Navigating the intricate landscape of tax legislation, particularly when it involves theCapital Gains Tax (CGT), can be a perplexing journey for many small business owners. The CGT realm may seem like a labyrinth of rules and regulations, that can leave you with uncertainties about potential exemptions and how to optimise your tax position.

With that in mind, we’ll aim to shed light on the 15-year exemption for small business CGT and demonstrate why your best nextstep might be to chat to the team at Attune Advisory to delve deeper into your specific circumstances and how they might fit into the exemption.

Understanding the Fundamentals 

Capital Gains Tax, often abbreviated as CGT, is the tax levied on the profit generated from the sale of a capital asset, whether it be property, shares, or even your own business. Navigating the complexities of CGT, especially when selling a business, can be a daunting task, given the numerous regulations set out by the Australian Tax Office (ATO)– this is where we can help ...

Start by picturing a scenario where your business could be exempt from this tax. That's where the15-year exemption for small business CGT comes into play. This provision was established to offer long-standing small businesses a reprieve when they sell their assets after an extended period.

Criteria for the 15-Year Exemption

To qualify for the 15-year exemption, certain criteria must be met:

• ‍Asset Ownership: The asset must have been owned continuously for at least 15 years.‍
• Age and Retirement: You must be an Australian resident, aged 55 or older, and considering retirement.‍
• Active Asset: The asset must have been an active asset for at least 7.5 of those 15 years.

It's vital to understand the nuances of each criterion. For instance, the "active asset" requirement means the asset must have been actively used in your business operations and not merely held for speculative purposes. This distinction adds complexity to the eligibility which we can help clear up for you if you’re in this position. 

Benefits of theExemption

Beyond the obvious benefit of not paying CGT, the 15-year exemption can offer other financial advantages:

• ‍Superannuation Contributions: It can be used to contribute to your superannuation, potentially enhancing your retirement savings.‍
• Incentive for Reinvestment: This exemption provides a compelling incentive for long-standing businesses to reinvest in new ventures or assets.

Frequently Asked Questions

1. ‍Partial Ownership Period: Can my business qualify if it hasn't operated for the entire15 years?
   Yes, the asset must be owned for 15 years, but it doesn't need to be active for the entire duration. It should be an active asset for at least 7.5 years during the ownership period.‍
2. Unforeseen Circumstances: Does this exemption apply if the asset is sold due to unforeseen circumstances before retirement?
   There are scenarios where the ATO may consider providing the exemption, especially in cases of disability or terminal illness. Consult with a tax expert to better understand your unique situation.‍
3. Multiple Uses: Can I use this exemption multiple times?
   You can use the 15-year exemption on various assets, but it's crucial to meet the eligibility criteria each time.Additionally, there are caps on the total amounts you can contribute to superannuation using this exemption.

The 15-year exemption for small business CGT offers significant relief to long-standing businesses in Australia. Business owners can make informed decisions about their assets by understanding this provision and its benefits. Keep in mind that every business's situation is unique, and what applies to one may not apply to another.

Sound like something that might fit you? Here’s what to do next…

Speak with an expert.Our dedicated team can provide clarity about your eligibility or offer guidance on various tax-related concerns. We're here to alleviate the stress of navigating the financial maze – in this instance the 15-year CGT exemption. Don't hesitate to book an appointment via email or give us a call on 1300 866 113.

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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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