August 2020

August 2020

August is now here and the wattle is in bloom, a sign that spring is around the corner. Australians will all be hoping for brighter days ahead, as we contend with rising COVID cases and sobering news on the economic front.

After postponing the Federal Budget until October due to COVID, the government released a budget update on July 23 which gave an insight into the economic impact of the health crisis. It estimates a budget deficit of $85.8 billion in 2019-20 (4.3% of GDP) rising to $184.5 billion in 2020-21 (9.7% of GDP). This would be the biggest deficit as a share of GDP since 1946 in the aftermath of WWII. The economy contracted an estimated 0.25% in 2019-20, with a further fall anticipated of 2.5% in 2020-21, the first consecutive annual falls in over 70 years.

Unemployment rose from 7.1% to 7.4% in June, the highest in almost 22 years. The jobless rate is expected to peak at around 9% in December before it begins to fall. As a result of the economic slowdown, inflation fell 1.9% in the June quarter (minus 0.3% on an annual basis), the biggest quarterly fall since 1931 during the Depression. The biggest price falls were for childcare, petrol, primary education, and rents. This was reflected in falling consumer confidence, with the ANZ-Roy Morgan confidence rating falling to a 13-week low of 89 late in the month (the long-term average is 112.8 points).

On financial markets, gold rose to a record high of US$1975 an ounce in July, reflecting its role as a defensive asset in difficult times. Crude oil prices inched up 1% in July but are down 25% over the year. And in good news for Australian exports, iron ore prices rebounded 8% in July (down 7% for the year). The Australian dollar continued to climb, closing the month above US72c.

Becoming a better active listener

Becoming a better active listener

We all want to be heard. Feeling truly listened to can boost your self-confidence, make you feel understood and strengthen the connection between you and others. In the workplace it can be the difference between feeling engaged or unappreciated.

In the book You’re Not Listening: What You’re Missing and Why It Matters, Kate Murphy writes: “Done well and with deliberation, listening can transform your understanding of the people and the world around you, which inevitably enriches and elevates your experience and existence.”i

The good news is with a little concentration, patience and practise you can develop your active listening skills.

Active listening instead of simply hearing

Ask that person with the glazed expression who is busy doing something while you’re talking to them if they’ve heard you, and they’ll probably say yes. They can parrot back what you’ve said but it’s unlikely they have let your words sink in.

The difference between hearing and active listening is that the latter involves your full attention, not just the ability to hear the sounds the speaker makes.

Why we’re not great at active listening

Active listening, is actually more difficult than any other form of personal communication. This is simply due to the fact that the rate at which we speak requires our brains to receive words at an extremely slow pace compared with its capabilities.ii Our brain has spare time for thinking while listening, which can be either used well or misused. This is made all the more difficult as our attention is pulled in many directions these days. Notifications on our phones and computers ping, we’re scrolling through websites, we often need to multitask – when we do have conversations it’s rare that we tune out these distractions and focus solely on the speaker.

Our emotional filters and perceived assumptions also influence our capacity to actively listen, as can our habit of trying to ‘get all the facts’, which prevents us from grasping broader concepts while committing facts to memory.

We can also misunderstand what it means to be a good listener. As the example above illustrates, perhaps you think the ability to repeat what was said means you’ve honed the art of listening. Or the fact that you can still hold a conversation while scrolling through your phone shows you can still listen.

Being an active listener is not something that comes naturally to many of us, but we can work at it.

The benefits of improved listening

While active listening is obviously beneficial to your interpersonal relationships as you’ll develop greater connections with the people around you, it also provides value to businesses. When people fail to hear and understand each other, productivity is impacted, mistakes occur, conflict can arise and processes break down.

Promoting active listening and platforms to enable communication, can improve customer satisfaction, enhance client retention and build company culture. Innovation and process improvements can also benefit as management hears suggestions and takes action.

How to actively work on your listening skills

How many times are you busy formulating your reply to someone before they’ve finished speaking? Most of us do this and it means we’re more likely to miss out on nuance, visual and verbal cues or an unanticipated revelation this way.

Recognise and moderate any preconceived assumptions or biases you may hold. Pause before rushing in. Ask for more information to help inform your response, using open-ended questions. Just as importantly, listen to yourself. How do your responses show that you respect the other person’s point of view?

Making a space conducive for listening is also important. This could be finding a separate room, stepping away from your computer and silencing your phone so you can focus on the conversation, maintaining eye contact and positive posture.

You won’t become an active listener overnight, but by making an effort to strengthen this ability you’ll undoubtedly reap the benefits.

i Murphy, Kate. You’re Not Listening: What You’re Missing and Why It Matters. Penguin. (Original work published 2020).


Make selling your business less taxing

Make selling your business less taxing

Selling a business you have spent so many years building up can be a difficult process, but getting the best price is not the only consideration. Tax has a big role to play in the financial result.

That means the ATO will be paying close attention. Selling a business is considered as disposing of an asset, so it triggers a capital gains tax (CGT) event.

If your sale isn’t handled correctly, you could find yourself on the receiving end of a hefty tax bill and a lot less profit than you expected.

Tax on sale proceeds

In most cases, planning your exit should start when you establish your business. That way you can choose a business structure that makes the most of the various tax concessions available. These are complex, so contact us for advice about which concessions may be apply to your business.

For tax purposes, selling a business is considered part of your business income, so the proceeds are taxed at the normal rate for your business structure.

For sole traders and partnerships, this can be as high as 47 per cent. Whereas small businesses operating through a company structure are taxed at the significantly lower rate of 26 per cent.

Calculating your CGT bill

Your CGT bill when selling depends on a range of factors, including how much it cost you to purchase the business, referred to as your cost base, sale price and the available tax concessions.

Case study

A decade ago, Ayumi set up a small dental practice. Over the years she has significantly grown her client base and now earns an annual salary of $190,000. Her current tax rate is 47 per cent (including the Medicare levy).

Ayumi agrees to sell the business to one of the dentists she employs in the practice for $500,000.

As she started the business from scratch, her cost base is nil, so when the sale goes through she will have triggered a $500,000 capital gain. (Her business set-up costs are not included in the cost base).

As this capital gain is added to her personal income, a potential $235,000 ($500,000 x 47 per cent) is added to Ayumi’s taxable income. If she takes advantage of some of the small business CGT concessions, Ayumi will be able to cut her tax bill substantially.

Reconsider your business structure

Your trading entity should be carefully considered when establishing your business, but it’s a good idea to review it periodically, particularly if you are thinking of selling.

With the government actively lowering tax rates for small business entities (SBE), the structure you originally selected may no longer be the most tax effective. The tax rate for SBEs operating as companies dropped from 27.5 per cent to 26 per cent from 1 July 2020 and a further cut to 25 per cent is coming in 2021-22.

Operating as a company also gives you the option to sell your business in different ways. You can either sell shares in the business or sell the business as an asset.

Exiting a business operating as a trust, sole trader or partnership is always an asset sale, but with a company structure either option can be used.

Minimise your CGT

Carefully reviewing your tax structure and negotiating the right type of sales agreement also allows you to maximise the valuable small business CGT concessions.

For example, if you operate through a company structure and can negotiate a share sale, you can access several CGT concessions that significantly reduce your CGT bill.

The concessions are also important to keep in mind when setting and negotiating your sale price.

If your sale price is over the $6 million maximum threshold, it may be worth reducing it to qualify for the small business CGT concessions.

Getting good advice

With so much at stake, professional planning and support are essential when the time comes to sell your business.

Many of the tax concessions are only available once, so it’s essential to organise your business and the sales process to maximise the available benefits.

Preparing your business for sale takes time and planning, if you would like assistance with your exit strategy please give us a call.

Building resilience to spring back stronger than ever

Building resilience to spring back stronger than ever

Our resilience has been tested of late and continues to be, with the ongoing situation of the coronavirus pandemic throwing challenges our way.

Resilience has certainly become a now frequently used buzzword, but what does it actually mean? According to the Oxford dictionary, the word resilience means “the ability of people or things to recover quickly after something unpleasant, such as shock, injury, etc.”i It also relates to the ability to return to the original form or position after being bent, compressed or stretched.

Not just recovering, but improving

What makes someone resilient? We often use this term to describe someone who can bounce back from a difficult situation or who takes challenges in their stride. Perhaps it’s a person who receives the news they didn’t land their dream job and is able to be pragmatic about it, or someone who receives a frightening health diagnosis and is able to calmly consider the next steps.

Resilience tends to be thought of as something that keeps us going as we were. But what if we instead think of resilience as not simply returning to the original form, but changing shape and improving? Not bouncing back, but moving forward in order to become stronger and better able to deal with the next challenge that comes your way.

Modelling yourself on resilient people

One way to improve your own resilience is to model yourself on resilient people. Studies show us that resilient people use positive emotions to recover and find the positives in stressful situations.ii As resilience can mean different things to different people, we can look to those we perceive as resilient to model ourselves on. Have a think about the resilient people in your life, or even in the public eye – what characteristics do they have? What is their perspective on the challenges they face? How do they dust themselves off and keep going when things aren’t easy?

Building resilience

The good news is that it’s never too late to build resilience. Look for opportunities to face, rather than avoid, your fears – you can start small and build your confidence. Perhaps you struggle to have salary conversations at work or ask for that promotion. You mightn’t put yourself forward for new opportunities as you worry about being rejected. By instead putting yourself out there you do risk disappointment, but learning to manage any frustration or let-down is part of honing resilience.

Reframing the narrative is also an important factor of resilience. If you see yourself as someone who can’t handle challenges, it’ll be difficult to build the confidence needed to do so. It’s worth also looking at how you deal with stress and what you may be adding to stressful scenarios – do you make a drama out of unexpected events? If so, how can you better react to them to minimise stress? Use difficult scenarios as a learning process and an opportunity for improvement, which will help you see them in a different light.

It’s much easier to be resilient when you are supported by a strong network of people. Studies have found that people with positive social relationships are less likely to struggle with depression, which can be a factor in low resilience. Friends and family often fill this support role, but there are other forms of support you can draw on, such as a coach, psychologist or online forums and groups.iii

While difficult times and situations challenge us, they can also propel us forward. They give us the opportunity to strengthen our resilience and not just ‘re-form’ into the person we were before, but become an improved version of ourselves.

Life isn’t always an easy path and some situations may present more of a challenge than others, so it is important you reach out if needed – you don’t need to deal with difficulties alone, so speak with your GP or mental health professional if you need some help.




This advice may not be suitable to you because contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.