By Mark Churchmichael, Head of Tax and Compliance
Most business owners don’t change accountants because something goes wrong. They change when they finally realise nothing has changed at all.
Same structure. Same elections. Same approach. Year after year.
And quietly, often invisibly, money is left sitting with the ATO.
Clients place enormous trust in their accountants as long-term advisers. That trust is usually deserved, but it also means advice is rarely questioned, even when tax law, ATO guidance and planning opportunities have moved on.
Below are three real-world style examples we see regularly. Individually, they look minor. Together, over time, they resulted in close to $200,000 in missed refunds and deductions.
Example 1: SMSF Still in Accumulation – A Missed Pension Strategy
The situation
- SMSF member aged 70
- Still working
- Total super balance: $3 million
- Entire fund left in accumulation phase
- No pension commenced, despite eligibility since age 60
What could have been done:
- Commence an account-based pension up to the transfer balance cap (assume $2.7 million)
- Retain $300,000 in accumulation
- Invest part of the pension balance in fully franked Australian shares
Why this matters (ATO position):
- Earnings on assets supporting a retirement-phase income stream are exempt current pension income (ECPI) (ITAA 1997 s295-385)
- Franking credits are refundable in both accumulation and pension phase, but retirement phase allows a full cash refund
- A pension cannot be backdated (ATO SMSFR 2013/1)
The corrected refund outcome
Assume:
- $1.5 million invested in fully franked Australian shares
- Cash dividend yield: 4%
- Annual cash dividends: $60,000
- Franking credits attached: ~$25,700
If left in accumulation phase:
- Assessable income: $85,700
- Tax at 15%: $12,855
- Franking credits offset tax
- Refund received: $12,845
If moved to retirement phase:
- Tax on earnings: $0
- Franking credits refunded in full
- Refund received: $25,700
The actual missed benefit:
The fund did not lose money through tax paid. It lost the additional refundable credits it could have received.
- Missed refund per year: $12,855
- Over 5 years: ~$64,000 missed
This amount is not recoverable. The pension was never commenced, and ECPI cannot be applied retrospectively.
Example 2: Depreciation on Farm Equipment Never Claimed
The situation
- Primary production business
- Significant farm equipment acquired
- Depreciation not claimed for 5 years
ATO position
- Depreciating assets are claimed under Division 40
- Missed depreciation can generally be corrected by amending prior returns (within time limits), or making later-year adjustments (ATO guidance on correcting mistakes)
Assume:
- Eligible equipment: $400,000
- Missed depreciation: ~$200,000
- Marginal tax rate: 30%
Missed tax benefit: ~$60,000
Example 3: GST Credits Not Fully Claimed Within a Group
The situation
- Two related entities
- Shared assets, operating costs and management fees
- GST credits only partially claimed
ATO position
- Input tax credits are available where entities are registered, taxable supplies exist and valid tax invoices are held (GST Act s11-5)
- Credits must generally be claimed within 4 years (ATO GST time limits)
Assume over 5 years:
- Unclaimed GST on assets: $40,000
- Unclaimed GST on operating expenses: $18,000
- Unclaimed GST on management fees: $12,000
Total GST missed: ~$70,000
The Real Cost of ‘Doing What We’ve Always Done’
- SMSF missed refunds ~$64,000
- Missed depreciation ~$60,000
- Unclaimed GST~$70,000
- Total missed tax benefits ~$194,000
These are not aggressive positions. They are ordinary outcomes under long-standing ATO rules.
January 2026: What Can Still Be Fixed?
Assume a new accountant prepares the 2025 returns and reviews prior years.
Income tax
- Most entities: 4 years to amend
- Individuals & small businesses: typically 2 years
- Most or all of the $60,000 depreciation benefit can still be recovered.
GST
- BAS amendments generally available within 4 years
- $40,000–$50,000 of GST is realistically recoverable.
SMSF pension strategy
- Pension never commenced
- ECPI never applied
- Only partial refunds received via accumulation phase
- The additional refundable credits are permanently lost
The Bigger Lesson
Most tax leakage isn’t dramatic. It’s quiet, technical, and repeated year after year. The danger isn’t bad advice – it’s unchallenged advice. A knowledgeable accountant brings fresh eyes, current law, and the confidence to revisit assumptions. Sometimes, that uncovers missed value approaching $200,000. And sometimes, it uncovers it just in time.
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