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Clarke McEwan Accountants

Start with the cure. The cure for affluenza.

Clarke McEwan recently attended a number of sessions with presenter at the 2018 Byron Bay Writers Festival. Richard is the author of Econobabble and Curing Affluenza , and co-author of Affluenza . He is chief economist at the Australia Institute.

Richard's book takes an honest look at the economy we support. It's home truths can help us recognise the symptoms in ourselves of this modern disease. He maintains that we have been trained to love things not for their material function, but for the symbolic act of acquiring and possessing them.

Below is an edited extract from Curing Affluenza: How to buy less stuff and save the world

"Affluenza has not just changed the world, it has also changed the way we see the world. Short of money? Borrow some. Caught in the rain? Buy an umbrella. Thirsty? Buy a bottle of water and throw the bottle away.

Our embrace of "convenience" and our acceptance of our inability to plan ahead is an entirely new way of thinking, and over the past seventy years we have built a new and different economic system to accommodate it. There is nothing inevitable about this current way of thinking, consuming and producing. On the contrary, the vast majority of humans who have ever lived (and the majority of humans alive today) would find the idea of using our scarce resources to produce things that are designed to be thrown away absolutely mad.

But the fact that our consumer culture is a recent innovation does not mean it will be easy to change. Indeed, the last few decades have shown how contagious affluenza can be. But we have not always lived this way, which proves that we don't have to persist with it. We can change – if we want to.

I define consumerism as the love of buying things. For some, that means the thrill of hunting for a bargain. For others, it is the quest for the new or the unique. And for others still it is that moment when the shop assistant hands them their new purchase, beautifully wrapped, with a bow, just as though it's a present.

But the love of buying things can, by definition, provide only a transient sense of satisfaction. The feeling can be lengthened by the "thrill of the chase", and may include an afterglow that includes walking down the street with a new purchase in a branded carry bag. It might even extend to the moment when you get to show your purchase to your friends and family.

But the benefits of consumerism are inevitably short-lived as they are linked to the process of the purchase, not the use of the product. So while consumerism is the love of buying things, materialism is the love of the things themselves – and that's an important distinction. "

Salespeople and psychologists are well aware of this phenomenon. The term buyer's remorse refers to the come-down that follows the thrill of buying something new. For many, the cold hard light of day takes the gloss off their new gadget, their new shoes or their new car. For some, this can be so overwhelming that they return the item. For a minority, the thrill of buying new things is so great, and the disappointment of owning new things so strong, that they make a habit of buying things they know they will return.

or those interested in the impact of consumption on the natural environment, it is crucial to make a clear distinction between the love of buying things and the love of owning things. While consumerism and materialism are often used interchangeably, taken literally they are polar opposites. If you really loved your car, the thought of replacing it with a new one would be painful. Similarly, if you really loved your kitchen, your shoes, your belt or your couch, then your materialism would prevent you rushing out and buying a new one.

But we have been trained to love the thrill of buying new stuff. We love things not for their material function, but for the symbolic act of acquiring and possessing them – the thrill of anticipating a new thing, of being handed it by a smiling shop assistant, of pulling up at the golf club in an expensive new car. For many, if not most, consumers, it is the symbolism of a new handbag or new car, its expensive logo proudly displayed, that delivers happiness, rather than twenty years of using a material object. It makes no sense to conflate materialism and consumerism. Indeed, our willingness to dispose of perfectly functional material goods and gadgets is the very antithesis of a love of things. The process of buying new things and displaying new symbols might provide status or other psychological benefits, but the pursuit of such symbolic objectives is largely unrelated to the material characteristics of the products being purchased and disposed of.

Symbols matter, and psychological benefits matter. The fact that people are willing to spend their own time and money to show they fit in or to make sure they stand out should be of little or no concern to others. But for those who are concerned with the impact of 7.5 billion humans' consumption decisions on the natural environment, the choice of such symbols matters enormously. Whether people choose to signal their wealth by spending money on huge cars or antique paintings is arbitrary, but that does not mean the environmental consequences aren't highly significant.

Put simply, if we want to reduce the impact on the natural environment of all of the stuff we buy, then we have to hang on to our stuff for a lot longer. We have to maintain it, repair it when it breaks, and find a new home for it when we don't need it any longer. If we want to cure affluenza, we have to get more satisfaction from the things we already own, more satisfaction from services, more satisfaction from leisure time, and less satisfaction from the process of buying new things.

If people loved their things, cared for them, maintained and repaired them and then handed them on to others who did likewise, the global economy would be transformed, as would the impact of human activity on the natural environment. But if people continue to embrace the benefits of "convenience" and pursue the symbolic appeal of novelty then, as billions more people emulate the consumption patterns of today's middle-class culture, the impact on the natural environment will be devastating. "

We hope you enjoyed this extract from Curing Affluenza: How to buy less stuff and save the world . If you would like assistance with setting up a budget or a financial plan, contact us now.

By Clarke McEwan July 2, 2025
Where are things at? Australian superannuation funds currently have about $400 billion invested in the US and tax concessions are currently available under existing tax treaties. This could change. A new bill, backed by the Trump administration and recently passed through the House of Representatives proposes higher taxes on countries seen to be discriminating against US businesses, including Australia. If the bill becomes law, Australian super funds could face higher taxes on US investments, directly affecting the long-term returns of super funds. The implications Even if you don’t have direct investments in the US, this matters. If your business is tied to superannuation funds or if you rely on consistent super returns for your retirement planning, changes like these can add pressure. It also adds a layer of uncertainty for Aussie businesses operating globally. As trade tensions rise and tax rules shift, doing business internationally becomes more complex and potentially more costly. Tax experts say these changes could override existing treaties between the US and Australia. And they’re not just aimed at big corporates, any individual or entity with US exposure could potentially be affected in some way. What’s being done? Industry groups including the Financial Services Council are calling on the Australian Government to step in and protect Australian investors through diplomatic and trade channels. Major super funds have already met with US lawmakers, reminding them that Australia is a significant source of capital for US markets and that strong partnerships go both ways. That said, this legislation is still working its way through Congress and faces pushback even from some Republicans. But as one US political expert said, ‘Bills that looked doomed have passed before.’ We live in hope but it’s not over yet. What can you do? Using John Howard’s barometer, for now we’re at the be alert but not alarmed stage. If you’re managing a business, planning your retirement, or investing overseas, this is a reminder of how global politics can impact your bottom line. Here’s what we recommend: • Stay informed. Tax rules can change quickly • Ensure your retirement planning is flexible enough to adjust if needed or talk to us to help you • Talk to us if you’ve got exposure to US investments, but you might need some input from a US tax specialist. There’s undoubtedly a bit to consider in the world of tax / finance at the moment, the environment’s changing at pace. You’re not alone in this though, as always please reach out if you have any questions and concerns. We’re here to help.
By Clarke McEwan July 2, 2025
Is there a shift away from trusts? In recent years, we have noticed a slight trend of businesses transitioning from trust structures to corporate entities. This shift is largely due to increasing scrutiny on how trusts are used and the growing complexities involved in managing trusts, particularly when it comes to documentation and compliance requirements. Trustees and directors of trustee companies are realising that they need to devote more time and resources to ensure compliance with evolving and complex regulations. One of the primary challenges in utilising trusts for business purposes is the need for timely and accurate decision making. Trustees are normally required to make decisions about distributions by the end of the financial year to prevent the profits of the trust from being taxed at penalty rates. This timing can be problematic as it might not align with the availability of complete financial information, especially for businesses that are actively trading. This can lead to difficulties in making informed decisions regarding the distribution of trust income and to achieve optimal tax outcomes. The ATO has also intensified its focus on trust arrangements, especially when it comes to the use of integrity rules which have formed part of the tax system for many years, but haven’t tended to be applied all that often. The risk of making mistakes and being detected is probably higher than ever before. All’s not lost (we’re here to help) While the landscape around trusts is evolving and the scrutiny is high, this doesn’t mean that trust structures don’t still have their place. With the right support (support that we can provide in conjunction with other experts) trusts can still offer advantages that other structures can’t. They can still be a useful platform for passive investment activities, estate planning and as part of a business structure. This isn’t the time to give up on trusts. But it is important to seek advice before setting up a trust to make sure it is the most appropriate option and to fully understand the advantages, disadvantages and practical issues that will need to be managed when using a trust structure.
By Clarke McEwan July 2, 2025
Finfluencers: bad tax advice could cost you Relying on this advice could not only leave you out of pocket but also expose you to ATO penalties, fines or in the worst case scenario - prosecution. What’s the problem? Many finfluencers make money by promoting financial products on behalf of companies, which means that they don’t necessarily have your best interests in mind when sharing information or insights. Finfluencers aren’t always qualified to provide advice on tax or financial products. You just can’t expect to receive solid, reliable or tailored guidance. Unfortunately, we’re seeing some influences share tax hacks that are either completely false or apply only in extremely limited situations. The ATO and some of the accounting professional bodies have sounded the alarm on some recent false claims, including: • Claiming your pet as a work related guard dog • Writing off luxury handbags as laptop bags • Deducting fuel costs without any documentation • Trying to claim swimwear as a work uniform These kinds of suggestions might sound plausible but following them could get you into serious trouble. The ATO uses sophisticated data matching tools to detect suspicious or inflated claims. If your deductions don’t meet the legal criteria, this could trigger an audit and if mistakes are found, the consequences can include: • An increased tax liability • Interest charges • Fines • A criminal record and in the most serious cases, imprisonment. Here’s how to stay safe and tax smart: • If it sounds too good to be true, it probably is. Dodgy deduction tips on social media are best ignored, at least until they can be verified. • Stick to trusted sources. For official tax guidance, visit ato.gov.au. • Don’t risk your business or personal reputation for a quick deduction. If you aren’t sure, please reach out to us and we can help you stay compliant, no filters or hashtags!
By Clarke McEwan July 2, 2025
What are the interest charges? There are two main types of interest that are charged by the ATO. These are: • General Interest Charge (GIC) : This applies when you pay your tax liability late. The ATO applies GIC to encourage tax liabilities to be paid on time and ensure taxpayers who pay late don’t have an unfair advantage over taxpayers who pay on time. GIC is calculated on a daily compounding basis on the overdue amount. The GIC annual rate for the July – September 2025 quarter is 10.78%. • Shortfall Interest Charge (SIC) : This is applied when there is a shortfall in tax paid because of an amendment or correction to your tax assessment. SIC is also calculated on a daily compounding basis. The SIC annual rate for the July – September 2025 quarter is 6.78%. The ATO applies SIC to the tax shortfall amount for the period between when it would have been due and when the assessment is corrected. What’s changing? Historically, both GIC and SIC amounts could be claimed as a deduction. This has meant that the net after-tax cost of the interest charges has been reduced for taxpayers who have a positive income tax liability for the relevant income year. However, the Government has passed legislation to ensure that GIC and SIC amounts incurred on or after 1 July 2025 are no longer deductible, even if the interest relates to a tax debt that arose before this date. As these interest charges are no longer deductible, this means that the after-tax impact of the charges is higher for many taxpayers. The impact becomes greater as your tax rate increases. For example, let’s take a look at two individuals who have the same level of tax debt owed to the ATO and the same level of tax debt owed to the ATO and the same GIC liability of $1,000 for a particular income year: • Sally is a high income earner and subject to a 45% marginal tax rate (ignoring the Medicare levy). Under the old rules the net cost of the interest charge was only $550 because she could claim a deduction for the GIC amount and this reduced her income tax liability by $450. Under the new rules no deduction is available and the full cost to Sally will be $1,000. • Adam is subject to a 30% marginal tax rate (again, ignoring the Medicare levy). Under the old rules the net cost of the interest charge was $700 because he could reduce his income tax liability by $300 by claiming a deduction for the GIC amount. As with Sally, under the new rules no deduction is available for the GIC and the full cost to Adam is $1,000. What can I do to minimise the impact of this change? The simple answer is to pay down ATO debt as quickly as possible. As you can see, the GIC rate is relatively high and continues to accrue on a daily basis until the debt is paid off. The faster you can pay off that debt, the lower the interest charges that will accrue. If you can’t afford to pay off your ATO debt in the short term then you might want to explore other options, including whether you would be better off borrowing money from another source at a lower interest rate to pay off the ATO debt. In some cases it is possible to claim a deduction for interest accruing on a loan that is used to pay tax debts, although this is normally only possible if the debt arose from business activities. It isn’t normally possible to claim a deduction for interest accruing on a loan that is used to pay a tax debt that arose from investment or employment activities. While the ATO will sometimes allow taxpayers to enter into a payment plan so that tax debts can be paid through instalments, tax debts that are subject to a payment plan still accrue GIC. On a more proactive basis, a better option is to plan ahead to ensure that upcoming tax payments can be made on time. This will sometimes mean setting aside funds regularly for tax instalments, GST, PAYG withholding and other amounts that need to be paid to the ATO. Keeping these amounts separate will help to ensure you’re ready when the ATO bill arrives. If you're currently carrying tax debt or need help staying ahead of your obligations, we're here to help. Let’s work together on a strategy that keeps you compliant and protects your bottom line.
By Clarke McEwan July 2, 2025
How does it work? While we are waiting to see whether the measure will become law, let’s assume for the moment that the Government passes legislation which is consistent with the Government’s announcements to date. If so: • If your TSB is over $3 million at 30 June, a portion of your annual superannuation earnings above that threshold will be taxed at an additional 15%. • The tax is assessed to you personally and can be paid from your super or your own funds. • Superannuation earnings for this purpose reflect the increase in your net super balance for the year, adjusted for certain contributions (eg, inheritance via death benefit pension) and withdrawals. • Some exclusions apply: children on super pensions, structured settlements (personal injury), and the deceased. It is important to remember that your TSB is the aggregate of all Australian superannuation interests (including balances with APRA funds, SMSFs and defined benefit schemes) held at the end of the income year. If the start date is 1 July 2025, then the first test date will be 30 June 2026. An individual’s TSB at this date, and each following 30 June, will determine whether they will have a Division 296 tax liability for that income year. Only where the individual has a TSB on 30 June in excess of $3 million will they have a Division 296 tax liability for that income year. Examples Sam’s account • 30 June super balance: $4 million. • Annual growth: $120,000. • Portion above $3m: ($4m–$3m)/$4m = 25% • Taxable earnings: $120,000 x 25% = $30,000 • Extra tax: $30,000 x 15% = $4,500 Lisa’s inheritance • Lisa’s balance rises from $2m to $4.5m after receiving a death benefit pension. • Only new investment growth (not the transferred amount) is taxed as earnings, but a total balance over $3m means she may still have a liability. What can you do? • Review your super fund liquidity and cashflow planning for future tax payments • Ensure your asset valuations are up to date • Estimate your combined super balances and plan for any large transactions • Document asset values, especially for SMSF members • Seek tailored professional advice before making any changes While we are waiting to see whether the legislation passes through Parliament and whether any significant amendments or adjustments are made to the proposed measures, if you have any questions or concerns around this in the meantime, reach out – we’re here to help.
Leveraging Xero for Medical Practices: The Importance of Monthly Bank Reconciliation
By Clarke McEwan June 12, 2025
Leveraging Xero for Medical Practices: The Importance of Monthly Bank Reconciliation In the evolving world of financial management, the use of cloud-based accounting software like Xero has transformed how businesses, including medical practices, handle their finances. For healthcare providers in Australia, maintaining accurate financial records is crucial, not only for compliance but also for ensuring business efficiency and growth. One of the fundamental accounting processes that support this is regular bank reconciliation. Why Choose Xero for Your Medical Practice? Xero is a user-friendly, cloud-based accounting software designed to simplify day-to-day financial operations. Here are some key reasons why medical practices are increasingly adopting Xero: Streamlined Billing and Invoicing : Xero allows for easy creation and management of invoices, ensuring that patients are billed correctly and efficiently. Real-Time Financial Overview : With Xero, you can access your financial data anytime, anywhere, providing you with a real-time snapshot of your practice's financial health. Integration with Other Systems : Xero integrates seamlessly with a plethora of healthcare management systems, reducing manual data entry and enabling smooth workflow. Efficient Payroll Handling : Automate payroll processing within your practice, helping you manage employee payments and relevant compliance efficiently. The Significance of Regular Bank Reconciliation Bank reconciliation is the process of aligning the records in your practice's accounting system with the corresponding information on your bank statement to ensure both sets of records are accurate. Here’s why doing this every month is vital: 1. Error Detection and Correction Bank reconciliation allows you to spot any discrepancies between your records and the bank's data. This includes identifying double payments, missed transactions, or bank errors that could cost your practice a significant amount if left unchecked. 2. Fraud Prevention By regularly reconciling your accounts, you create an opportunity to detect early signs of fraudulent activity or unauthorized transactions, safeguarding your practice’s funds. 3. Cash Flow Management Accurate reconciliation ensures that your cash flow statement reflects the true financial state of your practice, helping you plan for any financial commitments and investments with confidence. 4. Compliance and Reporting Regular reconciliation ensures your financial statements are accurate, facilitating smoother tax filing and adherence to Australian financial regulations. 5. Financial Decision-Making When reconciled correctly, your financial data becomes a reliable foundation for making strategic business decisions, such as expanding your practice or acquiring new equipment. Incorporating Xero into Your Routine To maximize the benefits of Xero for your medical practice: Schedule Monthly Reconciliation : Set aside dedicated time each month to complete your bank reconciliations without fail. Leverage Automation : Use Xero’s bank feeds to automate transaction imports, which makes the matching and reconciliation process quicker and more efficient. Stay Informed : Regularly review reports generated by Xero to keep abreast of your practice’s financial performance and trends. Consult with Professionals : Collaborate with your accountant or financial advisor to ensure that your reconciliation processes are optimized and aligned with best practices. In conclusion, adopting Xero and maintaining regular bank reconciliations in your medical practice are not merely about staying compliant; they are essential components of robust financial management. They ensure your practice operates smoothly and is prepared for growth, making them indispensable tools in today’s healthcare landscape. Discover how our accounting services can further enhance your financial management processes. Get in touch with us today for tailored solutions to meet the unique needs of your medical practice. To arrange a no obligation meeting please use the link here
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