

Some examples include:

Not categorizing expenses correctly
Overlooking tax deductions
Missing filing deadlines because the books weren’t done on time

Don’t stress if any of the above sounds familiar. We’re going to explain how you can avoid these errors below. For now, trust that taking a “best guess” approach to doing your books will come back to bite you in the butt. So hire an expert, or get the proper training from an expert bookkeeper so you know what you're doing!

Wasting more time than you need to

If your bookkeeping system isn’t tailored for your business, you’ll spend way more time doing the books than you should. Thankfully, this situation is easily avoided. Setting up a customized chart of accounts from day one is key.

If you don’t know how to do this yourself, a bookkeeper can:

Customize your chart of accounts for your business
Enter your initial balances
Teach you how to classify your expenses properly before you start doing your own books
Give you a “bookkeeping” checklist for you to tackle periodically (weekly or monthly)

Putting it off until the guilt drives you crazy

Nobody actually enjoys bookkeeping (except us, of course). But if you wait until your shoebox is overflowing with receipts, and your guilt forces you into a bookkeeping binge, there are some serious consequences.

You’ll struggle to remember what your receipts and transactions were actually for (let alone how you paid for them).
Bank reconciliation will be a nightmare.
You may forget to document tax-deductible expenses (meaning you won’t maximize your small business tax deductions for the year).
You won’t have time to catch and fix errors before they turn into major problems.
You’ll be making business decisions based on outdated financials.

Our advice? Do your books monthly at the very least. Weekly at most. Daily if your bookkeeping needs are insane (if you really need to reconcile daily, you’re at the point where you should hire a bookkeeper).

Mixing business and personal spending

So you take a client for lunch, but you forgot your business credit card. Not to worry. You can just pay for it with your personal debit card, right?

In the heat of the moment, it might seem easy to pay for a business expense with personal funds. But in the long run, commingling your finances makes bookkeeping (and taxes) a bit of a maze. It can even remove a layer of legal protection in the event that your business is audited or sued.

To avoid this pitfall, get into the habit of never using your own money to cover business expenses (and vice versa).

Here are some tips to help you keep everything kosher:

Manage your business finances in their own small business bank account
Get a dedicated small business credit card
Put a sticker on your business bank cards so you don’t confuse them with your personal bank cards
Keep a small amount of cash in your business checking account to cover quick, miscellaneous business expenses (so you’re not tempted to use your personal money when your business accounts are depleted)

Of course, if you accidentally pay for a personal expense with your business card (or vice versa) it’s not the end of the world. You can reimburse your business account for the purchase, or record the purchase as an “Owner’s Draw.” But why bother if you can avoid the hassle in the first place?

Throwing away receipts

If receipts get lost (or you throw them in the trash), you won’t be able to back up the deductions you made on your tax return during an audit. You may also be slugged with a fine.

A few things to note about keeping receipts:

Keeping digital records of your receipts is perfectly fine
You may need to present receipts upon request if your business is audited
To be safe, you should keep receipts for seven years

Take a picture of receipts on your phone and store them in Google Drive, Dropbox, or Evernote. Whatever’s easiest. Alternatively, upload photos of your receipts to the accounting software you’re using. (If you make the switch to having Bench to do your bookkeeping for you, you can also upload and store all the documents you want in the Bench app.)

Also, be sure to record the details of every expense (especially for meals and entertainment). This will help you find your receipts easily and justify the deduction during an audit.

Hiring an inexperienced bookkeeper

When it comes to hiring a bookkeeper, you get what you pay for. That bookkeeper you found on Craigslist for $8/hour is worth, well… $8/hour.

Hire someone who has bookkeeping experience in your niche. They’ll have bookkeeping tips and tricks up their sleeve, specific to your industry. And they should be able to get your books done faster - a Premium bookkeeper will give you premium results, saving you $$$ in the long run as there won't be errors to go back and correct!

Recording payments to yourself as an expense

We’re getting into the nitty gritty here, but we see this bookkeeping mistake quite often.

Sole proprietors and single-member LLCs: when you pay yourself, don’t categorize the payments as an expense. It’s an easy mistake to make. But it will lower your overall profit, and display a false total for the income you need to pay tax on.

Instead, record these payments to an equity account called “Owner’s Draw.” or "Directors Loan" depending on your business structure.

Reporting transfers as income

Does your business receive money via multiple accounts? For example, do you receive payments in a PayPal account or a TransferWise account?

At some point you’ll probably transfer that money across to your business checking account. When you do, be aware that accounting software will generally record that transfer as income (because the total cash in your checking account increases).

Whenever this occurs you’ll need to log in and update the transaction so that it appears in your books as a “transfer” (income moving from one account to the other), not “income” (new income being deposited into your checking account).

Neglecting sales tax (GST)

Frankly, the tax office doesn’t care if you know your sales tax obligations or not. They just care that you pay the sales tax you owe—whether you’ve been been collecting the sales tax from your customers or not.

Our best advice is to get your bookkeeper to determine and explain your sales tax responsibilities before you start business. If you haven’t consulted with a Bookkeeper yet, it’s never too late to schedule a check-in.

A good Bookkeeper can help you:

Understand your sales tax obligations
Collect sales tax correctly
Know your sales tax filing deadlines
File your sales tax on or before the deadline

Not reading your financial statements

Financial statements are a direct window into your business’s financial performance. If you don’t read them regularly (or you don’t know how to read them at all), you’re missing out on some big-time opportunities to generate revenue and avoid financial disaster.

Financial statements can help you:

Stay in control of your cash flow
Spot ways to maximize your tax deductions for the year
Successfully apply for a bank loan
See financial trends in your business
Know when to spend, and when to save
Make smart financial decisions that help your business grow
Show potential investors how your business is performing

Workplace Laws - Closing Loopholes!

There are new workplace laws that have come into effect this week, as part of the Closing Loopholes changes.

These changes are important to review if you engage workers under employee or independent contractor arrangements.

We have listed the upcoming changes below and have linked additional articles providing further information.

New definitions of employment – The Fair Work Act will define ’employee’ and ’employer’ based on the true nature and practical reality of the working relationship. This may result in some independent contractor working arrangements being characterised differently.
Changes to casual employment – The Fair Work Act will redefine ‘casual employee,’ introduce a new pathway for casuals to become permanent, and increase frequency to provide the Casual Employment Information Statement.»
Right to disconnect – Eligible employees will have the right to disconnect outside work hours, including refusing to respond to employer or third-party contact, with rules to determine whether such refusal is unreasonable. Note, these changes will not apply to small business employers until 26 August 2025.

New minimum standards for gig economy workers and the road transport industry – New minimum standards and protections for gig economy and road transport industry workers, called ‘regulated workers,’ will commence. The Fair Work Commission will be able to set minimum standards orders or guidelines regarding terms such as payments, deductions and insurance. The changes also expand access to collective agreements for regulated workers and provide the Commission with power to deal with dispute resolution for unfair terminations or deactivations.

Additional workplace delegates’ rights – The Fair Work Act will expand rights and protections for workplace delegates. Workplace delegates will include regulated workers, such as employee-like workers and regulated road transport contractors.

There will be further changes to laws affecting Australian workplaces as a result of the Closing Loopholes Acts, and we will continue to keep you up to date as these changes approach.

Tips for your business if you offer or accept gift cards

Gift cards are popular at this time of year. To help your business avoid problems with gift cards, we've listed the rules if you sell gift cards and some important things for your business to remember.

Rules if you sell gift cards

Your business must clearly state:

all conditions and restrictions on use of the gift card, including whether there are any limitations on the number of transactions
the expiry date of the gift card, which must be prominently displayed (with some exceptions)
the activation expiry date for cards that need to be activated
whether the card can be reloaded or topped up.

Avoid any surprises when the recipient is using the gift card

Recipients should not be required to pay any additional fees or charges on gift cards.

In most circumstances your business cannot have terms and conditions on gift cards that allow you to charge post-supply fees. Post-supply fees may include things like:

gift card activation fees
gift card account keeping fees
balance inquiry fees
inactivity fees.

Most gift cards must have a minimum 3-year expiry period

The law says that most gift cards must have a minimum 3-year expiry period, unless an exception applies.

Businesses should check whether any exceptions apply and can refer to the ACCC website. If exceptions don’t apply, the gift card must be redeemable for at least 3 years after the day it was supplied or purchased.

Gift cards are covered under the Australian Consumer Law (ACL)

Under the ACL, consumers have the right to expect certain things when they buy a product or service. These basic rights are called consumer guarantees. If one of the consumer guarantees under the ACL has not been met, you must offer a remedy, which is usually the solution of a repair, replacement, or refund.

Gift cards themselves are covered by these laws. If the gift card doesn’t work and the consumer is not at fault, the business should offer the consumer a refund or a replacement gift card.

Offering a gift card is not appropriate when a consumer is entitled to and wants a refund

If a product does not meet a consumer guarantee the business must offer the consumer a remedy. The type of remedy (repair, replace or refund) depends on whether the failure is major or minor.

Businesses should understand their obligations in relation to consumer guarantees and not seek to avoid them. For information on consumer guarantees please refer to the ACCC website.

Illiquid asset holders and SMSFs to bear brunt of $3 million super balance tax

A new report has revealed that the federal government’s proposed superannuation tax on balances exceeding $3 million will significantly impact professionals and business owners with high-value, illiquid assets — despite claims the reform targets only the wealthiest Australians.

According to financial analysis by the Australian National University and reporting by Australian Financial Review Economics Editor John Kehoe, the occupations most likely to be affected include doctors, engineers, senior managers and primary producers — particularly those who have built up superannuation balances within self-managed superannuation funds (SMSFs) through property, business or farm ownership.

Top points from the AFR report and ANU analysis

An estimated 87,000 Australians will be subject to the tax from 2025-26 — a significant increase from the 80,000 figure previously cited by Treasury
Those affected have a median superannuation balance of $5.9 million, often tied up in illiquid assets such as farms or small businesses
The tax applies to unrealised capital gains, meaning account holders may face tax liabilities even without having sold any assets
The $3 million threshold is not indexed, meaning over time, more Australians will be affected purely due to inflation
About 2,368 primary producers, or 2.7% of high-balance super holders, are expected to be impacted, raising concerns in rural and regional communities
Without indexation, Treasury acknowledges that up to 1.2 million people could eventually fall under the new tax regime — about 10% of all taxpayers.

The report suggests that while most of these households have sufficient overall wealth, many may not have the cash flow to meet annual tax liabilities, especially if their superannuation includes assets like property or private enterprise that generate little income.

The structure of the proposed tax — which includes taxing unrealised gains — has raised alarms with critics arguing it introduces volatility and complexity into what was once a trusted retirement savings system.

While the government frames the reform as a modest change targeting only the top end of town, its long-term reach and retrospective design are prompting growing concern from industry groups, former policymakers and wealth holders alike. In particular, the failure to index the $3 million threshold means the policy’s scope will expand each year, steadily capturing more middle-income Australians as the superannuation system matures.

What does it mean for you?

Business owners, professionals and SMSF trustees with long-term investments in super are urged to seek financial advice to assess potential impacts — particularly those with exposure to property, family farms or other non-liquid assets.

Need guidance on how the super tax may affect your position?

Contact your advisor to stress-test your super structure and safeguard your retirement strategy.

More time to amend business income tax returns

Businesses with an annual aggregated turnover of less than $50 million now have up to 4 years from the date of their tax assessment to request amendments, without the need to lodge an out-of-time objection request. This applies to returns for the 2024-25 and later income years.

Amendment requests should be lodged well before the end of the amendment period to ensure the Australian Taxation Office (ATO) can process them within the time limit.

Time limits on business and super amendments

The law sets time limits for amending your tax return, the period of time between the notice of assessment being issued and this time limit is known as the period of review. The time limits to amend your tax return are generally:

for small and medium businesses:two years for the 2023–24 and earlier income years, andfour years for the 2024–25 and later income years
four years for other taxpayers.

Your period of review begins on the day after we give you the notice of assessment for the income year in question. This is generally taken to be the date on the notice or, if we don't issue a notice, the date the relevant return was lodged.

You should submit an amendment early to ensure that we can process it within the relevant period of review. You can submit more than one amendment request within an amendment period.

The time limit gives you certainty about your tax affairs because it means we can't amend your tax return after the time limit has passed subject to fraud or evasion.

If you want to amend a tax return after the time limit has passed, you can't request an amendment but you can lodge an objection. You will need to include a request for an extension of time together with the objection.

For the full information, visit the ATO website at:

ATO Link for lodgements

Bookkeeping Buzz: Tips, Tricks, and Insights from the desk of BKH Bookkeeping

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