As part of our commitment to providing you with professional, transparent and compliant accounting and taxation services, we will be issuing an annual engagement letter to our clients.
 
There are two important reasons for this:

1. Professional requirements applying to accounting firms, including APES 305 Terms of Engagement; and
2. New Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) obligations that now apply to accountants.

Our annual engagement letter allows us to ensure that our records, the services we provide and the information we hold about you remain current and accurate.

What do you need to do?
Each year we will send you your updated engagement letter via DocuSign.
 
We ask that you:

• Review the engagement letter.
• Let us know if any of the information is incorrect or has changed.
• Sign the engagement letter.

 
Our commitment to you
We understand that regulatory requirements can sometimes create additional administration work for our clients.

Our aim is to make the annual engagement process as straightforward as possible while ensuring that we continue to meet the professional obligations that apply to our firm.
 
If you have any questions at all, please contact your client manager on (02) 8543 6800.

We are writing to inform you of important changes to Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws that affect many accounting firms from 1 July 2026. These reforms are administered by AUSTRAC and are designed to help prevent financial crime and protect the integrity of Australia’s financial system
 
What is Anti-Money Laundering (AML)?
Money laundering is the process of disguising funds obtained through illegal activities so they appear to come from legitimate sources. AML laws are designed to prevent criminals from using businesses and professional services to move, conceal, or benefit from illicit funds. These laws also help combat fraud, organised crime, and the financing of terrorism.
 
How does AML work?
AML regulations require businesses such as accounting firms to take reasonable steps to understand who their clients are, the nature of the services being provided, and the risks associated with those services. This involves:

• Verifying the identity of clients and, where applicable, beneficial owners and controlling parties.
• Understanding the purpose and nature of the client relationship.
• Assessing and managing potential money laundering or terrorism financing risks.
• Keeping client information up to date.
• Monitoring for unusual or suspicious activities and complying with any reporting obligations required by law.

 
What are HYD Advisory’s legal obligations?
Under AML/CTF legislation, accounting firms providing designated services are required to:

• Conduct client identification and verification procedures before providing certain services.
• Understand the ownership and control structure of entities, trusts, partnerships, and other organisations.
• Assess and document money laundering and terrorism financing risks associated with clients and engagements.
• Maintain records of identification and verification information.
• Implement internal AML/CTF policies, procedures, and staff training.
• Conduct ongoing customer due diligence and keep client information current.
• Report certain transactions or suspicious matters to the relevant regulatory authorities where required by law.

These obligations apply to all clients and are a regulatory requirement rather than a reflection on any individual client or business.
 

What do you need to do?
To meet our AML obligations, we may request additional information and documentation, including:

• Proof of identity and address.
• Details of directors, shareholders, trustees, beneficiaries, or beneficial owners.
• Information about your business activities and ownership structure.
• Information regarding the source of funds or source of wealth where relevant.
• Updated information from time to time to ensure our records remain accurate and current.

In some circumstances, we may be unable to commence or continue certain services until the required verification information has been obtained.
 
We appreciate that these requests may require some additional time and effort, however, these measures help us meet our legal and professional obligations while continuing to provide services to you in a secure and compliant manner.

Any information provided will be treated confidentially and managed in accordance with our privacy obligations.

If you have any questions or require assistance in navigating these changes, please do not hesitate to contact our office on (02) 8543 6800.

Click here to download the Business & Profit Matters Newsletter Autumn 2026

Click here to download the Business & Profit Matters Newsletter Summer 2026.

While the Division 296 tax is still yet to be legislated, it’s looking likely the tax will be introduced. For individuals who may be impacted by the change, it’s critical to understand how different scenarios might play out and what they should consider.   
 
Some of the key components of Monday’s announced changes include:

1. Delayed start date
   The commencement date has been deferred for one year to 1 July 2026 (focusing on a taxpayer’s TSB at 30 June 2027), allowing time for consultation and legislative drafting.

1. Two-tier thresholds introduced for higher superannuation balances
   A progressive tax model is now proposed to apply:       
   Balances up to the $3 million threshold: taxed at 15% on earnings
   Balances between $3 million and $10 million threshold: taxed at 30% on earnings
   Balances above $10 million: taxed at 40% on earnings

1. Indexation will apply to the new $3 million and $10 million thresholds
   Both thresholds (i.e., $3 million and $10 million) will be indexed to maintain alignment with the Transfer Balance Cap and to reflect inflation over time.

1. ‘Realised earnings’ taxed under changes
   The new rates will apply only to future realised earnings and not to unrealised gains.
   This shift addresses strong criticism that the original design could create cash-flow issues for SMSFs or funds with illiquid assets.  Treasury will consult on how realised gains will be calculated and attributed to members.

1. Defined benefit parity
   Defined benefit schemes will receive commensurate treatment to ensure equivalent tax outcomes.  Treasury will consult on the calculation method.