Are You on the ATO's Radar?

Unknown · 00:00Jason: Welcome to the next episode of The Numbers Game. I'm Jase. I'm here with Nick and Nick, petrol. I've just filled up for a ridiculous amount. How are you paying for petrol these days?

Unknown · 00:10Nick: Hang on, surely you're driving an EV?

Unknown · 00:12Jason: No, no.

Unknown · 00:13Nick: Yeah, I've just ordered one.

Unknown · 00:14Jason: Funny you mention that. I've just ordered one. Novated lease, FBT exempt. I'm gaming the tax system just like half the clients that I work with that are, you know, making sure they're getting the best of the tax system. So electric vehicles, FBT exempt, bring it on.

Unknown · 00:28Nick: So would you be surprised if I told you we'd had a spike in inquiry in the last 2 weeks on funding an EV vehicle.

Unknown · 00:35Jason: Not surprised at all. Yeah, Greg and I put our order in, Novated Lease. We're ready to rock and roll. That was an interesting segue.

Unknown · 00:42Nick: What was the experience? Well, look, I am very fortunate. I don't have to drive far to work. I live reasonably close to the city and I've got a pretty big fuel tank. So it's not often I'm looking at the tank the last 2 weeks, just looking at the headlines thinking, when's this war going to be over?

Unknown · 01:00I'm close to, you know, it tells you how many K's you got left. But I also don't like the stress of driving around with only 40 K's left, you know?

Unknown · 01:09Jason: Yeah.

Unknown · 01:10Nick: So look, to answer your question, I don't use a lot of fuel, but I did have to fill my tank the other day, which is a 70-litre tank, and it cost me $290.

Unknown · 01:18Jason: Pay in cash?

Unknown · 01:19Nick: I would never pay cash. How am I going to get cash?

Unknown · 01:23Jason: Just, hey, well, I'm not accusing you of anything. For the ATO listening at home, this wasn't an accusation. I will explain why I did ask about the cash question, Nick. We're talking what triggers an ATO audit. Just to get you straight into the theme of today. You know, it's 2026.

Unknown · 01:40Every year the ATO comes out with their bit of a hit list of what they're targeting and, you know, essentially how do you get on their radar, but also, you know, obviously how you stay off the radar. But obviously you stay off the radar by doing the right thing. So we're just going to leave that there and the rest now will be into, you know, some things that you may hear your mates at the barbecue talk about, you know, and they think they're getting away with things.

Unknown · 02:03But this is a bit of a how and why now it will be harder and harder than ever to continue to stay off the ATO radar.

Unknown · 02:11Nick: So the ATO can tell you're trying to stay off the radar, is that what you're saying?

Unknown · 02:17Jason: Well, yes, essentially. If you're too far off the radar, then the questions come as to— and I'll go straight into the example actually, just so this makes sense. There is a lifestyle assessment versus income. If you live a certain lifestyle but the ATO looks at your tax return and declared income, that is a big red flag, which is an audit risk as to how the ATO can come looking.

Unknown · 02:40The reason I asked you how you paid for your fuel is why this came up. We had a particular client that we heard about, or, you know, through the accounting groups that we chat to, and this particular person ended up audited, but they thought they were quite smart. They, if they received cash or if they were buying gift cards through their business, they would then use the cash or the gift cards to go and buy fuel or groceries.

Unknown · 03:04And because they bought fuel or groceries with that money, Woolworths and Coles and service stations never appeared on their bank statements. Now when you think about banking data, and in the event of an audit where you're asked to share your bank statements to prove that you weren't receiving cash income,.

Unknown · 03:21But all of a sudden the question becomes, well, how are you buying groceries or how are you putting petrol in the car? And let's say in your business you also declared, or, you know, in your tax return, if you're claiming a car, you also wrote down that you spent $4,000 on petrol and drove 15,000 kilometres for the year.

Unknown · 03:38Does that also match back to bank statements that shows that you spent $4,000, or do you have receipts? So these are the ways that you think you're being creative. But when it comes to the ATO's ability to match lifestyle with income and start to assess that.

Unknown · 03:54Nick: Question on that. So lifestyle matching lifestyle income. So that was a specific example.

Unknown · 03:59Jason: Yep. That's the number one audit flag for the ATO.

Unknown · 04:03Nick: Okay. So are they at a stage? So let's say I'm, you know, lodging a tax return that says a taxable income of $30,000, but they have, they accessing my bank statements now and they can see that 'Oh, you went on 6 holidays this year and spent, you know, $25,000 on flights and, you know, $20,000 on hotels.' Are they going to that degree and saying, 'Well, how can you—' They're not as granular, but it'll be total inflows and outflows.

Unknown · 04:33Jason: So that data, and then that's what will trigger the request for more information. The raising it to a review or an audit would come after. And again, these are all computer systems doing the data matching to go, Nick declared $30,000 taxable income, but Nick's bank account had $100 in, $100 out.

Unknown · 04:50Okay, that's a flag. We go and ask the question. And then if you can't prove or show how or why you're able to maintain the lifestyle where, you know, you've got a particular car and particular travel habits, that's when things start to go a bit pear-shaped. So you think about as well, you know, what car are you driving?

Unknown · 05:08What have you got insured? Property ownership, if you own a property but you don't necessarily declare enough income to show that you can monitor affording to pay for all the things on the upkeep of that property. And then social media visibility is a big one. So people who are posting flashy lifestyle pictures on social media, this is an area the ATO will go to review what you're posting online.

Unknown · 05:30You know, are you driving the nice car and getting a picture of your watch in there that, you know, is more than what you could afford based on your taxable income?

Unknown · 05:38Nick: So would they say— this is very interesting because everyone does try and promote a certain image generally on social media. So would this— the depth of going into social media, would that be post an audit, as in— sorry, during an audit, or are they analyzing this stuff to determine if they should audit?

Unknown · 06:01Jason: Combination of it all. Sometimes the investigations beforehand are looking at, you know, the data is flagged and then it's before it goes to order review stage. There can be a pre-review, but most of the time, again, it's part of the review an audit process, it's already usually triggered and then they're looking for evidence to try and continue to unpack that investigation.

Unknown · 06:23And, you know, I guess essentially the ATO needs wins. You know, the reason that we always kind of have this ATO audit list is, you know, the ATO has got a lot of debt. They want to collect it. And especially when it comes towards the end of a financial year, they want to bring in some revenue to look like they've made progress towards knocking down the debt book.

Unknown · 06:42So That was the first one, lifestyle versus income. That's one of the big ones. The other thing, you know, we've talked about it before, the data points. Banks are sending more data than ever. Crypto platforms are the most transparent platform you can get. A lot of people think that they're putting money into crypto and that cryptocurrency is a way to squirrel some money away that doesn't— no one needs to know about.

Unknown · 07:04There's nothing more transparent to the ATO than crypto money. So what goes into crypto, it's usually registered back to you, and they've got the data behind the scenes. If you've sold and purchased and declared a capital gains tax event on your tax return, pending that, you know, they're looking at that as an investment.

Unknown · 07:21If you're using it as currency, a bit of a different, uh, way to go about declaring any gains or losses. But that's a big one. And then even when you think about Airbnb, if you're registered on Airbnb and you've got a property that you're renting out a room and you're not declaring that on your tax return, again, there's all these kind of, uh, little measuring ones.

Unknown · 07:39And I'll flow on from the Airbnb comment to the second biggest audit area for the ATO is rental properties.

Unknown · 07:47Nick: So you've got rental properties, Nick? Did have, not anymore. Not anymore.

Unknown · 07:51Jason: That's right. You've cleaned yourself out. So big one for rental properties again will come from data matching. So back in the day when you had a rental property, you would have had a particular home loan that was attached to that rental property. That data matches back. It's usually assigned.

Unknown · 08:06There's, you know, security registered over it. If your interest that the bank tells the ATO is your tax deductible interest or your total interest component, If you declare something more over here in your tax return, data match, you've stuffed up.

Unknown · 08:22Congratulations, you're going to get audited. So, you know, and even this again, I say in this day and age where, you know, we'll bust our clients' balls sometimes to actually get their statements because if you've put money in and then redrawn it back out, changes the deductibility of that loan. Obviously, you know, what Innov8 does with their clients is offsets or, you know, carving out separate loans if you do have an equity redraw and those things.

Unknown · 08:44Sometimes clients will move accountants and they'll give the accountant the total interest to claim. But the accountant may not have had the time, didn't ask the right questions, and they didn't realise that there was actually an equity redraw on that particular investment property, which means that a portion wasn't tax deductible on that property.

Unknown · 09:02So there's so many things that can go wrong. Obviously, the interest component is the big one. But beyond that, you've got claiming repairs and maintenance on something that would have been capital in nature. You know, you put a new deck out the front of the investment property, you've spent $10,000 on it, but you put it it down as repairs and maintenance because, you know, you said you were repairing the deck instead.

Unknown · 09:23Straight away, up for the risk of claiming that immediate deduction. Simple one is they just ask you to provide the invoice for the repair, and if it says, you know, the carpenter built a new deck, straight away you're in a bit of strife there. The other big one there is rental income missing as well.

Unknown · 09:40So the landlord, or sorry, the landlord, the agency that manages the property for you, if you've got a real estate agent involved, that data is also sent to the ATO on how much revenue was collected on your property. So there's so many mechanisms now where the ATO already knows the number.

Unknown · 09:56They are just waiting for you to report the correct number. And if you don't, you've opened yourself up. So when it came to, I mean, look, this is where things get more complicated, but when it came to doing your rental property tax returns, I mean, obviously it was just provide the accountant everything needed and, you know, didn't cause you too much stress, wasn't something you thought about?

Unknown · 10:14Nick: No, well, for me, I would, I found it really easy to keep my own record. Yep. As in spreadsheet, wasn't difficult. And yeah, I'd just send that spreadsheet and really the bank statements, what they wanted. Yep. Loan statements, sorry.

Unknown · 10:30And they took my word for it as far as the expenses go. But I had all the, yeah, all the information I needed.

Unknown · 10:38Jason: Yep. Awesome. Cool. Other third area, and I kind of went around by talking about it because the cryptocurrency being totally, you know, tracked and measured. Crypto is far from invisible. As I said, it's the most visible asset class to the ATO based on the way the data is fed in.

Unknown · 10:55All of your buy and sell events are tracked and your wallet activity is generally tracked as well. That data is shared with the ATO. So it's a big audit area at the moment because you think about, you know, over the last 5, 6, 7 years, the boom of crypto over that time, you know, your Bitcoin, your Ethereum and the different things going on, Dogecoin.

Unknown · 11:14A lot of people that were buying, selling, and transacting years ago weren't necessarily thinking about the capital gains tax or the tax outcome. It was just something to do, especially during COVID for a lot of— especially in Melbourne, a lot of us were locked up for longer than others. And whether it was deliberate or not, a lot of people just disregarded it.

Unknown · 11:33You know, they stopped doing it, they went back to work, you know, they moved on. They lost some money or they made some money. The flow-on effect now is that the letters are coming out many years after the fact saying— and you know, usually the letter is, do you have an event you want to tell us about? That lets you self-own up to it initially.

Unknown · 11:51And that is your opportunity. If you do get one of those letters where it's asking you the question, you know, did you forget to report capital gains tax? Go back and review that year properly. Look for the transaction. I mean, as an accountant, I've done one where I sold a really small parcel of shares many, many years ago.

Unknown · 12:08Totally forgot about it. Come time to do my tax and I was just like, you know, I was getting towards due date, quickly punched in my tax return, pulled the prefill, a couple of deductions, good to go, lodge the return. And then it wasn't until a few months later, like I found the statement in my emails.

Unknown · 12:25I was like, you idiot, like you sold the shares, you got to— and I think I'd made a loss. So, you know, I had to put a capital gains loss statement in. But rather than the ATO coming after me because I forgot, I self-amended and sent it through at the time. But they're easy ones. And whether— not everyone is actually doing the wrong thing.

Unknown · 12:43Sometimes it's a genuine mistake that you forget to put something on your return.

Unknown · 12:47Nick: Yeah, and I think what people should do is find a way to manage this. So I think what often happens, particularly if you're doing shares, if you're not on a platform that will calculate the result for you, if you're— well, crypto's probably a better example because people are doing things all the time.

Unknown · 13:07But if you're active in the share market or active in crypto, you can get caught. I've sold that, I'm going to buy that, I'll sort that out later. And then it comes tax time and your accountant says, hey, where's all your information? And it becomes a real drag to bring all that together.

Unknown · 13:23You've got to— I've been guilty of it. You've got to search emails. What went on there? How did that happen?

Unknown · 13:29Jason: Oh yeah, I sold that for that.

Unknown · 13:31Nick: There's every chance you're going to miss something. And there's every chance you're just going to rush it because, as I said, it is a drag. So if you can find a way to be more regimented with it as you go along, and there's plenty of platforms out there. I think ShareSite is a really good one if you're selling and buying shares, that it's there for you all the time.

Unknown · 13:50So when the accountant wants it, you can just go bang, there it is. But most people scramble.

Unknown · 13:55Jason: Yeah, yeah, exactly. And look, that's great advice to sprinkle in a little bit of the right things to do during it. If you do have crypto and you haven't kind of assessed where you're at, Coinly with K, Coinly.io. There's a website you can go in and sync your wallets and it can do a CGT schedule for you.

Unknown · 14:11There's a paid version which is worth every dollar you pay for it. I think it's like $90 or $50. It's not expensive, but it gives you a detailed capital gains tax report that you can provide to your accountant. Another one is Crypto Tax Calculator. So rather than— so for accountants to calculate this stuff, you would pay us hundreds and hundreds and hundreds of dollars to sit there and map transactions in and out.

Unknown · 14:34These platforms exist and give you a solid work paper with the paid version that you can use. As I said, worth its weight in gold. Go and do that if you haven't kind of kept up on it. And then during the year, to that point exactly, whether it's your investment property, you know, whether it's, you know, your cryptocurrency, whether it's shares, create a system to make it easy so that you're, you know, a lot of people get to year-end and go, oh, tax time, you know, oh, it's a pain.

Unknown · 14:58Whereas if you've got that regular habit of, you know, some clients of ours have like a Google Drive called Tax 2026. Or, you know, OneDrive, whatever online cloud system they're using. And every time something hits their inbox, which is relevant for tax, you know, their Medibank statement for their private health, their income protection statement, a tax deduction because they bought, you know, a new phone they use for work, everything goes into that one folder.

Unknown · 15:24It's a simple system. And then at year-end, after the year-end goes, you have it, make sure everything's in that folder. You link it to your accountant and say, here's everything for tax for the year. And then you go and create a new folder called Tax 2027 and away you go. It doesn't have to be complicated.

Unknown · 15:40Nick: Yeah, yeah. And that's— then you can go one step further. If you are someone who likes to sit down and do it yourself, that's also going to make sure everything's readily available. It's going to halve the time. And if you do it that way, you're going to probably save yourself a few hundred bucks.

Unknown · 15:54Jason: 100%. Yeah, definitely. The more organised you are, the better it is for your accountant, the cheaper your accounting fees generally. Obviously depends who you work with, whether it's fixed fee. But yeah, I mean, Absolute no-brainer. And the sense of calm that you then feel when you are organised and on top of things.

Unknown · 16:09There isn't this mystery, this big scary tax burden that could be coming out. Like you're on top of it as you go. We actually have a lot of clients now booking in for tax planning because they are organised during the year. They've got their figures for the year. They've got a bit of an idea of where their deductions or things are at.

Unknown · 16:25Then they go, let's get in a room and plan what are my other options? So it might be superannuation contributions, kicking back some income, bringing forward some expenses, whatever that looks looks like. But tax planning is one of the biggest ones. Total side segue there, but you can obviously tell that I'm an accountant, love working with tax, and definitely don't love the ATO, but we've got to work with them to get the outcomes and try and make everyone happy and calm.

Unknown · 16:50The last two little areas I'll touch on before kind of one big last point I want to make, which is really relevant to business owners. So if you're a business owner, hang around. Incorrect deductions. And this is the old everyone claims it. Like, oh, everyone does that.

Unknown · 17:06Like, I can claim that. These ones are the— that's for the ATO, it's death by a thousand paper cuts kind of thing. So everyone claims a bit of home office or everyone puts in a bit of their car, you know, sent per car. Sunglasses. You know, I work outdoors, you know, just, just, just chuck in the same amount for the same sunglasses as last year.

Unknown · 17:26Laundry, you know, obviously not us. We're here in our non-logoed uniform, but someone who wears a uniform which is specific, let's say tradies, oh, just the maximum laundry for that, mate.

Unknown · 17:39Nick: What about the initials on the shirt? I've always wondered about that one. I see that a lot in business. Not me, but do you see people that have got the initials there or? No good. No?

Unknown · 17:48Jason: Unless you can be recognized by your uniform, you know, or it's protective in nature. So hi-vis for tradies, a nurse, a doc, Doctors are a little bit harder too. Doctor wouldn't be able to claim the standard clothes they wear, but if it's the, the particular jacket or in a hospital where you're dressed in a certain way, scrubs, you need to be able to be identified by what you're wearing.

Unknown · 18:11So police officer uniform, tax deductible for their laundry. But you and I can't get away with laundry even if you put a little NR or a little Innov8 on there. Like again, unless you've gone and registered Innov8 on AusIndustry and you register the logo and the particular uniform, we won't go into that, but if you want to look it up as to tax-deductible uniform and laundry, check out AusIndustry.

Unknown · 18:32Loophole. Loophole. Complicated. But those, those regular deductions that are $50, $100, $300, $1,000, when a whole lot of Australian taxpayers go and put in these standard deductions because everyone does it, that's where the tax system is being gamed in the wrong way as far as the ATO is concerned.

Unknown · 18:55And of course, if you didn't you didn't genuinely spend the money, you don't get to have a tax deduction for it. So many, many years ago, the ATO came out with around a standard $300 tax deduction. So let's say it was $150 for laundry and $150 for— Sunglasses?

Unknown · 19:11Printing and stationery, sunglasses. Now again, most people, a lot of people just throw this $300 in, but then they have all the other deductions as well, like their tax agent fees, the car, whatever. You don't get to just add $300 and call call it, you know, standard deduction. You need to again be able to justify that you've spent that money.

Unknown · 19:28The other ones are car expenses without logbooks— big hit list— and then personal expenses claimed either through the business or on the personal tax return as well. So this whole area of incorrect deductions, and everyone claims it, is a huge area.

Unknown · 19:43And as much as it's an audit hotspot, it's just— you've always just got to be aware that if you put something on your tax return, and this is probably the The thing for people to understand, if you choose your occupation and let's say you had your occupation as mortgage broker, when you put all your tax deductions in, in the schedule under D1 to D10 or as far down as D15, what the ATO does is benchmarks you against every other mortgage broker of a similar income in the country that selected mortgage

Unknown · 20:13broker as their occupation. And if your deductions are an outlier, that makes you an audit risk. So again, when you think about the deductions you're claiming, think about your industry and your role. Is this something standard that everyone out there is paying for, or am I going to look like I'm an outlier?

Unknown · 20:32And it's not to say you're doing the wrong thing. You may be an outlier, but make sure you've got your receipts and your justification as to why you claim something. And that's the biggest one. You know, there's so many different occupation codes to use as well. Sometimes even choosing the wrong occupation code can make you the audit risk.

Unknown · 20:48So choose carefully and have that conversation with your accountant if you're not doing your tax return yourself. Last area, and this one's a bit of an obvious one, but large, unusual, and one-off transactions. So big capital gain event, the property flip, you know, the knockdown rebuild, sell a business.

Unknown · 21:06All of these things usually then flow into a big tax event if it's not handled properly. And, you know, again, there's small business CGT concessions and things that can make do you end up not paying tax at all, but you need to document it properly. And if it's not on your tax return and the ATO is expecting to see it, that is why you're an audit risk or a potential to have that review or conversation.

Unknown · 21:28And you may have done it right, but the data will then lead, because of the large and unusual one-off transactions, it'll lead to you being an audit risk as far as the ATO are concerned. So they're my main areas, I guess, from all those. Anything that jumps out or surprises you before I get to my kind of last kind of—

Unknown · 21:46Nick: Oh, look, I just, I just think this whole lifestyle one is, to me, it's, mentioned this to you earlier, it's common sense that the ATO looks at that. It's like you're splashing money here, there, everywhere, but you're not claiming an income or claiming that you're earning a decent income. That to me is the obvious area that the ATO should and would tackle.

Unknown · 22:06And now they've got the tools to do it. So I think they've always had the tools to do it, just the resources and the amount of effort they had to put in to get to a result. That's obviously come right down. So I can see that being a real area where they could bring some people unstuck.

Unknown · 22:21100%.

Unknown · 22:23Jason: Now, this one applies to all Australian taxpayers, but predominantly Australian taxpayers that end up with a tax debt. So it is around the what's called GIC, General Interest Charges. So the word of warning here is if you have a tax debt or if you have many, many years of overdue taxes, there is a bit of an amnesty period between now and December 2026.

Unknown · 22:46Yes, correct. I'm just wondering what you were in. So between now and December 2026, this amnesty period exists where if you go and catch up all your overdue taxes and get all your lodgements up to date and you cop GIC, general interest charge, it's compounded daily on whatever debt you've had for years.

Unknown · 23:05It can end up being an astronomical number. So if you owed tax from— we've got a particular client right now that I'm trying to get up to date. They haven't lodged their tax since like 2013, and for quite a few years they were a subcontractor and they're going to have tax bills.

Unknown · 23:20So even if it was a $20,000 bill per year for 5 years back in 2014, you've got daily interest compounding on that tax debt, which in the past, up until—

Unknown · 23:32Nick: From 2013.

Unknown · 23:34Jason: From 2013, interest compounding daily. The current annual interest rate right now is like 10.96%. So again, compounded daily, it's the daily version of that rate. It's not 10% a day, but it adds up really bloody quick. So that interest rate from those tax bills from 2014, 2015, 2016, you might have owed $20,000 per year, but with compounding interest, you could end up paying an extra $100,000 in interest from the last 13, 14 years.

Unknown · 24:02Now, where the extra kicker here is, in the past, the GIC was tax deductible. So let's say you did do the hard yards and paid that GIC., you would claim it as a tax deduction on your next year's tax return in the year you paid the interest and you get a tax deduction and you get a refund back from the ATO.

Unknown · 24:19As of 1 July 2025, game over. GIC is no longer tax deductible. And this is where I say this is, it is one of the biggest opportunities for individuals and now business owners. And the reason I say both, the individual with the overdue taxes, get them lodged and get on the phone and ask for remission of GIC or work with your accountant to get the GIC remitted.

Unknown · 24:40Period, so cancelled out, you put your hand up and say, thank you for the amnesty period. I made a mistake because of this I lodged. Please remove the interest so I've got a chance of paying my tax bill. And you know, while you're in this amnesty period, if you call it out, the ATO, touch wood, are likely to want to work with you because you've owned it.

Unknown · 25:01After 31 December 2026, you are cooked. It's— you're so unlikely to have that remitted and removed from your name. Any questions before I roll on for that one?

Unknown · 25:12Nick: No, I'm just saying we're seeing a lot of inquiry in our commercial lending business for overdrafts. Yeah. Because traditionally people would use the ATO as a—

Unknown · 25:24Jason: Line of credit. As a line of credit.

Unknown · 25:26Nick: The interest rate was very competitive and then you could obviously claim that. Yeah. So now the interest rate is not as competitive. It's the act, the true interest rate is competitive still. Yep. From a commercial lending point of view. But what's not competitive is the fact you can't claim the interest as a tax deduction.

Unknown · 25:44And if you do go on a payment plan, the payment terms are shocking. And in a lot of businesses' cases will ruin cash flow and ruin their ability to trade. So we're seeing a lot of people come to us and say, well, I've got not a cash flow issue, but if I need a debt facility in my business to make sure that, you know, I can handle the ups and downs of cash flow, That debt facility should be a legitimate overdraft with a legitimate lender, which you could get probably unsecured at around 14%.

Unknown · 26:13But that then becomes tax deductible. Correct. That 14%, if you use it because you've used it not specifically to pay back the ATO. And in a lot of cases, you're just paying the interest component on that overdraft and you can pay it back when makes sense versus the ATO might say to you, we need your money back in 2 years.

Unknown · 26:34So you've got a 2-man payment plan.

Unknown · 26:35Jason: 100%. You're all over it, Nico. You know your numbers. And that is the other message here. Apart from the taxpayer that I say get caught up and have a chance of that remission, there's also then for the business owner that has been using the ATO as an overdraft or a line of credit, you know, we're seeing averages $100,000, $200,000, some are more.

Unknown · 26:54But even I've got the example here at $200,000 at that 10% amount. Now you're looking at about $40,000 of interest. Interest over that 2-year period on a $200,000 debt. Now, paying that back over 2 years, as you said, is already an absolute constraint on cash flow.

Unknown · 27:12You've now got that, that $40,000 of interest is not tax deductible. So that's pure, you know, cold hard out of pocket. It actually works out to cost you closer to $53,000 when you work back the tax effect. So if you were to then go and get the $200,000 loan or line of credit through the business, you're then able to claim, let's say the interest rate's not too far off, but let's say it's going to be instead of $40,000, it'll be $45,000 or $50,000.

Unknown · 27:38You get the 25% tax deduction. So it's at least $11,000, $11,500 in tax saving because you can claim a tax deduction. So if you are carrying an ATO debt, we're 9 months into 2026, you've been paying non-tax deductible interest to the ATO.

Unknown · 27:54It's time to go and have a conversation with your accountant. It's time to have a conversation with a broker and get that reset and worked into tax-deductible debt so that you're not paying the ATO and having non-deductible debt. I mean, it's a no-brainer. Yeah, and it's just a healthier way to run your business.

Unknown · 28:08Nick: And we've had clients come in here that have never had an overdraft ever and have always been stressed or, and they've got a great business, but just the way the cash flows in and out. Yeah. Sometimes the timing puts them under stress. And if you see the ATO as a solution to that, in the past, it's been a really easy solution, but it's not anymore.

Unknown · 28:28So, you know, understand how your business works from a cash flow point of view. And if you need you need an ongoing facility there, get one in place. It can do you the world of good.

Unknown · 28:37Jason: And I will finish on this because it's tied into the overdraft facility, debt facility, you know, working capital account, cash flow. The last thing from an ATO point of view that is big and real and happening soon is Payday Super. And might have talked about it before.

Unknown · 28:53You know, we've sent out notice to all of our clients. We're having conversations with everyone about moving to a fake Payday Super. Super now, but as of 1 July 2026, it is compulsory that every time you pay your staff, you will have to pay super on the day, and that money must clear within 7 days to the super fund, or you start to get yourself into trouble again.

Unknown · 29:13If you aren't in the habit of paying it regularly already, you imagine that, you know, your quarterly super bill—$10,000, $20,000, $30,000, $40,000 more for some bigger businesses—you've usually squirreled that cash away over 3 months and then you paid in a lump sum within 28 days of end of quarter, the days are gone.

Unknown · 29:32So you've got to get out of that habit of thinking that that's what's going to happen. The other thing we're seeing is this big recommendation to pay the April, May, June quarter super for this year, pay it before 30 June due to breaching concessional caps for people's super funds when they roll into next year with Payday Super.

Unknown · 29:51You're going to get all the super in timely next year. And if you let the lump sum roll over, you're going to breach people's caps and cause dramas. So big warning, payday super is coming soon. Get in the habit now of bringing your super payments into regular.

Unknown · 30:06Do it at the same time you do payroll now. And then by the time 1st of July rolls around, you are in the habit. It is done and dusted. Happy days. Well, mate, a lot of good information there.

Unknown · 30:18Nick: As always, yeah, and the business cash flow, nothing more important. And there's some significant changes coming from the ATO that people need to be aware of. Always. And to close, if you don't deal with the ATO, the ATO will deal with you.

Unknown · 30:34Game over.

Unknown · 30:37Jason: This podcast is for educational and informational purposes only. The conversations are of a general nature and do not qualify as financial or tax advice. We recommend before you make any financial decisions, you consult a licensed professional Individuals on the podcast may hold positions in the companies discussed. ---