Practical Business & Tax Insights

A client came to us for a second opinion on their tax return.

Sometimes, a second opinion can identify items that warrant a closer look.

After thoroughly reviewing their position, we identified that their draft tax return had not included approximately:

• $18,000 in personal superannuation contributions, and
• $1,300 in deductible donations

That's $19,300 of potential deductions that required further consideration.

What makes this particularly important is that tax agents generally have access to a significant amount of pre-fill information, including information relating to contributions made to regulated superannuation funds.

But having access to the information is not the same as actually reviewing it properly.

We have seen situations where information is available through pre-fill reports but is overlooked, not followed up, or simply not discussed with the client.

Clients themselves may not realise that eligible personal superannuation contributions can potentially be claimed as a tax deduction, subject to the relevant requirements — including lodging a valid notice of intent to claim a deduction with their super fund.

So if the accountant doesn't identify it and the client doesn't know to ask about it, a significant potential deduction can easily be missed.

The information was there — the review mattered

The information can be sitting there in front of you and still be missed.

Preparing a tax return properly means reviewing the information available, understanding what the client has actually done during the year, and following up when something warrants further investigation.

In this case, that review identified $19,300 of potential deductions that may otherwise have been overlooked.

Having the information is one thing. Knowing what to look for — and actually reviewing it — is another.

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General information only. Deductibility of personal superannuation contributions depends on the applicable requirements, including a valid notice of intent being lodged with and acknowledged by the superannuation fund within the required timeframe. Contribution caps and excess contribution rules should also be considered. Donation deductions depend on the recipient, the nature of the payment and applicable tax rules.

It's natural to compare accounting fees.

If one accountant charges $150 less to prepare a tax return, the cheaper option can appear to be an obvious saving.

But the accounting fee is only one number.

We have seen new clients who had been living in eligible regional areas but had not been claiming the Zone Tax Offset, despite potentially being entitled to it.

The returns may otherwise have been prepared correctly.

The issue was simply that an entitlement hadn't been identified and considered.

A cheaper fee doesn't necessarily mean a cheaper overall outcome

The Zone Tax Offset is available to eligible taxpayers whose usual place of residence is in specified remote areas of Australia, subject to the relevant requirements.

The amount isn't the same for everyone. It can depend on the particular zone and, in some circumstances, eligible dependants and other factors.

For an eligible taxpayer, the offset can therefore be worth considerably more than a relatively small difference between two accountant's fees.

And that's only one item on one tax return.

The same principle can apply to depreciation, superannuation contributions, deductible expenses, CGT, business structures and tax-planning opportunities.

That doesn't mean the more expensive accountant is automatically better.

Price alone simply doesn't tell you the value of the work being performed.

What are you actually paying for?

When comparing accountants, the question shouldn't only be:

“How much will you charge me?”

It should also be:

“What are you actually reviewing for that fee?”

A lower fee can represent excellent value where the appropriate work is being performed.

A higher fee can represent poor value if it isn't.

What matters is whether the accountant understands the client's circumstances, identifies the issues that warrant investigation and considers the concessions, deductions and planning opportunities that may legitimately be available.

For the clients we reviewed, the Zone Tax Offset was a relatively simple example of something that could easily be overlooked if nobody asked the right questions about where they lived and whether they qualified.

The difference in accounting fees may have been relatively small.

The difference in the quality and scope of the review can be much larger.

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This case study has been generalised and certain details have been changed to protect client and business confidentiality. General information only. Eligibility for the Zone Tax Offset depends on the taxpayer's circumstances, including their usual place of residence, the relevant zone, the required period of residence and, where applicable, dependant and other eligibility rules. The amount of the offset varies according to the taxpayer's circumstances.

Having five years of outstanding tax returns can feel overwhelming. The longer they remain outstanding, the easier it can become to keep putting them off.

We recently assisted a client who had five years of tax returns outstanding. They finally decided it was time to get everything back up to date and, after working through the outstanding years, there was a result they weren't necessarily expecting: they were actually entitled to a tax refund.

Being behind doesn't automatically mean you owe tax

People can sometimes assume that if they haven't lodged tax returns for several years, there must be a significant tax bill waiting for them. That's not necessarily the case.

The outcome depends on what actually happened during those years, including income earned, tax withheld, deductions available and the client's broader circumstances. For this client, once we obtained the relevant information and prepared the outstanding returns, the overall position resulted in a refund rather than additional tax payable.

The hardest part can be getting started

When tax returns have been outstanding for several years, people can become reluctant to contact an accountant. They may be wondering how much they will owe, whether there will be penalties, and where they should even start.

But delaying the issue doesn't provide the answer. Reviewing the position does.

We worked through each of the outstanding years, identified the information required and brought the client's tax affairs back up to date. Instead of discovering the large tax liability they may have feared, the client ended up with a refund.

Don't assume the outcome

Whether you are one year behind or several years behind, the first step is to establish your actual position. You may have tax to pay, you may been entitled to refunds, or there may be outstanding lodgment obligations that need to be addressed. You won't know until the numbers are reviewed.

For this client, five years of outstanding tax returns ended with money coming back to them rather than another bill to pay.

Sometimes the situation you've been putting off isn't as bad as you think. The important thing is to get started.

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General information only. Tax outcomes depend on individual circumstances. Outstanding returns may be subject to ATO compliance action, penalties and interest where applicable, and refunds may be applied against existing tax or other government debts.

The husband and wife had retired, their business had finished, and they wanted to close their company and move on.

That seemed like the logical next step.

But before extracting the remaining money and closing the company, we looked at what was still sitting inside it.

The company had approximately $800,000 in retained earnings, together with sufficient franking credits accumulated from company tax paid over the years.

Rather than simply taking everything out immediately, we compared two different strategies:

Extract the accumulated profits now — or progressively distribute them during retirement?

Under our modelling, the difference between those two approaches was approximately $196,000.

Retirement changed the equation

While the husband and wife were working, they had higher levels of personal taxable income.

Now they were retired and expected their taxable incomes to be substantially lower.

That mattered because eligible Australian-resident shareholders receiving fully franked dividends generally include both the dividend and associated franking credit in their assessable income, while receiving a corresponding tax offset for the franking credit.

Where eligible individuals have excess franking credits after their tax liability is calculated, those excess credits may be refundable.

So instead of looking only at the company's $800,000 of accumulated profits, we modelled the company and shareholders together.

Approximately $126,000 of tax versus approximately $70,000 of refunds

Under our modelling, extracting approximately $800,000 of accumulated profits in one financial year could result in approximately $126,000 of combined net personal tax for the husband and wife.

We then modelled an alternative.

Rather than extracting everything immediately, the company could potentially remain in place for approximately five years while fully franked dividends were progressively paid to the shareholders during retirement.

Assuming the husband and wife had no other taxable income, our projections indicated that this approach could potentially produce approximately $14,000 in combined ATO refunds each year, or around $70,000 over five years.

The projected difference between the two strategies was therefore approximately:

$196,000.

This wasn't about finding another deduction or somehow avoiding the company tax that had already been paid.

It was about when the accumulated profits reached the shareholders and how the available franking credits could potentially be utilised during lower-income retirement years.

Closing the business and closing the company are different decisions

Once a business stops operating, it's natural to want to clean everything up: take out the remaining money, close the bank accounts and deregister the company.

But where a company has substantial accumulated profits and franking credits, those steps shouldn't automatically happen together.

For these clients, we considered a planned five-year exit, progressively distributing accumulated profits during retirement and reviewing the position each year as their circumstances changed.

Once the accumulated profits had been substantially extracted, the company could then be considered for closure after reviewing its remaining assets, liabilities, franking account and other tax consequences.

The business may have been finished.

The tax planning wasn't.

Before closing a company with substantial retained profits, the better question may not be:

“How quickly can we close it?”

It may be:

“What's the most tax-effective way to extract the accumulated profits first?”

For these clients, modelling that question produced a potential difference of approximately $196,000 between the two strategies considered.

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This case study has been generalised and certain details have been changed to protect client and business confidentiality. General information only. Figures are illustrative and based on the assumptions used in this case study, including approximately $800,000 of retained profits, sufficient franking credits, eligible Australian-resident individual shareholders and no other taxable income during the projected five-year distribution period. Actual outcomes depend on the company's distributable profits and franking account, shareholder circumstances, other income, Medicare levy and applicable tax and integrity rules. Liquidation and company wind-up distributions can have different tax consequences and should be specifically reviewed before a company is wound up or deregistered.

A farmer came to us at an important stage in their life.

Their children weren't interested in taking over the farming business, the farmer was ready to step away, and the farming land was worth approximately $2 million.

Their initial plan seemed straightforward:

Stop farming, keep the property and lease it to another farmer for retirement income.

There was nothing inherently wrong with that strategy.

But before a $2 million business asset was converted into a long-term investment property, we wanted to compare the alternatives.

The farm wasn't just a $2 million property

The land had been actively used in the client's farming business.

That history mattered because eligible small business owners may potentially access the small business CGT concessions when disposing of qualifying active business assets.

The property had been owned for less than 15 years, so the period for which the land had been an active asset relative to the relevant ownership and test period was particularly important.

Leasing the farm to another farmer wouldn't automatically mean its previous active-asset history disappeared.

But changing from personally farming the land to holding it as a long-term rental asset could affect the position over time, depending on the circumstances and when a future sale occurred.

So before the farmer changed how the property was being used, we reviewed the potential CGT position and compared two fundamentally different retirement strategies:

Keep the farm and live from the rental income — or sell the farm as part of the client's exit from farming and redeploy the capital elsewhere?

A favourable tax outcome made selling worth considering

Our analysis indicated that, subject to satisfying the relevant eligibility requirements, the small business CGT concessions could potentially produce a very favourable outcome if the property was sold.

For example, if a sale at approximately $2 million produced an $800,000 capital gain after taking the cost base and relevant adjustments into account, the available CGT concessions could potentially substantially reduce — and depending on the client's circumstances, potentially eliminate — the taxable capital gain.

That didn't automatically mean the farm should be sold.

It meant selling deserved to be properly compared with leasing rather than being dismissed because the client needed retirement income.

The decision was bigger than CGT

The farmer's real objective wasn't simply to minimise tax.

They needed to turn a lifetime of farming into a sustainable retirement.

Keeping the farm could provide rental income, but it would also leave a substantial proportion of the client's wealth concentrated in one property, in one location and one predominant source of retirement income.

Selling could potentially release approximately $2 million of capital.

That raised another question:

Could that capital be diversified to provide retirement income from several different sources rather than relying predominantly on one farm?

We worked alongside the client's licensed financial adviser to explore that broader retirement strategy.

The client considered diversifying the available capital across different assets, potentially including residential investment property and a diversified managed investment portfolio, rather than retaining most of their retirement wealth in a single farming property.

Our role was to analyse the tax consequences of selling versus retaining the farm and the tax implications of the alternatives being considered. The licensed financial adviser separately advised on investment selection, asset allocation, diversification and the client's broader retirement strategy.

Diversification doesn't eliminate investment risk. But it gave the client another option: instead of relying predominantly on one farm for both retirement income and capital, they could consider having multiple assets, multiple potential income sources and greater flexibility over how their capital was held.

Retirement planning started before the farm stopped operating

The client's original plan wasn't necessarily wrong.

Leasing the farm could still have been a legitimate option.

The problem would have been making that decision without first understanding the alternatives.

For a client approaching retirement with approximately $2 million tied up in a major business asset, the conversation needed to happen before the asset's use changed — not years later when the client eventually decided to sell.

In this case, the tax analysis opened up a much broader retirement conversation:

Should the client continue relying on one $2 million farming property — or use the opportunity to transition both the business and their wealth into the next stage of their life?

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This case study has been generalised and certain details, including financial amounts, have been changed to protect client and business confidentiality. General information only. Eligibility for the small business CGT concessions depends on the taxpayer's particular circumstances and the detailed requirements of Division 152, including the basic conditions and active asset test. Ceasing a business or subsequently leasing an asset does not automatically result in the concessions being unavailable, and the relevant ownership, business-use and timing history must be considered. Our role was to provide tax analysis of the alternatives. Investment, diversification, asset-allocation and retirement-income recommendations should be provided by an appropriately licensed financial adviser.

Asset protection is important. But simply putting everything into a trust doesn't necessarily mean your assets are properly protected.

In some circumstances, it can create the opposite result.

We had a client who wanted asset protection and had previously purchased their principal place of residence — their family home — in the same trust used to operate their business.

When we reviewed the structure, we immediately asked:

Why was the family home sitting in the same structure carrying on the business?

That question exposed several issues.

What was the home actually being protected from?

People sometimes consider trust ownership because they're concerned about protecting assets from future risks, including businesscreditors or a possible relationship breakdown.

But putting a family home into a discretionary trust doesn't automatically put it beyond the reach of family-law proceedings.

The treatment of trust assets in family-law matters depends heavily on the circumstances, including who controls the trust, how it has been operated, the parties' interests and contributions, and the terms of the trust itself.

So if relationship risk is the concern, “put the house in a trust” isn't a complete asset-protection strategy. Specialist family-law advice is required, and other strategies - potentially including a properly prepared Binding Financial Agreement where appropriate - may need to be considered with a family lawyer.

The starting question should always be:

What exactly are you trying to protect the property from?

Business creditors? Professional liability? Personal guarantees? Bankruptcy? Relationship breakdown? Estate-planning risks?

Different risks can require very different solutions.

The tax cost of putting the family home in a trust

There can also be a significant tax trade-off.

Where an eligible individual owns and occupies a property as their main residence, the main residence CGT exemption can potentially eliminate the capital gain when the property is eventually sold.

An ordinary discretionary trust generally doesn't receive that same exemption simply because a beneficiary and their family live in the property.

Consider a simple example.

A family home is purchased for $800,000 and, years later, is worth $1.5 million.

That's a $700,000 increase in value before considering the property's actual CGT cost base and other adjustments.

If an eligible individual had owned and occupied the property as their main residence throughout the relevant period, the main residence exemption could potentially eliminate the resulting capital gain.

But where an ordinary discretionary trust owns the property, the same outcome generally isn't available merely because a beneficiary has lived there as their family home.

There can also be land-tax consequences. Depending on the State or Territory, trust ownership may prevent access to an ordinary principal-residence land-tax exemption or result in different land-tax treatment.

So the client may potentially give up valuable tax concessions in pursuit of asset protection that doesn't necessarily provide the protection they thought it would.

The bigger problem: the business was in the same trust

In this client's case, there was another fundamental issue.

The same trust holding the family home was also carrying on the business.

The client was effectively putting:

the asset they wanted to protect

in the same structure as

the activity creating commercial risk.

That undermined one of the fundamental objectives of asset protection — separating valuable passive assets from operating risk.

It raised the obvious question:

What exactly are we protecting the home from if the home and the business are sitting together?

That doesn't mean a particular structure automatically protects an asset from every creditor or claim. Personal guarantees, insolvency law, trust arrangements and other circumstances can materially affect the outcome. But it demonstrates why asset protection needs to be designed around the actual risks rather than simply assuming that “a trust” provides protection.

Fixing the structure later can be expensive

Unfortunately, once a property has already been acquired in the wrong structure, fixing it isn't necessarily as simple as changing the name on the title.

Transferring real property from a trust to an individual can potentially trigger CGT, transfer duty, refinancing and legal costs, together with other tax and commercial consequences.

That's why these questions should ideally be answered before the property contract is entered into.

Who should buy the property? What risks are we protecting against? Where should the business operate? What tax concessions could be lost? What are the land-tax and duty consequences? And does the proposed structure actually achieve the legal protection the client expects?

For this client, the family home and operating business had ended up in the same trust. That potentially meant losing access to the ordinary main residence CGT exemption while also failing to properly separate the home from the risks associated with the business.

Asset protection isn't simply about putting assets into a trust. It's about putting the right assets in the right structures for the right reasons.

Sometimes the most valuable structuring question needs to be asked before anything is purchased:

Who should actually own it?

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This case study has been generalised and certain details have been changed to protect client and business confidentiality. General information only. Trust, asset-protection, family-law, bankruptcy, CGT, transfer-duty and land-tax outcomes depend on the circumstances and applicable jurisdiction. Trust ownership does not automatically protect assets from creditors or family-law claims. Specialist legal advice should be obtained on asset-protection and family-law matters. Tax consequences should be considered before acquiring or transferring property.

One of our clients had accumulated more than $300,000 in cash inside their company.

Much of it was sitting in a company savings account.

At the same time, the directors personally had a home mortgage on which they were paying non-deductible interest.

But when we reviewed the company's balance sheet, something else stood out:

The company actually owed money to the directors.

That changed how we looked at the $300,000.

Before extracting profits, we looked at what the company already owed them

Over time, the directors had contributed or advanced money to the company, creating genuine amounts owing back to them.

That's an important distinction.

If a director owes money to the company, Division 7A and other tax consequences may need to be considered.

But where the company genuinely owes money to the director, repayment of that loan principal will generally not create additional assessable income for the director merely because the debt is repaid.

So before considering dividends or other ways of extracting accumulated company profits, we reconciled the director loan accounts and determined how much of the company's cash represented money that could simply be repaid to the directors.

A substantial amount could be returned on that basis.

For any additional extraction of accumulated company profits, we separately considered matters such as available franking credits, the shareholders' tax position and Division 7A rather than simply treating the company's bank balance as personal money.

Then we compared the company cash with the private mortgage

Suppose $200,000 could legitimately be returned to the directors and effectively applied against a private home mortgage charging approximately 6%.

That could potentially reduce mortgage interest by around:

$12,000 per year.

That's not a $12,000 tax deduction.

It's potentially $12,000 of interest the directors no longer have to pay.

Meanwhile, leaving surplus cash inside a company savings account could mean the company continues earning taxable interest while the directors continue paying non-deductible mortgage interest personally.

Looking at those two positions separately could therefore miss an opportunity sitting directly on the balance sheet.

But we weren't going to empty the company bank account

The fact that a company has $300,000 in cash doesn't mean $300,000 is surplus.

Before returning money to the directors, we also considered the company's requirements for tax, GST and PAYG obligations, employee costs and superannuation, suppliers, operating expenses, planned purchases and an appropriate working-capital reserve.

Only genuinely surplus cash should be considered.

We also considered how any returned funds would be applied against the home loan. Offset and redraw arrangements can produce different outcomes, particularly if the property later becomes income-producing, so the appropriate lending structure needs to be considered separately.

The opportunity was sitting on the balance sheet

The strategy didn't start with finding another tax deduction.

It started by asking:

Why does the company have more than $300,000 sitting in cash?

How much does it genuinely need?

Does it already owe some of that money back to the directors?

For these clients, answering those questions identified a substantial amount that could potentially be returned to them and put to more productive use — including reducing thousands of dollars of non-deductible home-loan interest each year.

Sometimes the balance sheet tells you more than the tax return.‍

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This case study has been generalised and certain details have been changed to protect client and business confidentiality. General information only. Director loan balances must represent genuine liabilities and should be reconciled and verified before repayment. Dividend, franking and Division 7A consequences depend on the particular circumstances. Companies should retain appropriate working capital and meet their liabilities as they fall due. Our role was to advise on the taxation consequences of extracting and applying the funds. Financial product advice may require an appropriately licensed financial adviser, while offset, redraw, lending and credit matters may require appropriately licensed credit advice.

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A large tax refund can feel like a good result. But sometimes it raises another question: Why did you have to wait until the end of the year to get your own money back?

We had a client who owned two rental properties that generated significant deductible expenses, reducing the client's overall taxable income. Each year, however, tax continued to be withheld from their salary at the normal rate. They would then lodge their tax return and receive a substantial refund.

This had been happening for years, so we discussed another option: a PAYG withholding variation.

Getting the benefit during the year

Where appropriate, an employee can apply to the ATO to vary the amount of tax their employer withholds from their salary. For someone with negatively geared rental properties, this can allow the expected rental property deductions to be taken into account during the year, rather than waiting until the tax return is lodged.

If the ATO approves the variation, the employer can reduce the PAYG withholding deducted from the employee's pay, resulting in more cash in the client's bank account throughout the year.

Consider a simple example. If a property investor would ordinarily receive a $12,000 tax refund because of their rental property deductions, they effectively wait until tax time to receive that money. With an appropriately calculated and approved variation, some of that benefit could instead be reflected progressively in their take-home pay - potentially around $1,000 per month in additional cash flow.

The overall tax outcome may ultimately be similar. The difference is when the client gets access to the cash.

Cash flow has value

Having that cash available throughout the year could help with mortgage repayments, rental property expenses, household costs or other financial commitments.

For years, our client had been waiting until their tax return was lodged to receive the benefit of deductions they were already expecting to incur. We simply asked whether that still made sense.

A large refund can sometimes mean more tax was withheld during the year than was ultimately required based on the taxpayer's final position. That's why we don't just ask “How big is your refund?” We also ask “Could we improve your cash flow during the year?”

Tax planning can also be about timing

For this client, the PAYG withholding variation wasn't necessarily about reducing their ultimate tax liability. It was about when they received the benefit of deductions they were already expecting to claim.

Instead of waiting until tax time for a larger refund, an appropriately calculated and approved variation could potentially improve their cash flow throughout the year.

Good tax planning doesn't always change how much tax you ultimately pay. Sometimes it changes when you get access to the cash.

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General information only. PAYG withholding variations are subject to ATO requirements and approval. The appropriate variation depends on expected income, deductions and other circumstances. Estimates should be reasonable, as an inappropriate variation can result in insufficient tax being withheld and tax payable on assessment.

Keeping your salary relatively low can sometimes make sense when you operate through a company and don't need all of the business profits personally.

But what happens when you actually need the money?

We had a client operating a successful business through a company. They had historically taken a relatively modest salary and left a significant amount of profit and cash inside the company.

Then their circumstances changed: they wanted to purchase an investment property and needed additional personal cash to help fund it.

Rather than simply continuing with the same salary strategy, we reviewed the client's broader position — including accumulated company profits, available cash, franking credits, Division 7A and the tax consequences of extracting additional profits.

How should the money come out of the company?

The first question wasn't simply, “How much money can we take out?”

It was, “What's the appropriate way to extract it?”

We considered the relative consequences of additional salary versus franked dividends. Salary may generally be deductible to the company but can also have PAYG withholding, superannuation and other consequences. Dividends aren't deductible to the company, but where the company has sufficient franking credits, those credits can potentially be attached to dividends and recognised in the shareholder's personal tax position.

In this client's circumstances, we considered a planned dividend strategy, including interim dividends during the financial year where appropriate, rather than waiting until year-end to decide how much money should be extracted.

That provided the client with additional personal cash that could be put towards the proposed investment property purchase.

Working backwards from the cash the client actually needed

Simply declaring a $100,000 dividend doesn't necessarily mean the client has $100,000 available to spend without further tax consequences.

A fully franked dividend generally comes with a franking credit representing company tax already paid. The cash dividend plus the franking credit is generally included in the shareholder's assessable income, with a corresponding franking tax offset. Depending on the client's overall taxable income and marginal tax rate, additional personal tax may still be payable.

So we worked backwards from the client's objective. How much cash did they actually need for the property purchase? How much should be distributed? What franking credits were available? And what additional personal tax could arise?

That gave the client a much clearer understanding of the after-tax cash actually available for the investment, rather than simply looking at the balance in the company bank account.

Avoiding an unintended Division 7A problem

This planning was also important because company money isn't automatically the shareholder's personal money.

Simply transferring company cash to a shareholder to fund a private investment can potentially create Division 7A consequences if the amount isn't otherwise appropriately dealt with. Depending on the circumstances, a payment or loan by a private company to a shareholder or associate can potentially result in an unfranked deemed dividend.

So instead of saying, “The company has the cash — use it for the deposit,” we considered how the money should legitimately be extracted before it was used.

In this case, properly declared franked dividends allowed us to plan the distribution of accumulated company profits while taking the available franking credits into account.

That's very different from withdrawing the money first and worrying about the tax consequences later.

Looking at the property and dividends together

The investment property would also change the client's personal tax position.

Once the property was held for income-producing purposes, eligible expenses could potentially include interest on investment borrowings, council rates, property management fees, insurance, certain repairs and maintenance, capital works deductions and depreciation on eligible depreciating assets.

Where allowable rental deductions exceed rental income, the resulting net rental loss may generally reduce the client's other taxable income, subject to the normal tax rules.

That was relevant because the planned dividends would increase the client's assessable income. Rather than considering the dividend strategy and investment property in isolation, we modelled how the different components would interact in the client's overall tax position.

Importantly, negative gearing wasn't the reason to purchase the property. A tax deduction only reduces part of an economic cost, and the investment itself still needed to make commercial sense.

Tax planning should respond to what the client is trying to achieve

If we had looked only at the client's salary, we might simply have continued with the existing approach. If we had looked only at the company, we might have focused on leaving profits inside it.

But neither approach answered the more important question:

What was the client actually trying to achieve?

They wanted to purchase an investment property.

That meant considering salary versus dividends, available franking credits, how much after-tax cash they actually needed, Division 7A before accessing company funds, and the tax consequences of the proposed investment property.

Tax planning shouldn't happen in isolation from the client's objectives. A strategy that made sense when the client didn't need the cash needed to be reconsidered when their circumstances changed.

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This case study has been generalised, and certain details have been changed to protect client and business confidentiality. General information only. Dividend, franking, Division 7A, salary, superannuation and rental-property consequences depend on the particular circumstances. Our role was to advise on the taxation consequences of the proposed arrangements. Investment decisions and financial product advice may require advice from an appropriately licensed financial adviser, while lending and credit matters may require advice from an appropriately licensed credit adviser.