Capital Works Deductions

Tax is an unavoidable part of life. However, with proactive planning, you can manage you tax obligations more effectively, reduce unnecessary expenses, and make well-informed financial decisions. Tax planning is not just for large businesses - but for individuals, families and businesses of all size who can benefit from taking a structured approach. Maximise your Deductions Many taxpayers miss out on deductions simply because they are unaware of what is available to them. Ongoing tax planning ensures you are claiming everything you are entitled to, helping you legally reduce your overall tax liability. Plan ahead with Confidence Tax planning isn’t just about this year’s taxes; it’s also about planning for the future. By making smart decisions now, you can set yourself up for a lower tax bill in the years to come. Avoid Costly Surprises Unexpected tax bills can place unnecessary pressure on cash flow. By reviewing your financial position throughout the year, you can estimate your tax liability early and prepare accordingly.  Stay Compliant Tax legislation is constantly changing, and it can be hard to keep up with all the latest updates. Tax planning helps ensure that you stay compliant while still minimizing your tax liability. Remember, the goal of tax planning isn’t to avoid paying taxes altogether; it’s simply to pay your fair share while keeping as much money in your pocket as possible.

When you take money out of your company for personal use, it’s not automatically a tax-free loan. To the ATO, that payment must be one of these: Salary and wages A declared dividend A properly set up loan If it’s none of the above, the ATO can treat the amount as a dividend and add it to your personal taxable income. This rule is called Division 7A. A common situation is when a business owner transfers money from the company account to their own account, planning to “put it back later”. Without the right paperwork, the ATO may say that money was actually a dividend, not a loan. For example: You take $50,000 from your company to renovate your home. If you do nothing, that $50,000 can be treated as a dividend. You will need to pay personal income tax on the full $50,000, and you don’t get any franking credits to reduce the tax. To avoid this, you can either: pay the $50,000 back to the company before the company’s tax return is due, or put a formal Division 7A loan in place. A proper Division 7A loan means: a written loan agreement interest charged at the ATO rate minimum yearly repayments over up to 7 years (or longer if secured by property) If you set up the loan correctly, you might repay roughly $9,000 per year (principal plus interest, depending on the rate and term). As long as you make those repayments on time each year, the ATO treats it as a loan, not a dividend. Problems usually happen when people: take money out casually don’t sign a loan agreement miss the required yearly repayment If a repayment is missed, the unpaid amount for that year can still be treated as a taxable dividend. In short, company money is not your personal spending account. If you use company funds for private purposes, either repay it quickly or set up a proper loan and stick to the repayments, or you risk an unexpected personal tax bill.  If you have any questions or would like to discuss how Division 7A applies to your situation, please feel free to contact our office for appointments.

For nearly 3 years now the Government has been proposing to bring in a new tax on taxpayers with high total superannuation balances. It has been referred to as the $3 million tax. Previous versions of the draft legislation resulted in significant opposition from both industry groups and political parties due to the unfair and unintended consequences of poorly worded legislation. Most significant was the taxing of unrealised capital gains within Self-Managed Superannuation Funds (SMSFs). Prior to Christmas, the Government finally released their updated draft legislation for the introduction of the new Division 296 tax. The main points are as follows: · The introduction of the tax will commence on 1 July 2026 (rather than 1 July 2025), which means the first financial year will be the year ending 30 June 2027. · The tax of 15% will apply on the portion of earnings on total superannuation balances above $3 million. · An extra tax of 10% will now also apply on the portion of earnings on total superannuation balances above $10 million. · The $3 million and the $10 million thresholds will now be indexed in line with CPI (previous legislation had no indexation). · After the first year the calculation of the portion above the $3 million will be based on the higher of the opening and closing total superannuation balance during the financial year. This is a significant change as previously it was only based on the 30 June balance at the end of each year. This allowed taxpayers to withdraw superannuation assets prior to 30 June to reduce their member balance and therefore avoid any application of Division 296 tax. · The definition of earnings has also changed. Earnings will now be based on normal tax principles and be closer to the calculation of taxable income (which is much fairer). Unrealised capital gains will no longer be considered as part of earnings.  · Special protections will be included to ensure any capital gains accrued up to 30 June 2026 will not be included in future earnings calculations. The draft legislation was open for industry comment up to 16 January 2026. The Self-Managed Superannuation Fund (SMSF) Association and other industry groups have tabled concerns regarding the complexity and over-complicated nature of the draft legislation. In their eyes this can only lead to higher compliance costs (in addition to the tax). We will keep you informed if there are any further proposed changes prior to this legislation becoming law.

January is when many business owners review their profit targets for the year ahead. That’s understandable — but in practice, it’s cash flow that determines how calm or stressful the year will feel. Clients who enter the year with clear cash visibility tend to make better decisions, move faster, and sleep better. Those who don’t often spend the year reacting rather than leading. Here’s why January is the right moment to reset your cash discipline — and where to focus first. 1. Cash flow is a timing issue, not just a performance issue Many profitable businesses still experience cash pressure. The reason is usually timing, not effort or demand. Common issues we see include: Invoices going out later than expected Payment terms that don’t match cost cycles Large expenses landing before revenue catches up January is ideal for mapping these timing gaps while the year is still flexible. Even a simple month-by-month view of expected inflows and outflows can highlight where pressure is likely to arise. 2. A rolling forecast beats a static budget Annual budgets often look impressive in January — and are forgotten by March. A rolling cash forecast, updated monthly, is far more useful. It allows you to: Anticipate short-term funding needs Make confident decisions about hiring or investment Spot problems early, while there are still options This doesn’t need to be complex. The goal is visibility, not perfection. 3. Client payment behaviour deserves attention Late payments are one of the most common causes of avoidable cash stress. January is a good time to ask: Are our payment terms clear and enforced? Do we follow up consistently? Are some Clients always slower than others? Often, small changes to invoicing timing or follow-up processes make a noticeable difference without harming relationships. 4. Cost creep is easiest to fix early Costs have a habit of accumulating quietly. Software subscriptions, contractors, and discretionary spending often feel manageable in isolation but add up quickly. Reviewing these early in the year gives you more control — and avoids rushed decisions later. Software subscriptions, contractors, and discretionary spending often feel manageable in isolation but add up quickly. Reviewing these early in the year gives you more control — and avoids rushed decisions later. 5. Strong cash control creates optionality The real benefit of cash clarity isn’t restriction — it’s choice. Businesses with healthy cash visibility can: Invest when opportunities appear Absorb surprises without panic Negotiate from a position of strength That flexibility is one of the biggest competitive advantages a business can have. January cash discipline isn’t about being conservative. It’s about giving yourself room to manoeuvre as the year unfolds. If you’re unsure how robust your current cash position really is, a short review now can save a lot of pressure later.