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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:



·         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.



·         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, 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 for information or further assistance on being SuperStream compliant.





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:

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.


Cash Flow is King

Money makes the world go and as we are all aware it is the only way that a business can survive.  Success or failure of a  business relies on the management of cash.  This is why it is so important from the very beginning of a business to monitor and have a really good handle on cash reserves.

Maintaining a healthy cash flow is important for every small business, regardless of the industry that the business operates in or type of business structure that the business operates through.   Once your business first experiences a cash shortage or timing flows which cause you to miss bill payments or render you unable to cover expenses, it can be difficult to consistently keep your business in the black or to keep it afloat.  Sometimes the proprietor propping up a business when cash shortages are experienced  can only be a short term measure for a long term shortcoming if not addressed immediately.

Seasonal businesses such as wool growing, sheep grazing and Broad acre farming and beef cattle grazing create an added complexity.  Meaning that the cash flow is not regular and the amount is unknown.  These variables make budgeting and cash flow challenging but not impossible.  It just means you have to monitor markets, exchange rates and the elusive weather.

The following points will help you improve the day-to-day flow of money in your business so you have cash on hand when needed: 

1. Stay on Top of Your Books

One of the quickest ways to lose control of your business finances is by failing to track money coming in and going out. Record both the cash receipts and payments regularly, and make a habit of checking what money is owed to you and who and how much you owe on a weekly basis.   If you employ staff, then looking at your staff obligations as well will provide a snapshot of what your short-term cash flow needs will be. If you don't have time or staff available to manage your books, enlist the help of a bookkeeper who can make sure your books are reconciled every month. There is no point putting off jobs for your business because you have to do the books.  It is important that new business proprietors look at the most efficient and effective use of money and time.  Sometimes we should all stick to what we are good at and get assistance for those that we are not so good at.

2. Send Invoices Promptly – Email can speed this up

It is difficult to get paid if your customers are not being invoiced in a timely manner. Make invoicing one of the first things you do at the completion of a project or when goods/services have been delivered to your customer.  With today's technology tax invoices should be able to be emailed through as soon as the job is completed.  This tax invoice should have account details so that payment can be transferred there and then.  It is also common place to have credit terms of 7 days.  This is not realistic terms because when you look at the time frame for payment for your suppliers you will see that they are probably 7 days as well.  As noted above review all open sales orders or jobs at least twice a month to make sure that a completed job has not been overlooked.

 3. Create a strict Accounts Receivable Process

How do you track money owed to your business?  It is important to keep on top of this area because in essence this is your lifeline.  At the commencement of your business or NOW if you have not addressed this area of concern, you need to formulate a credit policy.  This will include your terms of trade and what are the steps taken if the client does not pay on time.  These steps may involve advising the client that you are going to impose an administration fee on accounts which remain outstanding beyond your terms of trade.  Create a timeline for your accounts owing process so you know when you may need to call in outside reinforcements, such as a collections agency.

4. Get Rid of Unnecessary Expenses

It is important that you actively conduct a review of your business costs on a regular basis to see what can be cut or adjusted. Sometimes expenses can just go haywire and you need to look at them – expenses like sponsorship and advertising in small country towns can get out of hand especially when all the clubs approach you at varying times.  Without actively looking at this cost you would not be aware of how much is being spent in this area.  Even if there aren't many expenses you can eliminate completely, you may be able to work with vendors to change due dates so bills coordinate better with money coming into the business.

5. Offer Your Customers Multiple Payment Options

One way to help your customers pay on time is by offering several different options when it comes to paying invoices. At a minimum, consider taking payment by cheque and credit card or debit card. You can also make it easier for customers to pay you by providing an online payment option.  When deciding whether to have an eftpos machine available at your business please weigh up the usage to the cost of convenience of having the machine.  Again with technology and most people having a smart phone providing online bank account details might be an easy solution.

6. Payment in Advance for Project Work or large engagements

If you work on a project basis or for large engagements, it is always a good idea to require a portion of the total cost in advance. This means that you will have the money available for the initial costs and will avoid you having to fund the project from your own cash reserves.  On large engagements or projects you should agree to terms in a written contract so that  additional payments are due during specific milestones of the project. This helps you avoid having the bulk of the payment due at the end of the project.

7. Limit Inventory

If your business has inventory, you should look at the products you have in stock on a regular basis. To more effectively manage inventory determine which products do not sell quickly and only carry enough of those products to meet current customer demand. Inventory consumes cash and requires storage which costs money in the form of floor or shelf space.  For slow moving stock perhaps consider having a sale or a special discount day on those products.  You cannot possibly hold every product that your customer may need but if you can get it within 24 hours I am sure that is acceptable.

8. Use Payment Terms That Give You Breathing Room

One way to improve cash flow is to negotiate terms that shorten the collections cycle while extending the payment cycle. For example, ask your customers to pay you in 14 days or less while getting your suppliers to accept payment in 21 days or longer. The more effectively that you can employ this strategy, the greater likelihood of having sustainable positive cash flow.

9. Consider a Business Overdraft or Line of Credit

Another source of cash can be a business overdraft or a line of credit (LOC) with your financial institution. In addition to business credit cards, financial institutions will often provide a LOC that is secured by the assets of the business (i.e., equipment, inventory, receivables). It is important that you have the right funding needs and bank account to meet the needs of your business.  However please note that a start-up business is not going to be given the benefit of an overdraft and therefore needs to develop good business practises and a strong working relationship with their financial institution.  Having both these elements will only enhance the business.  Although everyone is in business to make a living, sometimes you need to lean on the services that are available to you to help your business go from strength to strength.

10. Anticipate and Plan

Sometimes life throws you a curve ball that you just were not prepared for and this causes your business undue stress but most times you are aware that things might need replacing or that you are going to incur a large cost.  You may not be able to anticipate all business needs, but you can make assumptions on some major expenditure. For example, if you know you are going to need to replace equipment in the near future, make sure you are setting aside funds to cover that expense well in advance.  If you are putting money aside then make sure that your money is working for you.  That is put the money into an account that is at least getting some interest.  Remember that there is no point having money sitting in a savings account earning 0.05% interest whilst your business account is constantly incurring bank overdrawn fees.  This would not be a wise use of your money.

With a little forethought and planning you can keep your cash flow healthy so your financials stay strong for the life of your business.

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Julie West
Rebecca Heath
Kerry Pretlove
Assistant Taxation Consultant
Elizabeth West
Graduate Accountant
Suzie Cranage
Off-Site Accountant/Tax Manager
Leanne Lloyd
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Abby Hepburn
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