As you’re no doubt, acutely aware, running a business inAustralia requires careful oversight of your tax obligations to ensure your financial affairs are truly in order. One such tax that may not be on your radar is Division 293 tax.

Below, we will shed some light on what Division 293 tax is and why it's essential for you as an Australian business owner to be aware of it…

What Is Division 293 Tax?

Division 293 tax is an additional levy introduced by theAustralian Taxation Office with a specific target: high-income earners. Its purpose is to minimise the generous tax benefits high-income individuals might receive from their superannuation contributions. Normally, superannuation contributions are taxed at a concessional rate of 15%. However, Division 293tax essentially doubles this rate for certain high-income earners, imposing an extra 15% tax on their contributions.

Here's a key point to note: If the combined total of your adjusted taxable income and your Division 293 super contributions for a financial year equals $250,000 or more, you could be liable for this additional tax.

Am I Considered a High-Income Earner?

You might wonder if you qualify as a high-income earner. TheATO has specific criteria for this classification. You are deemed a high-income earner if your Division 293 income exceeds $250,000 in a financial year. This income is determined through the 'Adjusted Taxable Income' calculation, which takes into account various components, including your taxable income and personal concessional contributions.

Why Does Division 293 Tax Exist?

The ATO introduced this tax to bridge the gap between the tax concessions available to high-income earners and those accessible to average-income earners regarding superannuation contributions. The existence ofDivision 293 tax is basically all about promoting equity in the Australian tax landscape, ensuring that all Australians, regardless of their income, benefit from tax concessions fairly and equitably.

Examples of Division 293 Tax Calculations

Let's illustrate the application of Division 293 tax with a couple of examples:

Individual Scenario: Suppose your Adjusted TaxableIncome is $300,000 with concessional super contributions of $27,500 in the 2023 financial year.

• Division 293 Tax = $27,500 * 15% = $4,125

Business Owner Scenario: If your Adjusted TaxableIncome is $240,000 with concessional super contributions of $27,500 in the 2023 financial year.

• Division 293 Tax = $17,500 * 15% = $2,625 (since only $17,500 exceeds the $250,000 threshold).

Frequently Asked Questions

1. ‍How will I know if I owe Division 293 Tax? Once you have lodged your individual tax return and the ATO has collected information from your superannuation funds, they will assess whether you owe any Division 293 Tax. If you do, the ATO will send you a notice detailing their calculations and when the payment is due.‍
2. What are my payment options? You can choose to pay directly from your personal bank account. Alternatively, you can fill out a nomination form to have the amount deducted from your superannuation account.‍
3. Can I avoid this tax? While it's absolutely essential to adhere to all tax obligations, your Attune team member can guide you through the most appropriate strategy for your situation that may reduce your Division 293 tax liability.

If you're a small to medium-sized business owner and have questions about Division 293 Tax and its implications for you and your business, it's crucial you speak with the Attune team so we can provide clarity and the best way forward for you.

We invite you to book an appointment via our website or call us on 1300 866 113. Our team of specialists is hereto guide you through the intricacies of your tax obligations and associated laws, ensuring that you're compliant and taking advantage of the best financial strategies for your business.

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As a business owner, you juggle various roles, from operations and customer service to possibly even manufacturing. Amidst it all, you may find yourself wondering, "When will I start making money?"Whether your business deals with products or services, you've likely encountered the term 'breakeven analysis.' But what exactly does it mean, and why is it important? At Attune Advisory, we understand the complexities of managing a business, and we're here to guide you through the intricacies of breakeven analysis.

What is Breakeven Analysis?

At its core, breakeven analysis serves as your financial lantern, illuminating the path to determine the minimum amount of sales you need to coverall your expenses. This is the point where you're not yet turning a profit, but you're not sinking into debt either.

The Significance of Breakeven Analysis

Your breakeven point is like a financial safety net. It provides valuable insights for setting sales targets, pricing strategies, and expansion plans. In essence, breakeven analysis empowers you to make informed financial decisions to ensure the stability and growth of your business.

Performing a Breakeven Analysis

Step 1: Fixed and Variable Cost Types

Begin by identifying your fixed costs, which remain constant regardless of your sales. These costs typically include expenses like office space rent, utilities, and staff salaries. Next, list your variable costs, which vary based on the volume of products sold or services rendered. Variable costs encompass expenses such as materials for products and additional labour you might need to deliver services.

Step 2: Crunching the Numbers

The breakeven analysis formula is pretty straightforward:

Breakeven Point = Fixed Costs / (Price per Unit (or Hour)– Variable Cost per Unit (or Hour))
That mathematics is simpler than it first appears – simply plug in your costs and prices, and you'll easily find your breakeven point.

Why Breakeven Analysis can be Your Best Friend

1. ‍Strategic Pricing: Breakeven analysis helps you establish optimal pricing for your products or services, preventing under-pricing while allowing you to maintain competitiveness and not sacrifice profitability.
2. Financial Transparency: Understanding your breakeven point offers valuable insights into efficient cash flow management. It unveils the minimum revenue required to sustain your business and plays a critical role in shaping your overarching business strategy.

Frequently Asked Questions:

• ‍What About Businesses Offering Both Products and Services? If your business combines products and services, you can conduct individual breakeven analyses for each category and then consolidate the findings for a comprehensive overview.‍
• Is Breakeven Analysis Beneficial for Startups? Undoubtedly. Breakeven analysis is indispensable for startups as it builds a financial guide that can facilitate funding acquisition as well as establish a path for future growth.‍
• Do I Need To Maintain and Refresh MyBreakeven Analysis? 100%. It's imperative to regularly review your breakeven analysis. With changing costs, fluctuating prices, and evolving business dynamics, performing annual updates is a prudent practice.

As you can tell, our belief is that understanding your breakeven point, whether your business deals in products, services, or a combination of both, is not a luxury – it's a necessity.

Having said all this, if you find breakeven analysis overwhelming or are looking for some help to get it right, let's tackle it together– you're not alone. At Attune Advisory, we're here to simplify the process for you. You can book an appointment with us via email or reach us at 1300 866 113, and we'll help you navigate your breakeven analysis and other financial aspects of your business with tailored advice that supports your business strategy.

Running a business in today's fiercely competitive landscape involves navigating complex challenges, embracing innovative technologies, and weathering global economic, political, and health uncertainties. These factors introduce intricacies, heightened risks, and increased ambiguity, underscoring the importance of sound financial strategy for maintaining a competitive edge.

However, many businesses grapple with the dearth of experience, expertise, or capital required to tackle these financial intricacies effectively. Balancing the multifaceted demands of a business often results in stunted growth especially in the startup ecosystem, where financial guidance is pivotal, yet resources are limited.

This dilemma is exactly why we offer our Virtual CFO service …

But what exactly is a Virtual CFO?

A Virtual CFO, also known as an Outsourced CFO, offers the same strategic financial insight and manoeuvring as a traditional CFO. However, the key distinction lies in their outsourcing arrangement and part-time or ad-hoc engagement.

This flexible model empowers businesses to harness expert financial guidance and strategy without shouldering the full cost of a permanent CFO. Attune Advisory’s Virtual CFO is the perfect solution for businesses seeking the expertise and financial insight of a CFO, without the permanent full-time employee price tag.

Here are four unmistakable signs that your business could benefit from a Virtual CFO:

1. You're Overwhelmed by "In" and "On" Business Tasks

Achieving a delicate equilibrium between working "in"and "on" your business is pivotal for sustained success. It's easy to become ensnared in day-to-day operational demands, leaving scant room to envision growth opportunities and strategic planning.

Alternatively, you might be dedicating considerable time to financial tasks, fund allocation, and business strategy, but a lack of financial expertise could render these efforts time-consuming and inefficient.Juggling all aspects of your business, though commendable, can prove counterproductive.

If your business faces a challenge in striking this balance, it's a clear signal that you could benefit from a Virtual CFO. Our Virtual CFO service creates an environment that fosters equilibrium, allowing you to allocate more time to your niche while benefiting from fresh financial perspectives to drive informed strategic forecasts and decisions.

2. Your Business Battles Financial Hurdles

A Virtual (or Outsourced) CFO can be structured in a way that best suits your business, but ideally would assume responsibility for overseeing all financial functions within your organisation. When your business encounters financial turmoil, we bring our seasoned skills and experience to the table, helping to steer your company toward financial stability.

A Virtual CFO can develop a comprehensive three-to-five-year financial plan, furnish monthly consolidated reports for informed decision-making, assess the timing and quantum of future capital raising, evaluate your company's valuation at specific milestones, and delve into essential financial metrics for your industry and plenty more.

3. Your Business Seeks Expansion or Experiences Rapid Growth

Business expansion invariably ushers in increased risk and heightened planning needs. A Virtual CFO is primed to develop the financial infrastructure your growing business requires. We can ascertain the most cost-effective tax structure, guide you through multi-state registrations, leverage our extensive network for equity and investments, and ensure robust financial reporting and risk assessment.

Our experts understand that startups and SMBs or SMEs have their sights set on growth. We’ve walked in your shoes, making our insights invaluable in devising effective strategies for your business's journey to success.

4. Your Business Lacks an ExitPlan

As the day approaches when you contemplate selling your business or making an exit, strategic planning becomes paramount. A Virtual CFO can offer commercial and strategic counsel to position your business favourably for sale. We assist in defining strategic objectives, refining market positioning and pricing, instituting corporate governance and ongoing reporting, optimising business structure, exploring domestic and international expansion, formulating HR strategies, and tackling other mission-critical concerns.

A forward-thinking Virtual CFO safeguards your business against value erosion by identifying and mitigating risks. We adopt a multifaceted approach to maximise your company's true worth, implementing processes and strategies over time to prepare your business for a successful exit. Preparing a business for sale is a gradual process, and engaging a Virtual CFO several years in advance is a prudent move.

Leverage the Expertise of Virtual CFOs

Our Virtual CFO Service can be relevant at any stage of your business's life cycle, whether you need short-term capital infusion or long-term growth planning. Regardless of your unique financial position, aVirtual CFO customises strategies, offers guidance, and facilitates planning to cater to your business's needs. With our expert guidance, you save both time and money.

To explore how our Virtual CFOs can empower your business, get in touch with the Attune team today on 1300 866 113. Your financial journey awaits, with your highly skilled Virtual CFO to guide the way.

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In the world of business, the age-old adage "You need to spend money to make money" rings true (generally). Yet, without proper financial planning and budgeting, companies risk overspending, accumulating debt, and jeopardising their financial goals. A well-structured budget serves as a compass, ensuring that businesses allocate resources efficiently, remain accountable, and steer clear of financial turbulence.

For business owners, the importance of crafting a strategic budget cannot be overstated. Here, we delve into the significant advantages of establishing a robust budget for your business:

1. Achieving Financial Goals

Every business owner harbours dreams of growth and expansion.However, without effective financial planning, these aspirations can remain out of reach. A budget serves as the roadmap to your financial objectives, guiding you through resource allocation, cost-saving strategies, and expenditure control. Employing a 3-way model – incorporating budget, forecasts, and cashflow – provides a holistic framework for efficient business planning and management.

2. Prioritising Expenses

Throughout your business journey, there will be periods where specific activities demand prioritisation. However, limited cash flow may hinder such endeavours. By integrating forecasts into your budget, you gain a clearer understanding of where your resources are best deployed. This insight enables you to optimise resource allocation, redistributing funds from less crucial areas to high-priority projects. To achieve this, always consider both your budget and forecast within your financial planning.

3. Effective Debt Management

Debt is an inescapable facet of most businesses, particularly startups and SMBs or SMEs grappling with uneven cash flows. It's easy to overextend credit and accumulate debt in pursuit of growth opportunities.Efficient cash flow management is the linchpin for effective debt management.Your budget should account for inflows and outflows, ensuring you meet payment deadlines without incurring late penalties or additional interest. Clear payment plans in your budget help proactively manage cash flow and honour financial obligations.

4. Preparing for Emergencies

While most expenses are foreseeable, external factors such as economic downturns or unforeseen crises can severely impact businesses. SMBs / SMEs, in particular, are vulnerable, often resorting to borrowing in dire circumstances. A well-structured budget allocates funds to an emergency fund, safeguarding your business from reactive resource reallocation during times of instability. This financial safety net provides the flexibility needed to maintain operations during challenging periods.

5. Informed Financial Decision-Making

Business owners frequently grapple with pivotal decisions that can shape their company's destiny. When it comes to allocating financial resources, having comprehensive information at your disposal is paramount. A3-way financial planning model empowers you to assess the consequences of your choices, from their impact on debt obligations to potential resource redirection from high-priority activities. For instance, deferring bonus payments to the next fiscal year can both reward employees and alleviate tax liability.

The Real Power of Effective Budgeting

Indeed, spending is an integral part of business growth.However, budgeting, along with forecasting and cash flow management, ensures that your expenditure is strategic, timely, and well-directed. Your business can only expand as far as its resources allow, and effective budgeting keeps the engines running smoothly while keeping debt in check.

If you require guidance in budgeting for your business, the Attune Advisory team are perfectly placed to help you formulate and implement a robust financial strategy and budget that is tailored to your business’ unique circumstances.

For insights into how we can assist you with your budget and strategy, reach out to us today on 1300 866 113 or send us an email to start the conversation– your financial success awaits!

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As the financial year progresses, it's crucial for both individuals and businesses to stay on top of their tax obligations. To assist you in keeping track of these vital dates and ensure you meet your tax lodgement requirements, we have compiled a comprehensive list of key October deadlines (provided by the Australian Tax Office (ATO)).
 
And remember, even though the first deadline is just weeks away, it’s not too late to get tailored, strategic tax advice and lodgement assistance with the Attune team. Now, let’s dive in...

October 21, 2023

1. PAYG Instalment Notice (Form N)‍

• Pay your annual PAYG instalment notice.
• Lodge only if you need to vary the instalment amount or use the rate method to calculate the instalment.

‍2. PAYG Instalment Activity Statement‍

• Lodge and pay quarter 1, 2023–24 PAYG instalment activity statement if you are the head company of consolidated groups.

‍3. Monthly Business Activity Statement

• Lodge and pay your September 2023 monthly business activity statement.

October 28, 2023

1. Activity Statement

• Lodge and pay quarter 1, 2023–24 activity statement if you choose to receive and lodge by paper and are not an active Single Touch Payroll (STP) reporter.
• Pay your quarter 1, 2023–24 instalment notice (form R, S, or T).
• Lodge the notice only if you need to vary the instalment amount.

2. Super Guarantee Contributions

• ‍‍Ensure you make super guarantee contributions for quarter 1, 2023–24 to funds by this date.
  Note: Employers failing to pay the minimum super contributions for quarter 1 by this date must pay the super guarantee charge and lodge a Superannuation Guarantee Charge statement by 28 November 2023.

‍3. Annual Activity Statement for TFN Withholding‍

• Lodge and pay the annual activity statement for TFN withholding for closely held trusts where a trustee withheld amounts from payments to beneficiaries during the 2022–23 income year.

October 31, 2023

1. Client List Update‍

• This is the final date to add new clients to your client list to ensure their 2023 tax return is covered by the lodgement program.
  Note: The lodgement program is a concession provided to registered agents, and the ATO may request documents to be lodged earlier than the lodgement program due dates.

2. Tax Returns for All Entities‍

• Lodge tax returns for all entities if one or more prior year returns were outstanding as at 30 June 2023.‍

Notes:‍

1. This means all prior year returns must be lodged, not just the immediate prior year.
2. If all outstanding prior year returns have been lodged by 31 October 2023, the lodgement program due dates will apply to the 2023 tax return.
3. Self-managed superannuation funds (SMSFs) in this category must lodge their complete Self-managed superannuation fund annual return by this date.
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3. Tax Returns for Prosecuted Entities‍

• Lodge a tax return for all entities prosecuted for non-lodgement of prior year returns and advised of a lodgement due date of 31 October 2023.

Notes:‍

1. Some prosecuted clients may have a different lodgement due date – please refer to the letter you received for the applicable due date.
2. Payment (if required) for individuals and trusts in this category is due as advised in their notice of assessment.
3. Payment (if required) for companies and super funds in this category is due on 1 December 2023.
4. SMSFs in this category must lodge their complete Self-managed superannuation fund annual return by this date.

4. Reports and Returns
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• Lodge your Annual Investment Income Report (AIIR).
• Lodge your Departing Australia Superannuation Payments (DASP) annual report.
• Lodge your Franking account tax return when both the: Return is a disclosure only (no amount payable); Taxpayer is a 30 June balancer.
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• Lodge your PAYG withholding annual report no ABN withholding (NAT 3448).
• Lodge your PAYG withholding from interest, dividend, and royalty payments paid to non-residents – annual report (NAT 7187). This report advises amounts withheld from payments to foreign residents for: Interest and unfranked dividend payments that are not reported on an Annual Investment Income Report (AIIR).
  Royalty payments.

• Lodge your PAYG withholding annual report – payments to foreign residents (NAT 12413). This report advises amounts withheld from payments to foreign residents for: Entertainment and sports activities; Construction and related activities; Arranging casino gaming junket activities.
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• Lodge your lost members report for the period 1 January – 30 June 2023.
• Lodge your TFN report for closely held trusts for TFNs quoted to a trustee by beneficiaries in quarter 1, 2023–24.
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By adhering to these important tax lodgement deadlines, you can ensure compliance with the ATO and avoid potential penalties. If you have any questions or require assistance with your tax lodgement, don't hesitate to reach out to the Attune Advisory team via 1300 866 113 or by sending us an email. We're here to guide you through the processes and offer tailored, strategic advice to help you build your financial future.

Navigating the intricate world of trusts in Australia can feel like navigating a maze, with one of the pivotal decisions being the choice between an Individual Trustee or a Corporate Trustee. The stakes are high, and making the wrong choice can have significant consequences. At Attune Advisory, we understand the complexities and pressures that small and medium-sized business owners can face, so below, we dissect the differences between a Corporate Trustee and anIndividual Trustee and shed light on why a Corporate Trustee could be a game-changer for your structure.

Corporate Trustee vs.Individual Trustee: Unravelling the Differences

The Basics

To put it simply, an Individual Trustee is a person, while aCorporate Trustee is a company established specifically to act as a trustee.While both options have their merits, your choice should revolve around your long-term goals and the level of control you want to maintain. Discussing your long-term goals with our strategic advisors can make all the difference to how you create your structure.

Why It Matters

Your choice between a Corporate Trustee and an Individual Trustee has a profound impact on how you manage trust assets, personal liability, and even succession planning. Small oversights at this stage can lead to significant challenges in the future, making it a decision that should be carefully considered – and that’s where we can help.

Advantages of a CorporateTrustee

Liability and Protection

A Corporate Trustee offers inherent limited liability. What does this mean for you? It creates a protective barrier between your trust's debts and your personal assets. Moreover, the corporate structure separates the legal ownership of trust assets from the beneficial ownership, safeguarding trust assets from your personal debts. In essence, it's a two-way protective shield, reducing risks and uncertainties.

Succession Planning

While no one enjoys contemplating it, succession planning is considerably more straightforward with a Corporate Trustee. Ownership can be transferred without altering the trust deed, ensuring a seamless process that saves you both time and money.

Why a Corporate Trustee MakesFinancial Sense

Individual trustees often necessitate separate asset titles foreach trust they oversee. In contrast, Corporate Trustees streamline this process, potentially saving you a substantial sum in stamp duty and other transactional costs over time.

Frequently Asked Questions

What's the Initial Cost Comparison?

At first glance, creating an Individual Trustee may appear cheaper, but a Corporate Trustee often proves to be more cost-effective in the long run, considering the benefits it offers.

How Difficult is it toTransition from an Individual to a Corporate Trustee?

While it's possible, this transition involves paperwork, time, and financial expenses. It's usually advisable to make the right choice up front to avoid complications later – once again, it’s best to speak with the Attune team first up to help with making the right choice that suits your specific situation.

What About Tax Implications?

It's important to note that the structure of the trustee does not affect the tax paid by the trust beneficiaries.

We’re Your Path to aTrustworthy Trust

Are you ready to delve deeper into why a Corporate Trustee maybe the optimal choice for your trust structure? We're here to guide you every step of the way with tailored, strategic advice that works for you. You can book an appointment via email with the Attune team or reach out to us at 1300866 113.

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As business luminaries like Peter Drucker, RichardBranson, and countless others have emphasised, cash flow is the lifeblood of any enterprise.

At Attune Advisory, we understand that cash flow management is essential for the survival and prosperity of small businesses and in a world where unforeseen challenges can arise at any moment, effective cash flow management becomes paramount. Let's delve into our tips to help you navigate the intricacies of managing your cash flow with finesse.

Creating a Clear Path with Forecasting 

The first step toward mastering your cash flow is to create a detailed cash flow forecast. This strategic tool provides an overview of your anticipated income and expenses over a defined period, often on a monthly or quarterly basis. By anticipating potential cash shortfalls or surpluses, you gain the power to take pre-emptive actions. Whether it's securing short-term funding or establishing payment arrangements with suppliers during tight periods, a cash flow forecast empowers you to navigate through financial uncertainties with confidence. 

The Power of Vigilance and Regular Monitoring 

Keeping your finger on the pulse of your cash flow requires robust accounting systems and vigilance. Choose accounting programs that align with your needs and preferences, and stay proactive by regularly monitoring your cash flow, ideally at least on a monthly basis. By routinely reviewing your cash flow statement and comparing it to your forecast, you can spot discrepancies and potential issues early on, allowing you to address them proactively.

Accelerating Cash Inflows through a Strategic Approach

Implementing strategies to accelerate cash inflows can significantly bolster your financial position. Consider offering discounts for early payments or incentives to customers who pay upfront. Timely invoicing and diligent follow-up on late payments can make a substantial difference in maintaining a healthy cash flow.

Our tailored approach to helping you build strategies for your business means the Attune team is perfectly placed to provide guidance on what options might work best for bolstering your cash-flow situation. 

Taming the Outflow

Controlling your cash outflows is equally essential.Regularly reassess your expenses to identify areas where savings can be achieved. Negotiate improved payment terms with suppliers, explore opportunities to reduce overhead costs, and eliminate unnecessary expenditures.It's crucial to remember that expenses can accumulate over time and easily begin to run away from you, and a prudent review can lead to cost savings and improved cash flow.

Building Resilience

A critical aspect of managing cash flow is establishing an emergency fund or cash reserve. This fund acts as a safety net to handle unexpected expenses or periods of low cash flow. Aim to set aside a percentage of your revenue each month to gradually build up this reserve, providing you with a cushion during turbulent times.

Once again, with some help building your overall strategy, we can offer guidance on how your emergency fund can be structured.

Strategic Inventory Management

If your business is product based, avoid tying up excessive capital in inventory. Optimise your inventory levels by accurately forecasting demand and regularly reviewing and adjusting your inventory orders. Strive for an inventory turnover rate that aligns with your supplier payment terms, enabling you to maximise cash flow efficiency.

For service-based businesses it’s not too far different, ensure you keep a close eye on your schedule and bookings alongside your expenses. 

Collaborative Partnerships 

We’ve said it already, but do what you can to forge collaborate relationships with your suppliers and work together to negotiate favourable payment terms. Extended payment periods or vendor financing options can provide the flexibility needed to preserve cash flow while fulfilling your obligations.

Efficient Receivables Management

Proactive management of accounts receivable is crucial. Similar to providing options for discounts here on-time or early payments are made, clearly define payment terms, send timely reminders for overdue invoices, and establish a systematic approach for following up on late payments. Building strong relationships and maintaining courteous, consistent communication can work wonders in securing timely payments. 

Exploring Financial Options

In times of tight cash flow, consider exploring financing options such as short-term loans, overdrafts and lines of credit, or invoice factoring. However, exercise caution and assess associated costs and risks before proceeding with these alternatives.

As with anything relating to your finance or taxation position, we suggest speaking with the Attune team before proceeding far with lending options and other potentially damaging finance options.  

Continual Adaptation 

As your business evolves, regularly review and update your cash flow forecast. Stay agile by adjusting projections based on new information, shifts in market dynamics, and changes in your business strategy.

Being in touch regularly with our team can ensure we stay abreast of what your business and indeed the strategy that supports your cashflow

Expert Assistance: Attune Advisory’s Commitment

At Attune Advisory, we understand the pivotal role of cashflow in your business's success. While cash flow management can be complex, our experts are here to provide you with valuable insights, guidance, and support.Let us partner with you to ensure your business thrives through effective cashflow management and forecasting. Reach out to Attune Advisory today to explore how we can assist you on your journey to financial prosperity.Call us on 1300 866 113 today to start the conversation, you won’t regret it.

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When it comes to understanding your business's financial health, there's no doubt that profit isa key player. But not all profits are created equal and deciphering them can be a daunting and even confusing task.

To truly grasp your business's financial performance, you need to ensure your numbers tell an accurate story. That's where choosing the right profit margin calculation becomes essential. In this article, we explore the intricacies of different profit margin calculations—gross, net, and operating—and shed light on why making the right choice matters for your business's success.

The Power of Profit Margin Calculations

Before we dive into the details, let's clear the air on what truly matters in assessing business success. While sales are crucial, the percentage of those sales that translates into profit takes the spotlight. This brings us to the realm of profit margin calculations—a critical metric in evaluating financial health. However, it's important to recognise that not all profit margin calculations are the same.Here, we break down the three primary types:

• Gross Profit Margin
• Net Profit Margin
• Operating Profit Margin

Each of these calculations unveils nuanced insights into distinct aspects of your business's profitability. The question now becomes: How do you determine which calculation type aligns best with your business goals? Which one will provide the insights necessary to steer your business toward success? Let's embark on a journey to discover the formulas, benefits, drawbacks, and suitability of each calculation type.

Gross Profit Margin: Unveiling Core Efficiency

The gross profit margin calculation offers a panoramic view of your company's profitability by deducting the cost of goods sold (COGS) from revenue. This calculation narrows its focus to your business's core operations, excluding additional expenses like operating costs and taxes. By examining gross profit margin, you can analyse production strategies, pricing effectiveness, and your ability to manage direct costs. A higher gross profit margin suggests superior efficiency in controlling production expenses.

Formula: (Revenue – COGS) / Revenue * 100

Pros:

• Insights into product pricing and production efficiency.
• Evaluation of direct cost impact on profitability.
• Identification of cost-cutting opportunities for better profit margins.

Cons:

• Ignores key operating expenses, potentially leading to misleading results.
• Doesn't account for changes in sales volume or non-core profits.
• Limited applicability when comparing businesses across industries.

Generally suitable for: Businesses, especially those with product-centric models, aiming to assess profitability without considering operating expenses. 

Net Profit Margin: The Comprehensive Profit Picture

The net profit margin calculation provides a holistic perspective on your company's profitability, encompassing all operating expenses—COGS, operating costs, interest payments, taxes, and deductions. This metric reflects your business's overall profit-generating capacity, accounting for taxes and interest. A higher net profit margin indicates effective cost management and revenue generation.

Formula: (Net Income / Revenue) * 100

Pros:

• Comprehensive view of overall business profitability.
• Incorporates all expenses, including operating and non-operating costs.
• Considers the impact of taxes, interest, and non-operating expenses.

Cons:

• Might not accurately reflect performance if sales volume is high.
• Susceptible to distortions from external factors like taxes or one-time events.
• Variability across industries makes direct comparison challenging.

Generally suitable for: Businesses seeking a comprehensive evaluation of financial performance across industries.

Operating Profit Margin: The Core Efficiency Gauge

Operating profit margin (or operating margin) measures core operational profitability by excluding non-operating expenses like taxes and interest. This calculation evaluates your business's operational efficiency and profitability, free from the influence of non-operational factors. A higher operating profit margin signifies efficient management of operational costs and higher core revenue generation.

Formula: (Operating Income / Revenue) * 100

Pros:

• Focuses on core operations, excluding non-operating expenses.
• Insights into core activity efficiency, aiding investor assessment.
• Identifies potential areas for cost optimisation and revenue generation.
• Enables competitor and temporal comparisons for efficiency evaluation.

Cons:

• Doesn't account for overall financial health or industry-specific factors.
• Requires supplementary ratios for holistic assessment.
• Limited as a stand alone metric measure.

Generally suitable for: Businesses aiming to evaluate core operational efficiency regardless of external influences.

Selecting the Right Path to Profit Clarity

The choice of profit margin calculation isn't merely an exercise in number crunching—it's a strategic move to understand and improve your business's financial standing.While gross profit margin zooms in on production efficiency, net profit margin offers a panoramic view of overall profitability, and operating profit margin unveils core operational efficiency.

By dissecting these metrics, you're equipped to make informed decisions that optimise costs, elevate revenue generation, and foster long-term profitability.

Consulting with theAttune team at any stage of calculations relating to your business can ensure the numbers are assessed with expertise and presented with complete clarity.

Remember, in the intricate world of profit margin calculations, precision paves the way to profit success.

To discuss the financial health and strength of your business, give the Attune team a call on1300 866 113 or send us an email to start the conversation. We’re here to offer you the tailored, strategic advice that can keep your business growing.

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As a property owner in the vibrant landscape of Sydney, you're no stranger to the complexities of taxes that come hand in hand with your investments.

Navigating the tax realm while making the most of your property ventures can often feel like an overwhelming task. But worry not, the AttuneAdvisory team is here to demystify property depreciation, after all, it can significantly impact your taxes. Here, we'll delve into the significance of property depreciation reports, equipping you with the knowledge that can guide you toward informed decisions that can ultimately save you money.

Understanding Property Depreciation

Whether your ownership extends to residential or commercial spaces, comprehending property depreciation is of key importance. It refers to the decrease in an asset's value over time due to factors like wear and tear, obsolescence, or age. This depreciation offers a unique opportunity for property owners to claim deductions, thereby reducing the value of certain assets over time.

To accurately navigate this terrain and harness its benefits, the key lies in procuring a property depreciation report, meticulously prepared by a qualified quantity surveyor.

The Role of Quantity Surveyors

Behind every accurate property depreciation report stands a quantity surveyor – an expert in assessing and quantifying the value of construction and assets. These professionals specialise in crafting comprehensive property depreciation reports that detail the depreciable value of your property's assets. This report, in turn, enables you to maximise your depreciation deductions according to the guidelines set forth by the AustralianTax Office (ATO).

Demystifying theAustralian Depreciation Report

In the context of Australia, a depreciation report is a document that outlines the annual depreciation expense that can be claimed as a deduction. It calculates the depreciation of building costs and fittings over specific time periods defined by the ATO. Providing this report to your AttuneAdvisory accountant ensures accurate deductions year after year.

Impact of Property Depreciation Reports on Taxes

The true value of a property depreciation report lies in its ability to provide a clear insight into the depreciable assets within your property. By outlining eligible items and furnishing precise calculations, this report enables you to claim the rightful deductions on your income tax return.These deductions, in turn, can significantly chip away at your taxable income, leading to substantial tax savings.

However, the impact extends beyond the immediate tax season.Property depreciation also wields influence on your property's cost base, an essential factor in capital gains calculations during sale. Accurate accounting of depreciation through the property depreciation report effectively reduces the cost base each year. Consequently, when the time comes to sell, the capital gain escalates as the cost base (original purchase price plus additional ownership costs) is subtracted from the sale price.

Frequently Asked Questions

What Assets are Included in a Property Depreciation Report? A property depreciation report encompasses both structural , plant and equipment assets. Structural assets involve components like walls, roofs, and foundations, while plant and equipment assets encompass air conditioning units, carpeting, appliances, and more.

How Often Should I Obtain a Property Depreciation Report? While it's advisable to secure a property depreciation report soon after property acquisition, it's never too late to do so. A seasoned quantity surveyor can assess your property's present condition and create a tailored report.

Are There Limitations to Depreciation Deductions? Yes, the ATO imposes specific eligibility criteria and limitations. Assets must have been installed after a particular date, and the depreciation methods vary based on asset types. Consulting a quantity surveyor ensures adherence to these regulations.

Understanding the profound impact of property depreciation reports on your taxes is merely the beginning of a journey towards enhanced financial management. To harness the full benefits and unlock optimal tax savings, your first stpe should be to contact the Attune Advisory team and allow us to connect you with a qualified quantity surveyor, well-versed in property depreciation. We’ll work alongside them to build the strategy tailored to your specific situation.

Whether you're a seasoned investor or just stepping into the property landscape, our expertise is tailored to guide you toward an efficient tax strategy. Reach out to us on 1300 866 113 for an appointment or visit our website to start your journey toward tax optimisation through property depreciation today.

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For small to medium-sized business owners, the tax season can often bring about a sense of unease, particularly when terms like "ATO audit" start circulating. The anxiety often arises from a lack of familiarity with tax requirements and the potential risks linked to non-compliance. But fear not, the Attune Advisory team is here to steer you through the landscape of tax risks.

Understanding Business Tax Risks

The world of business tax risks entails the possibility of financial penalties and reputational damage stemming from non-adherence to tax regulations. Businesses face risks when they fail to accurately pay taxes, meet return deadlines, or faithfully represent their financial situation.

High-risk strategies, such as aggressive tax planning, can lead to audits, fines, and even legal action. Common areas of concern include misreporting income, claiming ineligible expenses, and errors in GST reporting. However, armed with knowledge, you can minimise the odds of a time-consuming and costly ATO audit. 

Decoding the ATO Audit

The Australian TaxOffice (ATO) conducts audits to verify businesses' compliance with tax obligations. An ATO audit is essentially a review of your business's financial information, ensuring that your declared income aligns with the taxes paid.

The ATO has four primary expectations of taxpayers:

1. Accurate reporting of all earned income
2. Legitimate claims for tax deductions.
3. Timely submission of tax returns.
4. Maintenance of accurate records for auditing purposes.

Managing Tax Risks for Your Business

Effectively managing tax risks involves identifying, assessing, and mitigating potential taxation-related hazards. This encompasses adherence to relevant tax laws, minimising tax liabilities, and maintaining open communication with tax authorities. Implementing robust tax risk management strategies can considerably reduce financial losses and enhance overall business efficiency.

Help starts here: The Tax Risk Management andGovernance Review Guide

The Tax Risk Management and Governance Review Guide serves as an essential tool for businesses to effectively manage tax-related risks. It provides a framework of principles and guidelines that promote transparency and good governance in tax affairs. This guide benefits both tax authorities and taxpayers by fostering improved tax compliance strategies and enhancing overall tax administration.

Benefits of Proactive Tax Risk Review

Proactively reviewing your tax risks offers several advantages. It enables you to identify areas of potential non-compliance before they escalate. Additionally, a thorough review can uncover opportunities to optimise your tax position within legal boundaries, potentially leading to significant cost savings. Moreover, the review process brings peace of mind, eliminating uncertainties about potential ATO audits. Working with your Attune taxation advisor for this review can provide fresh insights and efficient navigation of tax compliance complexities.

TaxRisks and ATO Audits – FAQs: 

What triggers anATO Audit? The ATO may initiate an audit in response to unusual fluctuations in income or expenses, inaccurate reporting, late lodgement of returns, or consistent business losses.

How can I prepare for an ATO Audit? Maintain accurate financial records, regularly assess tax risks, and stay in touch with theAttune team if you require assistance or have questions.

How can I minimise tax risks? Prioritise diligent record-keeping, stay informed about tax laws, but most of all, access experienced and tailored planning and risk assessment help with the Attune accounting team. 

Embrace Informed Decision-Making Understanding and managing tax risks is crucial for sustaining a thriving business. While it might seem daunting, with experts on your side, you can navigate these complexities with confidence. Remember, knowledge is power, and being well-informed can set the stage for business success.

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If you're a small or medium-sized business owner grappling with tax risks and concerns about ATO audits or looking to ensure you’re processes and tax obligations are in the best shape, we’d love to chat.

Reach out to the Attune team today by calling 1300 866 113 or booking an appointment via our website.