Spring 2024

Clean out the cobwebs and freshen up your professional and personal life

As the seasons change and the air fills with the promise of renewal, it’s the perfect time to have a clean out—not just for your physical space, but for your life and career as well.

Spring cleaning isn’t just about dusting shelves and organising files; it’s about refreshing your mindset, optimising your processes, and ensuring that both your personal and professional worlds are in top shape. Here are some ideas to help you revitalise your business and life as we move into the warmer months.

Declutter your physical and digital environments

Start with your physical workspace. Clear out the clutter that has accumulated over months of hard work. A tidy workspace not only improves productivity but also clears mental clutter, allowing for better focus and creativity. Organise your files, shred unnecessary documents, and create a system that makes everything easily accessible.

Extend this decluttering to your digital life. Clean up your email inbox by unsubscribing from unnecessary emails and set up rules to automatically organise emails into folders. Streamline your phone by deleting unused apps, grouping them by categories as well as reviewing your contacts and deleting old ones. Make sure everything you need is being backed up properly.

Streamline your life and get organised

Next, it’s time to look at where you spend your time. Spring cleaning your life means being ruthless with your time management. It’s said that a small portion of our time and effort (20%) generates a significant part of our results (80%) so focus your efforts on those activities that yield the most effective outcomes.  Evaluate your commitments and activities—are they truly adding value to your personal or professional growth? Learn to say no to tasks or obligations that don’t align with your goals or values. This will free up time for activities that truly matter.

Then it’s time to get organised. Allocate time for the important stuff. Review your calendar and update it with both personal and professional commitments. Prioritise self-care and relaxation alongside business meetings and deadlines. This balance ensures you remain productive without burning out and it’s vital to have time in your life for the things and people that you care about.

Dust the cobwebs off your workplace and business processes

Take a critical look at your everyday processes at work. Are there inefficiencies that can be streamlined? Are there repetitive tasks that can be automated? Improving your processes not only saves time but also reduces costs and enhances customer satisfaction.

Getting your house in order also involves making sure your business is not vulnerable. Review your contracts with suppliers, clients, and employees, ensuring they are up to date and protect your interests. Evaluate your data security measures to safeguard sensitive information against cyber threats and review your insurance policies to ensure adequate coverage for your business needs.

Polish your skills and connections until they shine

Investing in yourself is key to staying competitive. Commit to ongoing professional development by planning to attend workshops, webinars, or conferences relevant to your field. Think about what areas you need to work on and update your skills and knowledge to stay ahead of industry trends and innovations. This can be as easy as listening to a regular podcast on your commute.

Networking is also crucial. Refresh your professional network by reconnecting with contacts, attending industry events, and actively building new relationships. Your network can provide valuable support, advice, and opportunities for growth.

Taking the first step to transformation

Spring cleaning your life, career, and business is not just a seasonal chore; it’s a transformative process that sets the stage for success throughout the year. By decluttering your physical and digital spaces, streamlining your life, honing your processes at work, and committing to ongoing growth, you set yourself up for greater productivity, efficiency, and personal fulfillment.

Take the first step today. Start small with one area—whether it’s organising your desk or updating your LinkedIn profile. Each step, no matter how small, contributes to the bigger picture of a rejuvenated business and a balanced life.

Remember, spring cleaning is not just about tidying up—it’s about creating space for new opportunities, ideas, and experiences. Embrace this time of renewal and watch as your business thrives and your life flourishes.

Quarterly Property update

New world order: Surprise cities climbing the residential ranks

There’s been yet another changing of the guard in Australian property along with the arrival of spring.

Rarely seen in close to four decades of real estate record keeping, Melbourne values have dipped below those of Adelaide and Perth, signalling a shake up for capital city property prices.

In June, Brisbane’s median dwelling value had already surpassed the Victorian capital and Canberra to take out second place on the CoreLogic totem pole, and now just two months later, it has fallen to fifth on the list.

Cost of living pressures and a continued plateau in the official cash rate by the RBA has resulted in a quieter than average winter in real estate. CoreLogic’s September Home Value Index revealed that national home values rose only 0.5 per cent during August, representing 19 months of consecutive increases.

Smaller city standouts

For much of the past two years, Perth, Adelaide and Brisbane have led the pack in terms of growth rates among Australia’s capital cities. Perth, in particular, has seen extraordinary growth with values up 23.24 per cent annually, followed by Adelaide at 15.12 per cent and Brisbane at 13.95 per cent.

This rapid rise has propelled both Perth and Adelaide prices past Melbourne. The South Australian capital’s median dwelling value is now at $790,800 while Perth’s is $785,250, compared to $776,044 for Melbourne – now the third lowest median among the capital city markets. Only Darwin and Hobart are now cheaper.

Melbourne’s market explained

It’s the first time Perth’s median dwelling value has been higher than Melbourne’s since February 2015, when the city was coming off an iron-ore boom. Adelaide has never recorded a median value higher than Melbourne in CoreLogic’s 40-year dwelling value series.

Melbourne’s real estate landscape has been on a downward trend for six consecutive months, which is attributed to a range of factors, from affordability constraints and elevated interest rates, to changes in investor sentiment and Victorian tax levies.

What’s also worth noting is that Melbourne is a unit-heavy market, where apartments account for approximately a third of the city’s housing stock—compared to just 16 per cent in Perth and Adelaide. This skew toward unit prices drags down the overall median dwelling value and, in reality, median house and unit values across Perth and Adelaide are still lower than in Melbourne.

Dwelling values over the quarter

Melbourne

Currently with a dwelling median sitting at $776,044, after a quarterly fall of -1.2 per cent, Melbourne is  now one of Australia’s more affordable cities according to CoreLogic data. Since the onset of Covid in March 2020, the Victorian capital’s median has increased by 10.1 per cent, representing an average $71,196 move in home prices. Currently, the gross rental yield is 3.7 per cent, however investors are collectively reevaluating their property portfolios since the introduction of a new Victorian land tax on non-primary residences.

Sydney

The median value of homes in Sydney is $1.18 million after a modest three-month movement of 0.8 per cent. At the beginning of the pandemic, Sydney’s median was $263,838 less but has since  risen 28.8 per cent. The gross rental yield for investment properties in the Harbour City is currently 3.1 per cent.

Brisbane

Still holding its spot as Australia’s second priciest city for residential real estate, Brisbane’s median dwelling value is $875,040 after a quarterly increase of 2.9 per cent. Back at the start of Covid, the Queensland capital’s median was $344,896 less but has subsequently soared by 65.1 per cent. Today the gross rental yield for the city is 3.7 per cent.

Canberra

The national capital was knocked out of second place back in June and recorded a slight -0.2 per cent decrease in the median dwelling value for the quarter to $845,875. Home values have risen an average of $201,558, or 31.3 per cent, since the start of the pandemic. The gross rental yield in Canberra is 4.1 per cent.

Perth

On an incredible trajectory since March 2020, Perth’s median home value has skyrocketed 72.5 per cent to $785,250. Over the last three months it was also home to the country’s largest capital city quarterly increase of 5.7 per cent. Perth’s gross rental yield is sitting at 4.3 per cent.

Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (September 2024) 

Tax update September 2024

New deductions and employer obligations

Employers need to check that payroll systems reflect recent legislative changes, and the ATO is highlighting deduction opportunities available to some small businesses. Here’s your roundup of the latest tax news.

Updated employer obligations

The ATO is reminding employers to stay on top of legislative changes affecting payroll systems.

The Super Guarantee rate increased on 1 July 2024 to 11.5 per cent of ordinary times earnings, so all payments (starting with those for the July to September quarter) to super accounts for eligible workers must reflect the new rate.ⁱ

Individual income tax rate thresholds and tax tables changed also changed on 1 July 2024 so you may need to check calculations for your Pay As You Go Withholding obligations.

Claims for energy expenses

Many small business are eligible for a bonus 20 per cent tax deduction for new assets (or improvements to existing assets), that support more efficient energy usage.

The Small Business Energy Incentive applies to eligible assets first used or installed ready for use between 1 July 2023 and 30 June 2024.ⁱⁱ

Eligible expenditure for external training courses for employees incurred between 29 March 2022 and 30 June 2024 could also qualify for a 20 per cent bonus tax deduction from the Small Business Skills and Training Boost.ⁱⁱⁱ

Pay less capital gains tax (CGT)

While a business can reduce capital gains made during a tax year by offsetting them with capital losses from the same or previous income years, not all capital losses are eligible.^iv

Capital losses carried forward from previous years need to be used first, with losses from collectables (such as artwork and antiques) only permitted to be offset against capital gains from collectables.

Losses from personal use assets (such as boats or furniture), CGT exempt assets (such as cars and motorcycles), paying personal services income to yourself through an entity you set up, and leases producing income (such as commercial rental property), are ineligible as offsets.

Fuel tax credit rates change

Before claiming fuel tax credits in your next Business Activity Statement (BAS), check you are using the latest rates as they have changed twice in the new financial year.^v

On 1 July 2024, the rate for heavy vehicles travelling on public roads changed due to an increase in the road user charge, with the rate altering again on 5 August 2024 due to a change in fuel excise indexation.

Different rates apply based on when you acquired fuel for your business’ use, so ensure you use the correct rate. If you are unsure, try the ATO’s online Fuel Tax Credit Calculator to work out the amount to report in your BAS.

Records essential for rental expense claims

Rental property investors without correct documentation to substantiate their expense deductions may find their claims declared invalid.^vi

The ATO is warning investors they need all receipts, invoices and bank statements plus details of how deductions were calculated and apportioned for a valid claim.

Lodging a ‘nil’ BAS

While taxpayers registered for GST automatically receive a Business Activity Statement and are required to lodge and pay in full by the due date, businesses with nothing to report are still required to lodge.

If you have paused your business, you are required to lodge a ‘nil’ BAS by the due date either online or via the ATO’s automated phone service.^vii

i How much super to pay | Australian Taxation Office (ato.gov.au)

ii Small business energy incentive | Australian Taxation Office (ato.gov.au)

iii Small business skills and training boost | Australian Taxation Office (ato.gov.au)

iv Pay less capital gains tax (CGT) | Australian Taxation Office (ato.gov.au)

v From 1 July 2024 to 30 June 2025 | Australian Taxation Office (ato.gov.au)

vi ATO warning to rental property owners: don’t let your tax return be a ‘fixer-upper’ | Australian Taxation Office

vii Cancelling your GST registration | Australian Taxation Office (ato.gov.au)

Which business structure is best?

A catchy business name, a trustworthy brand and an engaging website or social media presence are all vital to any small business. But don’t underestimate the effect of the business structure.

Choosing whether to operate as a sole trader, company, partnership or trust depends on many factors including cost, the size of the business, whether you have dependants and family members to share income with, and the degree of financial or legal risk involved in running the business.

Sole trader

Many small operators start out as a sole trader, and some decide to continue with this structure.

On the positive side, it’s easy to set it up and, with fewer business reporting obligations, it’s cheaper to run than other business structures.

There are one or two considerations that, depending on your circumstances, could mean a sole trader structure doesn’t work for you.

One of these is the extent of your liability if things go wrong. When you’re a sole trader your liability is unlimited, meaning your assets are at risk in the case of legal action. Some businesses may consider their risk to be too low to warrant changing the business structure or they may choose to find an insurance product to provide some protection.

Tax is another consideration. Among other issues, as a sole trader, you’re liable to pay tax on all income received by the business and you can’t split profits or losses with family members.ⁱ

Partnership

Two or more people can form a business partnership and distribute business income among themselves.

Like a sole trader structure, a partnership structure can be slightly cheaper to operate because there are minimal reporting requirements.

All partners are liable for all the debts and obligations of the business although there are different types of partnerships that vary liability among the partners.

For tax purposes, each partner reports their share of the partnership income or loss in their own return and pays tax on any income. Partners cannot claim a deduction for any money they withdraw from the business. Amounts taken from a partnership are not considered wages for tax purposes.ⁱⁱ

Company

A company structure has a number of advantages over a sole trader or partnership structure, but it costs more to set up and operate and there are more reporting requirements.

A company is considered a separate legal entity and has its own tax and superannuation obligations, but company directors have a number of legal responsibilities.

Companies pay an annual fee to be registered with the Australian Securities and Investments Commission (ASIC) and they usually cost more to put together the necessary annual accounts and tax return.

On the plus side, you will be able to employ yourself and claim a tax deduction for your wages.

But be aware of the Personal Services Income (PSI) rules. If more than 50 per cent of the income of the business is produced by your personal exertion, it’s considered PSI and you will pay tax at your marginal rate, rather than the lower company tax rate. This rule affects taxpayers with any business structure.

Trust

A trust is the most expensive and complex business structure to operate but it might be the most appropriate for your needs.

There are some pluses and minuses so expert advice from your accountant and lawyer is crucial. You will need help to decide on the type of trust, to set up a formal trust deed and to carry out annual administrative tasks.

On the positive side, there may be tax advantages and there are some protections from financial and legal liability.

On the flip side, all income earned must be distributed to beneficiaries each year otherwise tax is paid at the highest marginal rate. Also, losses can’t be distributed to beneficiaries, it may be difficult to dissolve or change elements of a trust and it may be more difficult to borrow funds.

Ask for guidance

The importance of choosing the best business structure for your needs and understanding the regulatory requirements is crucial to the success of any small business. Check in with us for expert guidance.

i Sole trader | business.gov.au
ii Business structures – key tax obligations | Australian Taxation Office (ato.gov.au)

How to improve your business cash flow

With the cost of doing business continuing to squeeze the bottom line, careful cash flow management has never been more important.

Not only is the ATO paying extra attention to timely payment of tax debts, but once the new payday super rules commence, many small businesses will no longer have access to one of their traditional sources of emergency funding.ⁱ

The government recognises how important cash flow is in small businesses and allocated an additional $23.3 million in the May 2024 Federal Budget to boost the adoption of eInvoicing. This electronic system is designed to help improve cash flow and productivity in smaller operations.

If you don’t have clear insights into your cash flow position and are not careful in managing income and expenses, it’s much harder to pay your bills and meet your tax, super and employer obligations.ⁱⁱ

A cash flow projection or budget helps to ensure there is enough cash available to meet upcoming expenditure. You will be able to understand your likely cash position at any time, identify fluctuations that could lead to potential cash shortages and plan for tax payments and major expenses.

The three main things to consider when creating a cash flow budget are timing, fixed and variable costs, and your income.

While cash flow projection tools can be off-the-shelf digital products or simple templates, we can also work with you to use the ATO’s Cash Flow Coaching Kit to improve management of this critical area.ⁱⁱⁱ

Improving your position

When you have completed a cash flow projection and understand your position, it is time to work on ways to improve it.

One of the most important ways to improve cash flow is to ensure your invoices are paid as quickly as possible. Make sure invoices are sent out as soon as you can and, if possible, ask for immediate payment.

Consider shortening your payment terms, particularly if they are currently longer than 30 days. Some businesses offer an early payment discount or charge interest on overdue accounts to help speed up payments.^iv

Setting clear payment guidelines for your customers is also valuable and think about taking action with customers who regularly fail to pay on time.

Review your payment cycle

Check suppliers’ payment terms to make sure you are not paying earlier than required (unless there is a discount on offer!).

Using a business credit card with an interest-free payment period can be an easy way to smooth your cash flow.

Separating your personal and business expenses makes tracking your business cash flow and expenses easier and reduces the time required for reconciliations.

Check stock levels

If you sell or supply products, carry out regular reviews of your inventory to ensure you are only holding the stock needed and are not tying up valuable cash flow and possibly increasing storage and insurance costs.

An inventory management system can be helpful to automate ordering and reduce lags between placing and receiving orders, and to identify unwanted or outdated stock.

Also review your pricing and margins to see if it is possible to raise prices without losing business.

Reduce your outgoings

Keeping a close eye on regular expenses and one-off spending helps to keep outgoings to a minimum.

Look for opportunities to save money by streamlining operations and reducing operating costs by cutting energy expenses and reviewing existing service contracts including phone and insurance.

Negotiating better prices with suppliers and more tightly targeting marketing expenditure can also boost your cash flow.

Make your asset work harder

If your business includes expensive assets like vehicles and equipment, ensure they are working hard for you.

Consider leasing or hiring assets to reduce upfront costs, sell assets you no longer need, and review any asset financing to make sure that it is competitive.

While these general tips may help improve your cash flow position, don’t forget we can provide advice tailored to the specific needs of your business. So, call us today if you would like our help.

i Payday superannuation | Australian Taxation Office (ato.gov.au)

ii Manage your business cash flow | Australian Taxation Office (ato.gov.au)

iii Cash Flow Coaching Kit | Australian Taxation Office (ato.gov.au)

iv Improve your cash flow | business.gov.au

Springing into action with a pre-approval in place

As the real estate market begins to bloom with opportunities for homebuyers, for those who wish to buy in the next few months understanding the distinctions between pre-qualification and pre-approval for a home loan can be pivotal in securing your dream home.

If you are starting out on your journey to buy a home, one of the first things you need to do is determine what you will be able to borrow so you are narrowing the field to hone in on properties you are likely to be able to afford.

A couple of the terms you may have come across when you are at this stage of determining your borrowing power are ‘pre-qualification’ and ‘pre-approval.’ While these sound like they might be the same thing, there are some important distinctions between them a home buyer needs to understand.

Differentiating between pre-qualification and pre-approval

When applying for a loan, the main difference between pre-qualification and pre-approval lies in the depth of scrutiny and commitment from the lender, with pre-qualification more of a guideline and pre-approval being more solid.

Pre-qualification – a non-binding estimate

Pre-qualification is the first step in the mortgage process, providing an estimate of how much you may be able to borrow based on self-reported financial information. This preliminary assessment typically involves a basic questionnaire or a conversation regarding your income, assets, debts, and credit score.

There are some benefits to going through the pre-qualification process. It gives you a general idea of the price range of homes you can consider, guiding your initial search.

Pre-qualification usually does not involve a hard credit inquiry, so does not have any impact on your credit score and finally it provides early insights into potential financing options.

However, it’s important not to make the mistake of thinking a pre-qualification and pre-approval is a binding indication of how much a lender is willing to provide. As the information you provide is not verified, it’s considered less reliable and it’s a good idea to consider a pre-qualification as more of a ballpark figure of what you could potentially borrow.

Pre-approval – a detailed commitment

Pre-approval is a more rigorous process where a lender verifies your financial information and provides a conditional commitment to lend up to a specified amount under certain conditions. This involves submitting documentation such as wages, bank statements, and tax returns for thorough evaluation so you’ll need to get your financial house in order prior to the pre-qualification process.

At this stage we’ll work with you to review your options in terms of mortgage products and lenders. When you are ready to apply for pre-approval, the selected lender then verifies this information and performs a credit check to assess your financial situation in detail. Based on this verification, the lender provides a conditional commitment to lend you a specified amount under certain conditions.

The advantages of pre-approval for property purchases

As we enter the warmer months the housing market typically sees increased activity and competition among buyers, which is why obtaining pre-approval should be a priority if you are getting serious about buying. Pre-approval does not just provide potential lenders with a comprehensive view of your financial health, it also empowers and informs your decisions. Knowing your approved loan amount allows for more precise budgeting and confident negotiations.

Armed with a pre-approval letter, you can concentrate on properties within your budget range, optimising your time and efforts. In a bustling market, sellers are more likely to favour offers from pre-approved buyers due to greater assurance of financial capacity and the potential for a swift transaction.

Pre-approval will also enable you to move faster and can speed up the process of finalising your loan should you be successful in your bid for your new property. When you find the right home, the last thing you want is to miss out as your finance took too long.

Planning ahead for a successful purchase

If you are wanting to purchase in the next few months, now is the ideal time to start preparing for your home purchase journey.

Start your journey with confidence by chatting to us at the pre-qualification stage and obtaining pre-approval early, ensuring you’re well-positioned to capitalise on opportunities and achieve your homeownership dreams as the property market warms up alongside the weather.