Shining the light on Sargents Cakes with Kim and Paul Sharwood
Husband and wife team, Kim and Paul Sharwood, share their business story with us. Sargents has such a long-standing history and we wanted to know all about it! Thanks to Kim and Paul for opening your doors and sharing your success with us.
- How old is the business?
Established 1952...so 66 years old!
- Where did the name Sargents come from?
Jim Sargent established the business in 1952. Paul’s Dad Barry lived next door to him. Jim only had one daughter who showed no interest in being involved with the business, so he asked Barry’s parents if Barry could begin work at Sargent’s as an apprentice. Barry was like the son he never had. Barry and Jim worked together until Jim retired and Barry bought the business in 1982. He decided to honour Jim by keeping the name Sargent’s Cakes. When Paul and I took over the business in 1997, changing the name wasn’t even a consideration. The name Sargent’s Cakes is synonymous with Reservoir, and the people of Reservoir don’t like change!
- Who owns the business now?
Paul and Kim Sharwood.
- Congratulations on being a super husband and wife team. How do you do it? What’s the secret to your success because not every husband and wife can work together!
I believe that as a couple, both in business and at home, we have a lot of respect and love for one another. We have been together since we were 14 years old, so we know each other extremely well. As far as the business is concerned, Paul starts very early in the mornings and his focus is on the production and quality control of the goods. I work part-time at the business, and my focus when I am there is on the staff and of course the customers. When problems arise within the business, we always openly discuss our options/solutions, and we make sure we are on the same page. A lot of the time Paul will have the answers to any manufacturing issues, due to his extensive knowledge in that area, (which I don’t have!)
- Which social media platform do you use and what is the name so that we can find it?
We have a website (www.sargentscakes.com.au), that is not utilised much since our introduction to Instagram, (sargents_cakes). It is much more time effective to post a cake photo and description on Instagram.
- What makes you smile at work?
Paul...” Seeing the shop full of customers, lining up to give us their money!” Kim...” Having a chat with customers who have become like family over the years; banter with my staff; looking at the final result of a beautiful cake that our decorators have completed!”
- You must have such a loyal customer following. How do you ensure that your quality and service keeps up to date with customers’ expectations?
We do have a huge local following. Many customers have been coming to us for over 50 years! Great enthusiasm and lots of hard work and time are dedicated to making sure that customers return. They expect a friendly greeting, knowledgeable and reliable information on our goods, a clean and appealing shop, and of course food that tastes amazing! This is achieved through the training and supervision of our staff; making sure that they know what our expectations are of them and for our customers. Our staff are very loyal many have worked for Sargent’s Cakes for over 20 years! The main drawcard for Sargent’s Cakes is that we bake fresh daily you can’t beat an apple pie or jam donut that has just come out of the oven!
- In a family business, they say success lies in each other knowing their strengths and weaknesses. What business roles [hats] do each of you do [wear?]. For example, who looks after the HR, who looks after the finances etc.?
Paul is a qualified pastry cook. He is hands on every morning, six days a week, making all the pies and cakes that we sell. I work part-time at the shop and work at home keeping the finances under control, doing the bookwork and answering emails/enquiries. Paul does not do technology, so needless to say all the HR falls into my hands. One of my young decorators has taken over the Instagram page from me, as she is more tech-savvy and more in tune with the lingo!
- You’ve been a client of McPhail and Partners for many years. How would you describe what it is that they do?
McPhails have looked after us the whole time we have owned Sargent’s Cakes, and also when Barry had the business. They give us peace of mind that our accounting needs are being managed by qualified accountants who have the knowledge to keep our business out of strife with the Tax Office (!) and running as efficiently as possible. They offer us advice and are always available to help us when we have enquiries.
- What motivates you every day?
Running and maintaining a successful business that people love to visit keeps us both motivated every day. Knowing that people are enjoying our food gives us great pleasure. Of course, wanting to provide for our family and to continue to provide us with a lovely lifestyle motivates us as well.
- How has retail changed for your business over the years?
Retail has changed for us over the years. We have a younger demographic moving into the area, so the demand for different products has increased. Customer expectations are higher than before, and value for money is extremely important. It is not as busy as the good old days, with competition from other bakeries and the big supermarkets. However, we have learnt to adjust to this. Our prices are very reasonable, and our quality is always high, so we know that Sargent’s Cakes is here to stay!!
Thanks Kim and Paul and congratulations on a wonderful success story.
Tax news, views and clues October 2018
Claiming work-related expenses: ATO guides and toolkits
This year, the ATO has launched its biggest ever education campaign to help taxpayers get their tax returns right. The ATO says the campaign, which is running throughout tax time, includes direct contact with over three million selected taxpayers, as well as specialised guides and toolkits for taxpayers, agents, employers and industry bodies. A key component of the campaign is simple, plain English guidance for people with the most common occupations, like teachers, nurses, police officers and hospitality workers.
ATO Assistant Commissioner Kath Anderson says that last year work-related expenses totalled a record $21.3 billion, “and we have already flagged that over-claiming of deductions is a big issue”. The most popular topics this year include car, clothing, travel, working from home, and self-education expenses, and the guides for tradies, doctors, teachers, office workers and IT professionals have been popular.
Illegal phoenix activity: public examinations in Federal Court matter
The ATO has announced that public examinations started in a Federal Court matter on 27 August 2018 in relation to a group of entities connected to a pre-insolvency advisor. The examinations will focus on the suspected promotion and facilitation of phoenix activities and tax schemes.
More than 45 service providers, clients and employees of pre-insolvency advisors, as well as alleged “dummy directors” of phoenix companies, will be examined.
Banking Royal Commission: possible super contraventions
On 24 August 2018, the Royal Commission into banking, superannuation and financial services misconduct released the closing submissions, totalling over 200 pages, that set out possible contraventions by certain superannuation entities. The evidence surrounding these alleged breaches was revealed during the fifth round of public hearings, when high-level executives of some of the largest superannuation funds were grilled about practices that may involve misconduct or fall below community expectations.
The Commission heard evidence about fees-for-no-service conduct and conflicts of interests which affect the ability of some super fund trustees to ensure that they always act in the best interests of members. Questioning during the hearings focused particularly on how trustees supervise the activities of a fund and respond to queries from the regulators. Executives were also quizzed about expenditure on advertisements and sporting sponsorships, and finally, the Commission turned its attention to the effectiveness of the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) as regulators.
What’s next?
The Royal Commission’s interim report is now due, and the sixth round of public hearings (10–21 September 2018) is investigating conduct in the insurance industry. The Royal Commission has released four background papers covering life insurance, group life insurance, reforms to general and life insurance (Treasury) and features of the general and life insurance industries.
SMSF issues update: ATO speech
ATO Assistant Commissioners, Superannuation, Tara McLachlan and Dana Fleming recently spoke at the SMSF Association Technical Days in various capital cities. The speech was mainly about practical considerations to be taken into account when setting up a new self managed superannuation fund (SMSF) and during the first year of its operation. Other issues raised included SMSF registrations, annual return lodgements, SuperStream SMSFs and exempt current pension income and actuarial certificates.
ATO data analytics and prefilling help tax return processing
The ATO reports that a record number of tax returns have been finalised in the first two months of this year’s “tax time” period, thanks to prefilling of tax return data and the ATO’s correction of mistakes using analytics and data-matching. Over $11.9 billion has been refunded to taxpayers, and errors worth more than $53 million were detected and corrected before refunds were issued.
The ATO has prefilled over 80 million pieces of data from banks, employers, health funds and government agencies to make tax returns easier for taxpayers and agents. The ATO’s advanced analytics allow it to scrutinise more returns than ever before, and make immediate adjustments where taxpayers have made a mistake.
TIP: Having a tax agent prepare and lodge your return is a tax-deductible cost. Why not let us handle your tax this year?
Parliamentary committee recommends standard tax deduction, “push return” system
The House of Representatives Standing Committee on Tax and Revenue has tabled its 242-page report on taxpayer engagement with the tax system. This significant report covers issues that have also been canvassed in previous tax reform reviews such as the Australia’s Future Tax System Review and the Henry Review.
In its inquiry, the Committee examined the ATO’s points of engagement with taxpayers and other stakeholders and reviewed the ATO’s performance against advances made by revenue agencies in comparable nations. The inquiry asked what taxpayers should now expect from a modern tax service that is largely or partly automated.
Australia’s complex system for claiming work-related tax deductions, for example, was highlighted during the inquiry as being out of step with approaches in most other advanced nations, which have almost universally standardised their approach. The Committee concluded that under Australia’s self-assessment model, more should be done to make tax obligations easier for taxpayers to understand and simpler to comply with. The report includes 13 recommendations to help achieve this goal.
12-month extension of $20,000 instant asset write-off
The Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2018has now passed through Parliament without amendment.
The Bill makes changes to the tax law to extend by 12 months the period during which small businesses can access expanded accelerated depreciation rules for assets that cost less than $20,000. The threshold amount was due to revert to $1,000 on 1 July 2018, but will now remain at $20,000 until 30 June 2019.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the extension but reminded small businesses and family enterprises that the instant asset write-off is a tax deduction, not a rebate – your small business needs to make a profit to be eligible to claim the benefit.
Cyptocurrency and tax: updated guidelines
The ATO says that for taxpayers carrying on businesses that involve transacting with cryptocurrency, the trading stock rules apply, rather than the capital gains tax (CGT) rules.
The ATO’s guidelines on the tax treatment of cryptocurrencies have recently been updated, following feedback from community consultation earlier this year. The ATO received about 800 pieces of individual feedback and submissions, and has now provided additional guidance on the practical issues of exchanging one cryptocurrency for another, and the related recordkeeping requirements.
The ATO as SMSF regulator: observations
In the opening address to the Chartered Accountants Australia and New Zealand National SMSF Conference in Melbourne on 18 September 2018, James O’Halloran, ATO Deputy Commissioner, Superannuation, shared some observations and advice from the ATO’s perspective as regulator for the SMSF sector. He spoke about matters including the crucial role of fund trustees, the ATO’s activities to address behaviour that seeks to take advantage of SMSFs, what sort of SMSF events attract close ATO scrutiny, and issues relating to the use of multiple SMSFs to manipulate tax outcomes.
Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.