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For many business owners, the term “Division 7A” can be intimidating, and for good reason. The rules around these loans are complex, and getting them wrong can lead to unwanted tax consequences. At Attune Advisory, we believe in making compliance clear, so here’s a straightforward look at what Division 7A loans are, why they matter, and how to avoid common pitfalls.
Division 7A applies when private companies provide payments, loans, or other benefits to shareholders (or their associates). While this may sound harmless, the ATO views these transactions carefully. If they’re not structured correctly, they may be treated as unfranked dividends, meaning they’re taxable in the hands of the recipient, often without the benefit of franking credits.
For small and medium-sized businesses, Division 7A isn’t just red tape, it’s about avoiding unnecessary tax bills and protecting cash flow. If your company provides financial benefits to shareholders that aren’t properly documented or repaid, you could face:
• Additional tax liabilities
• Interest charges
• Penalties for non-compliance
In short, overlooking these rules can create serious financial strain and erode the protections of your company structure.
Even well-meaning directors can run into Division 7A issues. Here are some of the most frequent mistakes:
One option that businesses sometimes use is declaring a franked dividend to offset a Division 7A loan. In this scenario, instead of repaying the loan directly, the company declares a dividend (with franking credits attached), which can then reduce the loan balance. This approach requires careful planning to ensure the tax impact works in the shareholder’s favour, so professional advice is critical.
What happens if we breach Division 7A rules?
Act quickly. Creating a compliant loan agreement, making minimum repayments, or fully repaying the loan can help rectify issues.
What is a “deemed dividend”?
If the ATO determines a benefit given to a shareholder (or associate) doesn’t meet Division 7A rules, it can be classified as a deemed unfranked dividend, taxable without franking credits.
Division 7A is one of those areas where mistakes can be costly. But with the right systems, documentation, and advice, you can stay compliant and avoid unexpected tax liabilities.
If you Need clarity on Division 7A or other company tax obligations? Give the Attune Advisory team a call on 1300 866 113 or send us an email to start the conversation — you’ll be glad you did.
Unlike direct costs (such as raw materials or project-specific expenses), overheads don’t directly generate income. Yet, they have a huge impact on profitability. Keeping overheads under control – without losing capability – is one of the most important financial management skills for any business owner.
Overheads are the fixed and variable costs required to support business operations. They can include:
• Facilities: rent, office supplies, utilities, cleaning.
• Staffing: salaries, superannuation, insurance, recruitment.
• Technology: software, subscriptions, IT support, security.
• Administration: professional fees, licences, training, and compliance.
These costs are unavoidable, but how you manage them can mean the difference between a healthy profit margin and a business under pressure.
It’s easy to underestimate the effect overheads have on your bottom line. Every dollar spent on an overhead is a dollar not contributing to net profit.
For example, if your business operates on a 20% margin, an unnecessary $10,000 in overheads means you need an extra $50,000 in revenue just to stand still. That’s why trimming overheads can create immediate, tangible improvements in profitability.
Overheads also matter from a cash flow perspective. Rising overheads eat into working capital, making it harder to cover wages, purchase stock, or invest in growth. For many businesses, especially SMEs, this is where financial stress starts to show.
Many businesses fall into the trap of allowing overheads to creep up unnoticed. Common pitfalls include:
Over time, these issues compound, eroding margins and creating inefficiencies.
1. Review Regularly
Overheads shouldn’t just be reviewed at tax time. Monthly or quarterly reviews give you visibility on what’s creeping up and where adjustments can be made.
2. Benchmark Costs
Compare your overhead ratios (like rent-to-revenue or wages-to-turnover) with industry benchmarks. This helps identify areas where you may be overspending.
3. Separate Fixed and Variable Costs
Understanding which costs are fixed and which are flexible helps you plan more effectively. For example, while rent may be locked in, utilities and casual staffing costs can often be managed more dynamically.
4. Embrace Technology
Using automation and cloud-based platforms can streamline processes, reduce admin costs, and free up resources for more value-adding activities.
5. Seek Strategic Oversight
Sometimes, overhead management requires an external perspective. That’s where professional advisory services can make a significant difference – that’s where we come in.
At Attune Advisory, we work with clients to make sure overheads are not just monitored — but strategically managed. Our services include:
• Business Advisory: We help businesses review their cost structures, identify inefficiencies, and develop strategies for leaner, more sustainable operations.
• Virtual CFO Services: For growing businesses, our Virtual CFO offering provides high-level financial leadership, including detailed overhead analysis, cash flow forecasting, and scenario planning – without the cost of a full-time CFO.
• Business Process Outsourcing (BPO): Outsourcing administrative functions can reduce payroll overheads and increase efficiency, letting you focus on what you do best.
By combining these services, we help clients track, trim, and tidy their overheads while maintaining the capability and resources needed to grow.
Overheads are a fact of business life, but they don’t have to erode your profitability. By keeping a close eye on your costs, benchmarking against industry standards, and making smart adjustments, you can ensure your overheads remain lean and sustainable.
Managing overheads isn’t just about cutting costs, it’s about aligning spending with strategy. With the right support, overhead management becomes a tool not only for survival but for long-term growth.
Want a fresh perspective on your overheads? Give the Attune Advisory team a call on 1300 866 113 or send us an email to arrange a review. You’ll be glad you did.
With the Federal Government’s push towards greener transport and recent tax incentives, more Australians are considering electric vehicles (EVs). One option worth exploring is salary sacrificing for an EV through a novated lease – but is it the right move for you?
A novated lease is a three-way agreement between you, your employer, and a leasing provider. Your employer makes lease payments on your behalf by deducting them from your pre-tax salary, and you get full private use of the vehicle.
When structured correctly, and if the vehicle qualifies, the arrangement can reduce your taxable income and in many cases be exempt from fringe benefits tax (FBT).
Let’s say you earn $100,000 a year. If you salary sacrifice $15,000 towards a novated lease, your taxable income drops to $85,000. Depending on your marginal tax rate, that could translate into thousands of dollars in annual tax savings. Over the course of a five-year lease, those savings could easily add up to more than $20,000.
While the tax savings can be attractive, it’s important to factor in ongoing vehicle costs:
• Charging: Using grid electricity costs around $500 annually for 12,000 km. Solar can bring this down, while public fast charging may cost $30–$40 per session.
• Insurance: EV insurance can be higher, averaging around $1,500 a year, due to specialist repair needs.
• Servicing: Lower than petrol vehicles, often around $1,000 a year since EVs have fewer moving parts.
• Registration & road fees: Vary by state, with some jurisdictions offering discounts.
These costs – along with charging, insurance, servicing, and even registration – can often be bundled into the lease, helping you budget more easily and potentially gain further tax efficiencies.
Not all vehicles qualify. To access the FBT exemption:
• The car must be a battery electric vehicle or hydrogen fuel cell vehicle.
• Plug-in hybrid vehicles will no longer qualify (since 1 April 2025, unless an existing lease is in place).
• The purchase price must be below the Luxury Car Tax threshold for fuel-efficient vehicles ($91,387 for 2025–26).
• The car must have first been held and used on or after 1 July 2022.
Even when exempt from FBT, the benefit is reportable, which may impact certain government payments or income-tested benefits.
If your employment ends, the novated lease doesn’t automatically stop. You’ll need to either:
• Take over the lease personally,
• Transfer it to a new employer, or
• Pay out/terminate the lease early (which may involve fees and residual costs).
The financial upside can be significant – but whether a novated EV lease suits you depends on your income level, career stability, driving habits, and overall financial goals. Employers can also consider novated leasing as part of their employee benefits offering, helping attract and retain staff.
For tailored advice on structuring a novated lease and understanding the tax implications, give the Attune Advisory team a call on 1300 866 113 or send us an email. Let’s make sure your decision delivers the best financial outcome possible.
As we approach World Mental Health Day (October 10), it’s a timely reminder of the importance of looking after our mental wellbeing – both personally and within the workplace.
At Attune Advisory, we understand that financial and operational success in business is closely tied to the wellbeing of the people behind it. Yet too often, mental health takes a back seat to deadlines, targets, and long hours.
Mental health challenges can affect anyone, regardless of role or experience. Ignoring them can lead to serious consequences, from burnout and absenteeism to decreased productivity and engagement. For business owners and leaders, fostering a culture that values mental wellbeing isn’t just the right thing to do for everyone involved, it also helps teams perform at their best.
• Checking in regularly: Simple conversations about workload and wellbeing can uncover issues early.
• Normalising support: Encourage employees to access professional help without stigma.
• Flexible work arrangements: Providing space for work-life balance can make a huge difference.
• Promoting wellness programs: Initiatives such as mindfulness sessions, mental health workshops, or wellbeing resources signal that mental health matters. These things can be easy to organise, and often at very low or no cost.
At a personal level, it’s equally important to recognise signs of stress or mental strain in ourselves. Simple strategies – from regular exercise and sleep to maintaining social connections and taking time out – can help prevent issues from escalating.
While the human cost of poor mental health is the primary concern, the business impact cannot be ignored. Teams that feel supported, understood, and valued are more engaged, innovative, and resilient. By prioritising wellbeing, businesses not only foster healthier workplaces but also contribute to more sustainable performance.
As we reflect on mental health this October, let’s commit to creating environments – both at work and at home – where wellbeing is actively supported. After all, thriving people create thriving businesses.
For more guidance on supporting mental health at work or in your own life, the World Health Organization provides helpful resources and initiatives: WHO Mental Health Day.
