#691 – Business & Finance With RBK Advisory’s Jason Robinson/
- April 21, 2020
Jason Robinson – CPA & Director at RBK Advisory
Jason is a CPA accredited tax accountant and Director at RBK Advisory. RBK Advisory has been awarded the Xero Australian Partner Of the Year and Jason won the 2018 Young Finance Leader Accountant of the Year.
On today’s episode of The Daily Talk Show, we discuss:
– Accountants in a time like this
– Working remotely
– Relationship with money
– B Corporation Certification
– Questions from the gronks
– Job Seeker And Keeper
– Financial planning
– Business structures
Jason Robinson: https://www.linkedin.com/in/jasonrobinsoncpa1/
RBK Advisory: https://rbkadvisory.com.au/
Email us: firstname.lastname@example.org
Send us mail: PO BOX 400, Abbotsford VIC 3067
The Daily Talk Show is an Australian talk show and daily podcast by Tommy Jackett and Josh Janssen. Tommy and Josh chat about life, creativity, business, and relationships — big questions and banter. Regularly visited by guests and gronks! If you watch the show or listen to the podcast, you’re part of the Gronk Squad.
This podcast is produced by BIG MEDIA COMPANY. Find out more at https://bigmediacompany.com
It's the daily Talk Show Episode 691.
Welcome to the show Jason Robinson.
Jason Robinson account.
extraordinaire, PGI advisory how I sorry no PG advisor very shy. Oh my god this is a non
client it's a client just raced out. We just reached out
right that's really good man. Good thanks for having me. I thought way to grade I was going to be show 700 I thought that was the big one that we lined me up. Well, only getting you your current back situation. What were you just showing us before? Geez, I thought that it come up if I did something silly, like show you guys this. This is my back and I was nodding my back. So yeah, thanks. Thanks for calling me out straightaway. I've got a sore back
We're Matt and Raymond all in at the moment so I don't have access to my local physio or massage lady back. So yeah, I've been self carrying my back Did you can you did you buy that on the island or that's
no that's a went for a trip to the local Kmart and bands Dale and I hooked myself up with my back knob. So really? I mean correct Yeah. Who's Matt is saying that was essential that was an essential essential travel.
I'm not sure who came up with the invention but I'll tell you what, in desperate times, and when you're in need. I was pretty happy with the purchase.
Right now see that everything Christmas Christmas? Yeah, you said this is Christmas time for accountants. what's the what's the vibe like this year versus last year? This time? Is Christmas a shit fight is the uncle is the annoying uncle here and he's actually just really pissed and picking on people. Or is it? You know, it's Yeah, look for a bit of back
Round RBK advisory and accounting firm in Melbourne, a couple of partners started a few years ago, we've got a decent team of nearly I think 25 of us in the accounting side, zero accounting firm of the year. So to give you a bit of a scale of the size of what we're doing and the clients that we work with small business clients brought down from sole trader to big companies and for the Christmas time for accountants a comment that I made was, it is Carnage like with stimulus and job caper and job seeker and all of the things to the COVID 19.
It's, it's, it's just nonstop. It's relentless in the amount of announcers like you guys, as business owners have felt yourselves. It's even rent relief. There's all these things that keep coming and keep changing and all these businesses are trying to do is survive and get through the current climate. What's the biggest thing that's changed? Do you think in the way that you guys were operating just a few months ago to now
look like you guys. You're operating it
are in homes on a video screen rather than being in a studio together, we've we've done the same thing all about offices, you know, empty so we're in Richmond, Hampton, BlackRock, nary Warren site down in Shillong, and Torquay and over in Perth. All of those physical office locations are empty and our entire team works from home using slack teams zoom zero, you know, to communicate with ourselves and with our clients. So that's the biggest change from a physical side. The other side is like all other business owners, you know, we're, you know, reducing costs, looking at how we communicate, looking at how we can do things differently. But I guess the benefit for us is the benefit for us. We're already working in a way where we could work remotely. We already had our team members work from home at certain occasions. So this was kind of not really a hard transition for us. I guess the hardest part is then transitioning our clients, the ones that still we're used to doing face to face meetings.
Going guys, we can jump on a zoom call and still see each other face to face and talk about how we improve your business and how it can help you right now. And, you know, because of the current situation, they had no choice but to jump on a zoom meeting or jump on a call, they went well, this is actually pretty good, I can still see you, I can still talk to you, you can still help my business and I don't need to come into the office to see so if anything, it's gonna change the way we do things, you know, three, six months from now, I don't think we'll have as many onsite meetings because people will be comfortable with the new way of doing things. Yeah, but I mean, I like having coffee with you and the mentors at the office where you were is quite quite actually appealing guys, and what's your emotional connection? And do you have one too many? I think we all do. It's probably fair to say as an accountant looking after a whole range of people's businesses in different health, you know, levels, what is your personal relationship with money?
Good question. That
wasn't in the quick questions listed pre show. So
with money wasting. Now you gotta know you gotta deal with
my relationship with money. It's not so much I don't need a million dollars but I don't need $10,000 there's a level of comfort you have from working hard and getting a return on the value that you give. So it's a value exchange for the money that you earn.
And then what you do with that money I mean, if you've got no hobbies, no pastimes, you know, you don't like to travel, you sit at home and you got a bank account full of cash, like it's what does that actually mean to you?
So, you have a relationship with money Look, I, I love what I do, and then earning money or as a return for that is, you know, it's part of the puzzle. I mean, I'd probably do what I do. If I earn half I'd probably do what I do if I earn five times as much and the relationship with money
Then becomes about if I'm okay with money and, and good at talking about it and then I can help clients be better. I guess there's a satisfaction and enjoyment that comes from from working with money all day every day and working with business owners and I guess improving their relationship with money.
Missouri you guys, sorry, Judge I just wanted to sort of follow up you say, I think you see people who treat or treat sort of business, like a game. So there's that less emotional attachment to it, where they're able to make decisions that aren't really connected to, you know, the the dollar figure, and it removes some fear. What for you? Have you like a psychologist that has people talking about you know, tragedy a lot. Have you got a thicker skin? Do you care less about you know, not caring less, but it's like, Yeah, do you see it like a game where you can if you play it right, you can make more
You make less if you don't play it right? What do you What's your sort of a black and white towards it?
Not so much black and white, I think a lot of the book of thinking Grow Rich, it's about having that desire and where you're going and what your direction is. So if you've got a roadmap of where you want to, some people create a business to keep for them forever, and that's their baby, and they treat it like their baby, and they nurture it and love it. And they get really
other than to sell in five years, 10 years, 20 years or to make money off and not have to work in the business. So I guess it's the understanding of who you work what they're trying to achieve. And that forms the conversation because it's going to be different with respect with
Yeah, your your Internet's a little bit cooks. Jason, do you want to jump on to
4g, or cut to hell? Yeah, three shot.
So we can we can just wait for a second. So
Have you done last exploited to have you actually?
Yeah, I have I think I think I actually did it pretty quickly. Like, I don't know this. I usually like as soon as it it becomes available for submission. I'm, I'm pretty much on to it. Do you George? Oh,
yeah. But yeah, it's I mean, I don't have much to do anyway. So like, it's a pretty easy, it's not as complicated. I think this year will be more
complicated with like, just with like, the chairs and all that sort of stuff. It becomes a little bit. I don't know what you have to do there.
Yeah, I mean, it's the working out how to like what advice to take what like it serves, how do you reconcile that you're doing the right thing.
literally just this is just for me, it's just searching online and just finding all the all the different things and sort of just going from there. Bye
Since mantor, is before Google before pipe, that listen to Scott papers, he tells you a piece of advice directly to your face. Just don't take it. There we go. I think that could be better the cats moving. So I think that's a good sign in the background. So on the back. So with RBK, I was curious about the B Corp stuff. So what is B Corp? For people who don't know and how and what does it take to get that status? Yeah, she'll be corpse a certification that your business acts in a certain way in relation to community environment, how it spends its profits. So effectively, what B Corp is saying that it's okay to be a business that makes profit, you don't have to be a charity or a business that puts all its profits into, you know, one particular charity or one particular kind of giving back. What what it's saying is that it's okay to be a business for profit, but it's how you use those profits and what you do with them. So
The different elements I guess, for us were our relationship with the environment. So you know, our encouragement of reusable water bottles using cape cups, donating money to certain charities and then a percentage of our profits going back to charities, our culture internally and the values that we operate by, there's all these different things but for any business owner that that I guess wants to operate in a certain way, B Corp and its code of conduct and the way that you have to operate to be a B Corp, I'd highly recommend people have a look at it.
It's a process it's like, yes, it's Yeah, it's look, I think, you know, john, oh, one of one of our business partners, he ran with it and worked really hard for it but it was like a three to six month process of they tear your organisation apart. They want to know everything and anything. Basically what you had for breakfast six months ago, where you bought that breakfast from, how much you spent on it. How soon
But there's a lot of detail that they go into where,
you know, you open up your organisation for scrutiny, and they will give, they gave us the feedback of, you know, you can't do that or you shouldn't spend your money there or you should change banks to be with a more ethical back
to the as an example.
But yeah, things like that. So, look, I think it, it makes us a better organisation today and also puts us in a community of like minded businesses. So, you know, right up to the level of your Patagonia and your Etsy and your stone and wood brewing, to be able to be associated with businesses have that kind of, I guess, you know, that kind of level. And then ob AK advisory is one of I think, three accounting firms in Australia that is a cope certified.
So, you know, puts us in really good for you and I'm really good land, to be working with great businesses that are in that community.
I know it's the burning question, john.
What was it that you had for breakfast six months ago? And how much supply would you get from?
smashed out? Oh, hopefully we had a pomegranate because I love that fresh burst of pomegranate when it goes off in your mouth. Yeah, it's probably paid too much. Yeah. Yeah. And probably from pillar results across the road from the Richmond office.
We got some questions from the gronk.
Before I get to that, I just wanted to say, since moving to you guys for all of our accounting, I feel like TJ and I have been able to relax as much as you can relax from a financial point of view, like the shitstorm. That's happened with all the COVID-19 stuff, knowing that not only for us being able to know what happens, but even Brady's getting emails or whatever with his updates and like it's made such a difference. I think it's so thank you for that. But also, it's great that you willing to answer some of the gronk questions around this stuff too, because it can create
A lot of friction and pain in people's lives. You're welcome my pleasure having you guys aboard. It's always been.
It's like collecting good businesses or collecting people to come along and work with us. We want to work with good people, relationships, which I guess is one of our big things. We don't just want another number, we don't want to just take dollars off someone and hand them a bass or a tax return at the end of the year. It's the ability for you guys to be able to drop us an email or give us a call, drop in for a coffee and you know, enjoy, enjoy coffee together, you know, strong almond latte, whatever it is that we're going to be having at the time and you not happy days. So
that's what it's about. Just before the questions from the gronk I think it's, it's it blows my mind, like
property managers, real estate agents, like there is such a consistent level of shitness in all of them. And I've had four other accountants that I can say they're all like, they're all
Had the elements of dogshit and averages. And so like it seems like you're just going the fundamentals relationships work with good people, you know, it's not just met like these seem like the simple things and I think majority of people are missing and it's it's sad What do you think? It's like communications the emails you know? Yeah and communication internally as well like I'm we're very fortunate we've got a great team, great business partners, great team and we communicate well internally, which then empowers our people to be able to communicate with you because I know for example, Teva and how he works with you guys. I might not be across all of the correspondence but I see it all Teva loops me and he updates me so that if there's something that I wasn't involved in, already know what you guys have asked, hey, everybody's responded back to see our communication is that huge part of it. Without communication, we can't do what we do. And I think that's where, unfortunately some accounting firms
Don't do that, you know, they may focus on other things like being really gifted technically with, you know, their ability to apply GST tax law, which doesn't necessarily excite you guys. But I also think like, the classic is an accounting firm becoming big. And then you end up left with a jr burger doing your books, whereas I feel like what's great
with what you guys have done with our BK is it's, you're actually giving a specialist so even though we're not working with you as a director all the time tavor actually knows more about zero and all of that sort of stuff than you in some cases. And so knowing that even the people around you are actually in a great position to give us feedback as well. Yeah, we learned that from experience from previous accounting firms, when we were the junior burgers, my business partners and I and
you just got to learn from those experiences. And then when you create we created the business it was laying down the foundations and the
Rules of how we wanted to operate. And like, you know, I'm not going to be available all day every day. So having someone who knows your business and can work with you is, is important. But it's also still being involved like I if I brought you guys on and then completely checked out and went, I don't need to look after these guys anymore. You know, we wouldn't be the business we are today and it wouldn't be growing and continue to be successful like it is. It's awesome. So Aaron asked my Freelancer with a US client. I'm registered for GST, can I invoice them in US dollars and do I need to include GST? Can are reflected differently so they aren't confused by the tax?
Yeah, so look, that's a couple of pot question and definitely not as simple as an answer I was kind of expecting when I put my head around it so GST payable part of it generally depending on what he is providing offshore is generally a GST free export
So he wouldn't have to charge GST on those services or products he's sending offshore. When it comes to putting the invoice
our Stoltz or a UD depends if there's a GST component, you would have to reflect that in the amount of Australian dollars payable. So it is expected that you would then need to put on the exchange rate for the GST if you were going to say it in not Australian currency because you do need to have it as Australian currency. So you can invoice someone in US dollars from your shrine company, and then they can pay you in US dollars. But if there is a GST component, you need to include the Australian dollar payable amount of GST on that invoice so it couldn't have been percent so it couldn't just be like the US the 10% of the US amount. Now, so I've got a little statement. So you have to put something for example, the GST is calculated in Australian currency exchange rate published by the RBA at time Australian Eastern Time.
On the business day of the date of this invoice, like that's how complicated they make it. So
to answer Aaron, it's not as simple as Yes, no, maybe it's what services he providing. If he does have to charge GST, then he will need to include that extra information if he's not charging GST, it can be US Dollars GST free, but you're happy to chat to Aaron afterwards and kind of break it down with him specific to his circumstance. And so I think you're like the I mean, to to go on are just gonna say, with all of this stuff, as you've said, who is someone who has you hit around a lot of things to do with money and finance and tax
is like do the does the tax department have a grown clause where they like, of course a you know, an operator who is not really that savvy, they're, you know, their bread and butter is drawing on a piece of paper for clients, and it's not doing crunching numbers. Is it like if you did do the opposite
Is there a way to then back off? You know, alter what you've done?
Yeah, look, the ATR is definitely not the bad guy, they're pretty lenient in a sense that if you can explain why you did it, there wasn't, you know, you weren't deliberately deliberately frauding, the audio and the government, there are people that want to work with people. I know a lot of the time you can get someone pretty shitty on the phone from the CEO, but it's, again, communication, talk to them about what happened, talk to them about why you did it a certain way. And if you're not good at what you do, then I guess the expectation is that you will go to a tax agent or ambassador and you will seek help to make sure that you get it right. Because unfortunately, the Australian tax system, unfortunately, is a self assessment system. So if you are self operating and just making decisions yourself, and then you sign your tax return at the end of the year, it's on you to know whether you've been doing it all properly if you're not going to go and seek advice from from professionals.
On the GST that this is quite a basic one, but I can't remember what the answer is. I feel like it would
help a lot of people when you buy something for a client. So for instance, say you buy a hard drive. There's GST on that you want to get reimbursed when it comes to putting that reimbursement on the invoice. Do we have to add GST again? Or is it the exact same amount? How do you sort of do that? So if you bought a hard drive for $88, just to make the numbers really easy on your books, it's gonna be an $80 expense and an $8 GST credit. So that when you charge the client to receive that you need to charge them $80 plus GST, so you're going to receive $88 in and you've recovered your $88 out. I think where some people kind of overcomplicate it is they go I spent 88. So I'm going to charge 88 plus GST, so you've ended up collecting more
Then what you're actually out of pocket. Okay. Yeah, sure.
Samantha asks, What should I be asking my accountant in regards to job tape a good one. Not nothing leave your accountant alone.
Seriously, jack. So Samantha depends on whether you're an employee of a business or whether you are the business owner. If you're the business owner, there's a whole kettle of fish you need to know that registrations opened yesterday for job keeper so you can apply for your business to be receiving those payments. Your business needs to have reduced 30% in revenue either March versus March, April versus April or there's a few other tests that are still coming out. And before the end of April, you need to ensure that you've paid your eligible employees more than 1500 a fortnight at least for the two fortnight's if you are going to be asking to be reimbursed by the way to in the first week of May. It is huge. There are so
How many T's and C's around what an eligible business looks like and what an eligible employee looks like?
So I guess, look, you need to be asking for as much information as possible. And if your accountants not available to give it to you, it's the Ico is trying to make this as simple as possible. They've broken it down into eight steps of how to claim the job caper on the HR website.
But again, you've got to jump on have access to the business portal or access to my gov and be able to flow through this application and they do word and infusing terms out a sole trader client, as I say, you know, what does it mean by I need to have lodged by 12th of March, and they worded in a real complicated way. And it's like, well, either if you haven't launched your 2019 tax return, you need to make sure you've lodged a couple of classes so far this year. And if you haven't done either of those things, it talks about making a basically an application to the A to Commissioner for their discretion to say that you can still claim or see and if you're an employee
I guess it's communicating with the business owner or you're the business, you work for it and talk to them saying, you know, I would like to be on job keeper, are you eligible? I am going to imply apply and then the employee fills out an employee nomination form to claim through that business owner.
Yeah, well, it's a long winded answer to the crazy job thing. I think it was good. It's,
I was just gonna say I think, as an employer, as an employee, it would feel like you
it would feel uncomfortable because you don't like I'm having the conversation with you about job caper. And as a director of the business, it's you know, like it's it's only one step for me to you to then understand this stuff. Whereas I get the sort of frustration or the, the feeling like you're unsettled based on not understanding is my is my boss, going to then interact with the finance department that they need?
interacts with the accounting team that then interacts with the, you know, the government which is, and so it's like fact, even if you do send the email asking about job paper, that's where I'd be like, Yeah, she isn't gonna happen. Are they that far down the track understanding that literally it's yesterday that it's come out and said, Yep. Now you guys can actually put your applications in. And so it's like, I guess it's now it's like applications are actually open. So they should be submitting them if they are. And so you're hoping that you get you know, truthful answer that isn't just, you know, trying to come out your feelings. And then it turns out that the joy, the joy of this is that applications open yesterday. But if you're going to be eligible, you need to have your application lodged by the 26th of April. So anyone who's kind of sitting back going, I've got plenty of time to do this applications just opened. If you want to be in that first round of payments in the first week of May, you've got until the 26th of April to get your application in. dot your I's cross your T's sorta
payroll Do you single touch payroll, employee nomination forms, the whole shebang.
You know, for anyone who you know, you don't have to be an advocate client, our blog on the website has the steps broken down as well under the job caper update that we posted. So you can grab some, you know, helpful information there and then take it on your way and sort out what you need to do
that. So you've only got till the 26th of April for business owners out there who want to be able to apply for job keeper and lock in their first payment in May. But the thing that everyone needs to understand is it's a reimbursement for the money you've handed to employees already. So you need to have paid 1500 per fortnight, and then you're putting your hand back out to the ACR to be reimbursed.
And so because I think that like the other interesting thing is that because this is so public, every gronk is hearing the news and obviously going to their employer and being like, hey, am I eligible for this or that so for instance, there's
Like, I've got a mate who works a few out like a younger dude works a few hours at a pool would only get 50 bucks a week and sort of rubbing his hands together like I'm gonna be, I'm gonna be cashed up I'm gonna get 1500 you know, off this a fortnight, is it for like, is that a possibility? Like does does that then mean the pool company would have to or you know, the facility would have to back pay him that 1500 per fortnight
correct. So if he's been a casual employee for more than 12 months, the pool facility applies for job caper and says we want to be able to give job keep it to our eligible employees, they would need to pay the pool boy who would have made 50 bucks hundred bucks a week. They need to give him 1500 a fortnight to be to then claim that 1500 a fortnight back. This is where it's caused a bit of I guess anks for employers. See, imagine you know the fish and chip shop, the cafe, the restaurant that may have to
20 casuals that would earn 200 bucks a week and all the all these casuals are calling the business owner going, Hey, I heard that I'm entitled to 750 bucks a week, I want my job caper payment without actually understanding that this poor business owner who's struggling to make ends meet because their businesses shut down or next to shut down, doesn't have that 1500 bucks in their pocket per fortnight yet. So it is an example of business with 10 employees needs to find $30,000 in spare cash before the end of April, pay all those employees and then wait for the HR to hand that money back. And the government's saying that's okay go to your bank and get a loan.
And I don't know about you but would go into the bank and getting a loan in this kind of climate is not seeming like a very easy feat at the moment. So yeah, it's it's complex. There's Samantha's questions, a great one it's hot on the lips of a lot of people out there that either business owners or employees so it's relevant to everyone. Well, I think Joe said example was like the Robin
The stick sets the analogy of the opposite of the roll rent of the roar into the deal. Well, you're getting the roar into the deal bashing in at that point if you are you're messy, it's a massive Yeah, it's massively advantageous for for those people that are in that position. But the roar end of the deal is people who you know, like in the arts industry where they make little bits of money here and there and they're, you know, contracted for three months at a time there's been a lot of sort of complaints from seemingly wealthy arts people that are getting behind this, you know, conversation around like, Oh, don't forget about the arts and stuff like that, because it's interesting for us, right? Like the you've got the super wealthy like arts people who then employ a bunch of people, I guess it's, it's, you know, that part, which it's so funny because I see that I understand as like, Fuck, that is so annoying, and it would be tough, but then I think about acid as a small business and
The way we've tried to do it correctly is very fucking painful. like for us to be able to get the three of us onto job keeper, that means we have to have paid superannuation every single quarter like pay YG and it's like that is super tough and the trade off with doing it like that is a lot of fucking friction. And so it's hard at this time to for people that walk out with the wrong the deal that might have just done some casual work coming in and out. It's like that on one hand, I get it and the other hand I don't because it's like, there is also the job seeker payment which is a
non taxed version of the job caper. We still have to pay our you know, income tax on that. Right. And so, the other end so hopefully so the job keeper does is that a taxed payment. It's not a tax payment. I didn't say that, but is that correct, sir Go? Yeah, it comes into you guys's income that you'll declare as revenue into your business and then because you pay it out to your employees. It should be
netting netting itself out. So there'll be an income coming in and an expense going out to the employees. And so the employer they see 1500, or will they see? So that's post tax? Yep. So you'll need to post it through payroll and payroll will calculate how much tax to withhold on the 1500 for that employee, depending on their circumstances. So 1500 is the gross amount. But you know, for example, Mason may end up with 1300 and 50 in his pocket, and $150 will be tax withheld that will appear on his Payment Summary at the end of the year. What is what is super mean in this this time, obviously, people are pulling out their super is super contributions still happening with with this payment?
Yes. So if the employee was stood down, and they weren't going to be earning any money, and then you reinstate them to give them the 1500 job k but that 1500 is like there's no super payable on that 1500 if the employee was to die
If the employee was already still working, you're gonna you are always going to continue to pay them their salary and the 1500 is helping to subsidise their salary you will still have to pay super as per normal. So there's a few different rules around that but yeah, I guess the important one is if if the employee was stood down and they weren't going to get any money and you brought them back on just to give them the job caper, your business won't be further out of pocket because of job caper making you pay super.
We've got another question from Ben who says Can I instant tax write off an iMac to my side hustle freelance business? I'm a sole trader.
Yes, so you know you're working under your ABN earning some money on the side. Perfect example you've raised $10,000 worth of invoices and collected $10,000 at a tax write of Missouri make it easy for myself 30 cents to the dollar. You know average right attacks for Ben. He would have owed an extra
$3,000 at the end of the year, and he's tax for his $10,000 profit. Now, if he goes and buys a Mac, and I'm going to make it even easier, he bought a $5,000. Mac. What that happens there is that instantly deducted off his $10,000 profit. He's left with $5,000 left over to pay tax on, he pays an extra one and a half thousand dollars tax. So he saved one and a half grand by going out and buying the new asset that he was able to write off using the accelerated depreciation rules for the instant asset write off. Does that make sense? Yeah. And so I mean, one of the complications that I never got my head around was around if you are an employee, and you have a side business, which is becoming more and more common. The working out, okay, I've got my phone bills. I've got all of these things. How do I split them up? Is there sort of a rule of thumb in regards to how to do that
sort of comes down to your mental caper diary.
And then a logo of how you use your assets, whether it's for using it for your employee job as an employee, and then using it on your side hustle. So it's really important to keep accurate records of all of your use of that equipment or use of your phone and internet, let's say, if you're using your phone, not really much for work to earn your wage, because your work provides you with the ability to make calls through the work system, but you're using your phone flat out on your side hustle to use it to hotspot generate income phone calls, emails, text messages, you'd record how much of your phone bill per month is dedicated to working on that side hustle and you'd claim that percentage of your phone bill on your tax return against your side hustle income. You know, and the ways of doing that printing off your phone bill highlighting all the phone calls, keeping a log in a diary of how long you're using your phone call phone for, let's say hotspot and data. But the better your records are and the more records you keep, you know, the easier it is to sleep at night knowing that if the ATF
came looking and said, Hey, we want to know why you claimed
80% of your phone bill. You know, if you've got records that reflect that you're on your phone all day, every day your calendar reflects that your diary reflects that you've printed off a few months where the phone bills that you can highlight 80% of it as work related. That'd be nice. Yeah. I mean, you hear that those kind of stories of people of the tax department coming in the example you just go there? How often are you actually seeing this where they're coming to people and going, alright, cough up the cough up the info.
Not often, I'd like to think here, the way the way we operate and the way we educate our clients have the records that they need means that you know, we've got a real clean, real clean bill. Looking at, this still happens. I mean, there's always just audits that happen because they pick a name out of a hat and you have to sit there and explain to the CEO why you claimed what you claimed. It's not super regular, and even excuse me, even in previous accounting firms I've worked for it's not like
Wanting 10 tax returns gets audited. I mean, you think about the the size and scale of our country and our economy and how many tax returns are large to then think about how it would be possible for the ATR to even look at, you know, 10% of them, 5% of them. If I had to put it in numbers, I've done everything I could I, yeah, I wouldn't even be comfortable putting into numbers, but it's not a regular thing. And if you're doing the right thing, I guess it's something you don't have to be too concerned about the people who do the wrong thing. I just my general rule of thumb is it's going to catch up with you eventually. You know, the HR audit period can be extended for a long time and if you've done something wrong, and they find you, they'll keep going back and back and back to dig up as much as they can. And I guess for their end, the beauty of this system is you're guilty until proven innocent when it comes to, you know, the lodgement of your tax returns. If they turned around and went. Actually we think you were collecting an extra $50,000 a year tax. They will lodge an assessment
meant that you were receiving that extra $50,000 a year tax. And then it's up to you to prove that you weren't, though. How annoying. I mean, we grande smiley, who you would have danced to his music? quite a quite a bit. Jason back in the day, like myself, yes, we were at his restaurant in LA and he was telling us that he has audit insurance, which is quite common over in the States. Is that something we do here? I'd never heard of it before. Yep, definitely. So we're, you know, ordered insurance for example.
Okay, let's use you guys. For example, you guys pick up ordered insurance, you might pay a couple hundred bucks for it. And then the CIO sends us a letter and says we want to review that big media company have paid all their superannuation on time. So if you're I then had to go and spend hours digging up bank statements paperwork, printing out zero records, and then sending that to the HR. Let's say I did that on your behalf and I raise you an invoice for 800 bucks for spending seven
Several hours of my time dealing with someone from the ITR acting on your behalf for the audit, you guys are going to pay that $800 invoice for my time. If you had ordered insurance, I would send my $800 invoice to the audit insurance company and you guys would sail off into the sunset a couple hundred bucks better off because you had ordered insurance so it's not a get out of jail free card. It's not like cookbooks you just you covered with no yeah it kind of
just Jason's problem
Yeah, yeah, he only covered with basically your accounting face. You still if you did something wrong you still gonna pay penalties today to you still going to pay
charges, you know, underpaid GST, underpaid income tax you'll still pay everything that you're required to pay by law you're still going to be copying that the only come on bro. Not Come on. A couple years for me. Just do a couple years in jail for me although as you get older to you do
clean as a whistle and nothing touches this, he got sign everything if anyone goes down.
all running about Ford. I mean, this is why like, Oh yeah, like To be honest, I could do that thing about the super with zero like these programmes, these new subscriptions
Game Changer like, like ridiculously game changing, like I can press one button will print off everything for us. I mean, you would know where the button is I would have to ask. But no one I mean, there's a charge for that there's a charge for that question. I
looked at that that was a real simple example. But look, the ones that get complicated might be a business that has seven motor vehicles and they haven't lodged a fringe benefits tax return and they let their seven vehicles they're taken home by staff members that drive them to you know, Mount Politico snowboarding on the weekend and, you know, all of a sudden the ATR comes along goes well those seven cars, someone's getting a benefit.
from having those cars in their driveway at home, somebody has to pay tax on that fringe benefit. And we're auditing you to figure that out. Now going back and figuring out how those seven cars were used if you don't have good records, where are the logbooks, blah, blah, blah, all of a sudden, that's a lot of work for someone to complain. There's a lot of liaising with the A to to go back and forward to to get those records correct. So that might be a bigger example of where, you know, you don't want to be spending too much of your time or your accountants time digging through those kind of things. But I mean, people are working from home a lot. There was a question from Tim saying, I'm working from home more as a business owner, what's the tax implications of this? I guess, as a broader question,
to sort of extend this what are the tax benefits of actually having an office like we're considering are maybe we spend like if we can free up, you know, 3540 grand a year in leases, and have it
At home, what are some of the considerations with this type of thing?
Good question. Let's talk about it from let's say an employee who's working from home now and is using their home internet and electricity guess what not the simplest version for them is the A to have up to the right to 80 cents per hour. So your record how many hours you're working from home from the 12th of march to the 30th of June. Let's say you're working from home for
you know, 40 hours a week, the 13 weeks times whatever it is, when I multiply that seven who works at home so say like mom, dad all that so think like there's one person climate or Can everyone climate.
I, everyone who works from home on their tax return can claim the 80 cents per hour that they've worked from home. So that's a real I mean, that's a bit like the set rate for driving a motor vehicle of 66 cents per kilometre. What they do is I try and make it easy. You know, you calculate your hours work from home and you multiply by 80 cents and that becomes the tax deduction.
tax return as an employee, that's the most available record, most available option for you. As a business owner, that's where it gets a little bit more complicated. So working from home as a business owner, which was Tim's specific question then goes down into, do you own your home? Or are you renting if you own your home and you elect to claim the operating cost of your house, so you're claiming a portion of interest, phone bills, electricity, gas, internet, you know, all the running costs of your home? And you let's say, you know, you say your office is 20% of the size of your property. And you claim that on your tax return, you claim 20% of the total cost of your house on your tax return. What happens then when you sell your house is that you have to pay capital gains tax on the portion of your property that was earning helping you earn income. So that's where people who work from home who owned their house have to be really careful with how they claim tax deductions for the home office.
Because again, if as soon as you're using your home to generate income, and you're claiming it as a tax deduction, there's big issues when it comes to capital gains tax and the kind of records you're keeping and the tax you're paying when you sell your house one day, if you're a business owner, and you're working from home, and you want to keep that neat and clean, that's where you go back to that 80 cents per hour method, and then claiming a small percentage of let's say, the bills that are actually attributed like phone bills or internet, which is more taxation rather than the company. So with that doing the personal tax level, then
yeah, you want to be claiming it as a personal tax level to keep CGT free from your house. Okay. And so what would that look like? The capital gains tax area? Yeah, so that means that like, is it looking at your previous books and saying, Okay, you've made X amount of money in a bit like how does doesn't matter doesn't matter what what you've made in your business. It's the percentage of your house that you traded as
A business asset as a business you so to a real life example, you bought your house for $500,000. And you decided that 20% of that was going to be used as your home office where you work, whether it's running a business, doing tax returns, doing child care, whatever you're using that 20% of your house for. Now, 10 years later, I can I can turn my son into a business. Can I just say I'm a childcare worker? 20% No, no comment live on.
Foot 1010 years down the track, you have $500,000 houses worth a million dollars, you've made a $500,000 capital gain. Now, if your main residence was your main residence, and you've never used that to generate income, you sell your million dollar house and it's tax free. That's your house. You've lived there with your family. You don't have to pay tax on that $500,000 profit you've just made. However, you've run a business there for the time you've owned the house, you've claimed 20% of those costs on your tax return.
On that $500,000 capital gain 20% of that now needs to go on your tax return for the ACR to tax you on. So $100,000 of extra capital gains, income goes on to your tax return now, there'll be discounts and other things that I won't get into to bore the pants off the viewers at home but that's why it's real complex like you don't want to just go and claim all this stuff on your tax if you don't understand the consequences, especially for you know, claiming home office expenses just because that's that'll be a big one. Now, with a lot of people turning to work from home and realising Geez, I can run my business from home. Maybe I'll just claim, you know, all this stuff on my tax return. not realising that a few years down the track, you could really you know, shoot yourself in the foot when it comes to other tax consequences. There were those ones like in regards to like, I guess there's a lot of things that are being offered up right now. It's like taking out your super the what are some examples of things that look really good right now in the short term
They didn't 612 18 months time or even, you know, 50 years time if it's super, will actually be problematic. Yeah.
Look, I think, look touching on the Super 110 thousand dollars in Super at the moment. So if you were to put, let's say Robin take 10,000 out you put 10,000 in. I think Scott Pape uses the example of someone in their late 20s, early 30s puts $10,000 into super. That's the equivalent of around 90 to $100,000 when you get to retirement age. Now reversing that if you go and pull again, like full disclosure, I'm not a financial adviser. I don't hold a financial advisory licence. This is just general friends talking about superheroes. If you take $10,000 out of super now, because it's tax free and you think you can prove that you're under financial hardship, you take $10,000 out now what you need to think about is if I can't put that $10,000 back in, am I comfortable having 100,000 lessons
When I retire,
because I guess when you think about it as $100,000 when you retire, it's more than just talk and have a quick win and get 10 grand now, in saying that, if you are under financial stress and you need that $10,000, talk to your financial advisor, talk to your accountant and figure out is that the best option? Are there?
that's, that's the biggest one at the moment, I think is super the early access to Super there's
10 grand out and spend it just because, you know, so I don't really like super. I don't really understand it. I think it would be. I guess one of
the, you know, for the 25 to 35 year old clients. Even sometimes beyond is there's a lack of appreciation for what the super environment does in the tax tax world. Have
What $10,000 now is $100,000 later and how that works in compounding.
Outside of that I mean look, I don't have a crystal ball was all of stimulus the job caper job CEQA working from home.
Well, we know it in a way and I look forward in a way to seeing us come out the other side of this in three or six months as an economy and as a counter trend react and push forward. A lot of opportunity for the people who look at it the right way and there's a lot of like of really bad things that are happening. That is happening I feel for a lot of people out there that are going blue
livelihoods, just checking it on Wi Fi real quick. The question that I want to ask in regards to that super stuff was in relation to pulling out super with the idea of then
I've heard cases of people getting it then like you get it tax free and then being able to do things
Like, reinvesting it the way that you want to, we'll just wait for Jason to perfect the people pulling out the super and then doing their own investing with the idea that our it's they're not being taxed or whatever or they get attached to the lower right tax benefits. Have you heard of situations like that?
If so, superannuation is taxed at 15 cents of the dollar.
If you pull super out and you're going to invest the money in your own name, our personal tax rates are as high as $45. So it really depends on what you're earning and what person will save it.
Alright, recommend that at all. I mean, most people are going to be hovering, you know, most people are going to be earning, you know, 4050 6070 80,000. And when you're earning more than 37,000, you're taxed at 32 and a half cents to the dollar, on on your earnings over 37,000. So if you pull your 10,000 out of super where it's taxed 15 cents to the dollar, and you start investing it yourself, you're going to be taxed.
32 and a half cents of the dollar more than those earnings as an average as an example.
I think that's why
not enough people work with a financial advisor. at any age, really, I made a lot, a lot of people just wait until it's a couple of years from retirement age and go, I should talk to a financial advisor now and say what my options are. Whereas getting it right in your late 20s or early 30s means you can go high growth and you can really lock in some good earnings for 20 years before flipping back to a more stable investment portfolio, which again, means talking to a financial advisor. But I mean, that's the options that are out there. I mean, you don't need to just kind of sit super off to the side and go I can't touch it. So I don't need to be interested in it. If you interested in investing and you like the stock market or property or you know ETFs and different portfolios, talk, you know, you can actually invest your super with your financial advisor in a way that makes you excited and you can watch it and see it grow.
And I guess having that relationship with it might make you a little bit more excited about it and then using it for tax deductions I mean, you know, you put $10,000 into super as a tax deduction and it lowers your taxable income and stops you from paying as much taxes as you would
pay P. Scott pipe has he's sort of questions to ask a financial advisor or your current one is that I mean to find a good one.
In terms of accountants, what do you think the questions to ask an accountant if someone's listening that I don't have one yet they've been lodging their own things, but this is sounding too confusing. They want someone who has, you know, the knowledge to be able to look after, you know, submitting the tax return every year. What should you ask an accountant?
Asking an accountant, you know, to explain something to you that you're generally interested in understand.
All doctors don't end how their taxes work, how Medicare levies charge.
They help repayment, they kind of just hand over their documents get the result at the end of the year and don't understand it and sometimes walk away a little bit like are My Refund was less than last year or more than last year? I don't get it, but I'm just gonna deal with it because it's just been handed to me. And I'm meant to trust that if you asked questions, how's that explained to you? So having a genuine interest in in your taxes and how it's calculated and how that's understood, you want to be able to have that explained to you in terms that you can understand, I guess as well, knowing how you're charged, you know, is if your tax return takes 15 minutes or one and a half hours, is it the same fee? Are you charged a flat fee an hourly rate? Do you even care how you're charged? You know, questions for an accountant? It's I guess it's what, you know, throwing it back to you guys, what are questions that you were interested in asking an accountant, and I guess as business owners or individuals it might be a little bit different, but I'm curious. I mean, I know we had some pretty decent chats at the start. I think it's
real world problems, I want to just have like start actually testing the relationship rather than it being some sort of hypothetical, actually showing our books and saying, Hey, this is what's happening, or we're having this issue here. And seeing how we can problem solve together I think is was super beneficial. Yeah, yeah, the communication.
Getting a response is always nice. But now just actually being able to talk through situation. And I guess it's different though, because our need as a small business at this stage is different to what it is for a freelancer who has the mindset of I'm not making enough money to need an accountant. And so that's but then at that point, it's like, those people probably also say, I'm not making enough money to justify paying $50 a month for zero, which I think is massively remiss not to invest in something like that. But yeah, I mean, what do you
You think when do you think it's appropriate for somebody who thinks that they can do it themselves like a Mr. 97 or should go and seek, you know, guidance from a business like yours,
like a business that's worth its weight in gold will there will be a value exchange. So savings if he does his own tax return, I'm pretty confident that if him and I sat down doing next year's tax return, and I looked back at last year's tax return, we'll identify things that were opportunities that were missed in his circumstance and his scenario where we'll be able to optimise his return to either get him a better return or fill it out more correctly so that he feels more comfortable.
I definitely think you know, all professionals that are good at what they do are going to be there is going to be a value exchange. So I guess it's if you don't, if you think you don't make that much money, and you might not need a tax accountant or a tax agent, having that initial conversation to say, Hey, this is my circumstance. Do you think you can help me
And have that conversation and see if what the potential is
you're going to work it out pretty quick. If there's something that you missing or something you're going to learn and you know, to hand over a couple hundred bucks to get a tax return done and begin a relationship, I think that's what's worked really well for us is we didn't have the start. And even now we don't have a all you're too small for us. We can't work with you. So if it's just once a year, we sit down and do your individual tax return or your sole trader or freelance tax return. That might be the one touch point we have this year. And then it might be another year goes by and we just chat one more time. But then through those couple of engagements and conversations, I guess it's feeling comfortable knowing that if you've got a question during the year, pick up the phone and call me drop me an email, shoot me a text and the relationship builds and builds and all of a sudden you feel comfortable going, I've got that question. I don't know whether I should buy this or or should I be doing it this way and they'll pick up the phone and call us and then all of a sudden the sole trader becomes a company or a
Trust, the freelance becomes GST, registered lodging basses were referring them to financial advisors to help them with this super fun. But that relationship doesn't start and grow unless you just get on the front foot and engage someone, even if it's one job a year.
So you can start small, I guess, to summarise all that start small, engage someone that you get along with former relationships so that you can start to ask the questions that you're curious about, and not have to rely on I guess, jumping online to forums and groups and doing all the reading yourself and hoping that you understand because, man, there's a lot out there. There's a lot out there that that even there's days where I have to read it 17 times. Really, is that really what the ATF wants us to do? It seems like the the financial advisory stuff I always find a little bit harder in regards to what am I getting. It's a little bit longer term. It feels like there's a lot more sort of bad players amongst that space.
The question is, what's the difference between an accountant and a financial advisor? Now there are people who do both. what's what's your perspective on how we can say, even where we're at with working with you as an accountant? How does it sort of transition on to be sort of the more advisory? So there are people that do both.
don't want to find this. I guess if you had an a mechanic that services your car, would you then want that mechanic to also service your boat? I don't know if that's a good analogy or a good example, but just because I'm looking at a car and a boat, I thought I thought that it makes sense. I think I have some work to do. Yeah.
Having someone who does your your business advice, your tax advice, your tax minimization, your advisory around the day to day running of your business and where your business is going? Is your accountant any business advisor, financial advisor focuses on things such as your superannuation, your personal interest,
and I guess your long term wealth planning strategy and then even your short term savings strategy as well for things like purchasing a house financial advisory, for example, those insurances I guess for you, Josh, you know, you might say, Look, I'm not too sure about getting involved in a financial advisor. Now, again, it's not something that has to cost a lot of money short term. It's something your super fund can pay for as well. And if invested correctly, you're more than make your gains back on your super fund. Because I was always funny about that, where it's like, okay, anytime I hear accessing super, it seems like it can be this easy decision. But yeah, he, Scott Pape, talk about the feet, like you know, fees and things like that. And I'm like, yeah, am I just draining my super? Yeah, so there's there if you go to the wrong financial advisor, their fee structure will be too high, they'll suck the life out of your super fund. So you want to make sure you're engaging someone who's going to work with you long term with really low fees and
Low Cost products that are invested the right way. So again, it's part of that educating and surveying a few providers or talking to your accountant going, well, who should I work with? And can you help me assess the fees in what's involved? You know, my personal situation, I took a long time to sit down with a financial advisor do it myself, it was the age old mechanics cause the worst car on the road, I was busy, I put it off, I wasn't interested in doing it. But then you see examples like a friend gets diagnosed with cancer, and, and goes through all sorts of shit. And it's like, well, how's that related to my Superfund? Like, what what does that even mean? So, in you, generally, in your Superfund, you're gonna have insurances being income protection, insurance, trauma insurance, total and permanent disability and life insurance. So if you don't know what portion of those insurances you have, let's say something happens to you, Josh, and you would have passed away what what gets left for break and pray like what does she get? Do you have
Any insurances at all if you had a mortgage is your mortgage going to be looked after? They're the kind of questions that working with a financial advisor, they're going to put those hard questions to you. If you're hit by a bus and you become a paraplegic, do you have total and permanent disability insurance where you'll be paid hundreds of thousands of dollars you know, at the point where you become a paraplegic to help you deal with making changes to where you live so that you have a lift or you know, a ramp instead of stairs. There's all things that happens inside the super realm with these insurances that not a lot of people understand or get
and it's starting to have those conversations do these are important like you know if you don't know if you have life insurance or income protection the trading is an example of trade he goes to work he's a sole trader has a missus and kids at home paying a mortgage and falls not on a job site, let's say you know, gets injured and does he's named playing footy and can't work for six months. Where does that family getting come from?
income protection insurance as an example, if you've got the right insurances, your income will continue to be paid. So they're all conversations for a financial advisor and accountant can be involved if they have the right licences and can frame the conversation the right way.
But the I mean, they brought out rules around financial advice and who can give it and who can't. There's some pretty strict licencing requirements around that just to make sure, because back in the day, as you noted, Josh, like, it's, you know, you feel like there's sharks out there that are just going to take your money. It's way more regulated now than what it was five or 10 years ago. So you know, those those bad advisors and sharks are generally disappearing at the moment. And the good ones are kind of rising to the top.
How do you work with a financial planner, when you want to do things like invest yourself or you've got these specific index funds? How do you sort of keep that control and the transparency and sort of, I mean, because I feel like a lot of financial planners would be like, okay, he is our investments. Let's
Put your money in investments, how do you work with them to be like, okay, I actually want to invest in this us index fund or something like that. Yeah, a lot of it's around the statement of advice. So if they're going to be managing the investment for you, it'd be setting the plan on your risk profile, what assets you're comfortable with, and then kind of handing over the case to them and letting them move forward with it. You can be involved in having conversations with them around chopping and changing. But if you wanted to make quick decisions day to day, a lot of that relies on it because of the rules around statement of advice and ensuring that the recommendations they're giving you fit to your profile and fit within the rules. It's a little bit harder if you're shopping and changing your investments day in, day out. So that's something you might manage yourself with. tailored plan that they might help you write and provide you but if they're managing it, it's kind of managed a different way where
it's more not a set and forget, but you're setting up a plan and allowing them to play within the rules that you guys have.
Written together based on your risk profile,
as an example, so, you know, with everything that's happened with COVID-19, at the moment, what's happened to the stock market, my financial advisor contacted Casey and I, and said, there's an opportunity to move the way your fund is managed.
I need to write you a new letter of advice to get you to sign off on it to make sure it's all aboveboard. I've called you to communicate with you. This is why this is how this is any change in fees, and this is the benefit we're going to get. But he still needs to go and write that all in writing and get myself and my fiance to sign off on it. But that's without a financial advisor. Right now, my funds would just be sitting in whatever it was sitting in before COVID-19 happened and where there's an opportunity in the market right now, who's really acting in my best interest. If I'm not, you know, going to be the one that goes out and does it myself. That's where my financial advisor steps up and says, you pay me a small fee. I've got your back. We're going to make these changes and you're going to be better off first.
In the long term
structures, company's sole traders trusts.
There's probably a bunch of people who are sole traders who see, see their mates doing trusts or things like that and think, oh, maybe I need to set it up. Who are they like, if you would have described those structures, what are some of the key elements or benefits for each of those?
I guess, as a sole trader, or a partnership, or any of those kind of structures where you are the person or individual doing the business. That's where as soon as you've proven the concept, and you've proven that that's, it's a working business, it's profitable. It's what you want to be doing,
is you don't be stuck in a structured way. There is personal liability and your personal assets are up for grabs. As a sole trader, your house, your personal bank account, your personal car, it's all in your name and the business is you it's your name. If something goes pear, you get sued, all that stuff can be up for grabs.
companies and trusts and structures of those around will keep it simple to just trust Oh companies limited liability, depending on you know, a trust with a corporate trustee and then a company as well, you know, you've got a direct, you've got shareholders, you've got a company tax write the benefits around that protecting your personal assets for a company, let's say and to trust. In a company, you're capping your tax rate at 27 and a half percent, you then need to pay the owners in wages, dividends, you know, there's compulsory superannuation the cost of running a company are higher, but the trade off is that you've got asset protection and the ability to do more tax minimization and tax planning with a company for a trust. The trust does the trading and creates the profit that needs to be paid out to beneficiaries. So a little bit more complicated in the way that it runs in the way that it not more company on the way it runs. More complicated the way it's taxed because there there is no tax in the trust because you
gotta pass the profits out to beneficiaries. If you leave money behind, it's taxed way too high. So I guess when you start to become more sophisticated as a business owner and look to move from sole traders to companies and trusts and unit trusts, and then even getting your own self managed Superfund on top of that, that's where having a good relationship, having the advisor, having conversations to understand all this becomes super important. We've got a lot of clients that come to us with these structures. And when we say to them, Hey, cool, you know, why? Why is it done that way? Why have you got this here and the trust there and the company there and they turn around and go, I've got no idea. my accountant just set it up that way. And you know, I just trusted that it was right.
The education part of it super important, because if you're going to be running that structure, day in, day out and you're going to sign off as a director, it's really important that you understand why you're structured that way and what it means if something goes right or wrong or
There's tax to pay and super pay. You got to understand your obligations as a business owner and as a director.
Makes sense. I mean, it Yeah. It's, it's complex. And it's, it's, it's challenging too, because I guess when you start out, you're like, I'll just be a sole trader because I'm not thinking about, you know, the big picture and, and is there any, is there any detriment to having that approach of like, oh, man, so get started, get myself an IBM bass. I'll try to Is there a detriment to doing that approach? No, not in a sense. I mean, that's, that's how the majority of great businesses started. I mean, and even at the moment, if, if you're unsure or if you're testing the waters and trying it out, and you want to get kickstart as a sole trader, it's low barrier to entry, low cost, you get your ABN you get a business name, you can do it all either for free, relatively free online or a couple of hundred bucks, or engage your accountant shouldn't be too much more expensive than that anyway, and you're ready to go. You've got a business name and an ABN
And and you're all freaking start raising invoices for people and doing your thing. When you're going to set up a company and a trust and whatnot, you are looking at 1000 2000 3000 depending on how complex your structure is, and then your annual accounting engagement becomes more expensive, your annual cost asik becomes more expensive. So there's not a lot of people that rush out on day one, forming a brand new business and go, I'm going to be a company and hand over all that money. And then sometimes you get a couple of months in and go, this isn't working. This isn't for me, you know, you go back and get the job where you go back to working with someone else.
Say so I'll try it is more than fine to start off with but the general rule of thumb is, you prove the concept you prove that it works and you start to take on any form of risk assets and liabilities. You don't want to say a sole trader for too long.
To figure out the you go to I was just gonna say I think just in terms of debt and business, you look at what's happening with Virgin
Australia at the moment, they $5 billion in debt. I think it was something ridiculous like that. And they're seeking a $1.4 billion injection of money to keep them going. I think the first thought is, How the fuck is a business that scale that far down in debt? And it makes you think, how are they even running in the first place? Is that like, I think I may come to that conclusion is probably the thing that all dummies are doing right now is like they shouldn't have been running anyway. They're in so much debt, in terms of debt and a business does a high level of debt mean the business is actually
you know, going pear shaped or is it not that simple?
Definitely not that simple looked at there needs to be a great balance between debt and equity in a business. Looking at a business like Virgin Australia, my very high level understanding at the moment just on something I saw on Twitter, so don't take this gospel is they leased all their planes. So when you lease all their planes, you have a lease.
agreement that says that you can have this plane for this many years, and it's going to cost you this much money. So you multiply that out over a hundreds of planes at hundreds of thousands of dollars a year. They've got to make their lease repayments and the debt of five or 6 billion is most likely a big chunk of that is their financial obligations on the leases of those planes for the next years ahead. I don't necessarily think it's, it's a $6 billion negative rate hole, necessarily on their balance sheet right now if but if they had to pay all those leases out, they owe $6 billion dollars over a period of time. The other thing with Virgin Virgin Australia that's interesting is all its foreign ownership. It's owned by all these overseas overseas airlines. There's very minimal if any Australian ownership or very minimal shrine ownership anyway, so I think people are kind of kicking up a stink going. Don't let a foreign country come in and buy Virgin Australia but quite a huge percentage of it is already foreign owned.
I'm sad to say it happened. I mean, obviously they relied on the day to day operations to pay their bills, like a lot of businesses that run up debts and and run up leases and loans and things like that.
That big, big interesting case but and also, I think the other thing that gets thrown around is they paid zero dollars tax in Australia in the way of income tax on profit. Another one of those those big foreign owned companies that paid zero dollars tax. And I think you look at there was a big list and at the top of it was Apple that on something like $9 billion profit paid 120 million dollars tax. And then there was a list of seven or eight other companies that paid zero dollars tax. Had it just makes you wonder when in billions of revenue and hundreds of millions of revenue, why there is zero dollars income tax, it feels like this is a time to when the government is bailing companies out. This is what they should be looking at. This is the time to sort of to check and see if they've been surprised
During the the economy in regards to tax,
the yeah to finish it off small businesses, business owners, you would be speaking to a lot of them. What's the biggest bit of you know, knowledge gap, or one thing that you wish every small business owner knew or maybe even something that you wish you knew at the beginning of your journey?
That's what I wish I knew at the beginning of the journey is that running a business is so much more complex and so much harder than what you probably anticipate on day one. And you guys can probably attest to this to the idea of, you know, I like business or I like business advisor. I like tax so I should run a business. That everything else that flows on from running a business in relation to, you know, hiring employees, what happens when you hire employees, engaging customers, what are the agreements
Like this, it goes off on so many tangents that is so much more complicated than the initial thought of you like doing something. So you start a business and you think you can make money off it. Business is a complex business is hard. It's definitely not easy. You work your ass off, and you got to be prepared for it, you got it, you really want it all the businesses that don't work are the ones that that didn't really want it bad enough in the first place.
For me even more, that's kind of my personal spin on it in a more general thing for clients that come to me or clients that come to us. I wish they took more care in a way of, of wanting to understand things for themselves and wanting to know that like they own knowledge, I guess it's times like these when things go a bit pear shaped that you can't just rely on somebody else to do everything for you in a way and I hope that doesn't sound rude or wrong but that there's there's a responsibility on a business owner to understand their situation, what they've got themselves into
If they hire employees, employment contracts and agreements and pay rates that you just got to go to be able to understand it and know know what's going on. And if you don't engage someone ask questions, learn more.
And work with someone work together as a team. And when she goes pear shaped kind of blame everyone else that's sits with you. I think that's the massive difference. Having worked with our BK now is the fact that that you promote the education part of it, I think for so long, especially having started a business when I was 14, it felt very hard to ask questions of accountants or there was sort of a closed book or there was all this magic that they were doing. And I think that what Tommy and I have respected with what you guys are doing is that you're actually you see the power in us and knowing and in passing on that knowledge and becoming experts in business, rather than just sort of outsourcing and hoping for the best
Well said, but yeah, great, man, it's been so good having you on. I mean, we've been wanting to do it, we thought, let's get six months down of,
you know, working together. But before we check you on to the, to the show, but we've, we, I mean, this is the this is the sort of conversations that we're constantly having anyway. And I think something like COVID-19 makes you appreciate having a great accountant. Are you guys still? Are you open for new clients at the moment? Or like, Is it just Yes, of course. Yeah. Look, it's, it is crazy. And there will be that kind of, you know, bear with us for being able to be booked in being able to have conversations with with different directors and different, you know, client managers at our vaycay we're all fantastic at what we do. And yeah, the doors are definitely open and you know, we want to be able to help people. So anyone who's concerned or thinks they need a hand and want to reach out, jump on stage.
BK site and jump onto the get in touch form and one of our amazing team will reach out and we'll get you sorted. saved. Can we just start forwarding the mailing list? email that they send us out to our gronk because they really, they they've crossed everything to be honest, a well designed, love it.
Thanks very much. Push him out, push it out. I'm happy about that.
It's a daily talk show RBK advisories Jason Robinson. Thank you for joining us. We'll see you in the afternoon guys have a good one. say God Cheers, guys.