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The Riddle Of Risk & Return

Winston Churchill once described Russia as " a riddle , wrapped in a mystery , inside an enigma " 

In today's world we are faced with a similar riddle, that of  risk versus return . This relates to so many 
decisions we make in our businesses , farms and investments generally.

Generally people belong in one of the 4 categories of risk style;
* cautious 
* daredevil 
* adventurer 
* calculator 

How you fit into these categories can change over time .
Any business / financial decision is usually made using a calculation of balancing the risk of an action 
against the expected return . Often the higher the risk the greater the return.

How can you measure the risk? How can you manage the risk ? Are questions we are often asked 
We can't solve the riddle but we can unwrap the mystery and help you through the puzzle 

Contractors Vs Employees

The ATO have signalled an intention to target employers who hire workers as contractors even though they are legally their employee.

We have experienced first hand the wrath of the ATO when it comes to this matter, having dealt with one recent audit in this area. 

The ATO argue that employers are engaging full time contractors in an attempt to avoid paying tax and superannuation, and annual and sick leave entitlements.

Contractors who invoice based on hours worked are to be particularly wary.  Not supplying materials for set jobs, an in some cases not using their own tools only add fuel to the fire that they are in fact an employee. 

The ATO argue that if a contractor is engaged, they should be contracted for a specific job/task, including the provision of materials and the responsibility to rectify defects.

In several cases, the ATO has forced employers to pay 9% superannuation in addition to the amount already paid to these contractors which they ATO deed to be employees.

One measure introduced by the ATO in the building and construction industry from 1 July 2012 is that an annual report will need to be lodged by the business operator specifically identifying every contractor used during the year.  Details required to be reported include on each contractor include:

·         Contractors ABN

·         Name

·         Address

·         Gross amount paid

·         Total GST

This report will provide the ATO with a reliable database whereby they will know which businesses to target.  

Beware,if you get a questionnaire in this field, its not random.  The ATO's data matching has found anomalies in your reporting and are confident they will find something.

In addition to the above, the industries being targeted for unpaid superannuation include all trades, cafes and restaurants, while also targeting the cash economy in these fields also.

The extent the ATO are willing to go in the Cafe industry involves ATO auditors going back to wholesalers, determining how much coffee a business has acquired, and determining how many cups they should have produced and at what price, and attempting to match this to sales.

You Can't Stop Progress

If you want your business to grow, you have to be committed to moving with that growth.
This little pearl of wisdom could be directed at the new digital age with the internet, smart phones and social media.
It could be directed at being flexible in your business planning and moving with the times and trends.
It also can be directed at your physical location, and being willing to move to where you are needed.

GMG Accounting have done just that.  As our firm continues to grow in terms of client base, employees, and development, we have also recognised that we are needed a little further afield.  With this in mind, we have opened an office in Charlton.

Myself and colleague Jess Round, a former Charlton local, are now available for appointments each and every Tuesday.  We can assist with your farm accounting, business accounting, individual tax, succession planning, estate planning, self managed super funds and anything else that you might want to discuss with a CPA.  We are even more than happy to talk about the weather, footy, netball, hockey and this month's blue moon, or the Olympics.

We are now open at the Circle in the old Globe building but will be opening our new premises at 17 High Street next month, so make an appointment today by calling 50329422

A Grain Of Knowledge


A recent session at the GRDC advisers update raised some interesting views . I was suggested that most farmers spend more time looking how to sell their crop than focussing on when to sell .


Suggested steps to developing a marketing plan include

  • Calculate the gross margin of the crop i.e. your breakeven price , which becomes your initial target
  • Create a cash flow budget the will tell you when receipts from sales are required
  • Determine when to sell in relation to the production cycle , pre planting , post planting , pre harvest , at harvest , post harvest
  • Determine how much to be sold /priced at these periods
  • Determine how to sell/price any sales before harvest ; swaps, options or forward physical sales
  • Determine what price to be targeted
  • Determine how much will be carried over to the next crop and how long this will be held for


It was also suggested that farmers should consider forward selling 2014 now as well.

Good Decision Making

 As advisers we often witness or are directly involved with the decision making process of our clients.
Whether that decision is merely the purchase or sale of some shareholdings or a significant property purchase the process to reach that decision varies from client to client.

There are basically two kinds of decision making processes.

   Justified - Decision already made just need to justify it.

   Selective - Gathering Facts and assessing alternatives.

Whilst many good gut decisions are made and then justified after the event by far the more consistent and considered approach particularly to those who are risk adverse is the selective approach.

The steps to a selective approach are relatively simple to implement

  • Gather the Facts
  • Identify a number of alternatives
  • Assess those alternatives
  • Decide

 Personalities and emotions often influence decision making but if you consider the four steps to the selective approach poor decisions are likely to be less.

Centrelink & Child Payments

Centrelink provides several payments to families to help support their income and reduce or subsidise child care costs. However, the eligibility requirements and what the payments actually provide a family can become very confusing.

As a young mother I encountered this when I decided to return to work. Many people gave me their opinion that child care was so expensive that it wasn't worth returning to work. However, I found this not to be the case, but understood how people may come to this conclusion.

Centrelink provides two main payments when it comes to child care. They are Child Care Benefit and Child Care Rebate.

The Child Care Benefit (or CCB) is entirely dependent on your family income, whether you are single or partnered. It is calculated as a percentage based on your annual income and is given to you in the form of a weekly reduction in your child care fees.
As an example, if the weekly cost of child care is $400 and Centrelink assesses you to receive 50% of CCB, your weekly child care costs are reduced by $200, so that you only pay $200 per week.

The Child Care Rebate (or CCR) is 50% of all your out of pocket child care costs up to $7,500 per year per child, and you can receive it weekly, quarterly  or annually.
Carrying on from the previous example, if after CCB you pay $200 in child care costs for the week CCR then reduces this to only $100 per week.

Child care costs do look expensive if you think that you are going to be paying $400 for the week. However, depending on your individual circumstances, Centrelink does provide some worthwhile benefits to reduce these costs and you may be surprised by how little you actually end up paying.

If you are confused by the child care benefits provided by Centrelink, or you are considering returning to the workforce and would like some further information, please contact us, we would be happy to help.

Health & Fitness. It benefits everyone

Are you struggling to get out of bed with these cold mornings?  
Do you sit for most of the time while you're at work?
Is the option of a hot pie more appealing than a cold salad?
 And is it just too much effort to go to the gym or do physical activity after work?
You find most your excuses include, It's to cold.
It's easier to cook bad foods.
I don't want to get sick and get a cold.
I don't have the time. It's too dark.
It's raining.
I can't be bothered.

It's time to wipe those excuses because there is an answer for all of them. Hate it when your kids back chat you? Now it's time to back chat your excuses.

With these cold winter months it is easy to fall off the track as far as your health is concerned. As the saying goes many grow that extra winter coat. Then by the time summer approaches many freak out and go on a strict diet to get that summer body, which many don't end up sticking to.

It doesn't have to be like that. It is much easier and fun to stay healthy and active the whole year through. By making small changes and encouraging yourself and people around you, you will find it's not that hard. It will be rewarding not only to yourself but to your workplace as well because you will be more productive.


Does your work have a weekly morning tea? Encourage people to bring in healthy food or healthier options. Some ideas could be a fruit platter, yogurt dip, carrot, celery and capsicum sticks, zucchini slice, fruit sewers and veggie muffins.

Prepare! Prepare! Prepare! Write a healthy weekly meal plan. Know all the ingredients you need and go shopping in preparation for the week ahead. Know everyday what you're going to have and prepare it that morning or the night before. If it's not in the cupboard, fridge or freezer you can't eat/cook it. And after all you don't have time to go shopping during the week.

Take snacks and your lunch to work with you. If you have food at work with you to eat you won't have the temptations of other foods. Keep a bag of unsalted mixed nuts in your handbag/esky/lunchbox as they are easy to snack on wherever you are.


 Have your workplace encourage you do physical activity. Go for a walk around the block for 10 minutes during morning and afternoon breaks. Eat your lunch outside if possible and go for a walk during your lunch break, this can include window shopping!

Take your sports clothes to work with you and get changed at work if possible. That way you can go straight to the gym or for a walk from work. You don't have to go home and won't be distracted by something at home.

The best time to do physical activity is in the morning before breakfast. It will get your metabolism going and give you a positive attitude for the day. Rug up when walking outside during winter, wear a beanie, scarf, gloves. Maybe invest in some thermal wear or skin's, these will prevent injures and keep you warm.

If you struggle to commit to doing exercise then do it with a friend. Plan to meet up and go for a walk or go to the gym together. This way you have to go otherwise you're letting your friend down. It's also a great chance to catch up on all each other's gossip. Another idea is to go to a gym class. Most classes are for 1 hour and when you're having fun that hour will go really quick. It is always a great way to meet new people and have everyone encouraging you.

When you're healthy you're happy. When you're happy you're productive. Everybody benefits! 

New ATO reporting requirements have been put in place regarding you and your contractors.

Effected businesses in the Building & Construction Industry are required to keep track of and
report the following details for each and every one of their contractors:

  • ABN
  • Name
  • Address
  • Gross amount paid (including GST)
  • Total GST paid


These reporting requirements have been put in place as of July 1 2012.


This requirement extends to all businesses in the Building & construction industries, The ATO have singled out over 70 different business types, so if you think this does not effect you, you may have to think again.


These industries include some of the following:

  • Bricklaying
  • Cabinet making
  • Earthworks
  • Engineering
  • Glass and glazing work
  • Irrigation system construction
  • Roofing and guttering
  • And many more - A full list is available at our resources page.


If you are concerned about exactly how you will have to report these payments, contact us at the office for more information.

Banking On Your Smartphone

 With the constant developments in today's technological environment, it is estimated that approximately 60 per cent of Australia's population will be using smartphones by the end of the year. If you're yet to jump on the iPhone or Android bandwagon, the benefits of the banking apps that are now available may have you convinced. If you're a fan of internet banking, the banking apps take the concept one step further, enabling customers to check their balances, make transfers and pay bills when they don't have access to their computers. The big four banks all have apps on the market, however CBA and ANZ have taken the notion one step further for those who are willing:

ANZ Mobile Payments - need to transfer money but not sure of the recipients bank account details? No worries. So long as they have an Australian bank account, you can simply type in their mobile number and send them through the money. Or, if you're feeling particularly brave.

Commbank Kaching -  With CBA's new app, they boast that you can 'leave your wallet at home'; there is no longer a need for cash or cards, only your smartphone. Kaching offers the same mobile payment feature as ANZ, but the real highlight is having the ability to pay for purchases under $100 by simply waving your phone over a PayPass terminal at participating stores. This requires the purchase of an iCarte case to fit to your smartphone, but otherwise it really is as simple as it sounds. CBA ensures that this feature is completely safe, but as to whether it will take over the use of cash and cards, is yet to be seen.

While these features are available to all customers, they do not necessarily have to be utilised; simply having the ability to transfer money from your savings to your cheque account while in line at the supermarket may be benefit enough for most. All of the bank apps are free to download, simple to use, and could be of benefit to your business or personal banking for those prepared to take the next step. If you'd like to find out more about smartphones, apps and all they have to offer, please give us a call.

Welcome to the new GMG Accounting website

As you may have noticed, we have recently revamped our website look. This website design change has been in the pipeline for a little while now so we are glad to see it has hit the light of day. We have updated a lot of our information and hope to be keeping everything fresh from now on. You can also look forward to more of the same handy tidbits of information that we are currently publishing in our latest blog posts. 

We would love for you to give us your opinion on the new look and website format.... you can drop us a line at  

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