New Financial Year To Do List

By Peter Vickers Business Group | Accounting, inflation, directors numbers, superannuation, lindfield superannuation fund, the share market, smsf audits |

DIRECTOR NUMBERS

Deadline to register is November. Although we can record the DIN on our accounting software, the government register promised by April is not yet available. Warning: if you are a new company director, you must have the DIN before you are appointed. The one thing the regulators have got correct is the penalties for getting this wrong. If you need help we are only a phone call away.

PAYMENTS TO THE AUSTRALIAN TAXATION OFFICE

One of the services that we provide as your tax agent, is to act as The human in the system that is largely automated. The ATO runs a number of accounts for each taxpayer, all run by its computer system. If you are required to make a payment then please check that you are using the correct reference number. Please do not rely on what you have in your internet banking. We normally send you the payment slip but if we did not the please ask us. This is also available if you have your own access to your ATO account. If you do make an error we can tell the ATO computer to fix this for you.

INFLATION

This is currently the big issue. Most people were not around in the 1980s to experience the mixture of high interest rates and high inflation rate and then high unemployment. All businesses now must very carefully monitor their costs and then raise their prices accordingly. Businesses should ensure that they have a decent profit margin. If you miss a cost increase then your higher margin will absorb that. The worry is NOT about the competitor and their lower prices. If they do not keep up or have a very low margin then they will go bankrupt. So who do you want to go bankrupt? You or your competitor.

The same goes for employees. Your wages need to increase in proportion to inflation or you will see your real wages go down. Inflation also causes issues in investment. If you get 6.5% interest on a term deposit, this is better than last year’s rate of 0.05% but if inflation is running at 7% then your money is losing value. Real assets like property and company shares usually keep up with inflation. Anything recorded in dollars will lose value, like term deposit, trade debtors and loans. For employees this requires you to have half yearly wage reviews.

SUPERANNUATION

The important change from 1 July is that any payment of wages from 1 July requires a payment of superannuation of 10.5% to be made, up from 10%. This will increase to 12% for the 2025/26 year. Please note that to be properly effective this rate needs to be 15% but one has to wait for the politicians for this.

The other important point is that the threshold of wages of $450 per month has gone. Employers have to put 10.5% of any amount paid in wages. The important point is if you hire a casual do not pay them any wages until they give you their super details. The large industry funds’ web sites allow people to join very easily

LINDFIELD SUPERANNUATION FUND

This is now dead and its death clearly shows why being a member of a large fund puts your money at risk. We started the first version of this fund when compulsory super came in and some clients did not want their money in an industry or retail fund and did not have enough to start a SMSF. Due to changes in regulators and legislation we lost control of this fund. We then advised all members about this and set up SMSFs for people with larger balances. We are helping clients clean up this mess and also problems with other large funds.

SMSF AUDITS LAST YEAR

I should start by saying there is no logical reason for SMSFs to be audited. Most taxpayers’ financial statements are not audited and the tax system still functions and very efficiently at that. This is part of the war between industry and retail funds and the Australian Taxation Office is the meat in the sandwich. The audit of the funds delayed the lodgment of the tax returns of clients by over a month. Our methodology is that we sit down with clients and go through all their accounts and tax returns including their super funds at one time. This ensures that all aspects of a client’s affairs are looked at rather than this being done in pieces. The SMSF tax return has a question “Date audit was completed”. Thus the return cannot be completed until the audit is completed as we need that date. There is also an auditing problem with this question. An audit is never completed even with the signing of the audit report. Auditing standards require that an audit be reopened if circumstances arise requiring that to happen. Clearly this question was written by a non auditor.

THE SHARE MARKET

The markets go up and then they go down. One of the things you MUST NOT do is panic. Jumping out of a Wall Street window did not stop the losses. If you have invested in solid companies running real businesses then even Covid cannot keep them down. Public sentiment is also not a good guide. We have seen research that if you picked ten days out of ten years then that is where the returns are. Who is able to make that pick? Moral - Stay invested.

Will there be a recession? Most Australians have a steady source of income. If their sentiment goes down then they stop spending and after six months they have paid back the credit cards or BNPL and then have spare cash. And guess what they do then? Back to the shops to spend their savings and run up their credit card debt again.

If you’d like more information on how to grow your business, please contact one of our accounting and tax experts using the button below.

_{The advice in this newsletter is general advice and does not take into account your individual objectives, financial situation or particular needs. Do not take any action based on the information provided without first discussing it with us.}

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