Menu

 Welcome to my blog

Immediate Superannuation Reporting Changes

IMPORTANT CHANGES TO SMALL BUSINESS SUPER CLEARING HOUSE

If you currently use the Small Business Superannuation Clearing House (SBSCH) to lodge your employee's superannuation guarantee amounts please note they will join ATO online services on 26 February 2018 and will no longer be accessible with the current user ID and password authentication after 19th February 2018.

To enable the ATO to effectively transfer your data across to the new system payments via BPAY or EFT must be completed prior to 3pm AEDT on 19 February 2018. You can still review and update other information within the system. If you pay employer superannuation contributions monthly, we suggest you complete your payments prior to this time.

There will be no access to the SBSCH from Tuesday 20 February to Sunday 25 February inclusive.

As a result of integrating with online services, the new SBSCH will have functionality including the ability to sort employee listings and payment by credit card.

If West Currie Consultants currently lodge superannuation on your behalf, we will continue to manage your super obligations through our online channel.

However, if you lodge your own super online via SBSCH you can contact us at West Currie Consultants for assistance in the transition or alternatively you can go to www.ato.gov.au  and search SBSCH joining ATO for all your transition information.

What is Cloud Accounting?

 

It's simply using the internet to access software, data and storage.  Cloud accounting uses the internet, via a web browser, as the means of accessing the accounting software. Accounting packages can be purely internet based like Xero, or the software is able to be accessed in the cloud and at a desktop level, like Reckon and MYOB Account Right. Cloud-based accounting software does rely on good home or business internet connection speeds and unfortunately using a satellite internet connection doesn't quite "cut the mustard", constant improvements are being made to improve the internet access and reliability daily.

Cloud-based accounting software offers a number of benefits for businesses including:

·         Ease of access is the biggest advance.  Online accounting means just that – it is online!  You can access your businesses financial data from anywhere worldwide and at any time, from any compatible device.

·         Price is always important.  A monthly access fee is generally paid which usually works out less than the cost of buying the software and paying your annual subscriptions.

·         The ability for business owners to interact with West Currie Consultants in real time instead of having to send the data file to us.

·         The software is automatically kept up-to-date by the software provider.  This stops you continually having to update software as previous version become obsolete.

·         Backups are made frequently and automatic in online accounting packages, and in case of a hard drive crash, data recovery can be done easily.  Therefore, less chance of losing data.

 

Nothing is perfect, so what are the disadvantages of online accounting?

·         If your internet is down, you lose the ability to access your data.

·         Customer Support can sometimes be restricted to emails only – no human contact.

·         You have to depend on third-party services to keep your data secure.

·         Antivirus software and firewall protection must be kept up to date

·         You will have to keep your subscription current to maintain access to your online data,

If you're thinking of moving to a cloud based accounting software package like Xero, Reckon, Intuit or Myob, here at West Currie Consultants we invest considerable resources into ongoing staff training to ensure we can recommend the best accounting solutions for your business.  Choosing the right package for your business can be difficult, as there are over sixty accounting packages available in Australia. 

If you enjoyed this post, I'd be very grateful if you'd help it spread by emailing it to a friend, or sharing it on Twitter or Facebook.  Thank you! - Kerry Pretlove

 

Super Changes 1 July 2017

 

 

 

Review your plans and stay on track

As the 1 July 2017 is fast approaching and there have been numerous changes to superannuation.  These changes will have an impact on your retirement strategy and possibly the contributions that you make. Care needs to be taken to avoid contributing in excess to the levels – which will result in tax penalties.

West Currie Consultants has set aside a day for Robert Goudie – Financial Adviser to attend our Edenhope Office. 

As you have expressed concerns or raised issues regarding superannuation in the past, I thought it was an opportune time for you to attend a no obligation free service to review your situation and ask any questions or concerns regarding your superannuation, your retirement or transition to retirement.

See above, a flyer outlining when he is attending  - Please contact the Office as soon as possible to secure your appointment.

If you have any queries please do not hesitate to contact this Office.

Financial Wellness in 30 Days

 

 

As New Year's Eve has come and gone but the beginning of the financial year is fast approaching, I thought it might be a good opportunity to introduce a Financial Wellness Program over the next couple of months.

 

Similar to when making a News Years resolution, we all should aim to do an annual financial health check to see whether there are fundamental improvements to be made which would assist with achieving your goals. Like all resolutions this program requires commitment, if you are to jump out anywhere along the way the end financial goal or reward may not be as great.

 

Over the next couple of months, I am going to provide you with a 30 day program which requires you to examine one financial aspect of your life each day.  Remember that some of the days may not be applicable to you at this stage, however, remember that is it always good to have knowledge and/or the positives or negatives about a financial product prior to jumping in head first.

 

The following ten dot points correspond with the first ten days of the Financial Health check -

 

1.     Before getting too far into the wellness check it is important to have an idea of the big picture. When you are working towards an ultimate goal it makes the day to day decisions easier.  Set yourself a goal of where you would like to be in 12 months, 2 years, 5 years and even 15 years. We are all at different stages of the life cycle – for me at the moment I am wanting to save for overseas travel and need to plan my retirement.  Your goals also need to be measurable, being measurable means they can be managed. For example, my goal is to travel overseas, put more specifically - I want to go to China in July 2018 and I want to have $12,000 available for tickets, tours and spending money.

 

2.     Do a mini audit on your wallet - you need to know where you spend your money.  Before setting up a budget to achieve your long term goals you need to work out where you are spending your money  at the moment.  To be able to achieve goals and save some money you need to spend less than you earn.

  

3.     Planning and setting a budget - there is no point setting a budget which is just not workable or is not based on reality but is a figment of your imagination?  If you buy a coffee daily as part of your normal routine - then there is no point depriving yourself of that .  If you make the budget too hard and difficult to achieve – then  you want stick to it and therefore it will be like that News Year resolution that you make at 12 midnight and you have broken it by 12 midday on the 1st of January.

 

4.     Change of attitude to finances - being financially fit needs to be considered as important as physically fit and healthy.  Our attitude to money, savings credit and finances is learnt behaviour mainly form our parents and sometimes our grand parents. Sometimes this can be good or really bad. It may be that you need to modify your attitude to finances in order to feel confident that you are able to achieve your financial goals. 

 

5.     Talk - feel confident to talk about money with partner, family, friends and work colleagues. Talk about your goals and where you see yourself in the future.  Remember always be open and honest and always ask for opinions especially from your partner.  Remember that you are both in this together and you need to have a level of understanding and agreement on financial goals and future directions.

 

6.     Insurance – This is a topic that people are either comfortable talking about or they hate the topic and think that the whole concept is silly.  However, you need to re-assess you and your families insurance needs - Assess whether you and your family can continue to pay your accounts if something untoward was to happen.  Look at your Life insurance, total and permanent disabilities, income protection insurance and perhaps mortgage protection insurance.  Insurance is a means of reducing risks associated with life – compensating for the bad things that can happen – but it will not stop the bad from happening.

 

7.     Be a better saver - Easier said than done! However, sometimes the setting up a direct debit so that money is less available is the easiest way to compulsory save, especially if you are an impulsive purchaser of items that you really want without questioning whether you actually need the item. From your salaries you should budget on allocating at least 20% to savings, 50% on essentials in life, and 30% to lifestyle.  Sometimes the amounts allocated to lifestyle can be trimmed and a greater amount put to savings. Compare the amount that you are spending on lifestyle choices into the amount that you earn on an hourly basis. For example, if you earn $25 per hour after tax in your employment and then you go and buy takeaway food one night -  pay $60 for all your friends to eat.  You need to stand back and think wow I just worked 2.4 hours to shout tea.  This puts earnings and lifestyle choices into perspective.

 

8.     Understand the difference between good and bad debt - Bad debt is getting a loan for a depreciating asset like a private car, a boat, a gadget, a toy or a credit card that you are unable to clear at the end of the month.  Good debt is when we borrow for an asset that is going to increase in value like property or shares. Used wisely good debt increases your wealth.  You should have a look at your bad debt to see whether there is a better financing choice that will enable a better use of your money or try to clear that bad debt as soon as possible.

 

9.     Make sure that you always maintain good records - A fundamental aspect of financial wellbeing is knowing what money comes in and where that money is going.  You cannot do this unless you have good records.  Take the time weekly to check what is leaving your account in line with the receipts that you have in your wallets.  Your need to make sure that your partner is also involved in this process so that you can really assess where money is going and what it is being used for.

 

10.   Know your credit rating - this will be the first thing that a bank or financial institution will look at when you apply for a loan, making sure that you pay accounts on time and when they are due will help your credit rating. You can review your credit rating at the ASIC Money Smart Website, follow the link below - https://www.moneysmart.gov.au/borrowing-and-credit/borrowing-basics/credit-scores.

 

  

This is a starting list of things to do over the next 10 days.  I want you to analyse these areas before I introduce the next steps.  If you have any concerns, want to discuss any of these measures or want help with working out a spending and savings budget – just call, email or drop into to West Currie Consultants and the team will assist you in achieving financial wellness and your financial goals.

 

Keep your eye out for the next 10 steps to financial wellness in the coming weeks.

 

Motor Vehicle Claims

For many years we have had four methods for claiming the use of a motor vehicle in our business or for employment purposes.  These methods have been:

·         Log Book

·         Cents per km – depending on the engine capacity of the vehicle and up to 5000 business kms

·         12% of Original Cost of the Vehicle

·         One third of all expenses

The Australian Taxation Office as part of its simplification program have reduced the methods to just (2) two –

(1)    Log book method

(2)    Cents per Km – up to 5000 business Km's – this is now at one flat rate of 66 cents per km

This took effect from 1 July 2015, however,  it appears that some business owners have not quite understood the impact that the removal of these  methods have had on their ability to claim motor vehicles expenses and also the GST on these business expenses. For example. if you previously claimed 12% of cost of your motor vehicle, which provided you the best claim, this method has been removed and unless a logbook has been kept you  are limited to the 5000 business km's which doesn't always provide the best claim.

During the 2015/2016 financial period information was detailed in our West Currie Consultant newsletter, promoted through our Facebook page, website and direct communication with clients to ensure that they acknowledged that they needed to reassess their motor vehicle methods and that if a client was not comfortable with limiting your claim to 5000 business Km's then you were compelled to complete a log book.

If there is no log book maintained during this period, then the total deduction is limited to $3300.00 – 66 cents per Km.   The simplification for the cents per/km method was altered to a flat rate regardless of  what engine capacity the  vehicle is. This method also restricts the amount GST credits claimable on motor vehicle expenses to only  20%.

As you can see this budget measure for simplification of motor vehicles has actually left some business owners cornered on their motor vehicle claims.

Please note that these simplification rules apply to motor vehicles which are defined as –

·         Designed to carry less than one tonne

·         And less than 9 passengers

·         Motor powered road vehicle – including 4 wheel drive vehicles

Any motor vehicle outside of these parameters are considered commercial vehicles and as such are 100% business claimable.

If you are uncertain about the treatment of your motor vehicles or are wanting to maximise your claim please contact the professional staff at West Currie Consultants.

On another important issue – are you Superstream Compliant? If not, you must be immediately, please contact the office if you need any assistance with registering under the Superannuation Clearing House.

Post Election 2016

 

 

Uncertainty is not just something that we as Australians are faced with, whilst Australia is currently staring down the barrel of a gun at a Hung Parliament; on a global scale 'Brexit' has resulted in the UK voting to move out of the EU and the ongoing saga of the American Presidency campaign with Donald Trump on the rise. They all share a very common theme, that there is an ongoing political shift away from the status quo; there is a consequential amount of our society that does not feel as though the political agendas of the major political parties represent their desires for the future.

Whilst attending public practice seminars and tax school conferences, we were told time and time again to 'watch this space' until after the Election; regarding the budget and legislative changes.   However, here we stand, four days from the Election on 2 July, and whilst the counting of the votes has resumed we are no closer to knowing the fate of the Australian Government. We are still in, for lack of a better term 'Government Limbo'. If the actual process of voting, with those long white Senate papers squeezed into the undersized voting booths wasn't enough to unsettle you, or  was  it the difficulty with choosing 'at least 6' parties for the Senate with a pencil and the ambiguity of the parties, we are now faced with the possibility of a hung parliament.

Whilst not really following the Election Campaign myself, as eight weeks was far too long to go around and around,  I found myself refreshing the website on Saturday night, watching both parties sneaking forwarding and taking a seat each. People are really not convinced either way, especially with the words Hung Parliament being continuously thrown around. Keep in mind that since 1940 there have only been two hung parliaments, with the most recent being in 2010. In my reading what has resonated with me the most is that a hung parliament can produce instability, delays, stagnant or untimely policies and the possibility of the flipping between governments. Instability is all too common in our Australian Government in recent years.

What we should take from all of this. The uncertainty that lies ahead of us tends to have an impact on business and consumer spending habits, Siobhan Blewitt from Morgan Stanley says they are concerned that the election results could undermine business confidence, leading to weaker volume growth for the banks in the 2017 Financial Year. The implementation of policy will stagnate with the election outcome diminishing any hope of smooth legislative agenda in our parliament. Julie spoke with Siobhan Blewitt, who is a stoke broker, this morning and she indicated that this is the most volatile and uncertain that she has seen the stock market in the last 10 years, this is attributable to both domestic and international events.

The budget paper has all but been forgotten, and with no result from the Election to date, we are no further advanced to know which policies will and will not be brought in. The politics within the Parliament itself will create a large hurdle for anything at all to pass. However, we can only continue as normal and be as informed as we can be if an when the bills are passed and legislation is created.

For West Currie Consultants however, business is as usual. The end of the financial year has come and gone and we are well underway in the 2017 financial year, with some returns having already been done. While once upon a time July was a quiet gave all staff the time to reboot and recharge before the onslaught of a new tax year. However, with the increase in technology we have clients knocking on our doors as early as 1 July. As always we thank our loyal clients for their trust and look forward to working with you into the future.

2016 Federal Budget

 

 

 

The 2016 Federal Budget has all but been forgotten in the wake of the Election set for 2 July 2016.  It is important to remember that the budget is merely a proposal put forth by the government of the day, it is not actually law until these policies get passed by the newly elected party.  Whilst there has been plenty of negativity surrounding the budget, there are also some advantageous measures coming out of the budget.

The relevant policies to take from the budget, holding the assumption everything comes in as proposed:

Superannuation:

-Positives

·         Removal of the work test for people aged over 65, as such everyone up to 75 can contribute to super and get the concessional tax deduction,  which from 1 July 2017 is $25000. This is a great initiative for the super space!

 

·         Removal of 10% Test: Even if you are earning wages and employer paying super you can contribute and get a tax deduction up to an aggregate $28K per year.

-          This paves the way for a greater range of options and flexibility in tax planning.

 

·         Allowance of catch-up concessional super contributions, for example, if you have only contributed 5K of the available concessional contribution each year for past 5 years, you can catch up using $25K annual deduction. The catch (as always) – an individual must have less than $500K in super to do so.

 

-Negatives

·         Removal of tax exemption on earning of assets supporting (TRIS). Whilst the option is still available, any income earned on fund will be taxed at 15%. Will be best to look at stopping your Transition to Retirement or conversely, convert them to a normal pension, if this option is available to make use of the tax free income threshold.

 

·         Limit of $500K on amounts that can be put into super on a non-concessional basis: this includes anything put in since 2007. However, I would suggest that you watch this space as the retrospectivity of this policy has caused quite the stir.

 

·         Introduction of $1.6Mil superannuation transfer balance cap, this cap is on the total amount of super you can transfer into pension phase. However, the majority of pensions will still be tax free within the superfund, up to $1.6Mil.

Regardless of the Government, Super is always a changing vehicle, make the most of the good policies while you can! Most of the measures are not proposed to change from 1 July 2017, so still plenty of time to make use of the current measures.

 

Other proposals relevant to our client base:

·         From 1 July 2016, 32.5% personal income tax threshold from $80000 to $87000. A slight tax saving for those creeping up a tax bracket.

 

·         Small business income tax offset (SBITO)  from 1 July 2016 will increase from 5% to 8%, however the $1000 cap per individual will remain – thus negating any benefit from such a proposal!

 

·         Reduction in company tax rate, 1 July 2016 will be 27.5%

 

·         Reminder of the $20000 Plant & Equipment Immediate Write off and the Primary Producer Accelerated measures :

 

o   Immediate deduction for Water Facilities – dams, tanks ,bores, irrigation channels, pumps, water towers and windmills

o   Immediate deduction for Fencing Assets – a repair of a capital capture, addition or extension

o   Three year Depreciation for Fodder Storage Asses – silos and tanks used to store grain and other animal feed.

I can't stress enough to 'watch this space', having attended two conferences post budget those three words were the most important piece of information given!

 

EOFY

  

 

 

EOFY, for those of us that are not up to speed with this acronym it stands for End of Financial Year.  The EOFY is fast approaching Easter Bunny has been, we have reverted to normal time (if there is such a time), we are well and truly into the football season, it is Federal Budget Day and we are now into the final quarter of the 15/16 financial period – we have some planning to do!

Planning might be in the form of the cropping program or your shearing and lambing programs.  It might be planning and budgeting to ensure that you have enough cash to get you through until the lambs and wool are sold or until harvest time.  Doing preliminaries figures, with the aim to minimise tax liabilities is also a great means of planning, it puts you in the informed position to make clear and concise decisions which are beneficial to you, your business, your family, and your future wealth.

Knowing your situation prior to year-end enables you to make constructive decisions about the following:

·         The redemption of or in putting in of Farm Managed Deposits

·         Superannuation contributions, using maximum levels may be extremely beneficial depending on your age

·         Cashflow

·         Tax circumstances

·         Revisiting of Loans – in these times of low interest rates

All of the above points made are connected to each other, which is why it is so important to ensure you have as much knowledge of your circumstances as you possibly can.

Planning must be done at many stages of our lives; there are times when we can just wing it. However, for important things including finances and wealth generation it is in your best interest to make a plan, or at the least advert your mind to a plan.

The majority of us use a diary to keep track and write down important notes and dates, some more religiously than others.  My Dad recently commented a couple of weeks ago that his diary nowadays has more medical appointments than social engagements – this  shows how our lives can quickly evolve as we move from one stage to the next in the "Circle of Life". 

Perhaps I have got a bit off track, but with the speed at which the days months and years are going past, planning is of extreme importance, and whilst tax planning is never easy or necessarily exciting, it is beneficial.  It helps us to ensure that we have covered and thought of all issues that are affecting our lives, businesses and families. 

Planning needs to be dynamic and adaptable to changes in any circumstances.  We all know in the primary production industry especially, that a plan is effective, until it doesn't rain or the livestock prices drop. Unfortunately we cannot plan for the weather or the conditions. Planning is not preparing a budget for the Bank Manager and then filing it in the bottom draw of the desk never to be referred to again.  It needs to change when circumstances change.  Variances need to be implemented and reflected in the plans or the budget.

We all need to start thinking about the big picture, into the future – the next 10 years.  For some of us that will be business succession and retirement, for others this will be children's educations and university fees and for the younger generation it will be buying a house and having babies. From all stages of life planning is important.

Now for some more important changes for the 2015/2016 financial year

·         Reduction to Company tax rate for small business – Rate drops to 28.5%

·         Tax Discount for unincorporated small businesses – this is a tax offset to a maximum of $1000 on net small business income.

·         Small Business – Capital Allowance – Immediate deduction for depreciating assets acquired and first used or installed ready for use on or before the 30 June 2017.

·         Primary Producers Capital Allowance – Fodder storage assets purchased during this period can be deducted over three years.  Fences and water facilities are outright deductions.

Important planning considerations that may need to be taken into account prior to year end

  • Primary producers have the option of tax averaging.  This enables the evening out of income due to the uncertain and seasonal nature of the industry.  In times of drought it is important to assess the impact that taxable income is having on average incomes.  Sometime it is necessary to consider opting out of the averaging system.  However, as this is irrevocable it needs to be discussed and examined carefully.
  • Variations to PAYG Tax Instalments – planning puts you in the driver's seat to be able to decide whether your tax instalments are too high and need to be varied.  This can provide a cash flow advantage when money is fairly tight.
  • Farm Management Deposits – planning and knowing your tax position means that you can withdraw any deposits that you have especially in times of drought or it may be that you want to add  a Farm Management Deposit to your tax planning.  There are rules to the amount that can be deposited so please ensure that you discuss this before tying up cash resources.
  • Make sure all accounts are paid prior to the end of the financial year.  However if this is going to result in a loss then the payment of these accounts may not be as important.  Planning puts you in the position to know where you are at and to ensure that the utilising of your valuable cash reserves are put to the best use of your money.

 Making money is hard work, holding that cash and making it work for you is even harder.  We need to be vigilant planners, spend wisely and make every decision a winning goal for your business.

 

Superstream - Your Time Is Almost Up!

 

SuperStream is a Government reform requiring employers to pay their employees superannuation contributions using the government's new data standards.  In layman's terms, it means all superannuation contributions need to be made and recorded electronically – no more cheque writing.  Cheque payments will not be accepted after 30 June 2016 and super funds will return any payments made by cheque.  This will also result in you being non-compliant and may result in ATO imposed interest and fees.

 

Employers will have to comply with following two things under SuperStream:

 

1.      The payment must be made electronically to the nominated superfund.

2.      Details of the payment transactions, such as employee name, Tax File Number and Super Fund member number are also sent to the superfund.

 

What does this mean for you?

Small employers (19 or fewer employees) must meet the SuperStream standard by 30 June 2016.  Here's what you need to do:

 

1.      Choose an option

·         Super clearing house

A clearing house pays super to your employee's funds for you.  You send a single electronic payment to the clearing house, together with the contribution data for all your employees, and the clearing house does the rest.  If you have 19 or few employees, or a turnover of less than $2 million a year, you can use the ATO's free Small Business Super Clearing House. Julie uses the ATO's free Small Business Super Clearing house, she has found if effective and efficient. The team at WCC have also assisted clients to register for this clearing house.

·         Your super fund's online system

Large super funds have online payment services you can use.  Check with your fund.

·         Payroll System that meets SuperStream standards

If you use a payroll system, check with the system provider that it is SuperStream ready.  You may need to update your system.

 

2.      Collect information and update your records

To use SuperStream you'll need to collect some new information from your employees, see below, in addition to the information you already use to pay super.

 

Once you have this information, enter it into your system, along with the other details you use to pay super, and you're ready to use SuperStream.

 

You only need to collect this information for current employees.  New employees who choose their super fund will fil out a standard choice form, which will have all the information you need.

 

Ask your employees for the following information, if you don't have it already:

·         Employee tax file number

·         Fund ABN

·         Fund unique superannuation identifier (USI)

 

If your employee has a self-managed super fund (SMSF), they need to give you slightly different information:

·         Employee tax file number

·         Fund ABN

·         Fund bank account details

·         Fund electronic service address

 

3.      Use SuperStream

Start using SuperStream ASAP, with only just over three months left, this will enable you time to get used to the system prior to 30 June 2016.

 

As employer, it is still up to you to meet your super guarantee obligations by the due dates.

 

Handy Tip - * If you're using a clearing house, check how long they will take to send the money and information to the super fund.  Generally an employee's super contribution is counted as being paid on the date the fund receives it.  Not the date a clearing house receives it from you.

 

Now is the time to finalise your plan for SuperStream and start processing your first employer contributions using SuperStream.

We understand moving electronic can be overwhelming and confronting, and the information out there can be wordy and confusing. Just remember everyone is in the same position as you, the steps are really quite easy, and once the initial work of getting your SuperStream up and running is completed, the paying of superannuation process may seem easier.

The team at West Currie Consultants are here to assist you in any way you may need to ensure you are comfortable with SuperStream and continue to be Super Compliant.

 

Call us today on 55 851 522 or email reception@westcurrie.com for information or further assistance on being SuperStream compliant.

Dry....Drier....Driest

 

 

 

2016 marks 20 years that West Currie Consultants have been attending Nhill.  During my first year working in Nhill a client told me that the water tap turned off when I hit town and today we are still praying for that tap to be turned back on.  Throughout these 20 years there have been many ups and downs within the primary production industry, from wool prices to fat lamb prices.  Unfortunately getting the right amount of rain flow at the right time seems to be the hardest variable to keep constant and is made harder because it is out of any one person's control.

It seems that every couple of years, we talk, read and watch releases about DROUGHT -the consequences of a lack of rain on our industry, our towns, our communities and our mental health and wellbeing.

We google the weather maps daily to see when the rain might be coming and what the 12 month forecast is, to enable us to start planning for the pending growing season.  With the seasons usually starting well there is optimism in the air and then, out of the blue, we are dealt a curve ball.  There is either a week of blistering heat that shrivels the grain in the filling heads or an untimely downpour which may cease harvest or kick in the summer weed problem causing  an earlier than normal chemical bill - one that we really cannot afford.

Feeding stock and examining stock holding ratios start causing sleepless nights, we assess the fodder levels we have against what we need to get us through until the rain comes to give a green pick to the ewes and lambs.  Additional fodder expenses are again something that was not in the budget and something that we cannot afford.

It is really hard to continue to pick yourself up, dust off your trousers and forge forward - especially when no matter how efficiently and effectively you run your farming operation there is a reliance on moisture, which given the past 20 years is uncertain and inconsistent.

Banks have traditionally been happy and content to lend against the value of the farming property.  The farmer has been able to obtain additional operating funds to put in crops after bad seasons due to the value of the land being high enough to satisfy the financial institutions requirements.  However, as the length of dryness continues and we are on the back of two ordinary seasons - banks are sure to start questioning serviceability for the debt.

Serviceability of debt forces business owners to examine whether they are in a position to repay debt if another bad year transpires.  One must assess whether the cash flow and income generation will enable them to repay all debts as and when they fall due, or do they need to go to the bank again with a heavy heart and ask for some faith in their business history - as time goes by business history may become a thing of the past.

Recently the interest rate has been extremely kind, with it reducing or flat lining and is providing some breathing room and making it comfortable for businesses which carry any debt.  However, any increase in interest rates will have an untimely and significant impact on businesses which are just surviving and will be catastrophic to those that are relying on household support to meet day to day living costs.

Business owners need to look at their debt levels and ascertain whether, if interest rates were to increase to 8-10% would the business be able to sustain this increase.  Farmers need to look at their situations in three categories: worst case, average and above average scenario.

There are programs released by State and Federal Government on how to drought proof our properties with water storage facilities and fodder storage and there are programs and opportunities to reassess how to continue moving forward under these relenting conditions.  Please see our December newsletter or follow the link posted below for further information:

 http://www.agriculture.gov.au/ag-farm-food/drought/assistance

Crunch time has arrived.  Although the rain, or lack thereof, directly affects farmers and primary producers, it has an overall effect on our economy.  All our businesses rely heavily on the season the farmers are having, when money is tight for the farmers this passes down the line to luxury items, cafes, pubs, hairdressers, clothing stores and other business which are not needed for basic survival.

We all need to actively seek assistance and help from the many programs and drought packages which are available. 

It is not the time to be too proud to accept help.

You are not alone; your neighbour over the paddock or the small business in your town is in a similar situation to you.

 

What We Do

At West Currie Consultants we aim to provide you with advice when your business needs it, not just when you ask for it.

READ MORE

Who we are

At West Currie Consultants we are committed to forming close partnerships with our clients...

READ MORE

Tool Box

Click the links to access these resources

READ MORE

Meet The Team

Julie West
Partner/CPA
FIND OUT MORE
Rebecca Heath
Partner/CPA
FIND OUT MORE
Kerry Pretlove
Assistant Taxation Consultant
FIND OUT MORE
Elizabeth West
Graduate Accountant
FIND OUT MORE
Suzie Cranage
Off-Site Accountant/Tax Manager
FIND OUT MORE
Leanne Lloyd
Administration Team
FIND OUT MORE
Emma Kennett
Administation Team
FIND OUT MORE

Latest News | RSS

West Currie Consultants Blog

Contact / Connect