Episode Summary:

In this second part of our budget special, we examine the significant tax changes that are placing Australian small businesses and investors under immense pressure. The conversation pulls apart the disconnect between government policy and the practical reality of running a business, highlighting how recent measures regarding negative gearing and capital gains tax are impacting the Australian dream. Our panel of experts explores the historical failures of similar tax experiments and warns of a looming valuation nightmare that could overwhelm both taxpayers and the ATO.

We also tackle the cumulative effect of multiple changes hitting businesses simultaneously, from Payday Super to rising wages and interest rates. The discussion reveals a growing sense of frustration among business owners who feel their risk-taking is being penalised rather than rewarded. Ultimately, the episode emphasises why strategic partnerships and specialist advice are now the only way for accountants to navigate this increasingly complex and uncertain landscape.

What You Will Learn:

• Why the current negative gearing changes might repeat the failures of the 1980s

• How the new capital gains tax framework creates a valuation crisis for 2027

• What the disconnect between stated policy and actual law means for your clients

• Why the mum and dad investors are the ones truly hurting from superannuation changes

• How to manage the significant cash flow impact of Payday Super in the first quarter

• Why the flight of capital to business-friendly countries is becoming a real threat

• How to maintain a positive mindset for clients amidst negative economic news

• Why strategic partnerships are the ultimate moat for your accounting practice

Key Takeaways:

• Historical Precedent Matters

• The panel notes that previous attempts to scrap negative gearing resulted in skyrocketing rents and were quickly reversed, yet current policy seems to ignore this lesson

• The Valuation Trap

• The requirement for asset valuations by July 2027 is described as a looming disaster that will lead to prolonged disputes and subjective challenges from the ATO

• Risk vs Reward

• There is a fundamental concern that the tax system is moving toward taxing capital risk at the same rate as labour, which discourages entrepreneurship and investment

• Cumulative Compliance Burden

• Small businesses are not just facing one change, but a tidal wave of measures including Payday Super and credit card law changes that hit cash flow and confidence

• The Power of Specialisation

• In an environment of extreme complexity and uncertainty, the generalist model is failing, making partnerships between accountants and lawyers more critical than ever

Notable Quotes:

• "Small business are really starting to feel the impact. Every time a government is in place, the small business seems to be the first group that gets hit." Peter Sa

• "If you want to discourage activity, you tax it." Ian Aldridge

• "The lack of consultation prior with people that are in the industry has caused these things to come out and not make any sense." David Patterson

• "We need to accept the proposition that normatively our tax rules should not encourage risk-taking... that is the key point." Gavin Quayle

Guest Information:

• David Patterson from The Bucket List Accountant (bucketlistaccountant.com.au)

• Gavin Quayle from Hilltop Tax Advisory (hilltoptax.com.au)

• Peter Sa from FWP Advisory (fwpadvisory.com.au)

Roundtable Events

Information, including registration details, for Roundtable events for Accountants: https://thebackroomop.com/thepartnershipeffect 

Panelist Information:

Talila Kroy - Emple

• Website: emple.com.au 
• LinkedIn: linkedin.com/in/talila-kroy 
• Specialisation: Building partner ecosystems for fast-growing businesses

Wayne Findlay - The Back Room

• Website: thebackroomop.com 
• LinkedIn: linkedin.com/in/waynenz 
• Specialisation: Offshoring solutions for accounting firms

Ian Aldridge - Progressive Legal

• Website: progressivelegal.com.au 
• LinkedIn: linkedin.com/in/ianaldridge1 
• Specialisation: NewLaw firm for growing Australian businesses

Production:

Co-host - Anthony Perl - Podcasts Done For You

• Website: podcastsdoneforyou.com.au 
• LinkedIn: linkedin.com/in/adperl/

The tax trap, why small business is under fire,

2

part two of our budget special.

3

Peter Sa: Just fed up with the tax

system that we've got in this country.

4

Small business are really

starting to feel the impact.

5

Every time a government is in place,

the, the small business seems to be

6

the first gets hit with all these

changes and in tax and so forth.

7

Talila Kroy: This is our lives

that they're meddling around with.

8

How do they get to campaign on

one thing and then break the rules

9

and bring in something that they

said they weren't allowed to do?

10

Anthony Perl: Today, we're continuing

to examine the fallout from the

11

latest budget and the significant tax

changes impacting small businesses

12

and investors across Australia.

13

Gavin Quayle: The young people

buying land to build their own

14

house, that is the Australian dream.

15

But acknowledging that affordability

is an issue, and so quite frequently

16

these young people will rent

where they want to live, but then

17

they'll buy an investment property.

18

Ian Aldridge: When Pauline Hanson

is polling better than you, is

19

that not the biggest wake-up call?

20

And now to rush this stuff through

and not provide, and not rethink

21

the strategy after that backlash.

22

David Patterson: Investors

can buy a brand-new house and

23

still get negative gearing.

24

The lack of consultation prior with people

that are in the industry has caused these

25

things to come out and not make any sense.

26

Anthony Perl: We're joined by a

powerhouse of panel experts to pull

27

apart the reality of these shifts.

28

Joining me are regular panelists, Talya

Lacroix from MPUL and Ian Aldridge from

29

Progressive Legal, plus three guest

panelists for this budget special.

30

Each of these three Australian

accountants brings deep expertise from

31

a different area of accounting practice.

32

David Patterson from the Bucket

List Accountant, who works with

33

small businesses every day and

is seeing firsthand the practical

34

challenges these changes are creating.

35

Peter Saar from FWP Advisory,

specializing in asset protection, business

36

structures, and succession planning

with a valuable insight into how these

37

reforms could affect each of these areas.

38

And Gavin Quale from Hilltop Tax Advisory.

39

With 11 years inside the Australian

Taxation Office, Gavin has seen firsthand

40

how tax law is designed, interpreted,

and enforced, giving him a depth of

41

insight into these budget measures

that very few advisors can match.

42

I'm your co-host, Anthony Pearl.

43

Let's get into the heart of what

these changes mean for you and

44

your clients, and what will make

you the connected accountant.

45

David, I want to start with you and talk

about the impacts of negative gearing and

46

all of those changes that are happening

as well that have been announced.

47

It's kind of like a harking

back to the old days when Paul

48

Keating tried all of this.

49

David Patterson: Paul Keating stopped

negative gearing, and I think it lasted

50

two years before he brought it back

in because it had the opposite effect

51

of what he thought was gonna happen in

that rents went through the roof and

52

suddenly, you know, rental affordability

was far worse than it was beforehand.

53

So, you know, that's a two-year

timeframe where he went, "I'm doing it.

54

Didn't work.

55

I've got to roll it back."

56

And yet somehow these guys

thinking something's different now.

57

I don't know what it is, but apparently

something's different and this

58

time negative gearing will work.

59

And, you know, if I just go back as

well, and we all know it's not true,

60

but the premise that they're doing all

this so that they can make housing more

61

affordable for the younger generation,

I mean If they were serious about

62

that, I think there's two elements

to this that are, that are not right.

63

They're still allowing negative

gearing on brand-new properties.

64

Now, my take on this mainly is that

the younger people coming through

65

looking to buy their first home, they're

not looking at second-hand houses.

66

They're looking at brand-new houses.

67

They wanna build their own house.

68

They buy a block of land.

69

Especially regionally, I don't know,

uh, there might be a difference between

70

regional and, and the city, but in the,

in the regional areas, you know, it's,

71

it's a big thing for someone to buy

their block of land and then build their

72

brand-new house as their first house.

73

Now, they're gonna be still

competing with investors because

74

investors can buy a brand-new house

and still get negative gearing.

75

Now, just none of it

makes any sense to me.

76

It just doesn't make any sense.

77

And I think it's part of this thing

that I'm not sure it was Ian might

78

have said earlier on, that the lack of

consultation prior with people that are

79

in the industry has caused these things

to come out and not make any sense.

80

A-and not none of it seems to be working

for the-- what they said it was made for.

81

Gavin Quayle: That's really

insightful, actually.

82

Young people buying land to

build their own house, you know,

83

that is the Australian dream.

84

But I think certainly in the cities and

the conversations I'm having with a lot

85

of people is that the preferred strategy

is rentvesting, and it's wanting to

86

get into the market, but acknowledging

that affordability is an issue.

87

And so quite frequently, these young

people will rent where they want to

88

live, but then they'll buy an investment

property because, you know, in the

89

cities everything's just too expensive.

90

And so I see this big disconnect when

the stated policy of the primaries and

91

the treasurer and what's actually in the

law, where the policy intent is to, is

92

to say, "Let's get people into housing."

93

But then they've done two things.

94

One, they've said, "Let's change

the entire capital gains tax system

95

and framework based on policy

that's really, really targeted."

96

And then with negative gearing, they've

said, "Well, let's grandfather up

97

until twelfth May twenty-sixth," so

that existing properties, you've still

98

got your negative gearing benefits.

99

But all the new people who are trying to

get in the market, they're gonna suffer.

100

I had a client who was looking to get

in the market and looking to purchase

101

an investment property up in Queensland.

102

He's done his research, and

he's paid for a buyer's agent.

103

And now with this negative gearing

gone, he's rethinking doing that at all.

104

And so it's increasingly a conversation.

105

Uh, do these changes impact on

demand and walkthroughs at houses?

106

Most certainly they do.

107

So there is one tick, but

how many crosses are there?

108

And it's those crosses that

I'm really concerned about.

109

So it really comes back to that

disconnect between what is the

110

policy and what is the law.

111

Anthony Perl: I think there's

an interesting point here as

112

well, Gavin, that is there an

overall strategic plan with this?

113

Because the interesting thing about

pushing people away from, y- you know,

114

in terms of affordability in the city, is

that you push them out of the city areas,

115

but do you actually have the funds to

supply the infrastructure that is needed

116

for that move and migration of people out

into those areas, is just one example.

117

So there's lots that just seems

to be a big disconnect between

118

what might be a short-term

money grab and an actual policy.

119

Talila Kroy: Every single one of us that

is holding property or had a property

120

strategy is now having to rethink it,

which affects the mortgage brokers,

121

and the buyer's agents, and every

other person in that industry as well.

122

Creates uncertainty for

all of those, I guess.

123

Ian Aldridge: Every investor.

124

Talila Kroy: And every investor

125

Ian Aldridge: This is not just

property, it's shares as well

126

Talila Kroy: Yeah, everything

127

Ian Aldridge: Why would

you buy shares right now?

128

Talila Kroy: That's really true

129

Ian Aldridge: What's

the incentive to invest?

130

I mean, we all know if you want

to discourage activity, you tax

131

it, and now you can't even buy a

property in your superannuation fund.

132

What are you gonna do with that property?

133

Well, you're gonna rent it out

because you want the income, right?

134

And you have to pay a significant

deposit on that anyway.

135

I think it's something

like 40%, is it not?

136

Yeah.

137

Peter Sa: I think, yeah, LVR is around

about 60 to 70%, I think, Ian, from what

138

I'm gathering from mortgage brokers.

139

Ian Aldridge: Obviously, this is a

Green's insistence, um, for some reason,

140

or which I still don't understand.

141

Peter Sa: But isn't it funny, Ian,

that the, the CGT measures that's

142

being discussed doesn't affect super?

143

Talila Kroy: And I also don't

understand CGT measures.

144

Yes.

145

Peter Sa: Yeah.

146

It, it doesn't affect

super, which is interesting.

147

And yes, I know that the Greens are

pushing for a ban on super funds

148

to purchase residential, but it

doesn't ban them from purchasing

149

through an RBA structure commercial.

150

I don't think that's banned.

151

So I'm a little bit confused by that.

152

Gavin Quayle: Who are the people

who are investing through their

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SMSFs in residential property?

154

It's the mum and dad.

155

And who are the ones that are investing

through SMSFs in commercial property?

156

It's sort of your ultra-high

wealth individual.

157

So who this is actually

hurting is the mum and dads.

158

That's it.

159

Yes.

160

It's, it's, it's ridiculous policy.

161

And this, and this was his back,

ba- back- sorry to, to sort of get

162

aggressive, but it really makes me angry.

163

It's this back- Mm-hmm … door deal

between, between Labor and the Greens

164

in order to pass it through the Senate.

165

And, and I think we should just say

that it's, it's really fresh that

166

these laws have now passed both houses

of Parliament, and this includes

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the revisions that were made by the

Treasurer, um, in the upper house.

168

And so we've only just had a peek at what

they look like, uh, these concessions that

169

were made, and it's passed both houses.

170

And so one of the, the concerning

things is just that the upper

171

house is the house of review.

172

And yes, the bill went through

a Senate committee, a sort of

173

rushed hearing of two days, and

I listened to a fair bit of that.

174

A critique would, or a cynical man

would say that it was stacked with

175

pro-government witnesses, but I

think it was relatively balanced.

176

But then the report that was

handed down was clearly rushed.

177

There were spelling mistakes, which you

don't typically get within these reports.

178

And again, it was saying, with the

policy that we've got, which is the

179

CGT discount is too, what's the word?

180

It's too generous, therefore

we need to pare it back.

181

Now, one of the things…

182

Sorry, d- I just want to be able to spend

a bit of time on this because it's, I

183

think it's really, really important.

184

For us to proceed with this law, we

need to accept the proposition that

185

normatively our tax rules should

not encourage risk-taking, right?

186

That is the key point, that our tax

rules should say that the receipt of

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capital from putting capital at risk

should be taxed the same as labor,

188

which is not putting capital at risk.

189

So we ought to be doing that.

190

Now- Put that to one side.

191

Now let's look at the history of the CGT

192

Now, that came off the back of the

Ralph Review, which was a really

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important piece in business tax

review over the past 30, 40 years.

194

Now, that report acknowledged

that the CGT discount is generous,

195

and that was a key design feature

of implementing the discount.

196

And the reason for that was simplifying

the tax rules, ensuring international

197

competitiveness, and it was primarily

encouraging investment and savings.

198

Right.

199

So are we now to accept that

those value drivers are no longer

200

part of the Australian value set?

201

Risk-taking, that we shouldn't

encourage investment?

202

'Cause that's what we have to

accept as a base proposition to

203

move forward with Labor's rules.

204

So I'll just pause there.

205

There's a fair bit to unpack

but, but that's my thought.

206

Talila Kroy: That's exactly right, and

that also comes down to business owners

207

because business owners do take risks.

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Like, we are the risk-takers.

209

Every time we start a business,

we're taking a massive risk.

210

We work much harder.

211

We don't get sick pay.

212

We don't pay ourselves.

213

We do all these things, and we do

that because we want the payoff

214

to be more than if we had a job.

215

Now, what they're basically saying

is, "No, you are going to do all

216

those things and not have any payoff."

217

That is what I am hearing.

218

And I also don't understand the CGT

thing because it seems to me that the

219

whole grandfathering system and all

that is going to cause people to have

220

to do all these valuations before 2017.

221

It's gonna cause people to not

be able to sell their assets.

222

All sorts of problems which, have

anyone thought about this, and why

223

is there not more of a hue and cry?

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Gavin Quayle: Thinking with my ATO hat on,

I would anticipate the ATO is particularly

225

nervous about the valuation point.

226

'Cause at the moment, you're

absolutely right, as of 1 July

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next year, uh, essentially every

taxpayer with assets will need to

228

get-- need to value their assets.

229

And so perhaps for listed shares and

ETFs it might be straightforward, but

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as we know, many assets are not that.

231

And so what does that valuation look like?

232

Now, the government has said, and

the law is, is drafted in a way that

233

says there's gonna be alternative

approaches to determining a sort of

234

a, a methodology of apportionment

between grandfathered and indexation.

235

But practically, we know this

or accountants know this with

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the indexation that lasted until

237

And so what I'd be advising clients

to do is to do both, and say, "Let's,

238

let's model and see what it looks

like if whatever is the a, i- i- is

239

the new methodology to come out, and

then let's also get a valuation, and

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we can see which is the approach that

gives us the better tax outcome."

241

So from an ATO perspective, they're gonna

be going, "I'm going to need to, to review

242

and challenge valuations that everybody in

243

And now valuations are the area

that the ATO will distinctly, I'll

244

say, like or dislike reviewing

because it's so subjective and it,

245

it results in prolonged disputation.

246

Taxpayers hate it, the ATO hates it.

247

But it's there.

248

And so that's, I think, perhaps the

real issue where there's gonna be a

249

lot of time sunk at this 1 July 2027

250

Talila Kroy: mark.

251

No, it could blow up the ATO.

252

I mean, the amount of work they're

gonna have to do and the amount of

253

dispute that could come out of it, just

that one thing alone, the CGT thing.

254

And that's the problem, is there's so

many multiple things in this budget,

255

and each one has got a flow-on effect.

256

It's not like they've just done one thing.

257

They've done all these different things

258

Anthony Perl: David, I'd love to

bring you in here as well, because

259

there's some things that happened just

prior to the budget as well, where

260

you paint this scenario for a typical

family who runs a small business.

261

You've got changes in superannuation.

262

You've got changes to

the credit card laws.

263

You've got minimum wages rising.

264

You've got interest

rates steady to going up.

265

You've got rental properties

going up in prices.

266

Like, there's a, a very difficult

scenario for small business owners here

267

that many of whom are your clients.

268

Ian Aldridge: And Payday

Super coming in as well.

269

Yes.

270

Got to pay it all the time.

271

David Patterson: Yeah, Anthony.

272

And yeah, you're right.

273

Even prior to the budget, I mean,

small business have just been…

274

They just seem to get hit every

chance that the government can

275

get, you know, and, and, and all

this stuff coming in together.

276

You know, Payday Super whilst

probably simplifies things and,

277

and makes it better, but there's a

significant cashflow impact on small

278

businesses in that first quarter.

279

You know, they've got to pay

the June quarter if they've been

280

doing it the way they're allowed

to do it and pay quarterly.

281

So they've got to pay April, May, and

June in that September quarter, but then

282

they've also got to pay the September

quarter's super in the September quarter.

283

So there's this hit of cashflow.

284

And as you said, you know, the changes

to the credit cards, they've now

285

potentially got to pay more for wages.

286

It just seems that every morning when

a small business owner gets out of bed,

287

and these are a lot of the ones that

I'm dealing with in particular, are

288

mum and dad small businesses, you know.

289

So they're not running

high, huge businesses.

290

Uh, they're running sort of local

businesses in town and, and trying to

291

provide a service to the community,

but now they're also trying to

292

balance all this other stuff.

293

And a lot of them are doing all the

extra bookwork and trying to keep up

294

to date with Payday Super and working

out what they're gonna do with their

295

credit cards and everything else,

doing all that themselves after hours.

296

So because they either can't afford or

they're trying not to spend money on a

297

bookkeeper or, or something like that.

298

So, so that was all c-coming up, and

then everything else had been hit with

299

the budget, and especially the small

business concessions, to lose the

300

fifty percent in the initial stages

and then to wind that back and then to

301

increase the turnover from two to ten.

302

I d- I mean, I don't

understa-- I, I like it.

303

I don't understand why

it needed to be made.

304

It's just another change that's

being introduced that we, we

305

need to learn what to do with.

306

And the biggest thing for me, the one

thing that I always try to encourage,

307

is that it's just knocking people's

confidence and knocking people's sense

308

of trying to put in the effort and trying

to get ahead in life and trying to, you

309

know, build for something later in life.

310

They're just kind of

saying, "What's the point?

311

I might as well go and get a job

somewhere, because it's simpler."

312

And it is simpler, you know.

313

Like the trusts…

314

And sorry, I think I've just

hopped up on my bo-box, so I'll,

315

I'll try and make it quick.

316

But- I re- I recall, and that might have

been the treasurer said, you know, that

317

what salary and wage earners don't get

the benefit of income splitting by putting

318

their wage into a trust, which is true.

319

But they're also not taking the risk

that a business owner is taking by

320

start running their own business.

321

You know, they don't have

to worry about cash flow.

322

They don't have to worry

about paying their bills.

323

They go to work at eight thirty

in the morning if, you know, or

324

later, or if they go to work at

all, they're working from home.

325

They knock off at five o'clock.

326

They forget about everything else.

327

Small business owner is, you

know, lying awake at night.

328

Ian Aldridge: Never,

never, never switches off.

329

David Patterson: Correct.

330

And so why should a small business owner

not get some reward for taking that risk?

331

And, and, you know, the capital gains tax

and the trust and the taxing at thirty

332

percent is, is starting to take away the

rewards that the small business owner

333

was getting from by taking that risk.

334

They just don't seem to

have that connection.

335

Without small business- There's

a hell of a lot of people

336

that are out of work, and no-

337

Ian Aldridge: There's no

ex- there's no economy

338

… David Patterson: Correct.

339

And so the government can't

afford mass retrenchments or

340

they haven't got the money to pay

unemployment benefits to people.

341

So they just don't seem to

recognize the importance that small

342

business plays in the country.

343

Ian Aldridge: We're all at

the coal face here, right?

344

We know that, like, small business

has been really struggling over the

345

last two to three years, and there's

record numbers of my insolvency

346

friends are very busy right now.

347

And then to introduce this and this,

like, three hits in one go, plus the

348

payday super, no wonder there's been

such a reaction on social media.

349

I mean, when Pauline Hanson is

polling better than you, is that

350

not a, the biggest wake-up call?

351

And now to rush this stuff through and

not provide, and not rethink the strategy

352

after that backlash, it almost feels

calculated and vindictive in a way that's

353

from a legal perspective, you know,

nor- ordinarily, I mean, that report

354

you were mentioning, Gavin, there was no

report this time and deep consultation

355

about massive tax changes, not reform.

356

I really fear deeply for small

business in this coming year.

357

On top of global uncertainty, on top of

our out-of-control debt, it's a recipe

358

for disaster, and if we weren't heading

towards a recession, I would have thought

359

Labor's doing its best to kick own

goals here, almost to make that happen,

360

which is really, really concerning.

361

You guys talk to small

businesses on a daily basis.

362

Is that a fair comment to make?

363

Talila Kroy: Yes.

364

I mean, I work with businesses growing,

they're scaling their business all

365

the time, and I can see the economy

effect is already hitting almost all

366

of our clients in some way or another.

367

The flow-on effects flow on and on.

368

And the thing is, it's like

the Aesop's fable, Ian.

369

You know, the, the man and the boy and

the donkey, and they put all the stuff

370

on the donkey and more and more, and

one day the donkey drops dead, dead?

371

And then…

372

or breaks, and then they

have to carry the donkey.

373

So they tried to push all the load

to someone else to the point where

374

the load came right back to them

10 times over, including the load

375

bearer, and that's what's happened.

376

I think people will go overseas as well.

377

Like, there are countries that

do respect small business.

378

Ian Aldridge: Flight of capital

is going to be enormous, isn't it?

379

Talila Kroy: Yes.

380

Like Singapore respects

small business, you know?

381

Ireland respects b- there are

countries that have got it right.

382

Estonia.

383

Like, why are we so stupid?

384

Why do we make all the dumb mistakes?

385

So-called lucky country.

386

Lucky, stupid country apparently.

387

Ian Aldridge: Even China's

capital gains tax, w- it's at 20%.

388

Talila Kroy: Yeah.

389

And I don't wanna get bitter,

but, you know, this is our lives

390

that they're meddling around with,

and they get money for sitting in

391

Parliament making these stupid laws.

392

Why can't they do it properly?

393

And also, how do they get to campaign

on one thing and then break the rules

394

and bring in something that they

said they weren't allowed to do?

395

Should that not disqualify them?

396

Like, if I was a business owner and I

made a promise to my clients that this

397

would happen and then I changed it

after they engaged me, wouldn't I be

398

able to be taken to court over that?

399

I

400

Gavin Quayle: think you've touched

on a really good point there too,

401

Loretta, and, and that's one that sort

of keeps me awake at night an- and

402

really sort of undermines just, just

my trust in Australian government and

403

sort of let- let's call it the rule of

law where, where one can expect that

404

there's gonna be certainty of law.

405

Now, we elected, uh, Labor on the basis

of their, their commitments and their

406

promises, and Australians aren't stupid.

407

We can see that…

408

The average punter can see that,

that these rules have been rushed,

409

that there's design problems,

that there's policy problems.

410

We can see that.

411

But I think o- one of the more contrasting

issues, which I think is just even more

412

important than the law and the policy

itself, is how the Prime Minister

413

and the Treasurer reacted when they

were put on the spot on budget night,

414

"Are you going to apologize to the

Australian people for a broken promise?"

415

And the way that they addressed that

was saying, "We changed our position."

416

Now, I accept that the way

that the policy mechanics are

417

is that you can't politically

say you've broken your promise.

418

But I think Australians expected

some level of contrition to say,

419

"Yes, we understand that, that

Australians plan their affairs on the

420

basis of commitments we provided."

421

Maybe use that word, commitments.

422

But there was none of that.

423

It was just, "We changed our position."

424

And I think Australians can s- see that.

425

I certainly saw that and I, I, I said,

"This is an insincere government,

426

uh, and I can't trust them."

427

Ian Aldridge: But Gavin,

positions change, okay?

428

Talila Kroy: Maybe we could tell

the government that we've all

429

changed our positions as well

430

Ian Aldridge: When is the election?

431

When is the next election?

432

Gavin Quayle: 20- 2028, which

is probably the greatest

433

uncertainty with the trust measure.

434

Talila Kroy: Wouldn't it be funny

if they lose power and then the next

435

government rolls it all back, and then

we have to pay twice for all of this?

436

Anthony Perl: Well, I think there's

a couple of interesting things that

437

I wanted to bring you in, Peter,

here as well, is that, you know,

438

we're talking about all of these

things here and all of these changes.

439

First of all, who's paying

for all of the accountants to

440

learn all of these new changes?

441

Like, there's a lot of time, effort, and

energy that is being spent on actually

442

learning how to do this, but also just

working out what the status really

443

now is that you should be advising.

444

Is it a sit and wait?

445

Is it a let's get ready?

446

Is it a protection measure?

447

Because it seems like there needs to be

a protection of assets and things as well

448

so that people actually have a future.

449

Peter Sa: As we were discussing, what

came to mind to me was a, a client asked

450

me last week, just fed up with the tax

system that we've got in this country,

451

and asked me the question, "Can I set up

my business in a tax-friendly country?"

452

Like the UAE or, you know,

Ireland or those sorts of places.

453

Because what that indicated to me

was that, uh, small business are

454

really starting to feel the impact.

455

Every time a government is in place,

the, the small business seems to be the

456

first group that gets hit with all these,

these changes and the tax and so forth.

457

And I think Ian alluded to this

before, are we going to see

458

a flight of capital overseas?

459

Are people going to be

operating from out of the…

460

I don't know.

461

I, I didn't really give an answer to,

to that question, but it was interesting

462

to me that they were thinking about

in order to get out of this tax regime

463

to go set up in another country.

464

And I'm sure Gavin would know a little bit

more about this around entities being set

465

up overseas and how that tax stuff works.

466

But coming back to Anthony's question,

there's gonna be a lot of learning that

467

as the professionals in this space.

468

So g- we're, we're gonna have to have

to do a lot of homework in order to

469

be able to help our clients with this,

and we are all uncertain ourselves.

470

As David said, we just don't know

how this is going to pan out.

471

So all we can do is just find out

what's coming down the pipeline

472

and to interpret what that is, and

then try to give that back to our

473

clients as some sort of advice.

474

Anthony Perl: I guess we

just try to wrap things up.

475

I want to ask you, Gavin, what is the

greatest measure that you can take?

476

You know, forget just your clients at

the moment, but just you as a business

477

owner, as an accountant, what is the

measure that you need to be taking

478

right now to, in order to position

yourself correctly so that you can

479

get on top of all of these things?

480

Gavin Quayle: I think it's a consistent

investment of time to paying attention

481

to what the changes are, to what the

guidance is coming out, whether it be

482

from the government or the tax office.

483

And I think perhaps more importantly,

it's, it's having conversations

484

with clients to say, "What are you

thinking of doing in the future?"

485

And educating them on, here's a state

of play of the tax law that we know,

486

here's the state that we don't know,

and now we're gonna need to factor that

487

into what your plans are going to be.

488

And so it's keeping the finger on the

pulse and just a constant investment

489

of time, as I, I think you've mentioned

that before, Anthony, around that

490

who is paying for all this, and

it's us small business advisors.

491

So…

492

And it's no small feat.

493

It takes a lot of time.

494

And when you've got law that is

unclear, that is complex- That is

495

going the wrong way of simplification.

496

It loses trust both in advisors and also

taxpayers, because they're trying to get

497

answers from their accountants, and their

accountants can't give them the answers.

498

Anthony Perl: David, just to wrap

things up from your perspective

499

as well, how do you cope with

exactly what Gavin was just saying?

500

You're put in a situation where

people are coming to you for answers,

501

and it's difficult to give them,

and it's difficult to stay positive

502

about what their future might be.

503

I

504

David Patterson: think, Anthony, for

me, the important part is that staying

505

positive as much as possible whilst

you've got all this negative news.

506

I wanna try and keep my clients as

positive as I can because I still

507

want them to push and to challenge

themselves and to continue to grow

508

their business and grow themselves.

509

You know, it's…

510

To get caught in that negative

mindset just has so many far-reaching

511

outcomes that we don't know what

that impact is gonna be yet.

512

You know, to, to shrink back and not to

push and not to grow and not to try and

513

be the best person as you can be I think

it's gonna have a long-term negative

514

impact on people if we don't try and

just keep them going, despite the fact

515

of all these sort of tax uncertainties,

just to try and keep them still positive

516

and still pushing ahead, I think is

gonna be the important thing for me.

517

Anthony Perl: I think, Ian,

from your perspective, I think

518

lawyers might actually benefit

the most out of all of this.

519

You're going to have, uh,

insolvencies to deal with.

520

You're going to have lots of advice

you're gonna be giving accountants to put

521

caveats on advice that they're giving.

522

There's a bit of work for you.

523

Ian Aldridge: I think actually

it's gonna be the opposite.

524

This is another knock for small business,

and I suspect, along with all the other

525

changes that are coming in in Payday

Super, et cetera, I actually think

526

there'll be a number of businesses now

just close up and throw the towel in.

527

And so I think that's really

gonna affect lots of businesses

528

and advisors to small businesses.

529

And many people think lawyers, by

nature, are very pe-pessimistic.

530

I'm very optimistic as a person, but

the way that I've seen the last few

531

years go for small business, things

have not gotten easier for small

532

business over the last few years.

533

It's gotten harder and harder.

534

Money is tighter.

535

There's less profit.

536

And so I think generally that

we're gonna see less expenditure

537

on non-essential services, and I've

always taken the realistic view that

538

lawyers are seen as an unnecessary evil

until they're completely necessary.

539

I wish, like accountants, we were, you

know, a first port of call when stuff

540

happens, but that's just not the case.

541

And I think anything that is not

income-producing with a direct return on

542

investment is gonna get smashed by this.

543

And I think any business advisors, unless

they can do something now to really embed

544

themselves with lots of partners, with

more marketing efforts, like, they're

545

gonna have to work harder to be able

to get the same amount of revenue or

546

continue with their expansion plans.

547

I think that's a reality.

548

It's a real shame that this government

is taxing them or making it harder.

549

Those people who help themselves

and help others, employ others, and

550

take those risks and collect that

tax on behalf of the Australian

551

people are being attacked like this.

552

It really is an attack on small business

and investors who wanna get ahead and

553

want to create wealth for their families

and for their future generations.

554

Talila Kroy: Yeah, I'm

gonna say two things.

555

Firstly, you're right, Ian.

556

There's never been a

better time to partner.

557

Firstly, because specialists will

need each other even more than ever

558

to make sure that they're compliant

and giving the right advice.

559

Secondly, because it's always the best

way to get clients, and with the rising

560

costs of marketing and all the other

things, partnering is one of the moats

561

that we can build around our companies

and making sure that we continue

562

to flourish in this difficult time.

563

But I also want to say the only way to be

positive is that some things are winnable.

564

I know that things that some of it's gone

through both houses, but I understand

565

there's lots of gray areas and I would

love to-- Gavin to tell me what do

566

you think would be the best and most

winnable things that we could still

567

see as change from the ATO internal

perspective of what's still gray area?

568

Gavin Quayle: So I think the biggest

win is that let's use our votes at

569

the voting booth in, uh, in 2028 to,

uh, to, uh, to elect a new government.

570

That's a while away.

571

And, uh, but all that would do is that

would upset the trust measure because

572

that's due to commence from 1 July 2028.

573

And so the election in 2028, then that

could mean that there's effectively

574

no trust measure that comes in.

575

So that's the one point.

576

And the second point is that with

the capital gains tax, we know from

577

1 July next year it's coming in, so

even if we were to use our vote to get

578

the government out, we've got a year

and a bit of the law being operative.

579

And so the next year we, we all

just need to pay attention to

580

what's coming out from the ATO.

581

So, so with the law now effectively

passed and it's just waiting royal

582

assent, the burden will shift, and

the burden now is gonna be with the

583

ATO to help taxpayers and provide

that meaningful guidance, and hope

584

that they're not too slow in doing it.

585

Ian Aldridge: Happened

in New Zealand, right?

586

They, they brought it in for two years

and then had to just fully scrap it

587

because they realized that it achieved

deleterious, um, objectives and, and

588

the opposite of what they had intended.

589

Gavin Quayle: So it very well could be the

case that, uh, what we see is that there

590

are no disposals of assets between the

591

Um, so but we, we, we could have

taxpayers holding out saying, "I'm

592

expecting a change of government."

593

And whether it be Angus or Pauline who's

gonna, who's gonna be the front runner,

594

there's a big question mark there.

595

Um, one would hope that their

policy platform is, uh, is

596

repealing these measures.

597

Anthony Perl: And just to, uh,

finish things up, Talila, I think the

598

interesting message about everything

that has been discussed in these

599

couple of episodes is that partnerships

are more important than ever before.

600

And I think we couldn't have seen that

coming when we decided to form this

601

particular podcast, that all of these

changes are gonna be happening and

602

particularly impacting not just small

businesses, but impacting accountants.

603

And I think the message is pretty

clear that partnerships are what's

604

going to get you through because

there's so much information to absorb.

605

Talila Kroy: And really, this

is a form of partnership.

606

We've got a lawyer and three experts

in accounting here, each with their

607

own angles, and each sees different

parts of the challenges and has

608

different information to give.

609

And so even this conversation was a

form of partnership, and partnership

610

is as much about knowledge and

support in market as it is about leads

611

and clients and all those things.

612

Ian Aldridge: And we really appreciate

you guys, David, Gavin, Peter, for taking

613

time out of your day, especially how close

we are to the end of the financial year.

614

We know how enormously busy- Yes … you

m- you guys must be, like us, having

615

to deal with this arbitrary deadline.

616

David Patterson: Certainly busy, but

I think this is an important topic

617

and conversation to have because

of the impact it's gonna have.

618

Anthony Perl: Well, that's all we have

time for in this conversation, but there's

619

plenty more coming up in The Connected

Accountant, so you definitely want to

620

make sure you never miss an episode.

621

To help you implement what we've discussed

today, you can download a workbook

622

from this episode via the show notes.

623

It includes specific questions for you to

answer, the quotes from the conversation,

624

and action steps you can take right now.

625

A reminder about some of our exclusive

roundtable events for accountants.

626

Visit the show notes for dates

and registration details.

627

All contact information for Talila,

Wayne, and Ian are also there as well.

628

This is a Partner Alchemy podcast

for thought leaders, a joint

629

venture between Emplal and my

team at podcastdoneforyou.com.au.

630

I'm Anthony Pearl reminding you,

like, share, comment, and subscribe

631

so you never miss an episode.

632

See you next time on

The Connected Accountant