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Business Insights: Vargiu Accountants 2024 Autumn Newsletter

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Welcome to another edition of our newsletter, Business Insights! 

The articles have been written by our team based on topics that we have been assisting clients with, or professional development days we have attended. 

We hope you find these useful or see if the circumstances in this newsletter might be similar to yours. 

Let us know if we can help you with these.  Our friendly team are always willing to help. Simply, get in touch with us by calling: (03) 9371 5858 to arrange a confidential chat. 

From Leo and the team at Vargiu Accountants. 

Capacity & Enduring Powers of Attorney for SMSFs 

Capacity refers to the member's ability to make decisions regarding their finances, particularly their Binding Death Benefit Nominations. The issue of capacity, when it comes to Self-Managed Super Funds, is fundamentally preliminary.  

A member needs to be capable of making decisions on how they would like to treat their finances. There is a belief that if a member is incapable, their spouse or children can make decisions on their behalf. However, without a formal appointment from the member, this is not possible.  

It is important to consider this when making future financial decisions and deciding where you would like your assets to go. If you become incapable of making these decisions, you will want to have a formal arrangement in place, such as an Enduring Power of Attorney, so that your appointed representatives can make these decisions on your behalf.  

Another key issue regarding this topic is the need for a binding death benefit nomination. This is very important as it sets out exactly who you want your superannuation assets to go to, leaving nothing in the unknown's hands. Ensure you speak to a solicitor regarding these matters so you do not face any of these issues in the future.  

Importance of correct dates on forms 

Accurate dates hold significant importance in document completion due to their legal implications. Important legal and financial transactions require a signature accompanied by a specific date, serving as an official reference point for the timing of agreements or actions.  

Incorrectly inputting this date may invalidate the entire document, potentially leading to legal disputes and expensive consequences. 

For instance, inputting yesterday's date instead of today’s date on a contract can cause confusion regarding the agreed-upon terms and raise doubts about the document's authenticity. Hence, it is essential to verify all dates before finalising, signing, and submitting any legally binding contracts or agreements. 

Inaccurate dates can also cause complications in official applications such as loans, visas, passports, or driver's license renewals. Government agencies strictly adhere to timelines and processing deadlines. Any errors in the date of your application due to human oversight or error could result in delays or outright rejection. 

For example: When purchasing a property via a trust, the trust deed must be signed and executed before any contracts are signed on its behalf. This is a common issue we see where the contract of sale may be signed and dated before the trust has been set up, resulting in either the undesired purchaser for the property or additional transfer costs to have it transferred in the correct name. It is essential to understand the timing and consequences before going ahead and signing or dating any legal documents.

Super Guarantee Charge Payment frequency updating 1 Jul 2026 

We’re reaching out to inform you about a significant change in the Super Guarantee (SG) payment schedule as outlined in the latest budget for 2023-2024. 

Currently, the ATO requires employers to pay their employees SG every quarter. However, starting from July 1, 2026, there will be a shift. Employers will be obliged to pay SG entitlements on the same day as the salary and wages are paid (payday).  

The ATO believes this will provide employees with greater visibility into the timely receipt of their entitlements and enhance their ability to recover any unpaid superannuation.  

We understand that this change may pose challenges to cash flow, especially as payment cycles transition from quarterly to potentially weekly or fortnightly, depending on your pay cycle.  

What you should do: 

  • We still have plenty of time for this to take effect so what we suggest is simple and effective to help. Set aside the required SG amount for each pay cycle in a separate business bank account. 
  • While the SG payments will continue to be payable quarterly, this proactive approach ensures that your business’s cash flow is tested and equipped for when this takes place. 
  • It's important to note that the ATO doesn’t allow any consideration for late payments of SGC and will impose penalties or interest if you are not on time, so this is one payment you do not want to miss.  

Projecting for success 

Vargiu Accountants recently celebrated a significant client success story, where they assisted a new client in venturing into a new line of business within the transport industry. The client approached Vargiu Accountants with a business concept based on market research of competitors within the industry and area.

To determine the feasibility of the business idea, Vargiu Accountants conducted a comprehensive financial analysis, including budgets, break-even points, and forecasts. This process is valuable for both new and established businesses, as it helps refine business plans to reflect more realistic income and expense figures. Additionally, Vargiu Accountants assisted the client in identifying opportunity costs, challenges, additional sources of income, and associated costs with particular income streams.

Throughout this process, Vargiu Accountants gained valuable insights and helped the client in several key areas. They assisted the client in understanding different levels of profit based on the business's capacity performance, such as operating at 50%, 75%, 25%, or breakeven. The team also identified new business strategies and revenue streams, best practices in acquiring assets, and gaps in expected expenses and costs.

Moreover, Vargiu Accountants played a crucial role in helping the client ascertain and determine their financial needs for capital equipment. They provided guidance on the business's operational capacity based on start-up capital, which included estimating how long the business could operate without generating profit.

What We Learned:

  • Assisting the client in understanding different levels of profit based on the business's capacity performance, such as operating at 50%, 75%, 25%, or breakeven.
  • Identifying new business strategies and revenue streams to help the client expand their opportunities.
  • Identifying best practices in acquiring assets to ensure the client makes informed decisions when investing in their business.
  • Identifying gaps in expected expenses and costs allows the client to better prepare for financial challenges.
  • Assisting the client in ascertaining and determining finance needs for capital equipment, ensuring they have the necessary resources to operate effectively.
  • Providing guidance on the business's operational capacity based on start-up capital, including estimating how long the business could operate without generating profit, to help the client plan for the future.

Contact us today to learn more about how financial projections can set you up for success!

Congratulations Alana!

Vargiu Accountants is delighted to share the news that Alana Napoli is set to head on maternity leave!

For our valued clients who deal with Alana, the Vargiu team will continue to be there to support you. Leo Vargiu will be your primary point of contact in Alana's absence, with Jacqueline Matthews ready to assist with all of your enquiries.

Alana is set to head off on leave in June and expected to return in the New Year, 2025.

Everyone at Vargiu congratulates Alana on the wonderful news and wishes her all the best on the journey to come.

To assist with this transition, Vargiu Accountants has recently hired a new Accountant, Leonardo Winardi, who started with the Vargiu team this month.

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