This document summarizes a presentation for barristers on running a business as a barrister. It covers topics like understanding business structures, accounting and invoicing, tax obligations, using debt, budgeting and cash flow management, asset protection, estate planning, retirement planning, and getting the right professional team. It provides an agenda and discusses concepts like understanding different entity structures, accounting on a cash basis, personal income tax rates, timing of tax obligations, using good versus bad debt, preparing budgets and cash flows, and leveraging structures like superannuation and trusts to protect assets and plan for retirement.

1. Bar Practise Course
Practice Management
Monday 18 August 2014
Proudly presented by

2. RUNNING A BUSINESS AS A BARRISTER
Presenters:
Tim Taylor
Marsha Lal
Hanrick Curran

3. You / Your
Practice
Chambers
Entity
Family
Trust
Superannuation
Lifestyle
Assets
Family
Home

4. Why are you coming to the Bar?
So it wasn’t to do …:
General Administration?
Financial Management?
Intimately understanding Tax obligations of sole trader?
Testing your effectiveness in sales & marketing?
Risk Manager?
Business Planning?

5. Agenda
 Understanding Structures HC
 Accounting for and Invoicing for Revenue HC
 Tax obligations and time frames HC
 The use of Leverage – Good Debt vs Bad Debt HC
 Budgeting and Cash Flow Management HC
 Workshop exercise HC
 BREAK
 Consider your Assets and how you can protect them MLIG
 Estate Planning – a few reminders WHTM
 Retirement Planning – Super considerations WHTM
 Key Messages HC

6. Understanding Structures
 Barristers are unique – special rules for you!
 Business revenue must be received personally so you are
unable to access the benefits a Company or Trust structure
when carrying on your business
 Business expenses – you may share resources, or share a % of
Chamber expenses, this arrangement can be structured in a
Company
 Your Investment Revenue and Assets can use Company or Trust
structures
 Family home – non-at risk spouse for asset protection
 Investment properties or shares – trust for asset protection
 Superannuation – a trust for asset protection & tax concession
benefits

7. Accounting for & Invoicing
for Revenue
Things to do before you get started
 Get an ABN
 Not registered for GST if <$75k income p.a.
 Register for GST
 Determine Cash vs Accruals basis
 Design invoice template
 ATO tax invoice
 Consider your payment terms and timing of invoicing
 Establish a special purpose Practice bank account
 Sweep ‘wage’ across to a personal acct to fund personal expenses

8. Tax Obligations
1. Personal Income Tax Rates
 For FY 2014-15
 Add Medicare Levy of 2%
 Budget Repair Levy of 2% applied to income > $180,001
Tax Threshold Tax Rate
0 – 18,200 0%
18,201 – 37,000 19%
37,001 – 80,000 32.5%
80,001 – 180,000 37%
180,001 + 45%

9. Tax Obligations
 Timing of Personal Income Tax
 Income Tax is not deducted from your revenue, therefore you need
to provide for it, particularly in the first year
 ATO will assess your prior year’s income and determine your tax
obligation payable up to 18mths after financial year end*.
 ATO will then determine a quarterly tax instalment or % rate to be
applied to income received in prior quarter.
Income
$200,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000
FYE-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Tax
$0 $0 $0 $0 $80,000* $20,000 $20,000 $20,000 $20,000
$20,000
* Assuming you use a tax agent, or else your tax return and payment is required in Oct 2015

10. Tax Obligations
2. GST (Cash Basis)
 10% charged on all Goods and Services
 Tax payers registered for GST may claim a refund for GST paid on
goods & services purchased in order to generate an income, ie on
travel, phone bills etc. If you had expenses of $5,000 associated
with generating your income, you would be entitled to a rebate of
$500
 Rebates accumulate and can be claimed quarterly via Business
Activity Statement (BAS)
 You need to include the 10% GST into your services and charge this
to your clients. ie if you perform $50,000 of services, you will need
to either add 10% onto this and charge your client $55,000 or be
prepared to fund the GST obligation within your professional fees.
 GST obligations can be paid monthly or quarterly and are offset by
any rebates, the net GST liability will be paid when lodging BAS.

11. Use of Leverage
Good Debt V Bad Debt
What purpose will you need to use debt in the future?
What component of debt is deductible and when?
 The interest payable on the principal sum borrowed, only when the
principal sum has been borrowed with the intention to create an
income
 ie interest on investment property loan, geared share portfolio,
overdraft facility
 Interest on a home loan (where you occupy the property) is not
deductible, nor is interest on a personal use credit card or personal
loan
 In the instance of a car lease …
 Principal repayments of any loans are not deductible, this includes the
residual value on car lease

12. Cash flow Management and
Budgeting
 Preparing a budget and forecasting your cash flow is an important
function in any business, but especially so when the following are
present:
 Income is not stable/cyclical
 Regular fixed costs must be met
 Tax obligations need to be managed
 Key attributes to an effective operational budget are:
 Realistic well considered assumptions
 Realistic timing
 Discipline to review and cross check actual vs budget to gain a
good understanding of business cash flow
 Forecasting monthly cash flows will readily highlight:
 The ‘working capital’ funding you need at the outset
 Provisions you need to make in the ‘good months’
 Refer to handout Appendix A, a detailed budget and cash flow

13. Workshop
Please split into pairs
Refer to Appendix B - the Income section of your cash flow
 Consider your future as a Barrister and outline the following
assumptions:
 Who is going to pay your invoices? (ie Solicitors or Crown)
 How often are you going to invoice them? (upfront, every 2 weeks, monthly, end of
trial, upon provision of advice?)
 What are your terms for payment, and realistically how long should you allow to
receive payment?
 Using some simple assumptions, forecast when and what your revenue will be for
the next 12 months, for simplicity assume it is excluding GST and using Cash
Accounting which means you are only deemed to have earned the income when you
receive payment of your invoice.

14. 20 mins break

15. Consider your Assets and how
you can protect them
Stuart Carter
Authorised Representative of Millennium3
Financial Services AFSL No. 244252
www.mlig.com.au

16. What are your responsibilities?
• Practicing Certificate / Professional Indemnity Insurance
• Cash Flow Protection
• Protecting your Family’s Lifestyle
What are your options?
• Replacement Revenue
• Injection of Capital
What provisions are already in place?
• Group Life Insurance
• Possible Superannuation
www.mlig.com.au

17. Main reasons barristers and legal
professionals claim
Source: Asteron Life Limited, based on 2011 income protection claim statistics
www.mlig.com.au

18. MLIG
Insurance
You
Hanrick Curran
Accountant
Wilson HTM
Investment
Bank
Account/loans
www.mlig.com.au

19. 1
A Leading Wealth Manager and Adviser
Bar Practice Course
Financial Planning & Investments
Andrew Fleming
and
Michael Börjesson

20. Wilson HTM
20
Established in
1895
National
presence
ASX listed
Over $11Bn
in Funds
Under
Management

21. 21
Financial Planning
Service Matrix
Investment Advice
External Wrap WHTM Wrap
Retail Offer Funds, Direct
Shares, Fixed Interest
Funds Under
Admin
Funds Under
Management
Client Type
Individual, Family Trust, Self Managed Super Fund,
Superannuation Account
Level of Service
Transaction based Fees Asset Based Fees

22. Asset Allocation – Driver of Investment Returns
22
Tactical Asset Allocation for “Balanced” Investor
Source: WilsonHTM
 The majority of superannuation funds have a “Balanced” asset allocation
 Diversification across a number of differing asset classes serves to reduce volatility
 Asset allocation is the main determinant of investment returns
 Investment selection within asset classes is also important

23. Asset Allocation – How does this make a difference?
23
Asset Class Performance FY 2014
Value of Tactical AA
Source: IRess, Bloomberg, WilsonHTM Estimates
 2014 financial year, equities
out-performed bonds.
 We expect this to continue,
albeit at a reduced rate.
 Over-weight international
equities allocation provided a
large positive contribution.
 Currency and interest rates will
be significant determinants for
asset allocation going forward.
 Focus on underweight bonds
and preference for emerging
markets over Europe in
international exposure

24. Financial Planning
Financial planning is the long-term process of wisely managing your finances so you
can achieve your goals and dreams, while at the same time negotiating the financial
barriers that inevitably arise in every stage of life. Financial planning is a process,
not a product. (Financial Planning Association)
24
Objective Considerations
Protect • Insurance & Risk Management
• Cash Flow Management
• Tax Structures
• Estate Planning
Position • Tax Structures
• Effective Income Distribution
• Personal / Income Growth
• Diversified Income Streams
Provide / Prosper • Wealth Creation and Investment Management
• Debt Structure and Reduction
• Retirement Planning

25. Effective Superannuation
Super Fund
Tax Rate: 15% - 0%
Outputs
Tax Rate: 31.5% - 0%
Inputs
Tax Rate: 30% - 0%
 Salary Sacrifice
 Reduce Income Tax
 Reduce CGT
 Splitting Contributions
 Spouse Contributions
 Govt Co-Contribution
 Small Business R/O’s
 Tax Effective Fees
 Life Insurance
 Estate Planning
 Tax Effective Pensions
 Income Ratios
 Legislative Compliance
 Investment Strategy
 Australian Shares
 Direct Property
 Business Property
 Borrowing
 High Yield Securities
 Reserves Strategy

26. Super Contributions
 Who can contribute?
– Anyone under age 65 (regardless of your employment)
– Anyone under age 75 (subject to an activity test)
 Who can get a tax deduction?
– Individuals who contribute to super in a financial year where less than 10% of your
assessable income comes from an employer who provides superannuation support
 How to contribute?
– Salary Sacrifice
– Personal Concessional Contributions
– Personal Non-Concessional Contributions
 Where?
– Existing Super
– Industry Super
– Self Managed Super
 How Much?
26

27. Contribution Limits
Concessional Contributions
Age FY 2015
Under 50 $30,000
50 & Over $35,000
Non-Concessional Contributions
Age Amount Bring Forward
Under 65 $180,000 $540,000
65 & Over $180,000 Not available
Excess Contributions
– 1 July 2013 forward
– 85% of contributions refunded
– Non-concessional cap reduced by refunded amount

28. Contributions
 No business asset to sell at retirement
 No employer contributions, notionally:
– $13,875 based on a salary of $150,000
– $18,500 based on a salary of $200,000
– $23,125 based on a salary of $250,000
 Access to a diversified income stream
28
$1,800,000
$1,500,000
$1,200,000
$900,000
$600,000
$300,000
$0
40 45 50 55 60 65
Early Contributions Both Contribute (from age 50) Late Contributions

29. Estate Planning
The arrangement, management and securement and disposition of a person’s estate
so that he, his family and other beneficiaries may enjoy and continue to enjoy the
maximum from his estate and his assets during his lifetime and after his death, no
matter when death may occur. (Meyerowitz)
29
Instrument Considerations
Will (valid) • Control of tax structures (via the will, or
embedded in the structure)
• Inter-entity loans
• Testamentary Trust (mandatory or voluntary)
• Guardianship of children
Power of Attorney • Enduring or not
Advanced Health Directives
Superannuation Nominations • Binding or Non-Binding
• Lapsing or Non-Lapsing
• Tax consequences for different beneficiaries
Insurance Policy Ownership • Super, Individual

30. More Estate Planning
 Ensure that all of your assets are controlled by your testamentary instructions, and
that your testamentary instructions properly populate your testamentary vehicles.
30
Asset Owner Directed by
Will?
Testamentary
Trust
Home Joint No No
Bank Accounts Joint No No
Shares Individual Yes Yes
Shares (CHESS) Joint / TIC No No
Investments Individual Yes Yes
Investments Family Trust No No
Insurance Individual Yes Yes
Insurance Super No? No?
Superannuation Super No? No?

31. Things to Consider
 Financial Planning should be an integral part of your on-going practice
management as a self employed professional
 We recommend that you reserve some of your earnings for retirement planning
 Superannuation is a tax effective structure in which to save for retirement
 Superannuation allows the potential for tax effective treatment of cash flow for
older members through the use of transition to retirement income streams
 We recommend that practitioners have an estate plan in place supported by
adequate protections through insurance/s to ensure financial stability during
illness, to cover debts and/or provide for dependants.
 Your Estate planning should be integrated with your superannuation
 Seek advice with respect selecting the appropriate product service offering to
facilitate your superannuation nest egg or other investments and the appropriate
level of insurance cover
31

32. Key Messages
 Get the right professional team
 Get the right structures in place for your income & assets from Day 1
 This means appointing a proactive Accountant who knows your Industry, asap
 Understand your tax obligations and timing of these
 Don’t over spend your pre-taxed income and be left with an unfunded tax bill
 Carefully consider the use of debt, structure it optimally, use it wisely
 Get into the habit of seeking a 2nd opinion before committing to debt
 Prepare a budget and cash flow annually, cross check Actual V Budget
 Insure your assets, that includes YOU
 Keep an eye on the future, plan for retirement and invest wisely
 Establish comprehensive Estate Plans, keep them current with regular
reviews
Meet with us now and prepare for a successful practice!

33. Key contacts
Tim Taylor tim.taylor@hanrickcurran.com.au
Marsha Lal marsha.lal@hanrickcurran.com.au
Liz Cooper liz.cooper@hanrickcurran.com.au
Tel: 07 3218 3900
Andrew Fleming andrew.fleming@wilsonhtm.com.au
Tel: 07 3212 1326
Michael Borjesson michael.borjesson@wilsonhtm.com.au
Tel: 07 3212 1908
Stuart Carter stuart.carter@mlig.com.au
Anthony Brown anthony.brown@mlig.com.au
Tel: 07 3007 7800

34. Thank you

35. Hanrick Curran Disclaimer
The information contained in this presentation and accompanying
papers is necessarily a summary only of relevant matters and is not
intended to be a complete outline of practitioner responsibilities.
These contents are not a substitute for detailed direct advice and
should not be relied upon as such.

36. Disclaimer
The information provided is of a general nature only and neither represents
nor is intended to be specific advice on any particular matter. The contents
are not to be relied upon as a substitute for financial or professional advice.
The information is provided by Medico Legal Insurance Group Pty Ltd which
is an Authorised Representative of Millennium3 Financial Services Pty Ltd
AFSL No 244252‘
www.mlig.com.au

37. Disclaimer
– This presentation has been prepared by Wilson HTM Investment Group Ltd (WIG).The
information in this presentation is current as at 04/02/2014.
– This presentation is not an offer or invitation for subscription or purchase of securities or
a recommendation with respect to any security. Information in this presentation should
not be considered advice and does not take into account the investment objectives,
financial situation and particular needs of an investor. Before making an investment in
WIG, any investor should consider whether such an investment is appropriate to their
needs, objectives and circumstances and consult with an investment adviser if
necessary. Past performance is not a reliable indication of future performance.
– WIG has prepared this presentation based on information available to it. No
representation or warranty, express or implied, is made as to the fairness, accuracy,
completeness or correctness of the information, opinions and conclusions contained in
this presentation. To the maximum extent permitted by law, none of WIG, its directors,
employees or agents, nor any other person accepts any liability, including, without
limitation, any liability arising from fault or negligence on the part of any of them or any
other person, for any loss arising from the use of this presentation or its contents or
otherwise arising in connection with it.