S & H Tax Accountants

Tag: financial plan

RBA Delivers Third Interest Rate Cut of 2025 — What It Means for You
August 12, 2025 — In a widely anticipated move, the Reserve Bank of Australia has lowered its official cash rate by 0.25 percentage points, bringing it down to 3.60% — the lowest level since April/May 2023

This marks the third reduction in the cash rate this year, following previous cuts in February (to 4.10%) and May (to 3.85%)

RBA’s Rationale

Governor Michele Bullock highlighted robust evidence of easing inflation, including a fall to around 2.7% in the RBA’s preferred measures like the quarter‑on‑quarter trimmed mean. At the same time, modest slackening in the labour market added to the case for easing policy.

However, the RBA sounded a cautionary note—long‑term productivity growth has been revised down from 1% to 0.7%, lowering the sustainable trend growth rate to around 2% and impacting future wage and economic growth alerts.

Impact on Borrowers
- Mortgage Relief: Households are expected to benefit significantly. For example, a borrower with a $600,000 mortgage stands to save around $90 per month, and in total $272 per month since February’s first cut.
- Banks Passing on Cuts: Major lenders—including Westpac, Commonwealth Bank, ANZ, and Macquarie—have pledged to pass the cut onto variable-rate borrowers.
- Fixed Rates Drop: Ahead of the decision, many banks had already started dropping fixed mortgage rates below 5%, with some offers dipping to 4.89% over two years
Market Reactions & Future Outlook

Economists widely expected the August cut, with around 90–91% of forecasts predicting it after the RBA held rates steady in July. Some experts are now forecasting further cuts, potentially lowering the cash rate to between 3.0% and 3.25% by early to mid‑2026 .

Governor Bullock suggested the RBA is data-dependent, with the board approaching future decisions “meeting by meeting”—all members fully backed the current 25‑point cut, and there was no discussion of a larger move.

Economic Trade-offs

While the rate cut offers much-needed relief for borrowers and may support spending and investment, the downgrade in productivity growth underscores long-term concerns about economic resilience and slower wage gains. Treasurer Jim Chalmers welcomed the decision but noted that productivity challenges and slower trend growth remain critical issues

This third cut of the year signals a continued shift from the restrictive stance adopted to tame post-pandemic inflation, though the RBA is proceeding with careful consideration of future economic data and risks.

S & H Tax Accountants have partnered with a few banks so that we can assist our clients in their financial needs. If your interested in a mortgage, refinancing and much more contact us today on 03 8759 5532 or email us on info@sahtax.com.au.
13/08/2025
New Law Denies Tax Deductions for ATO Interest Charges from 1 July 2025
As part of the 2023–24 Mid-Year Economic and Fiscal Outlook (MYEFO), the Australian Government announced a significant change to the tax treatment of Australian Taxation Office (ATO) interest charges. Now officially law, this measure will deny income tax deductions for certain ATO interest charges incurred on or after 1 July 2025.

What’s Changing?

Under the new law, taxpayers will no longer be able to claim deductions for the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) incurred from 1 July 2025 onward. These interest charges are typically applied to unpaid tax liabilities and underpaid tax amounts.

Which Charges Are Affected?
- GIC (General Interest Charge): Applied to unpaid tax liabilities and calculated daily.
- SIC (Shortfall Interest Charge): Applied when the ATO issues an amended assessment that increases a taxpayer’s liability.
If these charges are incurred on or after 1 July 2025, they will no longer be deductible—even if the related tax debt or shortfall relates to an earlier income year.

What Does ‘Incurred’ Mean?

Whether you can deduct a GIC or SIC depends on when the interest is incurred, not the year to which the underlying tax liability relates.
- GIC is incurred daily as long as a tax debt remains unpaid.
- SIC is incurred in the year you receive a notice of amended assessment.
This means that any GIC or SIC incurred after 1 July 2025—regardless of when the underlying tax issue arose—is not deductible.

What About Pre-1 July 2025 Interest?

The changes are not retrospective. GIC or SIC incurred before 1 July 2025 remains deductible under current tax law. However, if a previously claimed deduction for GIC or SIC is later remitted by the ATO, the remitted amount must be included in assessable income in the year of the remission.

What Are the Practical Implications?
- Taxpayers and advisors should carefully track when interest charges are incurred.
- There may be a financial incentive to resolve tax liabilities before 1 July 2025, to preserve deductibility.
- From 1 July 2025, remitted interest will not need to be included in assessable income, as it will not have been deductible in the first place.
Conclusion

This change reflects a broader trend by the Government to tighten the tax treatment of administrative penalties and interest. Taxpayers should review their current tax positions and consult advisors to ensure they are not caught out by these changes, particularly in planning payments and potential disputes with the ATO.
02/06/2025
Tax Planning in Australia: A Strategic Guide for Individuals and Businesses
Introduction

Tax planning is an essential aspect of financial management for both individuals and businesses in Australia. It involves the strategic arrangement of financial affairs to minimize tax liability within the legal framework. With the Australian Taxation Office (ATO) maintaining stringent oversight, effective tax planning ensures compliance while maximizing financial efficiency.

What is Tax Planning?

Tax planning refers to the analysis and organization of financial activities to legally reduce tax obligations. It differs from tax avoidance (which is legal but can be scrutinized) and tax evasion (which is illegal). Good tax planning involves using available tax deductions, offsets, exemptions, and structures to ensure that you are not paying more tax than necessary.

Why is Tax Planning Important in Australia?

Minimize Tax Liability: By taking advantage of deductions, offsets, and income-splitting opportunities.

Improve Cash Flow: Less tax means more money available for reinvestment or personal use.

Ensure Compliance: Avoid ATO penalties by staying within legal boundaries.

Plan for the Future: Prepare for retirement, inheritance, and business succession in a tax-efficient way.

Key Tax Planning Strategies

1. Maximize Deductions

Individuals and businesses should ensure they are claiming all eligible deductions. Common deductions include:

Work-related expenses (travel, uniforms, education)

Investment property expenses

Self-education and training costs

Charitable donations

2. Use Superannuation Effectively

Contributing to superannuation can be a highly tax-effective way to save for retirement:

Concessional Contributions (up to the annual cap) are taxed at 15%, often lower than marginal tax rates.

Non-Concessional Contributions can also be used strategically, especially when planning for retirement.

3. Consider Business Structures

For small businesses, choosing the right structure (sole trader, partnership, company, or trust) can significantly impact tax obligations:

Companies pay a flat corporate tax rate, which can be lower than personal income tax rates.

Trusts allow income to be distributed among beneficiaries in a tax-efficient manner.

4. Capital Gains Tax (CGT) Management

Selling investments or property may trigger CGT. Strategies include:

Holding assets for over 12 months to qualify for a 50% CGT discount (for individuals and trusts).

Offsetting gains with capital losses.

5. Income Splitting

Spreading income across family members in lower tax brackets (through trusts or family partnerships) can reduce the overall tax burden.

6. Timing Income and Expenses

Shifting income or deferring expenses to a different financial year can optimize tax outcomes. For instance:

Prepaying deductible expenses before 30 June

Delaying invoicing to defer income to the next financial year

Common Pitfalls to Avoid

Over-claiming deductions: Ensure claims are legitimate and substantiated.

Neglecting record-keeping: Keep detailed records for at least five years.

Failing to seek advice: Tax laws can be complex and subject to frequent changes.

Working with Tax Professionals

A registered tax agent or accountant can provide tailored advice, especially in complex situations involving business operations, investment portfolios, or estate planning. Engaging a professional also helps in preparing accurate tax returns and avoiding compliance issues.

Conclusion

Tax planning is not just a once-a-year activity—it should be an ongoing process. With the right strategies and professional support, individuals and businesses in Australia can reduce their tax liability, improve financial health, and plan more effectively for the future. Staying informed and proactive is key to navigating the Australian tax landscape successfully.
28/05/2025
The Importance of Accountants in Australia
Accountants play a crucial role in the financial landscape of Australia, contributing to the smooth functioning of businesses, individuals, and the nation’s economy as a whole. From small businesses to large corporations and individual tax returns, accountants provide essential services that ensure financial accuracy, compliance with regulations, and strategic advice that drives growth. Their expertise is indispensable across various sectors, highlighting the immense value they bring to the table.

The Role of Accountants in Australia

Accountants in Australia are responsible for a wide range of financial services, including bookkeeping, auditing, tax preparation, financial reporting, and consulting. They act as trusted advisors, helping individuals and businesses navigate the complexities of the Australian financial system. Below are some of the key areas where accountants have a significant impact:

1. Taxation Services

One of the primary responsibilities of accountants is managing taxation matters. In Australia, tax laws can be intricate and subject to change, which can be a challenge for individuals and businesses to navigate without expert help. Accountants ensure that their clients comply with the Australian Taxation Office (ATO) regulations, avoid penalties, and take advantage of any tax deductions or incentives available.

Taxation services also include preparing and filing personal income tax returns, business activity statements (BAS), and ensuring that businesses remain tax-efficient. Accountants can also advise on complex matters such as Goods and Services Tax (GST), payroll tax, and superannuation contributions.

2. Financial Reporting and Analysis

Accountants assist businesses with accurate financial reporting, which is crucial for decision-making and operational efficiency. These reports include profit and loss statements, balance sheets, and cash flow statements, which provide an overview of a company’s financial health. Accurate financial reports help management assess performance, make informed decisions, and present data to stakeholders such as investors and creditors.

For larger businesses, accountants often help with financial forecasting and budgeting, ensuring that the organization remains on track and adapts to changing market conditions.

3. Business Advisory Services

Beyond traditional accounting tasks, many accountants in Australia act as business advisors. They provide valuable insights into business strategy, cost management, and growth opportunities. Accountants work closely with business owners to develop strategies for increasing profitability, managing risks, and improving operational efficiency. They may also advise on business structures, mergers and acquisitions, or financing options to help companies grow sustainably.

4. Audit and Assurance Services

Auditing is another key function of accountants in Australia. An audit is an independent evaluation of a company’s financial records and processes to ensure they are accurate and in compliance with accounting standards and regulations. For many companies, especially public-listed companies, audits are a legal requirement to ensure transparency and accountability to stakeholders. Accountants also provide assurance services that give stakeholders confidence in the integrity of the financial information being presented.

5. Compliance and Regulatory Guidance

Australia has a rigorous regulatory framework for businesses and individuals, and accountants are essential in ensuring compliance with various laws and standards. This includes adhering to the Corporations Act, Australian Accounting Standards, and tax regulations, as well as specific industry requirements. Accountants help businesses avoid costly mistakes by ensuring they comply with regulatory requirements, reducing the risk of legal issues or financial penalties.

6. Superannuation Management

For individuals, managing superannuation (Australia’s pension system) is another key area where accountants play an important role. Accountants assist individuals with superannuation contributions, investment strategies, and retirement planning. They ensure that individuals are meeting their superannuation obligations while also maximizing the value of their superannuation savings for a comfortable retirement.

Why Accountants Are Crucial for Australian Businesses

Businesses in Australia, from startups to established enterprises, rely heavily on accountants to maintain financial health and comply with the law. Without the expertise of accountants, businesses would struggle to stay afloat in an ever-evolving financial and regulatory environment.

Some of the key benefits accountants bring to businesses include:
- Financial Management: Accountants help businesses maintain proper bookkeeping, manage cash flow, and ensure accurate financial reporting, which is essential for sustainable growth.
- Strategic Advice: Accountants offer insights into cost reduction, investment opportunities, and strategic planning, helping businesses remain competitive in their industry.
- Tax Efficiency: Accountants can help businesses minimize their tax liabilities through proper planning, tax-effective investment strategies, and identifying eligible deductions and credits.
- Risk Management: Accountants are skilled in identifying and managing financial risks, ensuring that businesses are well-positioned to weather economic downturns or unexpected challenges.
The Value of Accountants to Individuals

For individuals, accountants offer more than just tax preparation. They are key players in personal financial planning, helping with wealth management, estate planning, and investment strategies. Accountants guide individuals in optimizing their financial decisions, such as when to make significant investments or how to structure personal finances to reduce tax liabilities.

Additionally, accountants assist individuals with retirement planning by offering advice on superannuation and creating a comprehensive plan to ensure financial security in later years.

Conclusion: Accountants as Pillars of the Australian Economy

Accountants in Australia are indispensable for the smooth operation of businesses and the financial well-being of individuals. They ensure tax compliance, provide strategic advice, manage financial reporting, and help businesses thrive in an increasingly complex financial landscape. With their deep expertise, accountants not only help their clients achieve financial goals but also contribute to the overall economic stability and prosperity of the nation.

Whether it’s through efficient tax management, providing business advice, or guiding individuals toward better financial decisions, accountants play a central role in shaping the financial future of Australia. Their services remain vital to ensuring that individuals and businesses remain compliant, financially healthy, and positioned for long-term success. If you are in need of an excellent accountant, contact S & H Accountants on 03 8759 5532 or you can also email us on info@sahtax.com.au.
26/02/2025
What are the different type of taxation obligations in Australia
Different Types of Taxation Obligations in Australia

Australia, like many countries, relies on a robust tax system to fund essential public services, infrastructure, and social welfare programs. The Australian taxation system is progressive and multifaceted, with different taxes imposed at the federal, state, and local levels. Understanding the various types of tax obligations is essential for individuals, businesses, and organizations to ensure compliance and optimize their financial planning. In this article, we’ll explore the different types of taxation obligations in Australia, highlighting the major taxes and how they affect taxpayers.

1. Income Tax

Income tax is one of the primary forms of taxation in Australia. It is levied on the earnings of individuals, businesses, and corporations, and is a major source of revenue for the government. The Australian Taxation Office (ATO) is responsible for administering income tax.
- Personal Income Tax:
  - Individuals in Australia are taxed on their taxable income, which includes wages, salaries, business income, investment income, and certain government benefits.
  - The income tax system in Australia is progressive, meaning the rate of tax increases as income rises. The rates for individuals (as of the 2023-2024 financial year) range from 0% for income below a certain threshold, to 45% for income above AUD 180,000. There is also a Medicare Levy of 2% applied to most taxpayers’ income, which helps fund the country’s public health system.
  - Taxable income can be reduced by deductions for work-related expenses, charitable donations, and certain other expenses, as well as tax offsets for eligible individuals.
- Corporate Income Tax:
  - Australian companies pay tax on their profits, with the standard corporate tax rate being 30%. Small businesses with an annual turnover of less than AUD 50 million may qualify for a lower tax rate of 25%.
  - Companies can also claim deductions for legitimate business expenses, such as wages, rent, and operating costs, to reduce their taxable income.
2. Goods and Services Tax (GST)

Goods and Services Tax (GST) is a value-added tax applied to most goods and services sold in Australia. It is one of the most widely encountered taxes for businesses and consumers alike.
- GST Rate: The standard rate for GST is 10%, which is added to the price of most goods and services.
- Who Pays GST: The tax is ultimately paid by the consumer, but businesses are responsible for collecting and remitting it to the ATO. Businesses that are registered for GST must charge GST on their taxable sales and can claim GST credits for the GST paid on business-related purchases.
- GST Exemptions: Some goods and services are exempt from GST, including certain healthcare services, educational courses, and basic food items.
3. Payroll Tax

Payroll tax is a state-based tax levied on businesses with a certain level of payroll. This tax is paid to the state or territory in which the business operates, not the federal government.
- Who Pays: Employers are required to pay payroll tax if their total taxable wages exceed the threshold set by the state or territory in which they operate. This threshold can vary significantly from state to state, but in many places, it starts around AUD 1.5 million annually.
- Rate: The payroll tax rate typically ranges from 4% to 6%, depending on the jurisdiction. For example, in New South Wales, the rate is 5.45%, while in Victoria, it is 4.85%.
4. Capital Gains Tax (CGT)

Capital Gains Tax (CGT) is a tax on the profit made from the sale of certain assets, such as real estate, shares, and business assets.
- Who Pays CGT: Both individuals and businesses are subject to CGT when they dispose of an asset and make a capital gain. The tax is calculated on the difference between the asset’s purchase price (or cost base) and the sale price.
- Exemptions: Primary residences are generally exempt from CGT (though there are exceptions), as are certain assets held for longer than 12 months, which may qualify for a 50% discount on the capital gain.
- Taxable Event: The tax is triggered when the asset is sold or otherwise disposed of, such as when it is gifted or transferred.
5. Fringe Benefits Tax (FBT)

Fringe Benefits Tax (FBT) is a tax paid by employers on certain non-cash benefits provided to their employees or associates. This tax is designed to capture benefits that are provided in lieu of salary or wages, such as company cars, low-interest loans, or subsidized housing.
- Who Pays: The employer is responsible for paying the FBT, not the employee. However, the cost of FBT can influence an employer’s decision to provide fringe benefits.
- Rate: The current FBT rate is 47%, which reflects the total grossed-up value of the benefits provided to employees.
6. Stamp Duty

Stamp duty is a tax levied by state and territory governments on certain legal documents and transactions, such as the transfer of property and vehicles.
- Property Stamp Duty: When purchasing property, buyers must pay stamp duty, which is calculated as a percentage of the property’s purchase price or market value. The rate varies between states and can be a progressive tax, where the rate increases as the property value rises.
- Vehicle Stamp Duty: Buyers of new or used vehicles must also pay stamp duty, based on the value of the vehicle or its market price.
7. Superannuation Contributions Tax

In Australia, superannuation is a system that requires employers to contribute a portion of employees’ wages into a superannuation fund to support the employee’s retirement. Contributions to super are taxed at a lower rate than ordinary income.
- Employer Contributions: Employers must contribute 11% of an employee’s earnings (as of 2023) into a superannuation fund. This is known as the Superannuation Guarantee (SG).
- Tax on Contributions: Contributions made by employers to employees’ super accounts are taxed at a flat rate of 15% for most people, which is lower than the individual income tax rates. However, individuals earning more than AUD 250,000 per year are subject to an additional 15% tax on contributions above this threshold.
Conclusion

Australia’s tax system is comprehensive and designed to cater to various aspects of personal, business, and economic activity. Understanding the different types of tax obligations—such as income tax, GST, payroll tax, and others—is essential for ensuring compliance with the law and minimizing the risk of penalties. For individuals, businesses, and investors alike, staying informed about the changing tax landscape and seeking professional advice when needed can help make the most of available tax deductions and exemptions, ultimately contributing to a more efficient and fair tax system for all Australians.

If you need assistance in makings sure which tax obligations are eligible for you, then please contact S & H Tax Accountants today. We have an excellent team of well-qualified, vastly experienced and very professional individuals. Book an appointment today with S & H Tax Accountants as we prioritise your growth, call us on 03 8759 5532 or you can email us on info@sahtax.com.au
24/01/2025
Launching a business? Ask these 9 questions

Starting a new business can be incredibly exciting, but it’s important to thoroughly evaluate your business idea before taking the plunge to ensure you’re creating a sustainable and successful venture. To get started, here are 9 questions to consider as part of an overall evaluation process.
Save yourself money, time, and heartache down the line by investing a little time now.

What customer problem does your business solve?

Your business should aim to solve a customer problem in a unique and innovative way. An idea can be cool or interesting, but that doesn’t necessarily mean that it can meet an existing need in the market.

If you can identify a problem that many people face and create a business that offers an effective solution, you have a much higher likelihood of success.

How well does this business fit the current market conditions?

External factors, such as changes in the economy or advances in technology, can have a huge impact on whether a business will thrive or fail. The rise of sharing and gig economy apps is a great example of this. These apps not only gave consumers more affordable options for daily tasks and errands, but also provided individuals with a new way to earn money on their own schedules.

Think about any new opportunities that may be available in the current economy and technological landscape.

What limitations will you encounter?

Costs may be high, requiring careful planning. It’s possible that you’ll need to educate your customers and convince them to adapt to your business before they’re ready to use it. And let’s not forget about the competition that already exists in the market.

Are there other businesses already doing what you want to do?

Find out what’s the closest thing to your business idea already in the marketplace and ask yourself, “Why is my business idea better?” It’s a tough question, but if you have a convincing response, you might just have a good idea.

Competitor research is key when evaluating your business idea. Knowing who your competitors are, how they operate, and what their strengths and weaknesses are will help you create a successful strategy.

What is your understanding of the current market and trends?

Study your market – How big is it? What are the demographics of your market? Who will be your target audience? How much of the market is already cornered by your competition? This will help you to really hone in on your target market.

What resources do you need to start your business?

Starting a business requires resources, including financial capital, intellectual property, and staff. Make sure you have the necessary resources lined up, or can access them easily before getting started.

Knowing what barriers to entry exist is important. These barriers could include high startup costs, tough competitors, or regulatory hurdles that may need to be overcome.

How will the business make money, and how long will it take?

Think about how your business will generate income, and how long it will take to get it to a point where it is self-sustaining. Will you be able to keep it afloat until it reaches that point?

What are the potential risks you face?

Not every business idea is a guaranteed success. There are always inherent risks involved in starting a new venture. Evaluating these risks and creating contingency plans to address them is an important part of the evaluation process.

Starting a new business will take long hours, hard work and sacrifices. You’ll have to pour money and time into getting the business off the ground, possibly at the expense of time with your family and friends and financial security. Make sure this is something you really want to do.

Who is on your team?

Assembling a great team is vital to starting a successful business. Think about the skill sets necessary for your business idea and start building a team that can bring it to life.

Not everyone is an expert at everything. So when evaluating a new business idea, you have to ask yourself whether you have the right skills to pull off launching and running the business, or who you can gather around you to support you.

You can’t do it alone!

Good luck

While it might seem that we asked you all these questions to deter you, what we really want is to help you think about what you’ll need to do to turn your idea into a successful business.

Considering these questions will leave you with a better understanding of the viability of your business idea and the steps needed to make it a success.

Set your business on the path to success – reach out to us today!

Starting a new business can be a little daunting, as there is so much to consider whilst doing it. Another factor to consider is the financial position, as it is important that a business has a stable financial position when it is commencing to operate. S & H Tax Accountants offer the service of a business consultation, our accountants are well qualified and vastly experienced. Thus are able to guide you in the correct way and help you to achieve the business of your dreams. Book an appointment today with S & H Tax Accountants, call us on 03 8759 5532 or email us on info@sahtax.com.au

16/08/2023
Mastering the basics: A guide to accounting principles for small business owners
As a small business owner, you know that managing your finances is crucial to the success of your business. But with so many accounting principles and practices out there, it can be challenging to know where to start. That’s where we come in! In this guide, we’ll break down the essential accounting principles that every small business owner should know. We’ll discuss how these principles can help you keep track of financial transactions, create accurate financial statements, and make informed decisions for your business. So, let’s dive in, shall we?

Why Are Accounting Principles Important for Small Businesses?

Accounting principles are the foundation for any successful business. They provide a uniform framework for recording and reporting financial transactions, ensuring consistency and accuracy in your financial records. By adhering to these principles, you’ll be able to:
- Make better financial decisions based on accurate and reliable data
- Monitor your business’s performance and identify areas for improvement
- Meet legal and regulatory requirements for financial reporting
- Build trust with investors, lenders, and other stakeholders
Let’s explore some of the key concepts you need to know.

IFRS: International Financial Reporting Standards

International Financial Reporting Standards (IRFS) – as the name implies – is an international standard developed by the International Accounting Standards Board (IASB).

IFRS is used in more than 110 countries around the world and is a set of principles that help companies around the world show their financial information in a clear and consistent way. Think of it like a common language for money matters, so everyone can understand and compare how businesses are doing financially, no matter which country they’re from.

Accrual Accounting vs. Cash Basis Accounting

When it comes to accounting methods, there are two main options: accrual accounting and cash basis accounting.

Accrual Accounting is the more widely accepted method, where you record transactions when they are earned or incurred, regardless of when cash changes hands. For example, if you invoice a client for services provided in December but don’t receive payment until January, you would record the revenue in December under accrual accounting.

Cash Basis Accounting, on the other hand, records transactions when cash is received or paid. In the example above, you would record the revenue in January when the payment is received.

Double-Entry Accounting: The Backbone of Financial Record-Keeping

Double-entry accounting is a fundamental accounting principle that requires every transaction to be recorded in at least two accounts: one as a debit and one as a credit. This system ensures that your books are always balanced and makes it easier to detect errors or discrepancies in your financial records.

Here’s a simple example: When you purchase inventory for your business, you would record the transaction as a debit to your inventory account and a credit to your cash account.

By using double-entry accounting, you’ll have a clear and accurate picture of your business’s financial position, allowing you to make better financial decisions.

Practical Examples and Case Studies

To illustrate how these accounting principles can be applied in practice, let’s look at a few real-life examples:
- Example 1: A local coffee shop owner uses accrual accounting to record sales and expenses. They track their daily sales and expenses, recording them as they are earned or incurred, rather than waiting for cash to change hands. This allows them to monitor their cash flow and make informed decisions about purchasing inventory, hiring staff, and investing in new equipment.
- Example 2: A freelance graphic designer uses cash basis accounting for their business. They record income when they receive payments from clients and expenses when they pay for software, supplies, or other business costs. This simple approach helps them stay on top of their cash flow and ensures they have enough money to cover their expenses.
Becoming knowledgeable in accounting principles has the power to transform the way you run your small business. A strong grasp on your financials enables you to make informed decisions and accelerate revenue growth.

If you need assistance, we’re here to help.

When choosing accounting methods, it is essential to choose the one that suits your business. As for small businesses, the cash-basis accounting method can be quite effective, however large businesses tend to use the accrual accounting method to manage their transactions. If your business needs assistance in deciding which accounting method would be more appropriate for them , please contact S & H Tax Accounting. Our team of accountants are well-qualified and rather experienced, we aim to provide the best service to our customers. Please book an appointment today, call us at 03 8759 5532 or you can email us at info@sahtax.com.au
05/06/2023
Managing Debt and Creating a Debt Repayment System

Debt can be a significant burden on one’s financial life. It can cause stress, anxiety, and make it difficult to achieve financial goals. However, with a little planning and dedication, anyone can create a debt repayment system and get on the path to financial freedom.

Here are some tips for managing debt and creating a debt repayment system:

Take Stock of Your Debt

The first step in managing debt is to understand the extent of the problem. Make a list of all the debts you have, including the balance owed, interest rate, and monthly payment. This will help you determine which debts to tackle first and give you a clear picture of your overall debt situation.

Focus on High-Interest Debt

High-interest debt, such as credit cards or personal loans, should be your top priority. These debts often have interest rates of 15% or higher, making them the most expensive debts to carry. By paying off high-interest debt first, you can save money on interest charges and free up more money to pay off other debts.

Create a Budget

To pay off debt, you need to free up money in your budget. A budget can help you track your expenses, identify areas where you can cut back, and allocate more money towards debt repayment. Be sure to include debt payments as a fixed expense in your budget, so you don’t fall behind on payments.

Consider Consolidating Debt

If you have multiple high-interest debts, consolidating them into one loan can make it easier to manage and potentially lower your interest rate. You can consolidate debt by taking out a personal loan or using a balance transfer credit card. Just be sure to compare interest rates and fees to ensure you’re getting a good deal.

Make Extra Payments

Making extra payments towards your debt can help you pay it off faster and save money on interest charges. Even small extra payments can make a big difference over time. Consider using any extra money you receive, such as a tax refund or bonus, towards debt repayment.

Automate Payments

Setting up automatic payments for your debt can help you stay on track and avoid late fees. Many lenders and credit card companies offer automatic payments, so you don’t have to worry about remembering to make a payment each month.

Stay Motivated

Paying off debt can be a long and challenging process, but staying motivated can help you stick to your debt repayment plan. Set small goals along the way, such as paying off a credit card or reaching a certain milestone, to help you stay on track.

In conclusion, managing debt and creating a debt repayment system requires discipline, dedication, and a plan. By taking stock of your debt, starting with high-interest debt, creating a budget, considering consolidating debt, making extra payments, automating payments, and staying motivated, you can pay off debt and achieve financial freedom. Remember, it’s never too late to start, and every small step towards debt repayment counts.

We understand that managing your debt can be difficult and tiring. To relief your stress, contact S & H Tax Accountants. We are a local accounting firm that is known as one the best firms in Cranbourne. We have excellent staff, that can help make a debt repayment system, as our accountants are well-qualified and experienced. Make a booking today at S & H Tax Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

01/05/2023
Essential steps to managing your family’s finances

Managing family finances can be a daunting task, but with the right tools and mindset, it can be a smooth and effective experience. Here are some essential steps for managing your family’s finances, including budgeting, saving, and planning for the future.

Budgeting

Budgeting is the cornerstone of managing family finances. It involves creating a spending plan that outlines your family’s income and expenses. A budget helps you to keep track of your finances, avoid overspending, and save for the future. Here are some steps to follow when creating a budget:

Calculate your monthly income: This includes your salary, any rental or investment income, and any other sources of income.

List your monthly expenses: This includes your rent or mortgage payment, utility bills, groceries, transportation, entertainment, and any other expenses.

Determine your discretionary income: This is the amount of money you have left after deducting your expenses from your income.

Decide which expenses are most important: Allocate your discretionary income to your most important expenses first, such as savings, debt repayment, and emergencies. Any money left over after that can go to non-essential expenses.

Track your spending: Keep track of your expenses to ensure you stick to your budget. If you’re not sticking to your budget, identify areas where you could make adjustments. It’s possible you need to spend less, or maybe you can take on a side hustle for a while.

Saving

Saving is an essential part of managing family finances. It involves setting aside money for emergencies, retirement, education, and other long-term goals. Here are some tips to help you save more:

Start small: Even if you can only save a small amount each month, it will add up over time. Even $10 a month to start adds up if you keep doing it. Once you’re used to setting aside $10 a month, see if you can put aside $20 a month.

Make saving a priority: Set up automatic transfers from your checking account to your savings account each month. This way, you don’t have to think about it.

Cut back on expenses: Look for ways to reduce your expenses, such as eating out less or unsubscribing from services you don’t use.

Use savings apps: There are several savings apps that can help you save money effortlessly. Research which will work best for you.

Set savings goals: Setting specific savings goals can help motivate you to save more. As with above, you don’t have to start out with a huge goal. Start with a smaller goal that you can attain and build from there.

Planning for the future

Planning for the future is an essential part of managing family finances. It involves setting long-term goals and creating a plan to achieve them. Here are some steps to follow when planning for the future:

Set financial goals: Determine what you want to achieve financially, such as paying off debt, saving for retirement, or buying a home.

Create a financial plan: Develop a plan that outlines how you will achieve your financial goals, including how much money you need to save each month and how you will invest your money.

Invest wisely: Make sure you invest your money in a way that aligns with your financial goals and risk tolerance.

Review your plan regularly: Review your financial plan regularly to ensure you are on track to achieve your goals.

Seek professional advice: If you are unsure about how to create a financial plan, consider seeking the advice of a financial planner. They can help you determine which goals are a priority, how to best allocate your money, and strategies for investing for your future.

In conclusion, managing family finances involves budgeting, saving, and planning for the future. By following these essential steps, you can ensure that your family’s financial future is secure. Remember, it’s never too late to start managing your family’s finances, so start today!

At S & H Tax Accountants, we are aware that managing family finances can be extremely tiring and daunting. At S & H Tax Accountants, we provide you with best possible service, as we have well-qualified and experienced accountants. They can help you create a financial plan and guide you in making a budget. BOOK TODAY at S & H Tax Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

24/04/2023
Using financial reconciliation to keep your business on track

As a small business owner, you’re likely already aware of the importance of keeping your finances in order. Financial management goes deeper than paying your bills on time and collecting on invoices (although those are also important). It involves regularly checking up on your financial situation to make sure your accounts are in order, your records are up-to-date, and you’re spending within your budget.

Among those activities, financial reconciliation plays a vital role in keeping your finances–and your business–on track.

Here’s what you should know about financial reconciliation and how it can help your business.

What is financial reconciliation?

Financial reconciliation is a process of ensuring your financial records are consistent and accurate. Basically, when you conduct a financial reconciliation, you review financial statements and compare them with your bank statements, credit card statements, vendor statements, and other relevant financial records, such as invoices.

As you do this, you’ll look for any errors or discrepancies–for example if a payment appears on your bank statement but not your accounting records, or if the payments show as being for different amounts on different records. When you conduct a financial reconciliation, you want to make sure that the money in your bank account matches the money your financial documents show you should have.

Discrepancies need to be addressed or you’ll wind up with financial information that isn’t accurate, which affects your cash flow and your ability to make financial decisions. If the discrepancy involves an ongoing payment–to you or to a vendor–catching it early could save you a lot of money.

The goal of financial reconciliation is to ensure all financial transactions are recorded accurately and thoroughly in your accounting system. That way, you know exactly how much money you have and how much is moving into and out of your business, and you can make informed financial decisions.

Types of financial reconciliation

Every business has different reconciliation needs, depending on how big it is and how many and what types of transactions it has.

Bank reconciliation involves your business’s bank statement to your accounting records to ensure that all transactions have been recorded correctly. You’re looking here to make sure that the bottom line of your bank statement matches your bank account balance. If not, you’ll want to determine why. Is there an automatic withdrawal that hasn’t yet been posted to your account? If so, you need to be aware of it to prevent yourself from over-drawing on your account.

Credit card reconciliation involves reconciling your business’s credit card statements with your accounting records to ensure that all charges have been recorded accurately. This is similar to a bank reconciliation in that you need to know exactly how much you’ve spent on your credit card–including pending transactions–so you know how much you have available to you.

You can also conduct vendor statement reconciliation, where you examine your vendor statements against your accounting records to ensure all invoices have been paid and recorded accurately. This can prevent any errors in paying your vendors.

If you have two units of business or more–such as divisions, subsidiaries, or franchises, you’ll need to conduct intercompany reconciliation. This is where you compare financial records between two or more companies to ensure transactions are recorded accurately and consistently.

Why you need financial reconciliation

Financial reconciliation is a vital tool that helps you manage your business more effectively. It ensures your financial records are accurate, complete, and up-to-date. This prevents errors or discrepancies that could lead to financial losses, or legal or compliance issues.

It can also help identify any fraudulent activity or transactions you did not approve, protecting you against fraud and lessening the risk of financial losses. If you have numerous transactions that are difficult to keep track of, regular financial reconciliation prevents accidental overspending or missed payments that could ultimately affect your relationships with vendors.

As mentioned above, many businesses are required to comply with financial regulations and reporting requirements. Financial reconciliation helps ensure that your business is in compliance with these requirements. If you’re not compliant, you can take measures to address the issue quickly, before it gets out of control.

How to conduct financial reconciliation

If you’re looking to establish a solid, repeatable process, these are a few steps you can take:

Step 1: Identify what types of financial reconciliation you need to perform.

Step 2: Establish roles and responsibilities for each team member involved in the process. Make sure everyone knows and understands what they are responsible for and when.

Step 3: Create a schedule for conducting financial reconciliation on a regular basis. This may vary depending on the size of your business, and you may conduct different types of reconciliation on different schedules, depending on your unique business needs.

Step 4: Ensure all financial data is easily accessible to those who need it. Each time you conduct a financial reconciliation, make sure you have all relevant documentation and data needed. Cloud accounting software can help you manage your reconciliation.

Step 5: Conduct the reconciliation: Compare your financial statements to your accounting records to identify discrepancies or errors.

Step 6: Investigate and resolve discrepancies: If you find errors or inconsistencies, look into them and do what you can to resolve them. You may have to hunt down additional paperwork, contact vendors to discuss payments, or reach out to your bank or credit card issuer.

Final thoughts

As a business owner, you’ll need to make vital decisions to move your business forward. Accurate financial records enable you to make those decisions based on your cash flow and current financial standing.

If you have questions about financial reconciliation or other important financial aspects of your business, please reach out to us. We’re always happy to answer questions and show you how we can make your business management easier.

Making sure that your financial records are accurate and consistent, can be a tough job, however our team at S & H Tax Accountants are able to do that for you. Our team consists of well qualified and experienced staff members that can guide you on how to conduct your financial reconciliation. S & H Tax Accountants would love to assist you in any questions that you might have. Book an appointment today at S & H Tax Accountants, call us at 03 8759 5532 or email us at info@sahtax.com.au.

27/03/2023
Avoiding bankruptcy: Top reasons it happens and ways to prevent it
Starting a business is not for the faint of heart. A certain level of stress comes with carrying the responsibility of ensuring your company’s success. If things go wrong, it all falls back on you. That said, the freedom and sense of accomplishment of running your own business make the challenges well worth it.

With good planning and strong business practices, you can avoid the pitfalls and drive your business to financial success. Learn the top reasons why small businesses end up in bankruptcy and what you can do to prevent that from happening to you.

Poor cash flow

Not bringing enough money in is the main reason why businesses fail. You simply must have more money coming in than is going out, or you’re on the express train to bankruptcy. This might mean increasing your prices or decreasing your costs, or a combination of the two. There might also be different service models you can offer (such as subscription services) or ways to branch out your income.

Work with an accountant or bookkeeper to help you identify issues with your cash flow as soon as you know there’s a problem–or to prevent one before it happens. The earlier you catch a cash flow problem, the better.

Insufficient initial funding

Don’t rely solely on credit to fund your business. If you start in a deficit, climbing out of debt and becoming cash positive will be much harder. It can also be challenging to break the habit of throwing capital investments on credit in an attempt to start making money.

Explore all of your options for initial funding. Make sure you have more than enough funding to start your business off on the right foot.

Difficult market conditions

Economic recessions or depressions can negatively affect businesses, especially those relying heavily on consumer spending. Unfortunately, there’s not much anyone can do about a poor economic climate but try to budget for the ebbs and flows of the market so you have breathing room if times get tough.

An emergency account with money set aside for unexpected situations will at least give you some cash to survive on if things take a downturn.

Poor financial management

Finances can get complicated, which is why you need to make sure you’re on top of things. Failing to keep accurate financial records, not managing expenses effectively, and not correctly forecasting future revenues and costs are all issues that could hurt you financially.

Work with an accountant, bookkeeper or advisor if you’re having difficulty managing your finances. They can help you set a plan and show you how to ensure your money is best used.

Lack of market research

If you can’t compete with your rivals, your business may struggle to generate enough revenue to stay afloat. This problem typically comes back to a lack of market research.

An entrepreneur jumps into a market they’re passionate about, only to discover that somebody else is already offering the same thing – and they’ve already got the market cornered. Or maybe there’s no need for that particular product or service at all.

Do your market research before going into business, and before offering a new product or service. The results will tell you whether there’s a need for what you’re offering.

Legal issues

Lawsuits, fines, and penalties can be costly for businesses, draining their financial resources. The best way to avoid this is to ensure you’re familiar with the rules and regulations you must follow or get help from a professional advisor when necessary. An ounce of prevention is worth a pound of cure.

How to avoid bankruptcy

While the reasons businesses end up going bankrupt may seem numerous, there are some specific things you can do to make sure it doesn’t happen to you, such as:
- Maintain accurate financial records and regularly review your business’s performance.
- Develop a solid business plan that includes realistic revenue and expense projections.
- Diversify your business’s revenue streams to reduce reliance on a single source of income.
- Stay current on industry trends and market changes.
- Reduce unnecessary expenses and manage costs effectively.
- Seek professional advice from accountants, lawyers, and business consultants when necessary.
- Build up an emergency fund to help your business weather tough times.
- Avoid taking on too much debt and manage what you already have effectively.
By taking these steps, you can reduce the risk of bankruptcy and increase the chances of long-term success.

Final thoughts

A business might end up in bankruptcy for many reasons, but a bit of planning goes a long way. Do your research, be honest when you need help, and work with a financial professional to help you stay profitable. [Contact us] to further discuss how you can protect your business and learn how we can help.

If you are thinking of starting a new business but may have some concerns in mind such as financial success please contact S & H Tax Accountants. We are a local Accounting Firm, that has achieved great success with out clients. We have wonderful and experienced staff members who are able to assist you in issues regarding Cash Flow, Initial funding or even Financial Management. Please contact us on 03 8759 5532 or email us on info@sahtax.com.au.
23/03/2023
Federal Budget 2022: What it means for you
Treasurer Josh Frydenberg has released the 2022 Federal Budget ahead of a Federal election in a few months. This article has a summary of the “Winners and Losers” of the Budget and we’ve compiled a recap of the key points below. Get in touch with us if you have any questions.

A Quick Overview
- Due to soaring fuel prices, the fuel excise tax will be cut in half, saving motorists 22 cents per litre.
- Low-and middle-income earners will receive an extra $420 back on their tax returns to help with the increased cost of living.
- The low and middle tax offset means qualifying individuals may get up to $1500 back at tax time. This is “temporary and targeted” assistance for certain individuals.
- Pensioners, carers, veterans, job seekers and other concession card holders will receive a one-off payment of $250.
- Wages are not forecast to grow until later this year due to higher-than-expected inflation which will continue to put pressure on the cost of living.
- Big changes to the government’s Paid Parental Leave program including “Dad and Partner Pay” now combined with “Parental Leave Pay”, extended to 20 weeks and able to be shared between partners.
- Regional Australia will benefit from investments in infrastructure projects including port and road upgrades, dams and logistics hubs and the “Regional Accelerator Program” to improve supply chains.
- The first home buyers scheme expands so people only need to have a 5% deposit to buy a house with no lenders mortgage insurance (LMI).
- 50% reduction to minimum drawdown rate for pension accounts extended to 30 June 2023.
- Half a billion dollars allocated for the National Mental Health and Suicide Prevention Plan.
- New apprentice incentive scheme to replace the one ending 30 June.
- Tax break for farmers who make money by selling carbon credits.
- $1 billion for the Great Barrier Reef, $53 million for koala conservation as well as funding for National Parks and planting trees for the Queen’s platinum jubilee.
- Subsidies for vocational education and training places for aged care workers.
- Funding to boost Australia’s cybersecurity and intelligence capabilities.
- Funding for Indigenous Rangers including encouraging women to begin work as rangers.
- Extra places for Afghan nationals and temporary humanitarian visas for up to 3 years for Ukrainian refugees.
- Expanded task force to target tax avoidance by multinationals, large public and trust groups and wealthy individuals.
Fuel Tax Cuts

In a bid to bring down the soaring price of petrol, the government is cutting the tax levied on fuel in half. The war in Ukraine has caused an increase in oil prices and with some stations charging more than $2.20 a litre for petrol. The cut will last 6 months and will save motorists 22c per litre. The ACCC will keep an eye on fuel prices to make sure this is passed on.

Tax Offsets

Pensioners, carers, veterans, job seekers and other eligible concession cardholders will receive a one-off payment of $250 to help with the cost of living. This is estimated to go to 6 million people.

Low-and middle-income earners will receive $420 back on their tax returns to help with the cost of living. Plus the temporary low and middle tax offset will mean $1500 back at tax time for qualifying individuals.

Wages

Wages are not forecast to grow until later this year due to inflation. This means cost of living pressures will continue for the meantime.

Paid Parental Leave

The Paid Parental Leave (PPL) scheme will have some changes. Instead of offering two separate payments — two weeks of “Dad and Partner Pay” and 18 weeks of “Parental Leave Pay” — these will now be combined, meaning parents can choose to split the leave between them however they’d like.

Single parents will also be able to access the full 20 weeks of leave.

The income test will be adjusted to include a household income threshold of $350,000 a year.

Regional Australia

Billions have been set aside to help Regional Australia with “nation-building infrastructure projects”. The funding may go towards everything from upgrading ports and roads to building dams and logistics hubs and certain regions.

A “Regional Accelerator Program” will bring together schemes designed to improve skills, education and supply chains in Regional Australia.

First home buyers

The first home buyers scheme expands so people only need to have a 5% deposit to buy a house with no lenders mortgage insurance (LMI). The number of places will increase to 35,000 but there are rules on eligibility.

Mental Health

Half a billion dollars has been allocated for the National Mentional Health and Suicide Prevention Plan. Those on a mental health plan will again receive an additional 10 partially-Medicare subsidised visits to a psychologist, as was first announced during the pandemic.

Apprentices

A new incentive scheme will be created to encourage businesses to take on apprentices and hand new apprentices some cash.

The Boosting Apprenticeship Commencement scheme will end on June 30. The Australian Apprenticeships Incentive Scheme will replace it but will offer lower wage subsidies and only for “priority” occupations. The priority list hasn’t been announced just yet.

Farmers

Farmers that make money by selling carbon credits will receive a tax break.

The Environment

The big spend here is $1 billion for the Great Barrier Reef, particularly water quality, reef management and research. There’s also $53 million for koala conservation as well as funding for National Parks and planting trees for the Queen’s platinum jubilee.

$60 million has been added to the government’s recycling fund in order to find new and innovative ways to make recycling more efficient. The funding is to develop “advanced plastic recycling technology” which will better recycle soft plastics like chip packets. This will contribute to the government’s target to have 70% of plastic packaging recycled or composted by 2025.

Aged Care

Last year’s budget included $17.7 billion for aged care. This year includes subsidies for 15,000 vocational education and training places for the aged care workforce (both existing and new to the sector).

Cyber

A significant part of the budget has been allocated towards boosting Australia’s cybersecurity and intelligence through data analysts, computer programmers and software engineers.

The government has warned about potential cyber attacks from China and Russia and has urged businesses to update their systems to defend against future attacks.

Indigenous Rangers

The government will spend more than $636 million to create around 2,000 more ranger jobs by 2028 in regional and remote parts of the country. The funding will also encourage more Indigenous women to begin working as rangers.

Refugees

Australia’s humanitarian program will have extra places for 16,500 Afghan nationals and temporary humanitarian visas for up to 3 years for Ukrainian refugees.

Tax Avoiders

There’s also funding for an expanded task force to target tax avoidance by multinationals, large public and trust groups and wealthy individuals.

Get in touch

Got a question about how this budget will affect you? Get in touch with us today. We’ll keep you updated as more information is released. S & H TAx Accountants Cranbourne are here for help.
31/03/2022
How to Build an Effective Financial Plan for Your Business
Every business needs a financial plan. Your financial plan gives you a way to monitor and review your cash flow, make adjustments to your spending, and anticipate any upcoming financial issues. It can also make you more prepared to request funding or find investors so you can bring more money into your business.

Although many business owners are aware that financial planning is important, it is often overlooked. Without a financial plan, however, you could find your business doesn’t make the money you expected it to—or you could wind up with unanticipated expenses and no way of paying for them.

Here are some steps to take to build an effective financial plan for your business.

1. Set your goals

You need to know where your business is now and where you want it to be so you can develop a financial strategy to move forward. At least once a year, ask yourself important questions so you can plan for what’s to come. Among the questions to ask:
- Do I need to expand or grow my business (in terms of staff, locations, or goods and services)?
- Do I need to make any large equipment purchases?
- What resources might I need to buy this year?
- How will any purchases or expansions affect my cash flow?
- What adjustments might be needed to address these expenses?
2. Understand your cash flow

To build an effective financial plan for your business, you must understand your cash flow. Your cash flow is the movement of cash into and out of your business. If you have more money coming in than going out, you have a positive cash flow situation and are able to pay your expenses. If more money is going out than coming in, you are in a negative cash flow situation and need to bring in more money.

Understanding cash flow—including sales cycles—will help you build a plan for your business. If your business is seasonal, for example, it helps to know when sales drop and for how long, so you can plan for those periods. You can also anticipate when sales will be higher and you’ll have extra money to set aside for emergency expenses.

Remember that cash flow and profitability aren’t the same thing. Your business can be profitable, but if none of your clients are paying you on time you won’t have necessary cash flow to stay afloat.

3. Create a sales projection

An important part of your plan is your sales projection. This is related to your cash flow forecast, but focuses on your sales. It gives you insight into every segment of your business so you can better understand which of your offerings brings in the highest sales. For example, if you run a gym you might break down your sales forecasts into the different membership types.

When you forecast your sales, make sure you include the cost of goods sold so you can determine your forecasted growth margin. This information will help you determine which of your offerings are most profitable and which should be revised to increase your profits.

4. Talk to an expert

It’s not important for you to have all the answers for your business, but you have to be willing to talk to people who have the information you need. Once you know your current situation and what your goals are, talk to an accountant or financial expert to figure out your next steps.

Experts can help you make sense of your financial situation and how to move forward—whether that’s the best use of your profits or getting yourself out of a negative cash flow situation. They can offer you effective solutions you may not have considered, or help you revise your plan so it’s more realistic.

5. Monitor your progress

Throughout the year, take a look at your plan and your projections to ensure you’re still on track. If things are progressing as you expected, great. If not, explore how you can address the situation before financial problems become unmanageable.

Final thoughts

Creating a financial plan may feel overwhelming, but by having a clear picture of your goals, your current situation, and your progress, you can write an effective financial plan that increases your chances of success.
26/07/2021