SMSF & Superannuation

Why High Income Earners Choose SMSFs

superannuation eggs

Juston Jirwander

Juston Jirwander


In the realm of personal finance and retirement planning, high-income earners in Australia often gravitate towards a distinctive vehicle known as a Self-Managed Superannuation Fund (SMSF). But what is it about SMSFs that make them so appealing to high-income earners? In this article, we’ll delve into the strategic reasoning behind their inclination towards SMSFs, incorporating insights from the Australian Taxation Office (ATO) guidelines and relevant financial literature.

What is an SMSF?

Before delving further into why high-income earners are drawn to Self-Managed Superannuation Funds (SMSFs), it’s essential to understand what an SMSF is and how it functions.

Firstly, a Superannuation Fund in simple terms is a low-taxed investment entity taxed between 0% and 15% depending on a number of factors. The reason for the superfund to be low taxing is so it can accumulate wealth effectively to support its members through to retirement and hopefully not rely on a government-funded pension.

An SMSF, short for Self-Managed Superannuation Fund, is a type of superannuation fund in Australia. What sets it apart from other super funds is the level of control and responsibility it offers its members, who also act as trustees. In an SMSF, members are responsible for making investment decisions, managing fund assets, and ensuring compliance with regulations.

According to the Australian Taxation Office, as of June 30, 2022:

  • The number of SMSFs had surpassed 603,000, reflecting a 4% increase compared to the previous year and an impressive 8% growth over the five-year period from 2017 to 2018.
  • These SMSFs had a total membership exceeding 1.123 million individuals.
  • Collectively, SMSFs held a substantial $868.7 billion, accounting for 26% of the staggering $3.3 trillion in super assets under management.

So, what makes an SMSF so attractive to high-income earners? There are several key benefits to choosing this type of super fund, from securing more financial control to assisting with estate planning and intergenerational wealth management. If you’re a high-income earner for tax purposes and considering switching to an SMSF, you’ll want to consider the following points.

The Strategic Control Advantage

One of the primary motivations driving high-income earners to establish SMSFs is the unparalleled level of control they offer. An SMSF allows members to tailor their investment portfolio according to their individual risk tolerance, financial goals, and market outlook.

This level of customisation stands in stark contrast to traditional superannuation funds, where investment decisions are often made by professional fund managers. By exercising direct control over investment choices, high-income earners feel they can optimise returns and better manage risk exposure.

ATO Guidelines and Regulatory Framework

The Australian Taxation Office provides comprehensive guidelines and regulations that govern the establishment and operation of SMSFs. These guidelines ensure that SMSFs operate within the boundaries of the law while affording members the autonomy to make strategic investment decisions.

High-income earners are drawn to SMSFs due to the flexibility these guidelines offer, enabling them to explore a wide range of investment options, including shares, property, managed funds, and more.

The ATO also has a range of helpful SMSF resources, which are worth looking at if you’re considering making the switch.

piggy bank wealth accumulationTax Efficiency and Wealth Accumulation

Another compelling reason for high-income earners to embrace SMSFs is the potential for enhanced tax efficiency. The ATO guidelines stipulate that SMSFs enjoy concessional tax rates, particularly in the context of capital gains and income derived from investments.

This tax advantage can significantly amplify wealth accumulation over the long term, making SMSFs an appealing vehicle for high-income earners seeking to maximise their retirement savings.

Alongside an SMSF, there are several other clever ways to create efficiencies and reduce your taxable income if you’re a high-income earner. Combined with the proper management of your SMSF, you’ll be well-established for a very solid retirement bank.

Diversification and Risk Mitigation

The famous quote by Warren Buffett, “Don’t put all your eggs in one basket,” encapsulates a core principle of investment strategy. High-income earners recognise the wisdom of diversification, and SMSFs offer them a versatile platform to achieve it.

By gaining direct control over asset allocation, SMSF members can spread their investments across different asset classes, industries, and geographic regions. This diversification strategy is a pivotal component of risk mitigation, as it helps protect the retirement nest egg from the volatility inherent in financial markets.

Estate Planning and Intergenerational Wealth Transfer

SMSFs also hold a strategic advantage in the realm of estate planning and intergenerational wealth transfer. High-income earners appreciate the ability to create a tailored estate plan that aligns with their family’s unique dynamics, values, and financial aspirations.

Death Tax Notice

It’s important to make sure that there are strategies in place to reduce the possible Death Tax that can be applied to independent adult children who receive proceeds of superannuation on the death of a member. We highly recommend reading one our recent article “Death Tax” also known as Inheritance Tax to learn more about these strategies.

We understand this area of estate planning and wealth transfer can be difficult to navigate, so please reach out to one of our friendly team members for expert assistance and compassionate care.

Challenges and Considerations

While SMSFs offer a plethora of strategic benefits, they also entail certain challenges and responsibilities. High-income earners must diligently adhere to the ATO guidelines, including strict reporting and auditing requirements.

The burden of compliance and administrative tasks can be demanding, necessitating a keen attention to detail and a thorough understanding of the regulatory landscape. It’s imperative that individuals considering an SMSF undertake comprehensive due diligence and seek professional advice to ensure optimal decision-making.

If you’re concerned, it might also be a good idea to get tax audit insurance to protect yourself against the potential risks.

An SMSF Example

To illustrate the attractiveness of SMSFs as a vehicle for retirement planning among high-income earners, let’s consider a hypothetical scenario. Meet Lucy and Bruce, a high-earning couple with a combined amount of $700,000 in their retail super fund. They speak to their financial advisor about their desire to purchase property within their SMSF. After consulting with their trusted accounting firm, Bishop Collins, they decide to set up and manage their SMSF effectively. With the assistance of a Specialist Broker, they successfully borrow $800,000 through a Low Recourse Borrowing Arrangement (LRBA) via a Bare Trust.

Lucy and Bruce purchase a property in Byron Bay, where they plan to retire in ten years. Over this time, the property’s value appreciates to $3 million, resulting in a capital gain of $1.5 million. If this property were held in their individual names and assuming they were on the top marginal tax rate, the capital gain would be taxed at 47%, amounting to $352,500. However, under the SMSF structure, they place their fund into Pension phase and transfer the property to themselves, resulting in a tax-free gain of $1.5 million.

Yes, you read that correctly. $1.5 million completely tax-free.

While the entire process isn’t quite as simple as that (we wanted to save you the boredom of nitty-gritty details), the general picture is very accurate. This tax efficiency showcases why high-income earners often choose SMSFs for their property purchases in retirement, and why it should be very closely considered as your super strategy if you’re earning a higher-level income.

meet with an accountant at Bishop CollinsThe Bottom Line of SMSFs

High-income earners in Australia opt for SMSFs as a strategic tool for retirement planning due to the unprecedented control, tax efficiency, diversification opportunities, and estate planning advantages they offer.

While SMSFs come with responsibilities and complexities, the potential for long-term wealth accumulation and financial security makes them a compelling choice. As high-income earners navigate their financial journeys, SMSFs continue to serve as a valuable asset in their pursuit of a comfortable and prosperous retirement.

Before making any financial decisions, including the establishment of an SMSF, you should seek professional advice from a Financial Planner to ensure this type of investment strategy meets with your investment goals. If you wish to purchase property of your choice in a super fund then a SMSF is your only option. At Bishop Collins, we can provide you with expert assistance and guidance on navigating the setup and management of your SMSF. Contact our team today to discuss your options and start taking control of your finances in the best way possible.

Interested in taking the next step with your SMSF? Check out our ultimate guide to setting up a Self-Managed Super Fund.

Taxation & Tax Tips

What’s the Difference Between Cash and Accrual Accounting?


Juston Jirwander

Juston Jirwander


Warren Buffett, the legendary investor, once remarked, “Accounting is the language of business.” In the context of cash and accrual accounting, this quote underscores the essential role that accounting plays in conveying a company’s financial reality. Cash accounting speaks to the immediate availability of cash resources, while accrual accounting speaks to the broader economic activities that shape a company’s financial position.

In the realm of financial accounting, cash accounting and accrual accounting form the bedrock upon which businesses measure their economic activities and report financial performance. Each methodology offers distinct insights into a company’s financial position and transactions. This article will cover the nuances of cash and accrual accounting, unravelling their differences, benefits, and limitations. So, let’s unpack the difference between accrual and cash accounting.

cash-flow-to-represent-cash-accountingCash Accounting: A Snapshot of Present Finances

Imagine a quiet moment frozen in a bustling city, a snapshot capturing the essence of a vibrant street. Cash accounting, in the realm of finances, operates much the same way – freezing financial transactions into a single frame that represents a company’s immediate monetary movements. It’s like catching a single raindrop in mid-air amidst a storm of economic activities.

At its core, cash accounting is a pragmatic approach that revolves around actual cash inflows and outflows. When revenue comes knocking at the door in the form of tangible cash, it’s recorded as earned. Similarly, when expenses depart from the coffers, they’re noted as paid. This approach creates a clear depiction of a company’s liquidity and its aptitude in handling immediate financial responsibilities.

Pros of Cash Accounting: Uncomplicated Financial Insights

1. Simplicity: Easy Passage to Financial Clarity

For small businesses, especially those stepping into the realm of entrepreneurship for the first time, the allure of simplicity is magnetic. Cash accounting offers a straightforward approach that doesn’t demand an advanced degree in accounting to comprehend. The absence of intricate rules and elaborate procedures means that you can focus on the growth and prosperity of your business.

With cash accounting, financial reporting becomes a breeze. It minimises the complexities of accounting and translates them into an easily understood language. Small business owners can navigate through their financial data without getting entangled in the jargon, effortlessly grasping the inflows and outflows that shape their financial journey.

2. Immediate Tracking: Capturing the Rhythm of Transactions

In the realm of finances, timing can be everything – like capturing the exact moment a wave kisses the shore. Cash accounting offers this sense of immediacy, allowing you to record transactions as they occur. Picture it as a synchronised dance between your business and its financial activities, each step leaving a trace in the sands of your financial records.

The advantage of immediate tracking extends beyond mere record-keeping; it’s a tool for strategic decision-making. When a payment arrives from a customer, it’s recorded promptly. Similarly, when expenses are paid, they’re immediately noted. This real-time tracking ensures that your financial dashboard remains up-to-date, allowing you to gauge your business’s cash position at any given moment. Cash accounting becomes your financial GPS, providing accurate coordinates of your business’s financial journey.

Cons of Cash Accounting: The Shadows in Simplicity

1. Incomplete Picture: Ignoring the Symphony of Obligations

Cash accounting offers simplicity, but with it comes a trade-off – the sacrifice of a complete financial portrait. Imagine standing in front of a grand masterpiece, but only seeing a fraction of its intricate details. Similarly, cash accounting provides a snapshot of your business’s financial moment, but it can cast shadows over crucial aspects that shape its destiny.

The complexity of business extends beyond the immediate inflows and outflows of cash. It involves a symphony of obligations that resonate beyond the present moment. While cash accounting captures the stars of the financial show, it often leaves the supporting cast hidden behind the curtain. Long-term commitments, future debts, and impending expenses remain backstage, waiting for their cue. This is a key difference between accrual and cash accounting that must be considered.

2. Timing Mismatch: When Notes Fall Out of Tune

Picture yourself conducting an orchestra, each note resonating in perfect harmony. Now, envision one section of the orchestra playing out of sync – a discordant note that disrupts the entire composition. Cash accounting, in its pursuit of simplicity, can sometimes introduce a timing mismatch, creating dissonance between revenue recognition and the actual delivery of goods or services.

In the realm of business, revenue is often earned before the curtain rises on the performance. Cash accounting might record this revenue upfront, creating a discordant note between the cash inflow and the actual service provided.

This timing mismatch can lead to distorted financial performances, like a symphony with intermittent off-key notes. The financial reports may showcase peaks and valleys that don’t align with the business’s operational reality. Such inconsistencies can complicate accurate trend analysis, obscuring insights that are vital for strategic planning and decision-making.

glass-wall-with-words-the-big-pictureAccrual Accounting: A Holistic View of Financial Realities

In contrast, accrual accounting provides an expansive vista of a company’s financial terrain. It acknowledges revenues upon their earned status and expenses as they are incurred, regardless of cash flow considerations. This is a major difference between accrual and cash accounting in that this approach provides a more comprehensive understanding of a business’s financial activities.

Pros of Accrual Accounting: Painting a Comprehensive Financial Landscape

1. Holistic Picture: Illuminating the Financial Horizon

Accrual accounting goes beyond the instant snapshot of cash movements and delves into the intricate tapestry of a business’s financial story. It’s like stepping back from a canvas to appreciate the entire masterpiece, each brushstroke contributing to the grand narrative. With accrual accounting, the focus shifts from the immediate cash flow to encompass the broader canvas of current and future financial obligations. This holistic perspective offers a clearer vantage point for decision-making.

2. Matching Principle: Weaving Threads of Financial Synchrony

In the realm of business, revenue and expenses dance in a delicate choreography. Accrual accounting, with its matching principle, ensures that this dance is harmonious and synchronised. It’s akin to a skilled conductor orchestrating a symphony, ensuring that each instrument plays its part at the right time. This principle aligns revenues with their associated expenses, creating a clear link between cause and effect.

Let’s use a manufacturing company as an example. When a product is produced, accrual accounting captures not only the cost of materials and labor but also the indirect costs, like depreciation of machinery or rent for the production facility. These expenses are matched against the revenue generated when the product is sold. This synchronisation provides a precise calculation of the profit earned from each sale, offering insights into the actual profitability of the business’s endeavors.

Cons of Accrual Accounting: Navigating Complexity and Timing

Complexity: Unveiling the Layers of Financial Interpretation

While accrual accounting unveils a more complete financial tapestry, its intricate threads can sometimes lead to a complex weave. This is where we hit another major difference between cash and accrual accounting. The inclusion of non-cash items and the necessity to estimate unearned revenue and incurred expenses add layers of sophistication to the accounting process.

Consider a construction project where services are provided over several months. Accrual accounting requires estimating the proportion of work completed and recognising the corresponding revenue even before the final invoice is settled. While this precision enhances financial reporting, it can also introduce complexity.

However, complexity doesn’t necessarily equate to chaos. Just as a complex dance routine showcases a dancer’s skill and artistry, navigating the complexities of accrual accounting highlights a business’s financial acumen. It’s a testament to a company’s ability to decipher intricate financial movements and present them as a cohesive narrative.

Delayed Insight: Timing and Decision-making

In the realm of business, timing is often the conductor that orchestrates operational decisions. Accrual accounting introduces a subtle delay in reflecting cash movements, which could impact short-term decision-making.

This symphony of timing can sometimes lead to a dissonance between cash movements and financial reporting. A business might have a successful month in terms of sales but face cash shortages due to delayed payments. Accrual accounting’s delayed insight could impact short-term operational decisions, prompting businesses to fine-tune their cash flow management strategies.

It’s important to note that this delay doesn’t undermine the accuracy of accrual accounting – it simply adds a layer of nuance to the rhythm of financial reporting. Just as a symphony’s timing creates suspense and anticipation, accrual accounting’s delayed insight prompts businesses to harmonise their cash flow orchestration.

In essence, the cons of accrual accounting showcase the multifaceted nature of financial interpretation. Complexity and timing intricacies are not roadblocks; they are pathways to a more sophisticated understanding of a business’s financial symphony. Embracing these nuances allows companies to navigate revenue and expenses with finesse and precision.

Comparative Analysis: Timing Makes All the Difference

The key difference between accrual and cash accounting is all about the timing of revenue and expense recognition. Cash accounting emphasises actual cash inflows and outflows, focusing on the present moment. Accrual accounting, on the other hand, captures economic events as they occur, regardless of cash movements, painting a more comprehensive and forward-looking financial picture.

Imagine cash accounting as a pie-eating contest: you only count the pies you’ve already swallowed, ignoring the ones you’ve ordered but haven’t devoured yet. Accrual accounting, on the other hand, is like being a pie-eating contestant and recording a pie as consumed the moment you order it – before you’ve even tackled the first bite. It’s a bit like predicting your fullness level based on your eating ambitions!

accountant-meeting-a-clientExpert Guidance Matters

Understanding the difference between cash and accrual accounting must be achieved by looking in two distinct lenses through which businesses interpret and communicate their financial story. Cash accounting is akin to viewing a single frame of a movie, while accrual accounting provides the entire narrative. Both methodologies have their merits and drawbacks, making the choice between them a reflection of a company’s size, industry, and strategic goals.

When faced with the choice between cash and accrual accounting, seeking guidance from a skilled accountant becomes paramount. At Bishop Collins, we offer tailored consultations that delve into your unique circumstances. Our experts will not only elucidate the disparities between accrual and cash accounting but also provide personalised recommendations for your business. Contact us today and embark on a path of informed financial decisions.

Taxation & Tax Tips

8 Benefits of Tax Planning for Business

Alarm clock with a post-in note reading Tax Planning

Tim Ricardo Company Director on Bishop Collins

Tim Ricardo


As June arrives, businesses and consumers alike are familiar with the trademark End-of-Financial-Year sales (or EOFY to those in the know). For some, it’s a golden opportunity to hit the shops; for others, it’s a sign to start the often dreaded tax planning.

EOFY is very closely tied to tax planning—an essential aspect of financial management for businesses in Australia. By strategically managing your business’s tax obligations, that sinking feeling you’ve come to associate with business tax will disappear. You can minimise your business’s tax liabilities while maximising after-tax profits. In short, you can set your business up for ultimate financial and taxation success.

In this comprehensive article, we delve into the benefits of tax planning and explore effective tax planning strategies to help businesses navigate the final month of the financial year successfully.

1. Minimise Tax Liabilities

One of the primary benefits of tax planning is the ability to minimise tax liabilities. Every business owner aims to optimise their tax position, and tax planning plays a key role in achieving this goal.

The approach to your tax planning will vary based on the size and structure of your business.

At Bishop Collins, our tax planning process begins with a comprehensive review of your annual profit and a thorough calculation of your tax position. Based on this analysis, we offer customised options and valuable feedback to maximise the benefits of any available tax incentives, deductions, or offsets for the year.

By effectively implementing these strategies, substantial savings can often be achieved. It’s important to note a few things here regarding liability minimisation, some of which may apply to your business:

Cash Businesses

For businesses operating on a ‘cash basis,’ income is taxed when received, and deductions are claimed when paid. To reduce tax liabilities, a strategy could involve clearing payable bills within the financial year, reducing taxable income.

Accrual Businesses

In contrast, accrual-based businesses can claim deductions for expenses once they are incurred. However, businesses that carry stock must pay tax on closing stock balances. When placing purchase orders, focusing on overhead expenses or deductible business assets can help minimise tax obligations.


Superannuation is a critical aspect of tax planning. For employee super contributions, timely payment and processing before June 30th provide an easy deduction.

Business owners should also consider catch-up contribution rules and concessional contribution caps to boost their super and pay a lower tax rate.

Understanding the nuances of superannuation contributions can significantly impact tax liabilities.

Company Structure

Businesses operating as a company face different tax rates. Currently, the tax rate for small businesses in Australia is a flat 25%.

When planning taxes, it’s essential to consider both individual taxable incomes as business owners and the company’s profit.

Balancing dividend payments with the goal of long-term tax minimisation may involve increasing the company’s tax payable.

However, it’s crucial to exercise caution, as certain tax minimisation strategies can affect the company’s ability to pay franked dividends, potentially resulting in higher taxes.

Trust, Partnership, or Sole Trader Structure

Businesses operating as a trust, partnership, or sole trader should pay close attention to tax planning. These structures have their own unique considerations.

Trusts, in particular, require careful distribution planning and producing distribution minutes by June 30th. The distribution should align with the business’s profitability, aiming to optimise tax outcomes.

Prepaid Expenses

Prepaid expenses offer potential deductions for small businesses if they relate to expenses within the next 12 months. Businesses can take advantage of this deduction by prepaying eligible expenses before the financial year-end.

Temporary Full Expensing of Depreciating Assets

The temporary full expensing of depreciating assets, which ended on June 30th, 2023, provided significant tax savings during the Covid era. However, managing taxes became more complex as profits fluctuated from year to year.

Businesses should exercise caution when selling assets, as the full deduction means paying tax on the full sale price. It’s crucial to notify your accountant of all sold and purchased assets during the year and provide the appropriate documentation.

Business woman counting cash for tax planning purposes2. Enhance Cash Flow

Tax planning also plays a significant role in optimising cash flow for businesses. Carefully managing the timing of income recognition and expense deductions allows businesses to align their cash flows with tax obligations.

EOFY Stocktake

Conducting an End-of-Financial-Year stocktake allows businesses to convert some stock into cash, providing a cash flow boost without a significant tax burden. This extra cash flow can be allocated to other tax-deductible items like super contributions.

Income Recognition and Expense Deductions

Strategically timing the recognition of income and deductions can help businesses manage their cash flow. Deferring income recognition to the following tax year or prepaying expenses before the financial year-end can reduce immediate tax burdens and improve cash flow.

3. Reduce Tax Risk and Compliance Issues

Proactive tax planning helps businesses mitigate tax risks and ensures compliance with the Australian Taxation Office (ATO) regulations.

Staying up to date with changing tax laws enables businesses to identify potential risks, avoid penalties, and maintain good standing with the ATO.

Engaging the right accountant is paramount to ensure good compliance management.

4. Structuring and Entity Selection

When it comes to tax planning, one of the fundamental considerations is selecting the appropriate business structure. The choice between sole proprietorship (or sole trader), partnership, company, or trust can have significant implications for your tax obligations.

Each entity type comes with its own set of tax implications, advantages, and limitations. By carefully evaluating the tax consequences of each option, businesses can make informed decisions that align with their financial goals.

For instance, a sole trader may offer simplicity and flexibility, but it also means that the business owner is personally responsible for all tax liabilities. On the other hand, forming a company can provide certain tax benefits, such as the ability to distribute profits through dividends and access lower corporate tax rates.

Partnerships offer the advantage of sharing tax responsibilities among partners, while trusts can offer tax planning opportunities through income distributions and asset protection.

This thoughtful approach to structuring not only optimises tax outcomes but also lays the groundwork for effective tax planning strategies in the long run.

Receipts and documents ready for optimising tax deductions5. Deduction Optimisation

Deductions can seem daunting, especially for business tax. Understanding and utilising deductions to your advantage, however, can become a major asset to the success of your EOFY tax planning and can ultimately deliver a much better after-tax return.

Identify Legitimate Deductible Expenses

To effectively optimise deductions, you’ll need to carefully review your operations and identify all legitimate business expenses that qualify for deductions. Among others, this includes:

  • Costs related to rent
  • Utilities
  • Office supplies
  • Travel expenses
  • Advertising
  • Professional fees
  • Employee salaries

By comprehensively assessing your business expenses, you’re well-equipped to maximise your deduction potential.

Meticulous Record-Keeping

This is where a lot of people fall short in their tax planning efforts, and it’s understandable. Being organised and on-the-ball with record keeping can fall by the wayside, but it’s also essential for substantiating deduction claims and ensuring compliance.

Your business should maintain organised documentation, such as receipts, invoices, and bank statements, to provide evidence of the expenses incurred. If you’re not into the old-school method, there also plenty of easy-use apps and programs designed to make tracking deductions a whole lot easier.

Meticulous recordkeeping not only supports deduction optimisation but also facilitates smooth tax audits, if necessary.

Consult with Tax Professionals

While businesses can handle deduction optimisation on their own, consulting with a tax professional like Bishop Collins can provide valuable insights and ensure that no eligible deductions are overlooked.

Our tax professionals have the expertise and knowledge of current tax laws and regulations, enabling us to identify specific deductions that may apply to your industry or business circumstances.

We can also provide guidance on:

  • How to maximise deductions while maintaining compliance
  • Navigate intricate deduction rules and avoid potential pitfalls
  • Identify potential red flags or areas of ambiguity
  • Provide clear guidance on how to approach specific deductions

Conduct Regular Reviews and Adjustments

Deduction optimisation is an ongoing process that requires regular reviews and adjustments. As your businesses evolves, your deductible expenses may change.

Conducting periodic assessments of deductible expenses and seeking advice from tax professionals ensure that your businesses is taking advantage of all available deductions.

By staying proactive and up to date with deduction optimisation, you can maximise your business tax savings and maintain a strong financial position.

6. Capital Gains Tax Planning

For businesses involved in buying or selling assets, capital gains tax (CGT) planning is a crucial aspect of tax optimisation.

By strategically managing the timing of asset sales and leveraging available exemptions, concessions, and rollover relief provisions, businesses can effectively minimise their CGT liabilities and maximise their after-tax profits.

Timing Asset Sales

Timing plays a critical role in capital gains tax planning. Businesses can strategically plan the sale of assets to minimise CGT liabilities.

For example, if a business anticipates a significant increase in the value of an asset, it may be beneficial to delay the sale until a later tax year to take advantage of potential exemptions or concessions.

Conversely, if an asset’s value is expected to decline, selling it sooner may result in a reduced taxable gain.

Exemptions and Concessions

As a business owner, it helps to be aware of the various exemptions and concessions available to you under tax laws. For instance, certain small business concessions may allow eligible businesses to reduce or defer their CGT obligations when selling active assets.

These concessions can include the small business CGT concessions, which provide opportunities for significant tax savings. By understanding and leveraging these exemptions and concessions, you can minimise your CGT liabilities and retain more investment gains.

Rollover Relief Provisions

Rollover relief provisions provide businesses with opportunities to defer or reduce CGT liabilities when disposing of certain assets and acquiring replacement assets.

These provisions aim to facilitate business restructuring, expansion, or reinvestment. By taking advantage of rollover relief, you can defer the CGT consequences of asset sales and effectively manage your busines tax obligations while maintaining operational flexibility.

Navigating Complex Rules

Capital gains tax rules can be complex, and businesses must navigate them carefully to ensure compliance and optimise tax outcomes.

Seeking guidance from tax professionals who specialise in CGT planning can help you navigate the intricacies of the rules, identify relevant exemptions and concessions, and develop tailored strategies that align with their specific circumstances.

Tax professionals can also assist in assessing the CGT implications of different asset disposal methods, such as outright sales, rollovers, or the use of trust structures.

Piggy bank with Superannuation written on it7. Superannuation Planning

Superannuation planning plays a vital role in tax planning for businesses, offering valuable tax advantages and long-term financial benefits.

By maximising contributions to superannuation funds, you can leverage tax deductions and take advantage of the lower tax rates applied to these contributions.

Tax Benefits of Super Contributions

Contributions made to superannuation funds are typically subject to a lower tax rate compared to other forms of income. For businesses, this presents an opportunity to reduce your overall tax liabilities while simultaneously building retirement savings.

By diverting a portion of your earnings into super contributions, your business can enjoy immediate tax benefits and enhance its financial position for the future.

Tax Deductions on Super Contributions

Your business may also be eligible for tax deductions on your superannuation contributions. These deductions can provide further relief on taxable income, helping to lower your overall business tax burden.

It’s important for businesses to understand the specific rules and limitations surrounding deductible superannuation contributions, as they may vary based on factors such as the business structure and individual circumstances. Our accountants can assist you in navigating this.

Employee Benefits

Superannuation planning can not only benefits your business but also provide a valuable employee benefit. Offering competitive super contributions as part of an employee remuneration package can help attract and retain top talent.

Additionally, you can explore salary sacrifice arrangements, where employees agree to contribute a portion of their pre-tax salary into superannuation, further enhancing their retirement savings and maximising tax advantages for both parties.

8. Tax Incentives

Tax incentives present a valuable opportunity for you to enhance your business’s tax planning strategies and foster innovation within your company.

By implementing eligible tax incentives, you can unlock potential tax savings and stimulate growth in key areas such as research and development (R&D).

In Australia, the government offers generous tax incentives specifically designed to encourage businesses to engage in innovative activities.

Research and Development (R&D) Tax Incentives

The Australian government provides substantial tax incentives to businesses involved in eligible R&D activities. These incentives aim to support businesses in their pursuit of innovation, technological advancements, and economic growth.

By carefully planning and documenting R&D activities, your business can access these incentives and enjoy significant tax savings.

Identifying Eligible R&D Activities

The first step in harnessing R&D tax incentives is to identify eligible activities within your business.

R&D encompasses a wide range of activities, including experimentation, hypothesis testing, prototype development, and technical problem-solving.

It’s essential to conduct a thorough assessment of your business operations and identify activities that meet the criteria for R&D tax incentives.

Collaboration and External Expertise

Collaborating with research institutions, universities, and industry experts can strengthen R&D initiatives and enhance your eligibility for tax incentives.

Partnering with external organisations can bring additional expertise and resources to drive innovation within the business.

These collaborations can also facilitate the sharing of knowledge, access to specialised equipment, and invaluable networking opportunities – all while optimising your business tax planning.

Accountant meeting a clientEngage a Tax Planning Professional

Tax planning is a vital aspect of financial management for businesses in Australia. Compliance with the country’s high tax burden can be challenging, but strategic tax management can significantly minimise liabilities, enhance cash flow, and reduce compliance risks.

By employing effective tax planning strategies such as entity selection, deduction optimisation, capital gains tax planning, superannuation planning, and leveraging tax incentives, you can pave the way for a successful year ahead.

Interested in getting profesisonal assistance with your EOFY tax planning this year? Get in touch with our experienced team to get started.

Taxation & Tax Tips

How Tax Audit Insurance Can Protect Your Business

What Is Tax Audit Insurance?

Tax audit insurance is an insurance policy that can be obtained for an individual, company, self managed super fund (SMSF) or company directors. Depending on the scope of the policy, this insurance assists cover the professional fees of your accountant or advisor in assisting you to respond to an audit, inquiry, investigation, review or examination of returns lodged with the Australian Taxation Office (ATO) or other government revenue authorities.

The probability of a review occurring has escalated due to government authorities increasingly using data matching, artificial intelligence, and even social media, to compare disclosures made in your lodged tax returns to those of other taxpayers or benchmarks. The use of Single Touch Payroll (STP) for example allows the ATO to identify businesses (registered for STP) that have not met their PAYG and SG payment requirements. This facilitates greater compliance cross-checking leading to more audit activity.

Should the ATO or other government revenue authorities undertake one of these audits or reviews of lodged returns or financial compliance obligations, the costs and resources dedicated to responding to their queries can potentially be quite substantial.

Accordingly, the tax audit insurance policy is designed to protect you and your business (or SMSF) from the unexpected costs incurred in responding to the review or audit by reimbursing you for the related professional fees and costs.

Why is Tax Audit Insurance Important?

Tax audits are no longer targeted at simply big businesses and the wealthy. Small to medium enterprises, SMSFs, individuals with rental properties or trust structures are subject to review and investigation by the ATO.

Noticeably, taxpayers with cryptocurrency assets and those with excessive work-related deductions are potentially earmarked for scrutiny. The ATO also utilises benchmarks to hone in on the ‘cash economy’ to identify businesses not declaring all of their income. Non-compliance in these areas attracts a greater chance of being audited.

The most common audits are those undertaken by the ATO in relation to personal or business returns, however, compliance audits are also becoming more common, particularly those in relation to payroll tax obligations.

Should you or a related entity be selected for review, the audit or investigation process can be quite time-consuming. Depending on the type of audit, the scope of the review and the number of periods being audited, the related professional fees can add up.

audit insurance is important for businesses of all sizesWhich Entities Can be Covered?

Tax Audit Insurance Policies vary between insurers (or brokers). However, some common policies include cover for the following:

  • business audit only;
  • business and directors audit;
  • individual cover (for insured parties that are not a corporation);
  • self-managed superannuation fund cover.

The particular policy may also include additional coverage for things such as investigation cover and other such items.

You should speak with your broker or advisor to determine which policy and cover might be relevant to your circumstances.

tax laws can be complicatedWhich Tax-Related Laws Do Tax Audit Insurance Policies Typically Cover?

There are a number of laws and regulations that may be covered in a tax audit insurance policy. These include:

  1. Income Tax Assessment Act 1936 (Cth);
  2. Income Tax Assessment Act 1997 (Cth);
  3. Taxation Administration Act 1953 (Cth);
  4. Fringe Benefits Tax Assessment Act 1986 (Cth);
  5. A New Tax System (Goods and Services Tax) Act 1999 (Cth);
  6. Superannuation Guarantee (Administration) Act 1992 (Cth);
  7. Termination Payments Tax (Assessment and Collection Act) 1997 (Cth); or
  8. any legislation of an Australian State or Territory relating to payroll tax.

Additionally, your policy cover might include coverage of the professional costs associated with certain types of audits and reviews, including:

  • BAS/GST Compliance
  • Capital gains tax
  • Borrowing rules (LRBAs)
  • FBT
  • Income, Land and Payroll Tax
  • Record Keeping
  • Self-Managed Superannuation Funds and SIS contraventions
  • Superannuation Guarantee and Compliance
  • Workers Compensation / WorkCover

Some policies also include retrospective protection (that is, previously lodged returns are covered) as well as specialist fee cover (that is, fees of any other external specialists such as taxation lawyers or consultants).

audit insurance ensures you’re coveredA Word of Caution…

Before taking out a tax audit insurance policy, ensure you obtain advice and review the inclusions and exclusions of the policy carefully. Items generally not covered by tax audit insurance policies can include:

  • Fines or penalties imposed or for any amounts payable pursuant to an amended notice of assessment or adjustment. This includes for example any additional tax, duty or similar payments.
  • Matters in relation to applications, assessments or reviews of government benefits, entitlements, grants and any form of activity involving a review relevant to you maintaining industry status (e.g. licence compliance, membership).
  • Costs for work incurred which should have been undertaken prior to the audit activity (e.g. outstanding lodgements).
  • Audit activity where notification was given prior to the inception of cover;
  • Excess superannuation contribution tax issues.

Bishop Collins – The Compliance and Risk Management Experts

If you would like to discuss the benefits of tax audit insurance or have an in-depth discussion about your business structure, tax affairs and compliance obligations, or audit and risk management requirements, the team at Bishop Collins would be delighted to have an obligation-free and confidential discussion. Get in touch with us today to see how we can help!

Small Business

Small Business Accounting -What Services do you Really Need?

Brewery owner happy

Juston Jirwander

Juston Jirwander


When it comes to small business accounting, there are various services that you may need to ensure the financial health and success of your business. Accounting is not just about keeping track of your income and expenses; it involves a range of tasks that can be time-consuming and complex. Outsourcing certain accounting services can be a smart decision, allowing you to focus on running your business more efficiently. Here are some essential accounting services that small businesses often require.


Bookkeeping is the foundation of any accounting system. It involves recording and organising financial transactions, such as sales, purchases, expenses, and payments. Accurate and up-to-date bookkeeping is crucial for tracking your business’s financial health, preparing tax returns, and generating financial statements.

Financial Statement Preparation

Financial statements, including the income statement, balance sheet, and cash flow statement, provide a snapshot of your business’s financial performance. These statements are essential for assessing profitability, understanding the financial position of your business, and making informed decisions. Outsourcing financial statement preparation ensures accuracy and compliance with accounting standards.

Payroll Processing

Managing payroll can be time-consuming and complex, especially when you have employees. Payroll services encompass calculating wages, processing payroll taxes, issuing paychecks, and preparing payroll reports. Outsourcing payroll processing helps ensure accuracy, timeliness, and compliance with tax regulations.

small business owner checking phoneTax Planning and Preparation

Tax planning and preparation are crucial to minimise your business’s tax liability while complying with tax laws. Professional accountants can help you identify tax deductions, credits, and strategies to optimise your tax position. They can also prepare and file your business tax returns accurately and on time.

Financial Analysis and Reporting

Analysing your financial data and generating insightful reports can help you make informed decisions and track your business’s performance. Financial analysis services can include assessing key performance indicators (KPIs), conducting ratio analysis, and providing customised reports that give you a clear understanding of your business’s financial trends and areas for improvement.

Budgeting and Forecasting

Creating a budget and forecasting your future financials are critical for setting goals, planning growth strategies, and managing cash flow. Accounting professionals can assist in developing realistic budgets, projecting revenue and expenses, and providing financial insights to guide your business decisions.

small barbershopAccounts Payable and Receivable Management

Efficient management of accounts payable (AP) and accounts receivable (AR) is crucial for maintaining healthy cash flow. Outsourcing AP services ensures timely payment of bills, accurate record-keeping, and effective vendor management. On the other hand, outsourcing AR services helps you streamline your billing processes, track customer payments, and manage collections efficiently.

Financial Software Selection and Implementation

Choosing the right accounting software for your business can greatly simplify your financial management processes. Professional accountants can help you evaluate your needs, select suitable accounting software, and provide guidance on implementation, training, and ongoing support.

Business Advisory Services

In addition to traditional accounting services, many accounting firms offer business advisory services. These services go beyond number-crunching and provide strategic guidance, financial planning, and assistance in making informed business decisions. Business advisors can help you analyse market trends, assess the viability of new projects, and develop growth strategies.

Compliance and Regulatory Support

Staying compliant with accounting and regulatory requirements is essential for avoiding penalties and legal issues. Accounting professionals can help ensure your business meets all financial reporting standards, industry-specific regulations, and government requirements. They can also assist with audits, reviews, and other compliance-related matters.

When determining which accounting services your small business needs, consider factors such as the size and complexity of your business, your industry, your internal capabilities, and your budget. It’s advisable to consult with a reputable accounting firm or professional to assess your specific requirements and tailor a customised accounting

coffee shop owner at workBishop Collins – The Small Business Experts

It’s simple; with Bishop Collins Accountants, there are no surprises. We listen. We educate. We deliver. If you would like to discuss your small business accounting requirements, the experts at Bishop Collins would be delighted to have an obligation-free and confidential discussion with you.  Get in touch with us today to see how we can help!


Bookkeeping Best Practices: How to Achieve Accuracy and Efficiency

Bookkeeper’s office piled with paperwork

Glenn Harris

Glenn Harris


Accurate bookkeeping is crucial for maintaining the financial health of a business. You’re probably aware of this, but you might be put off by the seemingly dry and tedious nature of bookkeeping.

Well, stick around until the end of this blog; we’ll not only outline our top tips for accurate bookkeeping, but we’ll also highlight some famous (and infamous) bookkeepers of our time. Some of them might just change your mind about this would-be boring profession!

But back to business. By implementing effective bookkeeping practices, you can ensure accuracy, improve efficiency, and make informed financial decisions that are essential for the overall success of your business.

Our expert bookkeepers here at Bishop Collins have curated top tips for accurate bookkeeping best practices, and outline the essential skills and attributes of a good bookkeeper. Let’s open the books and get started.

What Do Bookkeepers Actually Do?

It’s always good to start with the basics. Bookkeepers play a vital role in managing the financial aspects of businesses. They’re responsible for accurately recording financial transactions, reconciling accounts, managing accounts payable and receivable, processing payroll, and generating financial reports for analysis.

Bookkeepers (well, good bookkeepers, that is) ensure compliance with tax laws and regulations, utilise accounting software and technology, and collaborate with accountants and auditors to maintain financial transparency.

With their expertise, bookkeepers contribute to the smooth operation of businesses by maintaining accurate financial records and supporting overall financial management.

Interested in a first-hand account of a real bookkeeper’s day-to-day? Check out our ‘Day in the Life of a Bookkeeper’ blog post here.

Bookkeeper diligently checking financial recordsTop Bookkeeping Tips for Accuracy and Efficiency

Now we know the basics of bookkeeping, let’s get into some of our most effective strategies and bookkeeping best practices.

Implementing these tips, or even being familiar with them so you can properly liaise with your own bookkeeper, can ensure that your financial records are organised, up-to-date, and error-free.

In this section, we will explore some top tips that will help you streamline your bookkeeping processes and achieve accuracy in your financial reporting. Let’s dive in!

Organise Your Financial Documents

Keeping your financial documents, such as receipts, invoices, bank statements, and payroll records, organised and readily accessible is essential.

By maintaining a systematic approach, you can easily retrieve and accurately record information when needed.

Utilise Cloud-based Accounting Software

Consider using accounting software that suits the needs of your business.

These cloud-based tools automate bookkeeping tasks, reduce errors, and provide real-time financial insights.

Explore options such as QuickBooks, Xero, or MYOB to streamline your bookkeeping processes.

Maintain Separate Personal and Business Accounts

To ensure accurate recording of business-related expenses and income, maintain separate bank accounts and credit cards for personal and business transactions.

This separation eliminates confusion and simplifies year-end tax preparation.

Implement a Consistent Chart of Accounts

Develop a chart of accounts tailored to your business needs.

This framework categorises and organises financial transactions consistently, enabling accurate reporting and analysis. It provides a standardised structure for recording income, expenses, assets, and liabilities.

Diligently Track Income and Expenses

Record all income and expenses promptly and accurately. This includes sales, purchases, payroll, overhead costs, and any other financial transactions.

Regularly reconcile bank statements to ensure all transactions are accounted for. Depending on your business type, consider reconciling weekly or at least monthly.

Monitor and Manage Cash Flow

Maintaining a close eye on your cash flow is vital for business success.

Track the inflow and outflow of cash to anticipate and address any cash shortages or surpluses in a timely manner.

This allows you to make informed decisions and ensure the smooth operation of your business.

Stay Updated on Tax Regulations

Keep yourself informed about tax regulations relevant to your business, such as payroll tax, GST, PAYG Withholding, and other obligations.

Accurately recording these transactions in your company’s general ledger is crucial. If you lack expertise or need assistance, consult a professional accountant to ensure compliance.

Regularly Review Financial Reports

Regularly review financial reports such as profit and loss statements, balance sheets, and cash flow statements.

These reports offer valuable insights into your business’s financial health and help identify discrepancies or areas that require attention. Use these reports to inform your decision-making process.

What Are the Attributes of a Good Bookkeeper?

A good bookkeeper possesses a unique set of skills and qualities that contribute to their effectiveness in managing financial records. These attributes go beyond technical knowledge and extend to personal qualities that enhance their performance.

Whether it’s a strong numerical aptitude, attention to detail, or proficiency in bookkeeping software, these attributes form the foundation of a competent bookkeeper.

A good bookkeeper possesses the following skills:

1. Strong numerical aptitude: Bookkeepers should possess a solid understanding of basic mathematics and be comfortable working with numbers.

2. Meticulous attention to detail: Accurate recording and organisation of financial transactions require meticulous attention to detail to avoid errors or discrepancies.

3. Knowledge of accounting principles: A strong understanding of fundamental accounting principles and concepts, such as debits and credits, double-entry bookkeeping, financial statements, and the general ledger, is essential.

4. Proficiency in bookkeeping software: Familiarity with specialised accounting software and the ability to efficiently navigate and utilise their features is important for streamlining bookkeeping processes.

5. Data entry and organisation skills: Bookkeepers should be skilled in data entry, organising financial records, and maintaining an orderly approach for accurate and accessible financial information.

6. Analytical skills: Strong analytical skills enable bookkeepers to analyze financial data, identify patterns or discrepancies, and generate meaningful reports for informed decision-making and financial planning.

7. Time management: Effective time management and prioritisation skills are necessary to handle multiple tasks, meet deadlines, and maintain accurate financial records.

8. Communication skills: Clear and concise communication, both written and verbal, is important for conveying financial information, addressing queries, and collaborating effectively with clients, colleagues, and financial professionals.

9. Integrity and confidentiality: Bookkeepers handle sensitive financial information, so maintaining high ethical standards, integrity, and strict confidentiality is crucial.

10. Continuous learning: Bookkeeping and accounting are ever-evolving fields with new regulations, software updates, and industry trends. A bookkeeper should have a willingness to learn, adapt, and stay updated to ensure professional growth.

Charles Dickens in 1858Famous Bookkeepers in History

We mentioned above some pretty famous bookkeepers that might just elevate the age-old profession for you. Have a look at these famous figures who, low and behold, dabbled in bookkeeping during their days.

Luca Pacioli

Luca Pacioli, an Italian mathematician, is often referred to as the “Father of Accounting.”

In 1494, he published the first known book on double-entry bookkeeping, titled “Summa de arithmetica, geometria, proportioni et proportionalita.”

Raymond Chandler

Before achieving renown as an author of detective novels, Raymond Chandler worked as a bookkeeper for the Dabney Oil Syndicate in Los Angeles.\\\

His experiences in the business world influenced his writing style and provided material for his later works.

Charles Dickens

The famous English writer target=”_blank”Charles Dickens worked as a bookkeeper in a blacking factory at the age of 12.

His early experiences in bookkeeping and observations of social and economic issues influenced his literary works.

Harry Truman

Before becoming the 33rd President of the United States, Harry S. Truman briefly worked as a bookkeeper for a bank in Kansas City.

Truman’s background in finance and accounting contributed to his understanding of economic policies during his presidency.

Infamous Bookkeeping Cases

You may have heard of those renowned bookkeepers above, but what about some of the infamous cases of bookkeeping? While these instances certainly didn’t display bookkeeping best practices, they did catch the eyes of millions – and are still talked about to this day.

Al Capone’s Bookkeeper

Al Capone, the notorious American gangster of the Prohibition era, had a bookkeeper named Joseph “The Accountant” Valachi.

Valachi became an informant and provided crucial testimony to law enforcement about Capone’s illegal activities, including tax evasion.

WorldCom’s Bookkeepers

WorldCom, a telecommunications company, faced a major accounting scandal in 2002.

The company’s CFO, Scott Sullivan, and other executives orchestrated an accounting fraud to inflate earnings and hide expenses.

This fraud, involving improper capitalisation of expenses, ultimately led to the company’s bankruptcy.

Experienced bookkeeper in an officeSpeak to an Experienced Bookkeeper Today

Accurate bookkeeping is essential for the financial health and success of any business. By following the top bookkeeping tips outlined in this article and employing a skilled bookkeeper with the necessary attributes, you can ensure the integrity of your financial records.

Whether you need assistance with bookkeeping or seek professional advice, the experienced bookkeepers at Bishop Collins are here to help.

Contact us today to discuss your bookkeeping needs and ensure your business’s financial well being.

Taxation & Tax Tips

The Latest Updates to Fringe Benefits Tax in Australia

Employee looking to buy a car

Juston Jirwander

Juston Jirwander


Let’s get something straight before I go anywhere with Fringe Benefits Tax. In the past I was not a fan of FBT, except for Not for Profit entities and Charities and for high net worth individuals in small circumstances.

In essence, I used to regard FBT as not worth the trouble for the employer entity; that is, until recent changes made to FBT on electric vehicles (EVs) from the 1st of July 2022. Eligible EVs and Hybrid cars are now exempt from FBT. I am now a fan!

Now for a little context to my update via a short history lesson.

FBT is applied on most non-cash benefits that an employer provides “in respect of employment”. The tax is imposed on the employer, not the employee, and is payable irrespective of whether the benefit is provided directly to the employee or to an associate of the employee.

FBT rules since the government introduced the legislation in 1986 and changes along the way are complex and designed to limit any tax savings of providing benefits to employees. As a general rule, it is not tax-effective for an employee to salary package benefits if their marginal tax rate is below the 2023 FBT rate of 47% (which is equal to the top marginal tax rate, including the Medicare levy).

Providing a benefit to employees was designed to attract employees and retain their services as the remuneration and the benefits enhanced their working experience. With most of these benefits being treated as a taxable benefit, the workload to provide them has lost its attractiveness.

These employees should generally limit the types of benefits they receive under salary packaging agreements to benefits that are exempt from FBT (e.g., work-related laptops) or to benefits that are concessionally taxed under the FBT rules (e.g., car fringe benefits), or to benefits that are “otherwise deductible” benefits such as additional superannuation contributions.

Note however, that this benefit of additional superannuation benefits paid for an employee are also not as beneficial to taxpayers whose taxable income plus superannuation contributions are in excess of $250,000 per year. So, as you can see the complexity makes it very time consuming and generally not worth the administrative burden on the employer. But things have changed!

electric vehicle on chargeElectric Vehicles, Hybrid Cars, Salary Packaging and Recent Changes

As an employer, you previously needed to pay FBT on motor vehicles (regardless of whether they were EV, Petrol or Diesel) provided to your employees. From the 1st of July 2022, you no longer need to pay FBT on benefits provided for eligible electric cars and associated expenses.

So what are the eligibility requirements? This comes straight from the Australian Taxation Office website:
“You will now be exempt from paying FBT on benefits provided for electric cars that meet all the following criteria:

  • the car is a zero- or low-emissions vehicle
  • the first time the car is both held and used is on or after 1 July 2022
  • the car is used by a current employee or their associates (such as family members)
  • luxury car tax has never been payable on the importation or sale of the car.
  • Registration, insurance, repairs, maintenance and fuel expenses associated with the eligible electric car are also exempt from FBT.”

Please note this exemption does not apply to motorcycles and scooters, whether they’re electric or not and home charging stations are also not exempt.

A WORD OF WARNING: as with all tax situations, there are several points to consider before rushing off to get that dream Porsche Cayenne EV for $300,000 packaged through the company. As luxury tax is applied to this vehicle, which means it is not eligible. The GST inclusive value of the car you are using must be below the Luxury car tax threshold.

For fuel efficient vehicles as outlined in the FBT exemption this threshold is higher than for other vehicles. In the financial year ending 30th of June 2023 this threshold is $84,916.


Now that we can exclude any car in excess of $84,916, let’s look at an example to illustrate the attractiveness of this environmentally influenced tax benefit:

Sandra has a salary of $180,000 plus $20,000 Super (SGC plus additional super). She has always wanted a Luxury Plug-In Hybrid Car. The GST inclusive cost including options and charges was $84,000 with no Luxury Car tax applied.

Sandra has 100% private use. She purchases the vehicle through her company with cash and no debt as part of her Salary Package and the company takes ownership of the car on the 1st of May 2023. Registration, insurance, repairs and maintenance and fuel expenses are forecast to total $11000 for the year.

Side Note: As the car was purchased and ready for use before 30 June 2023 the Backing Business investment accelerated depreciation allowance provides for an immediate deduction to the Car limit for Financial Year 22-23 of $64,741.

This is a significant up front tax saving of $16,185 for the employer if it is a company (Base Rate entity). The company can claim the GST paid on the car Circa $7K also assisting in cashflow in July 23. So, benefit to the company, tick.

Now to Sandra. Sandra will salary package her car and running expenses for FY 22-23 so let’s compare Sandra buying personally or through her company.

Current Tax, No Package
Income Tax on Taxable income of $180,000 Inc Medicare = $55,267
Net salary of $124,733.
Less Running Costs $11,000
After tax and costs cash position = $113,733

Salary packaging all costs
Taxable income: $180,000
Less running costs net of GST: $10,000
Add back input tax credit from GST on vehicle capped at car limit of $64,741: $5,885 for the first year and 0 the following years.
Taxable Salary: $175,885 first year and $170,000 following years
Tax on Salary: $53,662 first year and $51,367 following years
After tax and costs cash position: $122,223 first year and $118,633 following years

Net Tax benefit to Sandra in the first year: $8,490
Net Tax benefit to Sandra each year thereafter: $4,900

That means the net tax benefit over five years is a whopping $28,090! Finally to complete my FBT update…

employer shaking hand of employeeOther Recent Changes For the 2023 FBT Year Ended in March

The ATO has just released draft guidelines for calculating the electricity costs incurred by an employee when charging an electric vehicle at their home.

These guidelines are set out in Practical Compliance Guideline PCG 2023/D1 (‘PCG 2023/D1’).

Employers who choose to use the guidelines contained in PCG 2023/D1, can calculate the electricity costs incurred by an employee when charging an electric vehicle at their home, by applying the following formula:

4.2 cents x total KMs travelled by the vehicle during the FBT year.

Employers who pay/reimburse an employee’s electricity costs associated with charging an employer- provided electric car at their home will not be subject to FBT on the reimbursement.

EV home charging stationFBT got you groaning out loud? Bishop Collins can Help

FBT can be a key element to the operation of your business, and as such should be something that you are fully knowledgeable on. That’s where Bishop Collins come in! We’re passionate about helping our clients understand the information they need to successfully and profitably run their business, and we are experts when it comes to business tax and accounting. Reach out to us today to see how we can help with all your business tax needs.

Whatever stage your business is up to at Bishop Collins we are passionate about helping our clients achieve their version of success. Feel free to reach out if you would like professional assistance for your business.

Business Coaching Taxation & Tax Tips

Cash Flow Management – Top Tips to Manage Your Small Business

Adding a coin to the piggy bank

Juston Jirwander

Juston Jirwander


The importance of Cash Flow Management

“Entrepreneurs believe that profit is what matters most in a new enterprise. but profit is secondary. Cash flow matters most.” – Peter Drucker

“Never take your eyes off the cash flow because it is the life blood of business.” – Richard branson

“You don’t bank profits you bank cash flow” – Someone Somewhere

Alright, that’s enough of the festival of quotes. I think you get the message! but they serve a point – to highlight that one of the main reasons businesses fail is due to cash flow. The current bank failures in the US are a real life modern example of this principle that cash flow management is essential. bank depositors were withdrawing their funds, due to concerns of the bank’s stability. This created a cash crunch in the banks who were forced to realise losses and sell assets.

Cash flow can result from business operations, investment activities or structural changes to the balance sheet. So we need to look at both revenue, expenses, use of assets and liabilities to ensure cash flow management and cash flow forecasting.

winning at cash flowOur Top Tips to Effectively Manage Small business Cash Flow

1. Create a Cash Flow Forecast

Develop a detailed cash flow forecast that outlines your expected income and expenses for a specific period, typically on a monthly or quarterly basis. This will help you anticipate cash shortfalls or surpluses and take proactive measures such as obtaining short term funding or making payment arrangements in advance from some or all your suppliers during tight periods of cash flow.

2. Monitor and Track Your Cash Flow Regularly

This is achieved by having a good accounting system that you use to help you track your activities. Speak to your accountants to determine which programs are best for you and stay on top of your cash flow by monitoring it regularly, at least monthly. Review your cash flow statement and compare it to your forecast. This will enable you to identify any discrepancies or potential issues early on.

3. Accelerate Cash Inflows

Implement strategies to speed up your cash inflows. Consider offering discounts for early payments or incentives for customers who pay upfront. Send out invoices promptly and follow up on any late payments.

4. Control Your Cash Outflows

Keep a close eye on your expenses and control them effectively. Regularly at least annually negotiate improved payment terms with suppliers, explore opportunities to reduce overhead costs, and eliminate unnecessary expenses. Over time expenses can accumulate as they were spent last year, and the habit is to continue rather than review and assess if they are necessary this year. Examples can include:

  • Marketing costs for goods or services that are being or already wound down
  • Supplies no longer needed in the same quantity
  • Staff no longer adding value due to changes in structure

checking an empty wallet5. Maintain a Cash Reserve

Establish an emergency fund or cash reserve to handle unexpected expenses or periods of low cash flow. Aim to set aside a percentage of your revenue each month to build up this reserve.

6. Improve Your Inventory Management

Avoid tying up excessive amounts of cash in inventory. Optimise your inventory levels by forecasting demand accurately, negotiating favourable terms with suppliers, and regularly reviewing and adjusting your inventory orders.

A good benchmark to achieve is to get your inventory turnover the same or less than your supplier payment terms. This means you are selling your stock every 1-2 months and paying your suppliers in the same period. The result is that your suppliers effectively become your bank without the interest cost.

7. Negotiate Payment Terms with Suppliers

Work with your suppliers to negotiate favourable payment terms. Request extended payment periods or explore vendor financing options that allow you to preserve cash flow while still fulfilling your obligations. Review bulk buying or setting volume targets with rebates once achieved as they can improve cash flow and something suppliers appreciate, so everyone benefits.

8. Manage Your Accounts Receivable

“The squeakiest wheel gets the most attention”. We all know that those businesses that chase up late payments get the most attention. Stay proactive in collecting payments from your customers. Set clear payment terms and policies, send timely reminders for overdue invoices, and consider implementing a consistent system for following up on late payments.

Most importantly it is the relationship with the right person that needs to be developed. being consistent, courteous and persistent will work wonders and a little thank you goes a long way.

9. Explore Financing Options

In situations where cash flow is tight, consider exploring financing options such as short-term loans, lines of credit, or invoice factoring. However, carefully evaluate the costs and risks associated with these options before proceeding as they can sometimes not be worth the time or risk to manage.

10. Regularly Review and Adjust Your Cash Flow Forecast

As your business evolves, make sure to regularly review and update your cash flow forecast. Adjust your projections based on new information, changes in market conditions, or shifts in your business strategy.

team work makes the dream workBishop Collins Know Cash Flow

Keeping up to date on your numbers and regularly reviewing them must be on the top of any business owners or Director’s list of priorities. If your accountant does not provide you with this service offering please reach out to bishop Collins for any assistance you may require.

Bishop Collins Know Cash Flow Accountants can provide valuable assistance with cash flow management and cash flow forecasting to help ensure your small business thrives. Get in touch with us today to learn more about our services and how we can assist you with your cash flow requirements.

Taxation & Tax Tips

Understanding Your BAS Statement

Bookkeepers looking over figures


Glenn Harris


If you own or manage a business here in Australia, it’s likely that you are required to submit a Business Activity Statement (better known as a BAS) to the Australian Taxation Office (ATO) on a regular basis. Understanding your BAS is essential for ensuring you comply with your ongoing tax obligations and avoid any potential costly penalties and interest being applied by the ATO.

In this article, we’ll be providing an overview of the BAS statement and strive to explain the best way how to read and understand it.

What is a BAS Statement

A BAS statement is a document that most businesses in Australia are required to prepare and submit to the ATO on a regular basis. Your BAS will report and pay the businesses’ Goods and Services Tax (GST), as well as other taxes and obligations, such as Pay as You Go withholding (PAYGW), Pay As You Go instalments (PAYGI), and Fringe Benefits Tax (FBT). Most BAS statements are typically submitted on a quarterly basis, but some businesses may be required to submit it monthly or annually, depending on their circumstances.

The BAS statement is a key tool that the ATO uses to monitor compliance with tax laws and regulations, in combination with lodgment obligations including Single Touch Payroll (STP) and annual income tax returns.

consulting on BASUnderstanding Your BAS Statement

One of the most common questions we’re asked is “how to do a BAS statement on my accounting software”. Well, to know how to do it properly it’s first important to understand what exactly it is, and why it’s important. When you have your bookkeeper provide you with your BAS statement, it’s important to carefully review it to ensure that all the information is accurate and complete. The following are some key elements of the BAS statement you should review and ensure they are still correct for your business:

Business and Contact Details

The first section of the BAS statement will typically include your business name, ABN, and contact information. It’s important to ensure that these details are accurate and up to date, as any errors could result in delays or penalties.

This section of the BAS will also state the “GST Accounting method”. The two different accounting methods of reporting are as follows

  • Cash – Pay GST collected and claim credits in the period customer and supplier invoices are actually paid.
  • Accruals – Report and pay GST in the period the invoices are issued, even if they remain unpaid at the end of the period.

Businesses with a gross turnover of less than $10 million can choose to account for their GST using the cash accounting method.

It is very important you understand if your business is using cash or accrual for GST as the two different methods can often result in very different outcomes from period to period.

Tax Period

The BAS statement will indicate the tax period that the statement covers. This will typically be a quarterly period ending 30 September, 31 December, 31 March and 30 June each year. It’s important to ensure that the tax period is correct and that you are submitting the statement by the due date.

GST Information

The GST section of the BAS statement will show the amount of GST that you have collected on sales and the amount that you have paid on purchases. You will need to calculate the difference between these amounts to determine the net amount of GST that you owe or are entitled to receive as a refund. This amount will vary depending upon the reporting method you are using, being cash vs accruals.

You may also be able to use a second option which allows you to pay a quarterly instalment of GST and then lodge pay on an annual GST reconciliation. You can only use this method if you are voluntarily registered for GST. That is, you are registered for GST and your turnover is under $75,000 (or $150,000 for not-for-profit bodies).

PAYG Withholding Information

If you are required to withhold tax from your employees’ wages, the BAS statement will include a section for PAYG withholding information. This will show the amount of tax that you have withheld from your employees’ wages and the amount that you have paid to the ATO. Typically, the PAYGW section will only be for the month, and you will be required to lodge an Instalment Activity Statement (IAS) for PAYGW for the other 2 months in the quarter. The reason for this is if you withhold more than $25,000 p.a. from wages (medium withholder) you are required to report and pay PAYGW monthly. If you withhold more than $1m p.a. from wages (large withholder) you are required to pay within 8 days of the staff being paid.

Other Taxes and Obligations

Depending on your circumstances, the BAS statement may also include sections for other taxes and obligations, such as FBT or luxury car tax. FBT is payable on certain non-cash benefits provided to your employees.

Total Amount Payable or Refundable

At the end of the BAS statement, you will be required to calculate the total amount of tax that you owe or are entitled to receive as a refund. If the amount is payable, you will need to pay it by the due date to avoid potential interest charges being levied by the ATO.

Even if your business cashflow does not allow you to pay the BAS in full you should still lodge the BAS by the due date. You can then make an application to the ATO for a payment plan to pay off the debt due. If your debt is less than $100,000 the best way to apply to the ATO for a payment plan is via their online services. You should make the application prior to the due date for payment.

In addition to this keeping your lodgments and payments up to date (even on a payment plan) is very important. Non-compliance with this may result in the ATO issuing a Director Penalty Notice (DPN). If you receive a DPN, it’s important you seek immediate advice otherwise you may become personally liable for any outstanding PAYGW, GST or unpaid staff superannuation.

trying to understand your BASTips for Managing your BAS Statement

Here are some tips for managing your BAS statement and ensuring that you meet your tax obligations:

Keep Accurate Records

Accurate record-keeping is essential for completing your BAS statement and meeting your tax obligations. Should the ATO ever review a BAS, you have lodged you will need to substantiate each claim. Make sure that you keep detailed records of all financial transactions, including sales, purchases, and payments, including source documents, i.e., tax invoices.

Use Accounting Software

Current cloud-based accounting systems produce detailed reporting which allow for quick and accurate preparation of your BAS whether this be cash or accruals. Using a highly qualified bookkeeper in combination with a cloud based accounting system is the most effective way to ensure ongoing compliance with your BAS obligations.

your workers PAYG is a part of your BASBAS got your head spinning? Bishop Collins can Help

Your BAS is a key element to the operation of your business, and as such should be something that you are fully knowledgeable on. That’s where Bishop Collins come in! We’re passionate about helping our clients understand the information they need to successfully and profitably run their business, and we are experts when it comes to business tax and accounting. Reach out to us today to see how we can help with all your business tax needs.

Whatever stage your business is up to at Bishop Collins we are passionate about helping our clients achieve their version of success. Feel free to reach out if you would like professional assistance for your business.


Bookkeeping Vs Accounting – What is the difference?

Accountant and Bookkeeper


Glenn Harris


Bookkeeping and accounting are two distinct but closely related functions that play a crucial role in the financial management of any businesses. While both involve the management of financial data, they serve different purposes and require different training, experience, and skill sets.

This article explores the differences between bookkeeping vs accounting and why they are both essential if you wish to run your business successfully.

Accountants and Bookkeepers working togetherWhat is Bookkeeping?

Bookkeeping refers to the systematic recording and organising of financial transactions. This includes maintaining accurate records of all financial transactions, such as sales, purchases, payroll, receipts, and payments. Bookkeeping is critical for ensuring that businesses can keep track, on a regular basis, of their financial performance, manage their cash flow, and prepare accurate financial statements.

Bookkeeping involves several tasks, including recording financial transactions in a ledger, reconciling bank statements, generating invoices and receipts, tracking accounts payable and receivable, processing payroll and maintaining a general ledger. Bookkeepers are responsible for ensuring that all financial transactions are properly documented, recorded, and organised in the businesses financial reporting software.

Bookkeeping is usually the first step in the financial management process. It involves the day-to-day tasks that keep a business running smoothly. Without accurate bookkeeping, businesses would have difficulty tracking their expenses, managing their cash flow, and making informed decisions about their financial future.

What is Accounting?

Accounting is a broader function that encompasses bookkeeping but also involves more complex financial analysis and planning. Accounting involves interpreting financial data to generate reports that provide insights into a business’s financial performance. Accounting also involves developing budgets and forecasts, analysing financial trends, and making recommendations for improving a business’s financial performance.

Accounting involves several tasks, including preparing financial statements, analysing financial data, developing budgets and forecasts, and making recommendations for improving financial performance. Accountants are responsible for ensuring that financial data is accurate and complete and that financial statements comply with Australian Accounting Standards where required. In addition to this if your business financial statements are required to be audited, it would be your accountant who primarily works with the auditor to provide the data they require.

Accounting is critical for businesses because it provides valuable insights into their financial performance. Accounting helps businesses identify areas where they can improve their financial performance and make informed decisions about their future. Accounting also helps businesses comply with regulatory requirements and provides a basis for evaluating the performance of managers and other employees including measurement of Key Performance Indicators.

happy office workersBookkeeper vs Accountant- The Differences Between

While bookkeeping and accounting are closely related, there are several key differences between the two functions. Some of the main differences include:

1. Focus

Bookkeeping focuses on the systematic recording and organising of financial transactions, while accounting focuses on interpreting financial data to provide insights into a business’s financial performance.

2. Skills

Bookkeeping requires strong attention to detail and accuracy, as well as knowledge of bookkeeping principles and software. Accounting requires more advanced analytical and problem-solving skills, as well as knowledge of accounting principles and software

3. Timeframe

Bookkeeping is usually done daily, while accounting is done on a periodic basis, such as quarterly or annually.

4. Reporting

Bookkeeping generates basic financial reports, such as income statements and balance sheets. Accounting generates more complex reports, such as cash flow statements, financial forecasts, KPIs and financial ratios.

5. Legislation and Regulations

Bookkeeping is generally subject to fewer regulatory requirements than accounting, which must comply with accounting standards and other regulatory requirements.

Another difference between a bookkeeper vs accountant is the level of education and training required for each role. Bookkeepers generally require no formal education and undertake basic accounting training.  On the other hand, Accountants typically have a bachelor’s degree in accounting or finance and may also hold professional certifications such as a Chartered Accountant or Certified Public Accountant.

In a typical day an accountant may be asked a wide range of questions by clients well beyond the scope of the normal accounting and financial reporting. Some recent examples of these I have experienced include:

  • How much cash do I need to hold in my business?
  • How much is my business worth?
  • What are the best strategies for me to reduce tax? (This may include any of the following taxes)
    • Income
    • Capital Gains
    • Fringe Benefits
    • Payroll
    • Land
  • Can my business afford to increase its dividend payments?
  • Should I refinance my equipment for a fixed interest rate?

Why Both Bookkeepers and Accountants are Essential for Businesses

While bookkeeping and accounting are different functions, they are both essential for businesses. Bookkeeping provides the foundation for accounting by ensuring that financial transactions are accurately recorded and organised. Without accurate bookkeeping, accounting would be impossible.

Accounting provides valuable insights into a business’s financial performance, which can help businesses make informed decisions about their future. Accounting also helps businesses comply with regulatory requirements and provides a basis for evaluating the performance of managers and other employees.

bookkeeper helping clientBookkeeping and Accounting – We’ve Got You Covered

Bookkeeping and accounting are two distinct but closely related functions that play a critical role in the financial management of any business. If you need more information about either, or you’re looking at the best way to integrate one or the other into your business, the friendly team at Bishop Collins can assist. Get in touch with us today to see how we can help!

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